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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stock end higher, boosted by gains Stateside - FTSE closes up 28 points, Bunzl leads
- Yellen praised for strong G20 performance
- Eurozone CPI revised slightly higher
techMARK 2,917.47 +0.80%
FTSE 100 6,865.86 +0.41%
FTSE 250 16,539.29 +0.48%
UK stocks got the week off to a decent start, lifted by strong performances from Vodafone and Bunzl, as well as gains over in the US.
The FTSE 100 closed up 27.80 points at 6,865.86.
Sentiment was lifted by developments in Australia as Federal Reserve Chair Janet Yellen smoothed over concerns about the impact of monetary stimulus tapering on emerging markets whilst addressing the Group of 20 Finance Ministers in Sydney over the weekend.
UK oil and gas industry to undergo major revamp
Fast-track plans for a major revamp of the UK oil and gas industry were unveiled today. The recommendations, which are expected to generate "at least" £200bn during the next 20 years, were the work of retired businessman Sir Ian Wood, the former Chairman of energy services giant Wood Group.
His plans address collaboration between the industry and the government, regulation of the industry, as well as maximising production levels and utilising modern technology.
In other news, data indicated British service sector firms got the year off to a good start, although a spending survey showed consumers were still having to shell out more on gas and electricity, fuelling inflation concerns.
In the three months to February, optimism in the consumer sector and in business and professional services increased at its fastest rate since 1998, business lobby group the CBI said.
Eurozone CPI up 0.8%
The Eurozone´s Consumer Price Index for January was revised slightly higher, to reveal a gain of 0.8% year-on-year (consensus: 0.7%). At an 0.8% annualised gain the increase in the 'core' rate was as expected by consensus.
It comes as pressure has been building on the European Central Bank to undertake further stimulus measures to forestall the potential risks from greater than expected disinflation.
Meanwhile, the German Ifo business climate index surprised to the upside this morning, having gained to 111.3 in February. However, the rise was due exclusively to an improvement in the current conditions sub-index.
Bunzl tops risers after strong 2013
Bunzl was at the top of the leaderboard today after revealing its 2013 operating profit had jumped 18% to £414m, boosted by acquisitions, although it warned that adverse exchange rate movements could hit future earnings if they remained at current levels. Pre-tax profits rose to £372.2m, an increase of 18% on the back of increased revenues of £6.1bn against £5.3bn in 2012. The distribution and outsourcing giant also announced it had acquired businesses in Germany and the Czech Republic.
Vodafone shares were higher following the completion of the sale of its stake in Verizon Wireless and the attendant share consolidation. The sale has reduced the value of the telecoms giant by nearly £51bn. The firm also announced its intention to redeem approximately £3.5bn of its own notes.
Meanwhile, RSA Insurance was in the red after it issued a statement acknowledging recent press speculation regarding a potential rights issue and stated it was "considering" several options.
Banking giant HSBC was also a big faller after its 2013 profit missed consensus forecasts of $24.6bn after coming in at $22.5bn, although the company did continue to slash costs and jobs in its drive to reduce operating expenses. As a result of the miss, Cannacord Genuity lowered its target on the lender's shares to 750p from 825p.
Associated British Foods also dropped after the group reported a slump in the Sugar business. Despite the drop, it said it expects first half adjusted operating profit to be in line with 2013 following a strong performance from its Primark stores. The company's revenue and profit from Sugar will be substantially lower than last year, as prices declined. The world sugar price has also fallen to an "unsustainably low level", putting further pressure on industry revenues and margins. |
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FTSE 100 - Risers
Bunzl (BNZL) 1,585.00p +6.88%
Vodafone (VOD) 252.30p +6.68%
William Hill (WMH) 371.40p +3.92%
Hargreaves Lansdown (HL.) 1,357.00p +3.27%
Melrose Industries (MRO) 325.80p +2.68%
Schroders (SDR) 2,681.00p +2.25%
Ashtead Group (AHT) 868.00p +2.12%
Prudential (PRU) 1,372.00p +2.08%
British Sky Broadcasting Group (BSY) 941.00p +2.01%
ARM Holdings (ARM) 989.00p +1.96%
FTSE 100 - Fallers
RSA Insurance Group (RSA) 97.50p -3.66%
HSBC Holdings (HSBA) 635.70p -2.83%
Associated British Foods (ABF) 2,920.00p -2.44%
Antofagasta (ANTO) 933.00p -2.30%
Coca-Cola HBC AG (CDI) (CCH) 1,516.00p -2.19%
Rio Tinto (RIO) 3,536.50p -1.79%
Anglo American (AAL) 1,533.50p -1.73%
Pearson (PSON) 1,099.00p -1.26%
Standard Chartered (STAN) 1,305.00p -0.84%
FTSE 250 - Risers
Carphone Warehouse Group (CPW) 333.00p +8.82%
Centamin (DI) (CEY) 57.80p +7.84%
Dixons Retail (DXNS) 50.30p +6.66%
Essar Energy (ESSR) 67.20p +3.94%
COLT Group SA (COLT) 140.00p +3.70%
Ferrexpo (FXPO) 171.00p +3.57%
Hikma Pharmaceuticals (HIK) 1,428.00p +3.48%
UDG Healthcare Public Limited Company (UDG) 362.00p +3.43%
Diploma (DPLM) 756.00p +3.14%
3i Group (III) 416.70p +2.94%
FTSE 250 - Fallers
Rightmove (RMV) 2,660.00p -3.41%
Fidessa Group (FDSA) 2,450.00p -3.31%
Grainger (GRI) 239.50p -3.04%
Xaar (XAR) 1,095.00p -3.01%
Evraz (EVR) 80.15p -2.55%
Foxtons Group (FOXT) 367.10p -2.52%
Petra Diamonds Ltd.(DI) (PDL) 158.90p -2.46%
Workspace Group (WKP) 564.00p -2.17%
Oxford Instruments (OXIG) 1,517.00p -2.13%
NMC Health (NMC) 447.30p -2.12% |
| | The Fundamentals of Stock Market Highs | | How to Know when the Bull Market Ends - Given that the stock market rally has now lasted nearly five years and in view of new all-time highs, many market participants are faced with the question when will there be a top at the major share indexes. After all, everybody wants to exit the market near a high and lock in their profits before the market turns downwards again. Read more. |
| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks higher after rise in German business confidence - German business confidence rises
- Eurozone inflation revised up
- Italy's Renzi lays out reforms
FTSE 100: 0.41%
DAX: 0.54%
CAC 40: 0.87%
FTSE MIB: 0.42%
IBEX 35: 1.21%
Stoxx 600: 0.62%
European stocks advanced after the release of better-than-expected German business confidence figures and upwardly revised Eurozone inflation data.
The German Ifo business climate index, based on a survey of 7,000 executives, increased in February to 111.3 from 110.6 in January, surprising analysts who had predicted the gauge to remain unchanged.
While the survey pointed to recovery in Europe's biggest economy, Capital Economics warned that the report has been "consistently over-optimistic relative to the hard data over the last year or so, so its implications for growth should not be interpreted too literally".
Eurozone inflation in January was revised from the preliminary reading of 0.7% to 0.8%, in line with December's rate of growth.
However, it remained at levels well below the European Central Bank's (ECB) 2% target.
The ECB has been under mounting pressure to take greater measures to tackle falling prices which are seen to hurt growth in the bloc.
ECB President Mario Draghi has signalled that the central bank may take policy action, such as stimulus measures, at its meeting in March following the release of new 2016 forecasts.
"By then we'll have the full set of information needed for us to decide whether to act or not," he said yesterday at the Group of 20 Finance Ministers meeting in Sydney.
Renzi lays out reforms
Italian Prime Minister Matteo Renzi has vowed to cut labour taxes and implement institutional reforms to boost the nation's economy.
Renzi today faced parliament for the first time since being appointed premier last week.
He laid out an ambitious programme of change amid calls for reforms to address Italy's €2trn public debt.
"If we lose this challenge, the fault will be mine alone," Renzi told the Senate.
Meanwhile, Bank of England Governor Mark Carney has said the central bank will not take risks with the recovery and is going to implement monetary policy in a way that ensures sustainable growth in jobs, incomes and in spending.
He also said the revised forward guidance earlier this month reflected the necessity for a "more complex set of judgements" than was required in the first phase, when it was linked to the unemployment rate.
Vivendi, HSBC
Vivendi SA was higher after saying it was approached about a potential alliance between its French phone business SFR and cable provider Numericable Group SA, controlled by Altice SA.
HSBC slumped after the bank posted 2013 pre-tax profits that missed the consensus forecast and warned that it expected "greater volatility in 2014 and choppy markets".
Scania AB rallied as Volkswagen offered to buy the remaining stake in the Swedish truck-maker for €6.7bn.
Currys and PC World's parent group Dixons surged after confirming it was in merger talks with mobile phone retailer Carphone Warehouse. Carphone Warehouse also gained.
Bunzl advanced as the outsourcing and distribution group reported an 18% rise in 2013 operating profit, boosted by acquisitions.
PostNL NV slumped after the Dutch mail service reported a full-year loss that was wider than forecast by analysts.
The euro fell 0.07% to $1.3737.
Brent crude futures rose $0.615 to $110.530 per barrel, according to the ICE. |
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| | US Market Report | | US open: S&P 500 erases losses for the year - Yellen receives credit for speech at G-20
- Markit services PMI retreats in February
- S&P 500 erases losses for the year
Dow Jones Industrials: 0.86%
Nasdaq Composite: 0.88%
S&P 500: 0.91%
US benchmarks advanced Federal Reserve Chair Janet Yellen smoothed over concerns about the impact of monetary stimulus 'tapering' on emerging markets.
Yellen, who took over from Ben Bernanke early this month, indicated that the central bank would continue to scale back asset purchases at each policy meeting until ending the programme all together later this year.
The move raised fears that it would hurt the recovery of emerging markets amid weakening prices.
However, in her first global forum as Chair, Yellen won praise for helping to ease such concerns at the Group of 20 Finance Ministers meeting in Sydney over the weekend.
The S&P 500´s rise on Monday might be linked to the above. The benchmark gauge set a new intraday high and erased all of its losses for the year in early afternoon trading Stateside.
Sydney, India and South Africa were among the nations urging the Fed to consider the spillover effects of withdrawing stimulus.
Australian Treasurer Joe Hockey said Yellen was "hugely impressive" in dealing with the issue. "There was proper recognition that the movement of monetary policy in major developed countries either way, whether it be tightening or easing, is going to have an impact on emerging economies," he said in a speech.
Turning to today's agenda, former Fed Chairman Alan Greenspan will speak at a conference held by the National Association of Business Economists.
It will be an otherwise quiet day for macro-economics with the focus on company news.
Comcast Corp. rallied in pre-market New York trading following reports Netflix has agreed to pay for direct access to the cable company's broadband network. Netflix, on the other hand, declined.
Humana Inc. slumped as the US government proposed cutting payments made under the Medicare Advantage programme for 2015.
Chesapeake Energy Corp. advanced after the US natural gas producer announced plans to either sell or spin off its oilfield-services unit.
Services PMI retreats
Survey compiler Markit´s preliminary service sector Purchasing Managers´ Index for the month of February slipped to a reading of 52.7 from 56.7 in the month before.
Front month West Texas crude futures were higher by 0.48% to the $102.69/barrel mark on the NYMEX.
10-year US Treasury yields gained one basis point to 2.75%. |
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| | Broker Tips | | Broker tips: HSBC, Bovis Homes, Rightmove HSBC´s management made good progress in 'right-sizing' the lender´s operations given the current capital regime and the bank continued to be well-capitalised under the new basel framework for regulatory capital, Canaccord Genuity explained to clients in a note on Monday.
Nonetheless, the broker cut its fiscal year 2014 earnings per share estimate by 18% due to lower forecasts for revenues. Revenue might also continue to be under pressure due to volatility in emerging markets.
In particular, the analysts highlighted the still elevated cost/income ratio to be seen in Europe, which stood at 84% at the end of 2013. It came as net interest income slipped 9% over the year, dragged down by low interest rates and the current macroeconomic landscape.
The bank's quarterly dividend, at 18 cents, made for an increase of 28% versus the fourth quarter of 2012, but was nevertheless below Canaccord's higher than consensus expectations.
As a result of all the above they retained their 'buy' recommendation on the shares, but reduced their target to 750p from 825p previously.
The target was derived via the return-on-equity (ROE) versus price-to-book-value (PBV) approach. The cut was led by slower growth in net asset values (NAV) given their rebased estimates.
Broker Panmure Gordon upgraded its profit and price forecasts
for Bovis Homes, saying the house-builder's annual results were excellent.
Bovis on Monday said strong demand had fuelled a 48% increase in pre-tax profit in the year to December 31st to £78.8m from £53.2m a year ago on a 31% lift in revenue to £556m.
It attributed the increase to strong demand as the UK's housing market recovers and switches to building bigger homes in southern England.
Panmure said it now expected Bovis to report 2014 profits of £119.6m, up from its previous forecast of £115.1m.
It also raised its price target on the stock to 923p from 900p and kept its 'buy' recommendation.
"These are excellent results, with increases in volumes, prices and margins," Panmure said.
Property website Rightmove has a very clear business model and is benefitting from two favourable tailwinds; namely the secular shift towards online property advertising and the positive impact which the housing market recovery is having on advertisers, analysts at at Canaccord Genuity pointed out on Monday.
However, its shares were up by 57% over the year, by 7% on the month and were just 8% below the broker's 'business-as-usual' 3,000p October target.
For the above reasons the broker opted on Monday to downgrade the stock to 'hold' from 'buy', even while maintaining its price target of 3,000p.
As well, in 2015 Rightmove and Zoopla would be challenged by Agents' Mutual, these analysts pointed out, which according to recent press reports had signed up 1,830 estate agents offices on an exclusive basis, with a similar number having registered interest.
The company was due to report its fiscal year 2013 results on February 28th, with expectations that it was set to comment on its pricing policy and prospects for the year ahead. Rightmove´s target for fiscal year 2013 average revenues per advertiser (ARPA) was £600 per month. | | |
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