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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: FTSE ends in the red, Tesco weighs heavily - FTSE ended 31 points lower
- US new home sales higher than expected
- Tesco fails to impress investors
techMARK 2,899.47 -0.12%
FTSE 100 6,799.15 -0.46%
FTSE 250 16,471.66 -0.34%
UK markets finished today's session in the red, hit by a combination of weaker sentiment, ex-dividends, and concerns over the future of supermarket giant Tesco.
The FTSE 100 finished 31.35 points lower at 6,799.15.
Sentiment has been dampened by the ongoing turbulent situation in Ukraine, and concern about the impact of new regulations announced today by Ofgem.
Today saw Ukraine unpeg the Hyrvnia, its currency, from the US dollar in reaction to the recent drop in the country’s international reserves. The European nation is asking the international community to provide a $5bn emergency loan amid negative news-flow surrounding tensions with the Russian Federation.
Investors are also gearing up for a particularly busy session tomorrow, which will see the release of US durable goods and initial jobless claims, Eurozone, consumer confidence figures, German unemployment data, as well as a testimonial from Federal Reserve Chair Janet Yellen on monetary policy and the economy.
Ofgem announces new rules affecting 'Big Six'
Energy regulator Ofgem has unveiled new rules that will mean the "big six" energy suppliers will face tougher scrutiny to ensure a "simpler, clearer, fairer" market.
Under the new enforcements, which come into play at the end of March, the largest six suppliers in the UK will have to trade fairly with independent suppliers in the wholesale market, or face financial penalties.
January US new home sales surprise to the upside
Sales of new single-family homes in the US rose by 9.6% over the month to reach an annualised rate of 468,000 during the month of January, according to the US Department of Commerce. The consensus estimate was for growth of 405,000.
Barclays Research said the report was "consistent with the idea that foot traffic may have slowed somewhat and adverse weather across much of the eastern portion of the US may have reduced housing activity", but noted underlying demand and buying intentions had remained healthy, and predicted "any drop-off in housing to be a pause and not a retrenchment".
Timing of first hike in Bank rate difficult to predict, MPC's Miles says
Monetary Policy Committee member David Miles today said that interest rates will not rise in the next few months, and added that the Bank of England is "not in a hurry" to hike them.
Speaking to the BBC, Miles stated: "It may be that sometime next year might be the right time to raise interest rates. It is difficult to predict in advance." He also said the rise would be very gradual when it did occur.
Weir jumps on positive 2014 outlook
Engineering solutions provider Weir soared to the top of the risers today after it posted an in-line set of full-year results, as a positive performance by the Minerals division helped to offset an otherwise "challenging" year for the group. Looking ahead, the company believes it will return to underlying growth in the current year.
ARM Holdings was rising on the back of the four-day Mobile World Congress currently being held in Barcelona.
Leading the downside was easyJet, which fell after the stock went ex-dividend.
Tesco shares were firmly lower after Jefferies reduced its target from 440p to 375p, Nomura cut its target from 350p to 310p, and Oriel Securities downgraded the stock from 'add' to 'hold' after the troubled supermarket chain launched £200m of price cuts and said it was stepping up its store revamp programme. Sector peers Morrison Supermarkets and Sainsbury were also both firmly in the red.
ITV was lower despite a strong set of full-year results, which saw it boost its dividend and announce an additional special pay-out to shareholders. The fall is being attributed to the broadcaster's announcement it does not plan to make a bid for Channel 5, currently owned by Northern & Shell.
On the second tier index, International Personal Finances jumped after its profit came in slightly ahead of expectations. Profit before tax leapt 24%, prompting a 20% increase to the dividend.
Meanwhile, Beazley led the downside after going ex-dividend. |
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| | FTSE 100 - Risers
Weir Group (WEIR) 2,519.00p +7.10%
Wolseley (WOS) 3,452.00p +1.68%
ARM Holdings (ARM) 991.00p +1.59%
Imperial Tobacco Group (IMT) 2,446.00p +1.45%
RSA Insurance Group (RSA) 102.20p +1.19%
SABMiller (SAB) 2,901.50p +1.13%
Royal Mail (RMG) 604.50p +1.00%
GlaxoSmithKline (GSK) 1,690.50p +0.96%
International Consolidated Airlines Group SA (CDI) (IAG) 454.60p +0.64%
GKN (GKN) 412.30p +0.39%
FTSE 100 - Fallers
easyJet (EZJ) 1,680.00p -5.14%
Admiral Group (ADM) 1,448.00p -2.88%
Tesco (TSCO) 326.00p -2.74%
Royal Bank of Scotland Group (RBS) 354.00p -2.32%
ITV (ITV) 201.50p -2.23%
Kingfisher (KGF) 389.10p -2.09%
CRH (CRH) 1,751.00p -2.07%
Morrison (Wm) Supermarkets (MRW) 235.00p -1.92%
Persimmon (PSN) 1,435.00p -1.91%
Travis Perkins (TPK) 1,926.00p -1.88%
FTSE 250 - Risers
International Personal Finance (IPF) 557.50p +10.62%
CSR (CSR) 716.50p +5.60%
Greencore Group (GNC) 259.40p +5.02%
Ladbrokes (LAD) 160.00p +3.49%
St James's Place (STJ) 864.00p +3.47%
Pace (PIC) 415.00p +2.82%
Henderson Group (HGG) 249.20p +2.64%
Fidessa Group (FDSA) 2,504.00p +2.62%
Afren (AFR) 156.80p +2.48%
JD Sports Fashion (JD.) 1,588.00p +2.45%
FTSE 250 - Fallers
Beazley (BEZ) 258.30p -7.22%
Taylor Wimpey (TW.) 121.20p -5.24%
Evraz (EVR) 72.85p -4.71%
Kentz Corporation Ltd. (KENZ) 743.50p -4.25%
Kazakhmys (KAZ) 223.40p -4.12%
Capital & Counties Properties (CAPC) 377.00p -3.83%
Playtech (PTEC) 805.00p -3.77%
Cable & Wireless Communications (CWC) 52.60p -3.66%
Essar Energy (ESSR) 69.35p -3.34%
Foxtons Group (FOXT) 372.40p -3.12% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Utilities and banks lead stocks lower - Bank and utilities drag stocks lower
- UK GDP confirmed
- German consumer confidence rises
- US new home sales increase
FTSE 100: -0.46%
DAX: -0.39%
CAC 40: -0.40%
FTSE MIB: -0.37%
IBEX 35: -0.18%
Stoxx 600: -0.20%
European stocks declined as Credit Suisse led banks lower following reports US regulators are investigating its accounting practices.
The Securities and Exchange Commission said to be looking into claims Credit Suisse improperly moved money in its private-banking unit to conceal a drop in asset growth.
Utility stocks, including RWE and EON, were also among the biggest fallers in Europe after energy regulator Ofgem unveiled new rules that will mean major energy suppliers will face tougher scrutiny to ensure a "simpler, clearer, fairer" market.
Under the new enforcements, which come into play at the end of March, the largest six suppliers in the UK will have to trade fairly with independent suppliers in the wholesale market, or face financial penalties. German consumer confidence
In Germany, GfK’s forward-looking index for consumer confidence rose to 8.5 in March from a revised 8.3 in February, surprising analysts who had expected a reading of 8.2.
The upbeat data comes ahead of the European Central Bank (ECB)’s policy meeting next week.
ECB President Mario Draghi has indicated the central bank will consider action to tackle falling inflation and high unemployment at its March meeting following the release of more comprehensive data, including economic forecasts.
Credit Suisse expects the bank will also revise down its inflation projections in March. Inflation is currently at 0.8%, well below the ECB’s 2% target.
Tesco, Lanxess
Tesco slumped after Oriel Securities downgraded stocks from an ‘add’ to ‘hold’ rating after the supermarket chain launched £200m of price cuts and said it was stepping up its store revamp programme.
Lanxess was down as the chemicals maker predicted it would report a net loss of €159m for 2013 when it publishes final figures on March 20th.
Anheuser-Busch InBev NV, the world’s biggest brewer, advanced as it reported a rise in fourth quarter earnings that beat analysts’ expectations.
Repsol rallied following news Argentina will issue as much as $6bn in bonds that the Spanish oil firm can sell or hold until maturity.
Swiss Life climbed as the life insurer raised its 2013 dividend to 5.50 francs a share from the previous year’s 4.50 francs against analysts’ predictions for no change.
The euro fell 0.57% to $1.3667.
Brent crude futures rose $0.264 to $109.800 per barrel, according to data on the ICE. |
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| | US Market Report | | S&P 500 again flirting with record highs - US new home sales race past expectations
- S&P 500 flirting with new record
Dow Jones Industrials: 0.37%
Nasdaq Composite: 0.64%
S&P 500: 0.37%
The main US stock market averages were moving higher following a surprise rise in new home sales.
Sales of new single-family homes in the US rose by 9.6% over the month to reach an annualised rate of 468,000 during the month of January, according to the US Department of Commerce.
The consensus estimate was for growth of 405,000.
"The January US new home sales report is consistent with the idea that foot traffic may have slowed somewhat [...] but underlying demand and buying intentions have remained healthy, and we expect any drop-off in housing to be a pause and not a retrenchment," Barclays Research wrote following the release of the above data.
It will otherwise be a quiet day of releases ahead of a busy end to the week.
Reports on US durable goods, initial jobless claims and continuing claims will be out Thursday while gross domestic product, University of Michigan’s consumer confidence and pending home sales figures will be unveiled on Friday.
Federal Reserve Chair Janet Yellen will testify to Senate on monetary policy and the economy, which had been delayed due to bad weather.
Yellen has signalled that the Fed is likely to continue cutting back monthly asset purchases until ending the programme all together at the end of the year.
The move has prompted concerns that it might hurt growth in other countries, especially emerging markets.
Hong Kong’s Financial Secretary, John Tsang, today warned that the global outlook remains uncertain, highlighting the potential impact of cuts of the US Federal Reserve’s monetary stimulus.
"The US economy may see some improvement in 2014. Nevertheless, there is still uncertainty over the Federal Reserve Board's exit strategy and interest rate policy. Possible market fluctuations and the risk of reversal of capital flows will cast shadows over global economic growth this year," Tsang said during his budget speech.
Lowe’s, Aeropostale
Lowe’s rallied as the US home improvement chain reported a rise in fourth quarter profit that matched analysts’ estimates.
Aeropostale Inc. jumped following reports the teen apparel retailer is working with Barclays to explore options such as the sale of a convertible note or preferred stock to a private equity firm.
First Solar declined as the US solar panel manufacturer posted a drop in fourth quarter revenue.
DreamWorks Animation slumped as the independent animation studio said fourth quarter revenue fell as home video sales of Turbo missed forecasts.
Front month West Texas crude futures are rising by 0.87% to the $102.75/barrel mark on the NYMEX.
10-year US Treasury yields are now down by one basis point to 2.69%. |
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| | Brokers Tips | | Vodafone, Tesco, Taylor Wimpey Barclays sees several challenges ahead for Vodafone post-Verizon Wireless, not least increasingly tough European mobile trends for the group and how it can make best use of its underleveraged balance sheet.
More intriguingly, there is the ongoing press speculation that a bid by AT&T is looming for the UK mobile giant.
After considering the potential impact on Vodafone of these challenges, Barclays analyst Maurice Patrick and his team see the balance of risk for the stock skewed to the upside, especially with regards to the AT&T scenario given historical M&A precedents.
Patrick notes that Vodafone’s European mobile service revenues fell a hefty 7.8% in the third quarter and that the group is underperforming its peers on this front. He anticipates an improvement in underlying trends in 2015, due partly to easier comparatives, but cautions that “fundamentals here remain tough due to challenging macro conditions and competition”.
Project Spring, Vodafone's ambitious multi-billion pound network investment initiative – much of it aimed at Europe – could help the group not only offer a differentiated product, especially versus smaller rivals, but also enable it to make better use of its under-leveraged balance sheet, according to Patrick.
But a bid from AT&T would clearly offer more immediate upside. Barclays currently rates Vodafone at ‘overweight’ with a price target of 260p. This, however, provides only limited upside on any AT&T bid materialising.
A fuller valuation analysis by Patrick applies historical European M&A multiples of 7.2 x EV/EBITDA to Vodafone and suggests a take-out price of around 300p for the group.
Broker Oriel Securities has downgraded Tesco after the troubled supermarket chain launched £200m of price cuts and said it was stepping up its store revamp programme.
Oriel, which downgraded Tesco from a 'buy' to an 'add' last October, reduced its recommendation again to 'hold' with a 325p target.
It criticised Tesco's plans to speed up its turnaround programme outlined at the group's strategy day on Tuesday, saying they were just "more of the same".
Clarke halved capital spending plans to just £700m a year from £1.4m a year and effectively abandoned Tesco's target for a UK operating margin of 5.2%, the highest in the industry, by saying "the margin will be what the margin will be."
Clarke said he did not see the need for a change of strategy, saying the group just needed to speed up its turnaround plans.
But he admitted the group's performance "has not been what we wanted it to be".
He outlined plans to revamp all the company's larger stores by 2017 and to expand in convenience and online retailing, including click-and-collect.
Oriel said Tesco needed to do more than it was doing at the moment to overhaul the business, including increasing its planned £200m of price cuts and improving product quality.
It said it was taking 5% off its UK pre-tax earnings before interest forecast for Tesco next year, which meant pre-tax profit progress was unlikely.
Oriel said: "We disagree with management that a firm base has been rebuilt, and that simply evolving the current strategy will bring results.
"With the exception of some aggression where online is concerned, there was nothing much of any substance on how Clarke and his team see the brand moving forward."
Broker Panmure Gordon is reviewing its forecasts for Taylor Wimpey following "strong" annual results, but said it was keeping a 'hold' recommendation on the house-builder for the time being.
Panmure said it was likely to raise its earnings per share forecast on Taylor by between 1% and 3% after Taylor said EPS was 6.7p. Panmure has a 2014 EPS forecast of 9.46p.
But the broker said it was set to trim its forecast of net asset value, which for 2013 came in at 69.6p, below Panmure's 73p forecast.
Taylor increased annual operating profits by 39 per cent to £312.9m and revenue in the year to December 31st by 13.7% to £2.3bn. It also said it was returning about £250m to shareholders, of which £50m would be in 2014 and £200m in 2015.
Panmure said: "We recognise the value being delivered through early payments of cash back to shareholders. For now, we maintain our 112p target and 'hold' recommendation." | | |
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