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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: Strategists surprised by recent losses in markets - Mixed US employment data
- Barclays: Fed on track to continue tapering
- Persimmon and LSE shares power ahead
- NIESR: MPC will not raise rates until quarter two of 2015
Market Movers
techMARK 2,790.30 +0.40%
FTSE 100 6,571.68 +0.20%
FTSE 250 15,865.12 +0.48%
The FTSE 100 managed to end the day in the blue as investors chose to interpret the latest US employment report in the most favourable light possible.
US non-farm payrolls expanded by 113,000 in January coming in moderately below the 180,000 forecast by economists, after a very weak reading of just 75,000 in the month before. That led to an initial slide in stocks.
However, the unemployment rate 'ticked' lower, to hit 6.6%, as the labour force participation rate unexpectedly rose – which was welcome news for many observers.
By the end of trading the FTSE 100 had risen just 0.2% to 6,572, to stand 13 points above where it started the day.
In the opinion of Barclays Research the US non farm payrolls report continued to indicate that moderate job growth remained “in place”, which would keep the unemployment rate heading lower and the Fed on track for further 'tapering'.
Nevertheless, they also pointed out that “there appears to have been some slowing in the pace of payroll gains, which would be consistent with our expectation that real GDP growth will slow to about 2.5% [in annualized terms] in the first quarter of 2014”.
Acting as a backdrop, perhaps, Ralph Atkins wrote in Friday´s Financial Times on how market strategists seemed at a bit of a loss to explain the reasons for the recent losses in financial markets. Had the turmoil in emerging markets acted as a 'trigger' or had the recent spate of weak US data cast doubt on the strenth of the recovery? So even professional market watchers were at a bit of a loss in the current context.
As if the above were not enough, for others it was China and its shadow banking system which markets were now watching most, Atkins added.
Lastly, in a new research report issued late in the afternoon the NIESR stuck to its forecasts that the MPC would wait until the second quarter of 2015 before raising its main interest rate.
Tate & Lyle jumps after upgrade, Shire falls
Sugar and sweeteners firm Tate & Lyle was among the best performers throughout a large part of the day after JPMorgan Cazenove lifted its rating on the stock from ‘underweight’ to ‘overweight’. The bank said that group earnings have been held back recently by investment in the speciality food ingredients division “but we believe this is now bearing fruit”.
Housebuilder Persimmon was the top riser of the FTSE 100 a day after a report from Halifax, yesterday, showed house prices rose by more than expected in January. On Friday the stock managed to break above its most recent highs.
Shares of the London Stock Exchange Group continued to power ahead after announcing China-based firm GF Financial Markets Ltd has joined its equity and derivatives markets.
Heading the other way was Shire after saying it will no longer pursue the development of Vyvanse as a treatment for major depressive disorder as a clinical trial of the drug failed to meet objectives.
Oil and gas producers Tullow, BP Shell were trading lower as crude prices declined. Tullow was a heavy faller as recent bid speculation – which pushed the stock up sharply earlier in the week – began to fade. The decline in natural gas futures, as a result of forecasts for warmer temperatures Stateside, weighed on BG Group´s battered share price. |
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| | FTSE 100 - Risers
Persimmon (PSN) 1,385.00p +3.36%
Whitbread (WTB) 3,935.00p +3.09%
Aberdeen Asset Management (ADN) 419.80p +2.94%
London Stock Exchange Group (LSE) 1,928.00p +2.94%
Meggitt (MGGT) 517.50p +2.58%
CRH (CRH) 1,638.00p +2.50%
TUI Travel (TT.) 433.50p +2.29%
Smith & Nephew (SN.) 915.00p +2.12%
Antofagasta (ANTO) 894.00p +2.11%
Rio Tinto (RIO) 3,407.00p +2.05%
FTSE 100 - Fallers
BG Group (BG.) 1,053.00p -3.08%
Tullow Oil (TLW) 836.50p -3.01%
Sports Direct International (SPD) 691.00p -1.50%
Hargreaves Lansdown (HL.) 1,353.00p -1.31%
Standard Chartered (STAN) 1,240.00p -1.23%
Admiral Group (ADM) 1,418.00p -1.12%
Johnson Matthey (JMAT) 3,180.00p -1.09%
Compass Group (CPG) 892.00p -1.05%
Lloyds Banking Group (LLOY) 81.80p -1.04%
Melrose Industries (MRO) 295.00p -1.01% FTSE 250 - Risers
Alent (ALNT) 332.00p +5.90%
Kenmare Resources (KMR) 15.24p +4.74%
Vedanta Resources (VED) 852.00p +3.59%
Evraz (EVR) 83.40p +3.35%
Rotork (ROR) 2,428.00p +3.23%
BlackRock World Mining Trust (BRWM) 494.50p +3.02%
Carillion (CLLN) 343.40p +2.91%
Fidessa Group (FDSA) 2,351.00p +2.66%
Beazley (BEZ) 274.80p +2.54%
Taylor Wimpey (TW.) 117.70p +2.53%
FTSE 250 - Fallers
JD Sports Fashion (JD.) 1,470.00p -4.42%
Imagination Technologies Group (IMG) 178.60p -3.51%
Perform Group (PER) 229.10p -2.51%
Paragon Group Of Companies (PAG) 357.80p -1.97%
Supergroup (SGP) 1,570.00p -1.88%
Essar Energy (ESSR) 56.30p -1.83%
Brewin Dolphin Holdings (BRW) 314.20p -1.81%
Go-Ahead Group (GOG) 1,971.00p -1.79%
Xaar (XAR) 1,085.00p -1.36%
Aveva Group (AVV) 2,032.00p -1.36% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: US jobless rate fails to push stocks higher - US jobless rate falls but payrolls rise less than forecast
- German court refers ECB OMT to EU court
- German factory orders drop
- UK manufacturing and industrial output rise
FTSE 100: 0.20%
DAX: 0.49%
CAC 40: 0.96%
FTSE MIB: 0.96%
IBEX 35: 1.11%
Stoxx 600: 0.72%
European stocks ended the week higher as a report showed the US employment rate fell unexpectedly.
The jobless rate in the world’s biggest economy declined to 6.6% in January from 6.7%, according to the Labor Department. Economists had expected the rate to remain unchanged.
The report also showed that employers added 113,000 workers last month, missing the forecast of 180,000. December's payrolls figure was revised up only modestly, to 75,000, from 74,000.
Barclays said the mixed employment picture increases the likelihood that the Federal Reserve will hold back from further monetary stimulus tapering in March.
The Fed last month announced a second reduction to its monthly bond purchases by $10bn to $65bn, saying the economy had improved since deciding to start scaling back quantitative easing in December.
Germany refers ECB QE complaint to EU court
Germany's Constitutional Court has referred an objection against the ECB's "unlimited" quantitative easing programme to the European Court.
The ECB's Outright Monetary Transactions (OMT) programme was announced by ECB President Mario Draghi in September 2012 and is widely credited with stabilising the euro.
Germany’s top court questioned the OMT and asked the European Union’s highest tribunal to rule on the legality of the programme.
Elsewhere in Germany, industrial output fell 0.6% in December, from November, when it rose a revised 2.4%. Economists predicted a gain of 0.3%.
In the UK, industrial production increased by 0.4% month-on-month in December, compared to November when it fell 0.1% and the forecast for a rise of 0.6%.
UK manufacturing output climbed 0.3% in December from a drop of 0.1% a month earlier, missing analysts’ estimates for an increase of 0.6%.
Meanwhile, the National Institute of Economic and Social Research (NIESR) on Friday raised its UK economic growth forecast to 2.5% from a previous 2%.
The economic research body said growth will be driven by consumer spending and demand in the housing market but warned that weak productivity poses a risk for the country’s medium-term outlook.
Vedanta, Statoil
Vedanta Resources was higher after Bank of America Corp. lifted its rating on the commodity producer to ‘buy’ from ‘neutral’.
Statoil was higher as the Norweigan oil company scale back spending plans for the three years through 2016 by 8% to about $20bn a year in an effort to raise its free cash flow.
ArcelorMittal advanced after the world’s biggest steelmaker posted fourth-quarter profit that exceeded analysts’ expectations.
Shire slumped after saying it will no longer pursue the development of Vyvanse, its medicine for the treatment of major depressive disorder.
Outotec Oyj tumbled as the Finnish mining-equipment supplier posted fourth-quarter income that missed market forecasts.
SBM Offshore was lower after the company said a former employee tried to extort money by threatening to disclose information related to an ongoing investigation into possible improper sales practices.
The euro rose 0.15% to $1.3610 after falling earlier in the day.
Brent crude futures was up $0.851 to $108.110 per barrel, according to ICE data. |
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| | US Market Report | | US open: Stocks higher after jobs report US stocks rallied as investors weighed an all-important jobs report.
The Labor Department revealed employers added 113,000 jobs in January, falling short of analysts’ estimates of 180,000.
The unemployment rate declined to 6.6% last month, surprising economists who expected the rate to remain unchanged at 6.7%.
The Federal Reserve last month reiterated it will hold the interest rate near zero “well past the time” the unemployment falls below 6.5%.
The central has been closely watching the labour market after deciding to reduce monetary stimulus buy a further $10bn to $65bn per month in January.
“The disappointing 113,000 increase in non-farm payrolls in January cannot be blamed on the weather but, nonetheless, with the unemployment rate continuing to edge lower, to only 6.6% last month, we expect the Fed to maintain its policy of reducing the pace of its asset purchases gradually,” Capital Economics said.
Apple, LinkedIn
Apple gained after saying it bought back $14bn in stock.
LinkedIn Corp. declined after the professional-networking site forecast sales that fell short of analysts’ estimates amid slowing growth.
News Corp. rallied after reporting quarterly profit that beat market forecasts.
ArcelorMittal edged higher as the steelmaker reported fourth-quarter profit ahead of analysts’ projections. |
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| | Broker Tips | | Shire, Tate & Lyle, Aquarius Platinum, Acal Jefferies has kept its ‘buy’ rating for pharmaceuticals group Shire saying that it still sees ‘attractive growth’, but was disappointed by the outcome of clinical trials for the company’s major depressive disorder treatment, Vyvanse.
“We were more optimistic for expanded use of Vyvanse in major depressive disorder than binge eating disorder, so the setback comes as a negative surprise,” said Jefferies analysts Peter Welford and Chris Cooper.
JPMorgan Cazenove has lifted its rating for Tate & Lyle from ‘underweight’ to ‘overweight’, showing optimism about volume and earnings growth at the sugar and sweeteners firm.
The bank said its new target of 900p, which was raised from 735p previously, implies 19% upside from current levels. “New technologies such as natural sweeteners provide further upside to current growth forecasts and suggest a bull case price target of 1,580p,” it said.
Investec concedes miner Aquarius Platinum’s first-half numbers on Friday “undoubtedly” represent operational improvement; but with the group up against several heavy headwinds, not least a challenging platinum pricing environment, the broker continues to recommend selling the stock.
Singer initiated coverage on specialist electronics supplier Acal with a ‘buy’ rating and a price target of 380p. Analyst Andy Brown said his positive stance on Acal revolved around its transition from a general electronics firm to a specialised niche industrial distributor and solutions provider. | | |
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