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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 slightly lower ahead of US earnings - FTSE closes down 7.02 points at 6,674.74
- Focus turns to Apple and Facebook earnings
- UK public sector net borrowing falls
techMARK 2,742.15 +0.13%
FTSE 100 6,674.74 -0.11%
FTSE 250 15,989.64 -0.58%
The FTSE 100 settled just slightly lower than its opening level as investors weighed corporate earnings and economic data with yesterday's strong gains.
Markets are also awaiting earnings reports out from technology big players Facebook and Apple in the States.
Chris Beauchamp, a Market Analyst at IG, said: "ARM served up a nice appetiser to Apple’s figures this evening, posting a 10% rise in its pre-tax profits. However, the reaction among traders was a negative one, because of slower growth in the smartphone market.
"Apple’s results tonight will arguably be the bigger driver here, particularly if there are real signs that iPhone penetration in China is beginning to gain traction."
The FTSE ended the session down 7.02 points at 6,674.47.
Over in Eastern Europe, Russia's Foreign Minister Sergei Lavrov has said it will respond it its interest face attack. Speaking on Russian state television, he also said the US was "running the show" in Ukraine.
That was as the US dispatched hundreds of troops to Eastern Europe for manoeuvres, which came after Kiev accused pro-Russian separatists of torturing and killing two people and shooting at one of its aircraft.
Meanwhile, back in the UK it was today revealed that British manufacturers are feeling their most optimistic since 1973. The Confederation of British Industry’s (CBI’s) total orders index fell to -1 in April from a reading of 6 in the month before, according to the lobby group’s Industrial Trends Survey. The consensus estimate had been for a reading of 7.
However, business optimism amongst manufacturers registered its sharpest rise since 1973 thanks to strong order bookings, the CBI added.
In other UK news, public sector net borrowing slipped to £6.7bn in March, from £8.8bn in the month before, according to the latest figures from the Office for National Statistics.
The equivalent year-ago figure was £11.4bn and the consensus estimate for this month £11bn.
Meanwhile, the UK government has granted approval for eight major renewable energy projects as part of its wider energy reform plans, it was revealed this morning.
The projects, which will provide power to as many as 3m homes, will each be granted a Contract for Difference (CfD), under which prices for renewable energy suppliers are essentially guaranteed. The reforms will, however, add around 2% to household bills in the next six years.
MPC minutes show rise in Bank Rate unlikely over next year
The minutes of the Monetary Policy Committee’s (MPC) last rate-setting meeting showed that the decision to keep the current monetary policy settings unchanged was supported by the full majority of its members, with nine having voted in favour of no change and none having voted against.
The minutes also stated that a "range of opinions" remained on the amount of existing slack in the economy. That would suggest that there are differences of opinion in how long they expect the second stage of 'forward guidance' to apply.
ABF rises US expansion plans, broker upgrade
Associated British Foods was in the top spot on the FTSE 100 after the company announced its intention to expand its fast-growing Primark brand into the US towards the end of next year.
Panmure Gordon upgraded its rating for the stock from ‘hold’ to ‘buy’. saying: “This is sooner than we had anticipated, and whilst Primark will continue its measured approach to expansion, in our view this significantly increases the growth potential of Primark.” Interim results from the company also came in ahead of forecasts.
The potential value of AstraZeneca’s drug pipeline is still under-appreciated by the market, with or without a bid from US pharmaceutical peer Pfizer, according to Citigroup, comments which helped push the stock firmly into positive territory.
The bank upgraded its rating for the stock from ‘neutral’ to ‘buy’ and hiked its target for the shares from 3,500p to 4,900p. Citi sees an “extreme undervaluation” of AZN’s early- to mid-stage oncology pipeline and estimates at least 26% upside to consensus earnings per share after 2017.
Royal Mail was also a strong gainer. The company yesterday had its rating raised by Bank of America Merrill Lynch to "buy" from "neutral".
Meanwhile, Antofagasta was trading firmly in the red after going ex-dividend, meaning that from today new investors won’t be able to obtain the company’s latest payout.
High street sporting goods retailer Sports Direct was also lower after seeing a slight slowdown in growth in the fourth quarter. The company also warned of “further uncertainty” arising from its decision to cancel a controversial bonus payout to founder Mike Ashley earlier this month.
Shares in renewable energy provider Drax lost more than 13% of their value on Wednesday, hit by the group's announcement that one of its power station units was no longer deemed eligible by the UK government for an investment contract. |
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| | FTSE 100 - Risers
Associated British Foods (ABF) 2,962.00p +8.82%
Admiral Group (ADM) 1,408.00p +3.30%
Bunzl (BNZL) 1,654.00p +2.35%
AstraZeneca (AZN) 4,042.50p +2.08%
Randgold Resources Ltd. (RRS) 4,700.00p +2.06%
Royal Mail (RMG) 532.00p +1.92%
Resolution Ltd. (RSL) 295.80p +1.89%
Experian (EXPN) 1,127.00p +1.81%
Tesco (TSCO) 297.35p +1.69%
Wolseley (WOS) 3,417.00p +1.67%
FTSE 100 - Fallers
Antofagasta (ANTO) 796.50p -5.68%
Centrica (CNA) 330.60p -4.15%
Hargreaves Lansdown (HL.) 1,197.00p -4.01%
Sports Direct International (SPD) 797.00p -3.98%
Old Mutual (OML) 196.00p -3.92%
Morrison (Wm) Supermarkets (MRW) 196.70p -3.63%
Coca-Cola HBC AG (CDI) (CCH) 1,466.00p -3.43%
Rolls-Royce Holdings (RR.) 1,030.00p -2.83%
ARM Holdings (ARM) 956.00p -2.75%
Ashtead Group (AHT) 877.00p -2.61%
FTSE 250 - Risers
Spirent Communications (SPT) 104.00p +7.66%
Fenner (FENR) 415.00p +6.41%
Centamin (DI) (CEY) 55.95p +5.77%
Petra Diamonds Ltd.(DI) (PDL) 156.20p +3.65%
Merlin Entertainments (MERL) 363.60p +3.24%
Just Retirement Group (JRG) 154.40p +3.14%
Thomas Cook Group (TCG) 178.00p +2.53%
RPS Group (RPS) 313.00p +2.32%
Alent (ALNT) 316.40p +2.23%
Ophir Energy (OPHR) 230.00p +2.22%
FTSE 250 - Fallers
Drax Group (DRX) 657.50p -13.09%
Tullett Prebon (TLPR) 293.50p -5.96%
Ocado Group (OCDO) 352.30p -5.80%
Balfour Beatty (BBY) 286.90p -4.30%
Imagination Technologies Group (IMG) 183.80p -3.87%
Moneysupermarket.com Group (MONY) 179.40p -3.86%
NMC Health (NMC) 480.00p -3.75%
Heritage Oil (HOIL) 257.30p -3.60%
CSR (CSR) 648.00p -3.57%
Cranswick (CWK) 1,247.00p -3.18% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: ECB's task getting more complicated, Barclays says - Eurozone composite PMI comes in ahead of forecasts
- Tensions continue to simmer in Ukraine
- Euro turns around, rises towards 1.3840
- Automobile stocks are worst performers
FTSE-100: 0.1%
Dax-30: -0.58%
Cac-40: -0.74%
FTSE Mibtel 30: -1.18%
Ibex 35: 0.13%
Stoxx 600: -0.6%
European stocks ended Wednesday's session in negative territory despite generally better-than-expected readings on the Eurozone's manufacturing and service sectors, although French manufacturing data undershot expectations.
The so-called composite euro area purchasing managers index improved to a reading of 54 in April, from 53.1 the month before and above consensus forecasts of 54.
Analysts at Barclays Research pointed out the improvement seen in hiring intentions in both sectors. However, the composite input prices sub-index declined to a 10-month low to 50.4, well below the long-term average of 56.7, “complicating the European Central Bank's task”.
However, the PMI for France’s manufacturing sector slipped to a reading of 50.9, from 52.1 in the month before and against a consensus of 51.9.
The above came ahead of a speech by ECB President Mario Draghi on Thursday likely to be closely followed by market participants.
By the European close, the euro/dollar had moved slightly lower to 1.3816.
Jasper Lawler at CMC Markets said: "Markets in Europe traded with a negative bias today as yesterday’s pharma deals run into trouble and data suggested China’s manufacturing sector is still in contraction."
Acting as a backdrop, the US has dispatched hundreds of troops to Eastern Europe for manoeuvres. The order came after Kiev accused pro-Russian separatists of torturing and killing two people and shooting at one of its aircraft.
In a defensive move, European companies are increasing their stocks of natural gas, with flows from Britain to Europe having tripled in the past three weeks. Fresh cargoes of LNG from Qatar have been arriving at the UK’s South Hook terminal. European LNG inventories have risen by 20% since the end of March.
Technology stocks lead falls
From a sector standpoint, the worst performance was being logged by companies in the following industrial groups: Automobiles&Parts -1.32% Technology -1.05% and Media -0.66%.
Swedish mobile telecommunications equipment group Ericsson was lower after reporting first-quarter operating profits that came in below analysts’ estimates.
Shares of Scania AB retreated as shareholder Alecta said Volkswagen's offer failed to reflect Scania’s long-term fundamental value.
Shares in French cable operator Numericable rang up more than 8% as it prepared to undertake what may be the largest sale of junk bonds in history at €8.4bn, The Wall Street Journal reported.
Banca Monte dei Paschi di Siena has been upgraded to 'buy' from 'sell' at Goldman Sachs.
Euro moves higher
The euro/dollar was up by 0.05% at 1.3813.
Front-month Brent crude futures were edging lower by 0.62% to the $109.27/barrel mark on the ICE. |
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| | US Market Report | | US open: Stocks snap six-day winning streak - Apple, Facebook fall ahead of results
- AT&T slumps despite quarterly beat
- US manufacturing, new homes sales miss forecasts
Dow Jones: -0.10%
Nasdaq: -0.52%
S&P 500: -0.14%
US stocks declined on Wednesday on the back of weaker-than-expected economic data and rising tensions in Ukraine.
Meanwhile, nervousness ahead of earnings from heavyweights Apple and Facebook was causing investors to take profits after six days of gains. The companies are scheduled to report their quarterly results after the closing bell.
The S&P 500 retreated 0.1% early on, the Nasdaq was 0.5% lower, while the Dow Jones Industrial Average was down 0.1%.
Growth in the US manufacturing sector unexpectedly eased slightly in April, according to Markit. The preliminary purchasing managers’ index for manufacturing eased to 55.4 this month, from 55.5 in March. While still in positive territory, signalled by any figure above the 50-point threshold, analysts were expecting a reading of 56.
Meanwhile, US new home sales dropped by 14.5% to 384,000 in March, from an upwardly revised 449,000 in February and well under the 450,000 consensus forecast.
In other news, hundreds of US troops have been dispatched to Eastern Europe for manoeuvres. The order came after Kiev accused pro-Russian separatists of torturing and killing two persons and having shot at one of its aircraft.
US Vice President Joe Biden visited Kiev yesterday and warned Moscow to pull back troops or face another round of new sanctions following last week’s international agreement to “de-escalate” the crisis. He told Ukrainian leaders: “You will not walk this road alone.”
Apple, Facebook, AT&T
iPad and iPhone maker Apple was trading lower ahead of its fiscal second-quarter results due out later on which are expected to show that revenue was flat for the first time in at least a decade. Social media group Facebook also sank before its first-quarter figures this evening.
Telecoms group AT&T fell despite beating forecasts with its quarterly numbers. Net income fell 1.2% to $3.65bn, but revenues rose 3.6% to $32.5bn.
Video-streaming service Netflix was pulling back sharply after strong gains the previous session on the news that Amazon.com has inked a content deal with private TV broadcaster HBO.
10-year US Treasury yields were down one basis point at 2.70%.
West Texas crude futures were up 0.09% at $101.84 a barrel on the NYMEX. |
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| | Broker Tips | | Broker tips: AB Foods, ARM, Wolseley... Panmure Gordon has upgraded its rating for Associated British Foods from ‘hold’ to ‘buy’ after the company announced its intention to expand its fast-growing Primark brand into the US towards the end of next year.
“This is sooner than we had anticipated, and whilst Primark will continue its measured approach to expansion, in our view this significantly increases the growth potential of Primark.” The broker hiked its target for AB Foods shares from 2,760p to 3,210p.
finnCap has reiterated its ‘hold’ rating and 1,000p target for chip designer ARM Holdings after the company’s first-quarter results showed strong licensing revenues and weak royalties.
“Overall, the company remains on track for market expectations but is just not showing the growth rates to see the shares push beyond the current price-to-earnings ratio of 40.”
Wolseley’s share price was making gains on Wednesday after Credit Suisse upgraded the stock from ‘neutral’ to ‘outperform’, saying that it foresees substantial capital returns at the plumbing and building materials group.
“Our upgrade to WOS is primarily focused on the potential for capital return – we see potential for 1,400p/share over next five years, equal to circa 40% of market cap – but this must be considered alongside a robust trading outlook, a quality management team, a stock that has underperformed its peer group in the past year and a compelling valuation,” Credit Suisse said.
The potential value of AstraZeneca’s drug pipeline is still under-appreciated by the market, with or without a bid from US pharmaceutical peer Pfizer, according to Citigroup.
The bank upgraded its rating for the stock from ‘neutral’ to ‘buy’ and hiked its target for the shares from 3,500p to 4,900p. Citi sees an “extreme undervaluation” of AZN’s early- to mid-stage oncology pipeline and estimates at least 26% upside to consensus earnings per share after 2017.
Spirent Communications’s first-quarter results impressed the market on Wednesday with revenues and profits ahead of expectations, though Investec said that figures are “not as good as they appear on the surface”.
“After a year of unrelenting downgrades, statements that 2014 guidance is retained and market conditions have improved in all regions will likely be taken as a tonic,” said Analyst Roger Phillips. However, he said that the stock appears “fairly priced”. | | |
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