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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 closes marginally above key 6,700 level - FTSE closes up 14.47 at 6,700.19
- AstraZeneca drives index higher
- US imposes sanctions on Russia
techMARK 2,770.82 +0.83%
FTSE 100 6,700.16 +0.22%
FTSE 250 15,826.24 -0.39%
UK stocks closed modestly higher today, driven by AstraZeneca and further helped by gains in the US this afternoon, while even new sanctions on Russia failed to dampen spirits significantly.
The FTSE 100 ended the session 14.47 points higher at 6,700.16 - notably, albeit marginally, above the psychologically important level of 6,700.
Brenda Kelly, Chief Market Strategist at IG, said: "The US open has given the FTSE the resolve needed to cling on to its gains, after it looked rather weak around lunchtime.
"On a day of little economic data the M&A news in the pharma sector, with Pfizer actively bidding for AstraZeneca, has been a primary driver, although I question how long it can be used as an excuse for increasing exposure to equity markets."
It was revealed today that house prices in the UK increased by 0.6% in April, according to figures from Hometrack, with buyers now paying the highest average percentage of asking prices in 12 years.
The increase, registered by the housing specialist’s Monthly National Housing Survey, was unchanged over the previous month.
In other UK macro news, the Confederation of British Industry (CBI) said the economic outlook for the coming three months was "exceptionally strong", based on a survey of 675 firms which showed the higher level of growth expectation since 2003 when the CBI began collecting the data.
Elsewhere, the Financial Conduct Authority (FCA) has fined Invesco Perpetual, the UK's biggest retail investment manager, £18.6m after it was found to have exposed its investors to a level of unnecessary risk.
New sanctions imposed on Russia
The White House today announced that the Department of the Treasury is imposing sanctions on seven officials of the Russian government and 17 companies linked to President Vladimir Putin's inner circle.
Those individuals will be subjected to a visa ban and asset freeze, while the corporations included on the list will be undergo an asset freeze.
Included on the list are Dmitry Kozak, the Deputy Prime Minister of the Russian Federation, and Oleg Evgenyevich, the Russian Presidential Envoy to the Crimean District and a member of the Russian Security Council.
For its part, Capital Economics said it believes the crisis in Eastern Europe will "probably not" escalate significantly, "even though the risks of miscalculation are high". Nor, it said, would an escalation likely derail the recovery in Western Europe.
AstraZeneca soars on Pfizer bid interest
AstraZeneca was the day's stand-out performer, up by more than 15 per cent this afternoon after US pharma giant Pfizer confirmed that it had made a 'preliminary, non-binding indication of interest' regarding a possible merger in January. The £60bn proposal was rejected by AstraZeneca’s board, but Pfizer said it is considering its next move.
After Pfizer’s initial proposal was rejected and Astra declined to engage in further talks this month, the US group said it is “currently considering its options”. Pfizer said that any potential transaction would offer AstraZeneca’s shareholders a “highly compelling opportunity to realise a significant premium” to the recent share price and would include a “substantial” cash payment.
Other companies in the pharmaceutical sector were also performing well today as a result, including Shire and GlaxoSmithKline.
William Hill was another strong riser, aided by comments from Beaufort Securities, which reiterated its 'buy' rating on the betting firm following Friday's trading update. The gains also come ahead of a review due out Wednesday on fixed-odds betting terminals, which are expected to be softer than previously anticipated.
On the second tier, Al Noor Hospitals, which operates medical facilities in Abu Dhabi, jumped after it said it traded in line with expectations in the first quarter with revenues rising by a quarter. Revenues totalled $111.6m in the three months to March 31st, up 24.7% on the year before. During the period, three new medical centres were commissioned.
Back on the top 100, cyclical stocks such as miners and banks were dragging, with Rio Tinto and Royal Bank of Scotland both notable fallers.
Gas giant BG Group delivered a double blow to investors on Monday as it announced the departure of Chief Executive Chris Finlayson, warned its 2014 production levels would be at the lower end of expectations - due to challenges in Egypt.
"Departing BG chief executive Chris Finlayson will have been comforted this morning by the sharp drop in the share price, but as the day has gone on the buyers have come back in, assiduously closing the gap seen at the beginning of trading. Once the headline news has cleared, the rest of BG’s update will offer little comfort; the new boss will have to get a firm grip if he is to reverse the declining trend in production that has hobbled the share price all year," IG's Brend Kelly said.
Meanwhile, there was talk surrounding insurance company Saga. It will reportedly raise £430m in an effort to reduce its debt pile. If it went ahead, the flotation is expected to value the company at £3bn, reports were claiming.
On its website, the group stated: "We must stress there is no guarantee as to whether or when a public flotation will take place. However, if such a flotation does happen, we will contact all those who have registered an interest to provide them with information on the Saga share offer and how to participate." |
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| | FTSE 100 - Risers
AstraZeneca (AZN) 4,666.50p +14.38%
Sainsbury (J) (SBRY) 330.50p +2.61%
William Hill (WMH) 348.10p +2.38%
Shire Plc (SHP) 3,286.00p +2.37%
SABMiller (SAB) 3,188.00p +1.82%
Fresnillo (FRES) 864.50p +1.71%
Weir Group (WEIR) 2,700.00p +1.43%
Tullow Oil (TLW) 850.50p +1.31%
Morrison (Wm) Supermarkets (MRW) 198.80p +1.22%
Pearson (PSON) 1,103.00p +1.19%
FTSE 100 - Fallers
ARM Holdings (ARM) 915.00p -3.23%
Rio Tinto (RIO) 3,185.50p -2.84%
Royal Bank of Scotland Group (RBS) 295.50p -2.54%
Travis Perkins (TPK) 1,744.00p -2.46%
Reckitt Benckiser Group (RB.) 4,845.00p -2.28%
St James's Place (STJ) 763.50p -1.99%
easyJet (EZJ) 1,628.00p -1.99%
WPP (WPP) 1,235.00p -1.98%
Capita (CPI) 1,062.00p -1.85%
Barratt Developments (BDEV) 353.80p -1.78%
FTSE 250 - Risers
Ladbrokes (LAD) 145.10p +4.61%
AL Noor Hospitals Group (ANH) 1,029.00p +4.20%
Tullett Prebon (TLPR) 313.40p +3.91%
EnQuest (ENQ) 135.30p +3.20%
Cairn Energy (CNE) 175.90p +2.93%
esure Group (ESUR) 258.00p +2.38%
Rank Group (RNK) 161.70p +2.34%
ICAP (IAP) 424.10p +2.09%
Worldwide Healthcare Trust (WWH) 1,251.00p +1.96%
Ashmore Group (ASHM) 358.50p +1.90%
FTSE 250 - Fallers
Pace (PIC) 370.10p -7.45%
Supergroup (SGP) 1,397.00p -4.58%
Ocado Group (OCDO) 317.20p -4.31%
Foxtons Group (FOXT) 320.20p -4.30%
Paragon Group Of Companies (PAG) 367.50p -3.42%
Perform Group (PER) 220.70p -3.20%
Fidessa Group (FDSA) 2,379.00p -3.17%
Elementis (ELM) 282.70p -2.82%
Euromoney Institutional Investor (ERM) 1,090.00p -2.68%
NMC Health (NMC) 452.00p -2.63% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Russian economy more vulnerable than may seem - US imposes new sanctions on some Russian citizens and firms
- Russian Deputy Foreign Minister Sergei Ryabkov says sanctions will have response
- Healthcare stocks lead gains
- Traders anxious ahead of Eurozone CPI data
FTSE-100: 0.22%
Dax-30: 0.48%
Cac-40: 0.38%
FTSE Mibtel 30: 0.34%
Ibex 35: 0.14%
Stoxx 600: 0.19%
European stocks finished the day modestly higher on the heels of a raft of news on the mergers and acquisitions front and despite the imposition of new sanctions against Russia.
The truth is, Russian stocks initially gained after the above were announced. However, Capital Economics had this to say: “This could not have come at a worse time for Russia’s economy, which was struggling even before the crisis in Ukraine erupted. The resilience of Russia’s economy is often overplayed and a recession seems more likely than not this year.”
The think tank added however that the crisis in Eastern Europe will "probably not" escalate significantly, "even though the risks of miscalculation are high". Nor, it said, would an escalation likely derail the recovery in Western Europe.
That came on the heels of a report that the Mayor of the eastern Ukrainian city of Kharkiv – which had managed to remain relatively unscathed from the present chaos – had been shot and was undergoing emergency surgery.
Upcoming Eurozone CPI data in focus
Acting as a backdrop, traders are anxious ahead of Wednesday’s preliminary print on Eurozone consumer prices for April, which are expected show a gain of between 0.8% and 0.9% on the month, after falling to 0.5% in March. The CPI report is expected to reflect higher prices for services, especially travel-related, around the Easter holidays (which were in March last year), Barclays Research explained.
Also worth noting, this past weekend Unicredit slammed reports earlier in the week regarding the unsustainability of public finances in the Eurozone periphery and the recent drop in long-term bond yields.
Healthcare stocks lead gains
From a sector standpoint, and within the DJ Stoxx 600, the largest gains were seen in the following industry groups: Healthcare (1.57%), Chemicals (0.84%) and Food and Beverage (0.73%).
US drugs giant Pfizer confirmed a previous $99bn proposal to ‘merge’ with UK peer AstraZeneca. The American firm also indicated that it was still interested in a possible tie-up.
Over the weekend, German industrial conglomerate Siemens moved to block General Electric’s attempt to make away with French rival Alstom’s power unit.
French authorities postponed a meeting with GE Chief Executive Jeffery Immelt while the rival proposals are evaluated.
Bayer unveiled an 11% increase in its first quarter underlying operating profits, ahead of consensus.
Speaking to Swiss newspaper Schweiz am Sonntag Novartis Chief Executive said his firm can spend up to $5bn on bolt-on acquisitions.
Light day on the economic front
Some market commentary highlighted the drop in excess liquidity within the euro area to below €100bn seen last Thursday as a potential source of concern, although analysts at HSBC played this down as a risk.
Import prices in Germany declined by 0.6% month-on-month in March, according to the Federal Statistics Office, and by 3.3% year-on-year.
Crude futures slip
The euro/dollar was holding 0.01% higher at 1.3840.
Front-month Brent crude futures were advancing by 0.847% to the $108.66/barrel mark on the ICE. |
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| | US Market Report | | US open: Pfizer gains after revealing interest for Astra Zeneca - US levies new sanctions against Russian firms and individuals
- Russia will answer to US sanctions - Interfax
- Mayor of Kharkiv shot in eastern Ukraine
Dow Jones Industrials: 0.79%
Nasdaq Composite: 0.70%
S&P 500: 0.68%
US stocks got off to a solid start on Monday morning following a better than expected report on pending home sales and despite the announcement of new US sanctions against members of Russian President Vladimir Putin’s ‘inner circle’ and 17 Russian corporations linked to them.
In response, Russian Deputy Foreign Minister Sergei Ryabkov said that the US sanctions against Russia “will not remain unanswered and the response will be painful for Washington,” Interfax reported.
The European Union is set to expand the list of individuals targeted under its own sanctions later in the day.
The above follows various reports throughout the day of violence in eastern Ukraine, including the shooting of the Mayor of Kharkiv, a city which heretofore had largely escaped the current crisis.
US pending home sales rose by 1% month-over-month in March, rebounding after a revised 0.5% decline in February. The consensus estimate had been for an increase of 1%.
President Obama also said today that he was holding broader measures against the Russian economy “in reserve”.
Meanwhile, markets were also looking ahead to the Federal Reserve policy meeting on Wednesday, US ISM manufacturing data on Thursday and the all-important non-farm payrolls figures on Friday.
M&A activity lifts pharma stocks, Pfizer gains
Stock in Pfizer gained 4% after confirming that it had approached AstraZeneca in January regarding a $100bn approach for the UK-listed pharmaceutical group. After being rejected, Pfizer said it is still “considering a possible transaction” and “confident a combination is capable of being consummated”.
Drug development group Furiex Pharmaceuticals surged as much as 32% after a takeover offer from Forest Laboratories for $1.1bn in cash.
Over the weekend it was reported that Reckitt Benckiser may learn as soon as this week whether its bid for Merck&Co’s healthcare unit was successful. |
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| | Broker Tips | | Broker tips: Diageo, Ocado, Devro Credit Suisse has downgraded its rating for Diageo from ‘outperform’ to ‘neutral’, saying that challenges are mounting at the drinks group.
The bank has lowered its target price for the stock from 2,200p to 1,950p after cutting its earnings per share estimates for next year by 8% to 101p on the back of weaker assumed organic growth in the US and emerging markets, more currency headwinds and higher investment requirements.
Shore Capital has reiterated its ‘sell’ recommendation for on-line grocery group Ocado, saying that margins are facing negative pressure from the current price competition amongst UK food retailers.
The comments come after recent developments at retail giant Tesco, which said that it intends to invest more in base pricing in the UK. “Unless Ocado removes its price matching pledge with Tesco, we see its gross margin coming under greater pressure as the market leader sustains price cutting. Ocado does not match Tesco's promotions and so a re-allocation of resource by Tesco to price is troublesome to Ocado in our view.”
N+1 Singer has maintained a ‘sell’ rating for Devro after the sausage skin maker effectively delivered a profit warning on Monday.
“Today’s statement further underlines our longstanding concerns around volume and competitive pressure in Devro’s core markets,” said Analyst Sahill Shan. “We applaud the decisive cost action but ultimately until the top-line stabilises and improves, earnings on a 12-18 month view are likely to remain under pressure.” | | |
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