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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: Footsie reaches 14-year high despite investor caution - FTSE 100 near record highs
- Housing stocks lifted by Taylor Wimpey comments
- easyJet, TUI Travel and LSE fall
- Global investors underweight UK equities for a second month
Market Movers
techMARK 2,804.22 +0.35%
FTSE 100 6,873.08 +0.31%
FTSE 250 16,038.89 +0.36%
UK stocks managed a slightly stronger close on Tuesday despite the still tense situation in Ukraine and slightly weaker than expected data published in China.
The FTSE 100 ended the day 0.31% higher at 6,873.08, pulling back after hitting a high of 6,877.39 early on. Nevertheless, the index still remains within touching distance of the intraday record high of 6,950.6 registered on December 30th 1999.
That came as the Dow Jones Industrial and S&P 500 finished at fresh record highs overnight. During the session the S&P 500 actually managed to peer its head above the 1,900 point mark for the first time ever.
Global investors underweight UK equities for a second month
Bank of America Merrill Lynch's latest monthly fund manager survey revealed that average cash levels at those funds covered by its study jumped to 5% from 4.6%. That was well above the level of 4.5% which fund managers often consider to be a 'contrarian' signal to 'buy'. In that regard, the broker further noted how over the past 11 months cash levels have been above 4.4% while the S&P 500 has moved towards 1,875 points from 1,650 points.
A net 1% of investors were underweight UK equities in May, the same survey showed. That marked the second consecutive month 'underweight' by global investors following eight months of being 'overweight'. Positioning in Eurozone equities picked up to 36% 'overweight' during the month.
Bundesbank shows some flexibility
Investors were also digesting reports from The Wall Street Journal which cited sources saying that the Bundesbank is willing to back an array of stimulus measures next month from the European Central Bank.
German Foreign Minister Frank-Walter Steinmeier believes the Ukraine's presidential vote on May 25th will play a big part in resolving the unrest.
Steinmeier met acting Ukrainian Prime Minister Arseniy Yatsenyuk and Foreign Minister Andriy Deshchytsya in Kiev today in an attempt to find a diplomatic solution.
Meanwhile a spokesman for the European Commission on economic and monetary affairs today said Ukraine will be able to use the European Union's financial assistance to pay off its debt for Russian gas.
Housing, mining shares rise
Housebuilder Taylor Wimpey gave a bullish outlook on Tuesday with a "new and enhanced set of financial targets" as the housing market goes from strength to strength. The company also said it will return at least £200m of cash per year from 2016 on top of the £50m special dividend in July 2014 and £200m in July 2015.
Others in the sector were also given a boost by the comments, such as Barratt Developments, Persimmon and Crest Nicholson.
Manufacturing conglomerate Melrose gained after trading in the first quarter was in line with expectations with order intake up 3% since the start of the year. Broker Investec highlighted the encouraging signs in current trading and forward orders at the company.
AstraZeneca was also on the rise after reiterating its defence to an attempted takeover by US rival Pfizer. AstraZeneca said Pfizer is making an "opportunistic attempt [...] without reflecting the value of its exciting pipeline. This value should accrue fully to AstraZeneca shareholders."
Heading the other way was airline easyJet which was flying lower despite narrowing first-half losses by nearly 14% to £53m. "Whilst we remain hugely optimistic about the long-term prospects of this business, in the near term we expect the shares to pause for breath," said Analyst Gert Zonneveld from Panmure Gordon. Credit Suisse had a similar point of view, pointing out the shares trade at a forward price-to-earnings multiple of 15 but in their opinion are nevertheless a multi-year value proposition.
Travel and leisure peer TUI Travel was also lower as it said that the pre-tax loss widened 5% to £369m in the first half due to the timing of Easter.
London Stock Exchange dropped after confirming media speculation that it is considering a potential purchase of US asset-management and stock-index group Russell Investments. According to media reports, the group could be fetch a value of $3bn, equating to 10 times earnings.
Investment management and financial planning company Brewin Dolphin fell after saying that it will take a one-off charge of £32m this year after deciding to pull the roll-out of the JHC Figaro software across the group. |
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| | FTSE 100 - Risers
Persimmon (PSN) 1,404.00p +3.24%
Barratt Developments (BDEV) 386.30p +3.21%
Rolls-Royce Holdings (RR.) 1,028.00p +2.39%
ITV (ITV) 191.00p +2.25%
Melrose Industries (MRO) 293.50p +2.19%
Marks & Spencer Group (MKS) 468.20p +2.12%
GKN (GKN) 384.60p +1.99%
Shire Plc (SHP) 3,345.00p +1.83%
Sports Direct International (SPD) 773.00p +1.78%
Centrica (CNA) 323.60p +1.76%
FTSE 100 - Fallers
easyJet (EZJ) 1,658.00p -4.16%
London Stock Exchange Group (LSE) 1,808.00p -2.53%
Aberdeen Asset Management (ADN) 435.50p -2.22%
Antofagasta (ANTO) 779.00p -2.14%
Vodafone Group (VOD) 219.85p -2.05%
TUI Travel (TT.) 433.80p -1.77%
British Sky Broadcasting Group (BSY) 857.00p -1.32%
William Hill (WMH) 349.10p -0.94%
Fresnillo (FRES) 825.00p -0.90%
Mondi (MNDI) 1,031.00p -0.87%
FTSE 250 - Risers
Taylor Wimpey (TW.) 114.40p +7.62%
Fisher (James) & Sons (FSJ) 1,378.00p +4.39%
Supergroup (SGP) 1,110.00p +4.23%
CSR (CSR) 585.00p +3.72%
Pace (PIC) 385.50p +3.63%
Crest Nicholson Holdings (CRST) 363.50p +3.33%
Rank Group (RNK) 164.50p +3.13%
Workspace Group (WKP) 577.50p +3.12%
Ocado Group (OCDO) 334.60p +2.95%
Aberforth Smaller Companies Trust (ASL) 1,160.00p +2.84%
FTSE 250 - Fallers
Lonmin (LMI) 261.10p -3.72%
Perform Group (PER) 265.00p -2.97%
Partnership Assurance Group (PA.) 124.20p -2.59%
Drax Group (DRX) 637.50p -2.45%
Kazakhmys (KAZ) 250.30p -2.34%
Infinis Energy (INFI) 200.00p -2.30%
Brewin Dolphin Holdings (BRW) 320.00p -2.26%
FirstGroup (FGP) 132.00p -2.08%
Man Group (EMG) 95.00p -2.06%
Bank of Georgia Holdings (BGEO) 2,500.00p -1.96% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed as investors weigh data - German economic confidence falls
- US retail sales rise but at slower pace
- Report fuels ECB rate cut speculation
- Ukraine presidential vote is key, says German FM
FTSE 100: 0.31%
DAX: 0.54%
CAC 40: 0.25%
FTSE MIB: -1.11%
IBEX 35: 0.19%
Stoxx 600: 0.27%
European stocks were little changed as investors weighed reports on German economic confidence and US retail sales.
ZEW's index for measuring investor and analyst expectations for Germany's economy fell to 33.1 in May from 43.2 the previous month, trailing estimates of 40.
"The fifth consecutive decline in ZEW investor sentiment in May suggests that the German economic recovery might not gain much pace from here," Capital Economics said.
US retail sales grew 0.1% in April following a revised 1.5% increase a month earlier, missing analysts' forecasts for a 0.4% gain.
"This result has given the second quarter GDP bounce-back a knock but the first quarter may be back on track for 0.1% growth after the revision higher,"according to Jasper Lawler, Analyst at CMC Markets.
"Given the strength of the moves seen yesterday, retail sales is just one piece of data so markets are shrugging it off with consensus opinion rightly or wrongly unchanged that the second quarter will see a snapback in growth with further improvements in the labour market."
Euro falls on ECB rate cut speculation
The euro dropped 0.36% to $1.3707 following a report that Germany's central bank Bundesbank was willing to back a negative interest rate on bank deposits and European Central Bank (ECB) purchases of packaged bank loans if needed to keep inflation from staying too low
A person familiar with the matter told The Wall Street Journal that the ECB staff inflation expectations for 2016, due in early June, will be key to the Bundesbank's appetite for further monetary easing.
Ukraine unrest
German Foreign Minister Frank-Walter Steinmeier believes the Ukraine's presidential vote on May 25th will play a big part in resolving the unrest.
Steinmeier met acting Ukrainian Prime Minister Arseniy Yatsenyuk and Foreign Minister Andriy Deshchytsya in Kiev today in an attempt to find a diplomatic solution.
Meanwhile a spokesman for the European Commission on economic and monetary affairs today said Ukraine will be able to use the European Union's financial assistance to pay off its debt for Russian gas.
Ukraine and the EU were today due to sign an agreement on the provision of €1bn of financial assistance to Kiev in Brussels.
ThyssenKrupp, Pandora
ThyssenKrupp jumped as the steelmaker said 2014 profit excluding one-time items will almost double from last year's €586m as it reported a rise in first-quarter earnings.
Pandora was up as the Danish jeweller said full-year sales will exceed 10.5bn kroner, up from its previous forecast of 10bn kroner.
AstraZeneca edged higher on reports that said Pfizer may increase the value of its current bid for the UK drugmaker.
Telecom Italia SpA slumped after posting quarterly revenue that missed market forecasts.
easyJet declined after reporting a fall in first half losses but warning of increased levels of competitor capacity in the second half.
Airbus advanced after the French plane-maker reported first-quarter earnings that beat analysts' estimates.
Paddy Power retreated after Chief Executive Kennedy said he will step down from the Irish bookmaker next year.
Brent crude rose by $0.303 to $108.740 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks little changed after US retail sales US stocks were little changed after a report showed US retail sales rose less than expected last month.
Retail sales grew 0.1% in April following a revised 1.5% increase a month earlier, missing analysts' forecasts for a 0.4% gain.
"The 0.1% month-on-month increase in US retail sales in April gets the second quarter off to a soft start and suggests that real consumption growth in the quarter as a whole may be a bit weaker than we previously expected," Capital Economics said.
On the company front, DirecTV rallied following reports AT&T has held advanced talks to buy the company for about $50bn.
Pfizer advanced following news the the company may increase its bid for AstraZeneca.
Keurig Green Mountain Inc. gained after Coca-Cola Co. boosted its stake in the firm.
Elizabeth Arden Inc. slumped as the beauty products group reported quarterly revenue that missed analysts' estimates.
The 10-year US Treasury yield fell four basis points to 2.62%.
West Texas Intermediate crude futures rose by $0.465 to $101.060 per barrel, according to ICE data. |
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| | Broker Tips | | Broker tips: easyJet, Babcock, Melrose, Taylor Wimpey Shares in easyJet were flying firmly lower on Tuesday morning after the airline underwhelmed with a seemingly in-line first-half report.
Panmure Gordon maintained a 'hold' rating and 1,800p target for the stock. "Whilst we remain hugely optimistic about the long-term prospects of this business, in the near term we expect the shares to pause for breath," said Analyst Gert Zonneveld.
Credit Suisse has initiated coverage of Babcock International with an 'outperform' rating, labelling the company as a "one-of-a-kind engineering and technical services provider".
The stock is trading a 17.6 times estimated earnings for this year, falling to a multiple of 15.6 on next year's forecasts, which "does not look demanding in terms of the high visibility of [earnings] growth and upside potential from big ticket wins", Credit Suisse said.
Killik & Co has highlighted a buying opportunity for investors at Melrose after a "reassuring update" from the industrial conglomerate on Tuesday.
"We remain positive on the company, which plays well to the themes of smart technology and energy security, and offers exposure to an attractive 'buy, improve and sell' strategy. Following a period of share price weakness since the full-year results in March, we believe the current level is an attractive point to buy the shares."
Jefferies reiterated its 'buy' recommendation on Taylor Wimpey as the housebuilder set out ambitious medium-term targets and confirmed a generous new cash return policy. | | |
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