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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: Vodafone drags FTSE into negative finish, CPI in focus - FTSE closes down 42.55 points at 6,802
- Vodafone and M&S miss expectations
- CPI rises 0.2 percentage points in April to 1.8 per cent
techMARK 2,706.50 -0.48%
FTSE 100 6,802.00 -0.62%
FTSE 250 15,440.25 +0.40%
Significant falls by a number of blue chip heavyweights ensured a negative finish for UK stocks on Tuesday, with Vodafone providing the biggest drag.
The FTSE 100 closed down 42.55 points at 6,802.
Brenda Kelly, Chief Market Strategist at IG, said: "The FTSE's retreat from the highs of last week continued today, as we saw the index hit its lowest level for over a week. 6,800 might be important on a psychological level, but it is still only a 1.4% decline from the peak, and the picture is distorted to some extent by two consecutive days of big moves in stocks with significant weighting in the index.
"The market appears however to have stalled yet again, with little apparent desire to revisit 6,900 any time soon. Neither macro data nor earnings have shown the ability to energise this market, and this leaves us wondering what can."
The main news of the day was of course UK consumer price inflation (CPI), which climbed 0.2 percentage points in April to 1.8% year-on-year.
Barclays Research said the figure was in line with its above-consensus expectations and attributed the rise in the main to core inflation, particularly services, and to a lesser extent, energy.
It said: "Today's outturn, albeit slightly stronger than last month's, is in line with our view that inflation pressures remain muted in the economy. We expect inflation to be close to, but below, the 2% Bank of England (BoE) target in 2014 and 2015. Imported inflation pressures remain subdued amid the benign global inflation environment, while earnings growth is increasing at a measured pace.
"We believe that the current inflation outlook provides further comfort to the MPC that inflation pressures are not yet building up in the economy, despite the recovery gathering speed. We therefore maintain our view that the MPC will hike rates in the second quarter of 2015."
Cameron eyes tightening of Help to Buy after Carney warnings
Prime Minister David Cameron today said the Help to Buy scheme may have to be scaled back in order to prevent the UK property market from boiling over.
Following words of warning from BoE Governor Mark Carney at the weekend that rising house prices were the biggest risk to Britain's economic recovery, Cameron said he was wholly in agreement.
Carney said Help to Buy was a relatively small and "pretty targeted" scheme, but cautioned it "could grow a lot and it could change attitudes in other parts of the mortgage market".
UK credit card borrowing rises at fastest rate for five years, says BBA
Credit card borrowing in the UK increased at its highest rate for five years, potentially fuelling fears that the economic recovery may be too reliant on consumer debt.
Shoppers made 197m card purchases in March totalling £11.8bn, 13% and 8% higher respectively than during the same month a year ago, according to monthly data from the British Bankers Association (BBA).
Vodafone slides after results, Carnival docks in top spot
Vodafone was a notable faller today after it said earnings came in just shy of consensus forecasts in the year to end-March, though the mobile operator confirmed its expected final dividend of 7.47p per share.
Group revenue sank 1.9% in line with the consensus to £43.6bn, with organic service revenue declining 4.3%, leading to earnings before interest, tax, depreciation and amortisation (EBITDA) sliding 7.4% to £12.8bn, with consensus expecting £12.9bn.
Tesco declined after Jefferies cut its target from 320p to 310p, downgrading the supermarket chain to 'hold'.
Meanwhile, Carnival steamed ahead on the back of a rating upgrade from Morgan Stanley, although it did say that "ultimately, we remain cautious".
ITV climbed after it was upgraded to 'hold' versus 'sell' by broker Berenberg. |
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| | FTSE 100 - Risers
Carnival (CCL) 2,380.00p +3.39%
Barratt Developments (BDEV) 350.90p +2.30%
BT Group (BT.A) 379.30p +2.21%
ITV (ITV) 176.60p +2.20%
Coca-Cola HBC AG (CDI) (CCH) 1,375.00p +2.15%
International Consolidated Airlines Group SA (CDI) (IAG) 378.40p +2.05%
Travis Perkins (TPK) 1,649.00p +2.04%
Babcock International Group (BAB) 1,197.00p +1.61%
Ashtead Group (AHT) 830.00p +1.59%
WPP (WPP) 1,239.00p +1.39%
FTSE 100 - Fallers
Vodafone Group (VOD) 205.30p -5.46%
ARM Holdings (ARM) 845.00p -2.65%
Morrison (Wm) Supermarkets (MRW) 209.50p -2.10%
Anglo American (AAL) 1,533.00p -2.08%
Antofagasta (ANTO) 783.50p -2.06%
G4S (GFS) 252.60p -2.02%
BG Group (BG.) 1,270.50p -2.01%
Intertek Group (ITRK) 2,926.00p -1.94%
Tesco (TSCO) 306.05p -1.91%
Rolls-Royce Holdings (RR.) 1,004.00p -1.67%
FTSE 250 - Risers
Paragon Group Of Companies (PAG) 383.60p +9.57%
Homeserve (HSV) 340.30p +7.32%
Foxtons Group (FOXT) 304.90p +6.27%
Pace (PIC) 360.00p +6.07%
Rightmove (RMV) 2,267.00p +5.44%
Supergroup (SGP) 1,012.00p +4.98%
Greencore Group (GNC) 259.00p +4.82%
Vedanta Resources (VED) 1,058.00p +4.24%
NMC Health (NMC) 459.00p +4.08%
Ocado Group (OCDO) 312.20p +4.07%
FTSE 250 - Fallers
Afren (AFR) 145.30p -5.71%
Cobham (COB) 298.00p -4.55%
Intermediate Capital Group (ICP) 413.30p -3.77%
888 Holdings (888) 124.50p -3.34%
Imagination Technologies Group (IMG) 203.30p -3.19%
Ferrexpo (FXPO) 135.00p -2.74%
Soco International (SIA) 412.10p -2.53%
Laird (LRD) 275.70p -2.44%
Booker Group (BOK) 137.30p -2.42%
Lonmin (LMI) 236.00p -2.36% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after UK inflation - UK inflation rises
- German producer prices fall
- ECB may change policy calendar
- Russia warns over sanctions
FTSE 100: -0.62%
DAX: -0.21%
CAC 40: -0.39%
FTSE MIB: 0.30%
IBEX 35: 0.27%
Stoxx 600: -0.06%
European stocks were mixed as UK inflation rose more than expected in April.
The UK consumer price index (CPI) increased 1.8% year-on-year in April following a 1.6% rise a month earlier, surprising analysts who had predicted a 1.7% gain and moving closer to the Bank of England's target of just under 2%.
However, Investec said a closer look at the data showed the rise was driven by the timing of Easter.
"The Easter weekend fell close to the April CPI collection period this year whilst the holiday fell in March last year," the broker said. "Hence an 18% increase in air fares and 22% monthly rise in sea fares were set against a 6% fall and 3% rise, respectively, last year."
In Germany, producer prices fell 0.9% year-on-year in April following a 0.9% drop a month earlier, missing forecasts for a 0.8% decline.
Elsewhere in the Eurozone, the European Central Bank (ECB) is reportedly considering a 'Fed-style' calendar of monetary policy meetings, whereby meetings will be held every six weeks instead of every first Thursday of the month.
Michael McKee, Economics Editor for Bloomberg TV, tweeted:
"#ECB move to a #Fed-style every-six-weeks meeting schedule, according to people familiar. Worried frequent meetings raise expectations."
The comment follows an ongoing debate of whether the ECB should, like the Federal Reserve (Fed), also release the minutes of its policy meetings.
US Fed, Russia
In the US, Federal Reserve members Charles Plosser and William Dudley were due to speak today ahead of the release of the meeting minutes tomorrow.
"If anything, the views of these Fed officials, along with those of Esther George, Narayana Kocherlakota and Chairwoman Janet Yellen tomorrow, are more relevant as they take into consideration the latest data including the jobs report earlier this month which showed 288,000 jobs being created in April," said Craig Erlam, Market Analyst at Alpari.
"I can't imagine the Fed changing the pace of tapering because of this data, so if anything we may get further insight into their views on interest rates and when they expect the first hike."
In Russia, Prime Minister Dmitry Medvedev said he has prepared a raft of retaliatory steps in response to potentially wider sanctions imposed by the US and the European Union.
Medvedev told Bloomberg Russia is being pulled into a new Cold War with the US and its allies over the turmoil in Ukraine.
Carnival, United Internet
Carnival edged higher after Morgan Stanley upgraded its rating on the shares to 'equalweight' from 'underweight'.
United Internet, a German online-access and domain provider, gained after first-quarter sales rose to beat analysts' estimates.
Deutsche Annington declined as Monterey Holdings I Sarl sold a 12.5% stake in the German landlord.
Vodafone slumped after saying it forecasts earnings before interest, tax, depreciation and amortisation (EBITDA) to fall in the year ended March 2015.
Marks and Spencer retreated after reporting a 3.9% fall in annual pre-tax profit to £623m, reflecting a drop in sales at the struggling general merchandise division.
Sonova advanced as the maker of hearing aids proposed a dividend of 1.90 francs which exceeded expectations.
The euro fell 0.10% to $1.3695.
Brent crude futures rose $0.37 to $109.740 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks fall as Fed officials speak ahead of minutes US stocks declined ahead of speeches from Federal Reserve officials today before the release of the central bank's meeting minutes tomorrow.
Fed members Charles Plosser and William Dudley are due to speak on the economy and monetary policy at 16:30 and 17:00 GMT respectively.
"If anything, the views of these Fed officials, along with those of Esther George, Narayana Kocherlakota and Chairwoman Janet Yellen tomorrow, are more relevant as they take into consideration the latest data including the jobs report earlier this month which showed 288,000 jobs being created in April," said Craig Erlam, Market Analyst at Alpari.
"I can't imagine the Fed changing the pace of tapering because of this data, so if anything we may get further insight into their views on interest rates and when they expect the first hike."
Last month policymakers said economy is showing signs of picking up and the job market is improving. The Fed trimmed its monthly asset buying and said further tapering in measured steps was likely.
Russia's PM warns of retaliation over sanctions
Russian Prime Minister Dmitry Medvedev said he has prepared a raft of retaliatory steps in response to potentially wider sanctions imposed by the US and the European Union.
Medvedev told Bloomberg Russia is being pulled into a new Cold War with the US and its allies over the turmoil in Ukraine.
"We haven't especially commented on" sanctions "or responded to them harshly, although we could do something unpleasant or offensive to those countries that are introducing these sanctions," he said.
Urban Outfitters
Fashion retailer Urban Outfitters was a stand-out faller in pre-market trades after its profits missed market forecasts.
Dick's Sporting Goods moved lower after the firm cut its earnings projections for the year.
Home Depot gained after reporting a rise in first quarter net sales and income.
The 10-year yield fell one basis point to 2.54%.
Brent crude futures fell $0.119 to 109.240 per barrel, according to the ICE. |
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| | Broker Tips | | Broker tips: Greencore, AstraZeneca, Tullow Oil Greencore, the manufacturer of convenience foods, delivered a 'good' first half result, with a strong 26 per cent increase in like-for-like sales at its Convenience Foods unit in the US, and there is increasing visibility on growth next year, Investec analyst Nicola Millard told analysts in a research note.
In particular, there was an improvement in margins at the foods unit, including some improvement from low margin UK businesses. Nonetheless, comparatives for revenue growth will get tougher as the year progresses, especially in the fourth quarter, depending on the weather.
The increased visibility is a result from the US developments already announced but also of a new business win at Northampton, starting next year. As well, the group will be extending its food-to-go site at a cost of £30m. Yet that will not increase expectations for net debt given that it will be funded asset disposals scheduled for the second half of the year.
On the basis of all of the above the broker has lifted its forecast for profit before tax (PBT) this year to £66.2m from £65.5m and for next year to £75.2m to £76.8m.
As a result, Investec increased its price-to-earnings ratio –based price target to 278p from 273p and, given recent weakness in the share price, upgraded the stock to 'buy' from 'add'.
Citigroup has urged investors to buy takeover target AstraZeneca after it turned down rival Pfizer's latest bid.
Citi has added AstraZeneca to its Citi Focus List Europe, saying it is worth £49 a share following its rejection of Pfizer's "final" £55 per share offer.
AstraZeneca's shares endured a record intra-day decline after its decision and were trading 54.5p off at 4233p by 10:38 in London.
Pfizer had little scope to change its mind and make a higher offer before a deadline of next Monday due to strict takeover rules, analysts said.
But Citi highlighted its report in November saying AstraZeneca's line-up of early to mid-stage oncology drugs was extremely under-valued.
It also noted that its 2023 revenue forecast of $31bn, against a consensus of $28bn, was still materially below AstraZeneca's internal forecast of $45bn.
"We therefore add 'buy' rated AstraZeneca to the Citi Focus List based on our extensive previous analysis of its fundamental value drivers," the broker said.
In a research note issued on Tuesday analysts at Credit Suisse lowered their price target on shares of oil exploration group Tullow Oil despite the lower-risk drilling plan on which the company is embarking on this year and next.
Amongst the factors which motivated its decision are the recent appreciation in sterling (to 1.65 from 1.60), a string of unsuccessful well results (Emong and Ekunyuk in Kenya, Tapender in Mauritania, Butch East in the North Sea) and changes to future drilling plans (in Mauritania).
The above will only be partially offset by positive changes to its macroeconomic forecasts, for the 2014 price of Brent oil more particularly. The Swiss broker also modified its estimates for the company out beyond this year to reflect recently announced disposal plans.
On the plus side of things, Credit Suisse highlighted that the drilling plan which had been programmed for this year and the first half of 2015 looks to be lower risk (fewer expensive frontier offshore wells), the fact that it also targets various play types in the offshore (eg Gabon) in more tax-advantaged areas for exploration (eg Norway) and perhaps a more cost conscious approach and/or simply a reflection of the disappointing drilling track-record in the Late Cretaceous of late.
Regarding moves by the firm to reshape its portfolio of assets, the intention to monetise its North Sea assets makes sense to these analysts. However, it would be better if the sale of its stake in the TEN development were carried out in whole with its other shareholders, if possible, instead of separately.
The price target on the stock was lowered to 945p from 1,000p, and the 'neutral' recommendation maintained. | | |
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