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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: Flat finish after turbulent day, focus on Chinese PMI, UK GDP - FTSE closes 0.48 points lower at 6,820.56
- SABMiller leads risers, Royal Mail at bottom of pile
- Household spending drives rise in GDP
techMARK 2,744.10 +0.32%
FTSE 100 6,820.56 -0.01%
FTSE 250 15,675.09 +0.46%
Blue chips ended today's session flat, tipping marginally into negative territory in the final minute or two of trading.
Investors weighed a strong set of results from SABMiller, a negative reaction to Royal Mail's outlook, upbeat Chinese manufacturing PMI data, a rise in UK gross domestic product (GDP) and a positive start to the day over in the US.
The top tier index has closed 0.48 points lower at 6,820.56.
Chris Beauchamp, Market Analyst at IG, said: "The FTSE 100 has endured something of a seesaw day, hopping between gains and losses, but the overall impression has been of a market in a more relaxed frame of mind than was the case earlier in the week.
"Chinese data, which when positive always provides a useful tonic, provided support for the mining sector, rallying on hopes of increased consumption and helping to allay fears about weaker growth. Adding spice to the day was some bid talk in the tobacco arena, providing the wider market with a reason to remain in positive territory."
It was revealed today that household spending drove an expected rise in GDP in the first three months of the year, according to the Office for National Statistics (ONS), which confirmed earlier estimates that the economy expanded by 0.8% between January and April.
An 0.8% rise in household consumption, double the pace of the previous quarter, provided most of the 0.8% increase in GDP.
GDP was estimated to have increased by 1.7% in 2013, compared with 2012, un-revised from the preliminary calculations published on April 29th.
Meanwhile, the ONS also reported that public sector net borrowing requirement, excluding financial interventions, worsened to £7.4bn in April, versus the £4.5bn deficit forecast by analysts.
The tally was £1.7bn higher than in the same month of the previous year.
Positive surprise in China May manufacturing PMI survey figures
China registered a surprise increase in business activity in the manufacturing sector that nevertheless led analysts to consider that the central bank would continue to show an easing bias.
The HSBC manufacturing purchasing managers' index for May unexpectedly rose to 49.7 when consensus had expected the reading to remain unchanged at 48.1.
In other global macro news, US existing home sales reached an annualised rate of 4.65m in April, down from the 4.59m pace seen in the month before.
The consensus estimate had been for a print of 4.69m.
Meanwhile, initial unemployment claims for the week ended on May 17th increased by 28,000 to reach 326,000, according to the Department of Labour. The consensus estimate had been for a reading of 310,000.
SABMiller bubbles fizzes up on annual results
A taste for lager among drinkers in emerging markets helped brewing group SABMiller to add fizz to annual adjusted profits, although volumes declined in Europe and North America. SABMiller, whose brands include Peroni, Pilsner Urquell and Grolsch, said strong demand in Latin America, Africa and China drove a 1% rise in lager volumes, although that was partially offset by declines in Europe and North America.
Buoyed by the data from China, Fresnillo and Randgold Resources both tracked gold and silver prices higher, while Antofagasta shareholders were encouraged by a rise in the price of copper futures.
ARM Holdings climbed after the group yesterday gave a positive outlook for its royalty growth rates in the next three to four years at its analysts day.
Meanwhile, Royal Mail fell into the bottom spot after it warned on future competitive pressures and despite posting solid numbers. But Panmure Gordon was one of several brokers to reiterate a 'hold' recommendation on the shares. Analyst Gert Zonneveld said longer term prospects remained attractive and he expected "an element of regulatory intervention to protect RMG's need to achieve a commercial return on its activities".
However, he noted: "The company is facing a number of headwinds. The competitive market on the parcels side is more intense and the company is taking steps to remain leader in this growing market [...] On the letters front, direct delivery is the main concern."
Royal Dutch Shell fell after announcing it will cancel its popular scrip dividend programme from the current quarter, which analysts said was a "high-profile source of embarrassment". The oil giant said the cancellation meant the second quarter interim dividend and future dividends, forecast at $11.8bn for the full year, will be settled entirely in cash, rather than offering a share-based alternative, resulting in "a more efficient share buy-back programme".
AstraZeneca fell even though reports emerged that its largest shareholder had ratcheted up the pressure on its board to engage with Pfizer over a possible sale. US private equity group BlackRock, which holds an 8% stake in the pharmaceuticals group, is understood to support the Anglo-Swedish outfit's decision not to accept its rival's £55-share offer. |
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FTSE 100 - Risers
SABMiller (SAB) 3,372.00p +3.45%
ARM Holdings (ARM) 889.50p +3.31%
Aberdeen Asset Management (ADN) 440.00p +2.56%
Sports Direct International (SPD) 769.00p +2.40%
Smith & Nephew (SN.) 956.00p +2.14%
Antofagasta (ANTO) 786.00p +1.95%
Whitbread (WTB) 4,149.00p +1.89%
Fresnillo (FRES) 845.00p +1.87%
Petrofac Ltd. (PFC) 1,240.00p +1.64%
Compass Group (CPG) 1,002.00p +1.62%
FTSE 100 - Fallers
Royal Mail (RMG) 519.00p -9.74%
Royal Dutch Shell 'B' (RDSB) 2,456.50p -3.72%
AstraZeneca (AZN) 4,275.00p -3.28%
BG Group (BG.) 1,234.00p -2.18%
RSA Insurance Group (RSA) 481.70p -1.97%
SSE (SSE) 1,542.00p -1.15%
Unilever (ULVR) 2,668.00p -1.00%
Marks & Spencer Group (MKS) 447.80p -0.99%
IMI (IMI) 1,527.00p -0.78%
Reckitt Benckiser Group (RB.) 5,040.00p -0.59%
FTSE 250 - Risers
Halfords Group (HFD) 488.00p +10.56%
Imagination Technologies Group (IMG) 220.70p +5.45%
Entertainment One Limited (ETO) 284.70p +5.25%
BTG (BTG) 547.00p +4.99%
Ocado Group (OCDO) 333.30p +4.16%
Oxford Instruments (OXIG) 1,256.00p +3.97%
3i Group (III) 420.50p +3.83%
Playtech (PTEC) 629.50p +3.71%
CSR (CSR) 565.50p +3.29%
Countrywide (CWD) 548.00p +3.20%
FTSE 250 - Fallers
Dairy Crest Group (DCG) 427.90p -6.98%
Polymetal International (POLY) 510.50p -5.99%
Telecom Plus (TEP) 1,463.00p -3.69%
Mitchells & Butlers (MAB) 413.30p -3.19%
Booker Group (BOK) 138.00p -3.09%
Electrocomponents (ECM) 280.60p -2.91%
Supergroup (SGP) 984.00p -2.77%
RPS Group (RPS) 287.30p -2.71%
COLT Group SA (COLT) 137.00p -2.00%
Lancashire Holdings Limited (LRE) 613.50p -1.84% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after services and factory data - Eurozone manufacturing falls, services rise
- Chinese and US factory PMI grows
- US initial jobless claims increase
- US existing home sales climb
FTSE 100: 0.07%
DAX: 0.24%
CAC 40: 0.21%
FTSE MIB: -1.09%
IBEX 35: -0.10%
Stoxx 600: 0.20%
European stocks ended mixed after a batch of service and manufacturing data in the Eurozone, China and the US.
Markit's preliminary purchasing managers' index (PMI) for manufacturing in the Eurozone fell to 52.5 in May from 53.4 a month earlier, missing analysts' estimates of 53.2. A reading above 50 signals expansion.
The PMI for services, on the other hand, rose to 53.5 in May from 53.1 a month ago, beating expectations of 53.
In China, manufacturing PMI increased to 49.7 in May, a five-month high, from 48.1 in April and exceeding the 48.3 estimate.
In the US, manufacturing PMI climbed to 56.2 this month from 55.4 in April, beating analysts' prediction of 55.5.
In other US data, existing home sales in April came to 4.65m, up from 4.59m in the previous month, but under the 4.69m consensus.
Another report showed US initial jobless claims rose by 326,000 in the week ended May 17th following 298,000 claims a week earlier, falling short of the 310,000 estimate.
Miners rally
A gauge of miners edged higher, including Rio Tinto and Fresnillo, as metal prices rose.
Daily Mail and General Trust gained after announcing Zoopla Property Group's initial public offering.
Royal Mail slumped after the UK postal service warned of challenges in parcel and letter delivers as it posted its full-year results.
Raiffeisen advanced after reporting first-quarter net income that exceeded estimates.
British American Tobacco jumped on reports US firm Reynolds American is in advanced talks to buy Lorillard in a three-way transaction, which may be backed by the UK company.
The euro fell 0.23% to $1.3656.
Brent crude futures rose $0.253 to $110.830 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks little changed after jobless, manufacturing data US stocks were little changed as weekly jobless claims rose and US manufacturing activity grew.
US initial jobless claims rose by 326,000 in the week ended May 17th following 298,000 claims a week earlier, falling short of the 310,000 estimate.
The report comes a day after the Federal Reserve released minutes from its April meeting when policymakers announced a $10bn tapering off its monthly bond purchases, citing an improving jobs market and economy.
Separate data showed US manufacturing activity increased in May. Markit's preliminary purchasing managers' index (PMI) climbed to 56.2 this month from 55.4 in April, beating analysts' estimates of 55.5. A reading above 50 signals expansion.
In China, the HSBC manufacturing PMI rose to 49.7 points in May, a five-month high, from 48.1 in April. It exceeded the 48.3 forecast.
Another report showed existing home sales in April came to 4.65m, up from 4.59m in the previous month, but under the 4.69m consensus.
Twitter, Goldman
Twitter declined following news its directors and top executives are holding onto shares they own.
Goldman Sachs rallied after agreeing to sell its New York Stock Exchange market-making unit to IMC Financial Markets.
Chinese online retailer JD.com raised $1.78bn in its US initial public offering after pricing the shares above the marketed range.
The US 10-year yield rose one basis point to 2.54%. |
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| | Broker Tips | | Broker tips: Asos, Mothercare, Royal Mail Despite the slowdown seen in Asos´s sales during the second quarter analysts at Goldman Sachs decided to upgrade the shares to 'buy'.
Now the broker calculates that the digital fashion retailer´s three-year forward compound annual growth rate of sales will be at 31%, instead of 38%.
That means that Goldman´s earnings per share estimates up until 2016 have been reduced by 18% on average, resulting in a large drop in its 24-month price target on the stock. The latter is now estimated at 6,250p versus 7,300p beforehand.
That target implies a price-to-earnings ratio of 66 and an enterprise value/earnings before interest taxes and depreciation (EV/EBITDAR) multiple of 47 on the basis of their estimates for fiscal year 2015.
However, Goldman continues to believe that the retailer is "well-positioned" to take advantage of the current shift in global apparel towards on-line. Under the assumption that 20% of sales migrate to the digital space then that market may be worth €425bn by 2030.
Hence, they continue to forecast medium-term growth of between 30% and 40%. Even so, the firm is in an investment phase. As a result sales growth may moderate relative to their previous expectations, the broker admitted.
Oriel Securities has reiterated its 'reduce' advice on Mothercare, saying the baby product retailer's core UK business may take time to return to profit due to price competition.
Mothercare on Thursday reported another fall in annual UK sales, but said they were dropping more slowly than the year before.
Oriel, which has a 175p target on Mothercare, said its pre-tax profits were above its forecasts, but operating losses were "a touch worse" than it expected.
The broker said the addition of a further £10m to the group's banking facilities was welcome, but it suspected Mothercare was "closer to its banking covenants than it might like".
It added that pressure on prices in Mothercare's home and travel division remained and internet competition was likely to push them down further.
"Overall much remains to be done here and there is little sign of a medium term
solution to the pricing pressure Mothercare faces," Oriel said.
"We remain cautious about the time-frame in which the UK business can hope to return to profitability and reiterate our 'reduce' recommendation."
After Royal Mail posted solid numbers but warned on future competitive pressures, Panmure Gordon was one of several brokers to reiterate a 'hold' recommendation on the shares.
Analyst Gert Zonneveld said the results were good, with profits in line with forecasts and net debt down significantly to £555m.
However, he noted: "The company is facing a number of headwinds. The competitive market on the parcels side is more intense and the company is taking steps to remain leader in this growing market.
"On the letters front, direct delivery is the main concern."
RMG estimated that, without regulatory action, new rival TNT Post UK's publicly stated plans on direct delivery could result in a reduction of RMG's revenues "by over £200m" in 2017/18.
"Nevertheless," wrote the analyst, "the key value drivers of single digit revenue growth, margin expansion and underlying free cash flow growth remain the objectives for 2014/15."
And despite this concern, he added that the group was confident enough to pursue a progressive dividend yield.
"Longer term prospects remain attractive, as we expect an element of regulatory intervention to protect RMG's need to achieve a commercial return on its activities. Dividends are likely to rise, partly reflecting a likely rise in the payout ratio.
"Short-term competition concerns, however, are likely to be a drag on the share price in the near term." | | |
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