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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: Investors ponder merits of TSB float - FTSE 100 catches up after long weekend
- Euroscepticism tempered by elections results in Italy, Greece
- IHG gains on bid interest
- Lloyds to float TSB division
- Pfizer walks away from AstraZeneca proposal
techMARK 2,786.31 +1.03%
FTSE 100 6,844.94 +0.43%
FTSE 250 15,843.93 +0.88%
Equities ended the day modestly on the up, as traders reacted to positive economic data Stateside and the favourable European parliamentary election results seen in Greece and Italy over the weekend.
Thus, the Footsie tracked the S&P 500 29 points higher, finishing the day at the 6,845 point mark.
US durable goods orders increased 0.8% over the month in April following a 3.6% climb a month earlier, surprising analysts who had expected a 0.7% drop.
"The election results are a positive, especially for Italy and Greece, where euroscepticism would have been a powerful threat to pending reforms and to the return of international investors," according to analysts at RBS.
The day's key 'talking point' was Lloyd's announcement of its intention to offload some of its branch network under the TSB brand so as to comply with new regulations from the European Union.
Michael Hewson, Chief Market Analyst at CMC Markets UK, highlighted that the timing of the UK lender's management may be "a little bit off." In that same vein, Hewson pointed out how some institutional investors were complaining that the Saga flotation had killed off the IPO market.
But in his opinion, that seems "somewhat melodramatic, and when looking at the facts is just plain wrong."
The IPO market was already showing signs of fatigue before the Saga IPO with retail chain Fat Face pulling its plans to float earlier this month, Hewson added.
Coincidentally, on Tuesday independent information and communications technology service provider Timico announced its decision to postpone its upcoming float.
There was finally a modicum of good news on the geopolitical front. Following the results of Sunday's Ukrainian elections Russia's Foreign Minister indicated that his country would respect the will of the country's voters. Nevertheless, that came as news came in of heavy fighting between Ukrainian forces trying to retake the airport in the eastern city of Donetsk and pro-Russian separatists, with dozens amongst the latter having reportedly been killed.
IPO market may be dead but M&A speculation continues
IHG shares surged after Sky News reported that the company rejected a £6bn takeover bid on the grounds that it was too low. While the identity of the bidder has not been confirmed, analysts suggested that the proposal could have come from Starwood Hotels & Resorts Worldwide.
IAG was another top riser on the Footsie, after Goldman Sachs wrote to clients saying that they were forecasting a continued acceleration in passenger growth in the industry, "in line with an improving European economic outlook and airline capacity reactivations". In the specific case of IAG they said that the April US ISM bodes well for IAG's summer premium traffic.
Lloyds advanced after confirming it will float a quarter of shares in TSB on the London Stock Exchange in June. Chief Executive António Horta-Osório said the initial public offering of TSB "is an important further step for the group as we act to meet our commitments to the European Commission".
Heading the other way was AstraZeneca after US pharmaceutical giant Pfizer called an end to its takeover pursuit following continued rejections from the board of the Anglo-Swedish rival. Societe Generale was weighing further on AstraZeneca's share price after cutting its rating on the stock from 'hold' to 'sell'.
Ophir Energy sank after saying it failed to encounter significant hydrocarbon shows after drilling the Affanga Deep-1 well in the Gnodo block offshore Gabon. Sector peer
Aveva and Greencore gain on the back of broker comments
Software maker Aveva was the best performer on the FTSE 250 as it revealed an 11% increase in full-year profit underpinned by strong demand at its Engineering and Design Systems unit and improved margins.
Analysts at Numis Securities lifted their target on convenience food producer Greencore to 320p per share from 209p previously on the back of the company's interim results out last week. The broker highlighted the business win from M&S at the Northampton sandwich factory, which will add an initial £30m per year to the firm's sales starting next year.
The outlook for sugar and sweetener maker Tate & Lyle remains 'muted' following a challenging 2013/14, according to Davy Research which retained an 'underperform' rating on the stock. Ahead of the company's announcement of its results for the year-end March on May 29th, Davy said it expects adjusted profit before tax to total £323m, down from £327m the year before, in line with consensus forecasts. |
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| | FTSE 100 - Risers
ARM Holdings (ARM) 917.00p +3.97%
International Consolidated Airlines Group SA (CDI) (IAG) 392.90p +3.56%
InterContinental Hotels Group (IHG) 2,302.00p +3.41%
Travis Perkins (TPK) 1,724.00p +3.23%
Weir Group (WEIR) 2,604.00p +3.09%
Sage Group (SGE) 413.80p +3.04%
London Stock Exchange Group (LSE) 1,906.00p +2.92%
CRH (CRH) 1,680.00p +2.88%
Ashtead Group (AHT) 888.50p +2.66%
St James's Place (STJ) 788.00p +2.34%
FTSE 100 - Fallers
Fresnillo (FRES) 822.00p -3.18%
AstraZeneca (AZN) 4,252.00p -1.76%
Randgold Resources Ltd. (RRS) 4,428.00p -1.71%
Sainsbury (J) (SBRY) 339.00p -1.37%
Morrison (Wm) Supermarkets (MRW) 200.00p -1.33%
Severn Trent (SVT) 1,899.00p -1.30%
Smiths Group (SMIN) 1,308.00p -1.06%
Anglo American (AAL) 1,557.00p -1.05%
Rio Tinto (RIO) 3,236.00p -0.66%
BP (BP.) 504.20p -0.55%
FTSE 250 - Risers
Aveva Group (AVV) 2,350.00p +8.75%
Supergroup (SGP) 1,075.00p +5.39%
Fidessa Group (FDSA) 2,292.00p +5.14%
Entertainment One Limited (ETO) 301.90p +4.39%
Ted Baker (TED) 1,905.00p +3.87%
CSR (CSR) 574.50p +3.79%
Telecom Plus (TEP) 1,510.00p +3.57%
Greencore Group (GNC) 290.00p +3.39%
Carphone Warehouse Group (CPW) 313.80p +3.36%
Cineworld Group (CINE) 345.00p +3.29%
FTSE 250 - Fallers
Ophir Energy (OPHR) 250.00p -3.88%
Genus (GNS) 1,043.00p -1.88%
Hunting (HTG) 796.00p -1.85%
Investec (INVP) 506.50p -1.84%
Centamin (DI) (CEY) 59.95p -1.80%
Tate & Lyle (TATE) 668.50p -1.76%
Alent (ALNT) 311.70p -1.67%
Dechra Pharmaceuticals (DPH) 697.00p -1.62%
Vedanta Resources (VED) 1,063.00p -1.39%
Afren (AFR) 149.00p -1.39% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mostly higher after positive US data - US durable goods orders increase
- US consumer confidence rises
- Draghi says ECB ready to act
FTSE 100: 0.43%
DAX: 0.49%
CAC 40: 0.06%
FTSE MIB: -0.42%
IBEX 35: 0.25%
Stoxx 600: 0.23%
European stocks were mostly higher by the end of trading following the release of a batch of upbeat US data.
US durable goods orders increased 0.8% over the month in April following a 3.6% climb a month earlier, surprising analysts who had expected a 0.7% drop.
The Conference Board's US consumer confidence index edged up to 83 in May from 81.7 in April, in line with expectations.
Markit's services purchasing managers' index jumped to 58.4 in May from 55 a month before, beating the forecast of 54.4. A reading above 50 signals expansion.
"Consumer confidence is extremely important to the US economy as spending contributes a significant amount to final GDP," said Craig Erlam, Market Analyst at Alpari UK.
"The services PMI reading is equally important as services account for more than two thirds of US GDP."
ECB ready to act, says Draghi
European Central Bank (ECB) President Mario Draghi has said the monetary authority was ready to act with conventional and targeted measures to combat low prices in the Eurozone.
"What we need to be particularly watchful for at the moment is, in my view, the potential for a negative spiral to take hold between low inflation, falling inflation expectations and credit, in particular in stressed countries," he said at the ECB's new Forum on Central Banking at Sintra in Portugal.
The ECB is expected to introduce new policy at its June meeting.
JP Morgan analyst Greg Fuzesi said: "Overall, this speech is consistent with the ECB cutting rates in June and taking some targeted measures to support bank lending (some ABS purchases and/or some long-term lending to banks).
"The speech is also consistent with the door to quantitative easing being left open. But, it is less clear whether these comments signal a very big policy shift."
Lloyds, AstraZeneca
Lloyds Banking Group advanced after saying it will sell a 25% stake in its TSB consumer bank in an initial public offering next month.
AstraZeneca declined as US drugmaker Pfizer ended its six-month effort to buy the UK company after offering £69.4bn.
Aveva Group rallied after the UK maker of computer software posted annual pre-tax profits that beat analysts' estimates.
Ophir Energy slumped after the oil and gas explorer said one of its wells offshore Gabon had poor reservoir characteristics.
Accor jumped after agreeing to buy hotels in Germany and the Netherlands for about €900m.
The euro fell 0.18% to $1.3621.
Brent crude futures dropped $0.218 to $110.080 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks rise after US data US stocks gained after reports showed US durable goods and consumer confidence rose.
US durable goods orders increased 0.8% in April following a 3.6% climb a month earlier, surprising analysts who had expected a 0.7% drop.
The consumer confidence index edged up to 83 in May from 81.7 in April, in line with expectations.
Markit’s services sector purchasing managers’ index jumped to 58.4 in May from 55 a month before, beating the forecast of 54.4. A reading above 50 signals expansion.
“Consumer confidence is extremely important to the US economy as spending contributes a significant amount to final GDP,” said Craig Erlam, Market Analyst at Alpari UK.
"Increases here are very welcome as we head into the summer period. The services PMI reading is equally important as services account for more than two thirds of US GDP. It’s very important that this number remains well above 50 and any increases gives the market confidence that the US economy will go from strength to strength this year."
The US Richmond Fed manufacturing index remained unchanged at 7 in May while the Dallas Fed manufacturing index fell to 8 this month from 11.7 in April.
Pfizer, Bank of America
Pfizer rallied after abandoning its attempt to buy AstraZeneca.
Bank of America edged higher after resubmitting its capital plan to the Federal Reserve.
Cisco Systems advanced as Deutsche Bank AG analysts recommended buying the shares.
Hillshire gained as JBS’s Pilgrim’s Pride Corp. unit made an unsolicited bid for the maker of Jimmy Dean sausages and Ball Park hot dogs.
The US 10-year yield held at 2.53%.
West Texas Intermediate crude futures fell $0.106 to $104.130 per barrel, according to the ICE. |
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| | Broker Tips | | Broker tips: BG Group, Tate & Lyle, SABMiller, AVEVA Kepler Cheuvreux has lowered its recommendation for BG Group from 'hold' to 'reduce', saying that prevailing uncertainties are clouding the outlook for the oil and gas firm.
Analyst Peter Oppitzhauser said that BG's upstream portfolio "comes with high project delivery risk (high concentration risk, greater technical challenges and limited operatorship)". Meanwhile, the recent resignation of Chief Executive Chris Finlayson and the stock's current valuation levels add to short-term uncertainties, given that both factors "leave the company vulnerable as a potential M&A target, we think".
The outlook for sugar and sweetener maker Tate & Lyle remains "muted" following a challenging 2013/14, according to Davy Research which retained an 'underperform' rating on the stock.
"Earnings growth prospects deteriorated at Tate over the course of the year as softer US demand and competition in the sucralose market weighed on profits," said analyst Jack Gorman.
The valuation of drinks group SABMiller is now "too demanding", according to Investec which downgraded its rating on the stock from 'hold' to 'sell'.
Analyst Anthony Geard pointed out that the shares have had an "extraordinary run since early February", surging some 25% compared with the FTSE 100 which has only risen 6%. He said that the stock now trades at a "mid-teen premium to the peer group, which we regard as overly extended".
Numis Securities has reiterated its 'buy' recommendation for AVEVA after the software group's well-received annual results on Tuesday, saying the shares are significantly under-valued.
"AVEVA is a top quality business and we are comfortable that it is right to use any pull-backs as an opportunity to build positions," Numis said in a research report. | | |
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