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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 tread carefully ahead of record highs - Eurozone money supply weak, German unemployment rises
- Markets cautious after recent highs
- LSE leads financials higher
- GSK to be investigated by UK fraud body
techMARK 2,799.81 +0.48%
FTSE 100 6,851.22 +0.09%
FTSE 250 15,935.43 +0.58%
UK stocks ended slightly higher after trading in a narrow range throughout most of the Wednesday as investors showed caution given global indices were at multi-year or record highs and amid weak macroeconomic data out on the Continent.
So-called 'broad' money supply in the Eurozone eased to a year-on-year rate of 0.8% in April, versus the 1.1% which analysts had penciled in.
"The continuation of the downward trend in money supply (M3) growth to levels not seen since the immediate aftermath of the global financial crisis and weak April bank lending figures for households and non-financial firms significantly increase the likelihood that the ECB is going to announce further targeted liquidity measures on June 5th," Barclays Research wrote to clients.
The FTSE 100 ended the session just 0.1% higher at 6,851.22.
For her part, Chief Market Strategist Brenda Kelly from IG said that the weak German unemployment figures earlier in the day had "cast a pall over markets, and a day devoid of further major macro has meant markets are struggling for direction".
As an aside, the euro spent much of the day skirting the 1.36 mark.
Acting as a backdrop, in the afternoon Reuters quoted a NATO military officer as having stated that while Russian troops may indeed be slowly pulling back from the border with Ukraine the bulk of the force remains close to it for now.
In parallel, overnight the Governor of the central bank of China Zhou Xiaochuan said the economy is in a rare "complicated" situation amid speculation policymakers will introduce new measures to spur growth in the world's second largest economy.
London real estate heading for natural correction
The Confederation of British Industry's (CBI) distributives trades survey revealed a slowdown in the pace of retail sales growth in the UK during the month of May. The total sales index retreated to a reading of 16, whereas economists had been expecting a reading of 35.
For its part, London real estate is heading for a "natural correction", according to building society Nationwide, which released its results on Wednesday.
Volatility spike in Smith&Nephew shares
Smith & Nephew shares experienced a spike in volatility in afternoon trading on the back of reports – later denied by the ostensible suitor itself – that US medical device manufacturer Stryker was readying a takeover offer.
Stock exchange operator LSE was also in demand after Credit Suisse said it expects a re-rating of the stock over time if the possible acquisition of Russell Investments is completed. The bank added LSE to its 'Focus List' and kept an 'outperform' rating.
Cantor Fitzgerald reiterated its 'sell' rating on Royal Mail, and cut its target from 500p to 480p, pushing the stock into the bottom spot.
Meanwhile, BT Group benefited from an upbeat outlook from Goldman Sachs, which said the stock offers higher growth and a cheaper valuation than others in the sector. Goldman added that it is upbeat about the telecom's upcoming launch of consumer mobile operations later this year.
Shares in GlaxoSmithKline declined on the news that the Serious Fraud Office has opened a criminal investigation into the "commercial practices" at the pharmaceutical group. The news came as a further blow to shareholders after a wave of bribery allegations against the company in recent months.
Broker Shore Capital downgraded its 2015 and medium-term forecasts and said its neutral recommendation for Marks & Spencer, "may be so for quite a while". Analyst Clive Black is now looking for modest year-on-year growth of around 3% for 2015 earnings per share of 33.5p, a 4% downgrade. He forecasts a free cash flow yield of 7.5% for next year, with a dividend yield of 3.9%.
As a group shares in miners, such as Anglo American, Rio Tinto and BHP Billiton were lower by the close of trading following data which showed that Chinese industrial profits increased 10% this year through April from the same period in 2013, marking a slight slowdown on the previous three months. Overnight Chinese central bank Governor Zhou Xiaochuan said the economy is in a rare "complicated" situation amid speculation policymakers will introduce new measures to spur growth in the world's second largest economy.
Banknote printer De La Rue jumped after reporting a 43% surge in annual underlying operating profit and said it entered the new financial year with a good order book.
A host of stocks traded lower after going ex-dividend this morning, including heavyweights Marks & Spencer and Whitbread. Amec, Bellway, Britvic, Cable & Wireless Communications, Premier Farnell and Spectris also went ex-dividend today. |
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| | FTSE 100 - Risers
Smith & Nephew (SN.) 993.50p +4.25%
London Stock Exchange Group (LSE) 1,955.00p +2.57%
Hargreaves Lansdown (HL.) 1,216.00p +2.18%
Barratt Developments (BDEV) 368.90p +2.16%
Rolls-Royce Holdings (RR.) 1,016.00p +1.80%
Severn Trent (SVT) 1,933.00p +1.79%
BT Group (BT.A) 398.40p +1.63%
ITV (ITV) 184.60p +1.60%
HSBC Holdings (HSBA) 629.20p +1.29%
William Hill (WMH) 346.30p +1.23%
FTSE 100 - Fallers
Royal Mail (RMG) 516.00p -2.73%
Anglo American (AAL) 1,527.50p -1.89%
Rio Tinto (RIO) 3,177.50p -1.81%
GlaxoSmithKline (GSK) 1,608.50p -1.59%
Marks & Spencer Group (MKS) 443.60p -1.58%
easyJet (EZJ) 1,565.00p -1.45%
BHP Billiton (BLT) 1,922.00p -1.31%
Sainsbury (J) (SBRY) 335.50p -1.03%
Diageo (DGE) 1,880.50p -1.03%
Carnival (CCL) 2,393.00p -0.99%
FTSE 250 - Risers
De La Rue (DLAR) 874.00p +7.90%
Ocado Group (OCDO) 366.40p +6.33%
SIG (SHI) 196.20p +5.48%
Kier Group (KIE) 1,710.00p +4.97%
QinetiQ Group (QQ.) 205.50p +4.37%
Kazakhmys (KAZ) 276.40p +4.30%
Hikma Pharmaceuticals (HIK) 1,683.00p +4.21%
Laird (LRD) 297.00p +4.10%
Serco Group (SRP) 369.40p +4.06%
Kentz Corporation Ltd. (KENZ) 734.00p +3.82%
FTSE 250 - Fallers
Cable & Wireless Communications (CWC) 53.40p -3.78%
Rightmove (RMV) 2,262.00p -3.33%
Bwin.party Digital Entertainment (BPTY) 117.40p -3.22%
Amec (AMEC) 1,174.00p -2.57%
Evraz (EVR) 103.80p -2.54%
Barr (A.G.) (BAG) 623.50p -2.43%
Moneysupermarket.com Group (MONY) 170.00p -2.19%
Marston's (MARS) 151.10p -2.14%
Inchcape (INCH) 624.50p -2.04%
Entertainment One Limited (ETO) 296.50p -1.79% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed on euro-area economic data - German unemployment rises
- Eurozone consumer confidence up
- Eurozone money supply falls
- Goldman predicts ECB rate cut in June
FTSE 100: 0.09%
DAX: -0.02%
CAC 40: 0.04%
FTSE MIB: 0.85%
IBEX 35: 0.40%
Stoxx 600: -0.05%
European stocks were mixed after data revealed an increase in German unemployment and a slowdown in the rate of growth in the Eurozone's money supply.
German unemployment rose for the first time in six months by a seasonally adjusted 23,937 to 2.905m in May, the Nuremberg-based Federal Labour Agency revealed on Wednesday. Economists had predicted a fall of 15,000. The adjusted jobless rate was unchanged at 6.7%, in line with forecasts.
"With business and investment sentiment potentially pointing to lower activity in the second quarter, today's unemployment data was another indication that the German economy is about to be dragged down by the poor growth in France and the periphery," said analyst Jasper Lawler at CMC Markets.
Meanwhile, a final reading for the European Commission's Eurozone consumer confidence index confirmed an increase to -7.1 in May from -8.6 last month, as expected by analysts.
Another report showed the Eurozone's Business Climate Indicator climbed to 0.37 in May from 0.28 a month earlier, beating the 0.30 estimate.
In France, consumer spending contracted by 0.3% month-on-month and 0.5% year-on-year in April, according to French Statistics institute INSEE. The consensus forecast was for an increase of 0.5% on the month and 0.3% on the year.
Eurozone money supply falls
The growth rate of so-called 'broad' money supply, or M3, eased to an 0.8% year-on-year pace in April from a revised 1% in March, according to the European Central Bank (ECB).
Analysts had been expecting a reading of 1.1%.
"The present rate of monetary growth reflects ongoing financial fragmentation in the Eurozone," according to Colin Bermingham from BNP Paribas.
"The European Central Bank (ECB) has been increasingly vocal on this issue recently. Mario Draghi said on Monday that current credit dynamics are a factor holding back inflation and growth in the Eurozone and today's numbers reinforce that view. With the ECB poised to act in its policy meeting next month, finding the best way to restore credit growth will be high on the list of priorities."
Goldman Sachs is reportedly calling for the ECB to cut its policy rates by 15 basis points in June. They also expect an announcement on targeted credit easing measures.
Elekta, Smith & Nephew
Elekta slumped as the Swedish maker of equipment for radiation surgery reported fourth quarter income that fell short of analysts' estimates.
Smith & Nephew edged higher following a report that Stryker has hired advisors to bid for the maker of hip and knee implants.
GlaxoSmithKline retreated after confirming that the UK's Serious Fraud Office has started an investigation into the drugmaker's conduct.
Hugo Boss declined as its majority shareholder sold a stake in the German maker of luxury suits.
Telecom Italia advanced as Goldman Sachs added it to a conviction-buy list. Osram Licht dropped after cutting its sales forecast for 2014. Metso Oyj tumbled after Weir Group abandoned its attempt to buy the Finnish maker of rock crushers.
The euro was down 0.27% to $1.3598. Brent crude futures fell $0.292 to $109.700 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks little changed ahead of GDP data US stocks were little changed as investors awaited a report tomorrow that may show the economy shrank in the first quarter.
The US session will be relatively quiet today with the focus on earnings ahead of tomorrow's releases on gross domestic product (GDP), jobless claims, inflation and housing data.
The Commerce Department's GDP report tomorrow is expected to show the US economy contracted 0.5% in the first quarter, following a preliminary estimate of 0.1% annualised growth, according to economists' forecasts.
GDP rose at a 2.6% annualised pace in the previous period.
McDonald's, ICE
McDonald's declined as it said it plans to return $18bn to $20bn to shareholders between 2014 and 2016 through a combination of dividends and share repurchases.
Intercontinental Exchange Group (ICE) slumped as it announced its intention to spin-off and float its pan-European exchange platform Euronext.
Smith & Nephew surged on the back of reports that US medical device manufacturer Stryker is readying a takeover offer for its UK rival.
Toll Brothers gained as the US luxury-home builder raised its prices and delivered more properties during the latest quarter.
Twitter jumped as Nomura raised its rating on the shares to 'buy' from 'neutral'.
Michael Kors was lower as it reported better-than-expected fourth quarter profit and revenue.
The US 10-year yield fell four basis points to 2.47%. West Texas Intermediate crude futures dropped $0.250 to $103.850 per barrel, according to the ICE. |
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| | Broker Tips | | Broker tips: LSE, Vodafone, BT Group, AVEVA Credit Suisse has added London Stock Exchange (LSE) to its 'Focus List', saying it expects a re-rating of the stock over time if the possible acquisition of Russell Investments is completed.
The bank has set a 2,220p target for LSE's shares, at which level they would trade at around 17 times estimated 2015 earnings, compared with the current price-to-earnings multiple of 14.8. Credit Suisse said this offers around 16% potential upside to current prices.
Berenberg has downgraded its recommendation for telecoms giant Vodafone from 'buy' to 'hold', saying it sees limited upside for the stock.
The broker has reduced its profits forecasts for Vodafone to reflect worse-than-expected margin trends evident in the telecoms company's second-half results and a "sharply-reduced probability that AT&T will bid for Vodafone in the wake of AT&T's $49bn offer for DirecTV".
BT Group was benefiting from an upbeat outlook at Goldman Sachs on Wednesday, which said that the stock offers higher growth and a cheaper valuation than others in the sector.
"We argue that BT is trading on 10-year low multiples while offering 10-year high growth opportunities," the bank said, adding that mobile is the key to boost growth at the telecoms firm.
AVEVA's share price was pulling back after a surge the previous session as UBS downgraded its rating on the engineering software group from 'buy' to 'neutral'.
The bank said that "notwithstanding management's evident confidence in the pipeline", the current valuation of the stock is now "full". | | |
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