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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: FTSE closes firmly lower, housing stocks drag - FTSE closes down 65.26 points at 6,777.85
- Oil stocks continue higher, housing stocks sink
- Q1 UK construction data revised higher
techMARK 2,815.10 -1.11%
FTSE 100 6,777.85 -0.95%
FTSE 250 15,814.81 -1.93%
UK stocks ended the weak on a decidedly negative note, although London's Blue Chips regained some of the morning's losses to end 65.26 points lower at 6,777.85.
The notable decliners of the day were housing stocks, which offset the more modest gains seen amongst oil stocks, which tracked recent strong gains in both Brent and Crude amid growing concerns about developments in Iraq.
Chris Beauchamp, Market Analyst at IG, said: "There have been scarier Friday the 13ths in markets, but for the FTSE a drop of 1% has been rather unnerving. Crucially the index tested the 6,770 level around midday, but as expected, buyers were found. Disappointingly however, any bounce from here will run straight back into the 6,870 region that has been a real barrier so far this year.
"The real damage from Mr Carney's speech has been wrought in housebuilders, which have been shown to be extremely vulnerable to greater speculation about rate hikes. Crucially, Mr Carney stressed that increases would be gradual. In a sense, the UK is going through its own 'taper tantrum'. Ben Bernanke's careful hints about a reduction in QE set the cat among the pigeons, but when the taper did arrive markets were much calmer. Mark Carney is presumably aiming for a similar effect. Such is the magic of central banking."
Oil prices eased back today, having surged in recent days amid growing fears about the situation in Iraq, a major oil producer. Several of the country's major cities have been taken control of by Sunni Islamists militants. With reports suggesting the insurgents are planning to continue to move further south, concerns have grown about the effect the conflict will have on oil supplies.
In Beauchamp's view, the events look set to be significantly more disruptive than the crisis in Ukraine.
Also firmly in focus today was the increased possibility of a rate hike before the end of the year following Mark Carney's speech at Mansion House last night, where he said "the first rise in interest rates …could happen sooner than markets currently expect".
Capital Economics said that although this offered "a pretty plain signal" that tighter monetary policy is not too far away, it believes "rates will rise at a historically slow pace".
Explaining further, it said: "With inflation and pay growth low, more labour market slack than the unemployment rate suggests and the housing market already showing signs of cooling, our assumption is that Bank Rate reaches only 1.5% by the end of 2016."
UK construction data for first quarter revised sharply higher
In other UK news out today, data released by the Office for National Statistics (ONS) showed that the construction sector increased by 1.2% during April, as new work grew by 0.9% and repair and maintenance activity increased by 1.6%. The consensus estimate had been for a gain of 1.5%.
The previous month's gain was been revised to show a decrease of just 0.2% over the month versus the preliminary estimate of -1%.
Oil stocks gain as housing stocks dive
Oil and gas stocks were among the handful of names making gains today as share prices tracked oil prices higher, with Shell, BG Group and BP on the rise.
United Utilities was one of the strongest risers after Deutsche Bank increased its target from 900p to 980p and reiterated its 'buy' recommendation.
Miner Petra Diamonds rocketed on the news it has recovered an "exceptional" 122.52-carat blue diamond at its Cullinan mine in South Africa. RBC Capital upped its target from 180p to 200p, retaining an outperform rating.
Meanwhile, housebuilders Persimmon, Barratt Developments, Taylor Wimpey, Bovis Homes and Berkeley were all trading with heavy losses as investors reacted to the prospect of higher interest rates and a potential cooling of the UK housing market.
Property firms such as Land Securities and British Land were also out of favour. |
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FTSE 100 - Risers
Fresnillo (FRES) 807.00p +1.13%
Admiral Group (ADM) 1,551.00p +1.04%
G4S (GFS) 257.00p +0.82%
United Utilities Group (UU.) 893.00p +0.73%
Petrofac Ltd. (PFC) 1,257.00p +0.72%
SSE (SSE) 1,569.00p +0.64%
Coca-Cola HBC AG (CDI) (CCH) 1,409.00p +0.64%
Royal Bank of Scotland Group (RBS) 342.20p +0.56%
BG Group (BG.) 1,266.50p +0.12%
Severn Trent (SVT) 1,974.00p +0.05%
FTSE 100 - Fallers
Persimmon (PSN) 1,211.00p -6.99%
Barratt Developments (BDEV) 346.30p -6.30%
Sports Direct International (SPD) 779.00p -4.77%
Land Securities Group (LAND) 1,028.00p -4.37%
British Land Co (BLND) 686.00p -4.32%
Kingfisher (KGF) 369.00p -3.96%
Hammerson (HMSO) 577.50p -3.43%
Ashtead Group (AHT) 887.00p -3.38%
International Consolidated Airlines Group SA (CDI) (IAG) 379.00p -3.12%
easyJet (EZJ) 1,457.00p -2.93%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 180.00p +7.72%
Wood Group (John) (WG.) 809.00p +2.41%
Ophir Energy (OPHR) 240.10p +1.78%
Cairn Energy (CNE) 204.90p +1.69%
Alent (ALNT) 345.80p +0.90%
Evraz (EVR) 97.05p +0.83%
BH Macro Ltd. USD Shares (BHMU) 18.9 +0.80%
Atkins (WS) (ATK) 1,328.00p +0.76%
African Barrick Gold (ABG) 218.40p +0.60%
IG Group Holdings (IGG) 578.00p +0.52%
FTSE 250 - Fallers
Bwin.party Digital Entertainment (BPTY) 105.60p -7.37%
Howden Joinery Group (HWDN) 307.60p -6.73%
Thomas Cook Group (TCG) 140.00p -6.48%
Taylor Wimpey (TW.) 104.00p -6.31%
PayPoint (PAY) 1,093.00p -6.26%
888 Holdings (888) 117.50p -6.00%
Supergroup (SGP) 1,000.00p -5.93%
Restaurant Group (RTN) 579.50p -5.85%
Big Yellow Group (BYG) 486.90p -5.55%
Foxtons Group (FOXT) 297.00p -4.99%
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed on Iraq, economic data - Unrest escalates in Iraq
- US consumer confidence falls
- Chinese retail sales and industrial output rise
FTSE 100: -0.95%
DAX: -0.26%
CAC 40: -0.24%
FTSE MIB: 0.01%
IBEX 35: 0.23%
Stoxx 600: -0.22%
European stocks were mixed as the turmoil in Iraq escalated and as investors weighed a batch of economic data.
US President Barack Obama said the Iraqi government may need his county's assistance as the Islamic State in Iraq and the Levant (ISIL) seized several cities and made a drive at Baghdad. The unrest has raised concerns that it may disrupt oil supplies, pushing the price of oil higher.
Brent crude futures rose $0.247 to $113.300 per barrel at 16:45 BST, according to the ICE.
"With US President Barack Obama not ruling anything out, we have to assume that the situation in Iraq is going to get worse before it gets better," according to Alpari UK analyst Craig Erlam.
"This will be disruptive to say the least, not just to the consumer who will see disposable income take yet another hit as they are forced to pay higher prices at the pump, but also to companies that rely on oil and gas. Hence why these stocks could suffer a lot more in the coming weeks and months."
US confidence falls unexpectedly
The University of Michigan's US consumer confidence index for June fell to 81.2 from 81.9 a month earlier, surprising analyst who had expected it to rise to 83.
Chinese industrial production rose 8.8% year-on-year in May, as predicted by analysts, following an 8.7% gain a month earlier.
A separate report on Chinese retail sales showed a 12.5% jump, beating forecasts for a 12.1% increase and the previous month's 11.9% rise.
In Germany, inflation rose by 0.6% year-on-year in May on a harmonised basis, in line with estimates.
The euro fell 0.17% to $1.3529.
UK builders slide on prospect of interest rate hike
UK building stocks declined on concerns over a potential cooling of the British housing market after Bank of England (BoE) Governor Mark Carney warned that interest rates could rise within six months.
Meanwhile, Chancellor George Osborne vowed to increase the BoE's power to curb mortgage lending in order to prevent Britons taking out mortgages that are too big in comparison to their income or the value of their home.
Barratt Developments, Land Securities Group and British Land were among the biggest fallers. |
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| | US Market Report | | US open: Stocks little changed after US confidence data US stocks were little changed as investors weighed a report on consumer confidence and the situation in Iraq.
The University of Michigan's consumer confidence index for June fell to 81.2 from 81.9 a month earlier, surprising analysts who had expected it to rise to 83.
Meanwhile, the Islamic State in Iraq and the Levant (ISIL) has seized several cities and is heading for Baghdad. US President Barack Obama said the Iraqi government may need the country's assistance to stop the militants. The unrest has raised concerns that it may disrupt oil supplies, pushing the price of oil higher.
"With US President Barack Obama not ruling anything out, we have to assume that the situation in Iraq is going to get worse before it gets better," said Alpari UK analyst Craig Erlam.
"This will be disruptive to say the least, not just to the consumer who will see disposable income take yet another hit as they are forced to pay higher prices at the pump, but also to companies that rely on oil and gas. Hence why these stocks could suffer a lot more in the coming weeks and months."
West Texas Intermediate crude futures increased $0.047 to $106.580 per barrel, according to the ICE.
Intel, Express
Intel advanced as the world's largest semiconductor maker raised its second-quarter revenue forecast and said annual sales will rise for the first time since 2011.
Express gained after Sycamore Partners said it plans to buy the clothing chain.
Finisar dropped as the maker of fibre-optic communications devices forecast first-quarter earnings that fell short of analysts' estimates.
OpenTable edged higher after Priceline Group agreed to buy the online restaurant reservation company for $2.6bn.
The US 10-year yield rose three basis points to 2.62%. |
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| | Broker Tips | | Broker tips: Anglo American, Petra Diamonds, Water stocks Credit Suisse has maintained a 'neutral' stance on Anglo American but has said that the potential wage settlement with employees at its platinum operations in South Africa would be a positive for the company after 20 weeks of strikes.
However, the bank explained the importance of the offer, saying that the companies' thin margins mean that they have "very limited capacity to shoulder double-digit wage increases in the current platinum environment". The level of increase will have a bearing on Amplats' ability to divest marginal assets further down the line, it said.
Forecasts for next year at Petra Diamonds now look conservative after the discovery of an "exceptional" 122.52-carat blue diamond, according to Canaccord Genuity. The broker maintained a 'buy' rating and 195p target for the diamond miner.
Canaccord said that while estimates for the value of the diamond would at this stage be speculative, it sees "meaningful upside" to its current $523m revenue estimate for the year ending June 2015.
UK water stocks Severn Trent, United Utilities and Pennon offer "low-risk returns", according to Deutsche Bank, which recommended investors to buy a basket of the three stocks despite their recent strong run.
"With the share prices of UK water stocks rising strongly this year, our view that returns could converge down to those of UK and US peers as regulatory visibility improves has now somewhat played out. However, returns still look attractive in the current low yield environment and there is scope for bids after the completion of the review." | | |
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