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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 ends higher ahead of FOMC meeting - FTSE closes up 12.13 points at 6,766.77
- Attention on Iraq, FOMC
- Shire leads gains as miners weigh
techMARK 2,794.60 -0.09%
FTSE 100 6,766.77 +0.18%
FTSE 250 15,585.46 -0.77%
Blue chips recovered from a sharp dip earlier this afternoon to close in modestly positive territory, although concerns about Iraq continued to weigh, with investors also turning their attention to the latest Federal Open Market Committee (FOMC) meeting.
The FTSE 100 ended the day 12.13 points higher at 6,766.77.
David Madden, Market Analyst at IG, said: "As we get closer to the FOMC meeting, the market is becoming increasingly nervous, and the reactions to economic data correspondingly more severe. Today's weaker [US] housing data and stronger CPI gave a signal to move from equities for the day into the US dollar, prompting further weakness for equity markets.
"[...] Ahead of a big day for central banks tomorrow, the default position is prudence and hibernation, leaving the FTSE struggling around 6,760."
In Iraq, tensions continued to escalate as Sunni radicals moved south, although according to Credit Suisse, the situation "remains fluid". Last night, Barack Obama told Congress that he was deploying up to 275 military personnel to Iraq. The US president said the military personnel being sent to Iraq would provide support and security for the American embassy in Baghdad, but was "equipped for combat".
Today saw a step up in talks in a bid to establish greater stability, while in related news Foreign Secretary William Hague told Parliament the British embassy in Tehran is to re-open.
The latest FOMC meeting is expected to lead to additional tapering of asset purchases by the US central bank. Analysts predict the Fed will cut $10bn off monthly bond purchases and keep interest rates at 0.25%.
In the view of Capital Economics, "[while] the federal funds rate may still be around a year or so away, the question of how the bond market will react to the onset of tighter monetary policy is burning".
US consumer prices rose by 0.4% month-on-month in May, according to the Bureau of Labor Statistics, compared to expectations of an increase of 0.2%.
Elsewhere in the States, housing starts fell by 6.5% month-on-month in May to reach an annualised rate of 1.001m, below expectations of 1.033m.
UK house price rises in April raise spectre of lending clampdown
Back in Britain, house prices continued their upward march in April, piling pressure on Bank of England policymakers to clamp down on lending.
Prices increased 9.9% in the year to April, up from 8% in the year to March 2014, according to figures from the Office for National Statistics (ONS).
In other data released by the ONS, the consumer price index (CPI) fell sharply in May, with the rate of advance in prices slowing to a 1.5% year-on-year pace from 1.8% in the previous month, the lowest reading since May 2009.
The consensus estimate had been for a reading of 1.7%.
Shire soars on rumours of bid preparation
Pharmaceutical group Shire was making gains after Reuters reported that it has hired investment bank Citi as an advisor as it braces itself for takeover bids. The company's Irish tax base and its mid-sized market value of £22bn makes it a prime acquisition target, analysts told the news agency.
Morrison Supermarkets rose after it confirmed plans to slash 2,600 jobs as part of plans to reorganise and simplify its management structure. Having trialled the new structure on a small scale, the retail chain has decided to roll out the plan across the group. Chief Executive Dalton Philips said it was "the right time" to modernise the mangement of its stores.
Oil stock Tullow continued to rise amid the ongoing turmoil and violence spreading south in Iraq.
Insurer RSA was lifted by rumours it is looking to sell its Asian operations in an auction that could fetch up to $500m and draw a wide range of suitors.
Meanwhile, Ashtead engaged in a round of profit taking after the industrial rental group posted record profit for the year to April 30th, helping earnings beat expectations comfortably.
Kingfisher dropped after Oriel downgraded it from 'hold' to 'sell' with a target of 350p, while CRH was downgraded to neutral by Exane. |
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FTSE 100 - Risers
Shire Plc (SHP) 3,660.00p +3.51%
Morrison (Wm) Supermarkets (MRW) 192.60p +2.28%
Whitbread (WTB) 4,259.00p +2.18%
Tullow Oil (TLW) 872.00p +1.81%
Lloyds Banking Group (LLOY) 77.99p +1.73%
RSA Insurance Group (RSA) 492.00p +1.67%
Barratt Developments (BDEV) 349.00p +1.51%
G4S (GFS) 259.80p +1.37%
Sainsbury (J) (SBRY) 321.90p +1.32%
Smiths Group (SMIN) 1,285.00p +1.26%
FTSE 100 - Fallers
Ashtead Group (AHT) 831.50p -6.26%
Kingfisher (KGF) 361.80p -2.19%
Royal Mail (RMG) 478.40p -2.11%
Friends Life Group Limited (FLG) 315.30p -2.02%
Petrofac Ltd. (PFC) 1,250.00p -1.42%
Sports Direct International (SPD) 765.50p -1.42%
St James's Place (STJ) 758.00p -1.30%
Weir Group (WEIR) 2,609.00p -1.25%
Land Securities Group (LAND) 1,020.00p -0.97%
Melrose Industries (MRO) 271.30p -0.95%
FTSE 250 - Risers
Kazakhmys (KAZ) 295.10p +3.91%
Crest Nicholson Holdings (CRST) 337.00p +3.69%
Infinis Energy (INFI) 221.80p +2.21%
Rightmove (RMV) 2,169.00p +1.59%
Ferrexpo (FXPO) 126.50p +1.52%
Redrow (RDW) 255.00p +1.43%
Entertainment One Limited (ETO) 303.30p +1.37%
Daejan Holdings (DJAN) 4,717.00p +1.07%
NMC Health (NMC) 445.60p +1.04%
Investec (INVP) 526.50p +0.96%
FTSE 250 - Fallers
Xaar (XAR) 537.00p -27.68%
Supergroup (SGP) 853.50p -5.69%
Workspace Group (WKP) 571.00p -5.23%
Grainger (GRI) 204.00p -4.98%
Big Yellow Group (BYG) 460.60p -4.80%
PayPoint (PAY) 1,086.00p -4.74%
Foxtons Group (FOXT) 278.00p -4.30%
St. Modwen Properties (SMP) 338.80p -4.21%
Cranswick (CWK) 1,223.00p -4.15%
esure Group (ESUR) 261.00p -4.11% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks finish higher after slate of euro-area data - Economic confidence in Eurozone improves
- German investor sentiment falls
- European car sales gain
- UK inflation surprises to the downside
- US inflation rises past forecasts
FTSE 100: 0.18%
DAX: 0.37%
CAC 40: 0.58%
FTSE MIB: 0.09%
IBEX 35: 0.46%
Stoxx 600: 0.26%
European stocks jumped as reports showed Eurozone economic confidence rose and car sales in the euro-area gained.
European car sales edged up 4.3% in May, driven by purchases of new models from Renault and Volkswagen, according to data from the European Automobile Manufacturers' Association today.
Another report from the ZEW Institute showed Eurozone economic sentiment climbed to 58.4 in June from 55.2 a month earlier.
German investor sentiment, on the other hand, dropped to 29.8 in June from 33.1 the prior month, missing forecasts for an increase to 35, ZEW data revealed.
UK inflation falls to five-year low
UK consumer prices dropped sharply in May with the rate of advance in prices slowing to a 1.5% year-on-year pace from 1.8% in the previous month, according to the Office for National Statistics (ONS).
It marked the lowest reading since May 2009 and missed the consensus estimate for a reading of 1.7%.
US inflation increases
US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing estimates for gains of 0.2% and 1.9% respectively.
Core prices, which exclude both energy and food, also rose more quickly than forecast, rising by 0.3% month-on-month and 2% year-on-year.
Paul Dales, Senior US economist at Capital Economics said: "With core CPI inflation rising to 2% in May, from 1.8% in April, the [Federal Reserve] will have to acknowledge in tomorrow's policy statement that price pressures are building. The chances that it will hike interest rates before the middle of next year are increasing."
The central bank will take its latest policy decision tomorrow and is expected to cut back its quantitative easing programme by a further $10bn per month and keep interest rates at 0.25%.
Meanwhile, a report revealed housing starts fell by 6.5% month-on-month in May to reach an annualised rate of 1.001m. The consensus estimate had been for a reading of 1.033m.
Iraq turmoil
The US is deploying up to 275 military personal to Iraq to aid Baghdad in its battle against militant group Islamic State in Iraq and the Levant (ISIS).
The UK is also planning to re-open its embassy in Iran as reflection of "increasing confidence" in the international relations, marking an "important step forward" with the country, according to Foreign Secretary William Hague.
The news comes as ISIS has captured large swaths of territory around Baghdad.
Brent crude futures rose $0.677 to $113.720 per barrel in afternoon trading amid concerns that Iraq tensions will disrupt oil supplies.
Whitbread gains
Whitbread was a high riser after first half sales at its Premier Inn hotels and Costa Coffee chain topped analysts' estimates.
Rheinmetall rallied as the German automotive and defence-equipment supplier had its rating lifted to 'buy' from 'hold' by Berenberg Bank.
A.P. Moeller-Maersk dropped after China blocked the formation of a global alliance by the world's three biggest shipping lines.
Shire advanced after a report said it has hired Citigroup as it may receive takeover offers.
Subsea slumped after Berenberg cut the offshore oil services provider to 'hold' from 'buy'.
The euro fell 0.21% to $1.3545. |
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| | US Market Report | | US open: Stocks mixed after inflation and housing starts data US stocks were mixed as investors weighed reports on consumer price inflation and housing starts as they attempted to gauge the health of the world's biggest economy.
US consumer prices rose by 0.4% month-on-month and 2.1% year-on-year in May, surpassing estimates for gains of 0.2% and 1.9% respectively.
Energy prices advanced by 0.9% on the month and by another 3.3% over the past year, while food prices gained 0.5% on the month and 2.5% on the year.
Core prices, which exclude both energy and food, also rose more quickly than forecast, rising by 0.3% month-on-month and 2% year-on-year.
Paul Dales, Senior US economist at Capital Economics said: "With core CPI inflation rising to 2% in May, from 1.8% in April, the [Federal Reserve] will have to acknowledge in tomorrow's policy statement that price pressures are building. The chances that it will hike interest rates before the middle of next year are increasing."
The central bank will make its latest policy decision tomorrow. Analysts expect the Fed will cut back quantitative easing programme by a further $10bn per month and keep interest rates at 0.25%.
Meanwhile, a report showed housing starts fell by 6.5% month-on-month in May to reach an annualised rate of 1.001m. The consensus estimate had been for a reading of 1.033m.
Iraq turmoil
The US is deploying up to 275 military personal to Iraq to aid Baghdad in its battle against militant group Islamic State in Iraq and the Levant (ISIS).
The UK is also planning to re-open its embassy in Iran as reflection of "increasing confidence" in the international relations, marking an "important step forward" with the country, according to Foreign Secretary William Hague.
The news comes as ISIL has captured large swaths of territory around Baghdad.
West Texas Intermediate crude futures fell $0.178 to $106.710 per barrel amid fears the turmoil will disrupt oil supplies.
Whitbread, Shire
Whitbread rallied after sales at its Premier Inn hotels and Costa Coffee chain topped analysts' estimates.
Shire jumped after a Reuters report said the pharmaceutical company hired Citigroup Inc. as it may receive takeover offers.
Medtronic gained after both Morgan Stanley and Credit Suisse upgraded the stock after the $42.9bn takeover of rival Covidien announced yesterday.
The US 10-year yield rose four basis points to 2.65%. |
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| | Broker Tips | | Broker tips: Housebuilders, Real estate stocks, Burberry... British housebuilders are unlikely to take a major hit from a rise in interest rates, US broker JP Morgan Cazenove said on Tuesday.
"Given we expect a rate hike to be associated with improving economic conditions, we expect limited impact on market conditions".
Large UK property stocks, which are already trading at demanding valuations, could be set for a temporary de-rating on the back of "more challenging macro conditions", according to analysts at Deutsche Bank.
The bank pointed out that property majors in the UK and across Continental Europe are trading at valuations "that are nearly as demanding as those at the peak of the credit boom". Among the UK-listed names, it sees the greatest downside to its price targets in Segro and Capital & Counties.
Credit Suisse has maintained its 'neutral' stance on high-end fashion group Burberry, saying that recent currency movements are impacting it more than its luxury peers.
"Since we do not see Burberry's superior organic sales growth translating into superior earnings growth, we see a 'neutral' rating as appropriate."
Investec has upgraded its rating for Costa and Premier Inn owner Whitbread from 'sell' to 'hold' after a strong first-quarter update from the leisure group that beat forecasts.
"A premium rating and key risks around incremental hotel returns dilution preclude a more positive stance, although the strength of trading across its UK brands leads us to remove Whitbread from our 'sell' list."
Exchange operator London Stock Exchange (LSE) remains Morgan Stanley's preferred play across the European diversified financial sector.
With an "undemanding" valuation compared with others in the industry, the bank has repeated its 'overweight' recommendation.
JP Morgan Cazenove has downgraded Mitchells & Butlers (M&B) to 'neutral' from 'overweight' following the British pub group's £266m acquisition of 173 pubs from rival Orchid.
JP Morgan said it believed the acquisition of the Orchid pubs made it unlikely that M&B would resume paying a dividend in either the 2013/14 or 2014/15 financial years. | | |
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