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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: Stocks end week on strong note after US jobs report - Markets upbeat after US jobs data
- Asset managers lead gains
- Consumer staples and defensives unwanted
techMARK 2,851.59 +0.95%
FTSE 100 6,858.21 +0.66%
FTSE 250 16,232.90 +1.48%
Equities ended the session cleary higher, bolstered by a more or less in-line US non-farm payrolls report.
Nevertheless, the above data did mark the fourth consecutive month since November 1999-January 2000 during which job creation Stateside was at least 200,000.
The Footsie thus finished the week on a strong note but was only slightly up over the last five days, edging higher by just 13.7 points, although on Friday it did manage to advance by 44.12 points to reach the closing mark of 6,858.21.
Reacting to the above report Barclays Research explained to clients that: "while the report is likely to keep the tapering process on track, it is unlikely to alter the Fed's timeline for potential policy rate hikes significantly. We expect the Fed to taper its monthly purchase pace by another $10bn at its June meeting and conclude purchases in October. Our forecast also calls for the first rate increase in mid-2015."
The US bond market seemed to be in agreement with those forecasts, with the yield on US 10-year Treasuries steady at 2.58%.
However, while rate expectations may be quiescent across on the other side of the pond the Bank of England (BoE) on Friday revealed the proportion of Britons expecting an interest rate rise in the coming year is increasing.
A quarterly survey published by the central bank showed 42% of Britons in May predict interest rates will be raised from 0.5% in the next 12 months, compared to 40% in February and 37% in November.
In parallel, and regarding the state of the housing market – at the moment the main concern of policymakers at the Bank - Paul Fisher, deputy head of the BoE's Prudential Regulation Authority, explained to reporters that authorities will focus on whether household are overindebted and whether banks are over-stretching themselves too much, or not.
Asset managers lead gains
Gains on the FTSE 100 were led by asset managers, such as St:James´s Place, Aberdeen Asset Management and Schroders, which benefitted from the improved sentiment towards the outlook for capital markets as a result of today´s US jobs report. On the other side of the ledger, the biggest losses were seen in consumer staples, with falls in Unilever, Diageo and Reckitt Benckiser.
Medical devices maker Smith & Nephew retreated as investors paused for breath after the stock's strong run over the last few weeks amid speculation about a potential offer from three rumoured bidders: Johnson & Johnson, Stryker and Medtronic. The stock, down 1% today, is still 18% higher than a month ago.
British Gas owner Centrica advanced on reports in the Daily Mail that it has attracted interest from Qatari investors.
Temporary power and temperature control group Aggreko was making gains after Jefferies maintained a 'buy' recommendation, saying that it sees "plenty of exciting opportunities" to grow the business after an analyst visit this week. "Faced with a less buoyant power projects market, Aggreko is getting on the front foot and creating completely new markets for itself," the broker said.Communication services group KCOM gained after saying that after a recent re-financing and with underlying cash flow strong, it is looking for investment opportunities to strengthen its position in target markets.
International healthcare services group Synergy Health impressed after it announced a multi-year contract with medical device manufacturer Sterilmed. Canaccord Genuity upgraded the stock from 'sell' to 'hold' today and hiked its target. |
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| | FTSE 100 - Risers
St James's Place (STJ) 827.00p +4.03%
International Consolidated Airlines Group SA (CDI) (IAG) 418.90p +3.77%
Aberdeen Asset Management (ADN) 462.00p +3.59%
Persimmon (PSN) 1,296.00p +2.69%
Schroders (SDR) 2,674.00p +2.45%
RSA Insurance Group (RSA) 491.50p +2.44%
Hargreaves Lansdown (HL.) 1,299.00p +2.44%
Mondi (MNDI) 1,123.00p +2.37%
Barratt Developments (BDEV) 366.60p +2.17%
Whitbread (WTB) 4,350.00p +2.14%
FTSE 100 - Fallers
Fresnillo (FRES) 775.50p -2.08%
Smith & Nephew (SN.) 1,066.00p -2.02%
Unilever (ULVR) 2,632.00p -1.64%
Diageo (DGE) 1,875.00p -1.57%
Imperial Tobacco Group (IMT) 2,607.00p -1.29%
Randgold Resources Ltd. (RRS) 4,356.00p -1.16%
Burberry Group (BRBY) 1,479.00p -1.07%
Reckitt Benckiser Group (RB.) 5,070.00p -0.88%
Antofagasta (ANTO) 772.50p -0.71%
SABMiller (SAB) 3,235.00p -0.68%
FTSE 250 - Risers
Synergy Health (SYR) 1,396.00p +6.56%
Berkeley Group Holdings (The) (BKG) 2,376.00p +4.90%
Bellway (BWY) 1,500.00p +4.46%
Polymetal International (POLY) 548.50p +4.18%
Aveva Group (AVV) 2,289.00p +4.05%
Supergroup (SGP) 1,142.00p +4.01%
Henderson Group (HGG) 254.50p +3.92%
Enterprise Inns (ETI) 141.10p +3.83%
Redrow (RDW) 268.50p +3.63%
International Personal Finance (IPF) 631.50p +3.61%
FTSE 250 - Fallers
African Barrick Gold (ABG) 215.80p -1.69%
Lonmin (LMI) 251.60p -1.29%
Rathbone Brothers (RAT) 2,150.00p -0.74%
Diploma (DPLM) 644.00p -0.69%
Kazakhmys (KAZ) 278.30p -0.61%
esure Group (ESUR) 258.50p -0.58%
Croda International (CRDA) 2,518.00p -0.55%
Wood Group (John) (WG.) 793.50p -0.44%
Ophir Energy (OPHR) 250.00p -0.44%
Genus (GNS) 1,040.00p -0.38% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks close higher after US non-farm payrolls - US non-farm payrolls rise more than forecast
- German trade surplus widens
- Bundesbank raises GDP forecast for Germany
- Nowotny says ECB policy decision unanimous
FTSE 100: 0.66%
DAX: 0.40%
CAC 40: 0.71%
FTSE MIB: 1.54%
IBEX 35: 1.73%
Stoxx 600: 0.67%
European stocks advanced after monthly US job data topped analysts' expectations.
American employers added 217,000 new jobs last month, compared to a revised 282,000 a month earlier, according to the Labor Department's non-farm payrolls report, surprising analysts who had forecast 215,000.
The unemployment rate remained unchanged at 6.3%, slightly lower than the 6.4% predicted by the market. It followed a 0.4 percentage-point decline in April.
The Federal Reserve is watching the labour market closely to determine whether to continue tapering bond purchases and when to raise interest rates.
"The [Federal Open Market Committee] has mentioned numerous times in its statement that it will consider a wide range of labour market statistics to ascertain its health," Barclays Research said.
"Therefore, while the report is likely to keep the tapering process on track, it is unlikely to alter the Fed's timeline for potential policy rate hikes significantly.
"We expect the Fed to taper its monthly purchase pace by another $10bn at its June meeting and conclude purchases in October. Our forecast also calls for the first rate increase in mid-2015."
German data
Germany's trade balance in April rose to €17.4bn from €16.6bn a month earlier, surprising analysts who had expected it to narrow to €15.1bn.
Exports increased 3% in April following a 1.8% drop in March, beating the market consensus of a 1.3% rise. Imports climbed 0.1% in April after a 1.1% decline the prior month, against estimates for a 0.8% gain.
A separate report out of Germany showed industrial production was up 0.2% in April after a 0.6% drop a month before. Economists had expected a 0.4% increase.
Also in Europe's biggest economy, the Bundesbank said it expects gross domestic product (GDP) to expand 1.9% this year compared to its prior estimate of 1.7%. Its forecast for 2015 and 2016 settled at 2% and 1.8%, respectively.
The Bundesbank also cut its inflation forecast from 1.3% to 1.1% for this year.
It noted expectations for inflation to rise to 1.5% next year and 1.9% in 2016.
In the UK, the Office for National Statistics estimated the deficit on trade in goods and services to have been £2.5bn in April, against £1.1bn in March.
ECB policymakers all agreed on rate cuts, says Nowotny
After the European Central Bank (ECB) cut interest rates to record lows and announced a series of measures to fight deflation risks and support the Eurozone economy, ECB Governing Council member Ewald Nowotny said that, despite discrepancies, the monetary authority's entire team fully supported the decision.
The ECB cut the deposit rate by 10 basis points to -0.10% and slashed interest rates by 10 basis points to 0.15%.
Nowotny admitted that the discussion at the heart of the ECB on the decisions intended to improve credit flows and move money markets was long and "wasn't easy", but stated that the final conclusion was "unanimous" at the end of the meeting that concluded on Thursday.
Commerzbank, Monte Paschi
Commerzbank jumped after the lender's Chief Executive Officer Martin Blessing predicted that the ECB will find no problems during an audit.
Banca Monte dei Paschi di Siena SpA slumped after the Italian bank said it will offer new shares to investors in a rights offer.
Centrica advanced after The Times reported that Qatar or France's EdF may bid for the owner of British Gas.
Bank of Ireland was higher as the yields on benchmark debt in Ireland fell to 2.442%. Banco Espirito Santo rallied as the yield on 10-year Portuguese bonds also dropped.
The euro fell 0.16% to $1.3638.
Brent crude futures dipped $0.240 to $108.530 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks rally after non-farm payrolls rise more than forecast US stocks jumped after the non-farm payrolls rose more than expected in May.
American employers' added 217,000 new jobs last month, compared to a revised 282,000 a month earlier, according to the Labor Department, surprising analysts who had forecast 215,000.
The unemployment rate remained unchanged at 6.3%, slightly lower than the 6.4% that was predicted by the market. It followed a decline of a 0.4 percentage points in April.
The report comes a day after a report showed initial jobless claims in the week ended May 31st climbed by 312,000, compared to 304,000 the previous week, beating the 310,000 estimate.
On Wednesday, ADP data revealed the US added 179,000 jobs in May after 220,000 in April, ahead of the 210,000 consensus forecast.
The Federal Reserve is monitoring the labour market closely to determine whether to continue tapering bond purchases and when to raise interest rates.
"The [Federal Open Market Committee] has mentioned numerous times in its statement that it will consider a wide range of labour market statistics to ascertain its health," Barclays Research said.
"Therefore, while the report is likely to keep the tapering process on track, it is unlikely to alter the Fed's timeline for potential policy rate hikes significantly. We expect the Fed to taper its monthly purchase pace by another $10bn at its June meeting and conclude purchases in October. Our forecast also calls for the first rate increase in mid-2015." |
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| | Broker Tips | | Broker tips: Aggreko, ASOS, Synergy Health, Housebuilders Jefferies has maintained a 'buy' recommendation for temporary power and temperature control group Aggreko, saying that it sees the company "developing future growth" after an analyst visit this week.
"There are a range of opportunities available to Aggreko with some new and different ways of working," the broker said.
Goldman Sachs is keeping faith with stock market darling ASOS despite yesterday's news that the online fashion retailer cut its full-year margin guidance and blamed a strong pound for slower third quarter growth.
Asos said its earnings before interest and tax (EBIT) margin for the current financial year would be 4.5%, down from its previous forecast of 6.5%. Goldman, which has a neutral view on the stock, said the EBIT miss was material but ASOS was still experiencing good underlying growth.
Canaccord Genuity has upgraded its rating for Synergy Health from 'sell' to 'hold', hailing the healthcare services group's new contract in the single-use device (SUD) market.
"We believe Synergy will become increasingly attractive as a business over the next 12 months, as HSS increases and headwinds from Dutch linens reduce. This should return the company to organic growth for the first time in three years. However, in our view the valuation already builds in this return to growth."
Deutsche Bank has said that announcements made in this week's Queen's Speech regarding the government's focus on housing supply spells good news for UK-listed housebuilders.
The bank said: "With investors questioning how the gap is to be bridged from current housing starts to targeted levels we see this week's update as supportive to our view that an expansion in other tenures of housing (custom build, build to rent etc) are important elements being encouraged." | | |
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