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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 higher after US data beats forecasts - FTSE closes up 47.51 at 6,822.76
- UK services growth suffers slowdown
- US durable goods jump 22.6%
techMARK 2,833.11 +0.35%
FTSE 100 6,822.76 +0.70%
FTSE 250 15,998.00 +0.74%
It was a strong finish to Tuesday's session, with traders keen to keep up with the gains seen amongst global equities during the bank holiday.
After coming off declines following an initial jump, the FTSE 100 ultimately ended 47.51 points higher at 6,822.76, with afternoon trading helped by stronger-than-expected data in the US.
The initial gain was largely thanks to comments made at the Jackson Hole symposium of central bankers last Friday, at which Fed Chair Janet Yellen gave what was seen by some as a somewhat hawkish speech.
Also taking centre stage last week was European Central Bank (ECB) Govenor, Mario Draghi, who indicated that he had concerns about expectations for inflation and said greater flexibility was needed in fiscal policy.
"Latest news flow from arguably two of the most influential people in the market, Draghi and Yellen, has had the net effect of confirming that major central banks remain supportive of prices through the ECB's willingness to ease and the Fed's intention to require a continuation of economic strength to tighten," Spreadex's David White said.
UK service firms endure slowest growth in a year
Back in the UK, a survey revealed that the services industry slumped to its slowest growth in a year in the last three months.
Business volumes in the three months to August rose at their weakest rate since the same month in August 2013, the latest Services Sector Survey from the Confederation of British Industry (CBI) showed.
About 43% of firms said volumes were up compared with three months ago, and 17% said they were down, giving a balance of 25%.
US data beats forecasts
Across the Pond, reports showed that both durable goods and consumer confidence rose more than had been anticipated.
US durable goods surged 22.6% in July, following a 2.7% gain in June, driven by aircraft orders. Analysts had expected an 8% increase.
"Overall, with some producers starting to push up against capacity constraints and loans to businesses rising at a rapid rate, we suspect that investment will prove to be one of the economy's bright spots in the second half of this year," Capital Economics said.
The Conference Board's index for US consumer confidence rose to 92.4 in August from a revised 90.3 in July, surprising analysts who had expected a reading of 89.
However, expectations of the economic outlook fell slightly to 90.9 from 91.9 in July.
ABF, RSA lifted by broker ratings
Associated British Foods was a top performer on Tuesday after JPMorgan Chase & Co. reiterated its 'overweight' rating on the stock.
RSA was higher after Bank of America gave the stock a 'buy' recommendation, up from its previous rating of 'neutral', prompted by a cleaner balance sheet and better management and transparency.
Packaging and cleaning supplies group Bunzl was up after reporting a lift in underlying half-year profits and increasing its dividend.
Leading the downside was Antofagasta, the Chilean copper producer, after it saw its profit before tax for the period ended 30 June fall from $981m to $850.7m due to lower copper output and prices, as well as the impact from higher taxes in Chile. Net cash costs rose by 15.9% to $1.46 per pound. Earnings per share came in at 33.6 cents (consensus: 36 cents). The company maintained its full-year guidance for production.
Other miners, including Rio Tinto, Fresnillo and Randgold Resources, were all registering some of the biggest losses seen on the top tier on Tuesday.
Oil and gas explorer Petrofac saw revenues decline to $2.5bn over the six months ended on 30 June. Operating profits on an EBITDA basis were off by 16% to $340m. Engineering, construction, operations and maintenance (ECOM) order intake stood at $7.2bn for the first half, raising the backlog 35% to $20.3bn, "giving very good revenue visibility for the rest of the year", the company said. |
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FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 358.10p +3.50%
CRH (CRH) 1,420.00p +2.97%
easyJet (EZJ) 1,354.00p +2.65%
Ashtead Group (AHT) 973.00p +2.42%
Morrison (Wm) Supermarkets (MRW) 181.80p +2.31%
G4S (GFS) 271.20p +2.19%
Associated British Foods (ABF) 2,871.00p +2.10%
Mondi (MNDI) 1,028.00p +2.09%
Rexam (REX) 499.30p +2.09%
Royal Bank of Scotland Group (RBS) 365.70p +2.07%
FTSE 100 - Fallers
Antofagasta (ANTO) 798.50p -1.18%
Reckitt Benckiser Group (RB.) 5,210.00p -1.04%
Rio Tinto (RIO) 3,357.50p -1.03%
Fresnillo (FRES) 912.50p -0.98%
Smith & Nephew (SN.) 1,050.00p -0.76%
St James's Place (STJ) 740.00p -0.67%
Pearson (PSON) 1,121.00p -0.62%
Sage Group (SGE) 397.00p -0.35%
Persimmon (PSN) 1,344.00p -0.30%
Petrofac Ltd. (PFC) 1,123.00p -0.27%
FTSE 250 - Risers
Perform Group (PER) 211.00p +8.21%
Evraz (EVR) 113.90p +4.98%
Cairn Energy (CNE) 190.90p +4.60%
Infinis Energy (INFI) 219.80p +3.44%
BTG (BTG) 652.50p +3.41%
Hays (HAS) 133.30p +3.41%
Smith (DS) (SMDS) 283.30p +3.13%
Keller Group (KLR) 918.50p +2.97%
Thomas Cook Group (TCG) 128.70p +2.80%
Bellway (BWY) 1,653.00p +2.80%
FTSE 250 - Fallers
Regus (RGU) 179.00p -8.91%
Telecity Group (TCY) 716.00p -5.97%
Centamin (DI) (CEY) 61.40p -3.69%
Fidessa Group (FDSA) 2,267.00p -3.04%
Computacenter (CCC) 604.00p -2.27%
Ferrexpo (FXPO) 135.00p -2.17%
Cable & Wireless Communications (CWC) 49.08p -1.84%
African Barrick Gold (ABG) 231.50p -1.74%
Petra Diamonds Ltd.(DI) (PDL) 179.50p -1.70%
Betfair Group (BET) 1,071.00p -1.47% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Robust US reports boost stocks - US durable goods orders surge
- US consumer confidence rises
- Market weighs dovish Draghi
- Ukraine and Russian leaders meet
FTSE 100: 0.70%
DAX: 0.82%
CAC 40: 1.18%
FTSE MIB: 1.33%
IBEX 35: 1.28%
Stoxx 600: 0.73%
European stocks rallied after better-than-expected US reports on durable goods and consumer confidence.
US durable goods surged 22.6% in July, following a 2.7% gain in June, driven by aircraft orders. Analysts had expected an 8% increase.
The index for US consumer confidence rose to 92.4 in August from a revised 90.3 in July, surprising analysts who had expected a reading of 89.
However, expectations of the economic outlook fell slightly to 90.9 from 91.9 in July.
"While the expectations index has been volatile in recent years, the present situation index has been steadily trending higher over that time, mirroring improvements in housing and labour markets," Barclays Research said.
"We expect this pattern to continue over the medium term and look for consumer confidence to remain on a broadly upward trend as a result."
Earlier in Tuesday's session, a lack of data saw investors focus on dovish remarks from European Central Bank President Mario Draghi.
At the Jackson Hole symposium of central banks on Friday Draghi spoke about the possibility of full-on quantitative easing to fight off deflation which sent stocks higher on Monday.
European banks, including BNP Paribas and Societe Generale, rallied on Tuesday as the market continued to digest Draghi's speech.
Meanwhile, Ukrainian President Petro Poroshenko and his Russian counterpart Vladimir Putin met on Tuesday at a conference in the Belarussian capital of Minsk. The meeting comes a day after Poroshenko dissolved Ukraine's parliament and called for early elections in October.
Ten Russian soldiers were captured in the Donetsk region of eastern Ukraine with documents and weapons on them, according to Ukraine's Security Service on Tuesday. A Russian Defense Ministry official said the soldiers had been patrolling the border and "most likely crossed by accident", Russia's state-run RIA Novosti news agency reported.
WPP, Voelsalpine
WPP rallied after the ad agency reported a rise in first half revenue that beat market forecasts.
Voelsalpine gained as UBS upgraded the steelmaker's shares to 'buy' from 'sell'.
Telecity retreated after announcing that Michael Tobin will leave after 10 years as chief executive.
Antofagasta dropped after the commodity producer posted first half revenue that missed analysts' expectations.
Vestas Wind Systems declined as Bank of America downgraded the wind turbine manufacturer to 'underperform' from 'neutral', saying the US government may take longer to reintroduce tax incentives for wind turbines than expected.
The euro rose 0.06% to $1.3200.
Brent crude futures climbed 0.14% to $102.80 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks gain after better-than-forecast US data US stocks jumped after reports showed durable goods and consumer confidence in the world's biggest economy rose more than forecast.
US durable goods surged 22.6% in July, following a 2.7% gain in June, driven by aircraft orders. Analysts had expected an 8% increase.
"Overall, with some producers starting to push up against capacity constraints and loans to businesses rising at a rapid rate, we suspect that investment will prove to be one of the economy's bright spots in the second half of this year," Capital Economics said.
The index for US consumer confidence rose to 92.4 in August from a revised 90.3 in July, surprising analysts who had expected a reading of 89.
However, expectations of the economic outlook fell slightly to 90.9 from 91.9 in July.
"While the expectations index has been volatile in recent years, the present situation index has been steadily trending higher over that time, mirroring improvements in housing and labour markets," Barclays Research said.
"We expect this pattern to continue over the medium term and look for consumer confidence to remain on a broadly upward trend as a result."
A separate report showed US house prises grew more than expected. The house price index climbed 0.4% in June, the same rate as May, beating the forecast for a 0.3% rise.
In corporate news, Tim Hortons advanced after Burger King Worldwide agreed to acquire the company in a C$12.5bn cash-and-share deal.
Premier climbed after predicting full-year profit that exceeded analysts' estimates. The purchasing network also agreed to buy software company Aperek.
Best Buy slumped after posting a sales decline that was lower than forecast.
The 10-year treasury yield was at 2.38%.
West Texas Intermediate crude futures increased 0.87% to $94.17 per barrel, according to the ICE. |
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| | Broker Tips | | Broker tips: Telecity, Stagecoach, Antofagasta Telecity's shares slumped on Tuesday after announcing the departure of chief executive Michael Tobin who has been with the company for more than 10 years.
Tobin will leave in October following a handover period on 31 October. It comes shortly after Eric Hageman was appointed chief financial officer to replace Brian McArthur-Muscroft who left in January.
Liberum gave the stock a 'sell' rating after the news, saying there may be some concerns about changing the chief executive and chief financial officer in quick succession.
However, the broker said the news is likely to be well received regardless.
"Mike has clearly been an impressive entrepreneur, but we believe that the board is right to question whether he has the rights skills to take the business forward as a large mid-cap business," Liberum said.
"We believe that Mike's departure will be well received as shareholders look for increased focus on return on capital and cash generation.
"We expect a positive reaction today. However, we remain concerned about the margin sustainability and cannot justify the current valuation of 4% 2015 estimated free cash flow yield, 17 times 2015 estimated price/earnings and 10 times 2015 estimated enterprise value/earnings before interest, tax, depreciation and amortisation."
Panmure Gordon is advising investors to take a trip on Stagecoach after the transport group flagged higher revenue and said it was on track despite challenges.
Stagecoach said on Tuesday that all its businesses lifted revenue in the last three months, particularly its London bus contract operation which achieved an increase of 14.4% as it secured new work.
"Although there are a number of challenges to increasing profit in the year ending 30 April 2015, overall current trading is satisfactory and we remain on course to meet our expectations for the year," it said in a trading update.
Panmure said Stagecoach remains one of its preferred stocks in the transport sector.
"We retain our 'buy' recommendation and 400p target," it said in a note.
Despite largely in-line operating profits from Chilean copper miner Antofagasta broker Investec has reiterated its 'sell' recommendation on the shares of the company.
In particular, analyst Marc Elliot highlights the fact the company has capital programmes ahead. Together with volatile commodity prices he does not expect the company to repeat the 142% pay-out ratio achieved at the end of fiscal year 2013.
Nevertheless, and as he points out, the firm is working on various projects to cut costs. Those include the creation of an owner operator team rather than using contractors. In parallel, both the Antucoya and Los Pelambres projects are being expanded in a bid to take on harder ore and offset declining grades.
Also on the negative side of things, the Chilean government is working on a tax reform - set to be passed at the end of September - which looks likely to take the total effective charge to 35%.
Even so, Investec does not intend to make significant changes to its forecasts or price target, which are now under review. | | |
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