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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 recovers to end modestly higher - FTSE closes up 7.9 at 6,830.66
- ECB chatter, Thursday's data in focus
- German consumer confidence declines
techMARK 2,845.03 +0.42%
FTSE 100 6,830.66 +0.12%
FTSE 250 16,024.64 +0.17%
The FTSE closed just marginally above its opening level on Wednesday as investors responded to a drop in German consumer confidence, almost flat trading in the US and expectations for the next day's session, which is due to be significantly move data-heavy.
Coming off a sharp dip seen late afternoon, the FTSE ultimately closed 7.9 points higher at 6,830.66.
Chatter about the European Central Bank (ECB) and the quantitative easing (QE) was also moving markets following last week's Jackson Hole symposium.
"The Germans poured some cold water over ECB speculation early on when finance minister Schaeuble commented that Draghi's Jackson Hole speech was 'over interpreted'," CMC market analyst Jasper Lawler said. "The ECB then announced BlackRock had been appointed as a consultant for an asset-backed securities purchase programme, but not long afterwards sources noted that ECB action at the next meeting was unlikely without a slump in inflation.
"Draghi's hand may eventually be forced into an ABS purchase programme, but it still appears the ECB will wait as long as possible in the hopes that it won't be necessary."
That came as German consumer confidence declined for the first time in more than a year, with expectations dropping to 8.6 for September, against expectations for 9.0.
In other news, a measure of UK inflation dropped to its lowest level in a year and a half after the Debt Management Office sold £900m-worth of index-linked gilts due in 2040. The index dropped to 3.265 percentage points.
Investors are also likely to be looking ahead to Thursday's session, which will see the release of US economic growth data for the second quarter amid speculation over the first interest rate hike from the Federal Reserve.
US gross domestic product is forecast to rise an annualised 3.9% in the second quarter after a 4% increase the previous three months. Policymakers are assessing the health of the world's biggest economy to determine the best time to raise interest rates.
Also high on Thursday's agenda will also be the release of German unemployment figures and German inflation amid the suggestion that the European Central Bank (ECB) will introduce full-on quantitative easing to address price instability.
Any indication of weakness in Europe's biggest economy is likely to fuel speculation the ECB will take more action to boost the recovery.
Kantar data sends supermarket shares to opposite ends of spectrum
Sainsbury led the downside after Kantar Worldpanel revealed the supermarket had endured a sales decline of 2.2% and a slight fall in market share from 16.5% to 16.4% year-on-year.
Tesco was also very much in the red after the group, which is Britain's largest supermarket, saw its market share fall 4% year-on-year, from 30.2% to 28.8% in the 12 weeks ended 17 August.
The data also indicated that sales at Morrisons rose 2.4% in the period - the first signs of growth since it initiated a major price-cutting strategy, prompting the group's share price to rise.
United Utilities fell after both RBC Capital Markets and Bank of America downgraded the stock.
Petrofac, the oil and gas explorer was recovering one day after it said revenues had declined to $2.5bn over the six months ended on 30 June. Operating profits on an EBITDA basis were off by 16% to $340m. |
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FTSE 100 - Risers
Petrofac Ltd. (PFC) 1,149.00p +2.32%
Fresnillo (FRES) 928.50p +1.75%
International Consolidated Airlines Group SA (CDI) (IAG) 363.60p +1.54%
Morrison (Wm) Supermarkets (MRW) 184.40p +1.43%
Associated British Foods (ABF) 2,908.00p +1.29%
London Stock Exchange Group (LSE) 2,061.00p +1.23%
Antofagasta (ANTO) 808.00p +1.19%
Tullow Oil (TLW) 721.00p +1.19%
easyJet (EZJ) 1,370.00p +1.18%
Mondi (MNDI) 1,040.00p +1.17%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 304.20p -2.59%
Friends Life Group Limited (FLG) 304.60p -1.65%
CRH (CRH) 1,398.00p -1.55%
St James's Place (STJ) 730.00p -1.35%
United Utilities Group (UU.) 896.50p -1.27%
Kingfisher (KGF) 305.00p -1.23%
Tesco (TSCO) 249.30p -1.11%
Aggreko (AGK) 1,711.00p -1.10%
Capita (CPI) 1,214.00p -1.06%
Land Securities Group (LAND) 1,084.00p -0.82%
FTSE 250 - Risers
Lonmin (LMI) 234.10p +5.59%
AL Noor Hospitals Group (ANH) 1,168.00p +5.13%
Ocado Group (OCDO) 403.60p +4.24%
International Personal Finance (IPF) 546.50p +3.50%
RPS Group (RPS) 290.00p +3.46%
Centamin (DI) (CEY) 63.50p +3.42%
Polymetal International (POLY) 540.50p +3.35%
Just Eat (JE.) 260.00p +3.17%
Man Group (EMG) 121.50p +3.14%
Telecity Group (TCY) 737.00p +2.93%
FTSE 250 - Fallers
Foxtons Group (FOXT) 264.00p -10.30%
Countrywide (CWD) 518.50p -4.34%
Hays (HAS) 129.40p -2.93%
Exova Group (EXO) 213.30p -2.11%
Rotork (ROR) 2,745.00p -1.93%
Dunelm Group (DNLM) 873.00p -1.91%
Balfour Beatty (BBY) 242.80p -1.70%
Infinis Energy (INFI) 216.10p -1.68%
Taylor Wimpey (TW.) 115.50p -1.62%
Supergroup (SGP) 1,133.00p -1.48% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed on Ukraine-Russia talks, German data - German consumer confidence falls
- Ukraine and Russia make progress in talks
- ECB appoints advisor for ABS programme
FTSE 100: 0.12%
DAX: -0.19%
CAC 40: 0.04%
FTSE MIB: 0.57%
IBEX 35: 0.10%
Stoxx 600: 0.11%
European stocks were little changed on Wednesday as Russia and Ukraine made headway with talks and as a report showed German consumer confidence expectations fell.
Russian President Vladimir Putin said he held positive talks on Tuesday with Ukrainian President Petro Poroshenko over the conflict between the two countries over the past five months which has left 2,000 people dead.
Poroshenko on Wednesday said energy ministers from Ukraine and Russia will meet with the European Union's energy commissioner on 6 September. Ukraine could face a shortfall in natural gas this winter after Russia cut off supplies to the country over a price dispute during Moscow's annexation of Crimea in March.
Geopolitical tensions were blamed for a drop in German consumer confidence expectations for September.
GfK's forward-looking index for German sentiment dropped to 8.6 in September from a downwardly revised 8.9 a month earlier, missing forecasts for the reading to remain unchanged.
"The escalation of the situation in Iraq, Israel and Eastern Ukraine as well as the gradually accelerating spiral of sanctions in Russia have now also had a negative impact on the previously extremely optimistic economic outlook of Germans," said GfK.
"Uncertainty with regard to the continued economic developments in Germany has increased quite considerably."
Another report in Germany showed the import price index fell 1.7% in July compared to a year earlier. Analysts had predicted a 1.4% drop. The index slipped 1.2% in June.
In France, business confidence fell slightly in August below the long-term average of 100 to 96 from 97 in July.
ECB appoints BlackRock as ABS consultant
The European Central Bank (ECB) has appointed BlackRock as an advisor on developing a programme to buy asset-backed securities, Bloomberg reported on Wednesday.
The report comes after ECB Executive Board member Benoit Coeure called for a stronger backing of the ABS market by European governments.
ECB President Mario Draghi said in June that the central bank is accelerating preparations to purchase ABS as in an effort to boost the stagnant euro-rea recovery.
Meanwhile, Germany's finance minster Wolfgang Schaeuble told the Passauer Neue Presse that Draghi had been "overinterpreted" after the ECB President said that the Governing Council will use "all the available instruments" to address price instability.
Draghi was seen to suggest the possibility of full-on quantitative easing but Schaeuble said: "I know Mario Draghi very well, I think he is being overinterpreted," Schaeuble told the newspaper."
Asos, Polymetal
Asos jumped after The Guardian reported speculation that the online fashion retailer may be a takeover target for companies such as Ebay.
Polymetal International advanced after posting first-half earnings that exceeded analysts' expectations.
Marine Harvest slumped after unexpectedly reporting a second-quarter net loss as an asset-value reduction and a €20m fine from the European Commission related to its acquisition of Morpol, hurt earnings.
Ryanair rallied after the budget airline said it will start a service for business travellers.
Telecom Italia SpA gained after Oi SA said it is reviewing options for buying a stake in Tim Participacoes SA.
United Utilities Group retreated after Bank of America Corp. and RBC Capital Markets LLC downgraded the shares.
The euro rose 0.24% to $1.3194.
Brent crude futures climbed 0.02% to $102.51 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks open in the red as investors take a breather US stocks opened on Wednesday in negative territory as investors took a breather after indices hit record levels.
The Dow Jones Industrial Average fell about nine points to 17,096 in early trading on what was expected to be a lacklustre day in terms of news-flow.
Of the few items of economic data due out, analysts said EIA crude oil stock figures were probably the most notable as they could impact crude prices. MBA mortgage applications were also on the agenda.
Craig Erlam at Alpari UK said: "We've seen plenty of volatility in oil prices recently, with geopolitical events putting upward pressure on prices and falling global demand driving them in the other direction.
"The latter is winning the battle at this stage, despite the occasional spikes, and if we see further evidence today that demand is on the decline, we could see that continue."
In the event, the Energy Information Administration (EIA), the Department of Energy's statistical arm, reported that US commercial crude oil inventories fell by 2.1m barrels from the previous week.
Aircraft from the United Arab Emirates and Egypt attacked militia forces in Libya in the past week, the Pentagon's spokesman said, opposing the intervention.
"We discourage other nations from taking part in Libya's issues through violence," spokesman Rear Admiral John Kirby told reporters yesterday. "We want the issues solved in Libya to be done peacefully and through good governance and politics."
Iconic jewellery store chain Tiffany & Co unveiled a 16% rise in second-quarter profit led by stronger demand from the Americas and Asia and raised its profit forecast, while Smith & Wesson reported lower earnings.
Shares in Facebook were downgraded to 'neutral' from 'buy' at broker Janney Montgomery.
The value of equities globally has soared from $25trn in March 2009 to $66trn as of yesterday's close. Stocks were valued at $63trn at the 2007 peak, according to data compiled by Bloomberg.
MannKind Corp gained 4.8% after broker Jefferies recommended buying the stock.
Industrial conglomerate United Technologies reaffirmed its forecast for earnings per share this year of between $6.75 and $6.85. The company also raised the size of its share repurchase programme to $1.35bn from $1.25bn.
Front month West Texas crude futures are edging higher by 0.22% to $94.07 per barrel on the NYMEX.
US 10-year Treasury yields are now slipping by two basis points to 2.37%.
S&P 500 - Risers
Best Buy Co. Inc. (BBY) $30.73 +3.12%
Goodyear Tire & Rubber Co. (GT) $25.58 +1.81%
Staples Inc. (SPLS) $11.25 +1.75%
Pinnacle West Capital Corp. (PNW) $56.51 +1.72%
Waste Management Inc. (WM) $47.24 +1.44%
Frontier Communications Co. (FTR) $6.78 +1.42%
Whole Foods Market Inc. (WFM) $39.00 +1.31%
Seagate Technology Plc (STX) $61.41 +1.24%
Peabody Energy Corp. (BTU) $15.98 +1.20%
Sempra Energy (SRE) $103.68 +1.18%
S&P 500 - Fallers
Analog Devices Inc. (ADI) $50.53 -3.22%
Garmin Ltd. (GRMN) $55.80 -2.89%
Halliburton Co. (HAL) $68.29 -2.18%
Pioneer Natural Resources Co. (PXD) $207.07 -2.03%
United States Steel Corp. (X) $38.74 -1.90%
Tesoro Corp. (TSO) $63.61 -1.78%
Facebook Inc. (FB) $74.79 -1.54%
First Solar Inc. (FSLR) $69.97 -1.48%
Under Armour Inc. Class A (UA) $69.87 -1.34%
Macy's Inc. (M) $61.77 -1.31%
Dow Jones I.A - Risers
Unitedhealth Group Inc. (UNH) $85.78 +0.78%
Pfizer Inc. (PFE) $29.37 +0.55%
AT&T Inc. (T) $34.64 +0.40%
Verizon Communications Inc. (VZ) $49.44 +0.39%
Travelers Company Inc. (TRV) $94.54 +0.36%
Chevron Corp. (CVX) $128.62 +0.29%
Caterpillar Inc. (CAT) $108.27 +0.19%
General Electric Co. (GE) $26.04 +0.12%
Wal-Mart Stores Inc. (WMT) $75.60 +0.11%
American Express Co. (AXP) $89.24 +0.10%
Dow Jones I.A - Fallers
Visa Inc. (V) $215.77 -0.44%
Cisco Systems Inc. (CSCO) $24.71 -0.40%
International Business Machines Corp. (IBM) $192.31 -0.35%
Intel Corp. (INTC) $34.68 -0.34%
McDonald's Corp. (MCD) $93.82 -0.31%
Microsoft Corp. (MSFT) $44.87 -0.30%
3M Co. (MMM) $144.21 -0.27%
United Technologies Corp. (UTX) $109.45 -0.21%
Coca-Cola Co. (KO) $41.51 -0.21%
E.I. du Pont de Nemours and Co. (DD) $66.04 -0.18%
Nasdaq 100 - Risers
Staples Inc. (SPLS) $11.25 +1.75%
Vimpelcom Ltd Ads (VIP) $8.85 +1.55%
Whole Foods Market Inc. (WFM) $39.00 +1.31%
Seagate Technology Plc (STX) $61.41 +1.24%
Sirius XM Holdings Inc (SIRI) $3.59 +0.84%
Vodafone Group Plc ADS (VOD) $34.34 +0.82%
Ross Stores Inc. (ROST) $74.95 +0.81%
Gilead Sciences Inc. (GILD) $107.12 +0.80%
Applied Materials Inc. (AMAT) $22.39 +0.72%
Yahoo! Inc. (YHOO) $38.06 +0.71%
Nasdaq 100 - Fallers
Analog Devices Inc. (ADI) $50.53 -3.22%
Garmin Ltd. (GRMN) $55.80 -2.89%
Facebook Inc. (FB) $74.79 -1.54%
TripAdvisor Inc. (TRIP) $103.26 -1.20%
Linear Technology Corp. (LLTC) $44.51 -1.19%
Nvidia Corp. (NVDA) $19.23 -1.16%
Biogen Idec Inc. (BIIB) $339.65 -0.97%
Nxp Semiconductors Nv (NXPI) $64.14 -0.93%
Tractor Supply Company (TSCO) $66.25 -0.79%
Intuitive Surgical Inc. (ISRG) $475.21 -0.72% |
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| | Broker Tips | | Broker tips: Foxtons, 888, Chemring Foxtons' first-half results were "impressive", according to Canaccord Genuity.
The real estate company reported a 16% increase in turnover to £372.8m with property sales commissions up 32% to £37.8m.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 29% to reach £24.9m as EBITDA margins climbed by 330 basis points to 34.3%.
Canaccord gave the company a 'buy' rating, saying the EBITDA result was 2% above forecast.
"We value Foxtons with reference to its track record of generating high returns on invested capital, its ability to grow organically and its intention to return its free cash to shareholders.
"Our 382p May 2015 target is based on a full-year 2015 price-to-earnings of 21x and a price to earnings growth of 1.0x. With 30% potential upside to our 382p price target and scope for a 4% dividend yield, we repeat our investment recommendation: Buy."
However, Canaccord noted the firm's warning about the second-half being affected by the spectre of higher interest rates and a clampdown on irresponsible mortgage lending.
Not only were interim results from 888 lower than its expectations, but broker Panmure Gordon says the online gaming group holds notable downside risks on several fronts.
A principal risk is from the UK government's planned levying of a point of consumption (POC) tax in December that will hit companies such as 888 that are registered offshore and previously could escape UK gambling taxes.
Furthermore, the entry of rival Pokerstars into the online casino market and a slow start to US online gambling trading are predicted to weigh on earnings.
Results for the first six months of the year showed total revenue increased 13% to $225m driven by unregulated markets, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increasing by 27% to $49m.
However, analyst Karl Burns pointed out that this excludes losses from the US joint venture and foreign exchange movements, which combined to reduce profit before tax (PBT) by 4% year-on-year to $34m, below expectations.
Burns expects revenue growth to slow into the second half and 2015 and is likely to cut full year 2014 PBT forecasts due to these factors.
Previously, the broker had forecast 2014 EBITDA forecast of $83.9m, falling to 2015 expected EBITDA of $63.7m, which compares to consensus estimates of $82m, falling to $71m.
"We remain more cautious of the group's top-line growth in a post UK POC environment, with consensus currently forecasting circa 5% top-line growth, despite suggestions from the company that it will cut marketing spend."
Burns retains his 'sell' recommendation and 96p price target, implying 26% downside to the shares opening price on Wednesday.
Panmure Gordon analyst Sanjay Jha issued a bullish note on Chemring, as the US officially ended its "humanitarian no-boots-on the-ground airstrikes" stance and Nato deployed forces in Eastern Europe.
The US is now planning military action in Syria and northern Iraq, possibly with the help of its allies, and with possible extensions to Libya, where Egypt and the UAE have reportedly launched airstrikes against Islamist-allied militias battling for control of Tripoli.
On Tuesday, Nato's secretary general Anders Fogh Rasmussen, said that forces will be deployed to new bases in eastern Europe for the first time to counter any threat from Russia.
"Europe's defence spending, which has been left behind in the global arms race, looks set to bounce," says Jha. "Poland, for example, is moving forward its purchase of 30 attack helicopters originally planned for 2016."
He argues that airstrikes alone will not resolve the issues and says "it is inevitable" that ground forces will be deployed, if only to help train local allies.
As a supplier of short cycle war-related products such as countermeasures, pyrotechnics and devices to help counter improvised explosive devices, Chemring "remains the most geared UK play to conflicts".
Growth is obviously dependent on the scope and length of the campaigns.
Until recently, consensus estimates have so far predicted earnings per share will bottom out in full year 2014 and grow by 5% and 10% in 2015 and 2016, respectively, largely reflecting operational efficiencies.
However, Jha believes that top line growth will be stronger than market expectations as conflicts spread, resulting in earnings per share growth of 30% and 50% in in 2015 and 2016, respectively, and he slaps a 'buy' on the shares. | | |
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