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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: Miners and Vodafone lead gains The Footsie managed to close in the blue on Wednesday as investors reacted to better than expected economic data Stateside and continuing speculation regarding the possibility of further easing measures from the ECB in the near future. Acting as a backdrop, overnight the US and its allies carried out a first wave of airstrikes against IS targets in Syria. Although there is a broad coalition in place those attacks are being carried out, after all, in an independent state whose long-term aims may not be the same as those of the coalition. Hence, there is plenty of potential for "unintended consequences".
The Footsie ended the day higher by 30.19 points at 6,706.27.
A weaker than expected reading on the business climate in Germany on Wednesday morning had weighed on sentiment. The IFO Institute's business climate gauge slipped to a reading of 104.7 in September from 106.3 in the month before (consensus: 105.8).
Also in the background, Goldman Sachs economists revised their forecast for China's economic growth this year lower, to a projection of 7.1% versus 7.6% before.
Miners, Vodafone strong
Fresnillo bounced back despite recent losses in the price of the yellow metal as UBS added the company's shares to a list of most-preferred stocks. Rio Tinto advanced on the back of an upgrade from Morgan Stanley to 'overweight' from 'equalweight'.
Vodafone shares ran up on the back of takeover speculation.
Royal Bank of Scotland gained following the successful float of its US arm, Citizens Financial Group. RBS sold a quarter of the shares in Citizens at a price per share of $21.50 – bowing to pressure from investors to lower its price - and a further 3.75% in an over-allotment option, raising up to $3.46bn.
In other company news, water group United Utilities remained tight-lipped on negotiations with regulator Ofwat over its future price structure, but said first-half profits were at a similar level to last year's. As in the first quarter, revenue increased due to its allowed regulated price rise, but was offset by the impact of a customer discount, an increase in depreciation and other cost pressures.
Tiling retailer Topps Tiles forecast higher sales and profits after what it described as an excellent year's trading. Topps said revenue in the year to 26 September should be about £195m against £177.8m a year ago. Like-for-like revenues are expected to increase about 8% on the prior year, when they fell 0.5%.
WPP, one of the world's largest advertising groups, announced it intends to invest in Polestar, a start-up Chinese e-commerce service company. WPP will take a minority stake in Polestar, which will be led by its principal investors and which has also secured partnerships with Chinese and international brands.
Market Movers
techMARK 2,813.73 +0.32%
FTSE 100 6,706.27 +0.45%
FTSE 250 15,537.61 +0.03% |
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| | FTSE 100 - Risers
BHP Billiton (BLT) 1,797.50p +3.22%
Vodafone Group (VOD) 204.25p +2.82%
Rio Tinto (RIO) 3,182.50p +2.40%
Anglo American (AAL) 1,461.00p +2.28%
Kingfisher (KGF) 318.50p +2.28%
Fresnillo (FRES) 775.50p +2.17%
Marks & Spencer Group (MKS) 428.20p +1.76%
Shire Plc (SHP) 5,185.00p +1.67%
Antofagasta (ANTO) 741.00p +1.65%
Wolseley (WOS) 3,320.00p +1.53%
FTSE 100 - Fallers
Royal Mail (RMG) 414.40p -2.29%
Centrica (CNA) 308.10p -2.00%
InterContinental Hotels Group (IHG) 2,374.00p -1.33%
Aviva (AV.) 522.50p -1.32%
Dixons Carphone (DC.) 364.00p -1.27%
Associated British Foods (ABF) 2,587.00p -1.22%
G4S (GFS) 250.00p -1.22%
Sainsbury (J) (SBRY) 260.60p -1.21%
Johnson Matthey (JMAT) 3,020.00p -0.82%
Intu Properties (INTU) 332.20p -0.78%
FTSE 250 - Risers
African Barrick Gold (ABG) 215.50p +3.76%
Evraz (EVR) 127.80p +3.57%
Vedanta Resources (VED) 1,007.00p +3.33%
Polymetal International (POLY) 497.60p +2.96%
Kazakhmys (KAZ) 272.70p +2.83%
Galliford Try (GFRD) 1,250.00p +2.46%
Rank Group (RNK) 165.00p +2.17%
Fidessa Group (FDSA) 2,308.00p +2.03%
Pennon Group (PNN) 784.50p +1.95%
International Public Partnerships Ltd. (INPP) 136.80p +1.94%
FTSE 250 - Fallers
Alent (ALNT) 339.00p -4.51%
Premier Farnell (PFL) 182.80p -3.79%
Mitchells & Butlers (MAB) 405.60p -3.20%
Oxford Instruments (OXIG) 1,025.00p -3.03%
Pace (PIC) 292.20p -2.92%
Rightmove (RMV) 2,258.00p -2.88%
RPS Group (RPS) 266.20p -2.85%
Countrywide (CWD) 476.00p -2.82%
Kier Group (KIE) 1,655.00p -2.70% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks gain on ECB stimulus prospects, US home sales
Stocks in the euro-area rose amid speculation of European Central Bank (ECB) stimulus and a report that showed better-than-expected US home sales.
US new home sales surged 18% in August to 504,000 units after a 1.9% increase in July, surpassing analysts' forecasts for a 4.4% gain.
In the Eurozone, ECB President Mario Draghi vowed to keep policy loose to boost inflation during an interview with French radio's Europe 1.
"Monetary policy will remain accommodative for a long time and I can tell you that the (ECB) Governing Council is unanimous in committing itself to using the tools at its disposal to bring inflation back to just under two percent," he said.
The news came as a report revealed German business confidence dropped for the fifth consecutive month in September amid geopolitical tensions and growth worries for the Eurozone and China.
The business climate indicator for the Eurozone's largest economy fell from 106.3 points to 104.7, marking its lowest level since April 2013 and taking it below the consensus estimate of 105.7, according to the survey of about7,000 German companies published by the IFO Institute on Wednesday.
Merck, Rio Tinto
Merck gained after Commerzbank raised its rating on the pharmaceutical company to 'buy' from 'hold'.
Rio Tinto Group advanced as Morgan Stanley recommended buying the shares.
Offshore rig company Seadrill dropped as its Seadrill Partners business said it plans to sell eight million units for general company purposes.
TNT Express declined after the parcel company lowered its 2015 profit forecast.
Adecco slumped after the provider of temporary workers said Germany and France experienced weaker growth in September.
The euro dropped 0.46% to $1.2788.
Brent crude futures fell 0.78% to $96.10 per barrel, according to the ICE. |
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| | US Market Report | | US open: Markets unchanged as investors await data on the housing market Markets were largely unchanged on Wednesday, as the S&P 500 sought to avoid a first four-session declining streak since December.
Monday's poor figures on home sales showed a potential weakness in the market during August, with investors remaining cautious ahead of Wednesday's data on the housing market. New home sales are expected to rebound to a 430,000 annualised pace after two months of decline, according to economists' estimates in a Bloomberg survey.
For the second consecutive day there were disappointing figures out from Germany, with the country's IFO business climate survey falling to 104.7, its lowest level since April 2013.
It was the fifth consecutive time the parameter has fallen and prompted IFO analysts to say that the "German economy is no longer running smoothly", at a time when the European Central Bank is under pressure to implement measures to generate growth of inflation and output.
US Treasury prices fell as investors awaited a five-year note auction, with the yield on the benchmark US 10-year Treasury note rose 0.01%, while the 30-year Treasury bond yield moved up to 3.251% and the two-year note yield remained stable at 0.578%.
Accenture shares fell in premarket trading as the consulting group issued cautious forecasts for its next fiscal year, while Morgan Stanley dropped back slightly after J.P. Morgan downgraded its rating on the financial firm from overweight to neutral.
KB Home fell markedly before the bell as the company reported third quarter earnings and revenue that fell short of forecast, while Merrimack Pharmaceuticals surged after the firm said it agreed a deal to develop and market its pancreatic cancer drug outside the US.
Having posted better-than-expected quarterly earnings on Tuesday, Bed, Bath & Beyond share surged in premarket trade, while Lipocine registered a record 21% leap ahead of the company's conference call to discuss the latest results and developments of its late-stage study of an oral Androgen replacement. |
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| | Broker tips: | | Builders merchant Wolseley and plant hire group Ashtead are set to benefit from a bounceback in the US construction market, according to broker Brewin Dolphin. The broker said that while the non-housing construction recovery had taken longer than expected to occur, indications were now looking more positive with US construction spending up 1.8% month-on-month in July and private construction hitting its highest since 2008. Ashtead, which owns A-Plant, believes it is now clearly seeing signs of early recovery with its end markets up 8% year-on-year and management predicts four or five years of steady growth ahead, Brewin Dolphin said. Wolseley, which announces annual results on 30 September, continues to generate a lot of cash and management is expected to expand the business internally by opening branches and gaining market share rather than making significant acquisitions. "With gross margins remaining steady, and the careful control of costs a key part of the strategy, Wolseley should be geared into any recovery in worldwide building conditions," Brewin Dolphin said. The magnitude and speed of decline of margins at Tate&Lyle’s Sucralose division seems to suggest commodity pricing is at fault, Credit Suisse wrote in a report on Wednesday morning. “Margins have fallen from 40% to single figures in 3 years with no prospect of a recovery, we believe,” the broker points out. It now represents barely 5% of group profits and its diminishing significance undermines undermines the value-added story. A generous view might be to blame the supply chain disruption on the weather and therefore one-off in nature - and thus assume the £40m impact reverses next year. But deeper questions have to be asked about the (new) planning and information systems, not to mention management controls. Accepting that this year is somewhat one-off in nature at 600p the group would be trading on 13x our new-year (2015/16) earnings, with no reason to see that any higher. There is, however, no threat to the dividend, so a 4.5% yield becomes the prop. But growth continues to look a long way off. Credit Suisse has cut its target to 600p from 630p while reiterating its underperform. Iron ore miner Rio Tinto’s chief executive officer is reintroducing the principles which held before the “super-cycle” at the miner, including a dividend pay-out ratio which averaged nearly 50%. That saw the shares trade at a 3% dividend yield or at 0.80 times relative to the FTSE All Share. As well, the company will again adjust its investments and pay-out ratio to the company’s growth potential and the commodity price environment. On that basis, broker Morgan Stanley sees dividend growth of 34-41% to $2.57-2.70 per share by 2016 (on base case and spot price scenario). That means potential exists for the dividend yield to fall from 5.0-5.5% in 2016 to 3.5-4.0%. “At its CMD in December and its full-year results in Feb 2015, we believe RT can convince the market it has the resources and intentions to deliver.” Due to the above the broker raised its recommendation on the shares to ‘overweight’ from ‘equalweight’ while hiking its price target to 4,000p from 3,540p. | | |
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