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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 little changed after turbulent day After sliding early on, the FTSE surfed some choppy waves before climbing in the final two hours of trade to end little changed, down just 2.79 points at 6,646.60.
"Stocks suffered another setback today with investors concerned over the uncertainty and possible repercussions of demonstrations in Hong Kong and FX intervention from the Reserve Bank of New Zealand," explained CMC market analyst Jasper Lawler.
"Hong Kong stocks as well as the HKD saw substantial losses after police used brutal force including tear-gas and pepper spray to quell demonstrations in the city centre. Many shops and banks are closed while the demonstrations remain which won't help Hong Kong's deteriorating retail sales."
The protestors gathered in Hong Kong to rally against changes to the political system that allow direct elections, but only from a pool of candidates approved by Beijing.
"Protestors in Hong Kong are clearly aiming for the kind of representative elections that can be found in the UK which offers a choice between two Eton graduates," Lawler added.
In other news, the Eurozone sentiment index dropped to -11.4 from -10 in August, as expected by analysts, according to the European Commission.
The indicator dropped by 0.7 points to 99.9, just below the consensus estimate for a reading of 100.
Looking further afield, data from the States showed that the National Association of Realtors' (NAR) index of US pending home sales (PHI) fell 1% month-on-month in August to 104.7. The consensus estimate was for a drop of 0.5%.
Petrofac leads risers
In company news, Credit Suisse drove Petrofac shares higher after upgrading the stock from 'neutral' to 'outperform', target 1,340p.
Meanwhile, Standard Chartered and HSBC Holdings led the downside amid tense protests in Hong Kong as citizens react to controversial reforms that will allow direct elections, but only from a pool of candidates approved by Beijing.
Westhouse Securities pushed Pearson into the red after starting its coverage with a 'sell' rating and a target of 1,001p.
Emerging markets focused asset manager Aberdeen was also in the red after Canaccord Genuity reiterated its 'hold' on stock and cut its target from 460p to 430p. The reduction came after it saw its assets under management (AuM) rise by 3% in the two months to 31 August.
WM Morrison led the supermarkets lower after their rival and discount retailer Aldi delivered an impressive set of 2013 results.
It came as the Financial Conduct Authority revealed a former executive at Morrison has been charged with insider dealing related to trading in Ocado shares between February and May 2013.
On the second tier, Balfour Beatty tumbled after it said its 2014 fiscal year results would be hurt by a profit shortfall of about £75m in its UK construction services division. |
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| | Market Movers
techMARK 2,818.41 +0.28%
FTSE 100 6,646.60 -0.04%
FTSE 250 15,390.07 +0.04%
FTSE 100 - Risers
Petrofac Ltd. (PFC) 1,039.00p +2.87%
Compass Group (CPG) 984.00p +2.39%
Admiral Group (ADM) 1,281.00p +2.23%
Sports Direct International (SPD) 634.00p +2.18%
BG Group (BG.) 1,145.50p +1.60%
Reed Elsevier (REL) 994.50p +1.48%
Hargreaves Lansdown (HL.) 937.50p +1.46%
Capita (CPI) 1,169.00p +1.39%
Persimmon (PSN) 1,343.00p +1.36%
Travis Perkins (TPK) 1,687.00p +1.32%
FTSE 100 - Fallers
HSBC Holdings (HSBA) 635.00p -2.34%
Tesco (TSCO) 187.80p -1.96%
Standard Chartered (STAN) 1,155.50p -1.62%
Anglo American (AAL) 1,384.00p -1.60%
Marks & Spencer Group (MKS) 415.40p -1.49%
Rio Tinto (RIO) 3,051.00p -1.26%
Sainsbury (J) (SBRY) 247.30p -1.12%
Experian (EXPN) 986.00p -0.90%
easyJet (EZJ) 1,381.00p -0.86%
GlaxoSmithKline (GSK) 1,420.50p -0.84%
FTSE 250 - Risers
Micro Focus International (MCRO) 1,078.00p +4.56%
Polymetal International (POLY) 497.20p +4.13%
EnQuest (ENQ) 109.80p +3.68%
Playtech (PTEC) 731.50p +2.16%
AO World (AO.) 192.00p +2.02%
Pace (PIC) 300.00p +2.01%
Elementis (ELM) 255.90p +1.95%
Enterprise Inns (ETI) 121.50p +1.93%
AL Noor Hospitals Group (ANH) 1,089.00p +1.87%
Rank Group (RNK) 164.10p +1.86%
FTSE 250 - Fallers
Balfour Beatty (BBY) 190.50p -15.30%
Just Retirement Group (JRG) 128.00p -6.57%
De La Rue (DLAR) 474.90p -5.77%
COLT Group SA (COLT) 134.00p -4.08%
Morgan Advanced Materials (MGAM) 297.60p -3.16%
Carillion (CLLN) 302.20p -3.02%
Kazakhmys (KAZ) 262.50p -2.78%
Ferrexpo (FXPO) 115.10p -2.71%
Infinis Energy (INFI) 219.00p -2.45%
Centamin (DI) (CEY) 58.05p -2.44% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall on Eurozone confidence, Hong Kong protests European stocks declined as a report showed Eurozone economic confidence fell and as Hong Kong protests upset the market.
An index of executive and consumer sentiment in the euro-area dropped to 99.9 in September from 100.6 in August, the European Commission in Brussels said on Monday.
"We now expect third quarter gross domestic product to grow 0.1%, slightly better than the second quarter's zero growth, but still slower than the average 0.2% quarter-on-quarter growth during the Eurozone 'recovery'," said BNP Paribas. "Our forecast is currently in line with survey indicators, but risks remain."
Elsewhere in the euro-area, German inflation, on a harmonised basis, held at 0.8% year-on-year in September, better than the 0.7% expected by analysts.
Meanwhile, making waves was protests in Hong Kong against changes to the political system that allow direct elections but only from a pool of candidates approved by Beijing. London-listed banks including HSBC and Standard Chartered closed some of their branches in Hong, sending their shares lower.
In the US, personal spending increased 0.5% in August following a 0.1% drop the previous month, beating the forecast for a 0.4% gain.
US pending home sales fell 4.1% in August following a 2.7% increase in July, missing projections for a 2% increase.
The data comes as the Federal Reserve determines whether the economy is healthy enough to sustain an interest rate hike.
Commerzbank, Air France
Commerzbank dropped on reports the German lender is working to resolve an investigation into Iran sanctions violations. The group also reportedly faces a US inquiry into whether it broke anti-money-laundering laws.
Air France gained as the airline said it would look to resume a full flight schedule after a majority of pilots ended strikes.
RWE was lower as Germany's largest power producer said a plan to sell its RWE Dea oil and gas unit to Russia's LetterOne investment group has been delayed.
The euro rose 0.13% to $1.2701. |
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| | US Market Report | | US open: Markets open lower amid rising tensions in Hong Kong US markets opened significantly lower on Monday, amid an escalation in political tensions in Hong Kong.
Figures released on Monday showed that consumers spent 0.5% more in August, while the data for July was revised upwards, after initial reports last month had shown a 0.1% decline. Figures exceeded analysts' median forecast of a 0.4% rise.
Analysts suggested that the increase in spending confirmed that consumers were less intent on saving, an indication of their growing confidence in the current economic climate.
A further report, published by the National Association of Realtors, showed contracts to purchase previously owned properties declined in August, as limited wage growth and tighter credit weighed on potential buyers.
More economic data will be released over the next five days, with US figures on employment and output from the manufacturing and services industries due out this week.
In corporate news, Apple dropped 1.5% after news emerged that the European Union will probe the company's tax breaks in Ireland, while Civeo plummeted after the provider of workforce accommodation said it will relocate in Canada and it expects 2015 revenues and margins to be "materially lower" than in 2014.
Athlon Energy soared after news that Encana had agreed a takeover worth $7.1bn, while DreamWorks Animation rose significantly, following reports that Tokyo-based Softbank had made a $3.4bn offer for the group, valuing the shares at $32 each.
The price, first cited by a report in the Hollywood Reporter on Saturday, would represent 43% premium on the stock's closing price on Friday.
The 10-year US Treasury note yield dropped four basis points to 2.49%, while the five-year note yield lost three basis points to 1.77% and the 30-year bond declined by another four basis points to 3.169%. |
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| | Broker Tips | | Broker tips: Pearson, Balfour Beatty, Petrofac Publishing group Pearson has its long-term attractions but faces immediate trading and execution risks, with the resulting trade-off more than reflected in its current valuation, Westhouse Securities believes.
Hence, the current share price offers a profit-taking opportunity when compared to these analysts' price target of 1,001p for the stock.
Indeed, the company is an "interesting" play on long-term structural change in the global education market, thanks to its trusted brands, a broad customer base and robust finances, Westhouse deems.
Pearson should also benefit from population growth, increased public/private sector spending and the expansion of the middle class in emerging markets – including strong demand for English and the transition towards digital product and platforms.
Nevertheless, the cultural change being undertaken by the firm "carries further execution risk". Furthermore, print products still account for approximately 40% of revenues. Hence, a significant digital migration remains to be negotiated.
That transition, together with the disruption of several of the firm's core markets, will hold back growth over the broker's three-year forecast horizon. US dollar exposure could also constitute a potentially disruptive factor.
For all of the above reasons Westhouse Securities has initiated coverage of Pearson at 'sell' with a price target of 1,001p.
Balfour Beatty is impossible to value at present.
The problem contracts at the comparatively "tiny" Engineering services unit within the company's UK construction arm are a "potential black hole" which threatens the financial health of the group, analyst Alastair Stewart at Westhouse Securities wrote to clients in a note on Monday.
That is the reason that average net debt has increased at an alarming pace, as contagion begins to extend to other parts of UK construction. So much so in fact that another profit warning may follow, Stewart claimed.
In the company's latest trading update the firm's executives claimed that factors such as "slippage" and "poor delivery" were behind a reported £75m shortfall, £30m of which originated in the problem London contracts.
The resulting KPMG review of the firm's UK contract portfolio, the possibility that management failed to keep pace with the deteriorating outlook and the prospect of a new chief executive arriving, "could potentially result in a further significant write-down".
"Today's £240m Sellafield nuclear contract win displays Balfour at its best, but we are concerned that the problems surrounding the smaller contracts are undermining the group's many strengths," the broker added.
As of 15:55 shares of the constrcution outfit were off by 16.76% to 1,872p.
Shares of oilfield services firm Petrofac have been de-rated too far while the outlook is still robust, even when accommodation is made for some of the company's weaknesses.
The stock is now at a four-year low, near 1,000p, and trading on 8.2 times' the estimated 2015 price-to-earnings multiple. That represents a 20% discount to the wider European sector. Other fundamental ratios tell much the same story, Credit Suisse writes. The company, for example, is on just 5.1 times' next year's EV/EBITDA multiple – for a 30% discount to its historic average.
The latest directors' dealings are also supportive of the investment case, as is the company chief's 18% holding. Together with a solid balance sheet that means that the firm's dividend pay-out is "underpinned".
The key risk to Credit Suisse's positive rating is the trading update due out on 16 December. Petrofac then needs to deliver on 77% of its earnings guidance for fiscal year 2014, "which appears challenging". Yet backlog for execution covers 75% of the revenues forecast for next year, the broker adds.
As a result of all the above Credit Suisse has moved to an 'outperform' recommendation on Petrofac, from 'neutral' beforehand, but stuck with its price target of 1,340p. | | |
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