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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: Shire leads FTSE 2.83% lower The FTSE tumbled 2.83% on Wednesday thanks to weak data, news of Abbvie's reconsideration of its bid for Shire and a slide in US stocks, particularly on the Dow Jones.
After making fairly steady declines throughout the session, the top tier index closed 181.04 points lower at 6,211.64.
"This afternoon has seen a shock sell off on major indices; the Dax, Dow and FTSE have been slammed by underwhelming US data creating mass confusion within the market," said Toby Goar.
Commerce Department figures showed retail sales in the US fell more than expected in September, with a 0.3% decline exceeding the 0.2% fall estimated by estimates, following a 0.6% gain in August, the biggest increase in four months.
The producer price index for September fell 0.1% as opposed to expectations of a 0.1% gain.
Meanwhile, sales at automobile dealers dropped 0.8%, the most since January, after a 1.9% increase the prior month.
According to data from Ward's Automotive Group, sales fell to a 16.3m annualised rate in September, its lowest level since April, from a 17.5m pace a month earlier that was the highest since January 2006.
It was a data heavy session across the globe, which saw the UK unemployment rate drop to 6% in the three months to August, the lowest since October 2008. Consensus estimates had been expecting a smaller drop to 6.1% from the previous month's tally of 6.2%.
However, not all economic data was as positive on Wednesday, with the annual rate of Chinese consumer price inflation falling to an almost five-year low of 1.6% in September from 2% a month earlier, showing that domestic demand still remains weak. However, it has raised hopes that the government will step in with further stimulus to avert a slowdown.
Closer to home, the German consumer price index (CPI) remained at 0.8% year-on-year in September as expected, with prices actually unchanged when compared with August 2014.
"Germany's CPI continuing to flat-line add[s] to deflationary and recessionary concerns in the Eurozone," said Mike van Dulken, head of research at Accendo Markets.
Shire leads downside after Abbvie says it's reconsidering takeover
The share price of UK pharmaceutical group Shire collapsed after US drugmaker Abbvie said it was reconsidering its offer in light of the US Treasury's new rules regarding the takeover of foreign companies, specifically tax inversion deals. Shire pointed out it would be due a break-up fee of roughly $1.64bn if the deal falls through, but that didn't stop the latter's shares from sinking by nearly 23%.
The news dragged down sector peer Smith & Nephew as well as a number of other health-related stocks.
Falling oil prices pushed producers Tullow, Shell and BP into the red as Brent crude futures continued to fall after registering their worst one-day drop in four years on Tuesday.
Royal Mail was one of the day's small handful of risers, lifted in part by JP Morgan Cazenove which reiterated its 'overweight' rating on the stock, saying that concerns about parcel competition were fully reflected in the valuation.
Fresnillo also moved into positive territory after maintaining its guidance for silver production and actually increased its target for gold, after factoring in more volumes from the recent buyout of its Penmont joint venture.
On the second tier, CSR shares leapt after fellow chip designer Qualcomm announced it was buying out the company for 900p a share or £1.56bn - a 36% premium to Tuesday's closing price.
Infrastructure group Balfour Beatty saw its share price jump after appointing Qinetiq's chief executive officer Leo Quinn to take up the same position on its own board in 2015, ending a five-month search for a new boss. Qinetiq's share price was sharply lower.
Credit Suisse pushed Aveva shares higher after upgrading its share to 'outperform' from 'neutral' and upping its target from 1,700p to 1,800p.
Market Movers
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FTSE 100 6,211.64 -2.83%
FTSE 250 14,426.74 -1.66% |
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| | FTSE 100 - Risers
Royal Mail (RMG) 407.40p +1.88%
Morrison (Wm) Supermarkets (MRW) 157.60p +0.70%
Fresnillo (FRES) 794.00p +0.44%
Burberry Group (BRBY) 1,428.00p +0.21%
FTSE 100 - Fallers
Shire Plc (SHP) 4,012.00p -21.95%
Smith & Nephew (SN.) 921.50p -5.39%
Tullow Oil (TLW) 494.20p -4.69%
Barclays (BARC) 212.20p -4.41%
Royal Bank of Scotland Group (RBS) 342.20p -4.36%
Weir Group (WEIR) 2,120.00p -4.20%
Coca-Cola HBC AG (CDI) (CCH) 1,267.00p -4.16%
Ashtead Group (AHT) 893.00p -3.98%
Vodafone Group (VOD) 186.30p -3.92%
Prudential (PRU) 1,334.00p -3.51%
FTSE 250 - Risers
CSR (CSR) 855.50p +29.92%
Balfour Beatty (BBY) 156.50p +5.25%
Hochschild Mining (HOC) 125.00p +2.71%
Bellway (BWY) 1,590.00p +1.60%
Big Yellow Group (BYG) 503.00p +1.21%
NMC Health (NMC) 491.00p +1.20%
Savills (SVS) 595.50p +0.93%
AO World (AO.) 167.70p +0.84%
Rank Group (RNK) 161.30p +0.81%
Redrow (RDW) 263.00p +0.73%
FTSE 250 - Fallers
QinetiQ Group (QQ.) 193.00p -11.79%
EnQuest (ENQ) 77.30p -9.96%
Ferrexpo (FXPO) 87.05p -6.55%
Just Eat (JE.) 255.70p -6.27%
Bank of Georgia Holdings (BGEO) 2,185.00p -5.45%
Hays (HAS) 110.70p -5.38%
Man Group (EMG) 108.30p -5.33%
Premier Oil (PMO) 260.60p -5.24%
Foxtons Group (FOXT) 200.00p -4.76% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drop after US retail sales fall more than forecast European stocks declined after a report showed US retail sales fell more than expected.
Retail sales dropped 0.3% in September after a 0.6% increase in August, the Commerce Department said. Analysts had predicted a 0.1% drop.
The New York Fed's Empire State Factory Index dropped to 6.17 in October, missing the forecast for 20.25.
"The weak tone of the latest retail sales, manufacturing and PPI data is the first real sign that the stronger dollar and the global slowdown are taking their toll on the domestic economy. But it's hard to see a sustained slowdown when the economy is still generating more than 200,000 additional jobs per month," Capital Economics said.
On a brighter note for the US, the budget deficit narrowed, boosted by growth and falling unemployment boosted tax receipts, the Treasury Department said.
The shortfall was $483.4bn in the 12 months to 30 September, compared with $680.2bna year earlier, the Treasury said.
Meanwhile, the Federal Reserve will release its Beige Book report of regional anecdotal information about the US economy after European markets close.
In China, the consumer price index declined to 1.6% in September from 2% a month earlier, compared to analysts' estimates of 1.7%.
In the Eurozone, Ifo Institute President Hans Werner-Sinn accused ECB officials of avoiding tough decisions required to boost the ailing economy.
He told MNI that Eurozone officials are subjecting the currency area to perpetual crises by failing to enact the necessary economic policies.
ECB President Mario Draghi spoke in Frankfurt on Tuesday morning but focused solely on EU statistics.
In the UK, the unemployment rate dropped to 6% in the three months to August, the lowest since October 2008, according to the Office for National Statistics.
Employment rose by 46,000 over the period to reach 30.76m, the smallest gain since the three months ended May 2013, but more than the 30,000 expected by analysts.
Jobless claims fell by 18,600 in September, compared to the consensus forecast for a 35,000 drop and the previous month's decline of 33,200.
Weekly earnings increased 0.9% in the three months to August, more than the estimate and previous month's rise of 0.8%.
Balfour Beatty pinches Qinetiq CEO
Balfour Beatty rallied after naming Leo Quinn as its new chief executive officer. Qinetiq Group, where Quinn has been CEO for five years, dropped.
Petroleum Geo-Services edged lower after cutting its annual-profit forecast amid falling oil prices.
Shire tumbled after AbbVie said its board will reconsider a recommendation to shareholders to back its purchase of the UK drugmaker.
A gauge of healthcare stocks slumped on the Stoxx 600 including AstraZeneca and Smith & Nephew.
Brent crude futures dipped 0.09% to $84.96 per barrel, according to the ICE, as tensions in the Middle East continued to flare. |
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| | US Market Report | | US open: Markets plummet amid concerns over Eurozone economy US stocks plummeted on Wednesday, as concerns over the Eurozone economy and weak economic data weighed heavily on markets.
The S&P 500 was down 0.9% by 10:23 in New York, while the Dow Jones Industrial Average fell 0.8% and the Nasdaq dropped 0.6%.
In Europe, German Bund yields fell to a record low on as fears over a deteriorating Eurozone economic outlook continued to mount, after another credit rating blow for France and "free falling" inflation expectations dominated the market.
On Wednesday, Commerce Department figures showed retail sales in the US fell more than expected in September, with a 0.3% decline exceeding the 0.2% fall estimated by estimates, following a 0.6% gain in August, the biggest increase in four months.
The producer price index for September fell 0.1% as opposed to expectations of a 0.1% gain.
Meanwhile, sales at automobile dealers fell 0.8%, the most since January, after a 1.9% increase the prior month.
According to data from Ward's Automotive Group, sales fell to a 16.3m annualised rate in September, its lowest level since April, from a 17.5m pace a month earlier that was the highest since January 2006.
In corporate news, Bank of America dropped slightly after reporting a third-quarter loss that was smaller than expected, while Abbvie Inc. shares fell sharply in pre-market trading after the drug maker said it was reconsidering a $54bn deal to buy Shire, as the deal was made less appealing by a new set of rules introduced by the Treasury.
As a result, Shire shares dropped sharply, where they weighed heavily on the FTSE 100, and in New York.
Ebay, American Express and Netflix slid back after the bell with all three companies to report results after the bell, while Qualcomm Inc. rose after announcing it had offered to buy UK chip maker CSR for $2.5bn
Firms that have benefited from the growing concerns about the Ebola virus rallied once again on Wednesday, with Lakeland Industries, Versar and Alpha Pro Tech registering significant gains.
The yield on the 10-year Treasury note fell 16 basis points to 2.03%, while the five-year note yield shed 18 basis points to 1.26% and the 30-year bond yield was down 20 basis points to 2.76%.
The dollar dropped sharply against the euro and the yen, losing almost 1.5% against both currencies, while the greenback dropped almost percentage point against the pound. |
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| | Broker Tips | | Broker tips: Shire, Hargreaves Lansdown, Rio Tinto, Balfour Beatty Abbvie's potential $54bn takeover of Shire should still go through, according to an analyst at Panmure Gordon, despite fears on Wednesday of the deal sinking after the US firm said it was reconsidering. "The board of Abbvie has a responsibility to its shareholders to consider new facts relating to any ongoing event that impacts shareholder value. Ultimately we expect the deal to go through."
Citigroup has raised its recommendation for financial services group Hargreaves Lansdown from 'sell' to 'neutral', saying that while concerns remain the stock's poor performance so far this year has gone far enough.
The target for the shares has been slashed from 980p to 830p, but the bank has taken a more positive stance, explaining that the 43% drop from the stock's peak in January is "enough to reflect the risks".
Rio TInto remains Canaccord Genuity's top pick in the large-cap mining sector after the group's third-quarter production update on Wednesday.
"Its 4.3% dividend yield in 2014, rising to over 5% in 2016 as the free cash flow comes through is a signal of the strong free cash flows we expect from the group," the broker said.
Balfour Beatty's share price surged on Wednesday after the infrastructure group ended a five-month search for a new boss, but broker Westhouse Securities warned this may only be a "short-term positive" as it reiterated its 'sell' recommendation. | | |
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