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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: Remarks from Fed officials help steady nervous investors Thursday's session closed with modest losses as equities tried to recover from the previous day's spike in volatility, amid continuing concerns surrounding the financial stability of Greece and more bad news for blue chip pharmaceutical Shire.
After dropping early on and remaining low for much of the day, the FTSE 100 made something of a recovery to end just 15.73 points lower at 6,195.91.
IG market analyst Alastair McCaig said: "Equity markets have struggled for any sense of perspective as both comments from economists and economic data have offered already jittery investors yet more reason to panic. The VIX fear index continues to bubble around year highs, and the FTSE has now seen gains acquired from back in June 2013 wiped out.
"Once again conversations around equity trading floors are focused on the sovereign debt market as Greek 10-year debt hits yields of 9%, well above the 7% danger level. Market commentators will once again be dusting off their 'Greek Tragedy' quotes as this move looks anything but a short-term blip."
Yields on 10-year Greek government bonds surged in late morning trading after officials on Tuesday evening proposed an early exit to the country's international bail-out programme.
The jump sparked concerns about the ability of Greek banks to self-fund without the support of the European Central Bank. There are also fears that Athens might be attempting to lay the groundwork before backtracking on its commitments to economic reforms.
"Markets are becoming increasingly concerned that the country's desire to exit its bailout program early could mean that they are more likely to deviate from the reform programme set out by the International Monetary Fund," explained CMC chief market analyst Michael Hewson.
US initial jobless claims fall
US markets were knocked lower after initial jobless claims fell to 264,000 in the week ended 11 October, below consensus expectations for 290,000 and the lowest level since April 2000.
Claims for the week ended 4 October were unrevised at 287,000, while the four-week moving average of initial claims declined to 284,000 from a level of 288,000 the prior week. Continuing claims for the week ended 4 October rose slightly to 2.39m from an upwardly revised 2.38m, though the four-week moving average of continuing claims continued to decline to 2.40m.
"The low level of jobless claims reflects continued improvement in labour markets, which we expect will continue to drive the unemployment rate lower to 5.8% by the end of this year," Barclays said in a note to investors.
Extreme positioning in US dollars and a lack of clarity around the Federal Reserve's communications were cited by some observers as additional factors which may have accentuated the recent volatility.
Verbal intervention from the Fed
Helping to steady investors' nerves were reports that behind closed doors Fed chair Janet Yellen last weekend expressed confidence in the underlying robustness of the US recovery. In parallel, on Thursday afternoon James Bullard, the president of the Federal Reserve bank of St.Louis, said the central bank should consider postponing the end of QE.
Shire slides after Abbvie makes u-turn on takeover deal
Shire, which dropped 22% on Wednesday after Abbvie said it was reconsidering its bid for the firm, was down a further 8% after the US group advised shareholders vote against the takeover due to changes in the US tax law. Abbvie said that these changes had introduced "an unacceptable level of uncertainty" to the deal.
Banking peers RBS, Barclays, Lloyds, HSBC and Standard Chartered were also weighing on the blue-chip index.
British Sky Broadcasting Group failed to impress despite revealing that it had made a strong start to the year, with profits ahead of expectations in the first quarter as subscriptions surged.
International distribution and outsourcing firm Bunzl climbed after it said third quarter revenue increased 6% year-on-year on a constant exchange rate basis as acquisitions came on stream.
On the second tier, gaming giant Bwin.party rose after it reported a 2% rise in third quarter revenue to €148.7m as an increase in sports betting sales offset a fall in bingo, casino and poker. Sports betting revenue advanced 11% to €58.8m, driven by higher margins, the World Cup and growth in the number of people using their mobile phones to gamble.
On the downside, Enquest and Afren continued to slide after UBS AG said both had more exposure to falling crude prices than some of their sector peers. |
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| | Market Movers
techMARK 2,585.08 -0.07%
FTSE 100 6,195.91 -0.25%
FTSE 250 14,480.09 +0.37% FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 343.00p +4.54%
Bunzl (BNZL) 1,584.00p +4.28%
GKN (GKN) 299.60p +4.17%
Marks & Spencer Group (MKS) 405.50p +4.05%
ARM Holdings (ARM) 862.50p +3.79%
easyJet (EZJ) 1,403.00p +3.77%
Sainsbury (J) (SBRY) 233.00p +3.37%
Ashtead Group (AHT) 923.00p +3.36%
ITV (ITV) 199.90p +3.09%
Meggitt (MGGT) 436.50p +2.97%
FTSE 100 - Fallers
Shire Plc (SHP) 3,718.00p -7.33%
Royal Dutch Shell 'A' (RDSA) 2,066.00p -2.27%
Aviva (AV.) 476.10p -2.18%
Tullow Oil (TLW) 483.90p -2.08%
RSA Insurance Group (RSA) 447.90p -2.03%
Barclays (BARC) 207.90p -2.03%
St James's Place (STJ) 648.00p -1.89%
Royal Dutch Shell 'B' (RDSB) 2,160.00p -1.75%
Smith & Nephew (SN.) 906.00p -1.68%
Tesco (TSCO) 172.00p -1.66%
FTSE 250 - Risers
Bwin.party Digital Entertainment (BPTY) 88.10p +6.66%
AO World (AO.) 178.70p +6.56%
WH Smith (SMWH) 1,050.00p +5.47%
Brown (N.) Group (BWNG) 308.00p +3.67%
Fidessa Group (FDSA) 2,188.00p +3.65%
Rightmove (RMV) 2,066.00p +3.46%
Booker Group (BOK) 121.40p +3.41%
Greencore Group (GNC) 237.60p +3.26%
Man Group (EMG) 111.70p +3.14%
Ocado Group (OCDO) 227.40p +3.08%
FTSE 250 - Fallers
EnQuest (ENQ) 72.70p -5.95%
Afren (AFR) 93.25p -5.14%
IP Group (IPO) 185.60p -4.77%
Card Factory (CARD) 219.30p -4.65%
Go-Ahead Group (GOG) 2,304.00p -4.64%
Hochschild Mining (HOC) 120.50p -3.60%
Petra Diamonds Ltd.(DI) (PDL) 172.90p -3.46%
Fisher (James) & Sons (FSJ) 1,116.00p -3.38%
Premier Oil (PMO) 252.00p -3.30% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Nervous investors send stocks mostly lower European stocks were mostly lower on Thursday amid nervousness after US markets crashed a day earlier on fears over a global economic slowdown, too-low inflation and a plunge in oil prices.
Heavy selling in stocks in the US ensued on Wednesday on the heels of a batch of weak economic indicators. However, the US market recovered after bullish remarks - made behind closed doors over the weekend - from the Federal Reserve's Janet Yellen and St.Louis Fed president James Bullard. The latter said the central bank should consider extending its bond-buying beyond the expected end-date of October following a recent drop in inflation expectations.
As for Fed chief Yellen, Bloomberg reported that she had voiced confidence in the durability of the US economic expansion, as opposed to the cautious tone evident in the most recent set of Fed minutes.
Acting as a backdrop, traders continued to monitor the ongoing crisis in Syria and oil prices.
At one point in the session front month West Texas crude futures moved below $80 per barrel for the first time since June 2012 but later in the day bounced back to $81.22 by the close of trading in European markets. Brent crude ended the day 0.14% lower at $83.66 per barrel.
Ebola, which has hurt travel and airline shares, has also been weighing on equities, with the UN saying the virus is "winning the race" as it spreads.
Continuing to nag at the Eurozone is dangerously low inflation, along with perceived political instability in Greece ahead of the February presidential elections.
Euro-area inflation was today confirmed at 0.3% in September, well below the European Central Bank's (ECB) target of just below 2%.
Greek bonds declined to push 10-year yields higher in late morning trading after officials proposed an early exit to the country's international bail-out programme.
It has sparked concerns about Greek banks' ability to self-fund without the support of the ECB. There are also fears that Athens might be attempting to lay the groundwork before backtracking on its commitments to economic reforms.
Credit Suisse said it remains "cautious" on the Greek banking sector.
The ECB, meanwhile, reduced the discount it applies to the bonds Greek banks submit as collateral to borrow funds. A Greek central bank official said it would allow an additional €12bn of liquidity could be accessed by Greek banks.
"The move was decided late on Wednesday evening after talks between the government, the ECB and Greece's central bank governor," the official told Reuters.
In other Eurozone news, the EU has kicked off a two-week investigation of euro-area governments' draft budgets.
Italian Prime Minister Matteo Renzi's Cabinet has passed tax cuts that raised qualms over whether they meet EU rules.
US data
US industrial production rose by 1.0% in September after a 0.2% drop a month earlier, higher than the 0.4% increase expected by analysts. Manufacturing output increased 0.5% last month, compared to a 0.5% fall in August and forecasts for a 0.3% gain.
US initial jobless claims advanced 264,000 in the week to 11 October, better than the 290,000 that was predicted by the market. It compares to 287,000 a week earlier.
Nestle, Man Group
Nestle declined as the company reported a 4.5% increase in nine-month sales excluding acquisitions.
Man Group rallied after the hedge-fund manager posted a 25% jump in assets under management in the third quarter.
Shire dropped after AbbVie asked shareholders to vote against its takeover of the company.
The euro fell 0.22% to $1.2810. |
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| | US Market Report | | US open: Markets tumble despite positive data from jobless claims US stocks tumbled on Thursday, as the Dow Jones Industrial Average registered another triple digit drop, despite positive reports on jobless claims and industrial production.
US initial jobless claims fell to 264,000 in the week ended 11 October, below consensus expectations for 290,000 and the lowest level since April 2000.
Claims for the week ended 4 October were unrevised at 287,000, while the four-week moving average of initial claims declined to 284,000 from a level of 288,000 the prior week. Continuing claims for the week ended 4 October rose slightly to 2.39m from an upwardly revised 2.38m, though the four-week moving average of continuing claims continued to decline to 2.40m.
"The low level of jobless claims reflects continued improvement in labour markets, which we expect will continue to drive the unemployment rate lower to 5.8% by the end of this year," Barclays said in a note to investors.
Meanwhile, a surge in utilities and a rebound in manufacturing helped US industrial production to rise in September by the biggest margin since November 2012.
Figures released by the Federal Reserve showed that output at factories, mines and utilities exceeded analysts' forecast as it reached 1% following a 0.2% decline in August. Estimates for total production ranged from gains of 0.1% to 0.8%.
Manufacturing, which makes up 75% of total production, rose 0.5% in September, offsetting August's decline, while capacity utilization, which measures the amount of a plant in use, rose to 79.3% in September from 78.7% in August.
Utility output gained 3.9% after rising 1.2% in July, while mining production, which includes oil drilling, registered its biggest increase since April gaining 1.8%.
In corporate news, Netflix shares plummeted 24% after the company announced late on Wednesday that third-quarter subscriber growth that missed forecast, while Ebay slid back over 3% after giving a sales projection for the fourth quarter that missed estimates.
Goldman Sachs fell over two points, despite reporting higher than expected third quarter earnings and raising its quarterly dividend by five cents, while Nestle dropped over 3% after its nine-month sales missed analysts' expectations.
Shire dropped 10% after Abbvie's board officially informed its stakeholders to vote against the proposed merger with the UK drugmaker.
Man Group rose over 4% after the world's largest publicly traded hedge-fund manager said assets under management jumped 25 percent in the third quarter.
The price of West Texas intermediate crude continue to tumble, losing over 1.7% as crude was trading at just over $80.4 a barrel, while gold lost over 0.6%.
The dollar moved forward against the euro and the yen but lost ground against the pound. |
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| | Broker Tips | | Broker tips: Shire, Tesco, WH Smith, Bwin.party Panmure Gordon has upgraded its rating for pharmaceutical group Shire despite the news that US rival Abbvie has recommended investors to vote against its $54bn takeover.
The broker, which slashed its target for the shares from 5,300p to 4,200p as a result of Abbvie's comments, said that Shire's fundamentals remain strong and the stock's valuation "now looks attractive".
Don't expect Tesco to announce a major change in strategy alongside its first-half results next week, say analysts at Deutsche Bank, as the supermarket chain lets its new management team settle in after the recent management revamp.
The German bank has reiterated its 'hold' rating on the stock with a 220p target ahead of its interim report on 23 October. "We don't expect management to commit to a new strategy at this point," said analyst Niamh McSherry.
WH Smith's impressive annual results are likely to drive upgrades for the books-to-stationery retailer, according to Canaccord Genuity, which maintained its 'buy' recommendation and 1,225p target for the stock on Thursday.
Canaccord said: "We remain buyers for the strong growth prospects of Travel, now bolstered by a concerted push into international markets, and the continued strength of cash generation, which underpins a good dividend yield and further accretive share buybacks."
Peel Hunt said it is seeing "signs of life" at Bwin.party after the gambling group reported its first annual growth in quarterly revenues in over a year. | | |
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