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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: Weaker German business confidence, stress tests weigh on stocks UK-listed stocks closed lower on Monday, with banks and mining stocks providing a drag in the aftermath of the results of the latest EU bank stress tests and alongside a weak reading on German business confidence.
The FTSE closed down 24.92 points at 6,363.81 after falling early on.
Stocks were dragged lower by news that the IFO institute's gauge of German business confidence had dropped to a 22-month low in October, with the business climate index falling from 104.7 to 103.2, well below the 104.5 consensus forecast.
"We expect a stabilisation before the end of the year. For late 2014, our forecasts for Eurozone and German GDP are below consensus," said Berenberg economist Christian Schulz.
"Unfortunately, the October Ifo data suggests that the risks to our near-term calls remains to the downside."
That came as the results of the bank's stress tests were unveiled on Friday, with Lloyds proving a particular disappointment ahead of Tuesday's interim management statement.
"The British banks may have passed the European stress test but for traders the margin by which Lloyds passed was too close for comfort," IG market analyst David Madden explained.
"It hardly instills confidence in the UK financial sector when the big five banks are given the all clear but the sector still finishes lower."
Acting as a backdrop, the DJ Stoxx 600 Banks sector index fell 1.74% and the FTSE Mibtel by another 2.40%. Monte dei Paschi di Siena's stock price cratered 21.5% after the lender failed Sunday's ECB and EBA stress tests.
In other news, growth in UK retail sales seemed to stabilise in October, led by a bounce in the clothing sector, but risks to the Britain's economy more generally remain, the Confederation of British Industry (CBI) said in a report.
The CBI's reported sales index for the year to September remained at last month's level of 31%, instead of slipping to a reading of 25% as economists had been expecting.
There was nervousness too ahead of Wednesday's Federal Open Market Committee meeting, which was also prompting an element of caution on the markets, with policymakers expected to announce the end of quantitative easing in the States.
Travel stocks lead following recent Ebola-related declines
Travel stocks were among the best performers as investors continued to search for bargains after recent Ebola-related weakness in the sector.
TUI Travel, Intercontinental Hotels, Carnival, IAG and Easyjet put in decent gains, with the latter two being helped by positive comments from Morgan Stanley analysts, who recommended investors buy the stocks with 'overweight' ratings and raised its target on both.
Smiths Group was a big faller after its finance director announced he will step down in six months' time in order to pursue opportunities outside the group. The FTSE 100 technology group will use his remaining time with the board to find his successor.
Lloyds, HSBC, RBS and Barclays all traded firmly in the red following the stress test results.
On the second tier, Renishaw rose after it revealed that it now expects to continue to experience the revenue growth seen in its first quarter in the second half of its financial year. The brief announcement from the metorology and healthcare manufacturer came less than two weeks after it delivered its interim management statement, which revealed a 28% increase in first quarter revenue to £101.4m. |
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| | Market Movers
techMARK 2,688.02 -0.38%
FTSE 100 6,363.46 -0.40%
FTSE 250 15,040.39 -0.33%
FTSE 100 - Risers
TUI Travel (TT.) 374.70p +2.49%
InterContinental Hotels Group (IHG) 2,268.00p +2.30%
Reed Elsevier (REL) 995.00p +1.74%
International Consolidated Airlines Group SA (CDI) (IAG) 389.80p +1.70%
Admiral Group (ADM) 1,290.00p +1.10%
Reckitt Benckiser Group (RB.) 5,035.00p +1.08%
SABMiller (SAB) 3,392.50p +1.04%
Sainsbury (J) (SBRY) 240.40p +0.92%
AstraZeneca (AZN) 4,367.00p +0.91%
Unilever (ULVR) 2,427.00p +0.87%
FTSE 100 - Fallers
Royal Mail (RMG) 443.80p -3.06%
Smiths Group (SMIN) 1,121.00p -2.69%
Fresnillo (FRES) 746.00p -2.67%
Aberdeen Asset Management (ADN) 400.90p -2.58%
Aggreko (AGK) 1,499.00p -2.41%
Petrofac Ltd. (PFC) 1,045.00p -2.15%
Antofagasta (ANTO) 678.50p -2.09%
Barclays (BARC) 221.85p -1.99%
Weir Group (WEIR) 2,206.00p -1.96%
Rolls-Royce Holdings (RR.) 779.50p -1.95%
FTSE 250 - Risers
Renishaw (RSW) 1,666.00p +4.78%
Infinis Energy (INFI) 221.00p +4.49%
Just Eat (JE.) 292.10p +4.36%
SSP Group (SSPG) 244.00p +2.95%
Entertainment One Limited (ETO) 309.50p +2.82%
Brit (BRIT) 239.20p +2.66%
esure Group (ESUR) 241.90p +1.72%
PZ Cussons (PZC) 367.40p +1.63%
Fidelity European Values (FEV) 150.80p +1.55%
Card Factory (CARD) 220.80p +1.52%
FTSE 250 - Fallers
Ophir Energy (OPHR) 190.00p -6.27%
EnQuest (ENQ) 70.50p -5.11%
Kazakhmys (KAZ) 218.60p -5.08%
Hochschild Mining (HOC) 107.50p -4.87%
Supergroup (SGP) 919.00p -3.57%
Synthomer (SYNT) 212.80p -3.10%
Kier Group (KIE) 1,484.00p -3.07%
Vedanta Resources (VED) 806.00p -2.95%
Afren (AFR) 92.00p -2.95%
Petra Diamonds Ltd.(DI) (PDL) 170.10p -2.91% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks slide after worse-than-forecast German and US data European stocks were in the red after weaker-than-expected data in Germany and the US.
Ifo's German business confidence index dropped to 103.2 in October from 104.7 the previous month. It marked a 22-month low and missed analysts' forecasts for a reading of 104.5.
"We expect a stabilisation before the end of the year. For late 2014, our forecasts for Eurozone and German GDP are below consensus," said Berenberg economist Christian Schulz. "Unfortunately, the October Ifo data suggests that the risks to our near-term calls remains to the downside."
The report comes amid concerns over Europe's weak economy and low inflation.
In an effort to boost the euro-area's fragile economy, the European Central Bank (ECB) revealed it settled €1.7bn of covered bond purchases last week after starting the programme on 20 October.
President Mario Draghi has vowed to expand the institution's balance sheet by as much as €1trn with the help of covered bond and asset backed securities purchases.
The ECB and the European Banking Authority also conducted stress tests on banks to make sure they had enough capital to withstand a financial storm. They found most of the 130 banks analysed passed the so-called stress tests. They identified 13 that still need to come up with a total of €9.5bn in extra capital. There were 25 banks overall that failed the tests, facing a cumulative shortfall of €24.6bn.
In the US, Markit's purchasing managers index (PMI) for services fell to 57.4 in October from 58.9 a month earlier. Analysts had predicted a reading of 57.8. However, a level above 50 signals expansion.
A separate report showed US pending home sales rose 1% year-on-year in September after falling 4.1% in August. It fell short of market estimates for a 2.2% increase.
Monte Paschi slides after failing stress test
Monte Paschi, which was among the 25 banks that failed the ECB's stress tests, fell the most in the Stoxx 600.
Hermes International rallied after Natixis SA recommended buying shares of the French maker of Birkin handbags.
Air France-KLM Group declined after Dutch newspaper De Telegraaf reported the airline will on Tuesday discuss measures including job cuts.
TNT Express slumped after the Dutch parcel company reported an operating loss for the third quarter.
The euro rose 0.35% to $1.2715.
Oil slides as Goldman cuts forecast
Brent crude fell 0.67% to $85.55 per barrel at close of trading, as Goldman Sachs Group cut its oil price forecasts. |
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| | US Market Report | | US open: Stocks slide on falling oil prices, weaker-than-forecast data US stocks declined, led by energy stocks which took a hit from falling oil prices.
Brent crude and West Texas Intermediate futures dropped as Goldman Sachs Group cut its oil price forecasts.
The broker now sees front month West Texas crude futures falling to $75 per barrel in the first quarter of 2015 and remaining at that level throughout the second half of the year.
In the second quarter of 2015 Brent futures are seen dropping to $80 per barrel and West Texas crude futures to $70 per barrel.
Meanwhile, Markit's purchasing managers index (PMI) for services fell to 57.4 in October from 58.9 a month earlier. Analysts had predicted a reading of 57.8. However, a level above 50 signals expansion.
Another report showed pending home sales rose 1% year-on-year in September after falling 4.1% in August. It missed forecasts for a 2.2% increase.
In corporate news, Italian lender Monte dei Paschi was making waves that were being felt all the way over on the other side of the Pond. Its shares cratered after news the bank must replenish €2.1bn in capital within nine months to meet European Central Bank requirements.
Citizens Financial Group slumped despite reporting a rise in third-quarter profit as the bank set aside less money for bad loans. |
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| | Broker Tips | | Broker tips: Lloyds, GlaxoSmithKline, Airlines Lloyds may have passed the Europe-wide stress tests, but the UK's own bank-health checks may be an issue, according to broker Jefferies which downgraded the stock from 'hold' to 'underperform' on Monday.
The broker reckons that Lloyds is now "at risk" ahead of the Prudential Regulation Authority's forthcoming stress tests, which include scenarios such as a 35% fall in house prices and a 30% drop in commercial real estate prices. Jefferies said: "None of this bodes particularly well for LLOY given that it is UK mortgage centric (60% of first-half customer loans are in secured retail)."
UBS has cut its target for GlaxoSmithKline after trimming its estimates for the pharmaceutical company, and said that its dividend "still looks unsustainable". The bank has reduced its target for the shares from 1,380p to 1,250p and kept a 'sell' rating.
"We believe the current dividend level beyond 2015 is only safe if we see strong and sustained recovery of respiratory sales, for which we have no indication yet, UBS said.
Despite ongoing concerns about the spread of Ebola and its effect on tourism, Morgan Stanley has recommended investors to buy shares of UK-listed airline peers Easyjet, Ryanair and IAG, hailing the companies' fundamentals. | | |
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