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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: Stocks end higher after BoE announcement on leverage ratios Banking stocks drove the FTSE to a strong finish on Friday after the Bank of England (BoE) unveiled softer-than-expected requirements for leverage ratios and also thanks in part to an unexpected boost to stimulus from the Bank of Japan announced overnight. The top tier closed the day 82.92 points higher, making it a rise of 137.15 points for the week. The leverage ratio, a key gauge of a bank's ability to cushion itself against losses, measures the proportion of the bank's lending that is funded by equity. It had been provisionally set at 3% under Basel's global rules but the Bank of England was widely expected to unveil stricter requirements. However, chancellor George Osborne has urged the BoE to consider the impact toughening the regulatory regime for banks would have on lending to households and business. While he said he “fully accepts” the logic for an extra component to be added to the 3% level, the chancellor warned that work needed to be done on understanding what the impact might be on banks and large building societies. Overnight, Japan’s Government Pension Investment Fund announced it will put half of its holdings in local and foreign stocks, doubling previous levels, and invest in alternative assets. The Bank of Japan raised its annual target for monetary expansion to 80trn yen ($724bn) from 70trn yen. Over in the States, employment cost index was stronger than expected and rose 0.7% from the previous three months in the third quarter, exceeding analysts’ consensus of 0.5%, while the year-on-year increase came in at 2.2%. Growth in wages and salaries printed at 0.8%, continuing the steady upward trend in place since the first quarter, when wages and salaries only increased 0.3% from the previous three months. Meanwhile, the personal consumption expenditures price index rose 0.1% month-on-month on both overall and core measures, leaving the two parameters up 1.4% and 1.5% year-on-year, respectively. Barclays and RBS rise after BoE unveils softer-than-expected requirements for leverage ratios Banking stocks, already bolstered by stronger-than-expected quarterly results from RBS, received another big lift after the Bank of England unveiled its requirements for leverage ratios, which were softer-than-expected. Barclays, which had been most at risk from the rule with the lowest leverage ratio among its peer group at just 3.5%, surged in response to the news, while RBS was hot on its heels. Anglo-Spanish airline conglomerate IAG was also in demand as it reported a 30% jump in third-quarter operating profits on the back of falling fuel costs and lifted its guidance for full-year growth. It now expects full-year adjusted operating profits to grow €550m-600m over last year, compared with an earlier target for €500m growth. Direct Line said it remains on track to hit its full-year targets, but noted "highly competitive" markets as gross written premiums fell 5% in the third quarter. The stock dropped firmly into the red after a positive start. Gold stocks tracked the metal's price lower, with Randgold and Fresnillo both registering heaving losses. Standard Chartered continued to decline amid recent reports US prosecutors have re-opened their investigations into whether the lender withheld information into the possible violation of the sanctions regime imposed on Iran. |
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| | Market Movers
techMARK 2,778.78 +1.05%
FTSE 100 6,546.47 +1.28%
FTSE 250 15,501.37 +1.33%
FTSE 100 - Risers
Barclays (BARC) 240.80p +8.20%
Royal Bank of Scotland Group (RBS) 388.00p +6.21%
International Consolidated Airlines Group SA (CDI) (IAG) 409.20p +4.74%
St James's Place (STJ) 745.00p +4.56%
ARM Holdings (ARM) 875.00p +4.35%
Schroders (SDR) 2,411.00p +3.43%
Rolls-Royce Holdings (RR.) 843.00p +3.37%
Kingfisher (KGF) 302.50p +3.10%
Friends Life Group Limited (FLG) 323.40p +3.06%
Aberdeen Asset Management (ADN) 434.00p +2.92%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 3,678.00p -2.67%
Fresnillo (FRES) 697.50p -2.65%
Direct Line Insurance Group (DLG) 276.00p -1.95%
TUI Travel (TT.) 398.60p -0.55%
Morrison (Wm) Supermarkets (MRW) 154.80p -0.51%
Standard Chartered (STAN) 939.60p -0.42%
Sainsbury (J) (SBRY) 245.50p -0.41%
Intertek Group (ITRK) 2,722.00p -0.40%
Capita (CPI) 1,097.00p -0.36%
BHP Billiton (BLT) 1,610.50p -0.31%
FTSE 250 - Risers
Regus (RGU) 197.30p +6.82%
Ashmore Group (ASHM) 318.60p +5.53%
Henderson Group (HGG) 210.80p +5.35%
Card Factory (CARD) 236.70p +4.87%
Hays (HAS) 123.30p +4.76%
Fidessa Group (FDSA) 2,341.00p +4.51%
Investec (INVP) 572.00p +4.09%
Mitchells & Butlers (MAB) 380.00p +4.05%
IP Group (IPO) 206.90p +3.45%
Smith (DS) (SMDS) 264.70p +3.36%
FTSE 250 - Fallers
Bwin.party Digital Entertainment (BPTY) 89.65p -10.22%
Centamin (DI) (CEY) 51.20p -6.65%
Supergroup (SGP) 830.00p -6.21%
EnQuest (ENQ) 69.40p -4.41%
African Barrick Gold (ABG) 206.00p -3.78%
Ophir Energy (OPHR) 185.30p -3.14%
Riverstone Energy Limited (RSE) 838.00p -2.56%
Stock Spirits Group (STCK) 305.00p -2.49%
Cairn Energy (CNE) 145.10p -2.42%
Hochschild Mining (HOC) 98.95p -2.32% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks gain after BoJ stimulus, Eurozone inflation European stocks gained as investors weighed the Bank of Japan's decision to boost stimulus and a rise in Eurozone inflation. The BoJ raised its annual target for monetary expansion to 80trn yen from a previous 60 to 70trn yen. The move came as Japan's jobless rate rose to 3.6% in September from 3.5% the previous month, as expected.
Inflation in the world's third largest economy fell to 3.2% in September from 3.3% the month earlier, which was also predicted by the market.
Eurozone inflation rose by 0.4% year-on-year in October, as expected, up from 0.3% the previous month. However, it remains below the European Central Bank's (ECB) target of just under 2%.
The unemployment rate in the euro-area held at 11.5%, meeting forecasts.
"With euro-zone HICP inflation still close to zero in October and the unemployment rate holding near a record high, there remains a significant risk of deflation in the single currency area," Capital Economics warned.
In other euro-area news, German retail sales rose 2.3% year-on-year in September, following a 0.1% rise the prior month. Analysts had estimated a 1.2% gain.
In another lift to markets, ECB official Ewald Nowotny said on Friday: "Never say never" to full-blown quantitative easing in the Eurozone.
In an interview with CNBC, he refused to rule out a Federal Reserve-style bond-buying programme, but said he doesn't see the need for it at the moment.
In the US, personal spending fell 0.2% in September, following a 0.5% increase a month earlier. Analysts had predicted a 0.1% rise.
The University of Michigan's consumer confidence was revised higher to 86.9 in October from 86.4.
RBS, Barclays
Royal Bank of Scotland Group jumped after swinging to a third-quarter profit.
International Consolidated Airlines Group advanced as the owner of the British Airways and Iberia raised its full-year earnings guidance.
Danone climbed after agreeing to buy a 25% stake in Yashili International Holdings, a Chinese infant milk-formula maker.
BNP Paribas gained after posting an 11% increase in third-quarter profit that beat analysts' estimates.
Barclays was higher after saying it is confident of reaching the leverage ratio set by the Bank of England.
The euro fell 0.63% to $1.2533. |
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| | US Market Report | | US open: Markets soar after unexpected stimulus from BoJ US stocks soared on Friday, as the Dow Jones Industrials hit a new all-time intra-day high of 17,350.93 soon after the open, with investors buoyed by an unexpected boost to stimulus from the Bank of Japan.
Soon after 10am in New York, the Dow Jones Industrial Average was 135.15 points up to 17,330.31, while the S&P 500 advanced 18.38 to 2,012.94 and the Nasdaq was 51.04 points higher to 4,151.67.
Japan's Government Pension Investment Fund announced it will put half of its holdings in local and foreign stocks, doubling previous levels, and invest in alternative assets.
The Bank of Japan raised its annual target for monetary expansion to 80trn yen ($724bn) from 70trn yen.
The US employment cost index (ECI) was stronger than expected and rose 0.7% from the previous three months in the third quarter, exceeding analysts' consensus of 0.5%, while the year-on-year increase came in at 2.2%.
Growth in wages and salaries printed at 0.8%, continuing the steady upward trend in place since the first quarter, when wages and salaries only increased 0.3% from the previous three months.
"Government sector employment costs are growing at a slightly slower, but still solid pace of 0.5% quarter-on-quarter and 2.1% year-on-year," Barclays analysts said in a note.
"We continue to expect wage growth to rise gradually this year, reflecting continued improvement in the labour market and a reduction in labour market slack."
US personal spending fell 0.2% in nominal terms in September, lower than analysts' expectations of 0.1%.
The personal consumption expenditures (PCE) price index rose 0.1% month-on-month on both overall and core measures, leaving the two parameters up 1.4% and 1.5% year-on-year, respectively.
In corporate news, Linkedin rose sharply after better-than-expected sales, while Gopro soared after its prediction for fourth-quarter profit surpassed analysts' projections.
Starbucks slid after announcing later on Thursday that its fourth quarter revenue missed estimates, while Apple opened at an-all time high of $108.01.
Gold futures slid to $1,162.60, a level not seen since 2010, as the dollar surged forward following a surprise stimulus move from the Bank of Japan.
The greenback gained over 2.5 percentage points on the yen and it also registered smaller gains against the euro and the pound.
West Texas intermediate and Brent crude both fell, trading at just under $80 and $85 a barrel respectively. |
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| | Broker Tips | | Broker tips: RBS, St James's Place, Supergroup, Henderson Third-quarter profits from RBS were well-received by the stock market in London on Friday, though brokers remained divided over how to recommend the stock to investors. Analysts warned that, despite the progress made in the third quarter, one-off costs will continue to be a drag on RBS' bottom line going forward. Shore Capital kept a 'hold' rating on the stock, saying that while the bank is "clearly seeing good momentum", the unresolved conduct and litigation risks "cannot be ignored". Hargreaves Lansdown Stockbrokers also said that "a number of issues remain unresolved", such as the conduct and litigation issues which "will continue to be costly, time-consuming and distracting". There are also restructuring costs to be considered, he said.
St James's Place's share price was extending gains on Friday after a strong third-quarter update the previous session, with Barclays Capital providing a boost after naming the wealth manager as its top pick within the European insurance sector.
"Throughout SJP's recent period of underperformance, we continued to see its underlying fundamental drivers as undiminished," said Barclays analysts Alan Devlin and Chris Roberts.
The market had factored in some bad news ahead of Supergroup's profit warning on Friday, "but the quantum of the downgrade is greater than feared", according to Oriel Securities.
The broker retained its 'reduce' rating on the stock with a 760p target, saying that the fashion retailer's "fanatical adoption" of a strategy to sell stock at full prices is inappropriate.
Citigroup has highlighted an "attractive entry price" for potential investors of investment management firm Henderson Group, as it upgraded its rating on the stock from 'neutral' to 'buy'. | | |
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