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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: UK stocks retreat from two-month high as Petrofac, miners fall A wave of M&A news failed to give UK markets a boost on Monday as investors took profits after stocks hit their highest in two months the previous session.
The FTSE 100 finished 0.3% lower at 6,730 with a massive drop in the share price of oilfield services firm Petrofac and weakness in the mining sector offsetting bid activity which boosted shares of Friends Life, BT Group and Smith & Nephew.
A surprise interest-rate cut from the People's Bank of China (PBoC) saw London's blue-chip index settle at 6,750.76 on Friday, a closing level not surpassed since 22 September when it reached 6,773.63.
"Traders quickly cashed in their chips on the back of the Chinese interest-rate cut and now the city is wondering if one rate reduction is too little too late for Beijing to hit its annual growth target," said analyst David Madden from IG.
Speculation continues that the PBoC could ease policy further amid widespread concern over a drop in prices.
Very little economic data was released on Monday, though things are likely to pick up later in the week with gross domestic product estimates due out in both the US and UK, inflation figures in the Eurozone and a host of data from Japan.
Investors will also be looking ahead to Thursday's meeting of the Organization of Petroleum Exporting Countries (OPEC), with members facing a tough decision over whether to cut output in the wake of a 30% slump in crude prices since June.
Petrofac plummets, M&A activity returns
Petrofac's share price dropped 26% after the group scaled back its profit assumptions, saying that depressed oil prices and the timing of deliveries will result in a weaker bottom line. The company said net profits for 2014 will be at the lower end of the guided $580m-600m range, but would fall to just $500m in 2015. It had previously predicted "strong earnings growth" next year.
Mining stocks were also weighing on the FTSE 100, pulling back after a PBoC-inspired rally on Friday. Anglo-Australian miner BHP Billiton was leading the declines after cutting its spending plans for next year; Fresnillo, Anglo American and Rio Tinto were also lower.
Friends Life shares jumped 6% as the market reacted to a proposed ?5.6bn takeover offer from Aviva late on Friday, expected to create the UK's "leading insurance, savings and asset management business by number of customers". However, Aviva finished firmly in the red with analysts citing uncertainty about the deal with details about potential synergies from the tie-up still unknown.
BT advanced after the telecoms giant confirmed rumours that it is in talks with two UK mobile network operators "about a possible transaction in which BT would acquire their UK mobile business". It said one of these operators is O2, owned by Spanish group Telefonica.
Smith & Nephew was a strong riser amid speculation that Stryker, the US orthopaedic group, will put in another bid for the medical devices company. The reports come as the six-month cooling-off period that followed the previous offer comes to an end this week.
London Stock Exchange was making decent gains after analysts at Citigroup raised their rating on the stock to 'buy', but Hargreaves Lansdown dropped after the same bank cut the shares to 'sell'.
On the FTSE 250, transport firm FirstGroup took a hit amid claims it has missed out on the opportunity to win the East Coast mainline franchise. The company's bid is thought to be overlooked in favour of Eurostar and Keolis when the government releases a statement on the final decision this week. |
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| | Market Movers
techMARK 2,902.59 +0.30%
FTSE 100 6,729.79 -0.31%
FTSE 250 15,710.06 +0.12%
FTSE 100 - Risers
Friends Life Group Limited (FLG) 368.20p +5.90%
Smith & Nephew (SN.) 1,138.00p +4.40%
BT Group (BT.A) 394.10p +3.71%
London Stock Exchange Group (LSE) 2,172.00p +3.28%
Carnival (CCL) 2,664.00p +1.80%
ITV (ITV) 205.00p +1.59%
Dixons Carphone (DC.) 426.50p +1.57%
Reed Elsevier (REL) 1,074.00p +1.51%
CRH (CRH) 1,479.00p +1.09%
St James's Place (STJ) 773.50p +0.98%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 877.50p -26.45%
Aviva (AV.) 510.00p -5.38%
Hargreaves Lansdown (HL.) 958.50p -5.29%
Sainsbury (J) (SBRY) 252.30p -2.85%
BHP Billiton (BLT) 1,621.00p -2.47%
Fresnillo (FRES) 746.00p -2.29%
Weir Group (WEIR) 2,065.00p -2.23%
Rio Tinto (RIO) 2,976.50p -2.15%
Associated British Foods (ABF) 3,053.00p -2.12%
Centrica (CNA) 285.80p -2.12%
FTSE 250 - Risers
TalkTalk Telecom Group (TALK) 300.50p +6.37%
Cranswick (CWK) 1,404.00p +5.17%
Polymetal International (POLY) 582.00p +5.05%
Card Factory (CARD) 249.70p +4.04%
UBM (UBM) 586.50p +3.53%
UDG Healthcare Public Limited Company (UDG) 361.40p +3.38%
Evraz (EVR) 153.80p +2.95%
Inmarsat (ISAT) 762.50p +2.83%
AO World (AO.) 217.00p +2.50%
PayPoint (PAY) 916.50p +2.40%
FTSE 250 - Fallers
FirstGroup (FGP) 108.20p -9.68%
Ladbrokes (LAD) 113.80p -5.40%
William Hill (WMH) 339.60p -5.38%
Afren (AFR) 69.30p -3.41%
Lonmin (LMI) 186.70p -3.26%
Hunting (HTG) 683.50p -3.12%
African Barrick Gold (ABG) 227.60p -3.03%
Tate & Lyle (TATE) 602.00p -2.98%
Ferrexpo (FXPO) 71.15p -2.87%
Stock Spirits Group (STCK) 247.20p -2.72% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after German business confidence, US services reports European stocks were mixed following the release of better-than-estimated German business confidence data and a worse-than-forecast report on US services.
The Ifo institute's business climate index on German business confidence, based on a survey of 7,000 executives, rose to 104.7 in November from 103.2 in the previous month. Analysts had pencilled in a reading of 103.
"The confidence rebound could herald a recovery in business investment, which would boost growth back to trend levels in spring 2015, along with robust private consumption growth, resilient exports boosted by a weaker euro and some minor fiscal easing in 2015," said Berenberg analyst Christian Schulz.
"It is still early days: while investor confidence ZEW index also rebounded in November, the PMIs were weak."
The report came amid concerns about the euro-area's weak economy and low inflation. European Central Bank official Jens Weidmann said in Madrid that the Eurozone cannot rely on monetary policy to boost growth in the long-term.
The Bundesbank president's remarks come after the ECB's Mario Draghi cited the buying of government bonds as a possibility to tackle prolonged low inflation.
In the US, Markit's purchasing managers' index for services activity fell to 56.3 in November from 57.1 the previous month, missing the forecast for a reading of 57.3. A reading above 50 signals expansion.
The Dallas Fed manufacturing report for November showed the index remained at 10.5, compared to estimates for a drop to 9.
Earlier on, reports suggested China's central bank may again cut rates and loosen lending restrictions amid concerns about falling inflation.
The news followed the People's Bank of China's decision on Friday to slash rates for the first time in two years.
Friends Life, FirstGroup
Friends Life Group gained after Aviva said it's in talks to buy the company.
FirstGroup declined after report that the UK rail and bus operator will miss out on the London-Scotland East Coast Main Line train contract likely to be awarded this week.
Petrofac dropped after saying annual profit will be at the lower end of its guidance.
London Stock Exchange and Deutsche Boerse advanced after Citigroup recommended buying shares of the firms.
Raiffeisen Bank International AG jumped after ING Groep NV raised its stock rating to 'buy' from 'hold'.
The euro rose 0.32% to $1.2431.
Brent crude fell 0.11% to $80.29 per barrel, according to the ICE. |
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| | US Market Report | | US open: Stocks rise as confidence in the global economy grows US stocks advanced on Monday, as speculation suggested Chinese interest rates could be cut again and confidence in the global economy grew.
Just before 10:00 in New York, the Dow Jones Industrial Average rose 0.13%, while the S&P 500 was up 0.08% and the Nasdaq advanced 0.24%.
China is reportedly set to cut rates further and loosen lending restrictions amid concerns about falling inflation.
On 21 November, the People's Bank of China's announced it was slashing rates for the first time in two years.
"The PBoC decision to cut interest rates on Friday morning for the first time in two years has really given the markets a boost, particularly as people had not expected the central bank to take such bold measures," said Alpari UK analyst Craig Erlam.
"Targeted stimulus measures had been touted and even an injection of cash, but not a cut in interest rates which potentially shows just how concerned the PBOC is about growth and, maybe even more so, the inflation outlook."
Meanwhile, the president of the European Central Bank, Mario Draghi, said that, were inflation too remain low for an extended period of time, the ECB might implement bond buying.
"ECB quantitative easing is not guaranteed, but there is a higher probability that it will go ahead, given the Bank's mandate is to maintain price stability," said Jamie Brownlee, director at Citigate Dewe Rogerson.
"The ECB has done more than many could have imagined over the past few months, and we should expect the Bank to continue with growth supportive policies.
"Meanwhile, fiscal policy should be less of a drag on growth in 2015, as the European Commission forecasts a slight easing for the region in aggregate."
In corporate news, Tetraphase Pharmaceuticals rallied after reports emerged the company was exploring a sale, while Platinum Underwriters Holdings jumped over 20% after the reinsurer said RenaissanceRe Holdings will buy it for about $76 per share.
Best Buy advanced ahead of Black Friday on 28 November, while Tesla Motors gained after its chief executive said the electric-car maker planned to cooperate with BMW on battery technology and charging stations.
The dollar slid against the pound and the euro, but rose against the yen, while gold futures dropped marginally to $1.197.70.
The prices of oil opened the week of a negative note, with Brent crude and West Texas intermediate both losing more than 0.5% and trading at just under $80 and just over $76 a barrel, respectively. |
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| | Broker Tips | | Broker tips: LSE, Hargreaves Lansdown, British Land, Friends Life Financial services group London Stock Exchange's steady earnings growth, in an environment where most of its peers have suffered earnings downgrades, has seen its stock significantly outperform its peers.
Analysts at Citigroup expect the earnings momentum from the company's high-growth businesses, such as LCH Clearnet and FTSE, to continue. Meanwhile, the group's strategic review should see LSE deciding to sell Russell's investment management business, with the remainder of the unit set to be earnings enhancing. Citi's recommendation has been lifted to 'buy' from 'neutral'.
After upgrading their rating on Hargreaves Lansdown just last month, analysts at Citigroup have cut the stock from 'neutral' to 'sell' following the recent run in the share price.
"We upgraded from 'sell' to 'neutral' last month. Recently, however, shares have rallied strongly and there is now 17% downside to our target," the bank said on Monday, causing the stock to drop sharply. "We move back to 'sell' but make no change to [...] forecasts or 830p target."
Lower UK bond, or Gilt, yields have prompted broker Liberum to lift its net asset value (NAV) forecasts for UK property groups British Land and Land Securities.
However, with the stocks already up 20% over 2014 so far, the analysts reckon that these NAV upgrades are already in the price. They said that stock valuations now sit close to NAV, while returns look to peak in 2015. Liberum has downgraded its rating for British Land from 'buy' to 'hold' and has left Land Securities at 'hold'.
Canaccord Genuity has lifted its target for insurance firm Friends Life from 340p to 400p and repeated its 'buy' call, saying that the 5.6bn takeover offer from rival Aviva is a "good price" for shareholders. | | |
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