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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: FTSE 100 drops over 1% as oil and mining stocks drop Weakness in the oil and gas sectors and poor economic data from across the globe prompted a weak start to the week for the UK stock market, as equities pulled back from a two-week high.
With crude prices tumbling to their lowest in over five years, oil producers and stocks in the oil services sectors were registering sharp losses by the end of trade. Meanwhile, mining shares were weighed down by yet more disappointing data from top metals user China, where imports unexpectedly declined last month.
"Traders are coming to the realisation that without a new round of monetary easing from Beijing, there is little reason to buy mineral-related companies. There is no sign of the collapse in commodity stocks coming to an end any time soon," said analyst David Madden from IG.
London's FTSE 100 settled at 6,672, down 1.05% on the day after closing Friday's session at 6,742.84, its highest close since 21 November.
Global markets had finished last week strongly after the news that the US economy added 321,000 non-farm payrolls in November, its biggest monthly gain in three years. The better-than-expected data pushed both the S&P 500 and Dow Jones to new record highs on Wall Street on Friday, but both indices were retreating on Monday.
Sentiment was dampened early on after it was revealed the contraction in Japan was worse than originally thought in the July-September period, as investment and public spending increased by less than expected. Japanese gross domestic product shrank at an annual rate of 1.9%, compared with the initial estimate of a 1.6% contraction.
China's trade surplus rose to a record high in November, but annual export growth was much weaker than expected at 4.7% and analysts were caught off guard by a surprise 6.7% decline in imports.
Meanwhile, industrial production in Germany increased by just 0.2% in October, disappointing analysts who had expected 0.4% growth.
Oil-related stocks slide
Oil producers such as Tullow Oil, Shell, BP, Afren and Ophir Energy were falling as oil prices slumped, along with shares of engineering companies exposed to the energy market such as Weir Group, Petrofac and Hunting. Brent crude dropped as much as 3.1% to $66.94 a barrel on Monday, its worst level since October 2009.
Mining stocks were pressured lower by the weaker-than-expected Chinese data including BHP Billiton, Anglo American Rio Tinto and Glencore. Analysts at both Canaccord Genuity and JPMorgan Cazenove lowered their targets for BHP.
Retailer M&S dropped after problems with the firm's delivery service, as customers were warned that Christmas orders could take up to two weeks to arrive. The delay follows a backlog of Black Friday orders, which have also caused the next-day delivery service to be suspended.
Financial services group Hargreaves Lansdown was also extending losses made on Friday after the surprise departure of its chief financial officer Tracey Taylor after 15 years with the firm.
UK grocery chain J Sainsbury was also in focus after reports that an activist fund is talking with investors about buying up shares in the retailer. The Sunday Telegraph said Crystal Amber is looking to build a stake "as part of a bold plan that could see an attempt to engineer a takeover of the supermarket giant". The stock jumped early on but finished the session in the red.
Insurer Esure dropped after agreeing to buy the remaining 50% stake of price-comparison group Gocompare.com for ?95m. The deal will increase Esure's ownership of Newport-based Gocompare to 100% after its initial investment in 2010.
Supergroup was feeling the heat with shares dropping sharply ahead of the fashion retailer's half-year results later this week. "The owner of the brand SuperDry has warned on profits twice this year already, and traders aren't taking any chances!" said IG's Madden. |
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| | Market Movers
techMARK 2,969.51 -0.35%
FTSE 100 6,672.15 -1.05%
FTSE 250 15,952.47 -0.32%
FTSE 100 - Risers
ARM Holdings (ARM) 963.00p +1.74%
Admiral Group (ADM) 1,285.00p +0.55%
TUI Travel (TT.) 452.20p +0.49%
Friends Life Group Limited (FLG) 381.80p +0.34%
Bunzl (BNZL) 1,820.00p +0.33%
ITV (ITV) 213.90p +0.33%
Ashtead Group (AHT) 1,104.00p +0.27%
IMI (IMI) 1,222.00p +0.25%
Aviva (AV.) 507.00p +0.20%
Experian (EXPN) 1,057.00p +0.19%
FTSE 100 - Fallers
Weir Group (WEIR) 1,741.00p -5.28%
easyJet (EZJ) 1,705.00p -3.18%
Hargreaves Lansdown (HL.) 962.50p -2.88%
Marks & Spencer Group (MKS) 483.50p -2.70%
Royal Dutch Shell 'B' (RDSB) 2,171.50p -2.65%
BHP Billiton (BLT) 1,437.00p -2.51%
Royal Dutch Shell 'A' (RDSA) 2,095.50p -2.49%
CRH (CRH) 1,544.00p -2.22%
SABMiller (SAB) 3,350.00p -2.10%
Smiths Group (SMIN) 1,122.00p -2.01%
FTSE 250 - Risers
AO World (AO.) 285.00p +9.40%
Acacia Mining (ACA) 251.30p +6.30%
Ocado Group (OCDO) 350.70p +3.79%
Poundland Group (PLND) 330.70p +3.57%
FirstGroup (FGP) 112.70p +3.49%
Playtech (PTEC) 674.50p +2.43%
Hays (HAS) 143.20p +2.36%
Centamin (DI) (CEY) 50.75p +2.30%
Riverstone Energy Limited (RSE) 895.00p +2.29%
Genus (GNS) 1,351.00p +2.27%
FTSE 250 - Fallers
Afren (AFR) 41.27p -10.01%
Supergroup (SGP) 855.50p -7.21%
Lonmin (LMI) 167.20p -6.12%
Ophir Energy (OPHR) 131.50p -4.78%
Entertainment One Limited (ETO) 315.00p -4.37%
Hochschild Mining (HOC) 82.65p -4.17%
esure Group (ESUR) 206.60p -3.59%
Soco International (SIA) 262.30p -3.42%
Saga (SAGA) 150.00p -3.16%
Ted Baker (TED) 2,072.00p -3.00% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks in the red after oil prices slide, German industrial output data European stocks were in the red after another fall in oil prices and a worse-than-expected German industrial production.
Brent crude oil dropped 3.8% to $66.52 per barrel after Morgan Stanley cut its forecasts for the commodity. The bank said that oversupply would peak next year after OPEC decided against cutting output to address falling prices.
"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.
The market was also disappointed after German industrial production rose 0.8% year-on-year in October, missing expectations for a 0.9% gain. It followed a 0.1% increase in September.
In China, the trade surplus unexpectedly widened to $54.47bn in November from $45.41bn the previous month, despite export growth falling to a seven-month low of 4.7%, as imports unexpectedly declined.
"One problem we have here is that Chinese trade figures always throw up more questions than answers due to the lack of transparency," Alpari UK analyst Craig Erlam said.
"For example, in recent months, distortions with the reported trade figures between China and Hong Kong have led to suggestions that capital inflows are once again being passed off as exports."
Construction and chemical companies slide
A gauge of chemical and construction stocks declined, the most in more than a month.
Saint-Gobain declined as the company offered 2.75 billion Swiss francs to buy a controlling stake in Sika, a maker of construction chemicals. The Swiss company said the deal lacked industrial logic.
Bayer AG declined as the VCI trade group said German chemical-industry production and sales will rise 1.5% next year, matching gains in 2014.
Air France-KLM Group slumped after Europe's largest airline said cargo traffic dropped in November. |
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| | US Market Report | | US open: Energy stocks, McDonald's weigh as indices retreat from records Weak global economic data prompted US stock indices to retreat from record levels on Monday as the post-jobs report euphoria began to fade, with energy stocks weighing on markets as oil prices continued their slide.
By 10:08 in New York, the Dow Jones Industrial Average was down 0.04%, the S&P 500 was 0.06% lower, while the Nasdaq gained 0.09%.
The Dow and S&P 500 both set new all-time highs on Friday after the news that the US economy added 321,000 jobs in November, its biggest monthly gain in three years. The Dow in particular rose 0.3% to 17,958.79, coming close to the milestone of 18,000.
"With the dollar closing out last week at over 121 against the yen, it will only take one or two pieces of good news for the US markets to see the Dow finally breach that psychologically significant level. However, on a data-light day, the US will be looking for positivity from elsewhere if it hopes to reach that mark today," said analyst Connor Campbell from Spreadex.
US markets were tracking European indices lower after data showed that Japan's recession was deeper than originally thought, Chinese export and import growth was worse than expected, and German industrial output growth came in shy of forecasts.
With no major economic releases scheduled for Monday, the attention will be on Atlanta Federal Reserve president Dennis Lockhart, who is set to speak at 12:30 ET. Lockhart is one of the more dovish members of the Fed, although he currently is not a voting member of the Federal Open Market Committee.
Energy sector tracks crude lower
Energy stocks were under pressure such as oil producer Exxon Mobil and oilfield services group Schlumberger as crude prices dropped to their lowest in five years. Sector peers such as Chevron, Conocophillips, Hess Corp, Marathon Oil and Anadarko Petroleum were also trading in the red.
Fast-food giant McDonald's was also suffering steep losses early on after its November sales declined by more than expected. Global sales dropped 2.2% with the US suffered a 4.6% slide.
Wynn Resorts retreated after the government of Macau, where the firm generates over two thirds of its sales, forecast lower gaming revenue for 2015.
Cubist Pharmaceuticals soared after Merck & Co. agreed to acquire the firm for a deal worth $8.4bn. Merck will begin a $102-a-share tender for the group on Monday.
West Texas Intermediate (WTI) and Brent crude were trading at levels not seen since 2009 on Monday, with WTI falling as much as 2.6% to $64.20 a barrel and Brent dropped 3.1% to $66.94 a barrel. |
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| | Broker Tips | | Broker tips: DS Smith, Taylor Wimpey, Acacia Mining UBS has lifted its target for packaging group DS Smith from 340p to 355p and reiterated a 'buy' rating after the company's strong first-half results, saying it sees the potential for more deals in the future.
"DS Smith delivered an impressive performance during H1 with robust volume growth being delivered alongside further M&A activity and deleveraging," the bank said.
Meanwhile, Moody's Investors Service has said that last week's reform of the stamp-duty system in the Autumn Statement is "credit positive" for Taylor Wimpey and a number of other housebuilders.
Chancellor George Osborne announced last Wednesday a major overhaul of the stamp duty land tax (SDLT), which means that around 98% of house buyers will be better off.
Elsewhere, Deutsche Bank has taken a more positive view of the UK gold-mining sector, saying that the recent plunge in oil prices and weaker currencies should help producers to lower costs. | | |
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