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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 drop 2.1% on Greek politics, Tesco profit warning Political uncertainty, growth concerns and a profit warning from the UK's largest retailer sparked a sell-off on London's stock market on Tuesday, with the FTSE 100 finishing at levels not seen in over a month.
A surprise fall in UK industrial output also prompted worries that economic growth in Britain could tail off in the fourth quarter.
The FTSE 100 finished 2.1% lower at 6,529 with Tesco leading the decline after disappointing analysts with its profit guidance. The Footsie has not closed below this mark since 4 November when it settled at 6,453.97.
"The FTSE continued to fall as the lack of positive sentiment anywhere in the world meant the UK index had no chance of escaping its disappointing production figures unscathed," said analyst Connor Campbell from Spreadex. "With UK trade balance being revealed tomorrow, the FTSE will be praying for some strong numbers to drag it out of its recent dark spot," he said.
News that Greece has brought forward its presidential elections by two months rattled global stock markets on Tuesday, with Athens' own benchmark index faring the worst, dropping over 10%.
UK industrial production decreased 0.1% in October from the previous month, surprising analysts looking for a 0.2% rise. Chris Williamson from Markit said the results are a "timely reminder that policy-makers cannot be complacent about the UK's recent run of strong growth persisting into the New Year".
Meanwhile, German imports fell the most in almost two years in October,declining by 3.1% after a sharp rise of 5.2% in September. Exports fell by a less-than-expected 0.5%, leaving the trade surplus above forecasts at €20.6bn.
US stocks also got off to a weak start amid speculation that Federal Reserve officials may remove the "considerable time" phrase from their guidance on interest-rate rise as they ready the markets for impending policy tightening.
Tesco catches investors by surprise
Tesco surprised the market with another profit warning, causing shares to sink as much as 16%, though the stock only closed down 6.6%. In an unscheduled statement, the company said trading profit for the financial year ending February 2015 is not expected to exceed £1.4bn, compared with £3.315bn previously and analysts' forecasts which ranged from £1.8bn to £2.2bn.
The company also raised concerns for investors of rivals Wm Morrison and J Sainsbury after saying that it would unveil its hotly-anticipated strategic review at its next trading update next month, with analysts speculating about further price cuts.
Product-testing group Intertek and credit-checking firm Experian were heavy fallers after both were hit with a downgrade by Credit Suisse to 'neutral'. Temporary power and temperature control services outfit Aggreko had its rating lowered by Jefferies to 'underperform'. Shire and Galox Smith Kline were also weighed down as Bank of America Myriel Lynch cut its stance on the pharmaceutical stocks to 'neutral' and 'underperform' respectively.
Airline peers Easyjet and IAG, which have put in decent gains over the last few weeks on the back of the recent oil-price plunge, were falling sharply on Tuesday as crude prices rebounded after hitting a five-year low.
In contrast, the stabilisation in oil prices helped to erase losses at FTSE 100 oil producers Tullow Oil, BG Group and Shell, with all three stocks bouncing off their lows by the close. However, Afren and Enquest still finished sharply lower on the FTSE 250.
Polymers group Victrex was a rare bright spark after beating forecasts with a 9% rise in annual profits. The company also raised its full-year dividend by 5% and said it would be returning £43m to shareholders as part of a special dividend.
Lloyds fell after analysts at Citigroup said the lender is the most at risk in the upcoming British bank stress tests because of its exposure to the UK mortgage market. Results are due out on 16 December. |
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| | Market Movers
techMARK 2,906.66 -2.12%
FTSE 100 6,529.47 -2.14%
FTSE 250 15,714.28 -1.49%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 4,335.00p +3.56%
Fresnillo (FRES) 733.00p +2.45%
G4S (GFS) 279.80p +2.12%
Antofagasta (ANTO) 731.00p +0.62%
BG Group (BG.) 898.80p +0.42%
IMI (IMI) 1,225.00p +0.25%
FTSE 100 - Fallers
Tesco (TSCO) 174.90p -6.62%
Intertek Group (ITRK) 2,176.00p -6.00%
Coca-Cola HBC AG (CDI) (CCH) 1,329.00p -5.27%
Shire Plc (SHP) 4,335.00p -5.23%
easyJet (EZJ) 1,625.00p -4.69%
Aggreko (AGK) 1,489.00p -4.61%
Morrison (Wm) Supermarkets (MRW) 176.70p -4.43%
International Consolidated Airlines Group SA (CDI) (IAG) 458.00p -4.12%
London Stock Exchange Group (LSE) 2,155.00p -3.92%
Aberdeen Asset Management (ADN) 444.80p -3.66%
FTSE 250 - Risers
Victrex plc (VCT) 2,000.00p +7.30%
Hochschild Mining (HOC) 88.00p +6.47%
Ferrexpo (FXPO) 66.20p +2.87%
Elementis (ELM) 255.10p +1.51%
Kaz Minerals (KAZ) 249.00p +1.38%
Centamin (DI) (CEY) 51.40p +1.28%
Rathbone Brothers (RAT) 1,951.00p +1.09%
Acacia Mining (ACA) 254.00p +1.07%
BH Macro Ltd. GBP Shares (BHMG) 2,048.00p +0.89%
Daejan Holdings (DJAN) 5,395.00p +0.84%
FTSE 250 - Fallers
Afren (AFR) 38.82p -5.94%
Henderson Group (HGG) 208.00p -5.28%
Barratt Developments (BDEV) 445.10p -4.61%
Moneysupermarket.com Group (MONY) 215.40p -4.61%
Ocado Group (OCDO) 334.80p -4.53%
Fidelity China Special Situations (FCSS) 129.70p -4.42%
PZ Cussons (PZC) 315.80p -4.30%
EnQuest (ENQ) 40.95p -4.08%
Entertainment One Limited (ETO) 302.40p -4.00%
DCC (DCC) 3,363.00p -4.00% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks decline as Greek political uncertainty grows European stocks dropped on political uncertainty in Greece and a contraction in German imports and exports.
Greek Prime Minister Antonis Samaras brought forward a parliamentary vote on a new head of state by two months, which sent equities in the Mediterranean nation lower. The vote will now take place this month, potentially triggering a snap election.
In other euro-area news, German imports fell 3.1% in October from a month earlier, compared to forecasts for a 1.7% decline, the Federal Statistics Office said. Exports dropped 0.5%, less than the 1.7% contract expected by analysts.
The data comes amid concerns about the health of the Eurozone, with pressure building on the European Central Bank (ECB) to implement full-on quantitative easing.
However, International Monetary Fund Managing Director Christine Lagarde praised the measures that the ECB has taken to combat the crisis and urged governments of the need to implement fiscal policies in order to support growth.
In a speech given on Tuesday at the Bocconi University in Italy, Lagarde defined the ECB's steps in recent months as "bold" and insisted that the Eurozone central bank needed to "continue to play a crucial role in supporting demand".
In the UK, a report showed industrial production rose by 1.1% year-on-year in October, following a revised 0.8% increase a month earlier. Analysts had predicted a 1.8% gain.
Manufacturing production climbed 1.7% in October after a 2.2% rise the prior month, missing forecasts for a 3.2% jump.
The NIESR said it expects the UK economy grew by 0.7% in the three months in November.
Stateside, the NFIB's US Small Business Optimism index soared to an eight-year high in November, with a reading of 98.1 compared to 96.1 a month earlier. Analysts had pencilled in a reading of 96.5.
Miners drop
A gauge of mining companies, including Rio Tinto, edged lower after JPMorgan Chase & Co. cut its forecasts for iron ore through 2017.
Tesco's shares tumbled after saying its full-year trading profit will not be more than £1.4bn amid an accountancy scandal in which the grocer overstated its earnings estimate in September.
Deutsche Bank AG slumped following reports the German lender has been accused of using underfunded shell companies to evade US taxes.
Euronext NV slipped as Intercontinental Exchange sold the rest of its shares in the pan-European exchange. |
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| | US Market Report | | US open: Stocks suffer steep falls early on as global sell-off continues US investors joined in with the global rout of equities on Tuesday with Wall Street stocks suffering their biggest falls in two months.
The Dow Jones Industrial Average fell 0.9%, or 161 points, in early trading in New York, while the S&P 500 slid 0.9% and the Nasdaq dropped 1.1%.
This is the first time the Dow has opened with triple-digit losses since mid-October, according to Marketwatch.
Stocks were being pressured lower by a sell-off across global equity markets with Shanghai's benchmark index dropping the most since 2009 after China tightened collateral rules for short-term loans. The 5.4% slide was also partly attributable to a bout of profit taking after a recent rally pushed Shanghai stocks a three-year high.
Investors worldwide were also feeling a little cautious following the news Greece has brought forward its presidential elections by two months to December, potentially triggering a snap election. Greek bond yields soared while Athens' benchmark stock index sank over 11%.
Meanwhile, there was speculation that Federal Reserve officials may remove the "considerable time" phrase from their statement regarding the timeframe of the next interest rate rise as they ready the markets for impending policy tightening.
"The removal of this phrase will be viewed by the markets as a sign that the first rate hike is imminent, which could well spook investors," said analyst Craig Erlam from Alpari.
Oil prices continued to be in focus after touching a fresh five-year low on Tuesday. West Texas and Brent crude were both down 0.7% at $62.64 and $65.73 a barrel.
On a positive note, US small business optimism soared to an eight-year high in November, with a reading of 98.1 compared to 96.1 a month earlier. The figure, which was published by the National Federation of Independent Business's Small Business Optimism Index, beat the expectation of 96.5 and marked the highest reading since February 2007.
Conn, the electronics and appliance retailer, saw shares plummet after its chief financial officer Brian Taylor stepped down immediately as the company posted a surprise loss in the third quarter. The group also withdrew its 2015 forecast.
Spirit Airlines slipped after the carrier said profitability will decrease in the fourth quarter, as lower fares offset a decline in fuel prices.
Tesla Motors fell in early trading, extending the seven-day slump that has come amid concern cheaper fuel prices will make the company's luxury electric cars less appealing.
Bluebird Bio rallied after the company said its experimental gene therapy helped patients with an inherited blood disorder go without routine blood transfusions. Bluebird said it plans to talk to US and European Union regulators about speeding up the drug's development. |
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| | Broker Tips | | Broker tips: Tesco, Lloyds, ASOS A surprise profit warning from Tesco on Tuesday sent its share price plummeting, though analysts still see more downside to the stock which has already halved since the start of the year.
"Unfortunately, there remains only one constant amidst the turbulence, which is the market consensus. This remains rooted at a 'sell' and seems likely to remain so," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
Lloyds Banking Group is the most at risk in the UK banking stress tests, according to Citigroup, ahead of the results due next week.
"All listed banks are likely to 'pass', in our view, but we view Lloyds as most at risk, due to its large exposure to UK mortgages," the broker added. While the bank's risk profile has "improved markedly" over the past two years, Citi said that the company is still not without risk.
An in-line trading statement from online fashion retailer ASOS wasn't enough to change analysts' opinions on Tuesday as a number of brokerages remained on the fence about the stock. | | |
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