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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 open: Stocks sideswiped by oil plunge, growth concerns, Tesco profit warning UK stocks dropped sharply for the second straight session on Tuesday as plummeting oil prices, macro concerns and a profit warning from retail giant Tesco hammered market sentiment.
After losing 1% of its value the previous session, London's FTSE 100 was down a further 1.3% at 6,584 in early deals. The index has not closed below this level since 7 November.
Global stock markets were under pressure on Monday as crude prices fell to their lowest levels in over five years. Brent was trading as low as $65.29 a barrel on Tuesday while West Texas Intermediate fell to $62.25 a barrel, a level not seen since September 2009.
In economic data, 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.
"After yesterday's global growth concerns revival, we may have more of the same with this morning's German trade balance solidity showing a similar make-up to China's, benefiting from slowing exports and a plunge in imports," said Mike van Dulken, head of research at Accendo Markets.
"This is not what we want to hear for either nation, with hopes pinned on the former to help global growth and the latter to help the Eurozone region," he said.
In the UK, data is expected to show that industrial production has risen 1.8% in October following a 1.5% increase a month earlier, according to analysts' forecasts. Meanwhile, the NIESR releases its latest gross domestic product estimate, while the British Retail Consortium unveils November sales figures.
Investors were also feeling a little cautious following the news Greece has brought forward its presidential elections by two months, meaning they will now take place this month, potentially triggering a snap election. Athen's benchmark index was down over 6% early on.
Tesco shares tank, energy stocks extend losses
Tesco surprised the market with another profit warning, causing shares to sink early on. 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.
Supermarket rivals Wm Morrison and J Sainsbury also dropped sharply following the unscheduled trading update.
News of falling sales at high street bellwether John Lewis also hit sentiment in the wider retail sector with Next, M&S and Debenhams under pressure. Sales at John Lewis were down 10.6% in the week to 6 December after a strong showing over Black Friday week.
Oil and gas groups were continuing to feel the heat after the recent plunge in crude prices. Tullow Oil, Petrofac, BG Group, Soco International, Enquest, Premier Oil and Afren were all suffering heavy losses.
Polymers group Victrex was a rare bright spark on Tuesday 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.
A number of property stocks such as Land Securities, British Land and Shaftesbury were advancing as defensive sectors benefitted from a reduction in risk appetite. Consumer staples companies such as Imperial Tobacco and SABMiller also saw shares edge higher.
Land Securities also announced that it has sold two retail assets in Scotland for £224.1m as it continues to "reshap[e] our shopping centre portfolio to focus on dominant regional and Greater London assets". |
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| | Market Movers
techMARK 2,942.32 -0.92%
FTSE 100 6,583.95 -1.32%
FTSE 250 15,802.34 -0.94%
FTSE 100 - Risers
G4S (GFS) 279.90p +2.15%
Randgold Resources Ltd. (RRS) 4,254.00p +1.62%
Land Securities Group (LAND) 1,184.00p +0.34%
Reckitt Benckiser Group (RB.) 5,270.00p +0.29%
British Land Co (BLND) 772.50p +0.13%
Imperial Tobacco Group (IMT) 2,828.00p +0.07%
SABMiller (SAB) 3,350.50p +0.01%
FTSE 100 - Fallers
Tesco (TSCO) 165.05p -11.88%
Morrison (Wm) Supermarkets (MRW) 175.40p -5.14%
Sainsbury (J) (SBRY) 225.30p -4.45%
Weir Group (WEIR) 1,667.00p -4.25%
Aggreko (AGK) 1,498.00p -4.04%
Coca-Cola HBC AG (CDI) (CCH) 1,354.00p -3.49%
Petrofac Ltd. (PFC) 741.00p -3.39%
Tullow Oil (TLW) 378.70p -3.34%
Intertek Group (ITRK) 2,249.00p -2.85%
BP (BP) 405.65p -2.79%
FTSE 250 - Risers
Victrex plc (VCT) 1,918.00p +2.90%
Nostrum Oil & Gas (NOG) 560.00p +2.85%
Saga (SAGA) 153.50p +2.33%
Just Retirement Group (JRG) 147.80p +1.37%
Big Yellow Group (BYG) 588.50p +1.20%
Shaftesbury (SHB) 784.50p +0.84%
Spirent Communications (SPT) 67.20p +0.67%
Hellermanntyton Group (HTY) 300.00p +0.67%
Hikma Pharmaceuticals (HIK) 2,043.00p +0.64%
Synthomer (SYNT) 229.90p +0.61%
FTSE 250 - Fallers
Soco International (SIA) 243.30p -7.24%
EnQuest (ENQ) 39.86p -6.63%
Premier Oil (PMO) 176.00p -6.53%
Afren (AFR) 38.93p -5.67%
Ophir Energy (OPHR) 125.50p -4.56%
Fidelity China Special Situations (FCSS) 129.70p -4.42%
Ocado Group (OCDO) 336.40p -4.08%
Wood Group (John) (WG.) 565.50p -4.07%
Henderson Group (HGG) 211.00p -3.92% |
| | UK Event Calendar | | INTERIMS
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INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Current Account (GER) (07:00)
Retail Price Index (GER) (07:00)
Wholesales Inventories (US) (15:00)
GMS
Arian Silver Corporation (DI), Collagen Solutions, Paragon Diamonds
FINALS
easyHotel, OMG, RWS Holdings, Treatt, Victrex plc, Zytronic
AGMS
AB Dynamics, Aberdeen Latin American Income Fund Ltd , Billing Services Group Ltd., Debenhams, Fidelity Asian Values, GCM Resources, GETECH Group, Leed Resources, Xeros Technology Group
UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks drop as German imports and exports contract European stocks slumped as German imports and exports contracted in October.
The Federal Statistics Office said German imports fell 3.1% in October from a month earlier, compared to forecasts for a 1.7% decline. Exports dropped 0.5%, less than the 1.7% contract expected by analysts.
"While still-fragile domestic might have been holding back import growth, the drop in the oil price which began in October, is likely to have had the much bigger impact," said Berenberg senior economist Christian Schulz.
"Consumers and companies will increasingly benefit from sharply lower prices for oil imports since the end of September this year."
Brent crude fell 0.76% to $65.73. The head of state-run Kuwait Petroleum Corp. said that prices as likely to remain around $65 a barrel for the next six to seven months until the global economy recovers or OPEC changes its production policy.
In the UK, a report on industrial production is expected to show a 1.8% rise in October following a 1.5% increase a month earlier. Analysts also predict manufacturing production climbed 3.2% in October after a 2.9% gain the previous month.
Elsewhere in the UK, the NIESR releases its latest gross domestic product estimate while the British Retail Consortium unveils November sales figures.
Stateside, the focus will be on the release of NFIB's Small Business Optimism index,which is expected to rise to 96.5 in November from 96.1 the prior month amid signs of growth in the world's biggest economy.
Mining stocks fall
A gauge of mining companies, including Rio Tinto, edged lower after JPMorgan Chase & Co. cut its forecasts for iron ore through 2017.
Deutsche Bank AG slumped following reports the German lender has been accused of using underfunded shell companies to evade US taxes.
Royal Bank of Scotland dropped on reports the lender is seeking offers for its Coutts International private bank as soon as this week.
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 close: Stocks dragged lower by crude at five-year lows The main US equity benchmarks ended the Monday session moderately lower, with all eyes tracking the fall in crude prices to five-year lows.
As of 21:15 front-month West Texas crude futures were trading off by 4.42% to $62.89 per barrel on the NYMEX.
Not surprisingly, by the end of trading the largest losses were to be seen in the following industrial groups: Exploration & production (-5.16%), Coal (-4.98%) and Pipelines (-4.33%).
However, the Dow Jones Industrials finished the day just 0.59% lower at 17,852.48 points, while the S&P 500 was to be seen 0.74% lower at 2,060.31.
The drop came despite the President of the Federal Reserve bank of Atlanta, Dennis Lockhart, reiterating his call for a "sensible approach" to tightening policy, which he described as being patient when starting the rate hike cycle and cautious about subsequent moves.
Correlations are dead. Long live correlations!
Mc.Donald's retreated after posting a 2.2% drop in global like-for-like sales. When not adjusted for fluctuations in exchange rates, so-called system wide sales plummeted 6%. Sales in Latin America and Canada appear to have been a bright spot.
Cubist Pharmaceuticals rocketed after Merck announced its intention to purchase the firm for $8.4bn in cash or $102-a-share.
As an aside, Nick Colas, chief market strategist at ConvergEx, pointed out to CNBC how the correlation between the different asset classes had declined to a more than five-year low.
Reports of my (crude's) death have been greatly exaggerated
On Monday, Morgan Stanley lowered its forecast for the average price of Brent oil next year to $70 from $98, saying it expected it to trough in the second quarter, at $57.
However, "estimates of the oversupply are vastly overstated vs. true crude balances. The market may find balance as early as the second half of 2015 through demand stimulation, slower US production growth and/or an outage," the broker added. |
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| | Newspaper Round Up | | Tuesday newspaper round-up: FCA, Tesco, Chinese stocks Several senior executives at the Financial Conduct Authority will have to do without their bonuses. The decision was taken in anticipation of a report prepared by Clifford Chance, to be released on Wednesday, which will heavily criticise them for a blunder which hit the share prices of big insurers earlier this year, The Financial Times reports. Recently arrived Tesco chief executive Dave Lewis has managed some progress in his first 100 days on the job at the troubled food retailer. Hence the reason why analysts at the likes of HSBC and Bernstein have recently warmed to the shares. Lewis has pumped extra money into the stores to address his clients’ complaints about staffing, product availability and cleanliness. Ultimately, price is the battlefield on which Tesco will have to see off the likes of Asda, Morrisons, Sainsbury’s, Aldi and Lidl. Nevertheless, well done so far, says HSBC, The Times reports. Chinese stocks are undergoing a boom which is nothing short of an outright mania despite the country's economic slowdown and the threat of a crackdown by authorities. The Shanghai composite has galloped 32% higher over the last six weeks to hit a three-year high and yet corporate earnings are declining steeply. Unfortunately, as Andy Xie from Caixin points out, it will be impossible for China to deflate its epic bubble painlessly, The Daily Telegraph says. Black Friday and cyber Monday saw record orders at Asos over the three months ending in November. UK sales increased by nearly 25%, but trading conditions overseas remained tough. Revenues thus gathered momentum throughout the quarter after a fire hit the on-line retailer's warehouse during the summer. International sales on the other hand were off by 60%, The Daily Telegrpah writes. A lack of skilled workers from the UK is forcing many construction firms in London to turn down bidding opportunities, according to consultancy Manpower. Whereas a bricklayer normally gets paid £500 a week companies are now taking on skilled Portuguese bricklayers at twice that rate. On the upside, the survey results suggest that firms of a bigger size are set to lead a "charge" early on next year, with utilities being the most optimistic. Employers in Northeast England have the brightest outlook for jobs, The Guardian reports. Furniture maker DFS has put its flotation plans on ice as the company opts instead to focus on its plans for international expansion. In fact, just recently it opened shop in the Netherlands. Earlier this year Advent International, its private-equity owner, was reportedly looking at an initial public offering before the end of 2014, The Daily Express says. | | |
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