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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 erase gains as Brent drops 5%, Afren plummets UK stocks were levelled by a 5%-plus drop in the price of oil on Monday, overshadowing increased hopes of further stimulus from the European Central Bank.
The FTSE 100 finished flat at 6,501 by the close, erasing gains after hitting an intraday high of 6,542.43 early on.
"The Eurozone euphoria that is driven by quantitative easing talk is not felt in London as natural resource stocks weigh on the British market," said analyst David Madden from IG.
He said that turmoil in the commodity markets was "tak[ing] the shine off the ECB easing chatter", with oil and mining stocks falling sharply.
Brent crude was down 5.1% at $47.57 a barrel by Monday afternoon, a level not seen in over five and a half years, as analysts at Goldman Sachs and Societe Generale slashed their price forecasts. Saudi billionaire Prince Alwaleed bin Talal was making headlines after claiming that $100-a-barrel oil is a thing of the past.
Heightened fears about deflation - mainly attributable to the collapse in oil prices - have added to speculation that the ECB will introduce full-blown quantitative easing when it meets next week.
Nevertheless, investors were showing caution ahead of the unofficial start of US fourth-quarter earnings season with aluminium giant Alcoa releasing its results after the closing bell on Wall Street. JPMorgan Chase & Co, Goldman Sachs and Well Fargo will also report this week.
Afren leads oil and gas stocks lower
Oil and gas group Afren was a big mover on the stock market on Monday, dropping 21% after analysis of the Barda Rash field in the Kurdistan region of Iraq showed a "material reduction" in reserve estimates. The company said it is now looking at its "strategic options" for its 60% interest in the project.
Others in the oil and gas sector were also under pressure as crude prices continued to fall, such as BG Group, Ophir Energy, Premier Oil and Soco International. In contrast, the lower oil price was helping stocks in the travel sector higher, including Carnival and TUI.
Mining stocks were also weaker, including Glencore, BHP Billiton, Anglo American and Rio Tinto.
Biopharmaceutical group Shire was lower after agreeing to acquire US rival NPS Pharmaceuticals for $5.2bn in cash, in a deal which it said will boost its revenue and earnings growth profile, while creating new business opportunities worldwide.
Shares in energy providers SSE and Centrica were hit by comments from Ed Miliband who said he would try to introduce a law enabling energy regulators to force companies to cut prices when wholesale costs decline.
Electrical appliances seller AO World jumped after saying it was confident of hitting full-year expectations following 26% revenue growth in the third quarter and strong demand seen on Black Friday.
Engineer GKN was given a boost by Credit Suisse which lifted its target on the stock from 380p to 410p and reiterated an 'outperform' rating, saying that automotive and train operations could "deliver upside surprise to earnings consensus estimates". |
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| | Market Movers
techMARK 2,990.35 +0.26%
FTSE 100 6,501.42 0.00%
FTSE 250 15,943.69 -0.42%
FTSE 100 - Risers
GKN (GKN) 348.50p +3.17%
Compass Group (CPG) 1,109.00p +2.59%
ARM Holdings (ARM) 998.00p +1.99%
Unilever (ULVR) 2,678.00p +1.98%
AstraZeneca (AZN) 4,672.50p +1.86%
Randgold Resources Ltd. (RRS) 5,020.00p +1.80%
Mondi (MNDI) 1,067.00p +1.72%
WPP (WPP) 1,380.00p +1.62%
Reckitt Benckiser Group (RB.) 5,330.00p +1.62%
Carnival (CCL) 3,063.00p +1.56%
FTSE 100 - Fallers
SSE (SSE) 1,503.00p -5.77%
BG Group (BG.) 800.00p -3.63%
Antofagasta (ANTO) 727.50p -3.00%
Centrica (CNA) 261.00p -2.90%
Intertek Group (ITRK) 2,393.00p -2.68%
Standard Chartered (STAN) 921.20p -2.53%
Weir Group (WEIR) 1,723.00p -2.49%
Glencore (GLEN) 279.45p -2.36%
Rio Tinto (RIO) 2,924.50p -2.03%
Ashtead Group (AHT) 1,117.00p -1.93%
FTSE 250 - Risers
AO World (AO.) 262.50p +6.23%
Laird (LRD) 317.40p +5.24%
Acacia Mining (ACA) 294.00p +4.81%
Hikma Pharmaceuticals (HIK) 2,380.00p +4.25%
Betfair Group (BET) 1,538.00p +4.08%
Dairy Crest Group (DCG) 468.20p +3.26%
Synthomer (SYNT) 237.00p +3.00%
Pace (PIC) 342.10p +2.95%
Domino's Pizza Group (DOM) 703.50p +2.70%
NMC Health (NMC) 500.00p +2.63%
FTSE 250 - Fallers
Afren (AFR) 27.31p -30.53%
Hunting (HTG) 441.00p -8.05%
Ophir Energy (OPHR) 130.00p -7.14%
Premier Oil (PMO) 135.40p -6.69%
Drax Group (DRX) 356.00p -5.94%
Soco International (SIA) 255.00p -5.13%
Wood Group (John) (WG.) 539.00p -4.94%
Redrow (RDW) 265.10p -4.33%
Petrofac Ltd. (PFC) 608.00p -4.33%
Cairn Energy (CNE) 160.60p -4.29% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks advance as stimulus hopes rise ahead of ECB meeting Stocks finished strongly as rising speculation that the European Central Bank (ECB) will introduce a new bond-buying programme offset falling oil prices.
The ECB is widely expected to introduce full-blown quantitative easing (QE) to address deflation and the Eurozone's stagnant economy when it meets on 22 January.
"The ECB rumour mill is boosting global risk-assets and pressuring the euro over possible plans for QE in the Eurozone," said Jasper Lawler, analyst at CMC Markets.
Fuelling the rumours, ECB governing council member Jozef Makuch on Monday told the Slovak news agency the ECB was ready to launch QE if needed.
He also said Europe was now in a position to deal with a potential exit of Greece from the Eurozone.
Meanwhile, crude oil prices declined further, with Goldman cutting its estimates for global benchmark crude prices. Saudi prince Alwaleed bin Talal has said that the $100-a-barrel threshold will never be reached again. Brent crude fell 4.6% to $47.88 per barrel, according to ICE.
"With every panicked reaction to these oil prices moving lower, we are seeing a little life being breathed back into the gold price as it explores the ground above $1,230 and even threatens to move into short-term overbought territory," said Alastair McCaig at IG.
Healthcare providers rally
Roche Holding AG gained following news it will pay more than $1bn for a majority stake in US genetics business Foundation Medicine.
Hikma Pharmaceuticals jumped as it announced it will be able to distribute its colchicine drug in the US after a court rejected Takeda Pharmaceutical's motion to block sales of the gout-flares treatment.
Deutsche Lufthansa AG edged higher after Europe's second-largest airline reiterated profit forecasts for this year. |
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| | US Market Report | | US open: Markets in decline with sliding oil following Saudi minister remarks Markets were falling on Friday as oil continued to slide on a quiet day for economic data.
Early in the day the Dow Jones Industrial Average decreased 0.95% to 17,737.37, the S&P 500 dropped 0.84% and Nasdaq descended 0.64%.
Analyst Jasper Lawler from CMC Markets said equities are now in negative territory over the year-to-date: "US stocks plummeted back into the red for 2015 after the US unemployment report on Friday showed the number of jobs created exceeded expectations but wages declined in December.
"There had been some concern going into the [data] over the declines seen after the previous month's report. The fall in wages proved the catalyst needed to sell the initial strength after the data came out."
Meanwhile, crude futures continued to fall with WTI figures down 3.7% at $46.64 a barrel and Brent about 3.7% lower at $48.30 a barrel.
Alastair McCaig from IG noted: "Oil prices have taken another step towards the Saudi oil minister's prophetic statement about the $40 level, as Brent crude has now moved below $49 a barrel.
"With every panicked reaction to these oil prices moving lower, we are seeing a little life being breathed back into the gold price as it explores the ground above $1,230 and even threatens to move into short-term overbought territory."
Over on COMEX, gold futures were advancing 0.48% to $1,221.90 while the dollar was prevailing against the pound, but receding against the yen and the euro.
The yield on a benchmark US 10-year Treasury opened flat at 1.94%.
Meanwhile, in the corporate world NPS Pharmaceuticals surged over 8% after the news that it will be acquired by Shire for $5.2bn. |
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| | Broker Tips | | Broker tips: Shire, Afren, AO World, Broadcasters NPS Pharmaceuticals, bought by Shire on Monday, is a "natural fit" for the UK pharma group and the $5.2bn price tag paid is "undemanding" if guidance is correct, according to UBS. The bank kept a 'buy' rating on Shire.
"With NPS product Gattex approved for the treatment of Short Bowel Syndrome, a gastrointestinal disease, and with Natpara for the treatment of hypoparathyroidism facing [approval this month], we believe the NPS acquisition makes strategic sense for Shire given its focus on gastro-intestinal disease and rare diseases," UBS said.
The substantial reduction in reserve and resource estimates at Afren's 60%-owned Barda Rash field is a "significant negative", according to Canaccord Genuity which downgraded the oil and gas stock from 'buy' to 'hold' and lowered its target from 65p to 27p.
Canaccord analysts Thomas Martin and Charlie Sharp said the development was "very disappointing". "This news clearly affects the price that Afren may be able to achieve, and eliminates a potential source of funds to aid with refinancing," they said.
'Buy' shares of AO World, recommended broker Numis Securities, after sales growth at the online electrical appliances retailer accelerated in the third quarter.
"We continue to believe that AO's superior customer proposition underpins a large growth opportunity, both in the UK and Europe and retain our 'buy' recommendation."
After a surprising decline in print advertising during 2014 and the inexorable increases of online video, broker Berenberg views the media sector as expensive, with the best potential for structural growth in online, gaming and outdoor. | | |
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