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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 pares session gains to end lower on low inflation woes London's FTSE 100 index underperformed its European peers on Tuesday as investors cut exposure on the back of inflation data from the UK and US.
Inflation in the UK fell to zero while in the US, it moved out of the negative zone back into zero. With inflation in both countries at the same rate, deflationary fears are weighing on sentiment for both US and UK markets.
The FTSE 100 index closed 0.26% at 7019, above the 7000 market but paring session losses to underperform rival European bourses.
Market participants were left more confused about upcoming policies by the two converging central banks, the Federal Reserve and the Bank of England. Though low inflation with weak energy prices can be viewed as a short - term positive for both economies, the long term risk of deflationary is worrying to say the least.
Data earlier on Tuesday from the Eurozone showing an improvement in manufacturing and services activity did little to help UK markets. China's poor manufacturing data weighed on commodity prices earlier in the session but market participants soon concluded that poor Chinese data equate to more Chinese central bank stimulus.
Traders also closely watched events unfolding in France where a Lufthansa Germanwings Airbus A320 en route to Dusseldorf from Barcelona crashed. According to reports from AFP, flight 4U9525 lost contact when flying at an altitude of 6800 feet altitude.
In commodity markets, oil prices moved off overnight lows with Nymex crude futures up 0.7% while gold prices added 0.2% The British pound dipped against the US dollar by 0.8% after the inflation data to change hands at $1.4874 and the 10-year UK Gilt pared earlier gains to trade up just 4 basis points at 121.29.
Kingfisher falls on derailed French bid while Wolseley gets hit by impairment charge
Shares in UK-listed home improvement retailer Kingfisher fell over 1% after its bid for French rival Mr Bricolage ran into trouble.
Shares in construction and building material company Wolseley dropped after first-half profits plunged due to a hefty impairment charge, though the group did raise its dividend after strong growth in the US.
Real estate investment trust Land Securities sold a 95% stake in London's Times Square building to private equity group Blackstone for £268.4m.
Centrica shares fell after Deutsche Bank downgraded its rating on the energy firm citing the risks of the upcoming UK elections.
Associated British Foods, the owner of Primark fell after Credit Suisse downgraded its 2015 and 2016 earnings forecasts for the company as it expects a weaker euro to hit profitability. |
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techMARK 3,242.18 -0.09%
FTSE 100 7,019.68 -0.26%
FTSE 250 17,579.24 +0.16% FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 613.50p +3.63%
Persimmon (PSN) 1,716.00p +2.45%
Coca-Cola HBC AG (CDI) (CCH) 1,221.00p +2.26%
St James's Place (STJ) 990.00p +1.59%
Barratt Developments (BDEV) 542.00p +1.59%
Old Mutual (OML) 234.80p +1.56%
Dixons Carphone (DC.) 431.20p +1.51%
Reed Elsevier (REL) 1,187.00p +1.45%
Sports Direct International (SPD) 655.50p +1.39%
GKN (GKN) 372.10p +1.31%
FTSE 100 - Fallers
Associated British Foods (ABF) 2,925.00p -2.86%
Wolseley (WOS) 4,098.00p -2.66%
Rio Tinto (RIO) 2,884.00p -1.99%
Glencore (GLEN) 301.35p -1.87%
Anglo American (AAL) 1,093.50p -1.84%
Standard Chartered (STAN) 1,120.00p -1.84%
Intertek Group (ITRK) 2,536.00p -1.67%
Kingfisher (KGF) 367.20p -1.48%
Randgold Resources Ltd. (RRS) 4,868.00p -1.36%
Carnival (CCL) 3,110.00p -1.30%
FTSE 250 - Risers
International Personal Finance (IPF) 504.50p +7.68%
Just Eat (JE.) 378.00p +5.70%
Zoopla Property Group (WI) (ZPLA) 180.00p +4.05%
Dairy Crest Group (DCG) 468.80p +3.26%
Virgin Money Holdings (UK) (VM.) 406.30p +3.23%
Entertainment One Limited (ETO) 330.00p +3.00%
Balfour Beatty (BBY) 231.20p +2.80%
Thomas Cook Group (TCG) 146.10p +2.74%
Unite Group (UTG) 595.50p +2.67%
UDG Healthcare Public Limited Company (UDG) 485.00p +2.58%
FTSE 250 - Fallers
Soco International (SIA) 161.00p -7.63%
Spire Healthcare Group (SPI) 365.00p -6.41%
Kaz Minerals (KAZ) 217.60p -6.17%
Barr (A.G.) (BAG) 640.00p -5.47%
Vedanta Resources (VED) 542.50p -5.07%
Brown (N.) Group (BWNG) 335.20p -4.77%
Premier Oil (PMO) 142.00p -4.63%
Ocado Group (OCDO) 345.70p -4.61%
Lonmin (LMI) 129.60p -3.64%
AO World (AO.) 179.00p -3.24%
FTSE TechMARK - Risers
Torotrak (TRK) 10.38p +6.41%
Gresham Computing (GHT) 88.00p +3.83%
Filtronic (FTC) 11.88p +3.26%
BATM Advanced Communications Ltd. (BVC) 13.38p +2.88%
Anite (AIE) 88.75p +2.01%
E2V Technologies (E2V) 200.00p +1.65%
Spirent Communications (SPT) 89.75p +1.41%
Ricardo (RCDO) 758.00p +1.07%
Kofax Limited (DI) (KFX) 503.00p +0.60%
Vectura Group (VEC) 150.75p +0.50%
FTSE TechMARK - Fallers
NCC Group (NCC) 203.00p -7.73%
DRS Data & Research Services (DRS) 13.00p -3.70%
RM (RM.) 143.00p -1.38%
Consort Medical (CSRT) 856.00p -1.10%
Skyepharma (SKP) 321.25p -0.85%
Dialight (DIA) 775.00p -0.70%
XP Power Ltd. (DI) (XPP) 1,510.00p -0.49%
SDL (SDL) 436.00p -0.46%
Microgen (MCGN) 120.00p -0.41%
Optos (OPTS) 344.50p -0.29% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks little changed after Eurozone PMI, UK inflation European stocks were little changed as investors weighed data on UK inflation and Eurozone manufacturing and services.
UK inflation fell to zero in February, after registering a 0.3% gain the previous month, worse than the 0.1% increase that was predicted. The Bank of England is targeting inflation of 2%.
"With inflation hitting zero in February, the UK is on the cusp of deflation," said Vicky Redwood, chief UK economist at Capital Economics.
"But a brief period of gently falling prices driven by lower energy prices is nothing to be feared - in the UK, at least, deflation will be a good thing for the economy."
Markit's flash purchasing managers' index (PMI) Eurozone composite, which includes manufacturing and services activity, rose to a 46-month high of 54.1 in March, from 53.3 in February. Analysts had expected a reading of 51.5. A level below 50 signals a contraction while a reading above that indicates expansion.
"The improvement provides welcome news to a region awaiting signs that the ECB's quantitative easing is stimulating the real economy," said Markit's chief economist, Chris Williamson. "The region's GDP looks to have expanded by 0.3% in the first quarter, buoyed by a 0.4% expansion in Germany and signs of a long-awaited recovery in France."
In China, manufacturing activity contracted, sending commodity producers lower. HSBC's PMI for manufacturing fell to 49.2 in March from 50.7 the prior month, missing forecasts for a reading of 50.5.
Greek reforms
Greece has promised to deliver a list of solid reforms by Monday to unlock further aid from creditors.
German Chancellor Angela Merkel met with Greek Prime Minister Alexis Tsipras in Berlin on Monday to discuss what to do about Greece's debt.
European Parliament chief Martin Schulz told Italy's La Repubblica he expects Greece and its creditors could clinch a deal by the end of the week that would release further aid.
Sources told Reuters that Greece risks running out of cash by 20 April unless it secures more financial backing.
The euro fell 0.26% to $1.0918.
Airlines slide after French crash
Deutsche Lufthansa AG declined after an aircraft of its subsidiary Germanwings crashed in the Digne region of southern France.
Danske Bank A/S jumped after Citigroup recommended buying the stock.
Hennes & Mauritz AB edged lower as the fashion retailer warned the strong dollar will add to purchasing costs this year. |
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| | US Market Report | | US open: Dow and S&P edge forward, as oil prices rebound US stocks fluctuated on Monday, as markets relinquished some of last week's gains, with investors digesting comments by Federal Reserve members.
Just after 10:30 in New York, the Dow Jones Industrial Average was 59.69 points up to 18,187.34, while the S&P rose 5.67 points and the Nasdaq shed 2.46 points.
St. Louis Federal Reserve President, James Bullard told CNBC that the dovish statement from last week may have misplaced investor expectations about the first rate hike, while Cleveland Fed President Loretta Mester, said the Fed could do more to help guide the market in terms of rate moves.
The dollar lost over 1% against the euro 0.3% against the yen but was largely stable agains the pound, while gold futures slipped 0.16% to $1,182.70.
Oil prices rebound from last week's losses, with Brent crude gaining 1.3% to $56.05 a barrel, while West Texas Intermediate rose 1.12% to $47.10 a barrel.
"US stocks have been especially sensitive to moves in the US dollar and oil prices so with both moving lower on Monday, US stocks look to follow suit," said CMC Markets analyst Jasper Lawler.
Sales of existing homes rose 1.2% in February to a seasonally adjusted annual rate of 4.88m, falling below analysts' expectations of a 4.94m reading.
According to figures released by the National Association of Realtors, existing home sales remain sluggish, having fluctuated over the 5m level for the past two and half years.
The report added that the median sales price of used homes hit $202,600 in February, a 7.5% increase year-on-year.
Meanwhile, the Chicago Fed National Activity Index dipped to -0.11 in February from -0.10 in January. Any reading below zero indicates growth below historic trends.
The three-month moving average was at -0.08 from +0.26 in the month before. For the monthly index, the production and consumption/housing sub-categories were also below zero.
In company news, cruise-operator Carnival Corp fell 1.17% after Deutsche Bank's analysts downgraded the rating on the stock to 'hold' from 'buy', while railroad operator Kansas City Southern dropped almost 7% after the company lowered its 2015 sales growth outlook.
Drugmaker Gilead Sciences fell 1.8% after Bloomberg reported the company had warned health-care providers on Friday that nine patients taking its hepatitis C drugs Harvoni or Sovaldi along with the heart treatment amiodarone had developed abnormally slow heart beats and one had been died following a heart attack.
Tenet Healthcare Corp rose over 5% after it announced it was creating a $2.6bn joint venture with United Surgical Partners International. |
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| | Broker Tips | | Broker tips: AG Barr, Centrica, ABF Analysts at Investec Securities upgraded their full year forecast for soft drink producer AG Barr, citing strong performances and acquisitions. On Tuesday, the FTSE 250 group said that its profit on ordinary activities, before tax and exceptional items, increased by 10% to £41.9m, as all the group’s core brands - RN-BRU, Barr, Rubicon and Strathmore – outperformed the market. Total turnover rose 2.7% to £260.9m, while stripping out the impact of the loss of the Orangina, the metric grew 3.3%. While group chief executive Roger White warned that market conditions were set to remain challenging, Investec said the company had plans in place to deliver organic growth in 2016, adding the Funkin acquisition will provide an additional boost. The brokerage said organic sales and margins should continue to improve next year, helped by "the benign cost environment and improved manufacturing efficiencies". Investec said it expected profit before tax to be £44.9m in 2015, with earnings per share amounting to 30.6p. The brokerage raised its target to 714p and upgraded its rating on the stock to ‘add’. UK utility giant Centrica had its rating cut to ‘sell’ from ‘hold’ by Deutsche Bank who cited the upcoming UK elections as a risk. “The UK’s energy utilities are facing the riskiest general election since 1992 and Centrica looks most exposed,” said Deutsche Bank. It believes Centrica’s shares could be worth at least 20% less under a Labour-led government than a Conservative one.
“The valuation gap could be much bigger given that Labour leader Ed Miliband’s mooted 10% energy retail price cut would wipe out Centrica’s group earnings. The outcome looks too close to call yet the shares appear to be pricing in a Conservative win,” added Deutsche Bank.
It cut the target on Centrica stock to 225p from 280p. For further context, Deutsche noted that in the month before the 1992 UK election UK utility shares dropped 9% on the expectation of a Labour victory but on the day after the election, when the Conservatives unexpectedly prevailed, UK utility shares jumped almost 20%. “We believe the stakes are similar this year but will the sector see such a happy ending? Current polls suggest the outcome of the election is finely balanced, and it may prove difficult for either main party to form a stable government after the election,” added the bank. It went on to add that the outlook energy retail profits and the valuation of regulated networks would both be affected by the election outcome. “We estimate that a 1% reduction in retail margins would reduce Centrica’s equity value by 10%,” said Deutsche. Shares in Primark owner Associated British Foods tripped lower on Tuesday after Swiss bank Credit Suisse lowered its earnings forecasts for the company citing euro weakness. Although the bank retained it’s ‘outperform’ rating and price target of 3,250p on the stock, the ongoing weakness of the euro currency as the European Central Bank launches its stimulus programme meant AB Foods’ earnings forecasts were up for the chop by 3% this year and 8% next year.
“AB Foods doesn't usually feature in our regular FX updates on the sector, but given the severity of the euro's demise it should. For ABF the impacts are more transactional than translational,” said the bank.
It noted that its Primark largely sources in US dollar, but increasingly has a euro revenue exposure.
"Nothing new in this, and we already had anticipated an 110bps margin decline. The last time (2009) the US dollar rose 25-30% against the British pound, Primark's margins fell 160 basis points and this now forms the basis of our 2015/16 forecast,” said Credit Suisse.
In the sugar business, Credit Suisse said the group's costs are in pounds but selling contracts are in euro.
"Though the beet price is set to fall in the new year the revenue line (in sterling) will be softer too unless euro prices rise (which at this stage isn't in our expectations),” added the Swiss Bank. | | |
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