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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 retreat further from record on weak US data, Greece Stocks dropped sharply again on Wednesday as gloomy US economic data and ongoing uncertainty in Greece hammered sentiment. London's FTSE 100 finished 1.2% lower at 6,946.28, with investors extra cautious ahead of a policy statement at the Federal Reserve after the close.
This was the second straight day of +1% losses for the Footsie as the index continued to pull back from the record closing high of 7,103.98 reached on Monday.
After a slow start, markets sank into the red in the afternoon as data revealed that the US economy barely expanded at the start of the year. US gross domestic product grew by an annualised 0.2% in the first quarter, compared with the 2.2% growth seen in the fourth quarter and the 1% growth expected by analysts.
The dollar immediately weakened following the report, sending the euro-dollar exchange rate to its highest since early March, driven further by data which showed the first rise in European bank lending for three years.
"The benefit to exporters of the weaker euro has been a large driver of higher European stocks, so signs that the euro is starting to recover has been a cue for many to take profits after the 20%+ gains seen this year," said analyst Jasper Lawler from CMC Markets UK.
Greece was also in focus for investors on reports that Athens will present a list of reforms to creditors on Wednesday. The draft bill is set to outline several reforms for legislation, but was believed not to include additional concessions from the ones already agreed with lenders.
The Federal Open Market Committee is due to announce its vote on monetary policy at 19:00 following a two-day meet-up in Washington, with markets awaiting hints on when the first interest rate increase will be.
Earnings come in mixed
Banking group Barclays declined after first-quarter results showed statutory group profits decreased 26% to £1.4bn. However, adjusted profits were up 9% over last year, while the lender's capital buffers improved.
High street retailer Next was in fashion after first-quarter sales rose 3.2%, ahead of the 0% to +3% growth guidance given in March. More than half of the rise came from the opening of new space, with warmer weather and an earlier brochure also helping.
Industrial engineer Weir Group jumped after delivering a better-than-expected first quarter from minerals, its largest division. However, the company did say it was "taking further action to support profitability" in its oil and gas division amid tough conditions.
Antofagasta dropped as the copper miner scaled back its production guidance after first-quarter output was affected by numerous water issues at its Los Pelambres and Centinela projects.
British American Tobacco disappointed with a first-quarter update, which revealed that constant-currency revenues were down 5.8% amid a "challenging trading environment".
London Stock Exchange rose after saying it made a good start to the year with group revenues up 86% at £581m.
Homebuilders were weaker as speculation built ahead of the elections about growing support for Labour, which has promised to limit rent increases. Persimmon, Bellway, Redrow and Barratt Developments all finished in the red on concerns the move may stifle the demand for buy-to-let investments, analysts said.
Market Movers
techMARK 3,187.20 -1.13%
FTSE 100 6,946.28 -1.20%
FTSE 250 17,481.19 -1.01% |
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| | FTSE 100 - Risers
Weir Group (WEIR) 1,836.00p +5.64%
Next (NXT) 7,285.00p +1.67%
Royal Mail (RMG) 444.20p +1.51%
InterContinental Hotels Group (IHG) 2,844.00p +1.43%
Randgold Resources Ltd. (RRS) 5,095.00p +1.19%
Anglo American (AAL) 1,138.50p +0.84%
Sainsbury (J) (SBRY) 268.30p +0.83%
Travis Perkins (TPK) 2,076.00p +0.78%
Babcock International Group (BAB) 1,002.00p +0.70%
Hargreaves Lansdown (HL.) 1,231.00p +0.57%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 2,042.00p -3.72%
CRH (CRH) 1,823.00p -3.65%
Dixons Carphone (DC.) 418.90p -3.03%
Carnival (CCL) 2,964.00p -3.01%
Unilever (ULVR) 2,846.00p -2.83%
Centrica (CNA) 267.60p -2.80%
GKN (GKN) 350.00p -2.75%
Imperial Tobacco Group (IMT) 3,172.00p -2.73%
Diageo (DGE) 1,796.50p -2.68%
ARM Holdings (ARM) 1,125.00p -2.68%
FTSE 250 - Risers
Brown (N.) Group (BWNG) 349.90p +8.73%
Greggs (GRG) 1,155.00p +7.34%
NMC Health (NMC) 710.50p +7.00%
Supergroup (SGP) 1,016.00p +2.99%
Hellermanntyton Group (HTY) 345.40p +2.80%
Kaz Minerals (KAZ) 257.40p +2.55%
Ocado Group (OCDO) 352.90p +1.96%
Centamin (DI) (CEY) 64.05p +1.91%
Lancashire Holdings Limited (LRE) 643.50p +1.66%
Saga (SAGA) 188.60p +0.91%
FTSE 250 - Fallers
Just Eat (JE.) 449.50p -6.55%
Ophir Energy (OPHR) 161.90p -5.27%
Alent (ALNT) 368.00p -3.79%
Renishaw (RSW) 2,479.00p -3.69%
AL Noor Hospitals Group (ANH) 885.00p -3.33%
Smith (DS) (SMDS) 345.70p -3.30%
Redrow (RDW) 365.10p -3.21%
Daejan Holdings (DJAN) 5,545.00p -3.06%
Fidelity European Values (FEV) 176.50p -2.92% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drop after worse-than-forecast US GDP A worse-than-expected slowdown in US economic growth weighed on global stocks, sending European equities firmly lower ahead of the Federal Reserve's policy announcement. US gross domestic product (GDP) rose 0.2% year-on-year in the first quarter, well below analysts' estimates of 1% and a considerable slowdown from 2.2% the previous quarter.
"The important question for now is whether we see this slowdown as largely transitory or more permanent in nature," said Barclays Research analyst Michael Gapen.
"Our view is that most of the shortfall in activity relative to our expectation is related to transitory factors like adverse weather and the West Coast port strike, and we expect a bounce back in growth to 3.0% in Q2 driven by a solid 3.5% rise in personal consumption."
The report came before the Federal Reserve's policy decision with analysts expecting the central bank to keep interest rates unchanged at 0.25%. The market will be eager to see if the US central bank provides any hints on the timing of the first rate hike, with many seeing September as the earliest possibility for such a move.
"The consistently soft nature of the USA's recent data could see the return of a more 'patient' Fed, despite the door being opened for a 2015 rate rise," said Connor Campbell at Spreadex.
In Europe, German consumer prices rose 0.4% year-on-year in April, as expected, accelerating from the previous month's 0.3% gain. The European Central Bank (ECB) is trying to move inflation for the whole Eurozone back towards its target of just below 2% through its quantitative easing programme.
"April's slightly bigger-than-expected rise in German HICP inflation will reinforce hopes that recent price declines were a temporary phenomenon that will have positive effects on the economy," according to Capital Economics. "But with core inflation still low, there remains a risk of a more damaging and sustained bout of deflation in the Eurozone as a whole. "
The euro was up 1.73% to $1.1171 at the closing bell.
Greek debt negotiations
Greek finance minister Yanis Varoufakis is expected to remain in charge of creditor talks despite reports he was effectively sidelined after the government reshuffled its negotiating team.
Greece was reportedly expected to present draft reform legislation to creditors on Wednesday, lifting hopes of a deal to unlock further bailout funds.
Prime Minister Alexis Tsipras said he expects a deal as soon as next week
The ECB is set to increase emergency liquidity assistance or Greek banks by €1.4bn to €76.9bn.
Barclays falls on Q1
Barclays dropped after reporting first-quarter statutory group profits decreased by 26% to £1.4bn, mainly due to provisions for foreign exchange litigation.
Next gained after reporting a stronger-than-estimated start to the year as warmer weather and new store openings boosted sales.
Subsea rallied after reporting a rise in quarterly profit that surpassed market forecasts.
Spain's BBVA slumped despite saying net profit more than doubled in the first quarter from a year ago, beating forecasts.
Antofagasta declined after reporting a drop in copper production. |
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| | US Market Report | | US open: Stocks decline on disappointing GDP as investors await Fed decision US stocks slid on Wednesday, as investors digested disappointing economic data and awaited a statement from the Federal Reserve for further hints about the interest rate outlook. At 15:00 in London, the Dow Jones Industrial Average was down 43 points, while the S&P 500 and the Nasdaq lost five and 12 points respectively.
The central bank's meeting will conclude at 19:00 BST on Wednesday with a statement, which will be closely monitored by investors looking for clues on the timing of a first rate hike.
"There is a strong determination to raise rates among members of the FOMC but they are equally concerned about derailing the economic recovery at a time when so many headwinds exist," said Oanda's senior market analyst Craig Erlam.
"They'll want to see at least some of these pass before they act, particularly the inflation concerns as this is a core aspect of their mandate."
US gross domestic product (GDP) expanded by far less than expected over the first three months of the year, although some activity gauges had been hinting at just such an outcome.
GDP expanded at a 0.2% quarter-on-quarter annualised pace in the first three months of the year, well below the 1% expected by analysts and the 2.2% growth seen in the fourth quarter.
"The slowdown looks temporary, as a rebound from the first-quarter weakness is already being signalled by forward-looking survey data, but the sustainability of any upturn is by no means convincing yet," said Chris Williamson, chief economist at Markit.
"Policymakers will probably want to see how the economy performs in the second quarter before passing judgement on whether the time is right to start the process of normalising policy.
"That leaves September as the first realistic possibility of rates being hiked, providing of course that the economy bounces back in coming months."
US pending home sales rose for the third consecutive month in March, reaching the highest level since June 2013.
Figures released by the National Association of Realtors, showed the index rose 1.1% month-on-in March to a seasonally adjusted 108.6, in line with consensus expectations.
In corporate news, Twitter fell 3.86% after the group reported a wider-than-expected loss and sales missed estimates late on Tuesday.
The social media giant saw its target cut from $50 to $40 by analysts at Wedbush, while analysts at JP Morgan slashed their target from $67 and $55.
Time Warner rose 0.58% after its first-quarter profit and sales beat expectations, while wearable video cameras-maker GoPro soared 13% after it reported late on Tuesday that its first-quarter profit had jumped 52%.
Hilton Worldwide Holdings climbed 4.28% after reporting a 25% increase in first-quarter earnings, while sector peer Wynn Resorts plunged 14.2% after revealing on Tuesday it had swung to a loss.
The dollar fell 0.50% and 0.91% against the pound and euro respectively and gained 0.19% against the yen, while gold futures slid 0.52% to $1,207.60. |
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| | Broker Tips | | Broker tips: BP, Vodafone, Next BP smashed consensus forecasts with its first-quarter results on Tuesday, though analysts at UBS said that the read-through for future years is limited for the moment.
The Swiss bank maintained a 'neutral' rating and 450p target for the oil major, saying that changes to outer-year forecasts are only "negligible" due to the absence of material new guidance regarding the core business.
Vodafone's share price was performing well on Wednesday after the telecoms stock was upgraded by Berenberg from 'hold' to 'buy'.
The broker, which hiked its target for the shares from 214p to 270p, said the valuation was "attractive" after the stock's underperformance over the last year.
Next surpassed forecasts with its first-quarter sales update on Wednesday, though Investec maintained a 'hold' rating on the stock. | | |
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