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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 slide as Asian market continues to drag on China woes UK stocks returned to the red on Wednesday after the Asian market continued to struggle as concerns on China's flagging economy showed no signs of letting up. The FTSE 100 had rebounded on Tuesday after 10 days of declines as the People's Bank of China cut interest rates for the fifth time since November. The PBoC lowered its benchmark lending and deposit rates by 0.25 percentage points, adding that the rate cuts will become effective on 26 August and are aimed at reducing corporate borrowing costs.
China's central bank also reduced its reserve requirement ratio by 0.5 percentage points, starting from 6 September.
However, the move failed to soothe markets for long. The PBoC's decision to devalue to the yuan on 11 August has inflated worries on China's slowing economy. "Contagion from China to credit markets is deep and widespread, in our opinion. Despite the PBoC's latest measures, structural issues remain and things may get worse," Alberto Gallo at RBS said in a research note emailed to clients.
In economic data, the UK will at 0930 BST see the release of BBA loans for house purchases in July, which will indicate whether the housing market continues to thrive. Across the Atlantic, a report on US durable goods orders is due at 1330 BST with analysts expecting a 0.4% fall in July compared to a year ago.
On the company front, WPP dropped despite reporting a 44.5% jump in first half pre-tax profit as revenues grew 6.8%. Carillion slumped as it revealed flat pre-tax profits for the first half.
Miners continued to shoulder the weight of China woes with Anglo American, Antofagasta and Fresnillo in negative territory. Stocks in the sector were affected by lower gold, silver and copper prices. Going the other way, Betfair advanced after posting a 15% increase in revenue for the first quarter and announcing that it has agreed in principle to a possible merger with Paddy Power. |
| | Market Movers
techMARK 2,965.48 -0.75%
FTSE 100 5,993.23 -1.45%
FTSE 250 16,532.57 -1.13%
FTSE 100 - Risers
RSA Insurance Group (RSA) 517.00p +0.49%
Royal Bank of Scotland Group (RBS) 322.30p +0.34%
Admiral Group (ADM) 1,549.00p +0.13%
FTSE 100 - Fallers
SABMiller (SAB) 2,913.00p -3.06%
Anglo American (AAL) 666.00p -2.59%
Standard Chartered (STAN) 725.70p -2.59%
Glencore (GLEN) 140.65p -2.53%
Aberdeen Asset Management (ADN) 306.70p -2.45%
Antofagasta (ANTO) 565.50p -2.42%
Johnson Matthey (JMAT) 2,621.00p -2.24%
Unilever (ULVR) 2,530.00p -2.13%
ARM Holdings (ARM) 876.50p -2.12%
Fresnillo (FRES) 626.50p -2.03%
FTSE 250 - Risers
Betfair Group (BET) 3,098.00p +19.02%
OneSavings Bank (OSB) 330.80p +4.09%
AO World (AO.) 124.90p +1.63%
Euromoney Institutional Investor (ERM) 1,039.00p +1.37%
Pace (PIC) 336.60p +1.35%
Cranswick (CWK) 1,600.00p +1.20%
Moneysupermarket.com Group (MONY) 317.70p +1.05%
Spire Healthcare Group (SPI) 333.50p +0.91%
Electra Private Equity (ELTA) 3,214.36p +0.76%
Man Group (EMG) 153.90p +0.72%
FTSE 250 - Fallers
Ladbrokes (LAD) 96.65p -4.87%
Just Retirement Group (JRG) 183.30p -4.18%
Lonmin (LMI) 34.90p -4.02%
Synergy Health (SYR) 1,543.00p -3.68%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 413.00p -3.26%
Auto Trader Group (AUTO) 338.20p -3.01%
Polar Capital Technology Trust (PCT) 533.50p -3.00%
William Hill (WMH) 356.10p -2.89%
JPMorgan American Inv Trust (JAM) 249.40p -2.77%
Vedanta Resources (VED) 479.60p -2.74%
FTSE TechMARK - Risers
Skyepharma (SKP) 280.75p +5.05%
SDL (SDL) 378.25p +1.61%
Dialight (DIA) 557.50p +1.00%
Torotrak (TRK) 5.65p +0.89%
KCOM Group (KCOM) 89.50p +0.85%
IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 199.59 +0.22%
FTSE TechMARK - Fallers
Oxford Biomedica (OXB) 8.51p -6.99%
Innovation Group (TIG) 34.00p -2.86%
Spirent Communications (SPT) 76.50p -1.92%
Oxford Instruments (OXIG) 851.50p -1.62%
Ricardo (RCDO) 885.00p -1.12% |
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| | UK Event Calendar | | Wednesday August 26
UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trades Surveys (11:00)
Services Producer Price Index
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
Durable Goods Orders (US) (13:30)
MBA Mortgage Applications (US) (12:00)
INTERIMS
Anglo Pacific Group, Bioquell, Cape, Carillion, Frontline Ld, HSS Hire Group , NMC Health, Optimal Payments Plc, Paddy Power, PJSC Magnit GDR (REG S), Skyepharma, Vimetco NV GDR (Reg S), WPP
Q2
Frontline Ld, MHP SA GDR (Reg S)
GMS
Motive Television
INTERIM DIVIDEND PAYMENT DATE
Aberdeen UK Tracker Trust
INTERIM EX-DIVIDEND DATE
First Quantum Minerals Ltd.
AGMS
Coral Products, Great Eastern Energy Corp Ltd. GDR, IGas Energy, Iomart Group, Latham (James), Livermore Investments Group Ltd., New Century AIM VCT, Ovoca Gold, Oxford Technology 2 VCT, Oxford Technology 3 VCT, Oxford Technology 4 Venture Capital Trust, Oxford Technology VCT |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Equities back in the red as China slowdown fears persist European stocks fell at the open, taking their cue from Wall street, where indices closed in the red after failing to hold on to initial gains as worries about a slowdown in China persisted. At 0900 BST, the benchmark Stoxx Europe 600 was down 2.1%, France's CAC 40 was 2.3% lower and Germany's DAX was down 1.9%.
On Tuesday, markets rallied after the People's Bank of China announced that it was lowering its benchmark lending and deposit rates by 25 basis points and cutting the reserve requirement ratio by 50 basis points.
However, the euphoria was short-lived. "As investors agree that the Chinese rate cut is only serving to inflate their bubble even more, we are back in risk off territory," said Mike McCudden at Interactive Investor. "In early trade we are seeing low volumes as investors retreat back to the sidelines while the latest saga plays out. Another rate cut was not what the doctor ordered and will only serve to increase their debt mountain and risk of a spectacular crash."
"Best advice would be to back off and let market forces dictate where equities should settle. The 150% rise in Chinese equities in the past year was long overdue a correction and the PBOC needs to start being ahead of the curve if they are to restore sentiment."
Basic resources, which rely heavily on demand from China, took the brunt of the selling, with the Stoxx 600 index for the sector down 2.1%.
On the corporate front, mergers and acquisitions were in the spotlight after bookmarkers Paddy Power and Betfair said they have agreed in principle to a possible merger that would create one of the world's largest public online betting and gaming companies by revenue.
Shares in both companies surged in early trading, with Betfair up 19% and Paddy Power up 17%.
Elsewhere, Swiss offshore rig operator Transocean slid after saying it plans to stop investor payouts and book CHF2bn in impairments. German car maker Volkswagen was also on the back foot after it said sales in China, which is its biggest market, fell 5% in the first seven months of the year. |
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| | US Market Report | | US close: Stock market reverses gains with Dow and S&P ending lower The US market rally was short-lived on Tuesday as stocks ended the session in negative territory. The Dow the S&P 500 closed about 1.3% lower while the Nasdaq fell 0.45%, reversing earlier gains. Stocks had plunged on the wide-spread panic of 'Black Monday', sparked by concerns over China's shrinking economy.
In an effort to boost China's flagging economy, the People's Bank of China cut interest rates for the fifth time since November. The PBOC lowered its benchmark lending and deposit rates by 0.25 percentage points, adding that the rate cuts will become effective on 26 August and are aimed at reducing corporate borrowing costs.
China's central bank also reduced its reserve requirement ratio by 0.5 percentage points, starting from 6 September, adding the cuts are meant to ensure enough liquidity and stable credit growth.
Goldman Sachs said the cuts are "positive moves which are much needed to support the economy and the market" but they are "unlikely to be sufficient by themselves".
"Our baseline forecast is for another 100bp of RRR cuts by the end of the year, most likely in two movesthe exact timing will be data and market dependent," analysts at GS said.
"Further benchmark interest rate cuts are relatively less likely compared with further RRR cuts, in our view, given policy makers' residual worry over inflation and concerns on FX outflows, though we still have another 25bp cut in our baseline."
In economic data, the Markit composite Purchasing Managers Index declined slightly in August, figures released on Tuesday showed.
The index fell 0.7 points to 55.0, while the sub-index monitoring the services sector slid from 55.7 to 55.2, marginally ahead of expectations for a 55.1 reading.
US consumer confidence jumped from 90.9 to 101.5 in August, well ahead of expectations for a 93.4 reading, its second-highest reading since the recession.
"The rebound in this month's survey is reassuring given the recent volatility in financial markets and the sharp decline in confidence observed last month, which was driven in part by concerns over Chinese growth," Barclays' analysts said in a note.
Meanwhile, according to the S&P Case-Shiller 20-city composite index, prices rose 0.09% month-on-month in June and 4.49% year-on-year. Sales of new single-family homes rose last month, recovering from the sharp decline they suffered the previous month.
According to figures released by the Commerce Department, new home sales rose 5.4% in July to a seasonally-adjusted annual rate of 507,000, after a 7.7% slump in the previous month.
Analysts had expected a 5.8% increase for a 510,000 annual rate last month, compared with a downwardly revised 481,000 rate in June.
In company news, Netflix gained after entering bear market territory on Monday, while Apple advanced after falling to a 10-month low in the previous session.
Best Buy rose after its profit and sales beat estimates. Sector-wise, oil prices picked up with Brent crude rising 0.51% to $42.91 per barrel and West Texas Intermediate increasing 1.6% to $38.87.
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| | Newspaper Round Up | | Wednesday newspaper round-up: Banks, Fastjet, Uber Banks, already facing intense competition from hedge funds to secure top talent, have warned that they risk being handicapped in the hiring race by an overzealous interpretation of EU bonus rules. A legal analysis of EU legislation covering bankers' pay as made it clear that the rules must be applied across the sector, in theory removing the right of countries to apply exemptions. - Financial Times Active managers of UK equity funds have shielded investors from the worst of the market turmoil, with seven in 10 performing better than the falling FTSE 100 and FTSE All-Share indices. - Financial Times
Move over Billy and never mind the meatballs, the boss of John Lewis has warned Ikea that the department store is aiming to take its place as Britain's biggest home and furniture retailer. Ikea arrived in the UK in 1987 and its warehouse stores have become firmly established as the country's favourite destination for flatpack furniture, chairs and lighting. - Guardian
Complaints to the financial ombudsman about fee-paying packaged current accounts have soared to 1,000 a week, making them the second most complained about financial product after payment protection insurance. The Financial Ombudsman Service has been receiving batches of complaints submitted by claims management firms, many of which have switched their attention from PPI to encouraging people to claim compensation for alleged packaged account mis-selling. - Guardian
Fastjet, the budget airline that aspires to become a pan-African carrier, has passed a major milestone and struck a deal to buy its first plane. The Aim-listed company, which was founded in 2012 and backed by easyJet founder Sir Stelios Haji-Ioannou, is on Wednesday expected to announce that it has signed a letter of intent to purchase a nine-year-old Airbus A319. - Telegraph |
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