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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 higher as PBoC plays down investors' concerns UK equities advanced on Monday, led by gains in Glencore and Antofagasta, as China's central bank governor tried to play down concerns over a slowdown in the economy.
Glencore jumped after revealing its plan to reduce $30bn debt. Chief executive Ivan Glasenberg and finance chief Steven Kalmin said the company aimed to issue up to $2.5bn in new shares, cut its dividend, sell some assets and dispose of its stake in its agricultural business . Merrill Lynch analysts were among those to upgrade their rating on the stock.
Antofagasta was boosted as copper prices gained. The group last month announced it remained on track with its targeted streamlining measures, which should cut $160m of cost for the year and enable the cash-generative producer to outperform many rivals.
Meanwhile, the People's Bank of China governor Zhou Xiaochuan said the stock market has almost completed its correction after a bubble in the first half of the year.
"At present, the exchange rate of the renminbi against the dollar is stabilising, the correction in the stock market is already mostly over and the financial markets show hope for stabilising," he said at the G20 in Turkey over the weekend.
However, China cut its 2014 growth rate to 7.3% from 7.4% on Monday, adding to worries about the flagging economy.
Citi said in a research note that even a "major" slowdown in China would only have a modest effect on economic growth in the UK, although it might be enough to keep the Bank of England 'on hold' next year in so far as global disinflation is reinforced. JP Morgan also downplayed the risks posed to developed markets by the Asian giant, even as it admitted that the sensitivity of emerging markets economies is far greater.
Separately, it was revealed that China's foreign exchange reserves dropped last month as the country moved to prop up its currency by selling US dollars.
The Asian giant's stockpile of greenbacks decreased by $93.9bn to $3.557trn in August, somewhat more than the $70bn economists had pencilled in and the largest ever month-on-month decline.
Some observers have been fretting that excessive capital outflows from the country could lead to tighter financial conditions and stymie Beijing's attempts to bolster growth.
China's trade data on Tuesday may provide further insight into the impact the flagging economy has had on exports and imports. Inflation data on Thursday will also be closely followed by the market.
Closer to home, Britain's main manufacturing lobby EEF has halved its forecast for growth this year after overseas orders fell to their lowest since the financial crisis.
British manufacturing grew 3.1% last year, its best performance since 2010, but the EEF said it expected growth to slow this year to 0.7%, compared to an earlier forecast of 1.5%.
Elsewhere in the UK, the North Sea oil and gas sector has shed more than 5,000 jobs since late last year, according to the country's new Oil and Gas Authority, amid a decline in oil prices.
Brent crude was down 3.7% to $47.82 per barrel at 1650 BST.
In the Eurozone, German industrial production returned to expansion, according to the country's economy ministry. Industrial output rose 0.7% in July from a revised 0.9% drop the previous month, but fell short of the 1.1% reading analysts had estimated.
On a year-on-year basis industrial production climbed 0.5% compared with a 0.9% increase in the previous month but above the expected 0.3%.
Investors' confidence in the Eurozone slumped in September, as a slowdown in China weighed on sentiment, according to a survey by research group Sentix. The gauge of economic confidence among investors slipped from 18.4 in August to a seven-month low of 13.6 in September, short of consensus forecast for a 16.1 reading.
"While the perception of the current situation remains stable, economic expectations have cooled sharply," Sentix said in a statement.
"Investors now see the slowdown in China as well as in other emerging markets as a significant burden for the Eurozone's economy, which can no longer be compensated by good developments in the domestic Eurozone economy or the United States."
In the US, the market was closed for Labor Day with no economic data releases out.
Among companies, Pearson got a boost from a double upgrade on Monday, as both Investec and Kepler Cheuvreux raised their stances on the stock to 'add' and 'buy' respectively.
United Utilities rallied after Bernstein recommended the stock was one that would 'outperform', motivated by the valuation gap that has opened between it and Severn Trent since June.
RSA Insurance was higher as reports emerged that suitor Zurich Insurance had arranged financing to complete its bid for the London-listed company.
Fallers were led by Standard Chartered after unconfirmed news emerged on Friday afternoon that the Asia-focused bank may be cutting a quarter of its senior bankers.
Associated British Foods dropped after warning that margins were being squeezed by the impact of the strength of the US dollar on Far East sourcing.
Intu Properties slumped after chief operating officer Mike Butterworth revealed he will retire at the end of the year. The company said the process of determining how best to fill Butterworth's role had already begun.
Man Group climbed as the China head of the hedge fund manager denied she had been taken into custody by Chinese authorities to assist in a police investigation into market volatility.
Barclays rose after selling its UK secured lending portfolio to a group led by Goldman Sachs, which includes Elderbridge and Pollen Street Capital. |
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| | Market Movers
techMARK 3,072.86 +0.42%
FTSE 100 6,073.15 +0.50%
FTSE 250 16,837.45 +0.18%
FTSE 100 - Risers
Antofagasta (ANTO) 606.00p +7.35%
Glencore (GLEN) 132.10p +7.27%
Pearson (PSON) 1,124.00p +3.02%
United Utilities Group (UU.) 854.00p +2.28%
Legal & General Group (LGEN) 250.90p +1.50%
Anglo American (AAL) 678.20p +1.45%
Burberry Group (BRBY) 1,361.00p +1.34%
Standard Life (SL.) 407.40p +1.32%
CRH (CRH) 1,872.00p +1.24%
Johnson Matthey (JMAT) 2,627.00p +1.16%
FTSE 100 - Fallers
Standard Chartered (STAN) 701.00p -1.72%
Sports Direct International (SPD) 781.00p -1.45%
Coca-Cola HBC AG (CDI) (CCH) 1,288.00p -1.23%
BAE Systems (BA.) 439.60p -0.75%
Associated British Foods (ABF) 3,117.00p -0.70%
BP (BP.) 335.60p -0.68%
Sainsbury (J) (SBRY) 235.80p -0.67%
Intu Properties (INTU) 315.80p -0.50%
Taylor Wimpey (TW.) 197.90p -0.35%
InterContinental Hotels Group (IHG) 2,378.00p -0.29%
FTSE 250 - Risers
Kaz Minerals (KAZ) 160.50p +7.21%
Centamin (DI) (CEY) 59.75p +4.28%
Synthomer (SYNT) 350.70p +3.36%
IP Group (IPO) 243.50p +3.27%
Aveva Group (AVV) 2,059.00p +3.26%
Evraz (EVR) 68.25p +3.17%
Just Eat (JE.) 410.00p +3.14%
Jimmy Choo (CHOO) 155.00p +2.85%
Riverstone Energy Limited (RSE) 927.50p +2.49%
AO World (AO.) 136.90p +2.47%
FTSE 250 - Fallers
Lonmin (LMI) 25.39p -7.47%
Bwin party Digital Entertainment (BPTY) 104.90p -4.64%
Wetherspoon (J.D.) (JDW) 744.00p -3.63%
Premier Oil (PMO) 91.30p -3.39%
Redefine International (RDI) 53.15p -2.92%
Cairn Energy (CNE) 136.90p -2.63%
Ultra Electronics Holdings (ULE) 1,722.00p -2.33%
Ladbrokes (LAD) 95.00p -2.31%
Hunting (HTG) 459.10p -2.28%
Moneysupermarket.com Group (MONY) 329.70p -2.05%
FTSE TechMARK - Risers
Oxford Biomedica (OXB) 7.76p +3.47%
NCC Group (NCC) 250.75p +2.98%
Skyepharma (SKP) 344.00p +1.78%
KCOM Group (KCOM) 94.00p +1.08%
Gresham Computing (GHT) 104.50p +0.48%
SDL (SDL) 371.25p +0.27%
E2V Technologies (E2V) 238.25p +0.21%
FTSE TechMARK - Fallers
Dialight (DIA) 600.00p -4.31%
Oxford Instruments (OXIG) 795.00p -2.87%
Triad Group (TRD) 36.50p -2.67%
Torotrak (TRK) 6.25p -1.88%
Consort Medical (CSRT) 955.50p -1.85%
Spirent Communications (SPT) 78.75p -1.56%
Sepura (SEPU) 173.25p -1.42%
Ricardo (RCDO) 880.50p -1.01%
BATM Advanced Communications Ltd. (BVC) 17.50p -0.71%
IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 200.48 -0.08% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | European stocks closed higher on Monday, untroubled by a decline in their Asian counterparts, while a lack of economic data meant there was little for investors to work with.
The benchmark Stoxx Europe 600 closed up 0.49%, while France's CAC 40 gained 0.59% and Germany's DAX rose 0.70%
The euro gained 0.12% and 0.30% against the dollar and the yen respectively, but fell 0.37% against the pound, while Brent crude plunged 3% to $48.17 a barrel.
European investors were seemingly taking comfort from comments over the weekend by People's Bank of China Governor Zhou Xiaochuan, who told central bankers and finance ministers from the G20 that the correction in the stock market is almost done.
However, the comments could not prevent another decline across the board in Asia, where most markets closed in the red, with the exception of Japan's Nikkei Stock Average.
"Despite another wobble by the Shanghai Composite this morning, the European indices appear to have held off the spectre of more China-inspired losses this Monday," said Spreadex's financial analyst Connor Campbell.
Monday data
On the economic data front, German industrial production returned to expansion mode in July but not with the vigour that was expected.
According to the country's economy ministry, industrial output rose 0.7% in July from a revised 0.9% drop the previous month, but fell short of the 1.1% reading analysts had estimated.
"The recovery in the US and the Eurozone will more than compensate for the weakness coming from emerging Asia," analysts at UniCredit said in a note.
"In contrast to the statement of the ministry of economics, we think that one should not become overly concerned about the German intermediate goods industry."
There was, however, much worse news to come from the Eurozone, where investors' confidence slumped in September.
According to a survey released on Monday by research group Sentix, the gauge of economic confidence among investors slipped from 18.4 in August to a seven-month low of 13.6 in September, short of consensus forecast for a 16.1 reading.
In company news, shares in Italian utility Enel gained 1.74% after the company said it will meet its 2015 financial targets.
UniCredit climbed 0.98% after its chief executive told Italian newspaper La Repubblica that the bank doesn't need to raise capital. |
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| | US Market Report | | The US markets are closed today due to the celebration of Labour Day. |
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| | Brokers Tips | | Broker tips: DMGT, Pearson, GSK Exane BNP Paribas downgraded Daily Mail & General Trust to 'neutral' from 'outperform' and cut its price target to 850p from 920p.
It noted the stock's recent rebound, which has seen it outperform the media sector by around 10% in the last month following a precipitous drop in July after its weak third-quarter trading update.
"While we continue to see DMGT as offering exposure to a number of attractive, structurally growing assets, we see downside risks to consensus for 2016/17 forecasts in a number of key 'high-multiple' assets including RMS, Euromoney, Mail Online and DMG events, and a lack of positive catalysts on the horizon."
Still, it said the current valuation is not stretched versus peers, while EPS-accretive M&A or another buyback could offer some support going forward.
The bank added that it expects Mail Online to miss its 2016 £100m revenue target.
Pearson got a boost from a double upgrade on Monday, as both Investec and Kepler Cheuvreux raised their stances on the stock.
Investec lifted the stock to 'add' from 'reduce' given the recent underperformance of the shares. It also noted good dividend yield support, at around 5%.
Still, Investec said it continues to see mid-term pressure with limited evidence of positive structural/cyclical education drivers in numbers and flattish earnings per share growth in full-year 2016 despite extensive restructuring.
The brokerage cut its price target to 1,125p from 1,250p given EPS downgrades and peer multiple compression.
Kepler Cheuvreux also turned more positive on Pearson, upgrading it to 'buy' from 'hold' and raising the target to 1,400p from 1,300p after it carried out a case study that showed a solid market share performance.
"The most frequent question we receive from investors is whether the broad loss of US state testing contracts (guided £100m revenue miss in 2016) could entail market losses for Pearson in the larger US K-12 school textbook and services market," said the Swiss-French brokerage.
"We have run an in-depth analysis of the purchases of the State of Texas, underpinning on the contrary solid, competitive performance even, after the loss of the testing contract was made public."
It attributed the target increase to higher-than-expected proceeds from the sale of the Financial Times and The Economist.
Bank of America Merrill Lynch upgraded GlaxoSmithKline to 'neutral' from 'underperform' with an unchanged price target of 1,450p.
It noted that the stock is now trading around 18% off its April highs and 8% below the bank's price target, offering approximately 14% total return with a dividend yield of around 6%.
In addition, Merrill said that underlying earnings per share momentum may be bottoming. "Consensus EPS estimates for 2015/2016 are now broadly in line with ours, having fallen around 20% this year and having more than halved since early 2012."
The bank also said 2017-2020 EPS growth is back in line with the sector at 9%, while pipeline activity will increase to end 2016.
"Albeit not the key driver of our upgrade, we see pipeline news flow of interest starting to pick up which, against a backdrop of low expectation could be a net positive," it said.
Still, Merrill remains concerned about the company's balance sheet, which it said continued to be stretched, offering little strategic flexibility and presenting risk to the dividend beyond 2017. |
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