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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: Equities drop as investors digest BoE policy, Chinese inflation UK equities dropped as the Bank of England decided to keep policy unchanged and as China concerns persisted following the release of data on inflation and produce prices. The BoE unsurprisingly voted 8-1 in favour of maintaining interest rates at 0.5% and the asset purchase programme at 3375bn. Policymaker Ian McCafferty remained the only member of the Monetary Policy Committee to vote for an increase in rates, minutes of the policy meeting revealed.
However, the MPC highlighted that inflation remains well below the 2% target, with the 12-month consumer price index rising slightly to 0.1% in July. The move also comes amid worries on China's flagging economy.
"Given the increasing concerns surrounding China and the strength of the global economy and the impact that this had on financial markets across the world in August, it was perhaps unsurprising that no members were tempted to join McCafferty's side," said Cebr economist Sam Alderson.
"While growth in the UK economy has remained relatively strong in 2015, momentum is showing some signs of waning amidst the current headwinds. With the outlook for inflation remaining restrained, the MPC should be in no rush to raise rates early next year."
Elsewhere in the UK, Halifax revealed that house prices rose 2.7% in August to £204,674 month-on-month, exceeding economists' expectations for a 0.5% increase and way above the 0.4% decline registered in the previous month.
Separately, the Royal Institution of Chartered Surveyors said house prices in Britain would be 6% higher at the end of the year than they were in January. The average price for a house in the UK will increase by over £16,000 from the £272,000 level it was at in December 2014, RICS said.
China CPI, PPI figures
China remained in focus as data showed the consumer price index increased 2% in August from a year earlier following a 1.6% rise a month earlier, beating forecasts for a 1.8% gain. The growth was driven by pork prices.
Craig Erlam, senior market analyst at Oanda, said the rise was "not enough to ease the concerns of investors" as producer prices fell much more than expected, "increasing the risk of the economy experiencing deflation further down the road".
The producer price index fell 5.9% in August more than the 5.6% decline expected and July's 5.4% drop.
Trying to soothe concerns, Chinese premier Li Keqiang said China has the capacity to prevent its economy from falling apart and to succeed in its economic goals this year.
Speaking at the World Economic Forum in Beijing on Thursday, Li said China will allow foreign central banks to invest in the onshore currency market. China will establish the yuan's cross-border payment system before year-end, he added.
US data
US wholesale inventories declined 0.1% month-on-month in July from a downwardly revised 0.7% growth in June, falling short of analysts' expectations for a 0.3% reading, figures from the Commerce Department showed.
According to the Labor Department, US import prices slumped 1.8% month-on-month in August compared with a 0.9% decline in July and with analysts' expectations for a 1.6% drop.
The Labor Department said unemployment claims fell by 6,000 to 275,000 in the week to 5 September, down from the two-month of 282,000 recorded the prior week.
"At 275,000 to the 279,000 forecast the improvement wasn't vast, but was still notable enough to push the potential September rate hike to the forefront of investors' minds," said Connor Campbell, financial analyst at Spreadex.
Companies
Dixons Carphone rallied after the company reported an 8% like-for-like increase in first quarter revenue, driven by market share gains in mobile phones.
Wm Morrison slumped after posting 35% drop in underlying first half pre-tax profit as revenue fell on the back of price cuts.
Next jumped after reporting a 7.1% gain in first-half pre-tax profit, with revenue up as the company sold more items at full price than it had expected.
Home Retail Group declined after saying like-for-like sales at Argos fell 2.8% to £897m in the second quarter due to a decrease in sales of electrical goods driven by TVs , tablets and white goods.
Tullow Oil dipped after HSBC slashed its price target on the stock to 310p from 514p to reflect the bank's lowered oil price assumptions.
Barratt Developments gained a day after reporting a 45% jump in profits to £565.5m, supported by improving mortgage availability and government support through its Help to Buy scheme.
BHP Billiton, Glencore, Admiral and Standard Life were in the red as they went ex-dividend on Thursday.
Market Movers
techMARK 3,088.66 -0.70%
FTSE 100 6,155.81 -1.18%
FTSE 250 17,020.06 -0.78% |
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| | FTSE 100 - Risers
Barratt Developments (BDEV) 659.00p +3.29%
Ashtead Group (AHT) 1,018.00p +2.78%
Inmarsat (ISAT) 1,048.00p +2.44%
Dixons Carphone (DC.) 427.50p +1.81%
Taylor Wimpey (TW.) 202.10p +1.61%
Next (NXT) 7,775.00p +1.30%
Persimmon (PSN) 2,124.00p +1.14%
Direct Line Insurance Group (DLG) 364.20p +0.89%
Mondi (MNDI) 1,485.00p +0.88%
InterContinental Hotels Group (IHG) 2,433.00p +0.79%
FTSE 100 - Fallers
Glencore (GLEN) 132.90p -7.84%
BHP Billiton (BLT) 1,060.00p -5.95%
Admiral Group (ADM) 1,540.00p -4.58%
Standard Chartered (STAN) 713.60p -4.09%
Anglo American (AAL) 717.00p -3.49%
Tesco (TSCO) 185.55p -2.96%
Morrison (Wm) Supermarkets (MRW) 170.90p -2.84%
HSBC Holdings (HSBA) 505.20p -2.64%
Standard Life (SL.) 413.80p -2.59%
Centrica (CNA) 232.20p -2.56%
FTSE 250 - Risers
Polymetal International (POLY) 524.50p +5.60%
Telecom Plus (TEP) 1,117.00p +3.04%
Nostrum Oil & Gas (NOG) 511.50p +2.50%
BTG (BTG) 661.00p +2.40%
Phoenix Group Holdings (DI) (PHNX) 858.50p +2.39%
Crest Nicholson Holdings (CRST) 591.00p +2.25%
Close Brothers Group (CBG) 1,530.00p +1.86%
Bellway (BWY) 2,585.00p +1.69%
Redrow (RDW) 496.00p +1.66%
Rank Group (RNK) 262.60p +1.63%
FTSE 250 - Fallers
Lonmin (LMI) 23.22p -8.47%
Tullow Oil (TLW) 192.40p -7.37%
Premier Oil (PMO) 84.70p -6.25%
Petrofac Ltd. (PFC) 813.50p -5.90%
Home Retail Group (HOME) 140.00p -5.85%
Entertainment One Limited (ETO) 269.40p -5.71%
Hunting (HTG) 430.00p -5.35%
Foxtons Group (FOXT) 234.60p -4.79%
CLS Holdings (CLI) 1,810.00p -4.74%
Evraz (EVR) 70.45p -4.67%
FTSE TechMARK - Risers
Gresham Computing (GHT) 116.50p +5.91%
BATM Advanced Communications Ltd. (BVC) 18.25p +1.39%
Innovation Group (TIG) 40.00p +0.63%
E2V Technologies (E2V) 246.50p +0.20%
Oxford Biomedica (OXB) 8.19p +0.12%
FTSE TechMARK - Fallers
Oxford Instruments (OXIG) 640.50p -3.76%
SDL (SDL) 366.25p -3.04%
Skyepharma (SKP) 360.50p -1.77%
Ricardo (RCDO) 879.00p -1.62%
Spirent Communications (SPT) 78.25p -0.95%
Promethean World (PRW) 39.00p -0.95%
XP Power Ltd. (DI) (XPP) 1,600.00p -0.62%
NCC Group (NCC) 256.00p -0.58%
KCOM Group (KCOM) 93.50p -0.53%
Sepura (SEPU) 181.00p -0.28% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks decline amid fresh concerns over global economic growth European stocks declined on Thursday, snapping a three-day winning streak amid renewed concerns over a global slowdown. The benchmark Stoxx Europe 600 index fell 1.22%, while France's CAC 40 slid 1.46% and Germany's DAX closed down 0.90%.
The euro gained 0.49% and 0.76% against the dollar and the yen respectively but fell 0.26% against the pound, while Brent crude rose 0.96% to $48.04 a barrel.
Volatility spreads across Asia
Stocks in Asia ended lower following disappointing data releases. Figures showed core machinery orders in Japan - a key indicator of capital expenditure - fell 3.6% in July, compared with expectations for an increase.
In China, the producer price index dropped 5.9% in August, its biggest fall since 2009 and suggestive that deflation remains a risk.
The consumer price index rose to 2% in August from a year ago. "Just when investors though it was safe to get back in to the market, weak Chinese data has sapped confidence once again," said Mike McCudden, head of derivatives at Interactive Investor.
Mixed data in the Eurozone
On the economic data front, Spanish industrial production grew by 0.6% month-on-month in July, boosted by a jump in energy output, according to the country's statistics office, INE.
Meanwhile, French industrial production fell unexpectedly in July, dropping by 0.8% over the month against consensus for a 0.2% increase, as factory output decreased by 1%.
There was further bad news from Greece, where the unemployment rate rose to 25.2% in June from 25% in May, remaining at record highs but down from 26.6% in the same month last year.
In the UK, the Bank of England voted 8 to 1 to keep the interest rates unchanged, though policymakers added that economic risk had increased due to the China-driven volatility that has plagued the markets over the last month.
Even though the reasons for this decision are fairly obvious, investors still appeared to be sobered by the confirmation from the central bank that 'risks to the growth outlook were skewed moderately to the downside' across August due to the price-eroding pressure of China," said Spreadex's financial analyst Connor Campbell.
Across the Atlantic, US import prices in August slumped to their lowest level since the 2009 crisis, while weekly unemployment benefits pulled back from the two-month high they had registered in the previous week.
In company news, German utility EON tumbled 7.61% after it issued a profit warning and said it has abandoned plans to spin off its nuclear power plants. |
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| | US Market Report | | US open: Stocks struggle for direction as import prices slump US equities struggled for direction early on Thursday, as investors digested a batch of mixed economic data. Shortly after 1500 BST, the Dow Jones Industrial Average was down 14 points to 16,239.04 while the S&P 500 and the Nasdaq were one and nine points higher respectively.
"Whenever US stocks look cheap, dealers swoop in with the confidence that the Fed is not going to increase interest rates next week," said IG's market analyst David Madden.
"The jump in Chinese inflation overnight has left US traders fairly sure that Beijing will not be devaluing its currency against the greenback in the near future."
US import prices slump
According to figures released by the Labor Department, unemployment claims fell by 6,000 to 275,000 in the week to 5 September, in line with expectations and down from the two-month of 282,000 recorded the prior week.
"Consistently low readings for initial and continuing jobless claims suggest that the separations side of the labour market remains healthy, and we see little reason to expect a meaningful shift in labour market dynamics in the near term," analysts at Barclays said in a note.
Meanwhile, US import prices slumped 1.8% month-on-month in August compared with a 0.9% decline in July and with analysts' expectations for a 1.6% drop.
On a year-on-year basis, import prices tumbled 11.4%, the biggest fall since the 2009 crisis, from a 10.5% decline in the previous month and against analysts' expectations of 11.1% drop.
In company news, Apple edged 0.98% as the tech giant recouped some of the losses it registered on Wednesday after unveiling a business-oriented iPad Pro, new iPhone models and a revamped Apple TV.
GoPro climbed 1.16% after plummeting 10.3% in the previous session, while Krispy Kreme Doughnuts edged 0.78% lower after it lowered its full-year guidance late on Wednesday.
Athletic apparel Lululemon Athletica plunged 9.77% after its second quarter results missed estimates
Sports-clothing retailer Zumiez Inc. and recruitment company Korn/Ferry International are on tap after the close.
Elsewhere, Asian equity markets closed mostly lower, as the volatility that has characterised China over the last couple of weeks spread to Japan, dragging European stocks lower as a result.
The dollar was flat against the euro and gained 0.39% against the yen but lost 0.47% against the pound, while gold futures climbed 0.76% to $1,110.40. |
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| | Broker Tips | | Broker tips: StanChart, BP, Tullow Oil The largest UK banks face several further operational headwinds which the market may not be fully factoring in yet, analysts believe. Foremost among those is the 2018 implementation of the IFRS9 accounting standard regarding provisions, which will be half again as high as IAS39. That will reduce those lenders' Tier1 equity ratios by 70 basis points. On average, their tangible net asset values will be cut by 6%, although StanChart and Lloyds Banking Group will be the most affected, analysts at Exane BNP Paribas said.
Near-term dividend expectations may also be impacted, the analyst team led by Jonathan Pierce explained in a research note sent to clients.
On the basis of all of the above, Exane downgraded shares of Barclays to underperform from neutral and those of Lloyds to neutral from outperform. Their targets were cut by 10% and 9% to 260p and 82p, respectively.
StanChart on the other hand was kept at underperform, although the target on its stock was slashed by 22% to 700p.
HSBC and RBS were kept at neutral. The target on the stock of the former was lowered 11% to 540p while that for the latter was kept at 360p.
Bernstein upgraded oil giant BP to 'outperform' from 'market perform' and kept the price target unchanged at 450p.
It said that given recent relative share price performance, it sees attractive upside of more than 30%.
It noted that BP has underperformed the European oil and gas sector by 5% and the European market and major peers by 10% in the third quarter so far, which seems extreme. "Our recent analysis of BP's ability to weather really tough oil price storms e.g. 1987-1997 highlighted their resilience and will prove valuable in the current storm many investors expect," said Bernstein.
Shares in Tullow Oil were under pressure after HSBC slashed its price target on the stock to 310p from 514p to reflect the bank's lowered oil price assumptions.
On 31 August, HSBC cut its Brent price assumption to $55.4 a barrel for 2015 from $62.5. For 2016-2018, the bank now expects an annual progression of $60/70/80 a barrel versus $75/90/105 previously.
Nevertheless, it said it continues to see significant upside in Tullow. It noted that the TEN project in Ghana is now more than 65% complete and remains on track for first oil mid-2016.
The bank added that Tullow has acted decisively to reduce its cash burn. |
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