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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 fall after worse-than-forecast US GDP slowdown UK equities dropped after a data showed a worse-than-expected slowdown in US economic growth in the third quarter.
Gross domestic product in the world's biggest economy rose an annualised 1.5% in the third quarter, marking a considerable easing from the previous quarter's 3.9% growth and well below analysts' expectations for a 1.6% gain.
"The slowing had been flagged well in advance by the monthly business surveys and higher frequency data, and is therefore unlikely to have a major impact on policymaking," said Chris Williamson, chief economist at Markit.
"Instead, the Fed will be firmly focused on how the fourth quarter is playing out, writing off some of the third quarter weakness as temporary."
The Federal Reserve on Wednesday decided to keep interest rates unchanged, as expected, but kept the door open to an increase in December, downplaying global economic headwinds in its statement on the decision.
In other big data releases on Thursday, US pending home sales fell for the second consecutive month in September. The index from the National Association of Realtors declined 2.3% month-on-month in September compared with a 1.4% decline in the previous month and with analysts' expectations for a 1% increase.
US jobless claims rose by 1,000 to 260,000 in the week to 24 October, compared with analysts' expectations for a 265,000 reading, the Department of Labor revealed.
UK house prices on the rise
Closer to home, Nationwide revealed UK house prices rose 3.9% in the year to October, compared to expectations for a 3.8% gain in line with the previous month. Compared to a month ago, prices rose 0.6% in October, more than the 0.5% estimated. In contrast, British mortgage approvals declined from 70,664 to 68,874 last month, compared with analysts' expectations for a 72,500 reading, according to data published by the Bank of England.
Business confidence in the Eurozone beat expectations in October, according to the European Commission. The index monitoring economic confidence in the 19-bloc country rose from 105.6 to 105.9 this month, reaching its highest level since June 2011 and exceeding forecast for a slight decline to 105.1.
German unemployment fell 5,000 in October, more than the 4,000 that was forecast following a revised 1,000 increase in September, Destatis revealed. The unemployment rate remained at 6.4%, as expected.
Meanwhile, according to Germany's statistical office, the consumer price index rose 0.3% year-on-year last month compared with a flat reading in the previous month and with analysts' expectations for a 0.2% gain.
Month-on-month, the CPI was also flat from the previous month, compared with analysts' expectations for a 0.1% decline.
In company news, miners were in negative territory as hints from the Fed about a possible December interest rate hike saw the dollar strengthen and gold prices drop. Randgold, Fresnillo and Anglo American were among the fallers.
Barclays tumbled after reporting a drop in third-quarter pre-tax profit as the cost of claims settlements weighed on results and revenues fell.
Smith & Nephew dropped after posting a drop in third quarter reported revenue on currency headwinds and announcing the acquisition of robotics company Blue Belt Technologies.
Meggitt continued to slide a day after warning that full-year profit will be well below forecasts.
Aviva jumped after Panmure Gordon reiterated its 'buy' rating on the insurer and the company reported a 25% increase in new business.
Playtech rallied after the gambling, software and services supplier reported strong trading in both of its divisions in the three months to September.
Merlin Entertainments gained, as analyst suggested last week's news that the company and a Chinese state-backed private equity partner are preparing a joint venture for Legoland Park in Shanghai.
Market Movers
FTSE 100 (UKX) 6,389.07 -0.76%
FTSE 250 (MCX) 17,105.61 -0.22%
techMARK (TASX) 3,082.29 -0.84% |
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| UK equities dropped after a data showed a worse-than-expected slowdown in US economic growth in the third quarter.
Gross domestic product in the world's biggest economy rose an annualised 1.5% in the third quarter, marking a considerable easing from the previous quarter's 3.9% growth and well below analysts' expectations for a 1.6% gain.
"The slowing had been flagged well in advance by the monthly business surveys and higher frequency data, and is therefore unlikely to have a major impact on policymaking," said Chris Williamson, chief economist at Markit.
"Instead, the Fed will be firmly focused on how the fourth quarter is playing out, writing off some of the third quarter weakness as temporary."
The Federal Reserve on Wednesday decided to keep interest rates unchanged, as expected, but kept the door open to an increase in December, downplaying global economic headwinds in its statement on the decision.
In other big data releases on Thursday, US pending home sales fell for the second consecutive month in September. The index from the National Association of Realtors declined 2.3% month-on-month in September compared with a 1.4% decline in the previous month and with analysts' expectations for a 1% increase.
US jobless claims rose by 1,000 to 260,000 in the week to 24 October, compared with analysts' expectations for a 265,000 reading, the Department of Labor revealed.
UK house prices on the rise
Closer to home, Nationwide revealed UK house prices rose 3.9% in the year to October, compared to expectations for a 3.8% gain in line with the previous month. Compared to a month ago, prices rose 0.6% in October, more than the 0.5% estimated. In contrast, British mortgage approvals declined from 70,664 to 68,874 last month, compared with analysts' expectations for a 72,500 reading, according to data published by the Bank of England.
Business confidence in the Eurozone beat expectations in October, according to the European Commission. The index monitoring economic confidence in the 19-bloc country rose from 105.6 to 105.9 this month, reaching its highest level since June 2011 and exceeding forecast for a slight decline to 105.1.
German unemployment fell 5,000 in October, more than the 4,000 that was forecast following a revised 1,000 increase in September, Destatis revealed. The unemployment rate remained at 6.4%, as expected.
Meanwhile, according to Germany's statistical office, the consumer price index rose 0.3% year-on-year last month compared with a flat reading in the previous month and with analysts' expectations for a 0.2% gain.
Month-on-month, the CPI was also flat from the previous month, compared with analysts' expectations for a 0.1% decline.
In company news, miners were in negative territory as hints from the Fed about a possible December interest rate hike saw the dollar strengthen and gold prices drop. Randgold, Fresnillo and Anglo American were among the fallers.
Barclays tumbled after reporting a drop in third-quarter pre-tax profit as the cost of claims settlements weighed on results and revenues fell.
Smith & Nephew dropped after posting a drop in third quarter reported revenue on currency headwinds and announcing the acquisition of robotics company Blue Belt Technologies.
Meggitt continued to slide a day after warning that full-year profit will be well below forecasts.
Aviva jumped after Panmure Gordon reiterated its 'buy' rating on the insurer and the company reported a 25% increase in new business.
Playtech rallied after the gambling, software and services supplier reported strong trading in both of its divisions in the three months to September.
Merlin Entertainments gained, as analyst suggested last week's news that the company and a Chinese state-backed private equity partner are preparing a joint venture for Legoland Park in Shanghai.
Market Movers
FTSE 100 (UKX) 6,389.07 -0.76%
FTSE 250 (MCX) 17,105.61 -0.22%
techMARK (TASX) 3,082.29 -0.84% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks end slightly lower after mixed raft of data and earnings European equity markets declined on Thursday, dragged lower by some mixed economic data, while investors digested a hawkish policy statement from the Federal Reserve
The benchmark Stoxx Europe 600 closed 0.05% lower, while Germany's DAX fell 0.29% and France's CAC lost 0.10%.
The Fed stood pat on interest rates on Wednesday, but the accompanying statement suggested a rate hike in December may be on the cards.
As of 1630 GMT, the euro was on the front foot against the main currencies, gaining 0.41% and 0.55% against the dollar and the yen respectively and 0.21% against the pound, while Brent crude climbed 0.22% to $49.16 a barrel.
Mixed data in the Eurozone
On the economic figures released by the Federal Labour Agency showed German unemployment declined more than expected in October, while the unemployment rate remained unchanged at 6.4% - its lowest level since reunification.
Elsewhere, data from the European Commission showed business confidence in the Eurozone came in better than expected in October.
Meanwhile, according to Destatis, Germany's statistical office, the consumer price index rose 0.3% year-on-year last month compared with a flat reading in the previous month and with analysts' expectations for a 0.2% gain.
Month-on-month, the CPI was also flat from the previous month, compared with analysts' expectations for a 0.1% decline.
"We believe there is still some potential for a past euro weakness to push core goods prices higher in the near term," said Gizem Kara, senior European economist at BNP Paribas.
"With a tight labour market, domestic price pressures could also build up much quicker in Germany compared to elsewhere in Europe."
US economy slows down in Q3
Across the Atlantic, data released on Thursday showed gross domestic product expanded 1.5% over the three months to September, slower than the 3.9% gain registered in the previous quarter and weaker than analysts' expectations for a 1.6% reading.
"US GDP gave yet another indicator of why markets believe a December rate hike is optimistic at best from the Fed, with the headline rate falling back to 1.5%," said IG's market analyst Joshua Mahony.
Personal consumption expenditures, which make up the lion's share of GDP, grew at 3.2% after expanding by 3.6% over the previous three months, falling slightly short of consensus for a 3.3% increase.
Elsewhere, according to the Department of Labor, new claims rose by 1,000 to 260,000 in the week to 24 October, compared with analysts' expectations for a 265,000 reading
In company news, Deutsche Bank tumbled 7.25% after the company announced plans to cut up to 35,000 jobs over the next two years, as it posted a €6bn loss for the third quarter and said it will scrap its 2015 and 2016 dividends.
Royal Dutch Shell slipped 0.64% after the company slumped to a third-quarter loss of $6.1bn (£4bn), with earnings well short of forecasts. |
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| | US Market Report | | US open: Equity markets off on a downbeat note after GDP disappoints US stocks skidded early on Thursday, after figures released before the opening bell showed the world's largest economy slowed down more than expected in the quarter to September.
Shortly before 1400 GMT, the Dow Jones Industrial Average was down 28 points to 17,751.86, while the S&P 500 and the Nasdaq were six and 24 points lower respectively.
On Wednesday, the Fed decided to keep interest rates unchanged at 0.25%, as most analysts expected, and left the door open to an increase in December, downplaying global economic headwinds in its statement on the decision.
GDP slows down more than expected
Figures released on Thursday showed US gross domestic product expanded 1.5% over the three months to September, slower than the 3.9% gain registered in the previous quarter and weaker than analysts' expectations for a 1.6% reading.
Personal consumption expenditures, which make up the lion's share of GDP, grew at 3.2% after expanding by 3.6% over the previous three months, falling slightly short of consensus for a 3.3% increase.
"The high frequency data suggest that the US economy has entered the fourth quarter on a weak footing," said Markit's chief economist Chris Williamson.
"The US GDP data also add to signs that the global economy slowed in the third quarter, something which will worry policymakers, even if they are loathe top openly admit it."
Elsewhere, according to the Department of Labor, new claims rose by 1,000 to 260,000 in the week to 24 October, compared with analysts' expectations for a 265,000 reading.
Meanwhile, the average of new claims over the last four weeks fell by 3000 to a seasonally adjusted 259,250, the lowest reading in 42 years, the report added.
GoPro slumps
In company news, GoPro tumbled 15.7% after the maker of action cameras said late on Wednesday its earnings and sales missed estimates.
Biopharmaceutical group Baxalta gained 1.33% after delivering a positive full-year outlook on the back of better-than-expected quarterly profit, while the New York Times gained 2.22% after swinging to a profit.
Botox treatments-maker Allergan, slid 0.06% after it revealed it was recently approached by Pfizer over a potential takeover, while Starbucks and LinkedIn will report after the close.
Elsewhere, European stocks pulled back slightly, while Asian markets struggled for direction and oil prices declined, with West Texas Intermediate losing 1.41% to $45.32 a barrel and Brent losing 1.59% to $48.28 a barrel.
The dollar was broadly flat against the euro and the pound and gained 0.16% against the yen, while gold futures edged 0.37% lower to $1,151.84. |
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| | Broker Tips | | Broker tips: Centrica, Aviva, BP Citigroup upgraded Centrica to 'buy' from 'neutral', saying it offers one of the best value propositions among the UK utilities.
"Despite the potential for short-term headwinds from the CMA energy investigation, with potentially negative headlines on tariffs, an end to evergreen tariffs and the introduction of a default tariff, we believe Centrica's shares are already discounting such risks," it said.
The bank said that in the context of a flat or falling wholesale commodity price environment, Centrica's retail business, with its premium brand, should perform well.
Even in the context of increasing retail competition, Citi reckons a 4% EBIT margin is sustainable in the long-term.
It said that with an average free cash flow yield of 8% versus a sustainable dividend yield of 5.3%, as well as potential to beat its £750m cost-cutting target, Centrica is well placed in the context of the sector.
The bank trimmed its price target on the stock to 260p from 265p.
All key metrics at Aviva are moving the right direction Panmure Gordon said on Thursday.
Life value of new business did particularly well, rising by 20% over the past nine months to hit £823m, well above the £764m expected by analysts. General insurance also had a "good" quarter, with the so-called combined ratio falling to 94% from 9.59%.
The ratio is the proportion of an insurer´s losses and expenses as a percentage of underwriting profits, so a figure below 100% indicates profitability.
The integration of Friends Life will deliver much more than the market currently anticipates, analyst Barrie Cornes added.
Furthermore, at £10.1bn the company´s Economic capital surplus was "robust".
The broker added that the insurance group was "probably the most attractive looking" within its coverage universe.
The stock is trading on an IFRS earnings multiple of 9.8 for 2015 versus 15.4 for its peers and at 4.4% the dividend yield is "not meagre".
For all of the above reasons, Panmure Gordon reiterated its recommendation to ´buy´with a target of 660p.
BP performed well in the run-up to the 'mini Strategy Update' on 27 October, Credit Suisse pointed out on Thursday, but in the end most of the points discussed were neither new nor unexpected.
The company´s assertion that 80% of its ´fit for FID (final investment decision)' projects can 'break-even' at less than $60 per barrel is also questionnable, analyst Thomas Adolff said.
Furthermore, the oil major´s underlying thesis that it can go from 'utterly disappointing' project execution to 'perfect execution' from one cycle to the next is "unrealistic", the analyst added.
"There are also question marks surrounding portfolio depth and quality. We do think BP can moderately grow to 2020, but question the outlook beyond with the resource base currently available to the company." |
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