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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 gain as disappointing non-farm payrolls push back rate hike forecasts UK stocks ended higher on Friday after a disappointing US non-farm payrolls report pushed back expectations for an interest rate hike. Non-farm payrolls rose 142,000 in September, falling well short of analysts' estimates for a 201,000 increase, the Labor Department revealed. August was also revised to 136,000 jobs, down from a preliminary estimate of 173,000.
The unemployment rate was unchanged at 5.1% in September, as expected. Average hourly earnings rose 2.2% in September, the same rate of growth as in the previous month and below forecasts for a 2.4% increase.
"While it's always important not to over-react to one single data release, we'll make an exception in this case," said Paul Ashworth, chief US economist at Capital Economics.
"The chances of a rate hike by the Fed this year just went way down," he added, saying he expects the central bank will wait until early 2016 for an increase.
Before toady's release, Federal Reserve chair Janet Yellen had said policymakers expected a rate rise this year. The Fed meets on 27-28 October and again in December.
The non-farm payrolls report was followed by weak US factory orders figures. According to the Commerce Department, factory orders declined 1.7% in August, compared with analysts' expectations for a 1.3% drop.
Closer to home and in more positive news, data showed UK construction activity improved more than expected in September.
The headline seasonally-adjusted Markit/CIPS UK purchasing managers' index climbed from 57.3 in August to 59.9 last month, well above the 57.5 analysts had expected and the long-run survey average of 54.7. A reading above 50 signals expansion.
In corporate news, banks rallied after news the Financial Conduct Authority is considering a deadline of spring 2018 for any final payment protection insurance claims being lodged. Standard Chartered and Lloyds were among the risers.
Mining companies Fresnillo, Glencore and Randgold Resources also flourished as gold rose to previous levels and other precious metals gained following the non-farm payrolls report.
Legal & General jumped after saying it will provide retirement payments under a group annuity contract to 14,000 Royal Philips US retirees and other former employees in its first American pension risk transfer deal.
Experian declined after it was hacked, exposing the private information of T-Mobile customers and potential customers in the US.
FirstGroup reversed earlier gains after saying overall trading is in line with management's expectations and its multi-year transformation plans continue to progress, despite a more challenging trading environment in some of the group's markets.
Paragon Group advanced after buying Five Arrows Leasing Group through its subsidiary Paragon Bank for £117m.
Market Movers
techMARK 3,017.91 +0.25%
FTSE 100 6,129.98 +0.95%
FTSE 250 16,796.08 +0.19% |
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| | FTSE 100 - Risers
Fresnillo (FRES) 633.50p +4.80%
Glencore (GLEN) 95.00p +4.37%
Randgold Resources Ltd. (RRS) 4,098.00p +4.22%
Aberdeen Asset Management (ADN) 306.50p +3.34%
Standard Chartered (STAN) 666.70p +2.92%
Aviva (AV.) 462.00p +2.74%
BP (BP.) 351.45p +2.69%
Rolls-Royce Holdings (RR.) 704.50p +2.62%
Legal & General Group (LGEN) 242.70p +2.58%
BG Group (BG.) 987.80p +2.46%
FTSE 100 - Fallers
Experian (EXPN) 1,034.00p -3.81%
Wolseley (WOS) 3,677.00p -2.78%
Persimmon (PSN) 2,003.00p -1.67%
International Consolidated Airlines Group SA (CDI) (IAG) 571.00p -1.55%
Berkeley Group Holdings (The) (BKG) 3,328.00p -1.48%
Barratt Developments (BDEV) 636.50p -1.39%
Carnival (CCL) 3,367.00p -1.38%
Travis Perkins (TPK) 1,951.00p -1.27%
CRH (CRH) 1,711.00p -0.98%
easyJet (EZJ) 1,748.00p -0.96%
FTSE 250 - Risers
Nostrum Oil & Gas (NOG) 527.00p +13.58%
Paragon Group Of Companies (PAG) 434.60p +10.08%
Petra Diamonds Ltd.(DI) (PDL) 86.65p +5.93%
Synergy Health (SYR) 2,249.00p +5.09%
Greencore Group (GNC) 293.50p +5.05%
Evraz (EVR) 78.90p +4.85%
Tullow Oil (TLW) 192.80p +3.99%
Weir Group (WEIR) 1,224.00p +3.64%
Morgan Advanced Materials (MGAM) 291.90p +3.47%
Clarkson (CKN) 2,281.00p +3.03%
FTSE 250 - Fallers
OneSavings Bank (OSB) 357.70p -6.24%
CLS Holdings (CLI) 1,829.00p -4.34%
AO World (AO.) 163.00p -2.98%
Crest Nicholson Holdings (CRST) 556.00p -2.97%
Bovis Homes Group (BVS) 994.00p -2.93%
Bellway (BWY) 2,458.00p -2.69%
Electrocomponents (ECM) 175.30p -2.56%
Card Factory (CARD) 386.00p -2.50%
Pace (PIC) 354.10p -2.48%
Redrow (RDW) 451.10p -2.38%
FTSE TechMARK - Risers
SDL (SDL) 361.25p +11.58%
DRS Data & Research Services (DRS) 12.75p +6.25%
Filtronic (FTC) 6.50p +4.00%
Skyepharma (SKP) 345.00p +2.45%
Oxford Biomedica (OXB) 7.89p +1.68%
RM (RM.) 167.00p +1.21%
Sarossa (SARS) 1.91p +1.06%
KCOM Group (KCOM) 90.50p +0.84%
NCC Group (NCC) 277.50p +0.63%
Dialight (DIA) 675.50p +0.45%
FTSE TechMARK - Fallers
Oxford Instruments (OXIG) 566.50p -2.41%
XP Power Ltd. (DI) (XPP) 1,625.00p -0.91%
Ricardo (RCDO) 885.00p -0.84%
Torotrak (TRK) 6.78p -0.66%
Sepura (SEPU) 174.00p -0.43%
Consort Medical (CSRT) 928.50p -0.43%
E2V Technologies (E2V) 226.50p -0.22% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Disappointing US non-farm payrolls trim gains but equities edge higher European stocks relinquished most of their earlier gains but managed to close on an upbeat note on Friday, after a largely disappointing US non-farm payrolls report all but guaranteed the Federal Reserve will not hike interest rates this month. The benchmark Stoxx Europe 600 index closed 0.47% higher, while Germany's DAX climbed 0.46% and France's CAC rose 0.73%.
The euro was on the front foot against the main currencies, gaining 0.72% against the dollar and rising 0.14% and 0.33% against the pound and the yen respectively, while Brent crude shed 1.06% to $47.19 a barrel.
US data weighs on European stocks
"Just like yesterday the negative American open had a big knock-on effect for the European indices, with the DAX and CAC almost completely losing the robust gains they had been posting this morning," said Spreadex's financial analyst Connor Campbell.
Data released on Friday showed producer prices in the Eurozone fell more than expected in August.
According to Eurostat, producer prices declined 0.8% month-on-month, compared with a 0.2% drop in July and analysts' expectations for a 0.6% fall.
On a year-on-year basis, producer prices were down 2.6% in August, compared with consensus for a 2.4% decline and a 2.1% drop in the previous month.
Across the Atlantic, a report on non-farm payrolls showed 142,000 jobs were added in September, comfortably below the 201,000 reading analysts had estimated.
Furthermore, revisions to the prior month's data revealed 136,000 jobs were added, down from a preliminary estimate of 173,000.
"While it's always important not to over-react to one single data release, we'll make an exception in this case," said Paul Ashworth, chief US economist at Capital Economics.
"The chances of a rate hike by the Fed this year just went way down."
On the corporate front, shares in Telecom Italia lost 2.66% following reports that France's Vivendi has taken steps to raise its stake in the telecoms group to around 19% of the ordinary share capital.
Elsewhere, Air France-KLM climbed 1.39% after the company announced plans for significant job cuts, while Lufthansa rallied 4.06% as HSBC raised the stock to 'buy' from 'hold'. |
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| | US Market Report | | US open: Dow plunges over 200 points as non-farm payrolls rules out October rate hike US equities slumped early on Friday, after a disappointing non-farm payroll report all but dashed expectations of an October interest rates hike by the Federal reserve Shortly after 1500 BST, the Dow Jones Industrial Average was down 205 points to 16,066.77, while the S&P 500 and the Nasdaq were 26 and 61 points higher respectively.
Non-farm payrolls disappoint
A report on non-farm payrolls showed 142,000 jobs were added in September, comfortably below the 201,000 reading analysts had estimated.
Furthermore, revisions to the prior month's data revealed 136,000 jobs were added, down from a preliminary estimate of 173,000.
"While it's always important not to over-react to one single data release, we'll make an exception in this case," said Paul Ashworth, chief US economist at Capital Economics.
"The chances of a rate hike by the Fed this year just went way down."
The unemployment rate was unchanged at 5.1%, as expected and average weekly earnings were flat in comparison with August, coming in below the 0.2% rise which analysts had anticipated.
Meanwhile, according to figures released by the Commerce Department, factory orders declined 1.7% in August compared with analysts' expectations for a 1.3% drop.
July's figures were downwardly revised to show a 0.2% increase compared with the 0.4% rise that was initially reported.
Elsewhere, the ISM manufacturing for the New York area tumbled from 51.1 to 44.5.
Fed speakers
Boston Fed President Eric Rosengren will be on stage at 1330 BST, followed by Minneapolis Fed President Narayana Kocherlakota and Cleveland Fed President Loretta Mester , who will appear on separate panels at 1400 BST and 1600 BST respectively.
Fed Vice Chairman Stanley Fischer will also appear at the same event and is scheduled to speak at 1830 BST.
Elsewhere, Asian stocks ended the week on a mixed note, as investors remained concerns the Chinese economy might slowdown, despite the slightly better-than-expected manufacturing data released on Thursday.
European stocks advanced, while oil prices fell, with both West Texas Intermediate and Brent losing 1.1% to $44.29 and $47.17 a barrel respectively.
The dollar lost 0.45% against the pound, tumbling 0.59% and 0.88% respectively against the yen and the euro, while gold futures surged 2.46% to $1,141.02.
In company news, Advanced Micro Devices climbed 1.16% after saying on Thursday it will cut 5% of its workforce as part of its restructuring plan. |
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| | Broker Tips | | Broker tips: FirstGroup, Vodafone, Standard Chartered Investec has retained its 'buy' rating and target of 125p on FirstGroup after the transport operator said overall trading is in line with management's expectations. In a trading update for the six months to the end of September, FirstGroup said its transformation plans continue to progress, despite a more challenging trading environment in some of the group's markets.
The UK Rail business delivered further strong passenger volume growth, underpinning expected like-for-like passenger revenue growth of approximately 7%. Overall financial performance was toward the top of its range of expectations.
For its UK Bus division, the group's transformation plan continued to deliver growth in commercial passenger revenues of more than 2% in the first half. However, this was partially offset by the ongoing weakness in concessionary revenues being seen across the industry. Overall like-for-like revenue growth for the division is expected to be 1.3% in the first half, it said.
"On the positive side, five bus depots have been cut which should mean bus margins are stronger sooner and rail revenues were better than we anticipated, boosted by passengers travelling West to visit Dismaland," Investec analysts said.
"On the negative side, concessionary bus revenues were slightly worse than we expected and in North America, Greyhound and Transit have deteriorated."
However, Investec changed its forecast for full-year 2016 operating profit to fall 0.2%, as strong retail offsets weaker Greyhound and First Transit.
Organic service revenue growth at Vodafone grew by a "solid" 0.7% over the three months to June and will accelerate to a 1.3% pace in the third quarter, UBS said.
Despite a negative half percentage point impact from "phasing issues" in the second quarter, such as lapping price rises in Italy, one-off benefits at Vodacom in the second quarter and regulatory cuts in India, sales will accelerate as Germany improves, the broker said in a research note sent to clients.
"We see scope for an upside surprise on operating profits in EBITDA terms thanks to the company's 'operational gearing' as revenues grow.
"Lower churn should lead to lower SAC/customer costs and additional cost saving measures should be forthcoming," analyst Polo Tang wrote.
Investments linked to the company's Project Spring and working capital requirements will push free cash flow lower.
Nonetheless, Tang "remained relaxed" that Vodafone would achieve its fiscal year guidance for between 11.5bn and 12.0bn pounds in EBITDA.
So, while recent operating trends have been "mixed" UBS expected a sequence of solid/improving quarterly trends to help drive a re-rating of the share price.
"We would also note the CEO/CFO recently purchased 260,000/180,000 shares respectively. At current levels we think there is little priced in for growth/M&A and press reports have suggested there is scope for VOD/LBTY to re-visit talks."
UBS kept its 'buy' recommendation and 280p target unchanged.
New sanctions penalties and potentially higher-than-expected losses from commodity finance will lead StanChart to go cap in hand to investors for fresh funds, but the shares are still too underappreciated, broker KimEng said.
At just 0.6 on a price-to-book basis, the valuation for StanChart's Hong Kong-listed shares (2888HK) has become "undemanding" even under a worst case scenario.
According to media outlets cited by analyst Steven Chan, SCB may still keep the accounts of some Iranian entities, including Bank Saderat, and has generated revenue from the overseas companies of some Iran-connected entities, such as IFIC Holding and Mapna International.
Hence, SCB may face another US sanctions fine to the tune of $1bn in 2015, Chan explained.
Regarding commodity finance, SCB has lowered that to $48.8bn as of June 2015 (17.3% of loans) from $61.8bn a year before.
Of that amount, $25.6bn was to the "less risky" oil and gas related sectors. As well, about 58% of commodity finance was to investment grade clients and 72% had a maturity of under one year.
Due to market concerns over Glencore, KimEng took the "conservative" choice of raising its 'credit cost' forecast for non-oil and gas commodity finance to 10-11% in 2016-16 from 5-6% in the year before.
As a result, its CET1 capital cushion will drop to 11% by the end of December 2016. To bring it back to 12% SCB wil need to replenish $1.2bn of equity capital (at a theoretical issue price of HKD 51.50).
Tang lowered his target on the stock to HKD88.60 from HKD120. |
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