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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 close lower on UK deflation, weak Chinese trade data The FTSE 100 ended down 28.90 points to 6,342.28 on Tuesday as September data showed the UK experienced deflation and China's exports and imports declined.
The Office for National Statistics said the UK consumer price index fell 0.1% year-on-year last month, compared to analysts' estimates for a flat reading in line with August.
On a month-on-month comparison, CPI also dropped 0.1% in September following a 0.2% increase in August. Analysts had predicted 0% growth.
The main driver of deflation was discounting at clothing stores and falling petrol and diesel prices.
"As UK year-on-year inflation hit negative territory for only the second time since 1960, the impact of persistent disinflation upon Bank of England decision making will no doubt have been playing into traders mind-sets, sending GBP-USD 130 points lower within two hours," said IG market analyst Joshua Mahony.
"However, it is also worth bearing in mind that with wages growing at the fastest rate in over a decade, this is a benefit for the consumer and helps make up for all those years where real wages fell repeatedly."
Chinese trade
Chinese exports decreased 3.7% in September from a year earlier in US dollar terms following a 5.5% drop in August, the General Administration of Customs revealed. Analysts had expected a 6% slide.
Imports plunged 20.4% last month, worse than the 15.9% dip predicted, after a 13.8% fall in August.
The trade balance, however, unexpectedly widened to $60.34bn in September from $60.24bn a month earlier when a surplus of $47.90bn had been forecast.
"Chinese trade figures have been a source of concern for some time now, with both dollar-denominated exports and imports having contracted for most of the year when compared to 12 months previous," said Craig Erlam, senior market analyst at Oanda.
"The biggest concern is the huge decline in imports and while a large part of this can be attributed to the collapse in commodity prices and should therefore ease of in the coming months, there does also appear to be a domestic demand problem as well."
McCafferty calls for rate rise
BoE policymaker Ian McCafferty has reiterated that interest rates need to rise to allow more scope for cuts in the event of a financial crisis.
In a testimony to the Treasury Committee on the hearing of McCafferty's reappointment to the Monetary Policy Committee on Tuesday, he said there was a need to return the Bank Rate far enough above zero "to a level at which it can be an effective instrument" in tightening or loosening policy. Last Thursday, McCafferty voted in favour of raising interest rates to 0.75% from 0.50%. He was once again the only policymaker to recommend the move.
Royal Mail tops FTSE fallers
Royal Mail was in the red on news the government has sold its remaining stake in the postal service group to professional investors.
Luxury fashion retailer Burberry was under the cosh amid renewed worries about China - to which it is heavily exposed - following disappointing trade figures.
Barclays edged lower on reports the bank may name US investment banker Jes Stanley as its new chief executive.
Going the other way, SABMiller jumped after the brewer agreed to a £68bn takeover offer from AB InBev.
Housebuilders rallied in line with FTSE 250 peer Bellway which gained after posting a 44% jump in full-year profits that beat expectations. Persimmon, Barratt Developments and Taylor Wimpey were both firmly in the black.
Pharmaceuticals giant GlaxoSmithKline was also on the front foot after JPMorgan Cazenove upgraded the stock to 'neutral' from 'underweight' and lifted the price target to 1,370p from 1,320p. The bank noted that medium-term consensus earnings per share estimates have fallen 15-18% year-to-date and expectations now look achievable, with downgrades no longer a concern. |
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| | Market Movers
techMARK 3,034.34 -0.00%
FTSE 100 6,341.41 -0.47%
FTSE 250 16,902.78 -0.50%
FTSE 100 - Risers
SABMiller (SAB) 3,949.50p +9.06%
GlaxoSmithKline (GSK) 1,328.50p +1.72%
Persimmon (PSN) 1,967.00p +1.60%
Carnival (CCL) 3,384.00p +1.50%
Inmarsat (ISAT) 929.00p +1.42%
Berkeley Group Holdings (The) (BKG) 3,250.00p +1.25%
International Consolidated Airlines Group SA (CDI) (IAG) 577.00p +1.23%
Barratt Developments (BDEV) 633.50p +1.20%
easyJet (EZJ) 1,725.00p +1.17%
Taylor Wimpey (TW.) 192.70p +1.05%
FTSE 100 - Fallers
Royal Mail (RMG) 453.30p -4.00%
Tesco (TSCO) 194.30p -3.74%
G4S (GFS) 248.20p -3.27%
Burberry Group (BRBY) 1,427.00p -3.25%
Aberdeen Asset Management (ADN) 333.80p -3.11%
Standard Chartered (STAN) 739.40p -3.05%
Johnson Matthey (JMAT) 2,520.00p -2.85%
Sainsbury (J) (SBRY) 263.80p -2.73%
Old Mutual (OML) 205.30p -2.61%
Glencore (GLEN) 118.00p -2.60%
FTSE 250 - Risers
Michael Page International (MPI) 483.50p +4.16%
Bellway (BWY) 2,453.00p +3.50%
Spire Healthcare Group (SPI) 368.30p +3.40%
Sophos Group (SOPH) 231.90p +3.25%
Auto Trader Group (AUTO) 330.00p +2.96%
Crest Nicholson Holdings (CRST) 540.50p +2.85%
Virgin Money Holdings (UK) (VM.) 399.90p +2.51%
BTG (BTG) 573.00p +2.32%
CLS Holdings (CLI) 1,790.00p +2.11%
Vectura Group (VEC) 165.10p +2.10%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 135.40p -6.30%
Evraz (EVR) 89.20p -5.56%
Weir Group (WEIR) 1,284.00p -4.75%
IMI (IMI) 1,012.00p -4.17%
Vedanta Resources (VED) 578.50p -4.14%
Rotork (ROR) 179.10p -3.92%
Home Retail Group (HOME) 144.60p -3.73%
Homeserve (HSV) 411.00p -3.54%
Bodycote (BOY) 556.50p -3.30%
Ashmore Group (ASHM) 282.50p -3.19%
FTSE TechMARK - Risers
NCC Group (NCC) 260.00p +4.00%
Dialight (DIA) 664.00p +1.37%
Oxford Biomedica (OXB) 7.38p +1.37%
Triad Group (TRD) 31.50p +0.80%
Gresham Computing (GHT) 110.50p +0.45%
Skyepharma (SKP) 337.25p +0.30%
FTSE TechMARK - Fallers
Sarossa (SARS) 1.82p -4.71%
SDL (SDL) 383.75p -4.06%
Spirent Communications (SPT) 73.25p -2.98%
Oxford Instruments (OXIG) 677.00p -0.73%
Innovation Group (TIG) 39.50p -0.63%
BATM Advanced Communications Ltd. (BVC) 19.75p -0.63%
E2V Technologies (E2V) 235.50p -0.63%
XP Power Ltd. (DI) (XPP) 1,505.00p -0.33%
Ricardo (RCDO) 902.00p -0.28%
KCOM Group (KCOM) 90.75p -0.27% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Equities under pressure amid disappointing data from Germany and China European stocks were firmly in the red on Tuesday, as negative data from Germany and China weighed on sentiment.
The benchmark Stoxx Europe 600 index closed down 0.93%, while Germany's DAX fell 0.86% and France's CAC 40 was 0.97% lower.
As of 1647 BST, the euro was broadly flat against the yen but gained 0.25% and 0.87% against the dollar and the pound respectively, while Brent crude edged 0.04% higher to $49.88 a barrel.
German data disappoints
German data set the negative mood, as it showed investor confidence fell to its weakest level in a year.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations declined from 12.1 in September to 1.9 in October, marking the seventh consecutive decline and falling short of the 6.5 reading analysts expected.
Germany has endured a turbulent couple of weeks, with the Volkswagen emission scandal wiping 3.5% off the country's benchmark index in the two days after the car maker admitted fixing emission tests for over 11m vehicles.
ZEW's gauge for current conditions in Germany fell from 67.5 to 55.2 in October, while the sub-index tracking business expectations in the Eurozone declined from 33.3 to 30.1.
"In all, today's survey supports our view that German growth is likely to slow in the coming months and we expect a gain of around 1.5% this year to be followed by a slowdown to 1.2% next year," said analysts at Capital Economics.
Meanwhile, consumer prices in the Eurozone's largest economy remained flat as initially estimated in September, while wholesale prices continued to decline.
According to Destatis, the country's statistical office, consumer price inflation declined from 0.2% in August to zero in September, in line with the provisional results published on 29 September.
On a monthly basis, consumer prices declined 0.2% in September compared with a flat rate of growth in the previous month.
Elsewhere, there was negative news from China, where dollar-denominated exports dropped 3.7% in September from a year earlier, while imports fell 20.4%, marking their eleventh consecutive month of decline.
Exports were better than expected but imports were weaker, raising doubts over domestic demand.
"Markets have grown used to underperforming Chinese data and thus today's data was no surprise," said IG's market analyst Joshua Mahony.
"However, it did show the path continues to be one of deterioration and a recovery seems out of sight for now."
In company news, luxury goods group LVMH slid following a mixed set of third-quarter results.
Volkswagen was also on the back foot after saying it will cut investment by €1bn a year and accelerate its cost-cutting programme as it makes changes to the diesel technology used in its cars in the wake of the emissions scandal.
Credit Suisse and UBS were under the cosh, following reports that Switzerland's finance ministry will require the country's biggest banks to have capital equal to around 5% of their total assets. |
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| | US Market Report | | US open: Stocks decline amid disappointing Chinese trade figures US stocks edged lower on Tuesday, as Wall Street was left unimpressed by a set of weak Chinese trade data.
Shortly before 1500 BST, the Dow Jones Industrial Average was down 71 points to 17,060.71, while the S&P 500 and the Nasdaq were seven and 12 points lower respectively.
Asian stocks were largely in the red on Tuesday, after Chinese trade data pointed to a decline in global and domestic demand.
The Shanghai Composite Index lost 0.57%, while Hong Kong's Hang Seng rose 0.17% after figures showed overseas sales of Chinese goods continued to recover in September but import volumes missed economists' forecasts.
"Equity markets are lower after disappointing Chinese imports readings highlighted the economic slowdown in the country," said IG's market analyst David Madden.
"Natural resource stocks were the worst hit by the Chinese trade figures, and as imports have declined for eleven consecutive months it paints a very clear picture that the second largest economy in the world isn't as hungry for commodities as it once was."
In company news, US-listed shares of Anheuser-Busch InBev NV and SABMiller 1.44% and 6.30% respectively after SABMiller's board agreed on the key terms of a sweetened potential takeover offer worth £68bn.
Netflix slid 0.81% even though analysts at Nomura lifted their target on the stock from $120 to $125, while Twitter after announcing plans to cut 8% of its global workforce in a bid to improve efficiency.
Intel, CSX and JP Morgan Chase & Co are on tap after the close.
Elsewhere, European stocks were mostly in the red, while oil prices edged lower, as West Texas Intermediate lost 0.51% to $46.86 a barrel, while Brent shed 0.63% to $49.53 a barrel.
The dollar advanced 0.87% against the pound, although it fell 0.29% and 0.21% against the yen and the euro respectively, while gold futures slid 0.12% to $1,162.49.
On the economic data front, the National Federation of Independent Business said its index of small optimism rose from 95.9 in August to 96.1 last month, beating analysts' expectations for a 95.5 reading. |
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| | Broker Tips | | Broker tips: Jupiter Fund Management, Ladbrokes, GSK RBC Capital Markets has upgraded Jupiter Fund Management as it believes current forecasts underestimate the group's inflows and capital returns.
After Monday's trading update, RBC's new 'outperform' rating, up from the previous 'sector perform', is accompanied by a 3% increase in the target to 475p.
With a diversification strategy in place, the Canadian bank thinks net flow forecasts "could be conservative" and it expects Jupiter to return a huge chunk of its current market value to shareholders by the end of the 2017 financial year.
Forecasts for earnings per share are increased 1% for the current year, based on updated assets under management calculations after the flows and investment performance announced in Monday's results, while both 2016 and 2017 EPS are lifted 4%, while the changes to SICAV fees could be further profit-enhancing over time.
"Shareholders should continue to benefit from attractive returns," RBC analysts said, estimating a total dividend yield of 6% based on our 2015 forecast, which is among the highest in the sector.
"Further we estimate that Jupiter could return ~20% of its current market value to shareholders through 2017."
"Our expectation for fairly flat net inflows going forward is achievable and could even be conservative given Jupiter's strong brand name and diversification efforts by product, geography and client type. "
Citigroup upgraded Ladbrokes to 'neutral' from 'sell' and raised its price target to 110p from 100p, saying the shares have now fallen far enough.
It said the new target represents the mid-point between the upside potential it sees under a deal scenario and the downside risk under a no-deal scenario.
Citi estimated the share price upside potential from a merger with Gala Coral at around 30% and the downside risk if no deal emerged also at around 30%.
"The competition authority investigation will rumble on for several more months, dampening any need to take a strong view in the shorter term," the analysts said.
Citi added that the two key catalysts that could drive a more positive view were trading updates citing an online pick-up, with a rise in active customers and net gaming revenues, and CMA deal clearance arriving earlier than the bank's mid-2016 expectation.
JPMorgan Cazenove upgraded GlaxoSmithKline to 'neutral' from 'underweight' and lifted the price target to 1,370p from 1,320p.
The bank noted that medium-term consensus earnings per share estimates have fallen 15-18% year-to-date and expectations now look achievable, with downgrades no longer a concern.
In addition, it said a pipeline review suggests the company's upcoming research and development day has a positive risk/reward.
JPM said expectations are low heading into the R&D day, due to historical pipeline setbacks, and limited disclosure.
"We don't anticipate big upgrades , but we expect the event to be supportive, potentially increasing appreciation of the early-stage pipeline and partnered assets," it said. It expects a focus on oncology epigenetics, which involves turning off cancer genes, and very early stage immuno-oncology projects. |
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