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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 drop as market weighs US retail sales, China inflation, UK jobs London stocks dropped on Wednesday, weighed down by worse-than-expected reports on China inflation and US retail sales, while the UK labour report showed mixed progress in the jobs market.
US retail sales rose 0.1% month-on-month with a flat reading in the previous month and with analysts' expectations for 0.2% increase, the Commerce Department revealed.
Auto sales were again among the best performers, rising 1.7% from the previous month, while gas sales declined as expected 3.2%.
"For all the talk of a US interest rate hike, there is still no stand-out data to compel Fed chair Janet Yellen into action," said Dennis de Jong, managing director at UFX.com .
Chinese inflation slows
China's consumer price index rose 1.6% in September from a year earlier, slowing down from a 2% increase in August, the National Bureau of Statistic said,. Analysts had been expecting a 1.8% increase, adding to concerns about the health of the world's second largest economy. The decline was driven by a fall in food price inflation, particularly pork prices.
"Unfortunately the usual knee-jerk hopes of more China stimulus to help engineer that helpful 'bend' and boost economic growth are failing to appease," said Mike Van Dulken, head of research at Accendo Markets. "The inflation figures just add insult to injury after poor trade data yesterday (imports plunging, exports still falling) and come ahead of what is highly likely to prove a displeasing Q3 GDP print on Monday."
UK labour market report
The UK's unemployment rate fell unexpectedly to 5.4% in the three months to August from the previous quarter's 5.5% to reach its lowest level since mid-2008, the Office for National Statistics revealed.
The number of people in work climbed 140,000 to 31.1m in the last three months, in line with analysts' forecasts, while unemployment declined 79,000 to 1.77m.
Including bonuses, wages rose 3% year-on-year in the quarter to August, marginally ahead of the previous month's 2.9% gain but slightly short of analysts' expectations for a 3.1% increase.
Claims for jobless benefits rose for a second consecutive month in September, climbing 4,600 from the 1,200 gain recorded in August and against analysts' expectations for a 2,200 decline.
The claimant count rate, meanwhile, held steady at 2.3% last month as expected.
"The latest labour market data shows overall improvement after a recent soft patch, although the rate of improvement remains below the levels seen at the start of this year," said Howard Archer, chief UK and European economist at IHS Global Insight.
"We believe that the Bank of England is still more likely than not to raise interest rates from 0.50% to 0.75% in the first half of 2016, but will probably wait until May. This is based on our belief that the UK will see some improvement in growth from its third quarter soft patch and that consumer price inflation will start rising gradually from late-2015."
Companies
Hargreaves Lansdown was a top riser after reporting a 11% increase in revenue to £78.5m, on the back of a 24,000 increase in new clients in the quarter to 30 September.
Intertek Group rallied after agreeing to buy US-based construction material testing and assurance business Professional Service Industries.
Precious metals miner Fresnillo was up after saying it was on course to hit its full-year guidance, with third-quarter silver production dwindling to 11.04m oz but almost flat on the previous year and slightly lower than the preceding quarter.
Domino's Pizza advanced after saying full-year results are likely to be ahead of its expectations, as it delivered a tasty performance in the third quarter and a solid start to the fourth quarter.
N Brown jumped as the company said it remains optimistic of a turnaround after reporting a half-year decrease in profits.
On the back foot, a batch of housebuilders including Taylor Wimpey, Johnson Matthey and Barratt Developments, reversed the previous day's gains on the back of well-received full-year numbers from FTSE 250 peer Bellway.
Shares in luxury fashion retailer Burberry declined for the second day in a row ahead of its second-quarter update on Thursday and as worries gathered pace about growth in China, to which it is heavily exposed. |
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| | Market Movers
FTSE 100 (UKX) 6,278.01 -1.01%
FTSE 250 (MCX) 16,834.47 -0.38%
techMARK (TASX) 2,988.68 -1.40%
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 1,331.00p 3.74%
Intertek Group (ITRK) 2,584.00p 2.87%
Antofagasta (ANTO) 580.00p 2.38%
Fresnillo (FRES) 750.50p 2.25%
Glencore (GLEN) 120.25p 1.86%
FTSE 100 - Fallers
Barratt Developments (BDEV) 611.00p -3.63%
Taylor Wimpey (TW.) 186.50p -3.42%
BT Group (BT.A) 418.20p -3.14%
Inmarsat (ISAT) 903.00p -3.06%
Persimmon (PSN) 1,909.00p -3.00%
FTSE 250 - Risers
AL Noor Hospitals Group (ANH) 1,162.00p 16.84%
Domino's Pizza Group (DOM) 1,003.00p 12.70%
Electrocomponents (ECM) 222.10p 9.14%
Brown (N.) Group (BWNG) 340.30p 7.69%
Auto Trader Group (AUTO) 346.80p 4.43%
FTSE 250 - Fallers
Foxtons Group (FOXT) 215.90p -5.76%
Renishaw (RSW) 1,888.00p -5.27%
Countrywide (CWD) 467.00p -4.60%
Cable & Wireless Communications (CWC) 56.00p -3.70%
Laird (LRD) 358.00p -2.95% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drop after weak Chinese data European stocks fell as investors digested another round of disappointing Chinese data.
The benchmark Stoxx Europe 600 index finished 0.74% or 2.66 points lower to 355.81, Germany's DAX was down by 1.17% lower and France's CAC 40 by another 0.74%.
Data released overnight showed China's mainland consumer price index rose 1.6% in September from a year earlier, missing expectations of a 1.8% increase.
This came a day after figures revealed that dollar-denominated exports in China 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 and compounding fears of a slowdown.
"Investors are apprehensive about the sluggish growth in China and the recent data released this week has added negative sentiment for the European trading session," said Naeem Aslam, chief market analyst at Ava Trade.
Industrial production in the euro bloc declined 0.5% last month, down from the upwardly revised 0.8% climb in the previous month, According to figures from Eurostat.
On a year-on-year basis, production rose 0.9% compared with analysts' expectations of a 1.8% increase and down from the upwardly revised 1.7% hike registered in the previous month.
"With China's economy giving off renewed signals of distress and the Volkswagen scandal hitting business hard in Germany, today's announcement of disappointing industrial production data will come as no surprise," said Dennis de Jong, managing director at UFX.com.
On the corporate front, semiconductor equipment maker ASML Holding tumbled after the company said it projects sequentially lower sales in the fourth quarter. In addition, its third-quarter earnings were a little short of analysts' expectations.
Luxury goods retailers LVMH and Burberry, both of which have a high exposure to China, also came under pressure.
Brewer Diageo slipped after saying it has agreed to sell two of its wine businesses, including brands such as Blossom Hill and Yellow Tail, for $552m to US-based Treasury Wine Estates as it continues to sell off non-core assets.
On the upside, though, London-listed fund manager Hargreaves Lansdown rallied as investors welcomed its third-quarter update. |
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| | US Market Report | | US open: Stocks little changed amid disappointing data and mixed corporate earnings US stocks struggled for direction early on Wednesday, as investors digested a disappointing reading on retail sales and a number of corporate earnings reports.
Shortly before 1500, the Dow Jones Industrial Average was down seven points to 17,075.34, while the S&P 500 and the Nasdaq were four and 16 points higher respectively.
Retail sales disappoint
The Department of Commerce said retail sales rose 0.1% month-on-month compared with a flat reading in the previous month and with analysts' expectations for a 0.2% increase.
"The softness of September's retail sales figures supports our view that the Fed probably isn't going to hike interest rates until early next year," said Paul Ashworth, chief US economist at Capital Economics.
"We now estimate that third-quarter real consumption growth was around 3.0% annualised, which is still healthy enough, but not quite as good as the 3.6% gain that we were anticipating."
Meanwhile, according to the Labor Department, wholesale prices declined 0.5% month-on-month in September driven lower by the sharpest drop in gasoline prices since January.
The decline was bigger than the 0.2% drop analysts had forecast and was also lower compared to the flat reading registered in the previous month.
Elsewhere, applications for US home mortgages tumbled last week, as the Mortgage Bankers Association revealed its index of finance application activity slumped 27.6%.
Earnings in focus
In company news, Intel slid 3.43% after the IT giant reported slower growth in its data-centre businesses, although its quarterly profit beat forecasts.
JP Morgan Chase & Co was down 2.43% after saying late on Tuesday its quarterly revenue fell short of expectations.
Among the companies that reported before the bell, BlackRock gained 2.09% after its quarterly results beat analysts' expectations, while Bank of America climbed 2.26% after swinging to a third quarter profit, although revenue declined year-on-year.
Netflix and SLM are scheduled to report after the close.
Worries over China slowdown intensify
Elsewhere, Asian markets fell on Wednesday, after China's National Bureau of Statistics said the consumer price index rose 1.6% year-on-year in September compared with a 2% increase in August and with analysts' expectations for a 1.8% gain.
"We expect the fall in consumer price inflation to be temporary," said Julian Evans-Pritchard, China economist at Capital Economics.
"CPI and PPI are likely to pick-up markedly, easing concerns over deflation."
The dollar was on the back foot against the main currencies, losing 0.31% and 0.48% against the yen and the euro respectively. The greenback also declined 1.10% against the pound, while gold futures rose 0.72% to $1,177.20. |
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| | Broker Tips | | Broker tips: N Brown, ITV, Tullow Oil, Soco International Investec on Wednesday retained its 'hold' rating on N Brown after the fashion and home shopping retailer reported a decline in half-year profits.
The FTSE 250 group, whose shopping brands include plus-size focused Simply Be and Jacamo, lifted revenues 4.2% to £415.8m but saw operating profits sag 14.2% to £38.8m and statutory pre-tax profits plummet 54.6% to £19.4m, although this had been flagged. Underlying earnings per share were down 14.5% to 9.9p.
However, chief executive Angela Spindler's transformation delivered tangible results, including online penetration up 5 percentage points to 63% and a strong performance from Simply Be and Jacamo, with product revenue for both up 21%.
Although the business re-organisation towards an online focus means the "ongoing underlying profitability of the business is not yet clear", according to Investec analyst Kate Calvert. Certain exceptional costs largely relating to the closure of 18 clearance stores put a big dent in profits.
"While we like N Brown's structural growth niche and believe moving to a digitally led, retail model is the right strategy, the modernisation programme disruption means the ongoing underlying profitability of the business is not yet clear," Calvert said.
ITV is an attractive asset for investors and stands to gain from the "robust" macroeconomic environment, but advertising sales will take a short-term hit after England's elimination from the Rugby World Cup, one of the world's most influential brokers said on Wednesday.
Goldman Sachs said the company's advertising revenues would now expand by 4% in the fourth quarter, down from the 6% rise its analysts had pencilled in previously.
For the full-year that ad sales were expected to see an increase of 5.6%, in line with the analyst consensus as compiled by the company itself.
As well, the de-rating in US media was likely to cap multiples for ITV, Goldman said.
As a result, the broker lowered its target on the stock to 290p from 309p.
Nevertheless, the firm still has attractive content ownership. Hence, it makes sense for Liberty Media to own a larger blocking stake, for example, the broker added.
Goldman Sachs removed the shares from its Pan-Europe Conviction Buy List but reiterated its 'buy' recommendation.
Shares in Tullow Oil and Soco International were under pressure after Macquarie downgraded both stocks to 'neutral' from 'outperform' on valuation grounds, as it took a look at the European exploration and production sector.
Macquarie pointed out that crude oil price rose by $10 in the six weeks to 12 October.
"Most share prices have shown a stronger response than our sensitivity models predicted, however, and some have now overshot their fundamental values in our opinion," it said.
The bank noted that Tullow shares have risen 43% since late September on both oil prices and the alleviation of near-term balance sheet concerns, and are now trading close to fair value.
As far as Soco is concerned, it said reaction to the oil price rise has been even stronger, despite there having been no operational catalysts.
Macquarie added that Soco now trades close to its 186p price target. |
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