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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 end higher as traders weigh US data, Eurozone CPI The UK equity market finished the week on a high as US data came in better than forecast and low Eurozone inflation fuelled stimulus hopes.
The University of Michigan's forward-looking consumer confidence index rose to 92.1 in October from 87.2 the previous month, smashing expectations for reading of 89.
According to another set of figures released by the Federal Reserve, industrial output fell 0.2% from an upwardly revised 0.1% decline in the previous month and compared with analysts' expectations for a 0.3% decline.
"The decline in industrial production in September was a much smaller fall than we were expecting, but it nonetheless illustrates the impact that the stronger dollar is having on manufacturing and the impact that the slump in energy prices is having on mining output," said Paul Ashworth, chief US economist at Capital Economics.
Manufacturing output fell by a very modest 0.1% month-on-month last month and the decline in August was revised to 0.1% month-on-month from 0.4% month-on-month. Analysts had predicted a 0.2% fall.
Eurozone CPI
Eurostat's final estimate of the Eurozone consumer price index confirmed a 0.1% year-on-year fall in September, down from August's 0.1% rise, as energy prices continued to drag. The figures were as expected by analysts.
"With the Eurozone-wide figure expected at -0.1%, the region's indices could see a return of the market-lifting hopes that always seem to creep in whenever any data suggests that Mario Draghi might need to dip into his ECB QE coffers for a bit of extra stimulus," said Connor Campbell, financial analyst at Spreadex.
ECB policymaker Ewald Nowotny on Thursday said fresh measures were needed to lift inflation towards the monetary authority's target of just below 2%. The weak inflation figures come despite the ECB's €60m a month asset purchase programme which is due to run until at least September 2016. However, the ECB has indicated that it will consider extending the programme if the outlook for inflation worsens.
Companies
Burberry extended declines after revealing on Thursday that second quarter sales were hit by a slowdown in China.
Astrazeneca dropped as US health regulators declined to approve its fixed-dose diabetes drug combination.
Shire gained on the back of the news from AstraZeneca.
Provident Financial jumped after its third-quarter results showed the non-standard lender's UK bank continued to surpass expectations, with other businesses solid.
Interdealer broker ICAP slumped after Barclays downgraded the stock to 'equalweight' from 'overweight' and cut the price target to 500p from 600p pointing to a lack of earnings momentum. |
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| | Market Movers
FTSE 100 (UKX) 6,376.97 0.60%
FTSE 250 (MCX) 16,901.88 -0.28%
techMARK (TASX) 3,030.30 0.36%
FTSE 100 - Risers
Shire Plc (SHP) 4,510.00p 3.09%
Prudential (PRU) 1,524.50p 2.56%
Tesco (TSCO) 196.75p 2.39%
3i Group (III) 478.20p 2.18%
Whitbread (WTB) 4,691.00p 2.02%
Randgold Resources Ltd. (RRS) 4,580.00p 1.91%
Capita (CPI) 1,261.00p 1.86%
Direct Line Insurance Group (DLG) 382.40p 1.70%
Royal Dutch Shell 'A' (RDSA) 1,808.50p 1.66%
Royal Dutch Shell 'B' (RDSB) 1,833.50p 1.61%
FTSE 100 - Fallers
GKN (GKN) 270.40p -3.60%
Burberry Group (BRBY) 1,277.00p -1.92%
TUI AG Reg Shs (DI) (TUI) 1,211.00p -1.62%
Ashtead Group (AHT) 949.00p -1.61%
Royal Mail (RMG) 446.00p -1.55%
Rolls-Royce Holdings (RR.) 686.50p -1.51%
Glencore (GLEN) 116.00p -1.49%
BHP Billiton (BLT) 1,130.00p -1.31%
Smiths Group (SMIN) 1,009.00p -1.27%
Antofagasta (ANTO) 579.50p -1.19%
FTSE 250 - Risers
Provident Financial (PFG) 3,344.00p 5.22%
DCC (DCC) 5,215.00p 4.72%
Jimmy Choo (CHOO) 138.00p 2.99%
Worldwide Healthcare Trust (WWH) 1,705.00p 2.90%
Enterprise Inns (ETI) 108.20p 2.56%
Brown (N.) Group (BWNG) 357.00p 2.35%
Vedanta Resources (VED) 578.00p 2.30%
Allied Minds (ALM) 448.30p 2.14%
Bank of Georgia Holdings (BGEO) 2,007.00p 2.14%
Cable & Wireless Communications (CWC) 57.35p 1.96%
FTSE 250 - Fallers
NMC Health (NMC) 731.50p -9.97%
Bodycote (BOY) 510.50p -7.18%
Weir Group (WEIR) 1,164.00p -6.28%
Telecom Plus (TEP) 1,100.00p -5.01%
IMI (IMI) 951.00p -4.66%
Keller Group (KLR) 870.50p -4.45%
Renishaw (RSW) 1,948.00p -4.32%
Electrocomponents (ECM) 203.10p -4.29%
Morgan Advanced Materials (MGAM) 285.00p -4.07%
Ophir Energy (OPHR) 98.25p -3.77% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Equities end the week on upbeat note as CPI holds steady European stocks rose on Friday, taking their cue from upbeat sessions in the US and Asia as investors were buoyed by the prospect of continued easing policies from the major central banks.
The benchmark Stoxx Europe 600 index closed up 0.6%, while Germany's DAX rose 0.39% and France's CAC 40 finished 0.59% higher.
As of 1634 BST, the euro was on the front foot against the yen and the pound, gaining 0.34% and 0.12% respectively but declined 0.10% against the dollar, while Brent crude reversed earlier gains to decline 0.40% to $49.53 a barrel.
"In a week that saw US, Eurozone and UK CPI all within negative territory there is good reason to believe that we remain within an expansionary phase of monetary policy," said Joshua Mahony, market analyst at IG.
"Driven primarily by the second wave of the ECB, BoJ and PBoC, the overall monetary policy outlook remains bullish for stocks as long as rate hikes continue to be pushed back."
Eurozone inflation remains steady in September
Data released earlier on Friday showed inflation in the Eurozone remained largely stable in September.
According to the Eurostat, the Eurozone consumer price index grew 0.2% month-on-month in September, in line with analysts' expectations and compared with a flat reading in August.
On a year-on-year basis, the index declined 0.1% compared with a 0.1% drop in August and in line with consensus.
When excluding volatile items such as energy and foods, the core CPI rose 0.9% year-on-year in September, matching the previous month's rate of growth and falling in line with analysts expectations.
"With the Eurozone-wide figure expected at -0.1%, the region's indices could see a return of the market-lifting hopes that always seem to creep in whenever any data suggests that Mario Draghi might need to dip into his ECB QE coffers for a bit of extra stimulus," said Connor Campbell, an analyst at Spreadex.
Across the Atlantic, the University of Michigan's consumer sentiment index beat expectations in October. The index fell to a preliminary reading of 92.1 from 87.2 in September, compared with analysts' expectations for a 89.0 reading.
Meanwhile, according to figures released by the Federal Reserve, industrial output in the US fell 0.2% month-on-month in September from an upwardly revised 0.1% decline in the previous month and compared with analysts' expectations for a 0.3% drop.
Mixed earnings among European corporates
In company news, French retailer Carrefour rallied 6.60% after posting a jump in third-quarter revenue thanks to growth in key European markets.
Remy Cointreau slid 2.44%, even though the French drinks maker's second-quarter organic sales came in better than expected.
Vodafone edged 1.29% higher after striking an agreement to extend its strategic partnership with Russian mobile group MTS and expand its scope in Ukraine. |
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| | US Market Report | | US open: Equities edge higher after industrial production data US stocks edged higher early on Friday, as investors looked to extend the rallies of the previous session.
Shortly before 1500 BST, the Dow Jones Industrial Average was up 20 points to 17,161.32 while the S&P 500 and the Nasdaq were three and one point higher respectively.
Wall Street finished on the front foot on Thursday, with the Dow Jones clinching its best close since 19 August, while the S&P 500 closed above the 2,000 level to mark its highest finish since 20 August.
"We have now seen a tenth of the S&P 500 companies post their third-quarter figures and even though headlines might suggest a sluggish quarter, we have still seen just over 75% of those firms reporting better-than-expected earnings per share," said IG's senior market analyst Alastair McCaig.
"Sales figures over that same period however have been considerably less impressive.
"All of this points towards a US corporate picture telling us the same thing as economic releases, that the FOMC should be feeling no increased pressure to raise rates just yet."
US industrial output declines
With a reading on October consumer sentiment and August job openings still to come in the session, data released ahead of the bell showed industrial production in the US declined slightly less than expected in September.
According to figures released by the Federal Reserve, industrial output fell 0.2% last month from an upwardly revised 0.1% decline in the previous month and compared with analysts' expectations for a 0.3% decline.
Meanwhile, capacity utilisation fell to 77.5% from an upwardly revised 77.8% in August, marginally above the 77.4% expected.
"The decline in industrial production in September was a much smaller fall than we were expecting, but it nonetheless illustrates the impact that the stronger dollar is having on manufacturing and the impact that the slump in energy prices is having on mining output," said Paul Ashworth, chief US economist at Capital Economics.
In company news, General Electric rose 3.10% after posting better-than-expected profit and revenue before the opening bell.
Advanced Micro Devices declined 0.85% after the chip maker posted worse-than-expected earnings late on Thursday.
Elsewhere, Asian markets ended the week on an upbeat note, as Chinese stocks were buoyed by the prospect of more stimulus from the People's Bank of China, while European stocks advanced and were on course for weekly gains.
The dollar was broadly flat against the yen and the pound and fell 0.11% against the euro, while gold futures slid 0.01% to $1,182.95.
Oil prices staged a solid rebound, with West Texas Intermediate rising 2.23% to $47.44 a barrel, while Brent climbed 1.37% to $50.42 a barrel.
"The ongoing weak sentiment towards the Dollar has refused to have a positive impact on WTI which has suffered four successive days of declines this week," said FXTM research analyst Lukman Otunuga.
"The latest inventory report showed another huge stockpile and will further the continual concerns regarding oversupply." |
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| | Broker Tips | | Broker tips: Diageo, Icap, ABF HSBC initiated coverage of Diageo at 'hold' with a 1,830p price target, which implies 1% downside to the current share price.
The bank said the stock is trading currently at 19.5x its calendar 2016e EPS of 93.97p, in line with the peer group PE average, and it would wait for a more favourable entry point.
HSBC said that if Diageo wants to become greater than the sum of its parts, it will have to find a new winning formula or execute its current formula more vigorously.
"We think Diageo's brands are and should be the envy of the beverage industry. But since management prepared the market for difficult times by removing sales guidance in November 2013, Diageo shares have been weak, down mid-teens (versus the market at 10%)," it said.
Shares in interdealer broker ICAP were under pressure on Friday after Barclays downgraded the stock to 'equalweight' from 'overweight' and cut the price target to 500p from 600p pointing to a lack of earnings momentum.
The bank noted that ICAP shares were a strong outperformer from January to May but have since come off and are now only up 1% year-to-date versus the FTSE All Share.
"Our analysis of ICAP's electronic volumes shows weakening trends in recent months contributing to this. Volume comps get tougher from September 2015 onwards and the European investment banks are continuing to shrink their FICC divisions," it said.
They added that earnings momentum has stalled and pointed out that ICAP has seen consensus downgrades since May with the 2016E EPS cut by 4% since that time.
Societe Generale downgraded Associated British Foods to 'hold' from 'buy' on valuation grounds as the stock has hit its 3,300p price target.
The bank said it continues to value ABF using a sum-of-the-parts with Primark valued at 20x estimated 2016 earnings before interest, taxes, depreciation and amortisation, which is now a meaningful premium to peers H&M and Inditex.
The bank said it was a little nervous about Primark's US debut. Inevitably there will be lessons to learn as the Primark brand is not known in the US and it will take time to gain traction, it said.
"We continue to like the fundamental story but 33x price-to-earnings for 2017 EPS recovery and some risk in Primark US means that the risk-reward is more balanced from here." |
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