| | | | | The Top 10 Stocks for Q4 | | Your guide to the best investments for the new quarter
Our latest Top 10 Stocks report takes a look at a fresh selection of blue chips that have the potential to offer exciting trading opportunities for the new quarter and into year-end.
Get your copy of this report and discover our top picks for the quarter.
Losses can exceed deposits | | |
| | 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 after China rate cuts, positive PMIs The FTSE ended the week on a high note after China's central bank cut key rates and as better-than-expected manufacturing reports in the Eurozone and the US boosted investor confidence.
The People's Bank of China said it will cut its one-year deposit rate and one-year lending rate by 25 basis points each to 1.5% and 4.35%, respectively.
The PBoC also cut the reverse requirement ratio for all banks by 50 basis points to 17.5%, with an extra 50 bps reduction for some lenders.
"These moves come after clear signs of weakness in the economy in recent months. Amid continued capital outflow and falling CPI inflation, we believe these cuts may be necessary to prevent a tightening of financial conditions," said analysts at Goldman Sachs.
Earlier in China the latest survey from the Conference Board showed its index rose 1.6% month-on-month in September compared with a 1% gain in August and a 0.9% climb in July. The coincident index slid 1.2% after rising 0.7% in August and 1% in July.
Manufacturing data, ECB stimulus
The Eurozone manufacturing purchasing managers' index held at 52 in October compared to a month ago, beating expectations for a reading of 51.7, Markit revealed. A reading above 50 signals expansion in sector activity.
Separately, Markit's US manufacturing PMI rose from 53.1 in September to 54 in October, comfortably above the 52.9 reading analysts had expected.
Meanwhile, the market continued to digest Thursday's European Central Bank press conference where president Mario Draghi hinted at further stimulus to address prolonged low inflation amid concerns about risks from China and falling commodity prices.
Draghi said policymakers would re-examine the ECB's €60bn a month asset purchase programme in December and consider extending it past September 2016 if needed. He also revealed that the central bank had also discussed furthering lowering the deposit rate, although there was "no specific preference to one instrument or the other, they were all considered".
"Strong ECB easing in December also limits the chances the Fed will hike at the same time, pushing a lift-off further into 2016," said RBS analysts. |
| | The Top 10 Stocks for Q4 | | Your guide to the best investments for the new quarter
Towards the end of September, we've seen markets rally as buyers return to pick up some nicely discounted shares while inflation concerns look to be pushing a US interest rate rise further into the future. Our latest Top 10 Stocks report takes a look at a fresh selection of blue chips that have the potential to offer exciting trading opportunities for the new quarter and into year-end.
Download your copy of this report and discover our top picks for the quarter.
Losses can exceed deposits |
| | Market Movers
FTSE 100 (UKX) 6,444.08 1.06%
FTSE 250 (MCX) 17,240.70 1.15%
techMARK (TASX) 3,107.42 1.44%
FTSE 100 - Risers
Travis Perkins (TPK) 1,939.00p 5.09%
Shire Plc (SHP) 4,641.00p 4.41%
WPP (WPP) 1,478.00p 4.16%
Aberdeen Asset Management (ADN) 351.40p 4.09%
Burberry Group (BRBY) 1,351.00p 4.00%
Fresnillo (FRES) 758.00p 3.84%
Schroders (SDR) 2,961.00p 3.82%
Johnson Matthey (JMAT) 2,581.00p 3.65%
Dixons Carphone (DC.) 458.20p 3.59%
ARM Holdings (ARM) 1,073.00p 3.47%
FTSE 100 - Fallers
Pearson (PSON) 900.50p -5.21%
BG Group (BG.) 1,057.00p -2.31%
Royal Dutch Shell 'B' (RDSB) 1,775.50p -1.53%
Royal Dutch Shell 'A' (RDSA) 1,762.50p -1.37%
Reckitt Benckiser Group (RB.) 6,249.00p -0.97%
TUI AG Reg Shs (DI) (TUI) 1,208.00p -0.58%
Sage Group (SGE) 540.00p -0.46%
British Land Company (BLND) 865.50p -0.46%
Imperial Tobacco Group (IMT) 3,502.00p -0.31%
Inmarsat (ISAT) 976.00p -0.31%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 90.10p 7.58%
Ocado Group (OCDO) 370.80p 6.98%
Cable & Wireless Communications (CWC) 74.60p 6.57%
Carillion (CLLN) 319.70p 6.50%
Allied Minds (ALM) 447.30p 5.52%
AA (AA.) 276.50p 5.33%
Henderson Group (HGG) 283.50p 5.08%
Clarkson (CKN) 2,525.00p 4.34%
Man Group (EMG) 166.40p 4.33%
BBA Aviation (BBA) 206.20p 4.30%
FTSE 250 - Fallers
William Hill (WMH) 318.00p -7.93%
Home Retail Group (HOME) 112.70p -6.08%
Micro Focus International (MCRO) 1,170.00p -4.96%
TalkTalk Telecom Group (TALK) 256.80p -4.36%
Premier Oil (PMO) 74.80p -3.48%
Tullow Oil (TLW) 212.30p -2.84%
SIG (SHI) 137.60p -2.76%
Indivior (INDV) 209.00p -1.88%
Tullett Prebon (TLPR) 341.60p -1.84%
Sophos Group (SOPH) 257.90p -1.71% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks rally on promises of ECB stimulus and PBoC's rates cut European equity markets ended the week on an upbeat note, as investors continued to take heart from European Central Bank president Mario Draghi's dovish comments on Thursday and were buoyed by some positive data.
The benchmark Stoxx Europe 600 index closed up 1.99%, while France's CAC 40 rose 2.53% and Germany's DAX ended 2.88% higher.
As of 1630 BST the euro was on the back foot against the main currencies, falling 0.61% against the dollar and losing 0.33 and 0.30% against the yen and the pound respectively, while Brent crude lost 0.82% to $47.69 a barrel.
ECB boost
Although Draghi stood pat on policy, he hinted that additional stimulus measures could be announced at the December meeting.
In the press conference after the rate announcement, the ECB chief said the governing council had discussed expanding its bond-buying programme and cutting the rate on reserves held at the central bank.
"The reason the euro fell so sharply during Mario Draghi's press conference was because the market knows that weakening the euro is one of the ECB's unofficial policy tools to boost Euro-area growth," said CMC Markets' analyst Jasper Lawler.
Weakening the euro improves the competiveness of European exports and it also reduces the competitiveness of China's exports into Europe."
Global equity markets also received a somewhat unexpected boost after the People's Bank of China announced a sixth rate cut this year.
"While the move is a recognition that the Chinese economy is slowing, markets can apparently live with this if they believe that the PBoC is prepared to take steps to counter the weakness," said IG's senior market analyst Chris Beauchamp.
Some upbeat data also helped the tone as it showed the recovery in the Eurozone gained momentum in October, driven by higher demand for services.
The latest flash Markit Purchasing Managers' Index survey showed its composite index rose to a two-month high of 54 in October compared with a reading of 53.6 in the previous month and analysts' expectations for a 53.4 reading.
Earnings in focus
Electrolux rose 2.08% after the home appliances maker posted a 9% increase in third-quarter net sales year-on-year.
Sweden's Volvo was 2.81% higher after it said third-quarter operating profit rose to 5.1bn Swedish crowns from 2.9bn in the same period last year.
Gucci owner Kering surged 10.6% as it posted a 12% rise in third-quarter revenue to €2.89b, while miner Boliden rallied after reporting an increase in third-quarter net profit. |
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| | US Market Report | | US open: Equities rally on strong earnings and PBoC's decision US stocks rallied early on Friday, boosted by a series of positive earnings and by news the People Bank of China has opted to cut its interest rates.
Shortly before 1500 BST, the Dow Jones Industrial Average was up 148 points to 17,636.85, while the S&P 500 and the Nasdaq were 18 and 83 points higher, respectively.
Tech firms rally
Amazon rallied 6.87% after soaring 11% late on Thursday, after the e-commerce giant posted an unexpected profit for the third quarter and offered an upbeat outlook for the holiday period.
Alphabet, Google's holding company, surged 8.26% after announcing its first ever stock buyback plan, revealing it will invest more than $5bn in the programme.
"Profits are up almost 50% in the third quarter over the previous year, and this is whilst Google's earnings are still wrapped up with costly side projects like self-driving cars, which won't be the case in January under the new corporate structure," said CMC Markets' analyst Jasper Lawler.
Microsoft jumped 10.3% after posting better-than-expected revenue and profit late on Thursday, while Twitter gained 1.34% after its chief executive pledged to give $200m of his own shares to the employee stock pool..
PBoC cuts interest rates
After the close of the Asian session, the People's Bank of China said it will cut its one-year deposit rate and one-year lending rate by 25 basis points each to 1.5% and 4.35%, respectively, as it looks to bolster the slowing economy.
"As usual the PBOC showed its preference for action over rhetoric by cutting interest rates for the sixth time since November," said David Morrison, market analyst at SpreadCo.
"China's move should help to underpin risk assets as we get further towards the year-end. But the ECB have to come up with the goods at their December meeting. Then the big question is whether the Fed will delay a rate hike until next year."
Meanwhile, Asian and European stocks rallied as both were boosted by the prospect of more stimulus from the European Central Bank.
On Thursday, after the press conference after the rate announcement, ECB President Mario Draghi said the governing council had discussed expanding its bond-buying programme and cutting the rate on reserves held at the central bank.
"Although there might well be some debate as to the direct benefits of a change to already record-low interest rates, this once again proves that under Mario Draghi the ECB is acting rather than just venting rhetoric," said Alastair McCaig, senior market analyst at IG.
The dollar was broadly against the yen and rose 0.19% and 0.32% against the pound and the euro respectively, while gold futures declined 0.43% to $1,170.94. |
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| | Broker Tips | | Broker tips: Pearson, Mothercare, Carillion Exane BNP Paribas downgraded Pearson to ''neutral' from 'outperform' and cut the price target to 1,000p.
The bank said its investment case on Pearson was predicated on three main ideas.
It argued that cyclical headwinds, especially in US Higher Education, would abate from 2015 onwards and reckoned the transformation of the group towards digital and emerging markets would further help accelerate top line growth while operating efficiency gains would drive margin expansion.
"We were wrong," said Exane.
"We concede that it will take the group much longer to see the benefits of the hoped-for cyclical and structural turnaround. We also believe that capital allocation issues are likely to further put pressure on the shares in the near term. We do not see significant upside in the share in the short - term."
Berenberg initiated coverage of Mothercare at 'hold' with a 250p price target.
"While we feel that Mothercare does have some potential to improve, we think the risk/reward ratio at current levels is not compelling."
Berenberg noted that given the severe weakness in like-for-like growth and the contraction in gross margins in recent years, management is focused on rebuilding the business, aiming for more exclusivity, less discounting and greater customer engagement within stores.
The bank said it has pencilled in an average of 1.5% LFL growth for the next four years and gross margins moving up by around 75 basis points a year.
However, it said delivery here comes with a high level of risk, adding that a 1% change in LFL affects revenue by around £4m but, given the lossmaking nature of the UK business, affects EPS by around 20%.
Carillion got a boost on Friday after JPMorgan Cazenove upgraded its stance on the construction and support services company to 'overweight' from 'neutral' as it took a look at UK contractors.
JPM said the UK non-residential construction market is in recovery mode with meaningful opportunities in both the building and infrastructure markets.
The bank said it sees the greatest potential at Interserve, Carillion and Kier Group. |
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