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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: Equities close lower as investors weigh disappointing UK, US data The UK equity market slumped on Monday as worse-than-expected data in the UK and in the US offset a better-than-forecast German business confidence report.
The CBI Industrial Trends Survey's headline total orders balance fell from -7 in September to -18 in October, its lowest level in two-and-a-half years and well below the consensus expectation of -9.
The decline was driven by lower exports mainly due to a stronger pound and subdued foreign demand.
The latest figures published by the British Bankers' Association revealed mortgage approvals for house purchases fell to a four-month low of 44,489 in September from 46,567 in August, although they remained up 14% year-on-year. Analysts had expected 47,400 approvals.
Across the Atlantic, US new home sales tumbled 11.5% to 468,000 in September, more than the 0.6% decrease that was expected and following a 5.2% rise the previous month.
In Germany, the IFO institute's business confidence index dropped to 108.2 this month from September's 108.5, compared to analysts' estimates of 107.8.
The drop came amid the Volkswagen emissions scandal and poor data in China.
"A mild dip from 108.5 to 108.2 month-on-month can be chalked up as a win for the German index, and suggests that, whilst Volkswagen may still be in the gutter, the country's wider economy may be less-damaged than first thought," said Connor Campbell, financial analyst at Spreadex.
Meanwhile, investors continued to digest last week's rate cuts by the People's Bank of China.
The People's Bank of China decided to 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%.
FXTM Research analyst Lukman Otunuga said China's decision to cut its deposit rate, one-year lending rate and the reverse requirement ratio last week had renewed fears about the pace of growth in the nation's economy.
However, China Premier Li Keqiang soothed the market on Monday by saying the 7% growth target was never set in stone, Otunuga added.
The European Central Bank also remained in focus after saying it will re-examine its quantitative easing programme and consider extending it past September 2016 if necessary.
"The market reaction may be a little over the top; the ECB has not done anything yet. A statement saying the ECB governing council will 're-examine' the level of monetary accommodation doesn't mean that the examination will conclude anything needs to be done," said Jasper Lawler, market analyst at CMC Markets.
Traders are now waiting with baited breath for the Fed's decision on interest rates on Wednesday. The consensus forecast is that the central bank will keep rates unchanged at 0.25% amid low inflation and concerns about risks from a slowdown in emerging economies.
On the company front, Aberdeen Asset Management was a high riser on reports that the firm might be sounding out possible buyers. However, a spokesman firmly denied the claims, saying "In his 32 years running Aberdeen, Martin Gilbert has never made a formal or informal approach to anyone about buying the business," the Press and Journal reported.
WPP slumped after reporting a third quarter like-for-like sales that missed analysts' estimates.
AstraZeneca climbed after the US Food and Drug Administration's Arthritis Advisory Committee recommended the approval of lesinurad tablets for the treatment of hyperuricemia with gout.
Anglo American dropped after analysts at Citi lowered their target to 600p from 650p, citing lower expected volumes for diamonds and iron ore.
TalkTalk was knocked back for the second time since Friday's cyber-heist, after hackers warned over the weekend that they were planning another attack.
Among commodities, metals prices were mostly higher as the dollar weakened, with gold up 0.43% on the Comex, silver up 0.62% and copper up 0.21%.
Oil, on the other hand, was under pressure on concerns about an oversupply in the sector. Goldman Sachs warned in a note on Sunday that crude oil prices could drop sharply as refined product storage sites come close to maximum capacity in the US and Europe, adding to worries about an oversupply.
Brent crude futures fell 0.3% to $47.80 per barrel and West Texas Intermediate dipped 0.9% to $44.17 per barrel at 1532 GMT. |
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| | Market Movers
FTSE 100 (UKX) 6,420.77 -0.36%
FTSE 250 (MCX) 17,181.06 -0.35%
techMARK (TASX) 3,106.21 -0.09%
FTSE 100 - Risers
Aberdeen Asset Management (ADN) 362.30p 3.10%
International Consolidated Airlines Group SA (CDI) (IAG) 608.50p 1.67%
TUI AG Reg Shs (DI) (TUI) 1,227.00p 1.57%
Royal Mail (RMG) 453.50p 1.09%
Diageo (DGE) 1,877.00p 1.00%
Sainsbury (J) (SBRY) 271.70p 0.93%
Inmarsat (ISAT) 983.50p 0.77%
St James's Place (STJ) 930.50p 0.76%
Smith & Nephew (SN.) 1,155.00p 0.70%
Morrison (Wm) Supermarkets (MRW) 176.20p 0.69%
FTSE 100 - Fallers
Anglo American (AAL) 590.90p -3.12%
Glencore (GLEN) 115.95p -2.69%
ARM Holdings (ARM) 1,050.00p -2.14%
Wolseley (WOS) 3,776.00p -2.10%
WPP (WPP) 1,451.00p -1.96%
Burberry Group (BRBY) 1,325.00p -1.92%
Admiral Group (ADM) 1,628.00p -1.75%
G4S (GFS) 246.70p -1.71%
Randgold Resources Ltd. (RRS) 4,537.00p -1.69%
CRH (CRH) 1,794.00p -1.59%
FTSE 250 - Risers
National Express Group (NEX) 287.70p 4.24%
Senior (SNR) 244.70p 3.25%
Synthomer (SYNT) 333.80p 2.71%
Wizz Air Holdings (WIZZ) 1,874.00p 2.68%
Diploma (DPLM) 655.00p 2.66%
Indivior (INDV) 213.10p 2.26%
Home Retail Group (HOME) 115.20p 2.22%
Electra Private Equity (ELTA) 3,708.00p 2.01%
Close Brothers Group (CBG) 1,466.00p 1.81%
Bodycote (BOY) 532.50p 1.62%
FTSE 250 - Fallers
TalkTalk Telecom Group (TALK) 226.90p -11.64%
Hunting (HTG) 383.70p -4.86%
Kaz Minerals (KAZ) 121.10p -4.80%
Petra Diamonds Ltd.(DI) (PDL) 86.25p -4.27%
P2P Global Investments C (P2P2) 965.00p -3.98%
Tullow Oil (TLW) 204.60p -3.63%
Carillion (CLLN) 308.40p -3.53%
International Personal Finance (IPF) 411.30p -3.22%
Jardine Lloyd Thompson Group (JLT) 942.50p -3.08%
Bank of Georgia Holdings (BGEO) 2,071.00p -3.00% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets struggle for direction as investors remain cautious ahead of critical week European equity markets began the week on mixed a note, as investors remained jittery ahead of a Federal Reserve meeting later this week.
The benchmark DJ Stoxx 600 closed down 0.39%, while Germany's Dax gained 0.06% and France's CAC 40 slid 0.54%.
As of 1631 GMT, the euro was 0.25% higher against the dollar and broadly flat against both the pound and the yen, while Brent crude fell 0.46% to $44.77 a barrel.
"It is likely that today is a mere moment of respite between last week's market-moving announcements from the ECB and the PBOC and the wave of important figures and earnings releases still to come before October ends," said Spreadex's analyst Connor Campbell.
German business confidence beats expectations
The Volkswagen scandal did not leave even so much as a dent on German businesses' confidence, a survey from a leading think-tank revealed.
The IFO institute's business confidence index for October slipped to a reading of 108.2 from September's 108.5, but above of analysts' expectations for a 107.8 reading.
However, a sub-index of companies' expectations improved to a reading of 103.8 from 103.3 in September and ahead of consensus for a 102.4 reading.
"Surprisingly, the VW scandal did not play any role at all. Sentiment in the auto industry even improved," said Andreas Rees, chief German economist at UniCredit Research.
"The overall manufacturing sector also held up well. As repeatedly said, we think that impulses from the US and the Eurozone will overcompensate for the weakness coming from emerging markets."
Across the Atlantic, meanwhile, sales of new single-family homes slumped to their lowest rate in 10 months in September, tumbling 11.5% month-on-month to an annualised rate of 468,000, way below the 550,000 reading analysts had expected.
"Whether this is a sign of a wider slowdown in the US remains to be seen, yet with North East new home sales plummeting 61.8% there is a possibility this could be a regional phenomenon rather than a nationwide event. Nevertheless, the dollar certainly felt the effect of today's announcement, falling in response," said IG's market analyst Joshua Mahony.
Deutsche Bank on the back foot
In company news, Swedish security solutions provider Securitas AB jumped 3.94% on news that financial self-service solutions provider Diebold had agreed to sell it its North America security business for approximately $350m.
Credit Suisse rose 1.57% after the Swiss bank said a group of investors will buy 1.32bn Swiss francs worth of shares, as the lender looks to raise capital and comply with stricter regulatory standards. |
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| | US Market Report | | US open: Stocks broadly flat as investors hold fire pre-FOMC meeting US equity markets were little changed early on Monday, ahead of the Federal Reserve meeting and big corporate earnings later in the week.
Shortly before 1400 GMT, the Dow Jones Industrial Average was down 15 points to 17,631.67, while the S&P 500 and the Nasdaq were points three and six points lower respectively.
FOMC meeting in focus
The highlight of the week is the two-day Federal Open Market Committee's meeting ending on Wednesday.
The decision itself is likely to be straightforward, with any policy change thought to be extremely unlikely, but in the absence of a press conference the market will be boring down on little details in the statement.
"This is the Fed's last chance to convince the markets that a rate hike is coming this year, therefore December, assuming of course that it still intends to do so," said market analyst Craig Erlam of Oanda.
Apple, Twitter to report this week
In company news, home appliances maker Whirlpool rose 2.56% after analysts at Raymond James upgraded their rating on the stock to 'strong buy'.
Going the other way, pharmaceutical group Valeant declined 4.47% after revealing it has formed a special committee to review allegations over relationship with mail-order Philidor Rx Services.
Management solutions provider Xerox slid 0.87% after posting better-than-expected results, although revenue fell short of estimates.
The earnings season will shift through during the week, with Twitter and Apple, which declined 2.54% early on Monday, set to report on Tuesday after the close.
Elsewhere, most Asian markets opened the week on an upbeat note after Chinese authorities gave the green light to a new round of stimulus measures, while European stocks pulled back slightly.
"Chinese Premier Li Keqiang took the sting out of the tail of rate cut by saying China won't defend to the death its 7% growth target," said CMC Markets' analyst Jasper Lawler.
"Operating within a reasonable range of growth as opposed to defending 7% would imply a willingness to allow growth to slip to perhaps as low as 6%, which would require less stimulus."
The dollar was broadly flat against the euro and declined 0.33% and 0.12% against the yen and the pound respectively, while gold futures rose 0.15% to $1,166.25. |
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| | Broker Tips | | Broker tips: WPP, Shire, Anglo American WPP's shares declined on Monday on the back of third quarter like-for-like sales missing analysts' estimates, but Investec issued the advertising giant an 'add' rating, citing growth in digital and emerging markets.
In a note to investors, Investec analyst Steve Liechti said while the third quarter was "not as good as hoped", it kept its full-year guidance unchanged for like-for-like 3% growth.
"We like the growth shift to digital/emerging markets (EM) and cash generation, but see some unhelpful near-term global GDP uncertainty," he wrote, citing EM macro economics and foreign exchange effects.
Forecasts were not expected to change materially apart from tweaks to geographic assumptions given third quarter trends, better expected EM in the fourth quarter and softer fourth quarter group comparatives."
WPP reported revenues for the three months to 30 September were up 5.9% to £2.93bn, however at a constant exchange rate the company's revenue rose 7.9%. Like-for-like net sales rose 3.3%, stronger than 2.3% in the first half, driven by particularly strong growth in advertising and media investment management as well as direct, digital and interactive and specialist communications.
WPP said that while its forecasts are characteristically cautious, it expects revenue and net sales in the fourth quarter will show higher growth than the first nine months.
Shire Pharmaceuticals declined on Monday after Credit Suisse cut its price target and forecasts for 2016 earnings.
Analysts at the Swiss broker said while Shire has leading positions in pricing power and top line growth, there are "multiple overhangs" including the proposed Baxalta acquisition, the hold-up in receiving regulatory approval of lifitegrast and Lialda patent challenges.
"We are cutting our price target from £56.80 to £54 to reflect market moves and a 3% cut in 2016 earnings per share," Credit Suisse said, issuing a 'neutral' rating for the stock.
Shire, which reported growth in third quarter sales and profit last week, said it is continuing to pursue its bid for US company Baxalta but did not indicate whether it was sweetening its offer. A bid for the firm was made public in August.
"The Baxalta hostile bid remains the single biggest unknown at Shire. Fundamentally we believe it is an attractive combination with significant revenue and cost synergies," said Credit Suisse.
Meanwhile the US Food and Drug Administration has asked for more inflation about lifitegrast, a medicine for dry eye disease, before approving the drug.
In another hurdle for Shire, the US Patent and Trademark Office is taking a second look at a patent that protects the company's colitis medicine Lialda from generic competition.
Analysts at Citi lowered their target on metals miner Anglo American on the back of the company's latest production guidance for fiscal year 2015.
When compared with the broker's previous forecasts, that implied lower volumes for diamonds and iron ore but better ones for base metals.
Nonetheless, the now lower projections for 2015 meant Citi now had to lower its production estimates for the company in 2016.
The research team led by Heath Jansen also updated their model to account for higher costs, especially at Kumba (due to higher stripping), its Johannesburg-listed iron ore miner.
Their estimate for Anglo American's earnings per share in 2015 remained flat at 83 US cents, while that for 2016 was cut to 38 US cents from 46 US cents.
The broker also lowered its target to 600p from 650p, albeit keeping its neutral/high-risk recommendation intact. |
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