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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 rally ahead of Fed's interest rate decision The London stock market closed higher on Wednesday before the Federal Reserve's decision on interest rates.
The FTSE ended up 72.53 points to 6,437.80.
The Fed releases its policy decision at 1800 GMT and is expected to keep rates at 0.25% amid low inflation and concerns about the risks arising from a slowdown in emerging markets. While no surprises are expected, the press release will be looked at closely for any hints on when the first rate hike in nearly a decade will happen.
"After the September FOMC meeting the market consensus was surprised by the dovish tone of the Fed," said analysts at Rabobank.
"However, rather than been reassured by the expectation of low rates for longer, risky assets lost their footing as the market absorbed a less appealing outlook for both US and global growth.
"Although risky assets subsequently found comfort in the release of the weak September payrolls release, there remains a lot of uncertainty as to what cues investors will take from today's policy statements from the FOMC."
In economic data, the US trade gap in goods narrowed more than expected in September to reach a seven-month low. According to official government data, the trade gap in goods, excluding services, declined 13% month-on-month to $58.6bn compared with analyst expectations for a $64.3bn figure.
Meanwhile, a report from the Mortgage Bankers' Association showed mortgage applications fell 3.5% in the week to 23 October after a 11.8% rise the previous week.
Investors are now looking ahead to Thursday's US gross domestic product report which is expected to show an annualised 1.5% increase in the third quarter, slowing down considerably from the previous quarter's 3.9% growth.
In the Eurozone, GfK's forward-looking consumer confidence index fell to 9.4 in November from 9.6, as expected by analysts. GfK said the economic expectations are "decreasing significantly, seemingly as a result of the feelings created by the ongoing refugee crisis in particular".
On the corporate front, GlaxoSmithKline jumped after its third-quarter revenue and core earnings per share beat market expectations.
BT gained on news its £12.5bn acquisition of the EE mobile network has been provisionally approved by UK competition officials unconditionally and without remedies.
British American Tobacco rallied after reporting a better-than-estimated fall in sales for the first nine months of the year.
Lloyds Banking Group declined after reporting a decline in third quarter underlying profit as it was hit by a further charge for insurance mis-selling.
Meggitt plunged as the aerospace and industrial components supplier warned that full year profits will be well below forecasts after it endured softer trading during the third quarter, with a "marked deterioration" in September in energy markets.
Chilean copper producer Antofagasta edged lower after cutting its annual production target for the third time this year as it reported fairly stable output for the third quarter compared with the second.
Supermarket retailer Wm Morrison was under the cosh after Bank of America Merill Lynch cut its stance on the stock to 'neutral' from 'buy'. |
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| | FTSE 250 - Risers
BTG (BTG) 562.00p 4.46%
Just Retirement Group (JRG) 167.90p 3.64%
Cairn Energy (CNE) 149.30p 3.11%
Halfords Group (HFD) 441.50p 3.06%
Domino's Pizza Group (DOM) 1,073.00p 2.98%
Hunting (HTG) 366.30p 2.86%
Greggs (GRG) 1,177.00p 2.08%
Synthomer (SYNT) 336.00p 2.00%
Savills (SVS) 891.50p 1.94%
Bwin.party Digital Entertainment (BPTY) 108.20 1.88%
FTSE 250 - Fallers
Petra Diamonds Ltd.(DI) (PDL) 69.20p -13.98%
Cobham (COB) 278.70p -4.13%
Bank of Georgia Holdings (BGEO) 1,968.00p -4.00%
Foxtons Group (FOXT) 196.20p -3.87%
Senior (SNR) 228.30p -3.83%
SIG (SHI) 128.00p -3.54%
Kaz Minerals (KAZ) 110.70p -3.49%
TalkTalk Telecom Group (TALK) 246.50p -3.37%
International Personal Finance (IPF) 387.80p -2.78%
Enterprise Inns (ETI) 101.70p -2.68% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks rise ahead of Fed meeting European stocks finished higher ahead of the US central bank´s policy announcement which was due out later in the day amid a slew of corporate results.
The benchmark DJ Stoxx Europe 600 index was up 1.06% or 3.94 points to 375.82, while Germany's DAX advanced 1.31% or 139.77 points to 10,831.96. France's CAC 40 ended the day with gains of 0.90% at 4,890.58.
For Bill Hubard, chief economist at Bullion Capital, if the US Federal Reserve is 'boxed-in' by worries about the global economy and the upcoming elections Stateside, as some argue, then it is difficult to understand how it will ever manage to hit its own projections for a Fed funds rate at 3.5% by the end of 2018.
Societe Generale strategist Kit Juckes chipped in saying: "A policy move is really, really unlikely and I wouldn't hold out much hope of a shift in the policy statement to encourage pricing of a December hike (by, say, removing the reference to international developments in then assessments of risks)."
On the corporate front, shares in Volkswagen edged higher by 2% even though the German car maker posted an operating loss of €3.84bn in the third quarter, while stock in Heineken jumped 4% after its third-quarter results beat expectations.
Shares in Lloyds Bank fell sharply after it reported a decline in third-quarter underlying profit as it was hit by a further charge for insurance mis-selling.
Barclays was a little weaker as the bank confirmed the appointment of former JPMorgan investment banking head Jes Staley as its new chief executive.
Clothing retailer Next slipped despite posting a 6% increase in third-quarter sales and nudging up its profit guidance for the year.
Chilean copper producer Antofagasta dropped 1.47% after cutting its production target for this year again as it reported fairly stable output for the third quarter compared with the second.
On the upside, BT was a high riser after the company's £12.5bn acquisition of the EE mobile network was provisionally approved by UK competition officials. Stock in the group rose 3.7%.
In economics news, data from market research group GfK revealed that German consumer sentiment was set to weaken for the third month in a row in November as the migrant crisis takes its toll.
GfK said the forward-looking consumer sentiment index was expected to fall to 9.4 points from 9.6 in October.
Earlier in the day, Sweden's central bank kept its main policy rate on hold at 0.35% as widely expected, but extended its government bond purchasing programme as it looks to do more to lift inflation to its 2% target. |
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| | US Market Report | | US open: Stocks advance as FOMC's decision looms large US equity markets rose early on Wednesday, as investors waited to see whether the Federal Reserve will decide to hike interest rates this year.
Shortly after 1400 GMT, the Dow Jones Industrial Average was up 72 points to 17,653.11,while the S&P 500 and the Nasdaq were eight and 14 points higher respectively.
The US central bank concludes its two-day meeting on Wednesday and while it is widely expected to postpone a first hike in interest rates until the new year, market participants were reluctant to make any big bets.
"After the September FOMC meeting the market consensus was surprised by the dovish tone of the Fed," said analysts at Rabobank.
"However, rather than been reassured by the expectation of low rates for longer, risky assets lost their footing as the market absorbed a less appealing outlook for both US and global growth.
"Although risky assets subsequently found comfort in the release of the weak September payrolls release, there remains a lot of uncertainty as to what cues investors will take from today's policy statements from the FOMC."
Trade gap narrows
On the economic data front, the US trade gap in goods narrowed more than expected in September to reach a seven-month low, figures released on Wednesday showed.
According to official government data, the trade gap in goods, excluding services, declined 13% month-on-month to $58.6bn compared with analyst expectations for a $64.3bn figure.
"We continue to see a large drag from private inventory investment as trimming headline growth, but with a smaller drag from net trade and more modest equipment investment, the composition of third quarter GDP is likely to be more balanced," said analysts at Barclays.
Meanwhile, the Mortgage Bankers Association said its seasonally-adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 3.5% in the week ended 23 October.
Apple gains, Twitter disappoints
In company news, Apple climbed 1.75% after the iPhone and iPad maker said late on Tuesday that its fourth quarter profit surged 31%.
"Regardless of the worries markets might have about Chinese growth this has not negatively affected sales of iPhones to the Asian powerhouse as once again Apple have been able to post much better figures that had been expected," said IG's senior market analyst Alastair McCaig.
There was less positive news for Twitter, however, with the social media giant plummeting 9.76% after delivering a lower-than-expected outlook late on Tuesday, when it also reported its active user growth was smaller than expected.
Akamai Technologies slumped 19.3% after its quarterly results missed expectations, while chocolate maker Hershey had bitter news for investors, as it reported a 31% drop in earnings ahead of the bell, which dragged shares down 4.07%.
Newly-listed Ferrari fell 4.65% despite reporting a rise in profit and revenue, while Walgreens Boots Alliance tumbled 7.22%, despite swinging to a profit in the fourth quarter, as earnings beat forecast.
Sector peer Rite Aid dropped 8.02% after agreeing to a takeover from Walgreens worth $17.2bn in cash.
Meanwhile PayPal and GoPro will publish results after the close.
The majority of Asian stocks were firmly in the red on Wednesday, as investors remained cautious ahead of the upcoming Federal Reserve's decision on interest rates, while European stocks rebounded from the previous session's dip and were mostly higher.
The dollar was broadly flat against the yen but gained 0.11% against the pound and lost 0.27% against the euro, while gold futures climbed 1.24% to $1,181.36. |
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| | Broker Tips | | Broker tips: Meggitt, Lloyds, Petra Diamonds Meggitt was left reeling in the third quarter by a sharp decline in energy revenues, a worsening 'business-mix' and lower aftermarket sales for civilian and military spares, Investec said.
That led the broker to place its recommendation and target for the shares of the global engineering group 'under review'.
The firm, which describes itself as a specialist in extreme environment components and sub-systems for aerospace, defence and energy markets.
As regards energy, the 16% drop in the unit´s revenues suggests "weakness is no longer limited to to Heatric, but has spread to other businesses", analyst Rami Meyrson said.
The business-mix worsened across all of the firm´s end markets, shifting towards higher original equipment and lower after market sales, including in the civil and military aftermarkets.
Analysts were not particularly bothered by Lloyds´s weaker than expected third quarter profits, but the lender´s guidance might be another matter.
A 17% drop in 'other operating income' led to a 6% miss on underlying pre-tax profits. Nevertheless, that was compensated for by a leaner cost structure than had been anticipated.
Assets also performed better than markets had discounted.
"Impairments picked up slightly, likely driven by fewer write backs, but remained (at 15 bps) at a very low level," Goldman Sachs pointed out in a research note e-mailed to clients.
At £500m PPI provisions were also in-line with management´s guidance for about £1bn in claims by year-end, assuming a stable claims volume.
However, financial guidance for 2015 was mixed, Goldman´s Martin Leitgeb and Nick Baker said.
Investors in Petra Diamonds lack confidence, leaving the share price exposed should worries about Chinese demand persist.
The Asian giant represents only about 16% of market demand but expectations were for growth in the mid-teens going forward, making it an "important" growth market, broker SP Angel said in a research note sent to clients.
Nevertheless, the company maintained its guidance for the full-year on expectations for a better mix of stones in the second half of the fiscal year.
Furthermore, the drop in prices was partially offset by a 13% depreciation in the rand over the company´s fiscal first quarter.
"We continue to maintain that patient investors will be rewarded but may need to wait till better news flow in the second half."
SP Angel reiterated its recommendation to 'buy' and target of 156p.
RBC Capital Markets slashed its price target on Meggitt to 420p from 580p following the company's profit warning.
The bank, which kept its 'outperform' rating on the stock, noted that the warning was due to an abrupt slowdown in both the aerospace and defence after-markets and said it expects this to continue into the fourth quarter.
"Just when it seemed that Meggitt was getting it together, and reporting results similar to other aerospace suppliers, we lurch back into a sub-par performance," said RBC. "If it were not for the typical UK market freak-out sell-off today, we would be looking to downgrade."
However, with the stock down around 20%, a 2016 price-to-earnings ratio of 11.5x and a dividend yield of 3%, the bank said it was reluctant to capitulate here. |
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