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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 lower after raft of economic data The UK equity market ended lower on Friday as investors weighed a mix of economic data and earnings.
In the Eurozone, the unemployment rate fell to 10.8% in September from 10.9% in August while the consumer price index registered 0% year-on-year growth in October, up from a 0.1% decline the previous month.
Connor Campbell, financial analyst at Spreadex, said there was an "air of the bah-humbugs" despite the upbeat jobs and inflation data out in the Eurozone.
"Arguably the reason behind such a slip is that, whilst both figures are an improvement on last month, they aren't good enough to justify their potentially ECB QE-injection delaying capacity," he said.
Inflation remains well below the European Central Bank's target of just below 2%, which has prompted President Mario Draghi to say the governing council will re-examine its €60bn monthly asset purchase programme at December's policy meeting and consider extending it past September 2016.
Closer to home, GfK's UK consumer confidence index fell to 2 in October from 4 in September, missing expectations for a reading of 3.
"While consumer confidence remains elevated in light of improved real wage growth, it appears that consumers are starting to feel less confident about the future owing to global economic worries, with anecdotal evidence from the GfK press release suggesting that 'good news on the domestic front is being tempered by concerns about our ability to shrug off the global downturn'," said Barclays Research. "This may be weighed on further as the impact of fiscal austerity is felt and inflation picks up at the start of 2016."
In Asia, the Bank of Japan kept policy unchanged, despite cutting its economic and inflation forecasts. The central bank lowered its inflation estimate for the current fiscal year from 0.7% to 0.1% and its growth outlook by 0.5 percentage points to 1.2%.
Across the Atlantic, US consumer spending rose at the slowest pace since the turn of the year in September, according to figures released by the Commerce Department. Spending rose 0.1% month-on-month in September compared with a 0.4% increase in August and with analysts' expectations for a 0.2% gain.
Meanwhile, personal income rose 0.1% month-on-month in September, the smallest gain since March and short of expectations of a 0.2% increase. August's reading was revised up to show a 0.4% increase.
The Chicago purchasing managers' index rose to its highest level since the turn of the year in October. According to MNI Indicators, the index rose 56.2 from 48.7 in September compared with analysts' expectations for a 49.4 reading.
Consumer sentiment in the US declined in October, according to the latest University of Michigan reading. The index monitoring consumer sentiment slid to 90.0 from 92.1 in September, falling short of the 92.5 reading analyst had expected.
US employment cost rose in line with expectations in the third quarter, data showed. The employment cost index rose 0.6% in the three months between July and September, compared with a 0.2% gain in the previous quarter.
In company news, Royal Bank of Scotland declined after reporting a drop in pre-tax profit in the third quarter to o £295m from £3.2bn the previous year due to higher restructuring costs.
International Consolidated Airlines flew lower despite reporting a jump in third quarter profit. Societe Generale said a negative share price reaction was likely given the strong performance of the stock, which is up 22%year-to-date.
Meggitt bounced back after the aerospace and defence company suffered two days of heavy losses on the back of a profit warning. On Wednesday, the group cautioned that profit for the full year will be well below forecasts after it endured softer trading during the third quarter, with a "marked deterioration" in its end markets in September.
Barclays was on the back foot again after posting disappointing third-quarter results in the previous session.
Vectura Group rallied after the company said it had triggered two milestone payments following an approval of an inhaler in the US and also reaching a development milestone in Europe.
Shares in speciality chemicals group Elementis were also on the march as the company said positive trends in the first half would continue into the full year and help earnings meet expectations, despite a sales slowdown.
Pets at Home shares dipped as a cooler summer lowered demand for tic and flea treatments with sales hit as a result. Same store sales growth fell to 1.8% for the 28 weeks to 8 October from 4.2% last year.
Cineworld shares plunged after analysts at Canaccord Genuity downgraded the stock to 'sell' saying it was time to take profits.
Market Movers
FTSE 100 (UKX) 6,342.26 -0.84%
FTSE 250 (MCX) 17,085.00 -0.17%
techMARK (TASX) 3,072.12 -0.38% |
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| The UK equity market ended lower on Friday as investors weighed a mix of economic data and earnings.
In the Eurozone, the unemployment rate fell to 10.8% in September from 10.9% in August while the consumer price index registered 0% year-on-year growth in October, up from a 0.1% decline the previous month.
Connor Campbell, financial analyst at Spreadex, said there was an "air of the bah-humbugs" despite the upbeat jobs and inflation data out in the Eurozone.
"Arguably the reason behind such a slip is that, whilst both figures are an improvement on last month, they aren't good enough to justify their potentially ECB QE-injection delaying capacity," he said.
Inflation remains well below the European Central Bank's target of just below 2%, which has prompted President Mario Draghi to say the governing council will re-examine its €60bn monthly asset purchase programme at December's policy meeting and consider extending it past September 2016.
Closer to home, GfK's UK consumer confidence index fell to 2 in October from 4 in September, missing expectations for a reading of 3.
"While consumer confidence remains elevated in light of improved real wage growth, it appears that consumers are starting to feel less confident about the future owing to global economic worries, with anecdotal evidence from the GfK press release suggesting that 'good news on the domestic front is being tempered by concerns about our ability to shrug off the global downturn'," said Barclays Research. "This may be weighed on further as the impact of fiscal austerity is felt and inflation picks up at the start of 2016."
In Asia, the Bank of Japan kept policy unchanged, despite cutting its economic and inflation forecasts. The central bank lowered its inflation estimate for the current fiscal year from 0.7% to 0.1% and its growth outlook by 0.5 percentage points to 1.2%.
Across the Atlantic, US consumer spending rose at the slowest pace since the turn of the year in September, according to figures released by the Commerce Department. Spending rose 0.1% month-on-month in September compared with a 0.4% increase in August and with analysts' expectations for a 0.2% gain.
Meanwhile, personal income rose 0.1% month-on-month in September, the smallest gain since March and short of expectations of a 0.2% increase. August's reading was revised up to show a 0.4% increase.
The Chicago purchasing managers' index rose to its highest level since the turn of the year in October. According to MNI Indicators, the index rose 56.2 from 48.7 in September compared with analysts' expectations for a 49.4 reading.
Consumer sentiment in the US declined in October, according to the latest University of Michigan reading. The index monitoring consumer sentiment slid to 90.0 from 92.1 in September, falling short of the 92.5 reading analyst had expected.
US employment cost rose in line with expectations in the third quarter, data showed. The employment cost index rose 0.6% in the three months between July and September, compared with a 0.2% gain in the previous quarter.
In company news, Royal Bank of Scotland declined after reporting a drop in pre-tax profit in the third quarter to o £295m from £3.2bn the previous year due to higher restructuring costs.
International Consolidated Airlines flew lower despite reporting a jump in third quarter profit. Societe Generale said a negative share price reaction was likely given the strong performance of the stock, which is up 22%year-to-date.
Meggitt bounced back after the aerospace and defence company suffered two days of heavy losses on the back of a profit warning. On Wednesday, the group cautioned that profit for the full year will be well below forecasts after it endured softer trading during the third quarter, with a "marked deterioration" in its end markets in September.
Barclays was on the back foot again after posting disappointing third-quarter results in the previous session.
Vectura Group rallied after the company said it had triggered two milestone payments following an approval of an inhaler in the US and also reaching a development milestone in Europe.
Shares in speciality chemicals group Elementis were also on the march as the company said positive trends in the first half would continue into the full year and help earnings meet expectations, despite a sales slowdown.
Pets at Home shares dipped as a cooler summer lowered demand for tic and flea treatments with sales hit as a result. Same store sales growth fell to 1.8% for the 28 weeks to 8 October from 4.2% last year.
Cineworld shares plunged after analysts at Canaccord Genuity downgraded the stock to 'sell' saying it was time to take profits.
Market Movers
FTSE 100 (UKX) 6,342.26 -0.84%
FTSE 250 (MCX) 17,085.00 -0.17%
techMARK (TASX) 3,072.12 -0.38% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks struggle for direction as inflation remains muted European stocks ended the week on a mixed note, as investors analysed a number of contrasting economic reports.
The benchmark Stoxx Europe 600 closed down 0.08%, while Germany's DAX and France's CAC 40 were 0.46% and 0.24% higher respectively.
As of 1632 GMT, the euro was down 0.50% against the pound but rose 0.32% and 0.12% against the dollar and the yen respectively, while Brent crude rose 1.35% to $49.47 a barrel.
Mixed data on both sides of the Atlantic
On the economic data front, figures from Eurostat showed unemployment in the Eurozone grew slightly more than expected in September, while consumer prices fell flat in the current month, in line with analysts' expectations.
Meanwhile, German retail sales were flat compared with a larger-than-initially estimated 0.7% decline in the previous month and analysts' expectations for a 0.4% drop.
"There has been some good news in the Eurozone, with unemployment falling to a three-year low. Inflation even managed to rise, a fact that will give Mario Draghi pause for breath," said Chris Beauchamp, senior market analyst at IG.
"He has probably saved the Eurozone from depression, but the full-blown economic recovery he is looking for has yet to arrive."
Across the Atlantic, consumer spending rose 0.1% month-on-month in September compared with a 0.4% increase in August and with analysts' expectations for a 0.2% gain.
Elsewhere, according to the latest University of Michigan reading, the index monitoring consumer sentiment declined to 90.0 from 92.1 in September, falling short of the 92.5 reading analyst had expected.
Meanwhile, the Chicago PMI, surged back into positive territory in October, rising to a level of 56.2 from 48.7 in September, the highest level since January.
Mixed earnings
In company news, L'Oreal tumbled 4.57% after its third-quarter revenue missed analysts' expectations, while British Airways and Iberia parent International Consolidated Airlines Group fell 3.54% as quarterly numbers fell short of estimates.
On the upside, oil and gas company BG Group gained 0.20% after its third-quarter core earnings came in better than expected, as it raised its full-year production guidance following a sharp increase in output in the period.
Airbus gained 3.38% after reporting a 12% rise in third-quarter core earnings from the same period a year ago and announcing the buyback of €1.1bn of shares.
BNP Paribas was 1.77% higher after it posted a 14% rise in net income, beating analysts' expectations, while Belgium-based brewer Anheuser-Busch InBev advanced 1.57% after it said core earnings rose 9.6% in the third quarter. |
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| | US Market Report | | US open: Stocks struggle for direction amid mixed data US equities moved in tight ranges early on Friday a series of mixed economic report showed personal spending was flat in September.
Shortly after 1400 BST, the Dow Jones Industrial Average was down 14 points, while the S&P 500 and the Nasdaq were points two points lower and one point higher respectively.
Mixed economic data
According to figures released by the Commerce Department, spending rose 0.1% month-on-month in September compared with a 0.4% increase in August and with analysts' expectations for a 0.2% gain.
Spending on durable goods and services rose 0.6% and 0.3% respectively, while purchases of non-durable goods such as gas declined 0.3%.
"With the labour market approaching full employment, we still anticipate that rising wage growth and underlying inflation will be the big surprise next year, eventually forcing the Fed to hike interest rate more aggressively," said Paul Ashworth, chief US economist at Capital Economics.
"But that clearly hasn't happened yet, which is why the first rate hike is probably going to be delayed until early next year."
Elsewhere, according to the latest University of Michigan reading, the index monitoring consumer sentiment increased to 90.0 from .92.1 in September, falling short of the 92.5 reading analyst had expected.
Meanwhile, the Chicago PMI, surged back into positive territory in October, rising to a level of 56.2 from 48.7 in September, the highest level since January.
LinkedIn surges
On the company front, Valeant Pharmaceuticals plunged 6.47% after saying it will part ways with mail-order pharmacy unit Philidor Rx Services.
LinkedIn surged 12.3% after positing better-than-expected results late on Thursday and lifting its full-year forecast, while Starbucks rose 1.10% reporting a surge in profit driven by growth at its US stores.
Among the companies that reported before the bell, CVS Health fell 6.63% after a downbeat profit outlook, while Colgate Palmolive declined 2.59% after posting a fifth straight decline in quarterly sales.
Oil giant Exxon slid 0.09% after reporting that third quarter profit and sales fell less than expected, while sector peer Chevron rose 0.44% after the company beat profit and sales expectations.
Most Asian equity markets ended the week on a downbeat note, after the Bank of Japan refrained from implementing fresh stimulus measures, while European stocks edged lower on profit taking.
The dollar was on the back foot against the main currencies, losing 0.48% against the yen and falling 0.37% and 0.62% against the pound and the euro respectively, while gold futures shed 0.25% to $1,143.07. |
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| | Broker Tips | | Broker tips: Barclays, Cineworld, BT Group Analysts at Goldman Sachs lowered their target for shares of Barclays after the group guided to above consensus on costs, but gave short shrift to concerns about the now lower target from the lender for return-on -equity.
The banking group lowered its target for return-on-equity to 11% from over 12%, but mostly due to factors other than the bank�s underlying earnings trends, the broker explained.
As well, new guidance on the run-rate for non-core costs after 2016 was raised to �100m above company-compiled consensus, analyst Martin Leitgeb said.
For the first time ever, when the group published its third-quarter results it said it expected to incur approximately �1bn in costs over the 2015-18 period linked to structural reforms (US IHC, CCAR, UK ring-fenced bank).
Goldman Sachs trimmed its earnings per share estimates for 2015-2018 by between 0-4% as a result of the higher costs now expected.
Leitgeb kept his recommendation on the stock at 'conviction buy' while at the same cutting its target, calculated on the basis of the bank's 12-month return on tangible equity, to 335p from 345p.
Shares in Cineworld rose by a staggering 75% over the last twelve months, driven by a fantastic slate of films during that period, but the time had come to take some money 'off the table' a leading broker said on Friday.
That will reach its peak in the present quarter, with three 'blockbusters': Bond Spectre, Hunger Games: Mockingjay Part 2 and Star Wars: the Force Awakens, but so too might the gains in the stock, analysts at Canaccord Genuity said on Friday.
"It's time to take profits," the broker said in a research report sent to clients.
Analyst Nigel Parson explained that Cineworld "traditionally under-indexes versus Odeon and Vue on blockbusters and our research suggests this quarter will be no exception."
Next year�s slate is "less strong" and it could become a 'crowded trade'.
Sky�s aggresive customer retention efforts kept BT Group from accelerating the pace of broadband additions in the second quarter and there were regulatory clouds massing on the horizon, Nomura said.
The former neutralised BT�s marketing around the launch of its UEFA content, but the broker nonetheless remained positive on a medium-term basis.
Regulatory sentiment was set to turn more negative over the next year the broker pointed out, with Ofcom expected to kick-start its Fixed Access Market Review - which will look at unbundling, wholesale line rental and fibre regulation - by the end of 2015, analyst James Britton said.
The regulator was also expected to provide initial guidance on its CDR conclusions in the first quarter of 2016, with policies to suport competition in the access layer anticipated.
Regulatory headwinds were also expected to resume from fiscal year 2017, the broker added.
Offsetting the above to an extent, EE�s trading momentum was "welcome" and BT remained well positioned to benefit from converged services and and EE synergies over the medium-ter, Britton explained to clients in a research note sent on Friday. | | |
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