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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 pulled lower by mining slump after China sell-off London stocks ended lower on Friday on a slump in the mining sector as commodity prices declined.
The FTSE 100 finished down 17.98 points to 6,375.15 led by Anglo American, Fresnillo, Glencore and Randgold Resources. Gold, silver and platinum prices fell, although copper continued Thursday's gains. Oil prices dropped with Brent crude down 0.84% to $45.08 per barrel and West Texas Intermediate down 1.04% to $42.05 per barrel at 1640 GMT.
"Gains are proving hard to sustain as the week comes to an end, and with US markets on a half day and important events looming, most investors are struggling to find a rationale to keep buying into equities. Two days of gains, helped along by thin volumes, have given way to modest losses," said IG senior market analyst Chris Beauchamp.
"Chinese stocks overnight brought back unhappy memories of August, and as a result we saw heavy losses for miners once again."
The Shanghai composite finished down 5.49%, the largest daily percentage loss since 18 August as Chinese authorities investigated brokerages Citic Securities Co. and Guosen Securities over suspected violations.
Following the sharp sell-off in China, US stocks followed suit as the market reopened for trading. The US stock market will close early at 1800 GMT for the Thanksgiving holiday.
Meanwhile, investors seemed to shrug off UK economic growth data as there were no surprises. The second estimate of third quarter UK gross domestic product from the Office for National Statistics showed an annualised unrevised growth of 2.3% in October, as expected by analysts. The quarter-on-quarter comparison was also unrevised at 0.5% growth in the three months to September, down from 0.7% in the second quarter and in line with forecasts.
"Confirmation of reduced GDP growth of 0.5% quarter-on-quarter in the third quarter reinforces our belief that the Bank of England is unlikely to raise interest rates before the second quarter of 2016," said Howard Archer, chief UK and European economist at IHS Global Insight.
"However, we do expect the Bank of England will act before mid-2016. This is based on our belief that the UK will see some improvement in growth from its third quarter soft patch and that consumer price inflation will start rising gradually from late-2015."
Other data published by research company GfK showed UK consumer confidence declined to a six-month low in November. The consumer sentiment index declined from 2 points to 1 in October, the lowest level since May and falling short of analysts' expectations for an unchanged reading.
UK house prices growth slowed by more than expected in November to record the smallest rise since June, according to research by the Nationwide Building Society. The Nationwide house price index rose 0.1% in November compared to the previous month, down from the 0.6% monthly rise recorded in October, and lower than the consensus forecast for a 0.50% increase. The year on year measure showed a 3.7% increase, lower than the estimated 4.2% and down slightly from October's five-month high of 3.9% and 3.8% in September and the 26-month low of 3.2% in August.
Chancellor George Osborne's new 3% surcharge on Stamp Duty on buy-to-let (BTL) properties and second homes, which was announced this week and will come into force from April 2016, is expected to lead to a frantic rush as prospective investors snap up properties in the next four months to avoid the new charge.
Elsewhere, Japanese data overnight showed an unexpected fall in the jobless rate to 3.1% in October from 3.4% the previous month, while the consumer price index rose to 0.3% year-on-year last month from 0%, as anticipated by analysts. However, CPI fell 0.1% year-on-year, as predicted, when stripping out volatile food prices.
Japan's household spending dropped 2.4% in October, compared to forecasts of 0% and September's 0.4% decrease. The reports come amid pressure on the Bank of Japan to increase its bond buying programme in the coming months following prolonged weakness in inflation.
"While Japan's Jobless data improved, inflation showed need for continued BoJ stimulus," said Michael van Dulken and Augustin Eden at Accendo Markets.
Japan's Nikkei 225 closed down 0.30% following the data.
Among companies, water utility Severn Trent was a high riser for the second day in a row after it posted a 36% rise in first half pre-tax profit on the back of cost-cutting.
Anglo American was the standout loser as it announced the closure of its Drayton coal mine in Australia next year after the New South Wales Planning and Assessment Commission recommended that the government block an expansion of the mine.
Betfair gained after Deutsche Bank upgraded the stock to 'buy' from 'hold' and lifted the price target to 4,200p from 2,650p. The bank said it reckons Betfair can grow revenues/profits materially above the market growth rate following the group's relentless focus on product innovation coupled with brand investment over the past 24 months.
HSBC edged lower on news it will shut down its private banking business in India by March of next year and the 70 people working in the division will be moved to the retail bank.
SVG Capital advanced after reporting a 3% increase in net asset value for the three months to 31 October. |
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| | Market Movers
FTSE 100 (UKX) 6,375.15 -0.28%
FTSE 250 (MCX) 17,251.86 0.21%
techMARK (TASX) 3,226.10 0.14%
FTSE 100 - Risers
Inmarsat (ISAT) 1,113.00p 2.30%
Severn Trent (SVT) 2,248.00p 2.09%
Dixons Carphone (DC.) 481.00p 1.52%
United Utilities Group (UU.) 978.50p 1.29%
Admiral Group (ADM) 1,621.00p 1.25%
Babcock International Group (BAB) 1,084.00p 1.21%
Relx plc (REL) 1,197.00p 1.18%
Rolls-Royce Holdings (RR.) 606.50p 0.83%
G4S (GFS) 223.50p 0.72%
Compass Group (CPG) 1,141.00p 0.71%
FTSE 100 - Fallers
Anglo American (AAL) 400.55p -8.09%
Fresnillo (FRES) 715.00p -4.54%
Randgold Resources Ltd. (RRS) 3,997.00p -4.29%
Glencore (GLEN) 91.88p -4.17%
Antofagasta (ANTO) 496.20p -4.12%
Rio Tinto (RIO) 2,196.50p -3.28%
BHP Billiton (BLT) 807.60p -3.07%
Johnson Matthey (JMAT) 2,799.00p -2.85%
Aberdeen Asset Management (ADN) 334.70p -2.56%
Standard Chartered (STAN) 558.60p -1.24%
FTSE 250 - Risers
Pennon Group (PNN) 883.00p 5.50%
OneSavings Bank (OSB) 371.20p 5.39%
Supergroup (SGP) 1,640.00p 4.79%
SVG Capital (SVI) 478.10p 3.91%
Paragon Group Of Companies (PAG) 376.80p 3.80%
Thomas Cook Group (TCG) 117.90p 3.69%
Nostrum Oil & Gas (NOG) 376.30p 3.27%
Halfords Group (HFD) 371.10p 3.17%
Zoopla Property Group (WI) (ZPLA) 226.50p 3.10%
Kier Group (KIE) 1,321.00p 2.64%
FTSE 250 - Fallers
Polymetal International (POLY) 537.00p -3.07%
Tullow Oil (TLW) 198.40p -2.98%
Acacia Mining (ACA) 171.80p -2.83%
TalkTalk Telecom Group (TALK) 244.10p -2.36%
Jimmy Choo (CHOO) 141.20p -2.28%
Aggreko (AGK) 1,004.00p -2.24%
Ophir Energy (OPHR) 99.25p -2.12%
Circassia Pharmaceuticals (CIR) 277.00p -2.12%
Ted Baker (TED) 3,209.00p -2.08%
Weir Group (WEIR) 1,173.00p -2.01% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets end choppy session in the red on Black Friday European equities ended the week on a downbeat note, after a choppy session dragged markets lower as Chinese stocks slumped.
The benchmark Stoxx Europe 600 closed down 0.18%, while Germany's DAX slid 0.24% and France's CAC 40 fell 0.32%.
As of 1643 GMT, the euro lost 0.12% against the dollar, was broadly flat against the yen and gained 0.26% against the yen, while Brent crude lost 1.04% to $44.99.
With the US markets open only half day following Thanksgiving Day, investors had very little economic data to analyse.
The European Commission's index of executive and consumer confidence rose from an upwardly revised 105.9 in October to 106.1 in November, the highest reading since May 2011.
"The continued improvement in euro-zone sentiment is an encouraging sign that confidence in the region has not been damaged by fears about a sharp slowdown in China," said Jessica Hinds, European economist at Capital Economics.
"However, looking into 2016, we would still stress the downside risks to the recovery, as the tailwinds from the weaker euro and lower oil price fade.
"Either way, GDP growth is unlikely to be fast enough to bring headline inflation swiftly back to 2%"
The Shanghai Composite suffered its worst drop in three months, tumbling 5.5% as it emerged several brokerages in China were being investigated for alleged violation of securities regulations.
European stocks followed suit at the open before momentarily clawing their way back up on rising expectations of ECB action and after data from the European Commission showed confidence in the euro bloc hit its highest level in over four years in November.
Meanwhile, investors were looking ahead to the 3 December ECB meeting.
"European indices have maintained their healthy aspect of late, on expectations that Mario Draghi will put some more firepower behind his pledge to do 'whatever it takes' to save the Eurozone," said IG's senior market analyst Chris Beauchamp.
A symbolic interest rate cut could help as well, and it is likely that continental stocks will continue to gain in the first half of the coming week."
In company news, Altice shares gained 3.71% after the telecommunications company secured the rights to broadcast the English Premier League in France and Monaco for three years. |
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| | US Market Report | | US open: Stocks decline amid lack of data on Black Friday US equities declined early on Friday, as Wall Street failed to shrug off a sharp selloff in Chinese equities, while retailers were polarising the attention on Black Friday.
Shortly after 1500 GMT, the Dow Jones Industrial Average was 59 points down to 17,754.20, while the S&P 500 and the Nasdaq were two points lower and one point higher respectively.
"The Dow Jones obviously didn't have a good Thanksgiving, not that there was much to spark the index's decline, the US providing nothing of any worth this afternoon," said Spreadex's financial analyst Connor Campbell.
"Perhaps investors, free of any cumbersome data, have mulled over the impending - if still only potential - December rate-hike and decided to abandon the Dow for now."
Asian equities ended the week on a downbeat note, dragged lower by a slump in Chinese markets, with the Shanghai Composite Index tumbling 5.48% to 3,436.30, recording its largest daily percentage loss since 18 August.
The decline in Chinese stocks came as Citic Securities, the country's biggest stock broker, slumped 10% after agreeing to cooperate with China's stock regulator in an investigation of the firm for alleged violation of security rules.
In company news, retailers were in focus on Black Friday after shoppers spent $1.1bn on Thanksgiving, a 22% year-on-year increase.
During early trading on Friday, Target said Apple iPads were the best sellers in stores and online, while TV were also selling well in its shops.
However, Target was down 0.10% and Apple slid 0.26%, while Wal-Mart Stores declined 0.42% despite reporting that over 25m people visited its website and mobile phone app.
Walt Disney slid 3.25% after the media giant said its ESPN sports network lost 3m subscribers over the last 12 months.
Meanwhile KaloBios Pharmaceuticals jumped 50.8% after Martin Shkreli, the group's newly appointed CEO, revealed he has decided to stop lending out shares in the company.
Elsewhere, the dollar was broadly flat against yen and gained 0.21% and 0.31% against the euro and the pound respectively, while gold spot plunged 1.35% to $1,057.85. |
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| | Broker Tips | | Broker tips: Britvic, Betfair, Zoopla HSBC downgraded Britvic to 'hold' from 'buy' and slashed the price target to 700p from 860p.
The bank said Britvic's strategy is sound.
"The investment in the UK is required, Brazil should be a medium-term growth driver and we continue to see good growth potential from Fruit Shoot in the US."
However, it said the combination of the acquisition of Ebba and the anticipated three-year investment programme of around £225m in the UK places considerable pressure on free cash flow generation and reduces the returns profile for the next three years.
The bank updated its forecasts for both the increased capex assumptions for the next three years as well as factoring in a slower growth environment for the soft drinks markets that Britvic operates in.
Its earnings per share estimates fall by 5% to 46.1p for full year 2016 and 8% to 48.8p for 2017.
HSBC said its forecasts suggest EPS will rise by 1%, 6% and 9% in FY2016, 2017 and 2018, respectively.
Deutsche Bank upgraded Betfair to 'buy' from 'hold' and lifted the price target to 4,200p from 2,650p.
The bank said it reckons Betfair can grow revenues /profits materially above the market growth rate following the group's relentless focus on product innovation coupled with brand investment over the past 24 months.
In addition, DB sees upside risks to forecasts and said the upcoming merger with Paddy Power offers the ability to leverage higher returns on incremental investment given the material increase in scale.
The bank estimates that in year two of the merger the combined group would be trading on a 16x EV/EBITDA multiple or 23x earnings.
"We see these valuation metrics as attractive in light of the combined group's greater scale and ability to leverage higher returns on product and marketing investment."
Deutsche lifted its full year 2016 EBITDA forecast by 19% to £136m and its earnings per share estimate by 23% to 96p based on strong core Betfair revenue growth .
For full year 2017, it raised its EPS estimate by 22% to 116p and assumes EBITDA growth of 18% to £161m.
Zoopla Property Group was upgraded by Exane and Investec on bullishness about the company's ability to maintain its position in the market for property websites.
Exane moved to a 'neutral' rating from 'underperform', with a target of 220p, while Investec raised its recommendation to 'hold' from the previous 'sell' and set a 231p price target.
Exane admitted its consistently cautious position on Zoopla had reflected a view that its operations and pricing would suffer a "significant, lasting" effect from the launch of the new rival OnTheMarket website from estate agency collective Agents Mutual, together with the "must have" status of Rightmove.
But following around 30% cuts to 2016 profit forecasts since its IPO, Exane analyst William Packer now sees the consensus estimate for core portal earnings before interest, tax, depreciation and amortisation (EBITDA) as achievable.
"Based on conversations with our network of estate agent contacts, and with Agents Mutual at under 1k of intent after seven months of recruitment we remain cautious on its prospects for success and expect the challenger to be unsuccessful in reaching its 7.5k letters of intent target. We expect the status quo to hold, with Agents Mutual remaining a significant #3," Packer wrote.
Stats from online traffic analysts Alexa showed the relative gap between Zoopla and Rightmove in website visit ranking had widened since summer data showed Zoopla had around 46m visits per month in July compared to its rival's 110m in June.
So, Investec's Steve Liechti likewise said that while he remained concerned on the widening gap in Zoopla's portal proposition strength versus Rightmove, as well as the persistent drag from OnTheMarket and reliance on uSwitch's 'mono vertical', he believes these are "now more factored into the share price" since the shares fell around 10% in the last month.
While the knock-on impact of OnTheMarket (OTM) is weakening Zoopla's market position against Rightmove, with lower inventory, member stickiness, traffic and questions on lead quality, Liechti said he still believes Zoopla offers return on investment to its members and that its model and economics remain strong. | | |
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