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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: Miners down as copper slips again Investors stayed on the sidelines, deterred by weak inflation data out of China and as the Prime Minister laid out his conditions to Brussels for Britian to remain within the UK.
The Footsie finished off its lows of the session, down by 19.88 points or 0.32% at 6,275.28.
Miners were at the bottom of the pile on the top flight index on the back of downbeat research notes out of Barclays and JP Morgan and another day of losses for metals' prices.
"The last five years have been the worst period of performance since 1966. Looking forward it is hard to see what might pull the the sector out of its tailspin. A demand shock seems unlikely given the state of China's economy, although there are some signs of near-term improvement (money supply (M2), property starts and total social financing). We would have reverted to our Negative call of 2013-14 if it weren't for the recent pick up in some Chinese data, plus sector positioning)," the team of analysts led by David Butler said in a research note sent to clients.
As of 16:35 three-month copper futures were 1.2% lower - and at fresh six-year lows - to $4,925 per metric tonne on the LME.
Much weaker than expected China CPI prompts talk of further easing
Data released overnight by Chinese authorities said the country's consumer price index slowed to a 1.3% year-on-year pace in October (consensus: 1.5%), while producer prices fell at a 5.9% clip, as expected.
Those figures also revealed the first month-on-month drop in consumer prices since May, of -0.3%. It was the 44th straight monthly decline for factory gate prices.
Analysts at Capital Economics said they expected the drop in consumer price inflation to be temporary, pointing out that the bulk of the decline was the result of softer food prices, where the pace of gains retreated to 1.9% year-on-year from 2.7% in the month before.
Similarly, the -5.9% drop in factory prices was mainly attributable to falling commodity prices, the think-tank said, whereas the price of domestic goods was holding up much better than expected.
However, "the window for further interest rate cuts will remain open for some time yet," Chang Liu, China economist at Capital Economics said in a research report sent to clients.
Policy error by the Fed?
Musing about the 'market chatter' surrounding increased expectations for a first interest rate hike from the US Federal reserve in December, Jim Reid at Deutsche Bank said: "We have a bias to believe that a rate hike now would be a policy error mainly because global growth and inflation are so low that you risk activity tipping over into a recession in say 2017. Clearly a lot can happen between now and then but that's our current thinking.
In the absence of economic data in the UK, markets' focus was on the letter sent by David Cameron to European Union president Donald Tusk in which he spelled out the country's conditions for remaining inside the club.
The missive called for curbs on in work benefits granted to EU migrants and less red tape from Brussels.
One dissatisfied Conservative, Bernard Jenkin, angrily stood up in parliament and questioned "is that it? Is that the sum total of the government's position in this renegotiation?"
FTSE 100: Anglo American caves in after negative broker comments
Copper giant Anglo American was the object of negative comments out of JP Morgan and Barclays. "We also explicitly assume the progressive dividend is sacrificed at (or before) full year results. With income support expected to diminish, earnings declining through 2016 and management showing little appetite for a more fundamental restructuring of the business, AAL should, in our view, increasingly be viewed as a highly leveraged play on commodities," the former said. Barclays slashed its target on the miner to 485p from 625p.
Experian was at the top of the leader board after reporting first half operating earnings (EBITA) of $570m (consensus: $567m), alongside strong cash flow, according to some analysts. The information services company increased its dividend by 2% and hiked its share buy-back programme by $200m to $800m.
Shares of Vodafone shone after the telecommunications company's first half results beat expectations and it lifted full year guidance.
Broadcaster ITV gained ground after saying it was on track for double digit profit growth for the full year as it posted a strong third quarter book.
National Grid advanced after it announced strong first half earnings growth and confirmed rumours that it has begun to look at potentially selling a majority stake in its gas distribution business and returning the proceeds to shareholders via a likely special dividend.
Plumbing supplier Wolseley slid after its first-quarter update failed to impress, while property developer Land Securities was also under the cosh as its interim net asset value per share missed analysts' expectations.
Shares in engineering giant Rolls-Royce were on the backfoot after Exane BNP Paribas slashed its price target on the stock to 685p from 840p to reflect an additional pullback in the civil aerospace margin and further pressure on shorter-cycle activities.
Supermarket retailers Morrison and Tesco were hit as Deutsche Bank downgraded its ratings on the stocks, with the latter falling to a 'hold' from 'buy'.
FTSE 250: Broker pulls the plug on Drax
Shares in power company Drax slid after Deutsche Bank cut the stock to 'sell' from 'hold' as the "power price crunch" worsen.
DCC was a high riser after the distribution and logistics group reported an increase in interim pre-tax profit thanks to an improvement in gross margins, although revenue suffered a slight decline.
Engineering software company Aveva gained ground despite swinging to a pre-tax loss in the first half of the year due to declining oil prices , as it said it hopes to reach definitive terms on the reverse takeover by Schneider Electric in December, with completion by mid-2016. |
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| | Market Movers
FTSE 100 (UKX) 6,275.28 -0.32%
FTSE 250 (MCX) 17,039.82 -0.43%
techMARK (TASX) 3,073.38 -0.06%
FTSE 100 - Risers
Experian (EXPN) 1,187.00p 7.52%
Vodafone Group (VOD) 222.80p 3.89%
Inmarsat (ISAT) 1,036.00p 2.17%
Coca-Cola HBC AG (CDI) (CCH) 1,545.00p 2.05%
ITV (ITV) 261.50p 1.83%
International Consolidated Airlines Group SA (CDI) (IAG) 604.50p 1.76%
SSE (SSE) 1,488.00p 1.57%
National Grid (NG.) 909.30p 1.48%
Rio Tinto (RIO) 2,318.50p 1.20%
Berkeley Group Holdings (The) (BKG) 3,132.00p 1.16%
FTSE 100 - Fallers
Anglo American (AAL) 491.75p -4.70%
Wolseley (WOS) 3,630.00p -4.60%
Glencore (GLEN) 105.05p -4.24%
Burberry Group (BRBY) 1,319.00p -4.00%
Prudential (PRU) 1,489.50p -3.90%
Rolls-Royce Holdings (RR.) 672.00p -3.79%
Land Securities Group (LAND) 1,243.00p -2.74%
Morrison (Wm) Supermarkets (MRW) 159.10p -2.63%
Aberdeen Asset Management (ADN) 345.00p -2.51%
Antofagasta (ANTO) 497.70p -2.32%
FTSE 250 - Risers
DCC (DCC) 5,800.00p 8.22%
Greencore Group (GNC) 331.70p 3.81%
Centamin (DI) (CEY) 62.60p 3.05%
Dignity (DTY) 2,581.00p 2.83%
UDG Healthcare Public Limited Company (UDG) 498.10p 2.70%
P2P Global Investments C (P2P2) 974.50p 2.62%
Daejan Holdings (DJAN) 6,125.00p 2.59%
Betfair Group (BET) 3,318.00p 1.84%
Aldermore Group (ALD) 287.20p 1.81%
Supergroup (SGP) 1,606.00p 1.71%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 84.85p -14.85%
Drax Group (DRX) 237.50p -8.34%
Vedanta Resources (VED) 429.00p -7.64%
Tullow Oil (TLW) 213.60p -6.36%
Petra Diamonds Ltd.(DI) (PDL) 64.90p -5.53%
Vesuvius (VSVS) 346.20p -5.46%
Premier Oil (PMO) 73.95p -4.76%
BTG (BTG) 520.50p -4.67%
Allied Minds (ALM) 478.00p -4.05%
Ophir Energy (OPHR) 94.75p -3.33% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks shrug off slowdown worries to edge higher in session-free data European equities edged higher on Tuesday, shrugging off fresh bad news from China and some hawkish comments from a top European Central Bank (ECB) official.
The benchmark Stoxx Europe 600 index closed up 0.10%, while Germany's DAX rose 0.16% and France's CAC 40 gained 0.02%.
As of 1636 GMT, the euro was on the back foot against the main currencies, sliding 0.55% and 0.48% against the pound and the yen respectively and falling to a six-month low against the dollar, while Brent crude gained 0.92% to $47.63 a barrel.
China woes intensify
On a quiet day on the economic front on both sides of the Atlantic, investors received more bad news from China, with figures released by the National Bureau of Statistics earlier showed Chinese consumer prices rose only 1.3% in the year to October.
This was down from 1.6% in September, marked the lowest reading since May and fell short of expectations of 1.5%.
"Unless and until China data begins to pick up, those companies whose performance is heavily skewed towards Chinese demand will find the going tough," said IG's senior market analyst Chris Beauchamp.
"With the US earnings season winding down and markets still adjusting to the increased possibility of a December rate hike, we may well see equities struggle for the time being, with the gains of October continuing to be unwound."
Miners, which are heavily dependent on demand from China, were under the cosh after the release of data from Beijing.
A downgrade of the European mining sector to 'neutral' from 'positive' did little to lift the mood, as Barclays pointed out that the last five years have marked the worst performance since 1966.
"A demand shock seems unlikely given the state of China's economy, although there are some signs of near term improvement," the bank said.
ECB Weidmann issues low-interest rates warning
Meanwhile, ECB member and Bundesbank president Jens Weidmann dampened sentiment further after talking up the risks that ultra-low interest rates could present for financial stability.
"Monetary policy bears responsibility for risks to financial stability if they affect the long-run outlook of price stability or our capacity to ensure price stability in the future," he said.
"In that sense I share concerns about monetary policy that's too loose for too long."
In company news, Vallourec slumped 10.2% after the French steel pipe maker posted a third quarter loss amid falling demand from its oil and gas customers and said it does not expect market conditions to improve any time soon.
Swedish carmaker Volvo declined 1.03%, despite receiving a favourable arbitration ruling, which is expected to boost fourth quarter operating profit by approximately 800m Swedish kronor (£61m). |
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| | US Market Report | | US open: Stocks skid after disappointing economic data US equities edged lower early on Tuesday, as they extended the decline from the previous session after some uninspiring data.
Shortly before 1500 GMT, the Dow Jones Industrial Average was down 21 points to 17,709.77, while the S&P 500 and the Nasdaq were three and 30 points lower respectively.
On the economic data front, import prices declined 0.5% month-on-month compared with a downwardly revised 0.6% drop in September and with analysts' expectations for 0.1% fall.
On a year-on-year basis, import prices tumbled 10.5%, compared with a downwardly revised 11.3% fall in the previous month and with analysts' expectations for a 9.4% drop.
"We expect import prices to decline further over the medium term as the effects of past dollar appreciation continue to weigh on prices," said analysts at Barclays.
"In addition, we believe that weakness in emerging Asia, especially China, is likely to push down import prices over and above any effect from the appreciation of the dollar."
The National Federation of Independent Business said its gauge of small business optimism held steady at 96.1 in October, compared with analysts' expectations for a 96.5 reading and below the long-term average of 98.
Selling prices rose a point to +2, remaining much higher than implied by the very low level of gas prices, which usually greatly influence the number.
"Stripping out the gas price effect, we reckon the selling price number is consistent with core CPI inflation breaching the 2% mark early next year," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Still to come, figures on September wholesale inventories are released at 1500 GMT.
In company news, cloud computing group Rackspace Hosting surged 8.12% after posting better-than-expected quarterly profit and revenue late on Monday.
Synchrony Financial declined 4% after saying late on Monday that it will replace Genworth Financial in the S&P 500 from 17 November, while Chipotle climbed 1.64% after announcing it will reopen all the 43 restaurants that were closed amid an E-coli outbreak last week.
Home retailer Wayfair gained 0.46% as its sales beat expectations and its quarterly loss shrunk, while Apple slid 2.47% after a Credit Suisse report warned of weak demand for its iPhone 6.
Elsewhere, most Asian markets declined, as worries over a slowdown in China intensified after another poor set of economic data, although Japan's Nikkei Stock Average gained for the fifth consecutive session.
European equities were trading mostly lower, while oil prices slid, with West Texas Intermediate losing 0.39% to $43.70 a barrel, while Brent shed 0.23% to $47.08 a barrel. |
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| | Broker Tips | | Broker tips: Rolls Royce, Drax Group, Morrison, Tesco Shares in engineering giant Rolls-Royce slid after Exane BNP Paribas slashed its price target on the stock to 685p from 840p to reflect an additional pullback in the civil aerospace margin and further pressure on shorter-cycle activities.
Exane said Rolls, which it rates at 'neutral', has been the worst performer in the sector over 12 months, but the arrivals of Warren East as CEO and an activist fund on the the share register have revived hopes of turnaround.
The bank said communication and transparency have started to improve, attracting interest from value investors tempted to capture the potential of a large, young installed base that should turn cash generative over time.
However, Exane sees short-term downside risk to cyclical activities which account for up to 46% of sales, on which the company is likely to comment in its interim management statement on 12 November.
As the "power price crunch" worsens, Deutsche Bank has downgraded power company Drax Group from 'hold' to 'sell'.
The investment bank said on Tuesday that capacity concerns have been in the spotlight, with National Grid's notice of insufficient system margin (NISM) signalling a tightening UK power market.
However, the pressure on Drax's earnings and cashflows is likely to rise due to weakening gas prices, and more LNG exports from the US will to the pressure.
With the rally in the share price over the last month and drop in UK power prices, Deutsche Bank said it is concerned about potential downside scenarios.
Tesco and Morrison were under pressure after Deutsche Bank downgraded the stocks as it took a look at the UK food retail sector.
The bank resumed its coverage of Tesco following a period of restriction, cutting the stock to 'hold' from 'buy' and chopping the target to 210p from 240p.
"Our conclusions suggest that there is limited upside to sector profitability and that Tesco's historical margin premium will narrow," the bank said.
It added that net proceeds from the disposal of the South Korea business were less than it had factored into its sum-of-the-parts.
Deutsche downgraded Morrison to 'sell' from 'hold' and cut the price target to 155p from 180p saying the company had the right balance sheet but the wrong competitors.
The bank said Morrison has the greatest customer overlap with the discounters and Asda, due partially to its geographical exposure and its customer demographic. | | |
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