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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 edged higher on Chinese data Equities and copper prices found their footing on Wednesday following a raft of more or less in-line economic data released overnight in China, although the latest UK employment numbers left a trail of confused analysts in their wake.
The FTSE ended the day higher by 21.92 points or 0.35% at 6,297.20, while the Stoxx Europe 600 index rose 0.65% to 378.71.
An unexpected drop in British unemployment to its lowest since 2008 gave the pound a boost versus the US dollar - albeit after recent sharp drops - but failed to lift the uncertainty surrounding the probable timing of the Bank of England's first rate hike.
Three-month copper futures finished up by 0.5% to $4,938.0 per metric tonne on the LME.
Front month Brent crude futures on the other hand dropped 2.71% to $46.19 per barrel after the latest weekly inventory data from the American Petroleum Institute revealed a 6.3 barrel build in US oil stocks last week. That weighed on the shares of oil majors BP and Royal Dutch Shell.
Something for hawks and doves in UK employment data
Unemployment in the UK unexpectedly slipped to 5.3% over the three months to September, the lowest level since April 2008. However, 'core' earnings were weaker, falling to 2.5% from 2.8% in August, against consensus of 2.6%.
Howard Archer of IHS Global Insight summed up the report well, saying that the "uneven" jobs report "will do little to clarify the uncertainty over exactly when the Bank of England will hike interest rates".
Economists at Barclays appeared to be a tad more downbeat, pointing out how "if our inflation forecasts are realised and core wage growth does not pick up and at an increasing rate, we could begin to see real wages dip further, eating into consumption, supporting our view that private consumption will slow into H2 15 and 2016."
Better tone to Chinese data
Fixed asset investment in Asia's largest economy rose at a 10.2% year-on-year pace in the first ten months of the year, according to the country's statistics bureau, in line with the consensus estimate from economists.
Julian Evans-Pritchard, China economist at Capital Economics, said: "The rebound in fixed investment growth last month suggest that the recent easing of monetary and fiscal policy is beginning to have the desired effect. With policymakers likely to err on this side of caution and continue to adopt an accommodative policy stance, we expect this tailwind to economic activity to last for some time."
Carney thinks British-EU relationship is working
Speaking at today's Bank of England Open Forum Bank of England governor Mark Carney told Sky News that the country's relationship with the European Union was working, but added that the BoE's job was "to make whatever the British people decide work [...] if things change we will do what's necessary."
SAB Miller and Anheuser Busch-InBev seal takeover
Anheuser Busch-InBev made a formal offer to buy London-listed rival SABMiller for £44 a share in cash, the companies confirmed on Wednesday. The deal, which is expected to complete in the second half of next year and follows months of negotiations and extended deadlines from the Takeover Panel, represents a premium of around 50% to SABMiller's closing price prior to renewed speculation of an approach.
Shares in information services company Experian rallied for the second day in a row, after Citigroup lifted its price target on the stock by 9% to 1,340p to reflect higher earnings and the sector's re-rating. Morgan Stanley lent a helping hand, hiking its target on the shares to 1,400p from 1,350p.
Interim results from Sainsbury's showed like-for-like sales shrank 1.6% and profits crashing 17.9% lower to £308m but ahead of consensus estimates of £300m. Underlying earnings per share tumbled 17.2% to 12p, but were also ahead of forecasts of 11.5p.
Housebuilder Barratt said net private reservations per week in the 19 weeks to 8 November were up 12.5% to 261 with a sales rate of 0.70 (2014: 0.63) net private reservations per active site per week against 0.63 last year. The company said it was "on track to deliver further good progress in FY16".
SSE saw adjusted profits jump in the first half of the year, driven by revenue from its wholesale energy portfolio management and electricity generation division. Revenue rose from £12.4bn in 2014 to £13.8bn, an 11% jump from 2014 and ahead of consensus estimates for £12.5bn.
FTSE 250: TalkTalk jumps
TalkTalk estimated the one-off financial impact of the cyber attack that occurred in October at between £30m and £35m. The telecommunications company said earnings before interest, tax, depreciation and amortisation fell to £90m from £110m, missing expectations of around £98m. However, it raised its interim dividend 15% from last year to 5.29p - a move that surprised analysts and investors who had been expecting a cut.
Tullett Prebon agreed to buy rival inter-dealer brokes Icap's hybrid voice broking and information business in an all-shares deal. Tullett will issue a parcel of new shares greater than its current share capital such that once the deal is completed, Icap shareholders will own 36.1% of its rival, existing Tullett shareholders will own 44% of the enlarged company and the remainder will be owned by a new holding company of the Icap business.
Tullow Oil also had a poor showing on the market, after it adjusted the full year production guidance from its West Africa operations and confirmed revenue and costs are in line with annual expectations.
Egyptian gold miner Centamin kept production levels up in the third quarter but rising cash costs and a falling gold price led to a crunch on profits. Gold production from the Sukari field in the three months to 30 September reached 105,413 ounces. But the cost of this production climbed to $767 per ounce and all-in sustaining costs to $918 per ounce, versus the $706 cash and $853 all-in costs in the previous quarter.
Great Portland Estates posted a 15.7% rise in first half pre-tax profit and a 14% jump in net asset value per share on the back of solid leasing activity. NAV per share rose to 808p in the six months to the end of September, while pre-tax profit came in at £24.3m. |
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| | Market Movers
FTSE 100 (UKX) 6,297.20 0.35%
FTSE 250 (MCX) 17,101.77 0.36%
techMARK (TASX) 3,105.90 1.06%
FTSE 100 - Risers
St James's Place (STJ) 971.00p 2.53%
Merlin Entertainments (MERL) 410.30p 2.50%
Experian (EXPN) 1,214.00p 2.27%
Reckitt Benckiser Group (RB.) 6,295.00p 2.19%
Intertek Group (ITRK) 2,589.00p 2.17%
Babcock International Group (BAB) 979.00p 2.14%
BT Group (BT.A) 475.45p 2.14%
Aviva (AV.) 491.30p 2.10%
WPP (WPP) 1,514.00p 1.95%
Relx plc (REL) 1,171.00p 1.91%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 253.30p -7.08%
SSE (SSE) 1,444.00p -3.22%
BHP Billiton (BLT) 923.70p -2.41%
Royal Dutch Shell 'A' (RDSA) 1,656.50p -1.75%
Morrison (Wm) Supermarkets (MRW) 156.90p -1.63%
Aberdeen Asset Management (ADN) 339.50p -1.59%
Royal Dutch Shell 'B' (RDSB) 1,667.50p -1.45%
Barratt Developments (BDEV) 568.00p -1.30%
Marks & Spencer Group (MKS) 526.00p -1.22%
BP (BP.) 377.90p -1.20%
FTSE 250 - Risers
TalkTalk Telecom Group (TALK) 246.00p 13.21%
Sophos Group (SOPH) 274.30p 8.94%
Ophir Energy (OPHR) 101.80p 7.90%
Ultra Electronics Holdings (ULE) 1,849.00p 5.67%
ICAP (IAP) 498.00p 5.58%
Just Eat (JE.) 457.60p 3.98%
BTG (BTG) 539.00p 3.55%
OneSavings Bank (OSB) 399.50p 3.42%
Kaz Minerals (KAZ) 87.60p 3.24%
Domino's Pizza Group (DOM) 1,092.00p 3.11%
FTSE 250 - Fallers
Tullett Prebon (TLPR) 320.10p -10.06%
Tullow Oil (TLW) 197.60p -7.49%
Petra Diamonds Ltd.(DI) (PDL) 61.00p -6.01%
Grafton Group Units (GFTU) 650.00p -5.46%
Hunting (HTG) 329.40p -4.49%
Centamin (DI) (CEY) 60.05p -4.07%
esure Group (ESUR) 245.90p -3.61%
Vedanta Resources (VED) 414.50p -3.38%
Amec Foster Wheeler (AMFW) 495.00p -3.32%
SIG (SHI) 122.70p -3.00% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Equities gain ground as Draghi calls for European banking union European stocks rose on Wednesday as investors analysed a speech by European Central Bank president Mario Draghi.
The benchmark Stoxx Europe 600 index closed up 0.65%, while Germany's DAX gained 0.70% and France's CAC 40 rose 0.82%.
As of 1639 GMT, the euro was broadly flat against the dollar but declined 0.45% and 0.11% against the pound and the yen respectively, while Brent crude tumbled 2.79% to $46.15 a barrel.
Speaking in London, the ECB said the Eurozone's banking union needed to be complemented by a deposit insurance scheme encompassing all the 19 countries.
"By expressing his wish for a European banking union did little to satisfy markets craving more talk of easy money," said CMC Markets' analyst Jasper Lawler.
On an extremely quiet day in terms of economic data on both sides of the Atlantic, investors digested data releases from China.
Industrial production there slowed to 5.6% year-on-year in October from 5.7% in September a touch weaker than expected. Retail sales, meanwhile, were up 11% on the year in October compared with a 10.9% increase in September and with analysts' expectations for an unchanged reading.
"Coming in the week that Chinese trade data fell once more, the importance of domestic consumption should not be understated for its role in pulling the Chinese economy out of this slowdown," said IG's market analyst Joshua Mahony.
SABMiller and AB InBev toast mega-merger
In company news, Anheuser Busch-InBev confirmed it has made a formal offer to buy London-listed rival SABMiller for £44 a share in cash, lifting the stocks 2.16% and 1.83% respectively.
Danish brewer Carlsberg rallied 17.7% as investors welcomed its decision to cut staff by 15% as it looks to return to growth. The company also said it would book $1.4bn in impairment and restructuring costs.
E.ON shares slid 0.35% after the company posted a wider-than-expected loss for the third quarter, while Henkel surged 7.05% as it lifted its earnings per share forecast and reported a rise in quarterly profit.
UniCredit shed 0.08% after revealing it was planning to cut 18,200 full-time staff, as part of a new strategic plan aimed at cutting administrative expenses by 2018 and the exit of its retail banking operations in Austria and its leasing unit in Italy. |
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| | US Market Report | | US open: Major M&A deals push equities higher US equities gained ground early on Wednesday as Wall Street looked to have put last week's wobble behind it, while some investors focused on big M&A deals.
Shortly before 1500 GMT, the Dow Jones Industrial Average was up 24 points to 17,781.99, while the S&P 500 and the Nasdaq were three and five points higher respectively.
The Dow Jones and the S&P 500 gained 0.16% and 0.15% respectively on Tuesday, clinching their first daily gains after fears over a potential December interest rate hike had sparked a four-day decline.
"Markets have finally priced in Friday's nonfarm payrolls surprise and the potential for a more hawkish Fed," said Colin Cieszynski, chief market strategist at CMC Markets.
M&A in focus
In company news, drink giants Anheuser-Busch InBev and SABMiller gained 1% and 2.05%, after the latter accepted a $106bn takeover offer, as it agreed to sell its 58% stake in the MillerCoors LLC joint venture to its partner Molson Coors Brewing, whose shares gained 0.26%.
Supermarket chain Kroger gained 0.19% after confirming it has agreed to takeover grocery chain Roundy in a deal worth $800m, sending Roundy shares up 64.2%.
Alibaba declined 1.79% even though the Chinese e-commerce giant posted record sales for China Singles' Day.
Chip maker Skyworks Solutions edged 0.46% higher after announcing a $400m stock buyback plan late on Tuesday, while retail giant Macy's tumbled 11.7% after lowering its full year outlook as sales fell short of estimates.
Elsewhere, most Asian equity markets advanced on Wednesday, as investors shrugged off another batch of mixed data from China.
Official figures showed industrial production in the world's second largest economy grew 5.6% year-on-year in October, compared with a 5.7% gain in the previous month and with analysts' expectations for a 5.8% reading.
European stocks gained ground, while oil prices edged lower, as West Texas Intermediate lost 0.66% to $43.92 a barrel, while Brent slid 0.06% to $47.41 a barrel.
The dollar was broadly flat against the yen and the euro but fell 0.31% against the pound, while gold spot slid 0.24% to $1,087.07.
The economic calendar is extremely quiet on Wednesday, while bond markets are closed for the Veteran's Day holiday.
Meanwhile, the Mortgage Bankers Association (MBA) said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 1.3% in the week ended 6 November. |
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| | Broker Tips | | Broker tips: Jimmy Choo, Whitbread, Experian Liberum downgraded Jimmy Choo to 'hold' from 'buy' and slashed the price target to 160p from 210p.
"We believe Choo faces increased competition in shoes as other luxury goods companies chase growth," the broker said.
It said the speed of the luxury slowdown is notable and yet to be discounted in Choo's consensus forecasts.
Liberum sees Burberry as a bellwether and estimates that sales in China fell from -2% in the second quarter to -11% in the third, and in the US from +8% to -7%.
In view of increased completion in the market, Liberum cut its 2015 EBIT forecast to £32.3m from £40.1m and its EBITDA estimate to £51.6m from £59.5m.
Jefferies downgraded Whitbread to 'underperform' from 'hold' and cut the price target to 4,100p from 4,300p.
"We argue the rapid growth of the room-sharing economy will negatively affect Whitbread because of its focus on the expansion of Premier Inn in greater London, which we think is the area most at risk."
The broker said Whitbread is making a big bet on the continued growth of the London budget hotel market, with plans to increase the proportion of rooms within the M25 from around 13% of the total in 2010/11 to around 27% in 2018.
At current levels of profitability, this means the region would generate approximately 40% of divisional EBITDA by then.
Jefferies reckons this strategy puts Whitbread at risk from the rapidly growing room-sharing economy.
Shares in information services company Experian rallied for the second day in a row, after Citigroup lifted its price target on the stock by 9% to 1,340p to reflect higher earnings and the re-rating of the broader business services sector.
The broker said the results brought important validation of its view that Experian can still grow solidly in Brazil despite contracting consumer and business credit issuance and that its management is genuinely committed to shareholder distribution.
It also said the results show the Decision Analytics division has found a margin trough after eight years of decline.
Citi forecasts Experian to return around 6% of market cap to investors in full year 2016 while delivering 4% underlying organic EBITA growth.
It also thinks organic EBITA growth could double to 7-8% in 2018 as organic growth accelerates to around 6% and margin leverage returns. | | |
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