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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 as investors weigh disappointing US data London stocks ended lower on Monday as traders scrutinised US data that missed forecasts.
Markit's US manufacturing purchasing managers' index fell to 52.6 in November from the prior month's 54.1, well below the reading of 54 that was expected by analysts but above the 50 threshold that separates an expansion from a contraction.
Separately a report showed a 3.4% drop in US existing home sales to 5.36m, which was more than the 2.7% fall to 5.36m predicted.
The data comes amid speculation on whether the Federal Reserve will raise interest rates at its meeting next month.
Federal Reserve Bank of San Francisco president John Williams said over the weekend that there is likely to be a "strong case" for raising interest rates next month following a batch of upbeat economic data. The second estimate of third quarter US gross domestic product on Tuesday will be closely monitored for signs of further recovery which could back such a case for a rate hike at the 15-16 December Fed policy meeting.
Meanwhile, Eurozone manufacturing activity rose to a 19-month high in November, according to Markit's flash PMI, which increased to 52.8 from 52.3 in October.
"While the data is encouraging and points to slightly stronger growth in the fourth quarter from the meagre 0.3% seen in the third, I don't think it will dissuade the ECB from easing monetary policy at the meeting next month," said Craig Erlam, senior market analyst at Oanda.
"The recovery in the Eurozone is very fragile and these monthly improvements can quite easily be following by weak numbers next month."
In company news, miners were in the red, including Glencore, Anglo American and BHP Billiton, as metal prices declined.
Aerospace and defence stocks Rolls-Royce and BAE Systems gained as prime minister David Cameron announced a £12bn increase to the defence budget.
HSBC was a high riser as Standard Life Investments' head of equities, David Cumming, said it would back the bank if it decides to relocate its headquarters outside the UK to escape increasingly burdensome regulations.
Tesco dropped it emerged that losses at Harris & Hoole - the coffee chain part-owned by the supermarket retailer - doubled last year following a rapid expansion. Pre-tax losses at the coffee chain widened to £25.6m in the year ending 1 March 2015 from £12.8m the previous year.
Imperial Tobacco rose as Citigroup raised its rating to 'buy' from 'neutral' and increased the price target to 4,000p from 3,700p.
Mitie Group slumped after half-year operating profits were hit by the deterioration of its performance in its healthcare arm and as it exited unprofitable contracts in that segment.
Astrazeneca dipped after selling the US rights to Crohn's disease medicine Entocort to Perrigo Company for $380m.
Playtech plunged on news that it scrapped its acquisition of Plus500, with a second proposed deal for Ava Trade hanging in the balance, after receiving a number of concerns from the Financial Conduct Authority. |
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| | Market Movers
FTSE 100 (UKX) 6,305.49 -0.46%
FTSE 250 (MCX) 17,106.91 -0.48%
techMARK (TASX) 3,182.21 -0.24%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 569.00p 3.08%
Babcock International Group (BAB) 1,011.00p 2.22%
Johnson Matthey (JMAT) 2,754.00p 1.81%
BAE Systems (BA.) 498.50p 1.32%
CRH (CRH) 1,917.00p 0.89%
Inmarsat (ISAT) 1,061.00p 0.86%
Wolseley (WOS) 3,778.00p 0.75%
Fresnillo (FRES) 701.00p 0.72%
HSBC Holdings (HSBA) 534.90p 0.72%
Sage Group (SGE) 565.00p 0.62%
FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 1,088.00p -3.46%
Tesco (TSCO) 165.65p -3.38%
Morrison (Wm) Supermarkets (MRW) 152.10p -2.75%
easyJet (EZJ) 1,646.00p -2.31%
RSA Insurance Group (RSA) 429.20p -2.21%
Antofagasta (ANTO) 497.00p -2.17%
Intertek Group (ITRK) 2,583.00p -2.12%
Land Securities Group (LAND) 1,225.00p -1.84%
Glencore (GLEN) 90.65p -1.82%
Burberry Group (BRBY) 1,258.00p -1.80%
FTSE 250 - Risers
Home Retail Group (HOME) 110.10p 6.48%
Spire Healthcare Group (SPI) 290.80p 3.89%
AO World (AO.) 161.00p 3.54%
Premier Oil (PMO) 74.90p 3.38%
Pets at Home Group (PETS) 284.10p 2.75%
Virgin Money Holdings (UK) (VM.) 364.10p 2.71%
Aldermore Group (ALD) 262.90p 2.46%
Supergroup (SGP) 1,627.00p 2.26%
Bank of Georgia Holdings (BGEO) 1,880.00p 2.12%
Pace (PIC) 390.70p 1.98%
FTSE 250 - Fallers
Playtech (PTEC) 775.00p -8.98%
Nostrum Oil & Gas (NOG) 355.00p -8.86%
Mitie Group (MTO) 303.30p -8.67%
Enterprise Inns (ETI) 102.00p -4.67%
Riverstone Energy Limited (RSE) 801.00p -4.30%
Poundland Group (PLND) 216.00p -4.30%
Lookers (LOOK) 170.10p -3.90%
Amec Foster Wheeler (AMFW) 438.20p -3.88%
Foxtons Group (FOXT) 177.20p -3.43%
Close Brothers Group (CBG) 1,429.00p -3.25% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Single currency slips as Credit Suisse warns of falling liquidity European stocks saw some profit-taking on Monday as weakness in the commodity space weighed on benchmarks, with hawkish remarks over the weekend from a US Fed official also serving to limit gains.
That came in the run-up to the US Thanksgiving Day holiday, which would likely see trading volumes recede as the week progressed.
On Monday Credit Suisse cautioned clients that falling levels of market liquidity heading into year-end, just as the ECB and US Federal Reserve took different paths on rates, left a lot of scope for volatility in markets.
The benchmark DJ Stoxx 600 finished the session 0.37% lower at 380.37, with Germany´s Dax to be seen 0.25% lower and Paris´s Cac-40 down by 0.44%.
As if on cue, the euro/dollar retreated another 0.30% to 1.0610.
Acting as a backdrop, the Bloomberg Commodity Index hit a 1999-low as three-month copper ended with losses of 2.9% at $4,478.00 in LME trading.
On Thursday and Friday of last week, Goldman Sachs and Bank of America-Merrill Lynch referenced the risk of a larger-than-expected Yuan devaluation in 2016, which would weigh on commodity prices.
"The data I think have been overall encouraging, especially on the labor market. Assuming that we continue to get good data on the economy, continue to get signs that we are moving closer to achieving our goals" and gaining confidence of getting back to 2% inflation, then "there´s a strong case that can be made in December to raise rates," John Williams, the president of the US Federal Reserve bank of San Francisco said on Saturday.
"Increased security tensions across Europe and a continued downward spiral of commodity prices means...sentiment is likely to be tested further with a very quiet week ahead on both the economic and corporate data front, culminating in the-two day Thanksgiving celebrations in the US," said Simon Smith, chief economist at FXPro.
Credit Suisse slid 3% after the bank said it has raised 1.32bn Swiss francs from the first phase of a CHF6bn capital increase.
AstraZeneca nudged lower after announcing that it has sold the US rights to Crohn's disease medicine Entocort to Perrigo Company for $380m(£250.8m).
Elsewhere, shares in Standard Chartered tumbled as the stock began trading ex-rights.
Figures released by Markit showed output in the Eurozone expanded at its fastest pace in over four years in November, although the terrorist attacks left their mark on French services sector activity.
Markit's Eurozone composite purchasing managers' index rose from 53.9 in October to 54.4, according to the preliminary 'flash' reading, indicating the fastest rate of expansion of output in manufacturing and services since May 2011 and beating analysts' expectations for a 54.0 reading.
Growth in Germany accelerated to a three-month high on the back of the biggest monthly improvement in new business for two years, but business activity in France rose at the slowest rate in three months.
Aside from corporate and macroeconomic news flow, investors were also keeping an eye on developments in Europe after Belgian police made 16 arrests in late-night raids related to the Paris terrorist attacks, but failed to find a prime suspect.
Brussels was on lockdown for the third day in a row on Monday due to a "serious and imminent" threat of attack. |
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| | US Market Report | | US open: Equities struggle for direction as commodities remain under pressure US stocks moved in tight ranges early on Monday, with commodity shares under the cosh as oil prices continued to decline.
Shortly before 1500 GMT, the Dow Jones Industrial Average was down 11 points to 17,812.76, while the S&P 500 and the Nasdaq were two and eight points higher, respectively.
Commodities were under pressure, as the dollar strengthened on the increasing likelihood the Federal Reserve will raise interest rates next month.
As of 1409 GMT, the greenback was broadfy flat against the yen and the euro respectively and gained 0.20% against the pound, while spot gold fell 0.70% to $1,070.51.
"Gold remains fundamentally bearish and with the direction completely dictated by US interest rate expectations, a rate increase in December threatens to send gold back towards its lows and may invite an opportunity for a further decline to $1,050," said FXTM research analyst Lukman Otunuga.
Meanwhile, West Texas Intermediate crude was down 1.28% to $41.37 a barrel, while Brent fell 0.45% to $44.46. Oil prices looked to have recouped some of their earlier losses after the Saudi government said it was willing to use all measures necessary to ensure a stable oil market.
"The Cabinet stressed the Kingdom´s role in the stability of the oil market its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries," a statement said.
On the macroeconomic front, according to the National Association of Realtors, existing home sales declined 3.4% month-on-month to a seasonally-adjusted annual rate of 5.36m, compared with consensus for a 2.7% decline to 5.40m.
However, despite the decline, home sales remained 3.9% higher year-on-year, while median home prices rose 5.8% over the past 12 months to $219,600.
Meanwhile, the "flash" reading of the Markit manufacturing purchasing managers' index fell to a 25-month low of 52.6 in November, down from a 54.1 reading in October and its lowest level since October 2013, reflecting a decline in all the five components.
"With the trade-weighted dollar at the highest levels in over a decade, the headwinds facing US manufacturing have yet to subside," said analysts at Barclays.
Wall Street faces a shortened week, with markets closed on Thursday for Thanksgiving Day and open only half day on Friday (with closing time set for 1800 GMT).
"History teaches us that indices tend to rise in the week leading up to Thanksgiving, as US traders look forward to their seasonal feast, so stock market bears may find it hard to gain any real traction in coming sessions," saidIG's senior market analyst Chris Beauchamp.
Pfizer and Allergan agree merger
In company news, drug giant Pfizer slid 2.42% after it agreed to buy botox-maker Allergan for $160bn, in a deal set to create the world's biggest drug-maker.
Target gained 0.82% after the retailer said it would offer a 15% discount on its website on Cyber Monday, whileGeneral Electric fell 0.42% after it agreed to sell its UK home lending portfolio to a private-equity consortium.
Dick's Sporting Goods rose 0.54% after analysts at Canaccord upgraded their rating on the stock to 'buy', whileGameStop slumped 11.7% after its third quarter sales and adjusted earnings missed analysts' expectations.
Elsewhere, Asian equity markets began the week on a mixed note, while European stocks traded lower despite a series of encouraging PMI reports. |
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| | Broker Tips | | Broker tips: Imperial Tobacco, Ocado, Home Retail Citigroup lifted Imperial Tobacco to 'buy' from 'neutral' and raised the price target to 4,000p from 3,700p.
"We now believe a takeover is more likely than we did before FT Alphaville reported on Nov 20 that 'advisers to British American Tobacco' have put together a group of banks 'willing to support an offer'," the bank said, adding that the new price target assumes a 33% chance of a bid.
Citi said that even without a bid, the underlying investment is decent, playing well to its strategists' themes with a high and growing dividend and exposure to Europe, while the price-to-earnings ratio is much lower than other consumer staples.
In addition, it pointed to the company's self-help initiatives, with cost savings from the US and from pricing power.
"We still believe that the most likely outcome is that BAT does not bid for Imperial in the next 12 months, essentially because we believe it doesn't fit in with its strategy, and because it would be exceptionally hard to organise (for anti-trust reasons). However, there are some good arguments in favour of a bid."
Ocado got a boost after UBS upgraded the stock to 'buy' from 'neutral' with an unchanged target of 480p.
"Having looked in depth at most corners of the earth, we think Ocado is comfortably ahead of anybody else in making online grocery profitable and scalable," the bank said.
It noted that Ocado was expecting to sign a new partner in 2015 but, with around 90% of the year complete, it hasn't happened yet.
"We think the unique business model is attractive but, in our view, some expectations in the market had become too optimistic (it was the reason we cut the shares from 'buy' to 'neutral' in July). With some of the heat coming out as the year has wound on, we see greater scope for surprise."
RBC Capital Markets and Investec said fresh rumours of a £1bn takeover bid for Home Retail Group were credible but also highlighted that the shares are undervalued and could recover under current management.
Home Retail, the owner of the Argos and Homebase retail chains, is "being circled by potential buyers" after its recent profit warning, according to reports on Sunday.
The investment banks said such reports were not surprising given the recent weakness in the shares and valuation support that lies within the group, notably its net cash position of close to £200m and fully-funded net loan book that will top £600m by year end.
"Bid discussions tend to come and go, however we think the company's depressed valuation and potential for an alternative strategy means that the press reports cannot be dismissed out of hand," RBC said, which has a 150p price target and 'outperform' rating.
Investec said it continued to see Home Retail as a value play in its own right and has a 155p target and 'buy'rating on the shares. | | |
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