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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: Geopolitical tensions weigh on market UK stocks were under pressure on Tuesday as heightened geopolitical tensions weighed on the market.
Travel and leisure stocks led the FTSE 100 to end down 28.26 points to 6,277.23.
British Airways owner International Consolidated Airlines and easyJet flew lower after suspending all flights to and from Egypt's Sharm el-Sheik due to security concerns. BA flights have been cancelled up to and including 14 January and easyJet services to the Egyptian resort are suspended until at least 6 January.
Hotel companies Whitbread, which owns Premier Inn, and InterContinental Hotels were also knocked lower by worries about the effects on tourism.
Adding to geopolitical concerns, Turkish warplanes shot down a Russian military aircraft on the border of Syria on claims it was violating Turkey's airspace. Russian President Vladimir Putin insisted the aircraft was flying over Syrian territory, describing the incident as a "stab in the back" committed by "accomplices of terrorists".
"While both nations retire to work out their next move - which in Turkey's case involves calling an extraordinary meeting of NATO - investors are left wondering what the ramifications will be," said IG analyst Chris Beauchamp.
"We have seen oil prices spike again today as markets factor in a greater level of disruption to supplies, while major airline and travel names are under pressure once more."
BoE's Haldane suggests further easing
Bank of England's chief economist Andy Haldane has said monetary policy may need to be eased rather than tightened in the short-term in response to headwinds from emerging markets.
In testimony to the Treasury Select Committee on Tuesday morning, he said "risks to the UK from the external environment are skewed to the downside, as they are in the Bank's latest Inflation Report projections".
Governor Mark Carney also explained that interest rates remained low due to external risks, demographic changes and the impact of technology on the labour market. Carney remained vague on when rates might rise.
Mixed US data
US economic growth was revised higher in the third quarter in line with analysts' expectations, the Commerce Department revealed. The second estimate of gross domestic product was raised to an annualised 2.1% from a previous 1.5%. The decrease in private inventory investment was smaller than previously estimated. GDP rose 3.9% in the second quarter.
Separately, official data showed US consumer confidence declined unexpectedly in November. The index monitoring the confidence among US consumers declined from an upwardly revised 99.1 to 90.4 in November, comfortably below the 99.5 reading analysts had expected.
Commodities-linked stocks gain
Burberry declined after Nomura cut its rating to 'neutral', citing a downside risk to consensus expectations.
Housebuilders, notably Taylor Wimpey and Barratt Developments, were also lower ahead of Chancellor George Osborne's Autumn Statement on Wednesday, which is expected to contain some major developments for the sector. In a note to clients, Deutsche Bank noted that the last Budget saw a 5% fall from the building sector, but expected the reaction to be more moderate this time.
Going the other way miners Glencore, Anglo American, Randgold, Fresnillo and BHP Billiton rallied, along with Shell and BP as copper and Brent crude futures both moved ahead. Copper made a small recovery after comments from Chile sent it lower overnight, while oil was towards the upper end of the recent range with long sellers using Turkey's kerfuffle with Russia and Saudi comments to bump up the price a week before OPEC meets.
Intertek shares were lifted after the testing, inspection and certification services company said it was on track to meet full year targets as it benefits from good growth in its products and trade-related businesses.
A positive interim result boosted Babcock International, with news of 12% growth in underlying revenue for the first half of the year, due to strong growth in its support services division.
Rolls-Royce was another riser after giving details of a "major restructuring" from new CEO Warren East. The aerospace and engineering firm released an outline of its intentions on Tuesday ahead of a full presentation later in the day that will show how it plans to save between £150m and £200m per year from 2017. |
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| | Market Movers
FTSE 100 (UKX) 6,277.07 -0.45%
FTSE 250 (MCX) 16,946.35 -0.94%
techMARK (TASX) 3,161.11 -0.66%
FTSE 100 - Risers
Glencore (GLEN) 93.91p 3.86%
Rolls-Royce Holdings (RR.) 589.50p 3.60%
Intertek Group (ITRK) 2,665.00p 3.25%
Babcock International Group (BAB) 1,036.00p 3.08%
Randgold Resources Ltd. (RRS) 4,065.00p 2.76%
Anglo American (AAL) 452.00p 2.46%
Fresnillo (FRES) 712.50p 1.64%
Royal Dutch Shell 'B' (RDSB) 1,666.50p 1.55%
Royal Dutch Shell 'A' (RDSA) 1,650.00p 1.44%
BP (BP.) 385.70p 1.30%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,192.00p -5.25%
Whitbread (WTB) 4,303.00p -3.24%
easyJet (EZJ) 1,593.00p -3.22%
International Consolidated Airlines Group SA (CDI) (IAG) 550.50p -3.08%
Carnival (CCL) 3,386.00p -2.67%
Dixons Carphone (DC.) 453.70p -2.60%
GKN (GKN) 292.90p -2.59%
Merlin Entertainments (MERL) 395.90p -2.56%
Taylor Wimpey (TW.) 178.40p -2.35%
Marks & Spencer Group (MKS) 496.90p -2.28%
FTSE 250 - Risers
NMC Health (NMC) 814.00p 6.61%
Spire Healthcare Group (SPI) 304.80p 4.81%
Drax Group (DRX) 243.60p 4.46%
Kaz Minerals (KAZ) 92.45p 3.76%
Petra Diamonds Ltd.(DI) (PDL) 57.25p 3.62%
Tullow Oil (TLW) 203.90p 3.56%
Circassia Pharmaceuticals (CIR) 273.70p 3.28%
Serco Group (SRP) 102.80p 2.95%
Aggreko (AGK) 1,017.00p 2.21%
Acacia Mining (ACA) 172.40p 1.89%
FTSE 250 - Fallers
AO World (AO.) 142.90p -12.33%
BBA Aviation (BBA) 178.60p -7.94%
Entertainment One Limited (ETO) 205.20p -5.61%
Supergroup (SGP) 1,556.00p -4.36%
Bank of Georgia Holdings (BGEO) 1,804.00p -4.04%
Evraz (EVR) 81.50p -4.00%
Halfords Group (HFD) 363.90p -3.96%
Big Yellow Group (BYG) 755.50p -3.88%
Home Retail Group (HOME) 106.20p -3.80%
Thomas Cook Group (TCG) 98.35p -3.67% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Equities plunge as geopolitical tensions rise European stocks plunged on Tuesday as geopolitical concerns intensified after a Russian warplane was shot down by the Turkish airforce
The benchmark Stoxx Europe 600 index closed down 1.24%, while France's CAC 40 declined 1.41% and Germany's DAX lost 1.43%
As of 1634 GMT, the euro was broadly flat against the dollar and declined 0.32% against the yen but gained 0.46% against the pound, while Brent crude rose 2.37% to $45.92 a barrel.
Geopolitical tensions rise
Earlier on Tuesday, a Turkish military jet was reported to have shot down a Russian warplane near the Syrian border, after it had allegedly entered Turkish airspace and ignored warnings to return.
"The heightened geopolitical threat from the downing of a Russian jet by a NATO member country while Brussels remains in lockdown is sending people into safe havens like the yen and gold and out of travel-sensitive stocks," said Jasper Lawler, market analyst at CMC Markets.
The Stoxx 600 travel & leisure index slumped, dragged lower by the US State Department's global travel alert on Monday, in which it advised its citizens to exercise vigilance amid "increased terrorist threats".
IG's senior market analyst Chris Beauchamp highlighted investors are likely to remain jittery for some time to come, following the latest geopolitical developments.
"Turkey's downing of a Russian fighter has raised the spectre of further global tensions in an already inflamed trouble spot," he said.
"While both nations retire to work out their next move investors are left wondering what the ramifications will be."
On the macroeconomic front, the German IFO institute's headline business confidence index rose from 108.2 in October to 109 in November, beating expectations for an unchanged reading.
Meanwhile, Germany's federal statistics office confirmed an earlier flash estimate showing seasonally adjusted GDP grew 0.3% in the quarter to September from the previous three months, when it expanded 0.4%.
Across the Atlantic, consumer confidence declined unexpectedly in November, falling from an upwardly revised 99.1 to 90.4, comfortably below the 99.5 reading analysts had expected
Meanwhile, US economic growth was revised higher in the third quarter as the second GDP estimate was raised to an annualised 2.1% from a previous 1.5%.
In company news, easyJet lost 3.16%, after the low-cost carrier said it was cancelling all flights to and from Sharm el Sheikh until 6 January.
Shares in aerospace supplier Zodiac Aerospace tumbled 7.70% after it reported a 44.6% fall in core annual earnings.
Telecoms group Altice plunged 9.35% after shareholder Next Alt, which is owned by Patrick Drahi, said it wanted to exercise a right to 7.5% of its shares. |
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| | US Market Report | | US open: Dow drops 90 points despite positive GDP, housing data US stocks declined early on Tuesday, as an upwardly revised GDP data failed to allay concerns due to a fresh rise in geopolitical tensions.
Shortly before 1500 GMT, the Dow Jones Industrial was down 91 points to 17,701.82, while the S&P 500 and the Nasdaq were eight and 18 points lower respectively.
Earlier on Tuesday, a Turkish military jet was reported to have shot down a Russian warplane near the Syrian border, after it had allegedly entered Turkish airspace and ignored warnings to return.
"The heightened geopolitical threat from the downing of a Russian jet by a NATO member country while Brussels remains in lockdown is sending people into safe havens like the yen and gold and out of travel-sensitive stocks," said CMC Markets' analyst Jasper Lawler.
Following the downing of the Russian aircraft, European equities were firmly in the red, while Asian markets endured a mixed session as the slump in commodities prices continued to weigh on stocks in the region.
US GDP revised higher
US economic growth was revised higher in the third quarter as expected, the Commerce Department revealed on Tuesday.
The second estimate of gross domestic product was raised to an annualised 2.1% from a previous 1.5%. GDP rose 3.9% in the second quarter.
"Real gross domestic income was much stronger than GDP, at 3.1%, suggesting scope for further upward revision to GDP in due course," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
"We look for 3% Q4 GDP, a bit less than previously because the scope for an inventory rebound has been greatly reduced by the revised Q3 numbers."
Meanwhile, the S&P/Case-Shiller index rose 0.2% in the three months to the end of September, while house prices rose 5.5% year-on-year compared with a 5.1% gain in the previous month.
On a month-on-month basis, prices rose 0.6% compared with a 0.1% gain in the previous month and analysts' expectations for a 0.3% advance.
Still to come on the economic calendar, investors will analyse a reading on consumer confidence for November at 1500 GMT.
Elsewhere, the dollar fell 0.12% and 0.34% against the euro and the yen respectively but gained 0.35% against the pound, while gold spot rose 0.77% to $1,077.41.
Oil prices rebounded, with West Texas Intermediate gaining 2.91% to $43 a barrel and Brent crude rising 2.80% to $46.12 a barrel.
In company news, high-end jeweller Tiffany & Co. gained 0.42% despite issuing a profit warning, while Dollar Tree rose 2.85% even it missed quarterly profit targets. |
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| | Broker Tips | | Broker tips: Babcock, AO World, Burberry Babcock's mission critical services division failed to deliver at the half-year stage, but analysts at Panmure Gordon had anticipated it and other parts of the business acted as an offset.
Hence, analyst Michael Donnelly stuck to his 'buy' recommendation.
The engineering support services company´s MCS division had been the driver of the investment case for more than a year but now it looked as if the fiscal year would be at the lower end of guidance for growth of 0%, Donnelly said.
As well, despite the stock's outperformance over the last couple of months - circa 6% - it was still trading about 10% below Panmure's target of 1,108p, putting them on 14.1 times its estimate of 2016 earnings per share - in line with the shares' ten-year median rating, the analyst said.
AO World's shares will likely come under pressure amid an "erratic" retail environment thus far in the third quarter and after the company posted larger than expected losses per share for the first six months of its financial year, Shore Capital said in a research note sent to clients.
However, analyst George Mensah retained his 'buy' recommendation on the belief that management will "deliver on its strategy and will become sufficiently profitable with scale".
Regarding the company´s aim to extend its reach into Holland, with trading due to commence in Spring 2016, around the start of its fiscal year 2017, the analyst pointed out that it represented a €3.2bn opportunity for the retailer.
However, "this investment in marketing we believe is necessary, with brand awareness still weak relative to AO's market share position," the broker said.
Nevertheless, he added that "short-term multiples remain astronomical."
According to Mensah's calculations, the company's current EV/EBITDA for the full-year stood at about 134, falling to 65 times in fiscal year.
Luxury stocks in Europe were under the cosh on Tuesday after Nomura said expectations for 2016 may be too high and there is a risk of a sector de-rating.
The Japanese bank said it was cautious on the European luxury sector in the short - term given an uncertain macroeconomic environment, volatile forex and weaker Chinese consumer sentiment owing to the country's volatile stock market.
In the longer term, however, Nomura has confidence in underlying demand from China for luxury goods and said its research suggests rising disposable incomes, a reduced income gap, and increased spending on discretionary items in China all support increased luxury spending.
It downgraded Burberry to 'neutral' from 'buy' and cut the price target to 1,500p from 1,700p. The bank cut Hugo Boss to 'reduce' from 'neutral', lowering the price target to €95 from €120 and downgraded Tod's to 'reduce' from 'neutral', trimming the target to 76p from 80p.
Finally, it downgraded Swatch to 'neutral' from 'buy' and slashed the price target to CHF410 from CHF460. | | |
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