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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 rise after 'robust' UK construction PMI London stocks edged higher as a report revealed growth in the UK construction sector activity in October.
The Markit/CIPS construction purchasing managers' index declined from 59.9 in September to 58.8 last month, but comfortably above the 50 threshold that signals expansion and in line with analysts' expectations.
Housing activity growth eased from September's 12-month high and the latest rise in civil engineering was the slowest since May, while commercial building work increased at the sharpest pace for eight months.
"This is still a largely robust survey, despite the headline construction activity index edging back in October from a seven-month high in September," said Howard Archer, chief UK and European economist at IHS Global Insight.
"In fact, the headline activity index was still at a high level in October that is consistent with strong construction expansion."
The report follows Monday's impressive UK manufacturing PMI which rose from an upwardly revised 51.8 in September to a 16-month high of 55.5 last month, exceeding analysts' expectations for a 51.3 reading. The Bank of England is closely monitoring UK data ahead of Thursday's policy decision. Analysts expect no change to interest rates or the asset purchase programme amid low inflation and risks stemming from the slowdown in emerging markets.
Stateside, US factory orders fell 1% in September more than the 0.9% drop that was expected by analysts, according to the Commerce Department. Orders decreased a revised 2.1% in August.
"Given the relatively small revisions to durable goods data, this morning's report provides little new signal on the state of US manufacturing," according to Barclays Research analysts. "Demand for many categories of manufactured goods continues to struggle from the effect of a stronger dollar, weak foreign demand and lower energy prices."
In company news, Standard Chartered slumped after posting a disappointing third quarter and launching a capital raise to strengthen the balance sheet and support its strategic review.
Housebuilders Barratt Developments, Persimmon and Taylor Wimpey declined after Liberum cut its rating on the stocks to 'sell' from 'hold', saying valuations are "too optimistic to accommodate margin pressure".
Shire dropped following Monday's news it agreed to the $5.9bn acquisition of US-based biotech Dyax Corporation.
Meggitt jumped after Barclays reiterated its 'overweight' rating on the shares, saying the stock was "too cheap to ignore".
Royal Dutch Shell climbed as it announced it will accelerate the implementation of measures to deal with a prolonged downturn in oil prices once the acquisition of BG Group is complete. BG also rallied on the news.
Imperial Tobacco increased as it posted a rise in pre-tax profit and underlying tobacco net revenue for the year ended 30 September and said it was well placed to meet expectations for the coming year, despite a drop in overall revenues.
BP, Tullow Oil and Premier Oil were on the front foot as Brent crude rose 1.9% to $49.77 per barrel and West Texas Intermediate increased 2.2% to $47.22 per barrel at 1647 GMT. |
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| | Market Movers
FTSE 100 (UKX) 6,374.25 0.20%
FTSE 250 (MCX) 17,172.76 0.03%
techMARK (TASX) 3,075.89 -0.15%
FTSE 100 - Risers
Meggitt (MGGT) 373.40p 4.56%
BP (BP.) 403.25p 3.86%
Glencore (GLEN) 119.45p 3.33%
Anglo American (AAL) 561.90p 3.23%
BHP Billiton (BLT) 1,058.50p 3.17%
Aberdeen Asset Management (ADN) 355.90p 3.01%
Royal Dutch Shell 'A' (RDSA) 1,757.50p 2.96%
Royal Dutch Shell 'B' (RDSB) 1,761.50p 2.77%
BG Group (BG.) 1,057.00p 2.72%
Antofagasta (ANTO) 535.00p 2.49%
FTSE 100 - Fallers
Standard Chartered (STAN) 666.00p -6.67%
Taylor Wimpey (TW.) 187.80p -5.25%
Barratt Developments (BDEV) 585.00p -4.10%
Shire Plc (SHP) 4,715.00p -3.48%
Berkeley Group Holdings (The) (BKG) 3,197.00p -3.27%
Carnival (CCL) 3,499.00p -2.67%
Persimmon (PSN) 1,921.00p -2.39%
TUI AG Reg Shs (DI) (TUI) 1,165.00p -1.94%
United Utilities Group (UU.) 965.00p -1.88%
Kingfisher (KGF) 348.90p -1.86%
FTSE 250 - Risers
Tullow Oil (TLW) 235.20p 17.42%
Premier Oil (PMO) 81.40p 14.17%
Weir Group (WEIR) 1,140.00p 6.05%
Evraz (EVR) 88.45p 5.05%
Stagecoach Group (SGC) 369.00p 4.44%
Cairn Energy (CNE) 157.70p 4.16%
Keller Group (KLR) 874.00p 3.80%
Supergroup (SGP) 1,494.00p 3.75%
Laird (LRD) 354.00p 3.36%
Rotork (ROR) 194.60p 2.96%
FTSE 250 - Fallers
Clarkson (CKN) 2,128.00p -11.63%
Jardine Lloyd Thompson Group (JLT) 888.00p -7.60%
Indivior (INDV) 199.20p -6.70%
Redrow (RDW) 440.20p -6.58%
Tullett Prebon (TLPR) 329.20p -6.32%
Moneysupermarket.com Group (MONY) 319.60p -4.74%
Crest Nicholson Holdings (CRST) 530.50p -3.89%
Bovis Homes Group (BVS) 987.50p -3.85%
Bellway (BWY) 2,526.00p -2.81%
Domino's Pizza Group (DOM) 1,059.00p -2.40% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks edge higher amid mixed earnings and lack of data European equity markets edged higher on Tuesday as investors sifted through a batch of mixed corporate results.
The benchmark Stoxx Europe 600 closed up 0.42%, while France's CAC 40 rose 0.41% and Germany's DAX was flat.
As of 1632 GMT, the euro was on the back foot against the main currencies, declining 0.55% and 0.43% against the dollar and the pound respectively and losing 0.25% against the yen, while Brent crude was rose 2.30% to $49.94 a barrel.
"The Eurozone was somewhat limper, largely due to the latest decline from Volkswagen pushing the DAX into negative territory," said Spreadex's financial analyst Connor Campbell.
"The region will be looking for an extra boost tomorrow morning as Draghi gives the opening remarks at the ECB Forum on Banking Supervision.
"Whilst not guaranteed, the ECB president does have a knack for providing just enough enigmatic goodwill to see the markets bounce after his comments."
In company news, Switzerland's UBS declined 4.55% despite posting better-than-expected third-quarter profit, as the bank cut its financial targets on the back of new capital rules and a difficult macroeconomic backdrop.
Shares in beleaguered German car maker Volkswagen reversed early losses to gain 1.30%, after US environment regulators said late on Monday that the company had used devices to cheat air pollution tests in luxury diesel vehicles.
Royal Dutch Shell rose 3.52% after saying it will accelerate the implementation of measures to deal with a prolonged downturn in oil prices once the acquisition of BG Group is complete.
BMW shed 0.73% despite announcing a surprise increase in operating profit for the third quarter thanks to strong sales in core European markets.
The economic was extremely quiet in the Eurozone, while across the Atlantic factory orders declined 1% in September compared with analysts' expectations for a 0.9% drop.
Meanwhile, August's figures were downwardly revised to show a 2.1% increase compared with the 1.7% rise that was initially reported.
"Given the relatively small revisions to durable goods data, this morning's report provides little new signal on the state of US manufacturing," said analysts at Barclays. |
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| | US Market Report | | US open: Equities struggle for direction amid disappointing earnings US stocks moved in tight ranges early on Tuesday, as investors digested a raft of disappointing corporate earnings and some tepid factory orders data.
Shortly after 1500 GMT, the Dow Jones Industrial Average was 15 points to 17,842.52, while the S&P 500 and the Nasdaq were five and 13 points lower.
Earnings in focus
In company news, videogame maker Activision Blizzard climbed 0.33% after it unveiled plans to buy Candy Crush Saga maker King Digital Entertainment for $3.4bn in cash plus debt.
King Digital jumped 14%, while Molson Coors Brewing fell 0.52%% after the Financial Times reported the brewer was negotiations with joint venture partner SABMiller to acquire a majority stake in MillerCoors.
US-listed of oil giant Royal Dutch Shell climbed 0.82% after the group said it expects synergies from its planned $70bn takeover of BG Group to be 40% higher than originally estimated.
Among the companies that reported ahead of the bell, agricultural commodities manufacturer Archer Daniels Midland slumped 8.12% after its third quarterly profit and revenue fell more than expected, while cereal manufacturers Kelloggs dropped 4.22% after revealing its third-quarter earnings fell 8.5% amid costs related to its turnaround efforts and other one-time items.
Meanwhile CBS, Tesla Motors, Herbalife and Groupon will publish quarterly results after the close.
Factory orders decline unexpectedly
On the economic data front, according to figures released by the Commerce Department, factory orders declined 1% in September compared with analysts' expectations for a 0.9% drop.
Meanwhile, August's figures were downwardly revised to show a 2.1% increase compared with the 1.7% rise that was initially reported.
The main event in terms of economic data will come on Friday, when a report on non-farm payrolls for October could shed light on the timing of an interest rates hike, after the Federal Reserve hinted liftoff could come as early as next month.
"This divergence between the most recent economic data and the Fed's view on the US economy has only served to deepen the uncertainty investors have about how the US central bank is seeing the US economy," said CMC Markets' chief market analyst Michael Hewson.
Most Asian equity markets moved into positive territory, as concerns over a slowdown in China abated slightly, while the Reserve Bank of Australia left interest rates unchanged overnight at 2%, which was largely in line with expectations.
Elsewhere, European stocks wavered, while oil prices rose, as West Texas Intermediate gained 1.87% to $47.02 a barrel, while Brent advanced 1.35% to $49.45 a barrel. |
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| | Broker Tips | | Broker tips: Meggitt, Tullett Prebon, Housebuilders Aerospace and defence engineer Meggitt rallied after Barclays reiterated its 'overweight' rating on the shares, saying the stock was "too cheap to ignore".
Meggitt's shares plunged last week after warning that full-year profits will miss its £369m forecast, due to fewer contracts and increasing programme deferrals.
"Rarely do we find A&D companies which are simply too cheap, but post last week's warning Meggitt is firmly in that bracket," Barclays analysts Phil Buller and James Zaremba wrote in a note to investors on Tuesday.
"At 10x FY16 P/E, 9x EV/EBITA with a comfortably affordable dividend yielding circa 4.5%, the shares trade at a 25% discount to their own historical averages vs. the sector in spite of a 6% EPS CAGR and unmatched cash progression."
The analysts added they were concerned about the near-term visibility and capital deployment discipline but it seemed more than in the price.
They lowered Meggitt's price target to 420p from 610p.
"In short, we see this as a compelling entry point with limited further downside. 420p price target implies 19% upside."
Shares in Tullett Prebon fell sharply after Barclays downgraded the stock to 'underweight' from 'equalweight' and slashed the price target to 310p from 385p on valuation concerns.
The bank pointed to a deteriorating volume outlook for inter-dealer broker markets in 2015 and a relative lack of progress on electronic/post-trade services expansion.
It noted the stock has strongly outperformed year to date, up 22% versus the FTSE All Shares which is down 1%.
It said there have been upwards earnings per share revisions but only from January to April. Since then, energy volumes - to which the new CEO's strategy appears heavily geared - have weakened.
Barclays said this has resulted in the share trading at 10-11x 2016E price-to-earnings, which is a significant premium to its through-the-cycle average of around 8.5x.
Housebuilders were under pressure after Liberum downgraded its stance on Barratt Developments, Persimmon and Taylor Wimpey to 'sell' from 'hold'.
"We believe the largest housebuilders' valuations are too optimistic to withstand the gross margin pressure that we expect in the coming years as house price inflation is suppressed by a more vigilant regulator and build cost inflation returns."
Liberum said these three stocks are especially vulnerable to falling gross margins as managements have turned their backs on volume growth.
The brokerage sees better value in some of the builders who can grow profits by raising output, such as 'buy' rated Bellway and Gleeson, which are its top picks.
As far as Barratt is concerned, Liberum said it has the most scope to continue to grow volumes to potentially offset gross margin pressure, but its high valuation assumes a setback-free outlook.
Liberum said that while Persimmon is rightly admired for the quality of its land bank and how well it managed the downturn, its valuation appears to assume continued growth in margins and returns.
Taylor Wimpey is the most improved housebuilder in the UK, making excellent use of strategic land to keep land costs under control as well as repositioning itself away from secondary locations. | | |
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