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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: Copper prices weigh on miners ahead of US jobs report Equities ended near their worst levels of the day despite a dovish set of minutes from the Monetary Policy Committee´s last meeting, weighed down by a further drop in commodity prices.
Following its meeting, the MPC said there were downside risks to growth linked to emerging markets and described 'core' consumer price inflation running at about 1% as "subdued".
The top flight index ended the session lower by 0.75% or 47.98 points at 6,364.90 after an initial run higher when the details of the MPC minutes and the November Inflation Report hit the wires.
Sterling ended the day sharply lower nevertheless, losing 0.97% to stand at 1.5236 against the Greenback by the close of trading. Three-month copper futures finished the session lower by 2.3% at $5,023 per metric tonne in LME trading.
The MPC voted 8-1 to keep the benchmark interest rate at 0.5% and 9-0 to keep the asset purchase programme at £375bn, as expected by the market consensus. Ian McCafferty was the only policymaker to vote in favour of a rate hike.
"Overall, today's decision and minutes support our view that a Bank Rate hike is off the table in the short - term and will be pushed out into at least Q2 2016, acknowledging risks to the downside in light of the above," Barclays said in a research report sent to clients.
"The "Super Thursday" announcements from the MPC were on the whole quite dovish, with the Committee signaling that it is still in no hurry to raise interest rates. We remain comfortable with our view that rates will not rise until Q2 of next year," chimed in Vicky Redwood, chief UK economist at Capital Economics.
Thursday's decision came close on the heels of hawkish remarks from Fed chairwoman Janet Yellen on the day before. Speaking before the House financial services committee she said that the US economy was performing well and a rate hike next month was still a "live possibility".
To take note of, Societe Generale said the US employment on Friday would be critical in shaping market expectations of the December FOMC meeting.
"A report with a headline number around 200K is likely to raise market pricing of a December rate hike, and pave the way to a further dollar advance, the bank said.
Momentum returning to housing market, economist says
UK house prices jumped by 1.1% month-on-month in October, according to the latest tally from Halifax.
That partly reflected "some catch-up [with other suverys] after years of relative weakness", said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
However, "momentum is clearly returning to the housing market as [...] Banks continue to seek to increase their mortgage loan books, and the Financial Policy Committee's rules on loan-to-income multiples are still not close to biting," he added.
According to the Society of Motor Manufacturers and Traders (SMMT), new car sales in Britain declined 1.1% year-on-year in October, the first decline in 43 months, as 177,664 new cars were registered last month.
In parallel, the European Commission lowered its forecasts for British GDP growth this year and next by two tenths of a percentage points, to 2.4% and 2.2%, respectively.
Those for the Eurozone were raised a tad, but Brussels warned that the scars of the past financial crisis would weigh on growth for the next few years.
RSA and AstraZeneca pace gains
RSA Insurance booked a net loss of £16m in the third quarter as a result of the earthquake in Chile, but its shares were on the up as it insisted turnaround plans remained on track and posted a 1% rise in underlying premium income for the first nine months of the year.
Though its third quarter revenues were hit by foreign exchange woes, AstraZeneca led the FTSE's risers throughout most of the day after it upgraded its revenue outlook for the year. While year to date revenues were flat at constant exchange rates on the previous year at $18.3bn (£11.9bn), the quarter only brought in $5.9bn in total revenue - a 2% drop.
Anglo American was the big faller due to a drop in copper prices. After the company's stock rose more than its sector peers over the week, the market quickly corrected itself by seeing the price drop by over 6% and falling to 16-year lows.
Third-quarter like-for-like sales at Morrison Supermarkets fell at a faster rate than in the previous quarter and worse than expectations, putting a drag on its shares. Management confirmed they expect underlying pre-tax profit to be higher in the second half than in the first, but analysts were mostly disappointed.
In the FTSE 250, shares in Amec Foster Wheeler tumbled after the oil and gas engineering services company announced it was cutting its dividend by half and lifting its cost-savings target for the year amid tough market conditions.
Travel company Thomas Cook was under the cosh after Prime Minister David Cameron decided late on Wednesday to ground all UK-bound flights from Sharm el-Sheikh in Egypt following the Russian plane crash in the Sinai desert last week. Investors were concerned that the move could reduce demand for holidays in Egypt.
Clothing retailer SuperGroup climbed after the company said sales were up 22.4% in the first half but warned that comparatives throughout the second half are more challenging.
Engineering firm Cobham slipped after saying it expects underlying earnings per share for the full year to be at the lower end of current market expectations on the back of order delays and decreased demand for some of its products. |
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| | Market Movers
FTSE 100 (UKX) 6,364.90 -0.75%
FTSE 250 (MCX) 17,117.13 -0.38%
techMARK (TASX) 3,089.61 -0.01%
FTSE 100 - Risers
RSA Insurance Group (RSA) 429.00p 3.35%
AstraZeneca (AZN) 4,247.00p 2.90%
easyJet (EZJ) 1,772.00p 2.31%
Persimmon (PSN) 1,900.00p 2.21%
Barratt Developments (BDEV) 585.00p 2.09%
British Land Company (BLND) 852.00p 2.04%
Hammerson (HMSO) 620.50p 1.89%
Berkeley Group Holdings (The) (BKG) 3,148.00p 1.81%
London Stock Exchange Group (LSE) 2,560.00p 1.79%
Land Securities Group (LAND) 1,323.00p 1.77%
FTSE 100 - Fallers
Anglo American (AAL) 534.60p -7.68%
Standard Chartered (STAN) 627.00p -6.31%
Morrison (Wm) Supermarkets (MRW) 167.50p -5.63%
Randgold Resources Ltd. (RRS) 4,121.00p -4.43%
Aberdeen Asset Management (ADN) 349.50p -4.12%
Royal Bank of Scotland Group (RBS) 312.00p -4.09%
Antofagasta (ANTO) 516.00p -4.00%
Glencore (GLEN) 121.50p -3.46%
Intertek Group (ITRK) 2,604.00p -3.45%
BHP Billiton (BLT) 1,034.00p -3.32%
FTSE 250 - Risers
Supergroup (SGP) 1,619.00p 9.24%
Howden Joinery Group (HWDN) 491.30p 7.08%
Lancashire Holdings Limited (LRE) 729.50p 3.84%
Foxtons Group (FOXT) 193.90p 3.47%
Redrow (RDW) 442.00p 2.74%
Bellway (BWY) 2,516.00p 2.65%
Just Retirement Group (JRG) 164.50p 2.49%
Telecom Plus (TEP) 1,083.00p 2.46%
Shawbrook Group (SHAW) 364.90p 2.44%
Just Eat (JE.) 446.90p 2.43%
FTSE 250 - Fallers
Amec Foster Wheeler (AMFW) 574.00p -23.16%
Premier Oil (PMO) 80.00p -9.09%
Wood Group (John) (WG.) 572.00p -8.77%
Petrofac Ltd. (PFC) 799.50p -8.47%
Thomas Cook Group (TCG) 112.20p -7.27%
Hunting (HTG) 347.60p -6.78%
Petra Diamonds Ltd.(DI) (PDL) 75.70p -6.66%
TalkTalk Telecom Group (TALK) 220.90p -6.44%
Ashmore Group (ASHM) 261.20p -6.35%
Kaz Minerals (KAZ) 114.40p -5.14% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks waver amid disappointing earnings, euro surges against pound European equity markets struggled for direction on Thursday, as investors weighed up some upbeat corporate results against disappointing data releases and digested the latest comments from European Central Bank president Mario Draghi.
The benchmark Stoxx Europe 600 index closed down 0.39%, while France's CAC 40 gained 0.64% and Germany's DAX rose 0.39%.
As of 1635 GMT, the euro was broadly flat against the dollar and gained 1% and 0.17% against the pound and the yen respectively, while Brent crude slid 0.39% to $48.39 a barrel.
During a speech in Milan, Draghi said the current quantitative easing programme has been "undoubtedly effective" so far, but also reiterated that it will be reassessed next month.
He added that even if easing does come to an end, the ECB would still have "many tools" at its disposal.
Mixed data in the Eurozone
On the economic data front, figures released by Destatis showed German factory orders unexpectedly fell in September, by 1.7% month-on-month versus expectations for 1% growth.
Meanwhile, figures from Eurostat showed Eurozone retail sales declined unexpectedly in September. Sales in the euro area fell 0.1% month-on-month compared with analysts' expectations for a 0.2% gain and a flat reading in August.
"There are already early signs of weakness," said Jessica Hinds, European economist at Capital Economics.
"Sales have stagnated in the past couple of months and consumer confidence has deteriorated. This suggests that the recovery in retail sales and overall household spending is already losing momentum."
The latest Markit Eurozone retail purchasing managers' index declined from 51.9 in September to 51.3 last month, as sales rose at their slowest pace since June but grew for the sixth consecutive month.
Elsewhere, the Bank of England kept its key interest rate on hold at 0.5%, as widely expected.
"We think the BoE is awaiting the next ECB meeting, which is held seven days before the next BoE meeting. The December meeting is crucial for our more hawkish view on the BoE," said analysts at Danske Bank.
"We expect EUR/GBP to trade gradually lower in three to six months."
Meanwhile, across the Atlantic, the Department of Labor said new unemployment claims rose by 16,000 to a two-month high of 276,000 in the week to 31 October, compared with analysts' expectations for a 260,000 reading.
In company news, Vestas Wind Systems advanced after its third quarter operating profit came in ahead of expectations and the company lifted its profit outlook for the year, while Societe Generale rallied as it said third quarter income grew 2.4%. |
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| | US Market Report | | US open: Equities edge higher after jobless data US stocks edged higher early on Thursday, as investors awaited more indications from the Federal Reserve over the timing of a first interest rates hike.
Shortly before 1500 GMT, the Dow Jones Industrial Average was up 20 points to 17,887.55, while the S&P 500 and the Nasdaq were one and three points higher respectively.
Yellen hints at December rate hike
On Wednesday, Fed chairwoman Janet Yellen said an interest rate hike in December remained on the cards.
"At this point, I see the US economy as performing well [...]," she said.
"Domestic spending has been growing at a solid pace and if the data continue to point to growth and firmer prices, a December rate hike would be a live possibility."
"Fed Chair Janet Yellen didn't say anything different from the FOMC statement in her congressional testimony on Wednesday," said CMC Markets' analyst Jasper Lawler.
"Such are the sensitivities of the markets to Fed chatter and even a gentle reminder that a rate hike in December is a 'live possibility' was enough to send a shiver through the spine of markets."
On the economic data front, according to the Department of Labor, new claims rose by 16,000 to a two-month high of 276,000 in the week to 31 October, compared with analysts' expectations for a 260,000 reading.
"The Labor Department reported no special factors in this week's report, and the modest uptick in claims is in line with the historical volatility of both series," said analysts at Barclays.
"With initial and continuing jobless claims near decade lows, separations data continue to point to solid labor market conditions."
Meanwhile, according to the Bureau of Labor Statistics, non-farm labour productivity - a gauge of how much each worker can produce in an hour - grew at 1.6% quarter-on-quarter in the three months to September beating expectations for a 0.1%.
That was driven by a 1.2% increase in output, although the number of hours worked dropped 0.5%.
Facebook and Ralph Lauren impress
In company news, Facebook gained 4.79% after the social media giant's quarterly results beat expectations on Wednesday night.
Going the other way, wireless technologies provider Qualcomm tumbled 9.68% after its profit guidance for the current quarter disappointed, while Whole Foods Market dropped 5.10% after its earnings fell short of estimates.
Among the companies that reported ahead of the bell, Ralph Lauren surged 14.9% after its quarterly results beat estimates, while brewer Molson Coors climbed 0.33% after saying it swung to a profit during the last quarter.
Madison Square Garden rose 0.66% after quarterly revenue grew 26% year-on-year, while SeaWorld tumbled 7.87% after its profit was dented by an ongoing public image battle.
Meanwhile Walt Disney, News Corp, Kraft Heinz, Shake Shack and DreamWorks Animation are among the companies that will report after the close.
Elsewhere, Chinese shares closed in on bull-market territory but failed to lift stocks across the region, while European stocks edged higher after a raft of largely positive data.
The dollar slid 0.18% against the euro but climbed 0.15% and 1.04% against the yen and the pound respectively, while gold futures were flat at $1,107.85. |
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| | Broker Tips | | Broker tips: SSE, Howden Joinery, StanChart Lower gas prices spell trouble for utilities companies in Europe, especially so for SSE which will see the pressure pile up on its dividend and undermine its premium rating, Goldman Sachs said.
Oversupply in global liquid natural gas markets was set to drive European gas prices down by more than 20% in 2017-2019.
Things would be even worse in the medium-term, with Goldman slashing its price forecasts by up to 30%.
The UK, Italy, France and Iberia would be the most impacted, Goldman said.
With the above in mind, it added SSE to its conviction list as a 'sell'.
"We expect EPS to fall 19% in 2015-20E, and our forecasts are 10%-20% below Reuters consensus in FY18-19E at EPS and more than 40% below at DPS."
Another London-listed stock for which Goldman´s new forecasts implied a "material" deterioration in earnings was Drax.
In the same report Goldman lowered its view on Centrica to 'neutral' from 'buy' and trimmed its target by 5% to 215p.
Howden Joinery managed to skirt the troubles seen elsewhere in the sector since summer and October trading was "outstanding", so the shares have scope to recover after the battering they took on the heels of Travis Perkins´ warning last month, N+1 Singer told clients.
"Performance in H2, including the key October trading period, has been outstanding at +10% LFL particularly once positive gross margins are also factored in," N+1 Singer said.
Thursday´s 10% like-for-like sales figures from the company imply a two-year growth rate of about 22% and represent a substantial market outperformance, the analysts said.
Furthermore, the manufacturer and supplier of fitted kitchens, appliances and joinery products should continue to avoid the deterioration in business seen by some companies in the sector "even if housing activity softens slightly given the tenuous link there vs consumer confidence and replacement cycles (still recovering)".
The impact of the Living Wage should also be immaterial given Howden´s bonus/salary structures.
After Travis Perkins´s warning, shares in Howden Joinery fell back to a price-to-earnings multiple of 16.6 versus the 20 seen at the June peak, N+1 Singer pointed out.
"The Free-cash-flow yield is 5% (or 6% ex deficit injections). We have edged our target up 2% to 510p, so with >13% total shareholder return we upgrade to 'Buy' from 'Hold'."
Standard Chartered's restructuring plan is "rather uninspiring" Macquarie told clients on Thursday, downgrading its recommendation because in its opinion the bank has turned itself from a '2018 hope story' into a '2020 hope story'.
The Asia-focused lendder's strategic plan lacked direction, Macquarie said, and the capital raise only addressed the smallest of the lender's three problems.
The other two were asset quality and "a potentially broken business model that has to be restructured by exiting subscale and underperforming markets and businesses," analysts wrote.
"To raise new equity at 0.40x price-to-book value (1H15) leaves one scratching their head. It is far from certain where the new capital may go and raises the question whether the capital increase is enough, in our view," they added.
Asset quality was "deteriorating rapidly" and it was unclear how deep the rabbit hole went. | | |
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