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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: Equities close higher on rally in banking stocks The FTSE 100 closed up 39.56 points to 6,395.65, lifted by the banking sector after Britain's biggest lenders passed the Bank of England's stress tests.
The BoE's stress tests showed all seven of the UK's largest banks had enough financial strength to sustain the possibility of another financial meltdown, amid a slowdown in China and emerging markets. The Royal Bank of Scotland failed to meet its individual capital guidance requirements and Standard Chartered failed to reach its so-called Tier 1 minimum capital requirement of 6% but both lenders passed the overall test.
Alongside the stress test results the Financial Stability Report was also released. Investors took confidence from BoE Governor Mark Carney's affirmation that banks would need to hold Tier 1 equity of 11% of risk-adjusted assets by 2019, which is less than the 13% that was already held in aggregate by the major banks in September.
Banks will be required to have a so-called counter-cyclical capital buffer (CCB) of 1%, equivalent to an extra £10bn.
Meanwhile, investors seemed to shrug off data that showed UK manufacturing activity growth slowed more than expected in November. The Markit/CIPS purchasing managers' index fell to 52.7 last month from October's 16-month high of 55.2, missing analysts' forecasts for a reading of 53.6. A reading above 50 signals an expansion in the sector while a level below that indicates a contraction.
Earlier in the session, Chinese manufacturing data came in mixed. The official PMI fell unexpectedly to 49.6 in November from 49.8 the previous month.
Caixin's PMI on China manufacturing, however, rose to 48.6 in November from 48.3 in October, surprising analysts who had expected no change.
Markit's final reading on Eurozone manufacturing PMI was confirmed at 52.8 in November, as expected, compared to 52.3 in October.
Separately, official data showed the Eurozone unemployment rate fell to 10.7% in October from 10.8% in September, beating expectations for an unchanged reading.
In the US, the ISM manufacturing index fell to its lowest level since July 2009 last month. The index fell to 48.6 from 50.1 in November, remaining marginally above analysts' expectations for a 50.5 reading.
The final reading of the Markit US manufacturing PMI for November declined from 54.1 in October to 52.8, reaching its lowest level since October 2013, although the figure was marginally above the 52.6 flash estimate released last month.
According to the Commerce Department, US construction spending increased 2.2% month-on-month compared with a 0.6% gain last month and analysts' expectations for an unchanged reading.
On the corporate front, Hammerson gained after Goldman Sachs upgraded the stock from 'neutral' to 'buy'. It said that the shares trade on 5.2% earnings yield, 62 basis points above their historical average.
Aberdeen Asset Management plunged, continuing its downward streak from Monday's results which revealed underlying pre-tax profits at the investment house rose only slightly to £491m from £490m due to the slump in Asian and emerging market equities.
Babcock International Group declined after Citi trimmed its earnings per share forecasts for 2017 and 2018 by 2% each, lowered their target on the stock to 1,000p and downgraded its recommendation to 'sell'.
Home Retail Group rallied following a report that Nicholas Marshall, a former executive of the Garden Centre Group, is mulling a bid for Homebase.
Petra Diamonds jumped after buying an interest in the Kimberley Mines in South Africa from De Beers Consolidated Mines Proprietary Ltd, in a consortium with Ekapa Mining for around $7.2m.
Merlin Entertainments gained after it confirmed it is likely to end its rollercoaster year on a stable footing with full year profit forecasts expected to meet lowered expectations despite the continued significant weakness at Alton Towers since the crash on its Smiler ride in June. |
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| | Market Movers
FTSE 100 (UKX) 6,397.45 0.65%
FTSE 250 (MCX) 17,512.99 0.53%
techMARK (TASX) 3,229.97 -0.02%
FTSE 100 - Risers
Barclays (BARC) 234.15p 4.91%
Royal Bank of Scotland Group (RBS) 312.20p 3.24%
TUI AG Reg Shs (DI) (TUI) 1,137.00p 3.18%
Hammerson (HMSO) 627.50p 2.78%
Randgold Resources Ltd. (RRS) 4,141.00p 2.45%
Lloyds Banking Group (LLOY) 74.71p 2.40%
Whitbread (WTB) 4,655.00p 2.35%
G4S (GFS) 232.00p 2.25%
Berkeley Group Holdings (The) (BKG) 3,280.00p 2.15%
SSE (SSE) 1,462.00p 1.95%
FTSE 100 - Fallers
Glencore (GLEN) 94.48p -2.31%
Sage Group (SGE) 576.50p -1.71%
Babcock International Group (BAB) 1,056.00p -1.40%
Aberdeen Asset Management (ADN) 315.10p -1.35%
Vodafone Group (VOD) 222.10p -0.96%
Morrison (Wm) Supermarkets (MRW) 151.40p -0.72%
BT Group (BT.A) 493.00p -0.69%
Johnson Matthey (JMAT) 2,811.00p -0.67%
Anglo American (AAL) 406.35p -0.56%
Sainsbury (J) (SBRY) 252.70p -0.43%
FTSE 250 - Risers
Drax Group (DRX) 256.70p 14.04%
Petra Diamonds Ltd.(DI) (PDL) 72.25p 12.63%
AO World (AO.) 160.00p 7.38%
Virgin Money Holdings (UK) (VM.) 379.00p 6.49%
Serco Group (SRP) 116.70p 5.61%
Tullow Oil (TLW) 206.60p 5.19%
Acacia Mining (ACA) 182.60p 5.18%
Daejan Holdings (DJAN) 6,425.00p 4.56%
Poundland Group (PLND) 225.50p 4.54%
Pets at Home Group (PETS) 278.80p 3.99%
FTSE 250 - Fallers
Sophos Group (SOPH) 258.00p -9.03%
CLS Holdings (CLI) 1,775.00p -4.05%
Weir Group (WEIR) 1,157.00p -3.74%
SSP Group (SSPG) 303.10p -3.56%
Jimmy Choo (CHOO) 138.20p -2.88%
Premier Oil (PMO) 69.50p -2.18%
esure Group (ESUR) 247.90p -2.05%
Greencore Group (GNC) 330.90p -2.01%
Polymetal International (POLY) 527.00p -1.86%
Dignity (DTY) 2,436.00p -1.85% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks edge lower amid deluge of economic data European equity markets slid on Tuesday, as investors analysed a raft of economic reports amid growing expectations that the European Central Bank will announce additional stimulus measures on Thursday.
The benchmark Stoxx Europe 600 index closed down 0.31%, while Germany's DAX shed 1.06% and France's CAC 40 fell 0.87%.
As of 1636 GMT, the euro was on the front foot against the main currencies, gaining 0.47% and 0.40% against the dollar and the pound respectively and rising 0.15% against the yen, while Brent crude was down 0.59% to $44.35 a barrel.
"Strong data from the Eurozone has made investors jittery about the prospect quantitative easing," said IG's senior market analyst Chris Beauchamp.
"It appears that markets are now having doubts at the eleventh hour. Certainly, it does seem odd to contemplate fresh easing when unemployment in the Eurozone's strongest pillar continues to touch fresh lows."
On the macroeconomic front, German unemployment data was encouraging, showing a bigger-than-expected decline in November, while the unemployment rate dropped to 6.3% from 6.4% - the lowest level since German reunification and better than anticipated.
Manufacturing activity in Germany hit its highest level in three months in November. Markit's PMI rose from 52.1 in October to 52.9, exceeding expectations for a 52.6 reading.
As far as the Eurozone is concerned, manufacturing figures showed the recovery in the bloc gathered pace in November.
Markit's final manufacturing PMI rose from 52.3 in October to 52.8, in line with last month's "flash" estimate and the highest level since April 2014.
Unemployment in the euro bloc dropped to a three-year low of 10.7% in October from 10.8% in September, compared with expectations for an unchanged reading.
"October's Eurozone unemployment data confirmed that the region's steady labour market recovery has continued," said Jennifer McKeown, senior European economist at Capital Economics.
"But the bigger picture is that unemployment remains too high to boost wage growth and inflation."
In company news, French hotel group Accor gained 2.84% after saying it acquired three hotel asset portfolios from European investors for €284m.
Shares in German utility RWE rallied 17.6% after the European Commission approved the UK government's support for converting the Lynemouth power station from coal to biomass.
On the downside, industrial gases company Linde tumbled 14.4% after cutting its 2017 profit target. Zurich Insurance was also on the back after it announced that its chief executive Martin Senn was stepping down. |
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| | US Market Report | | US open: Stocks gain ground despite poor ISM data US equities rallied early on Tuesday, as Wall Street looked to begin December on the front foot, despite some disappointing manufacturing data
Shortly before 1500 GMT, the Dow Jones Industrial Average was 146 points up to 17,865.70, while the S&P 500 and the Nasdaq were 17 and 33 points higher respectively.
ISM index hits six year-low
On the macroeconomic, the US ISM manufacturing index fell to its lowest level since July 2009 last month, sliding to 48.6 from 50.1 and falling short of analysts' expectations for a 50.5 reading.
The final reading of the Markit manufacturing purchasing managers' index for November declined from 54.1 in October to 52.8, reaching its lowest level since October 2013, although the figure was marginally above the 52.6 flash estimate released last month.
Soon after, at 1500 GMT, the Institute for Supply Management's index of manufacturing is scheduled for publication and is expected to have risen from 50.1% in October to 50.5%.
A reading on construction spending for October is also out at 1500 GMT.
The US central bank is widely expected to signal a first lift-off in almost a decade at its 15-16 December meeting after a strong set of economic data in November, but data released this week could provide further indication over the Fed's intentions.
"Monday saw the Dow fall following weak data, unusual for the index given how it has traded throughout the year," said Spreadex's financial analyst Connor Cambell.
"Tuesday's figures will test then just how far the good is bad/bad is good pattern has reversed."
Investors will also hear from a number of Fed speakers, with Chicago Fed President Charles Evans set to give a speech on the economy at Michigan University at 1745 GMT, while Fed governor Lael Brainard will talk about "Lower Neutral Rate and its implications for Monetary Policy" in California at 2300 GMT.
In company news, software group Infoblox surged 20.3% after reporting better-than-expected results late on Monday, while HF Financial jumped 18.2% after agreeing to a $139.4m takeover offer from Great Western Bancorp.
Elsewhere, Asian stocks rallied as investors pinned their hopes on expectations Chinese authorities will soon introduce fresh stimulus measures, while European equities moved in tight ranges.
The dollar was broadly flat against the yen but fell 0.47% and 0.12% against the euro and the pound respectively, while gold spot rose 0.34% to $1,068.35.
Oil prices edged lower, as West Texas Intermediate rose 0.14% to $41.59 a barrel, while Brent crude shed 0.59% to $44.35 a barrel. |
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| | Broker Tips | | Broker tips: Babcock, Petra Diamond, Merlin Enetertainments Babcock is in a sweet-spot strategically, given its growing market and "solid" barriers to entry, but at present there are "too many risks for comfort" around the investment case, analysts said.
In a research mote sent to clients, Citi analysts Ed Steele, Marc van'T Sant and Avinash Mundhra said they were adding top-line and succession risks to their previous concerns surrounding the company's margins and cash-flow.
For those reasons, they trimmed their earnings per share forecasts for 2017 and 2018 by 2% each, lowered their target on the stock to 1,000p and downgraded and slapped a 'sell' recommendation on them.
Analysts at Finncap greeted the decision by two of Petra Diamond's lending groups to waive the measurement of two covenant tests relating to its operating profits for the year to 31 December 2015.
"This announcement effectively takes a considerable amount of perceived risk out of Petra and should reverse some of the negative sentiment," analyst Martin Potts said in a research note sent to clients.
Potts retained his 191p price target and 'Buy' recommendation on the South Africa-focused diamond mining group.
Depending on the valuation model chosen, Merlin Entertainments's expansion plans could boost the value of the company's discounted cash flow by up to half, Shore Capital said in a research note sent to clients.
The broker explained that its 400p a share DCF valuation hinged on a forecast for only 33 Midway sites to be rolled out, versus the 100 envisaged by the company's director's
However, should Merlin manage to hit its target then that would be worth an additional 86p per share in terms of DCF.
As well, the firm was planning to open 20 Legoland parks, with a new one scheduled to open its doors between every 2-3 years. Each new site could be worth about 10p per share, analysts Martin Brown and Greg Johnson estimated.
"This implies that Merlin's current expansion plans could be worth 150-200p a share over and above our core 400p DCF valuation."
Brown and Johnson stuck by their previous recommendation to 'buy' the stock. | | |
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