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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 track losses on Wall Street Investors took profits on Friday as Wall Street fell on day two after the US Federal Reserve's decision to hike interest rates, defying expectations for the traditional Santa Claus rally in stocks.
The FTSE 100 finished the session lower by 50.12 points or 0.82% to 6,052.42 while the second-tier index dropped 71.41 points or 0.42% to 6,070.68.
"Blink and you'll have missed it, as the US interest hike feel good factor looks to have already evaporated. Historically, this has been the week in December when the benefits of the Santa rally can be enjoyed by equity investors," said Alastair McCaig, market analyst at IG.
"Uncertainty and indecision created in the run up to Wednesday has seen the boost equity markets would have hoped for turn out as more of a whimper than a bang, and last night's Chinese 'Beige Book' has only sped up this turn around."
London's equity markets saw healthy gains on Thursday as investors welcomed the Federal Reserve's first rate hike in nearly a decade, which was accompanied by reassurance from chairwoman Janet Yellen that the tightening path would be gradual.
A jump in copper prices gave shares of miners a shot in the arm despite some downbeat news out of the People´s Republic of China.
Three-month copper futures rose by 2.8% to hit $4,674 per metric tonne on the LME.
According to a private survey from China Beige Book International, national sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure at the country´s companies were all weaker in the latest quarter .
Meanwhile, after its latest meeting to decide on monetary policy the Bank of Japan kept its base money target under the stimulus programme but set up a new one to buy exchange-traded funds, extend the maturity of bonds it owns and up its purchase of key risky assets.
Markets in Japan briefly rallied on the news, but BoJ governor Haruhiko Kuroda said in the press conference following the announcement that the latest policy changes did not amount to additional easing and were designed to give flexibility to adjust policy.
In the corporate space, heavily-weighted miners advanced in line with metals´ prices, with Anglo American, BHP Billiton and Rio Tinto all in the black.
"A squeeze higher in the mining sector falling the additional falls yesterday is preventing a complete sea of red on the FTSE this morning as we see a mild bounce in copper prices," said Brenda Kelly, head analyst at London Capital Group.
Smith&Nephew received a boost from news that US-based rival Stryker had tabled an $18bn (£11.92bn) takeover bid.
Carnival was also to be found near the top of the leaderboard after unveiling a fourth quarter profit of USD$270m (£181.12m) - up from a loss of $104m a year earlier. Revenue did slip 0.2% to USD$3.71bn.
Stock in BG slipped lower despite receiving approval from the US Federal Energy Regulatory Commission to construct and operate a natural gas liquefaction and export facility in Lake Charles, Louisiana.
Sports Direct was a little firmer after it put out a statement hitting back at allegations made in the Guardian last week.
GlaxoSmithKline was in focus after its HIV business reached a couple of deals with Bristol-Myers Squibb to acquire its late-stage HIV research and development assets as well as its portfolio of pre-clinical and discovery stage HIV research assets. |
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| | Market Movers
FTSE 100 (UKX) 6,056.38 -0.76%
FTSE 250 (MCX) 17,090.57 -0.50%
techMARK (TASX) 3,163.76 -0.38%
FTSE 100 - Risers
Anglo American (AAL) 278.10p 5.52%
Smith & Nephew (SN.) 1,172.00p 4.64%
Carnival (CCL) 3,648.00p 2.64%
BHP Billiton (BLT) 717.20p 2.46%
Randgold Resources Ltd. (RRS) 4,031.00p 1.36%
Worldpay Group (WI) (WPG) 298.00p 1.19%
G4S (GFS) 217.50p 0.88%
Royal Dutch Shell 'A' (RDSA) 1,462.00p 0.83%
RSA Insurance Group (RSA) 427.60p 0.80%
Fresnillo (FRES) 659.00p 0.69%
FTSE 100 - Fallers
BT Group (BT.A) 458.30p -2.63%
Associated British Foods (ABF) 3,327.00p -2.26%
Capita (CPI) 1,183.00p -2.23%
Dixons Carphone (DC.) 477.60p -2.13%
BG Group (BG.) 926.60p -2.03%
InterContinental Hotels Group (IHG) 2,523.00p -1.98%
Barratt Developments (BDEV) 603.00p -1.95%
Inmarsat (ISAT) 1,108.00p -1.95%
ARM Holdings (ARM) 1,021.00p -1.83%
Sky (SKY) 1,082.00p -1.81%
FTSE 250 - Risers
Daejan Holdings (DJAN) 6,560.00p 6.41%
Dechra Pharmaceuticals (DPH) 1,043.00p 4.30%
Home Retail Group (HOME) 93.50p 4.24%
Aldermore Group (ALD) 225.00p 3.69%
Genus (GNS) 1,537.00p 3.64%
Spirax-Sarco Engineering (SPX) 3,196.00p 3.36%
Just Retirement Group (JRG) 169.20p 3.17%
Restaurant Group (RTN) 675.00p 2.97%
Jardine Lloyd Thompson Group (JLT) 914.50p 2.75%
BGEO Group (BGEO) 1,950.00p 2.69%
FTSE 250 - Fallers
Circassia Pharmaceuticals (CIR) 294.50p -5.09%
OneSavings Bank (OSB) 360.80p -5.05%
Foxtons Group (FOXT) 173.10p -4.58%
Allied Minds (ALM) 384.10p -4.05%
Spire Healthcare Group (SPI) 294.00p -3.86%
Brown (N.) Group (BWNG) 291.50p -3.80%
Provident Financial (PFG) 3,240.00p -3.71%
Entertainment One Limited (ETO) 170.00p -3.46%
Auto Trader Group (AUTO) 421.00p -3.44%
Card Factory (CARD) 375.40p -3.27% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Investors take profits European stocks ended in the red on Friday, giving back some of the gains made in the previous session.
Stocks in Europe racked up solid gains on Thursday as investors cheered the Federal Reserve's first rate hike in nearly a decade and reassurance from chairwoman Janet Yellen that the tightening path would be gradual.
As of the close, the benchmark DJ Stoxx Europe 600 index was down 1.01% to 361.23, France's CAC 40 by another 1.12% and Germany's DAX by -1.21%.
"While Wednesday's Fed rate hike removed one cloud of uncertainty from the markets thinking in 2015, speculation about when the next one is likely to occur is not expected to remain too far away, given the divergence between what policymakers expect to occur one year on from here, on their dot plot expectations, and what investors expect to happen," said Michael Hewson, chief market analyst at CMC Markets.
Investors were also digesting some news out of Asia.
China's Beige Book showed that conditions in the world's second-largest economy worsened in the fourth quarter.
According to a private survey by China Beige Book International, national sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure at the country´s companies were all weaker than in the previous quarter.
"Concerning China, their version of the 'Beige Book' seems to indicate that their domestic economy might be in deeper trouble than previously thought meaning not only that a turnaround might still be a long way off but also that worse might is still to come before things finally get better," said Markus Huber, senior analyst at Peregrine & Black.
Meanwhile, the Bank of Japan kept its base money target under the stimulus programme but set up a new one to buy exchange-traded funds, extend the maturity of bonds its own and up its purchase of key risky assets.
Markets in Japan briefly rallied on the news, but BoJ governor Haruhiko Kuroda said the press conference following the announcement that the latest policy changes did not amount to additional easing and were designed to give flexibility to adjust policy.
On the corporate front, French supermarket operator Casino Guichard-Perrachon was under the cosh again, extending losses from the previous session when research firm Muddy Waters said it was one of the "most overvalued and misunderstood" companies it had come across.
Altice NV was on the back foot after the US Justice Department asked that a decision on the company's bid to buy Cablevision Systems Corp be deferred until a national security review can be carried out. |
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| | US Market Report | | US open: Stocks fall on day two after Fed rate hike Stocks dropped immediately lower out of the gate on the second day post the US central bank´s decision to raise interest rates, with little in terms of fresh economic news and with most traders making sure their books were squared going into the typically extremely quiet holiday season.
The Dow Jones Industrials fell 1.14% or 200 points to 17,297, while the S&P 500 and Nasdaq Composite were down by 19 and 33 points each to 2,023 and 4,970, respectively.
Nevertheless, the Baker Hughes rig count due out at 18:00 GMT did hold the potential to move oil markets.
To take note of, dollar/yen - often considered a proxy for risk-appetite globally - was on the backfoot after new stimulus measures in Japan got a cold reception from some traders.
Markit´s services sector purchasing managers index slipped in December from a reading of 56.1 to 53.7 (consensus: 55.9) - its lowest level since December 2014.
Surprise Japan decision sends Asia markets into decline
Elsewhere, surprise measures from the Bank of Japan to boost its economy had Asian markets stunned on Friday.
The central bank announced new measures, which would supplement its easing programme, including a plan to purchase exchange-traded stock funds worth up to JPY300bn (£1.66bn).
Initial reactions on Japanese markets were positive, but that excitement quickly subsided as the relative scale of the programme, when compared to the country's lengthy economic struggle, caused many analysts to question its probable effectiveness.
"They're all helpful measures, but they won't make much difference in practice", said Marcel Thieliant of Capital Economics.
He described the additional stock funds purchases as "miniscule".
Other analysts described the move as a technical measure, rather than additional easing.
Shingo Ide of the NLI Research Institute said that given Japanese stocks were trading up to 15% higher than 12 months ago, the Bank of Japan needed to but more exchange-traded stock funds for its easing to have the same effect.
Oil prices were little changed, with WTI crude futures flat at $34.95 per barrel.
M&A news moving shares
In company news, Stryker may be set to offer $18bn for Smith&Nephew, according to a person with knowledge of the situation, StreetInsider reported.
Analysts were keeping an eye on Bristol-Myers Squibb shares after GlaxoSmithKline announced it would be buying a number of its HIV assets. |
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| | Broker Tips | | Broker tips: Bodycote, Restaurant Group, Northgate Bodycote got a boost on Friday after N+1 Singer upgraded the stock to 'buy' from 'hold' saying sentiment was likely to warm next year.
The broker cut its estimates to reflect the more challenging trading environment which was confirmed in the group's third quarter update.
It downgraded its pre-tax profit and earnings per share forecasts by 10% for 2015 and 16% for 2016, saying this assumes a further weakening in the last months of this year and a 2.7% organic sales decline next year due to subdued end markets.
However, Singer expects sentiment to become more positive in the year ahead.
It pointed out that the shares are trading on a discount to the sector on consensus forecasts based on low expectations.
In addition, it said comparatives will begin to soften from the second quarter of next year, while management execution remains strong and the sales mix continues to benefit from faster growth by higher margin Specialist Technologies.
"Furthermore, the strong balance sheet would support a cash return or M&A," said Singer, which cut its price target to 635p from 785p.
UBS initiated coverage of Restaurant Group at 'buy' with a price target of 860p.
The bank said it sees the company as a highly-attractive continuing roll-out story.
"Our bottom-up analysis of the market potential of the group's key brands shows that in an upside scenario, the group's expansion potential could be 4x Restaurant Group's own targeted increase. This could support double-digit revenue growth for 18 years, assuming 2.5% LFL sales growth."
UBS said the stock offers a high-quality growth story and management has a track record of delivering strong returns through value-creating new site additions.
The bank reckons a combination of management initiatives to continue driving volume, and a more favourable pricing environment, will see sustainable LFL sales growth going forward, following the average 2.6% LFL growth posted in 2011-14.
It also sees limited risk from wider market supply growth given that total restaurant numbers in the UK are declining, while the Restaurant Group's predominantly out-of-town locations provide a controlled supply environment.
Berenberg upgraded Northgate from 'sell' to 'hold', citing the downside risk being priced into the stock.
It said over the last five months, the company has seen a 40% fall in its share price as "lacklustre end-market growth and new depreciation policies have weighed on top-line and margin development."
That has led the company to issue guidance of flat profit before tax for the next three years.
"As a result of this, combined with the fear of residual value deflation and an increasingly competitive landscape, it is unsurprising that the shares have seen a substantial pullback."
With that in mind, Berenberg revised its target down from 455p to 400p, but upgraded its rating. | | |
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