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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 plunge as ECB's decision on QE disappoints UK stocks reversed earlier gains in Thursday's session to end lower after the European Central Bank failed to deliver on market expectations for an increase in monthly asset purchases.
The FTSE fell 2.27% at the close to 6,275 points as ECB President Mario Draghi announced the asset purchase programme will be extended to March 2017 from September 2016 but will continue at €60bn a month. Analysts had expected the ECB to increase purchases to around €75bn a month.
The euro surged 2.36% against the dollar to $1.0865 after the policy decisions was revealed. European equities plunged, with the DAX finishing down 3.58%, the CAC 40 also down 3.58%, the FTSE MIB down 1.99%, and the IBEX 35 down 2.15%.
Ben Brettell, senior economist at Hargreaves Lansdown, said "judging by the market reaction, Draghi appears to have over-promised and under-delivered".
"The disappointment in financial markets is palpable this afternoon. The euro has strengthened (which won't help the Eurozone economy) and stock markets have fallen on the announcements," he added.
Draghi's press conference on the QE announcement followed the ECB's decision on key rates, which revealed a 10 basis point cut to the deposit rate to -0.30%, as expected. Interest rates and the marginal lending rate were left unchanged at 0.05% and 0.30%, respectively, as predicted.
In other Eurozone news, retail sales gained 2.5% year-on-year in October, compared to analysts' expectations of 2.6% and the previous month's 2.9%, Eurostat figures showed.
The Eurozone services purchasing managers' index was revised down unexpectedly to 54.2 in November from an earlier estimate of 54.9, Markit revealed.
A reading above 50 suggests growth in the sector while a figure below that indicates a contraction.
In the UK, Markit's services PMI rose to 55.9 last month from 54.9 in October, beating estimates of 55.
Stateside, the Institute for Supply Management's non-manufacturing index, which surveys the sector's purchasing and supply executives, tumbled to 55.9 in November from 59.1 in October and compared with analysts' expectations for a 58 reading.
US durable goods rose 2.9% in October compared with a 3% increase the previous month, according to the Commerce Department.
Separately, the Commerce Department revealed factory orders rose 1.5% in October compared with analysts' expectations for a 1.4% gain and a 1% decline a month earlier.
Among companies, shares in Costa Coffee and Premier Inn owner Whitbread were higher after Credit Suisse added the stock to its 'Global and Europe Focus Lists', lifting the price target to 5,800p from 5,500p.
Meggitt was in the black, bouncing back from recent losses as it emerged the aerospace and defence firm has been relegated to the FTSE 250 following the latest FTSE quarterly review.
Equipment rentals company Ashtead was on the back foot after Exane BNP Paribas cut the stock to 'neutral' from 'outperform', saying the risk/reward was increasingly skewed to the downside.
Associated British Foods was also knocked lower by a downgrade, as Goldman Sachs cut its rating on the stock to 'sell' from 'buy'.
Investment management firm Brewin Dolphin Holdings jumped after reporting substantial statutory profit growth for the year as the company focuses on expansion. |
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| | Market Movers
FTSE 100 (UKX) 6,292.97 -1.99%
FTSE 250 (MCX) 17,428.34 -0.72%
techMARK (TASX) 3,217.73 -1.10%
FTSE 100 - Risers
Berkeley Group Holdings (The) (BKG) 3,352.00p 1.24%
Sage Group (SGE) 581.50p 0.78%
Whitbread (WTB) 4,723.00p 0.55%
Meggitt (MGGT) 376.80p 0.48%
G4S (GFS) 232.80p 0.04%
SABMiller (SAB) 4,045.50p -0.00%
Merlin Entertainments (MERL) 423.50p -0.35%
Randgold Resources Ltd. (RRS) 4,182.00p -0.40%
Barratt Developments (BDEV) 606.50p -0.41%
Rolls-Royce Holdings (RR.) 598.50p -0.42%
FTSE 100 - Fallers
Sports Direct International (SPD) 697.50p -5.36%
Ashtead Group (AHT) 1,051.00p -4.97%
Johnson Matthey (JMAT) 2,708.00p -4.68%
Royal Mail (RMG) 466.60p -4.07%
Experian (EXPN) 1,203.00p -4.07%
Schroders (SDR) 2,904.00p -3.94%
Shire Plc (SHP) 4,570.00p -3.69%
3i Group (III) 479.20p -3.58%
Severn Trent (SVT) 2,199.00p -3.55%
BP (BP.) 368.55p -3.52%
FTSE 250 - Risers
Brewin Dolphin Holdings (BRW) 289.60p 7.66%
Keller Group (KLR) 873.50p 5.81%
Aveva Group (AVV) 2,338.00p 4.80%
Shawbrook Group (SHAW) 346.70p 4.11%
Ted Baker (TED) 3,493.00p 3.37%
CLS Holdings (CLI) 1,860.00p 3.33%
Big Yellow Group (BYG) 837.50p 3.14%
Laird (LRD) 377.70p 3.06%
Northgate (NTG) 407.60p 2.93%
Greggs (GRG) 1,322.00p 2.72%
FTSE 250 - Fallers
Spire Healthcare Group (SPI) 303.10p -7.82%
Debenhams (DEB) 80.00p -6.32%
Evraz (EVR) 75.95p -5.89%
Jimmy Choo (CHOO) 125.50p -5.64%
Smith (DS) (SMDS) 396.40p -4.80%
Intermediate Capital Group (ICP) 595.50p -4.64%
Petra Diamonds Ltd.(DI) (PDL) 66.60p -4.17%
Wizz Air Holdings (WIZZ) 1,680.00p -4.00%
Telecom Plus (TEP) 1,085.00p -3.98%
Henderson Group (HGG) 300.20p -3.60% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks tumble as ECB leaves investors disappointed European equities slumped on Thursday, after the European Central Bank president Mario Draghi disappointed investors as the new monetary policy was not what markets had hoped for.
The benchmark Stoxx Europe 600 index slumped 3.17%, while France's CAC 40 and Germany's DAX both plunged 3.58%.
The ECB's decision sent the euro surging. As of 1637 GMT, the European currency was up 2.78% and 2.59% respectively against the dollar and the yen respectively and gained 1.77% against the pound, while Brent crude jumped 1.80% to $43.27 a barrel.
"The European Central Bank's failure to meet the expectations for further policy loosening fuelled by its own dovish signals has dented both its reputation for communication and, more importantly, the outlook for the euro-zone economy," said Jonathan Lyones, chief European economist at Capital Economics.
ECB and Draghi disappoint investors
Draghi announced the asset purchase programme will be extended to March 2017 from the original finish date of September 2016.
However, the ECB decided to keep asset purchases at €60bn a month, in a move that surprised analysts who had expected an increase to around €75bn.
The ECB will extend the range of assets that are eligible for quantitative easing to include the purchase of regional and local government debt.
Draghi added that the central bank will reinvest the principal payments on the securities purchased under the QE programme as they mature, as long as necessary.
"Mario Draghi failed to live up to the sizeable expectations resulting from his continuous dovish rhetoric since the October meeting," said IG's market analyst Joshua Mahony.
"He implemented two of the three measures markets were looking out for, yet the decision to leave asset purchases at €60bn per month signalled a somewhat conservative approach that seemed to contradict his 'whatever it takes' mantra."
On the macroeconomic front, Eurozone retail sales fell 0.1% month-on-month compared with analysts' expectations for a 0.2% gain and a 0.1% drop the previous month.
On a year-on-year basis, retail sales grew 2.5% last month compared with a 2.9% advance in October and short of consensus expectations for a 2.6% gain. Elsewhere, the final Markit Eurozone purchasing managers' index rose from 53.9 in October to 54.2 in November, registering the 29th consecutive month of expansion.
The figure was slightly below the flash estimate but slightly above the 53.9 reading registered in the previous three months.
In company news, Royal Dutch Shell fell 2.34%. despite winning approval from Australia's Foreign Investment Review Board for its proposed $70bn takeover of BG Group.
Solvay fell 4.25% after the Belgian chemicals company launched a share issue to complete the funding for its purchase of Cytec Industries. |
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| | US Market Report | | US open: Stocks struggle for direction ahead of Yellen's speech US equities struggled for direction early on Thursday, as investors awaited a speech from Federal Reserve chairwoman Janet Yellen and analysed the latest moves from the European Central Bank.
Shortly after 1500 GMT, the Dow Jones Industrial Average was down 32 points to 17,697.21, while the S&P 500 and the Nasdaq were two and 10 points higher respectively.
Yellen will give testimony to the Joint Economic Committee of Congress at 1500 GMT.
On Wednesday, the Fed chairwoman provided arguably her most hawkish offering of the past few months, as she hinted that December's FOMC meeting should see a rate-hike lift-off.
"Yellen was very bullish on the economy and claimed she is looking forward to raising rates," said Oanda's senior market analyst Craig Erlam.
"More of this talk today would surely be a direct intentional signal to the markets that rates are rising in two weeks."
On the macroeconomic front, the Department of Labour said new unemployment claims rose by 9,000 to 269,000 in the week to 28 November, compared with analysts' expectations for a 270,000 reading.
"The trend in claims is consistent with payroll growth in excess of 250,000 but in the short-term the numbers can diverge widely," said Ian Shepherdson chief economist at Pantheon Macroeconomics.
Meanwhile, the Institute for Supply Management's (ISM) non-manufacturing index, which surveys the sector's purchasing and supply executives, tumbled to 55.9 from 59.1 in October and compared with analysts' expectations for a 58 reading.
Still to come, at 1500 GMT investors will analyse readings on durable goods and factory orders for October.
Market participants will also hear from Fed Vice chairman Stanley Fischer who will give a speech at the Cleveland Fed conference on financial stability at 1810 GMT
In company news, Yahoo slid 0.57% after a number of firms have emerged as potential suitors for the group's core internet business.
Dollar General climbed 2.83% after its quarterly profit beat expectations but sales fell short of consensus.
According to sources cited by the Wall Street Journal, IAC/InterActive and Verizon Communications are among the companies interested.
Elsewhere, Asian stocks were mixed as a result of an overnight decline in oil prices and concerns over higher interest rates in the US, while European stocks advanced after the European Central Bank cut its deposit rates to -0.30% as widely expected, but left other rates unchanged.
Oil prices rebounded as OPEC's two-day meeting kicked off in Vienna, with West Texas Intermediate rising 1.43% to $40.52 a barrel, while Brent jumped 2.19% to $43.44 a barrel. |
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| | Broker Tips | | Broker tips: Debenhams, Greene King, Glencore Debenhams shares were under pressure on Thursday after Goldman Sachs downgraded the stock to 'sell' from 'neutral', pointing to slowing space growth.
"As one of the UK general retailers wrestling with the online channel shift dynamic, and in recent times suffering from store-based sales cannibalisation, while approaching the end of its UK space growth plans, Debenhams' earnings growth outlook is modest by European retail standards," it said.
Goldman noted around 2% earnings per share growth over 2016/17 versus around 10% for peers.
It said the group's Christmas trading statement in mid-January and the interim results in April 2016 should underpin the bank's earnings forecasts and cautious stance on the shares.
GS has an 83p 12-month price target on Debenhams.
Accounting adjustments and increased synergies will boost Greene King's profits in the medium-term, but not the company's cash-flows, Canaccord Genuity said.
That followed the company's announcement that it would take a £325.6m provision to replace its "onerous" £50m lease provision for the +100 pubs which resulted from the March 2004 sale and leaseback from Texas Pacific.
That led Parson to revise his forecasts for adjusted earnings per share in fiscal years 2016 and 2017 higher by 7.6% an 4.9%, respectively, to reach 69.0p and 75.7p.
He also bumped up his estimate for 2018 adjusted EPS by 3.2% to 80.0p.
However, the lion's share of the boost to earnings was solely the result of accounting fair value adjustments with no changes to cash-flow, the analyst emphasised.
He left his 'buy' recommendation on the shares unchanged but increased his target to 1,110p from 1,050p.
RBC saw possible short-term catalysts for Glencore, but added that the outlook was 'mixed'.
The shares should rally further as the commodities trader unveiled further asset sales and operational improvements, with a 10 December update serving as one potential catalyst, Tyler Broda and Alexandra Slattery said in a research note sent to clients.
Indeed, the company was likely to announce more asset sales than had originally been targeted, which would help it to hold on to its investment grade credit rating through 2016 as long as the reference price for copper remained above a $2.10/lb.
A credit downgrade to 'junk' was not out of the question, although it would not be the end of the world for Glencore, the analysts added. | | |
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