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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 close higher on upbeat China trade data The FTSE closed in positive territory on Wednesday after China's trade surplus unexpectedly widened, soothing concerns about the nation's flagging economy.
China's trade surplus grew to 382.05bn yuan in December from 343.10bn yuan in November, beating analysts' forecasts of 338.80bn yuan.
Exports rose by 2.3% in December following a 3.7% dip a month earlier. Economists had pencilled in a 4.1% drop.
Imports declined 4% last month, compared to analysts' estimates for a 7.9% fall and November's 5.6% slide.
"China's trade data for December support our view that, despite the turmoil in Chinese financial markets, there has not been a major deterioration in its economy in recent months," according to Capital Economics.
"Meanwhile, another large trade surplus last month provides a cushion for the People's Bank in the face of soaring capital outflows."
The People's Bank of China fixed the yuan at 6.5630 to the dollar on Wednesday, marking the fourth day that the central bank has kept its yuan guidance roughly stable.
The yuan traded at 6.5752 to the dollar in the offshore market, slightly stronger than 6.5770 late Tuesday.
Meanwhile, oil prices swayed between gains and falls as US weekly supply data showed inventories of crude oil and refined products hit record highs, adding to worries about an oversupply in the market.
Inventories of gasoline increased by 8.4m barrels in the week to 8 January, following a 10.6m barrel build the previous week, beating expectations for a 1.6m build, data from the Energy Information Administration revealed.
At 1626 GMT, Brent fell 0.52% to $30.70 per barrel and WTI rose 0.71% to $30.66 per barrel.
In the Eurozone, industrial production rose 1.1% in November from a year ago, following a 2% increase in October. Analysts had predicted a 1.3% gain.
Across the Atlantic, mortgage applications for the week of January 8 rebounded 21.3% according to the Mortgage Bankers Association.
Still to come, Federal Reserve policymaker Eric Rosengren speaks in Iowa at 1730 GMT and the central bank publishes its Beige Book at 1900 GMT.
In company news, miners rallied on upbeat China trade data with Rio Tinto, Anglo American and Glencore sitting higher.
Premier Oil's shares were suspended from trading on Wednesday morning pending the announcement of a potential acquisition of assets which may be classed as a reverse takeover under the Financial Conduct Authority listing rules. Later in the day the group announced it had struck a deal to acquire E.ON's UK North Sea assets for a net $120m (£83.3m) plus working capital adjustments.
J Sainsbury declined after reporting a 0.4% drop in like-for-like retail sales over the festive third quarter. However it was less than the 0.7% forecast, leading the grocer to say that the second half as a whole is likely to be better than the first.
Sports Direct advanced after it snapped up an 11.5% stake in Umbro and Lee Cooper-owner Iconix Brand Group and 2.3% of US retailing giant Dick's Sporting Goods. The group last week warned on profits amid widespread criticism about the treatment of its staff.
Lloyds Banking Group was the biggest faller after Exane BNP Paribas downgraded the stock from 'neutral' to 'underperform' on a bleak operational outlook for UK banks.
Galliford Try was a high riser after the construction group pointed to solid trading across the board in the first half, as its order book rose in an improving market. |
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| Market Movers FTSE 100 (UKX) 5,949.01 0.33%
FTSE 250 (MCX) 16,695.77 0.05%
techMARK (TASX) 3,162.85 0.35% FTSE 100 - Risers BP (BP.) 335.85p 3.95%
Shire Plc (SHP) 4,269.00p 3.77%
Babcock International Group (BAB) 988.00p 3.51%
Sports Direct International (SPD) 425.80p 3.35%
Capita (CPI) 1,191.00p 2.14%
St James's Place (STJ) 936.50p 2.02%
Rio Tinto (RIO) 1,683.50p 1.91%
Standard Life (SL.) 375.00p 1.82%
Centrica (CNA) 210.20p 1.74%
Fresnillo (FRES) 693.00p 1.69% FTSE 100 - Fallers Merlin Entertainments (MERL) 429.80p -2.69%
Lloyds Banking Group (LLOY) 67.64p -2.40%
Provident Financial (PFG) 3,160.00p -2.14%
London Stock Exchange Group (LSE) 2,531.00p -2.05%
Sky (SKY) 1,083.00p -1.81%
easyJet (EZJ) 1,690.00p -1.74%
Antofagasta (ANTO) 368.10p -1.60%
International Consolidated Airlines Group SA (CDI) (IAG) 589.50p -1.50%
Whitbread (WTB) 4,136.00p -1.50%
TUI AG Reg Shs (DI) (TUI) 1,251.00p -1.42% FTSE 250 - Risers Electrocomponents (ECM) 237.40p 6.17%
Home Retail Group (HOME) 149.80p 5.57%
Acacia Mining (ACA) 181.00p 5.54%
Ophir Energy (OPHR) 85.25p 4.73%
Tullow Oil (TLW) 128.90p 4.71%
AO World (AO.) 156.00p 4.00%
G4S (GFS) 224.60p 3.98%
JD Sports Fashion (JD.) 1,058.00p 3.83%
Centamin (DI) (CEY) 64.40p 3.45%
Spire Healthcare Group (SPI) 314.60p 3.38% FTSE 250 - Fallers Mitie Group (MTO) 280.10p -6.94%
BBA Aviation (BBA) 171.30p -6.09%
Aldermore Group (ALD) 202.20p -5.43%
Vedanta Resources (VED) 223.40p -4.53%
Virgin Money Holdings (UK) (VM.) 327.60p -3.76%
CLS Holdings (CLI) 1,722.00p -3.58%
Renishaw (RSW) 1,712.00p -3.28%
Aveva Group (AVV) 1,438.00p -2.97%
IP Group (IPO) 190.30p -2.96%
Allied Minds (ALM) 348.10p -2.90% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares bounce back for a second day European stocks racked up healthy gains on Wednesday as a bounce in oil prices and better-than-expected Chinese trade figures lifted the mood.
The benchmark Stoxx Europe 600 index finished up by 0.41% and France's CAC 40 by another 0.30%, while the Dax closed 0.25% lower.
The latest trade out of China showed exports fell 1.4% year-on-year in December in US dollar terms, which was better than the 8% drop expected by economists.
Meanwhile, imports declined 7.6%, beating expectations for an 11% slide.
"The latest trade data are a challenge to those who believe that China's export sector needs renminbi depreciation to compete or that China's economy is continuing to slow.Today's data underline that export competitiveness is not a major concern."
"Still it needs to be seen if one set of good numbers will manage to bring a shift in sentiment about," Mark Williams, chief Asia economist at Capital Economics said in a research note sent to clients.
In the commodities space, front month Brent crude futures fell 1.28% to $30.48 on the ICE despite a forecast from the US Department of Energy that the oil market would not begin to balance until the third quarter of 2017.
The gains helped to push the Stoxx 600 oil and gas index up 1.36%.
On a very dour note, Societe Generale stategist Albert Edwards predicted the S&P 500 would fall to 550 points in the current valuation-bear cycle as the effects of the Fed's quantitaive easing on emerging markets unwound.
In corporate news, Sodexo rose after the food services and facilities management company posted first quarter organic revenue growth of 4.7%.
Dutch insurance group Aegon surged after announcing a €400m share buyback programme and lifting its 2015 dividend.
Elsewhere, Banco Popolare and Banca Popolare di Milano rallied following a report the banks were close to agreeing a deal on a merger.
In London, supermarket retailer Sainsbury's nudged up after its third quarter sales were better than expected and the company said the second half was likely to see an improvement.
Macroeconomic news was a little less cheery, however.
Figures released by Eurostat showed industrial production fell by 0.7% month-on-month in November from October.
The drop was steeper than the 0.3% slip expected by economists and marked the biggest month-on-month drop since August 2014.
On the year, production was up 1.1%, falling short of expectations for a 1.3% increase. |
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| | US Market Report | | US open: Stocks rise as China trade surplus widens, oil prices recover US stocks rallied on Wednesday after better-than-estimated China trade data soothed concerns about the slowdown in the world's second largest economy.
The Dow Jones Industrial Average rose 0.93%, the Nasdaq increased 1.44% and the S&P 500 climbed 1.06% at 1430 GMT.
China's trade surplus grew to 382.05bn yuan in December from 343.10bn yuan in November, beating analysts' forecasts of 338.80bn yuan.
Exports rose by 2.3% in December following a 3.7% dip a month earlier. Economists had pencilled in a 4.1% drop.
Imports declined 4% last month, compared to analysts' estimates for a 7.9% fall and November's 5.6% slide.
"China's trade data for December support our view that, despite the turmoil in Chinese financial markets, there has not been a major deterioration in its economy in recent months," according to Capital Economics.
"Meanwhile, another large trade surplus last month provides a cushion for the People's Bank in the face of soaring capital outflows."
The People's Bank of China fixed the yuan at 6.5630 to the dollar on Wednesday, marking the fourth day that the central bank has kept its yuan guidance roughly stable.
The yuan traded at 6.5752 to the dollar in the offshore market, slightly stronger than 6.5770 late Tuesday.
In another boost to the market, oil prices recovered from Tuesday's declines. At 1413 GMT, West Texas Intermediate crude rose 2.6% to $31.23 per barrel and Brent increased 2.1% to $31.52 per barrel.
US mortgage applications for the week of January 8 rebounded 21.3% according to the Mortgage Bankers Association.
Other economic data out today includes US oil and gas inventories at 1530 GMT, as well as the monthly budget statement and the beige book at 1900 GMT.
The dollar was up against all the main currencies, rising 0.25% against the pound, 0.26% against the euro and 0.42% against the yen. Spot gold was down 0.20% to $1,084.39.
In company news, Supervalu jumped after posting a drop in third quarter net earnings as sales edged down in line with forecasts.
KFC's parent company Yum! Brands gained after it reported on Tuesday that sales at its restaurants in China rose by around 1% in December, compared to its 3% decline the previous month. |
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| | Broker Tips | | Broker tips: Sainsbury's, BBA Aviation, Lloyds Sainsbury's third quarter highlights the group's compelling strategy and differentiation from the other 'Big Four' supermarkets, Societe Generale said on Wednesday.
The company's like-for-like (LFL) retail sales were down 0.4% over the festive third quarter but by less than the 0.7% forecast, leading the grocer to say that the second half as a whole is likely to be better than the first.
The supermarket, which is continuing to mull a bid for Home Retail after a November offer was rejected, lifted total retail sales 0.8% excluding fuel, as its new simpler pricing strategy of lower regular prices and reduced levels of vouchering and promotional participation helped grow transactions and volumes.
"The group benefitted from a more transparent pricing policy, with fewer promotions/multi-buys and a stronger focus on 'low'," said Societe Generale analyst Arnaud Joly.
Societe Generale gave Sainsbury's a 'buy' rating and a target of 315p.
Citigroup initiated coverage of BBA Aviation at 'buy' with a 210p price target, noting the shares have dropped 19% since 1 July 2015.
The bank said the fall provides investors with an attractive entry point, with completion of the Landmark acquisition in early 2016 a primary catalyst.
BBA announced the acquisition of US aircraft services and private jet hire company Landmark for £1.3bn in September.
"Landmark will grow BBA's Signature network by more than 75% in North America and reinforce its market dominance," it said.
Citi estimates Landmark is 11% accretive to earnings per share and over 20% accretive including cash tax benefits.
The bank noted that BBA trades at 10.5x 2015e pro-forma price-to-earnings, inclusive of cost and tax synergies.
The company is due to report its 2015 results on 3 March and Citi is around 10% below consensus as a result of flat US business jet activity and one-off disruptions in the smaller divisions.
"However, we forecast earnings rebounding in 2016e/2017e as US economic conditions are supportive of a recovery in business jet demand."
Exane BNP Paribas has downgraded Lloyds Banking Group from 'neutral' to 'underperform' and reiterated its 'underperform' rating for Barclays on a bleak operational outlook for UK banks .
In a note to investors on Wednesday, it said comments from the Department for Business, Innovation & Skills (BIS) and the Bank of England's Financial Policy Committee (FPC) have led it to soften its view on capital.
That in turn has forced Exane BNP Paribas to expect lower than consensus dividends over the next three years.
On top of that, the investment bank believes the operational outlook for the sector is increasingly bleak.
"We cut 2017 EPS estimates by an average of 4% to reflect slightly lower margin and slightly higher impairment assumptions - driven by a more rapid reduction in releases and recoveries."
It said Britain's potential exit from the EU could also push up the sector's risk premium ahead of the referendum.
Exane BNP Paribas' concerns about Lloyds Banking Group's margin and impairment have increased since it last downgraded the stock in September 2015.
"We also think the cost income target of 45% by 2018, set just one year ago, is now unachievable," the note said.
"Distribution potential is also debatable, and we think the bank will be able to pay just 12p of dividends (or the equivalent in buybacks) over the next three years, well below some market estimates."
The investment bank also believed Barclays should raise capital given how tight it is operating against end-point requirements.
"Even if this capital was not ultimately needed, we believe it could be used to significantly enhance earnings through a LME on its subordinated debt."
It said if the bank did this, Exane BNP Paribas' might look more positively on the stock.
Its target on Barclays was dropped 14% to 215p, while it dropped the target of Lloyds 5% to 74p but raised Standard Chartered's target 3% to 515. | | |
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