| | | | | | | | Metro Bank IPO: What you need to know In just a couple of weeks, Metro is due to launch its IPO. It’s following in the footsteps of smaller rivals, Aldermore and Shawbrook, who listed last year. Both performing strongly in the months following their IPOs.
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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: FTSE rises as oil prices gain, US GDP revised higher London stocks ended the week on a high as oil prices rebounded, US fourth quarter economic growth data was revised higher and China's central bank hinted at further stimulus.
Oil prices reversed the previous day's declines as traders closed short positions, with Brent crude rising 3.4% to $36.56 per barrel and West Texas Intermediate increasing 2.1% to $33.80 per barrel at 1637 GMT.
In another lift to equities, the Commerce Department's second estimate of US gross domestic product growth for the fourth quarter was revised to an annualised 1% from an initial 0.7%, surprising analysts who had expected a 0.4% increase.
Separately the Commerce Department said US personal spending rose 0.5% in January, beating economists' expectations for a 0.3% increase. Personal spending had advanced 0.1% in December.
The University of Michigan's final estimate on its US consumer sentiment index for February was revised to 91.7 from a preliminary reading of 90.7. It was below last month's final reading of 92.0 but a touch ahead of analysts' expectations for a print of 91.0.
Meanwhile, the People's Bank of China Governor Zhou Xiaochuan said there were more tools in the central bank's policy to help turnaround the nation's economic slowdown. His remarks were seen by analysts to suggest that more stimulus may be on the cards.
Closer to home, investors shrugged off a worse-than-expected survey from GfK on UK consumer confidence. The index measuring sentiment fell to 0 in February from 4 in January, missing analysts' estimates of 3.
Economic confidence in the Eurozone was also in the dumps last month. The European Commission's headline economic sentiment indicator fell to 103.8 from a revised 105.1 in January. This was below economists' expectations for a reading of 104.4 and marked the lowest reading since June 2015.
On the company front, shares in Burberry jumped after Nomura upgraded the fashion company to 'buy' from 'neutral' and lifted the price target to 1,500p from 1,450p.
Pearson was on the front foot as it reported a surge in net profits in 2015, following the sale of the Financial Times and The Economist.
Royal Bank of Scotland tumbled after the bank confirmed it made a £1.98bn loss for 2015, down from a £3.47bn loss the previous year The group, which warned investors in January it would make a loss, said litigation and conduct costs increased 62% to £3.57bn. "The bank's CEO, Ross McEwan, might well feel the bank has achieved everything it wanted to in 2015, but an eighth year of losses - now totalling £51bn- has not impressed the markets, sending the shares tumbling by over 9%," said IG analyst Alastair McCaig.
William Hill declined as the gambling group posted a drop in 2015 profit as revenue fell, reflecting the lack of a major football tournament in the period, a lower average number of shops and a major restructuring on the Australian business. |
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| Market Movers
FTSE 100 (UKX) 6,098.57 1.43%
FTSE 250 (MCX) 16,573.17 1.06%
techMARK (TASX) 3,196.95 0.79%
FTSE 100 - Risers
Glencore (GLEN) 128.25p 7.95%
Standard Chartered (STAN) 430.00p 7.85%
Burberry Group (BRBY) 1,269.00p 7.54%
Anglo American (AAL) 451.80p 7.02%
London Stock Exchange Group (LSE) 2,817.00p 6.95%
Pearson (PSON) 838.00p 4.55%
HSBC Holdings (HSBA) 467.35p 4.13%
BHP Billiton (BLT) 716.90p 3.91%
Persimmon (PSN) 2,219.00p 3.84%
Royal Dutch Shell 'A' (RDSA) 1,644.50p 3.56%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 226.60p -7.13%
Coca-Cola HBC AG (CDI) (CCH) 1,364.00p -3.19%
International Consolidated Airlines Group SA (CDI) (IAG) 541.00p -3.13%
Severn Trent (SVT) 2,130.00p -1.30%
Inmarsat (ISAT) 979.00p -1.06%
Dixons Carphone (DC.) 432.40p -1.05%
Intertek Group (ITRK) 2,925.00p -0.98%
Merlin Entertainments (MERL) 449.00p -0.95%
Randgold Resources Ltd. (RRS) 6,405.00p -0.77%
United Utilities Group (UU.) 924.50p -0.70%
FTSE 250 - Risers
Tullow Oil (TLW) 163.60p 10.69%
International Personal Finance (IPF) 253.20p 8.48%
Petrofac Ltd. (PFC) 879.50p 8.25%
Amec Foster Wheeler (AMFW) 362.10p 7.58%
Ophir Energy (OPHR) 77.55p 6.89%
Countrywide (CWD) 352.20p 6.66%
Weir Group (WEIR) 936.00p 6.30%
Rotork (ROR) 161.10p 5.50%
Aveva Group (AVV) 1,511.00p 5.22%
SIG (SHI) 137.40p 5.21%
FTSE 250 - Fallers
Genus (GNS) 1,405.00p -5.00%
Rightmove (RMV) 3,752.00p -4.16%
Dignity (DTY) 2,470.00p -2.99%
Allied Minds (ALM) 316.40p -2.65%
Acacia Mining (ACA) 244.70p -1.77%
Pennon Group (PNN) 810.50p -1.76%
Daejan Holdings (DJAN) 5,525.00p -1.69%
Meggitt (MGGT) 410.60p -1.44%
Domino's Pizza Group (DOM) 1,042.00p -1.23% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Strong US data, bounce in oil lift equities European stocks advanced on Friday as oil prices rallied and the latest batch of economic data out of the States came in firmly ahead of economists´ forecasts.
The benchmark DJ Stoxx Europe 600 index ended the day up by 1.53% to 331.54 points, Germany's DAX closed higher by 1.95% to 9,513.30 and France's CAC gained 1.56% to 4,314.57.
Oil prices pushed higher amid continued hopes of production cuts from OPEC and the evidence that was quickly piling up that US tight oil producers were accelerating their own output reductions. On Thursday, it emerged that Venezuela, Russia, Saudi Arabia and Qatar will meet again next month in a bid to stabilise prices.
West Texas Intermediate was up 0.84% to $33.35 a barrel and Brent crude was 1.86% firmer at $35.96.
Strong economic data from the States weighs on the pound, euro
US personal consumption expenditures jumped by 0.5% month-on-month in January, more than doubling forecast from analysts once revisions to prior months´ data is taken into account.
Figures contained in the same report also showed that headline PCE inflation printed at 1.3% year-on-year (consensus: 1.0%).
The 'Core' PCE price deflator advanced at a 1.7% year-on-year pace last month - its largest gain since the end of 2012 - coming in ahead of market forecasts for a rise of 1.5%.
Commenting in the above data, Paul Ashworth, chief US economist at Capital Economics said: "The Fed won't raise rates in March, but we do expect it to resume hiking in June, with the fed funds target range climbing to between 1.00% and 1.25% by end-2016."
"Markets have ignored the steady increase in core CPI inflation over the past year, but they can't ignore this," chimed Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Goldman Sachs´s latest forecasts called for the Fed to skip hiking rates when it next met on 16 March, followed by three rate rises throughout the remainder of 2016, perhaps even as early as April.
Sentiment was also underpinned by expectations that the G20 meeting of finance ministers in China will deliver a coordinated stimulus programme to bolster the slowing global economy.
Cable finished the session 0.69% lower to 1.3868 alongside losses of 0.88% to 1.0927 for the European single currency in its own cross versus the US dollar.
RBS pummeled
In corporate news, education publisher Pearson surged as it swung to a loss in 2015, but said it sees a turnaround in sight by 2018.
Spanish travel IT company Amadeus rallied after it posted a rise in full year profit and said it was targeting a dividend payout of 50% of reported profits this year.
BHP Billiton was firmer after it denied reaching a settlement with Brazilian authorities over the Samarco mine disaster but said significant progress has been made in negotiations.
German chemicals company BASF was in the black despite posting a 76% drop in fourth quarter net profit.
Burberry was on the front foot after Nomura upgraded the stock to 'buy' from 'neutral'.
On the downside, shares in Royal Bank of Scotland tumbled after it posted a full year loss and delayed the prospects of any dividend payouts.
Although the loss was narrower than the previous year, it was the bank's eighth year of losses.
British Airways and Iberia parent International Consolidated Airlines Group was a little weaker despite reporting a big jump in 2015 profit.
Salzgitter slipped as the steelmaker said its loss after tax widened in 2015.
Investors also digested the latest data from the European Commission, which showed economic sentiment in the Eurozone deteriorated more than expected in February.
The EC's headline economic sentiment indicator fell to 103.8 from a revised 105.1 in January.
This was below economists' expectations for a reading of 104.4 and marked the lowest reading since June 2015. It was also the second consecutive month of decline.
The EC said the fall came on the back of deteriorating confidence among consumers in all business sectors apart from construction, while in terms of countries, the Netherlands saw a sharp drop.
Meanwhile, the EC's business climate indicator fell by 0.2 points to 0.07, missing consensus expectations for a reading of 0.28.
Pantheon Macroeconomics said the indicators were poor. |
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| | US Market Report | | US open: Stocks gain as US fourth quarter GDP revised higher US stocks opened on the front foot on Friday as oil prices rebounded and fourth quarter economic growth data was unexpectedly revised higher.
The Dow Jones Industrial Average rose 0.46%, the Nasdaq climbed 0.65% and the S&P 500 gained 0.48% at 1441 GMT.
Oil prices reversed the previous day's declines as traders closed short positions, with West Texas Intermediate crude rising 2.7% to $34.01 per barrel and Brent increasing 3.2% to $36.48 per barrel at 1421 GMT.
The Commerce Department's second estimate of US gross domestic product growth for the fourth quarter was revised to an annualised 1% from an initial 0.7%, surprising analysts who had expected a 0.4% increase.
"Financial markets were expecting a slowdown in the world's largest economy, so much so that conversations about a recession weren't far away," said Dennis de Jong, managing director at UFX.com.
"Yet, with unemployment remaining low and wages increasing at their fastest rate since 2009, growth is back on the agenda. Add to that cheap fuel prices and low mortgage rates, and it may only be a matter of time until disposable incomes are fully realised and growth continues to speed up."
Elsewhere, China's central bank hinted at further stimulus measures to boost the flagging economy. People's Bank of China Governor Zhou Xiaochuan said there were more tools in the central bank's policy to help turnaround the slowdown.
"While the reform direction is clear, managing the reform pace will need windows (of opportunity) and conditions...The pace will vary, but the reform will be set to continue and the direction is not changed," Zhou said at a conference held by the Institute of International Finance in Shanghai in conjunction with a G20 meeting of central bank governors and finance ministers.
The news saw Asian equity markets close mostly higher on Friday.
Still to come, US personal income, spending and consumption data will be released at 1500 GMT while the University of Michigan consumer confidence survey is also out at the same time.
In company news, shares in JC Penney surged after it reported fourth quarter earnings that were better than expected as well as an upbeat profit forecast.
Gap slumped as its full year adjusted profit guidance fell short of analysts' estimates.
Foot Locker dropped despite fourth quarter results that came in above expectations.
The dollar rose 0.15% against the pound, increased 0.51% against the euro and climbed 0.51% against the yen. |
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| | Broker Tips | | Broker tips: Burberry, Lloyds, Britvic Nomura upgraded Burberry to 'buy' from 'neutral' and lifted the price target to 1,500p from 1,450p.
It said since the company announced a review of the global market, its initiatives, efficiency programmes, productivity and capital allocation, expectations have risen in anticipation of change.
Nomura expects the review to be thorough given chief executive Christopher Bailey will have been at the helm for two years in May.
"A change of the group's approach would be a positive to the market. Despite a recent rebound in the stock, we see potential for a greater valuation if Burberry can successfully drive productivity measures, while being more disciplined on cost and capital allocation," the Japanese bank said.
Nomura said the company had five areas of focus: productivity, conversion, product, costs and capital allocation and share buybacks.
It said a focus on VIP/regular customers may be more effective than attempting to attract new customers.
It also said its product analysis suggests range overlap.
"Consolidating the sub-brands should drive better availability, an improved shopping experience and a more coherent product architecture," said Nomura.
It warned of a tough trading environment and the potential costs of implementing initiatives, but said it sees a favourable forex environment and initial benefits of cost initiatives offsetting in full year 2017.
In addition, Nomura said the stock's valuation appears attractive despite the lack of short-term growth.
It expects full year results on 18 May to be a catalyst.
UBS reaffirmed Lloyd's Banking Group as its 'top-pick' on Friday thanks to the lender´s capital generation targets, which in its opinion underwrote a dividend yield of over 8% in a Footsie that was "increasingly starved" of payouts.
Analyst Jason Napier highlighted that the total dividend payout of £2.0bn for 2015, against a statutory profit of £0.5bn, "should provide significant reassurance to investors in Lloyds (and RBS) that the regulator is comfortable with current capital levels."
Lloyds´s 200 basis point target for capital generation per year was worth 6p a share in payouts, Napier said in a research note sent to clients.
Furthermore, the lender´s guidance for loan losses in 2016 was as expected, while net interest margins were expected to outpace consensus estimates.
To take note of, UBS believed fears for the latter were much worse than the company-collated consensus of 2.65%.
In the analyst´s opinion, Lloyds also got too little credit for its ability to manage front and back book margins for the benefit of its shareholders.
Management had also targeted continued improvement in the bank´s cost/income ratio for every year between 2016 to 2020 - despite the low interest rate environment.
"LBG is trading with a yield well over 8% each year from 2016-2020. We have the stock at 1.2x tangible net asset value for a 14% forecast return on tangible equity. We think LBG is good value and retain it as our top pick in the UK. Our sum of the parts-derived target remains 88p - 30% capital upside."
Berenberg initiated coverage on the four UK mid-cap soft drinks manufacturers, highlighting a preference for Britvic and Nichols.
"We feel this market is often overlooked by investors due to the lack of absolute growth in the end-markets. However, we believe these businesses score well on several elements relative to our broader UK mid-cap coverage."
The bank said they typically generate strong and stable margins driven by operating efficiencies, they can deploy capital on value-accretive M&A, and they have demonstrated a good level of success by UK and international expansion.
It started Britvic and Nichols with a 'buy' rating and 850p and 1,450p price targets, respectively.
The bank said its preference for these two was mainly due to a combination of a propensity for future EPS upgrades and reasonable valuations.
On Britvic, it said EPS momentum was stabilising and there are several areas that could surprise to the upside, such as margin uplift from supply chain investment, Fruit Shoot's move into the $2bn US multipack market, and the International division returning to profitability.
"We believe these upside risks are not reflected in the current 14.3x FY 2016E P/E multiple, which makes the stock the cheapest among soft drinks peers and in the broader consumer sector."
As far as Nichols is concerned, it said recent acquisitions of Feel Good and Noisy Drinks have helped drive strong EPS momentum. In addition, the company generates much higher margins and return on invested capital than most peers.
Berenberg started AG Barr and Fevertree with 'hold' ratings and 550p and 570p targets, respectively.
It said Fevertree was an exciting prospect and demonstrates many of the characteristics it looks for, but growth potential is more than reflected in the valuation. | | |
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