| | | | | | | | 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 ends lower on China slowdown worries The FTSE 100 ended February on a low as bets of further quantitative easing from the European Central Bank failed to offset growing worries over China's slowdown.
The Eurozone unexpectedly entered deflation in February, according to Eurostat. The consumer price index fell 0.2% year-on-year this month, compared to analysts' expectations of 0% and January's 0.3% gain. Inflation once again undershot the ECB's 2% target, fuelling hopes the central bank will expand its quantitative easing at its 10 March policy meeting.
"Coming in at -0.2% (the first deflationary reading since last September) against the 0.0% expected, and the promising 0.3% last month, this latest inflation figure almost surely guarantees action from Mario Draghi when the ECB meets next Thursday," said Connor Campbell, financial analyst at Spreadex.
Dragging on investor sentiment elsewhere, China's government made no statement at the weekend's G20 meetings on concrete plans for stimulus measures to lift the flagging economy. Investors had been hoping for further action to be announced after People's Bank of China chief Zhou Xiaochuan said on Friday there was more room for easing.
The PBoC guided the yuan lower for fifth straight session on Monday, adding to worries that China is using the manipulation of its currency as a major tool to help turnaround the economy.
China's central bank also announced on Monday that it was cutting the reserve-ratio for banks by 0.5 percentage points. The ratio refers to the amount of cash China's lenders must keep as reserves.
"The People's Bank paused monetary loosening in recent weeks apparently on concerns that it would worsen capital outflows," according to Capital Economics.
"The government stepped up fiscal support instead. Today's cut to the required reserve ratio (RRR) is therefore both confirmation that policymakers retain a bias towards easing and also a signal that they are less concerned about outflows getting out of control."
On this side of the pond, the Bank of England revealed mortgage approvals reached a two-year high in January and consumer credit expanded at the fastest pace in a decade. Mortgage approvals for house purchases numbered 74,581 in January from 71,335 in December. Analysts had expected 74,000 approvals. Consumer credit increased 9.1% year-on-year in January or by £1.56bn, compared to analysts' forecasts for a £1.3bn increase.
Across the Atlantic, an index measuring US pending home sales fell 2.5% month-on-month in January to a seasonally adjusted reading of 106 in January, the National Association of Realtors revealed. The drop was much worse than the 0.6% decline expected by analysts and reflected lower inventory and rising prices.
The Chicago Purchasing Managers' index fell 8 points to 47.6 in February following a sharp increase to 55.6 the previous month. The data, released by the Institute for Supply Management, missed economists' expectations for a reading of 53, led by significant declines in production and new orders. A reading below 50 signals a contraction in sector activity while a level below that indicates an expansion.
Meanwhile, oil prices gained as Saudi Arabia said it would work with other producers to limit oil market volatility.
"The kingdom (of Saudi Arabia) seeks to achieve stability in the oil markets and will always remain in contact with all main producers in an attempt to limit volatility and it welcomes any cooperative action," the Saudi cabinet said in a statement.
Saudi Arabia and several fellow OPEC members agreed with non-OPEC Russia this month to freeze output at January levels but Iran has remained the main obstacle at curbing an oversupplied market as it takes advantage of the recent lifting of its international economic sanctions.
At 1641 GMT, Brent crude rose 2.9% to $36.16 per barrel and West Texas Intermediate increased 2.7% to $33.72 per barrel.
On the company front, HSBC was in the red after Bernstein downgraded the stock to 'underperform' from 'market perform' and cut the price target to 380p from 550p.
Supermarket retailer Tesco was under the cosh after denying reports that it was planning to cut store staff numbers by 39,000 over the next three years, with news Amazon is entering the fresh food market also ramping up the industry pressure.
AstraZeneca was weaker despite announcing that it has entered into a licensing deal with China Medical System Holdings Ltd for the commercialisation rights in China to its hypertension medicine Plendil.
Heavily-weighted miners - which are dependent on demand from China - were the standout gainers on the index after the PBoC cut its reserve requirement ratio.
Shopping centre owner Intu Properties was on the front foot after Bank of America Merrill Lynch upgraded the stock to 'buy' from 'neutral'. |
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| Market Movers
FTSE 100 (UKX) 6,081.73 -0.23%
FTSE 250 (MCX) 16,579.48 0.08%
techMARK (TASX) 3,188.53 -0.19%
FTSE 100 - Risers
Anglo American (AAL) 480.25p 6.58%
Burberry Group (BRBY) 1,320.00p 4.02%
Glencore (GLEN) 133.25p 3.90%
Intu Properties (INTU) 299.20p 3.78%
Pearson (PSON) 859.00p 2.75%
Rio Tinto (RIO) 1,904.00p 2.34%
Ashtead Group (AHT) 924.00p 2.33%
Merlin Entertainments (MERL) 458.00p 2.03%
Barclays (BARC) 172.20p 1.83%
Sports Direct International (SPD) 404.60p 1.81%
FTSE 100 - Fallers
London Stock Exchange Group (LSE) 2,678.00p -4.93%
Shire Plc (SHP) 3,788.00p -2.80%
Capita (CPI) 1,004.00p -2.52%
Tesco (TSCO) 179.75p -2.39%
AstraZeneca (AZN) 4,107.00p -2.32%
Worldpay Group (WI) (WPG) 286.90p -2.12%
Berkeley Group Holdings (The) (BKG) 3,281.00p -2.03%
Centrica (CNA) 207.20p -1.89%
HSBC Holdings (HSBA) 459.15p -1.75%
DCC (DCC) 5,625.00p -1.75%
FTSE 250 - Risers
Vedanta Resources (VED) 274.50p 8.37%
International Personal Finance (IPF) 267.90p 6.39%
Morrison (Wm) Supermarkets (MRW) 199.00p 5.91%
Amec Foster Wheeler (AMFW) 380.70p 5.49%
Entertainment One Limited (ETO) 158.10p 5.47%
TalkTalk Telecom Group (TALK) 231.20p 4.76%
Aldermore Group (ALD) 201.40p 4.57%
Rightmove (RMV) 3,937.00p 4.40%
Evraz (EVR) 68.75p 3.93%
Northgate (NTG) 406.00p 3.81%
FTSE 250 - Fallers
Hiscox Limited (DI) (HSX) 970.00p -8.58%
Ocado Group (OCDO) 259.00p -8.12%
Ultra Electronics Holdings (ULE) 1,785.00p -5.95%
Assura (AGR) 50.00p -4.67%
Allied Minds (ALM) 303.20p -4.29%
Senior (SNR) 207.30p -3.54%
AO World (AO.) 154.00p -3.02%
Just Eat (JE.) 386.00p -2.99%
Cranswick (CWK) 1,950.00p -2.89%
Pendragon (PDG) 36.30p -2.68% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Investors pin hopes on ECB, China European stocks finished the day largely up as the market looked ahead to hopes of more stimulus from the European Central Bank, while mulling on the meaning of China's cut to its bank reserve ratio.
The markets started the day in the red, as disappointment over the outcome of the G20 meeting in Shanghai late last week lingered. Traders were not pleased that the meeting ended without a coordinated effort to stimulate global growth.
But by the close, the benchmark Stoxx Europe 600 index was up 0.5%, Germany's DAX was 0.52% lower and France's CAC was up 0.51%.
During the day oil prices were also on the up, with Brent crude up 2.61% at $36.04 a barrel and West Texas Intermediate gaining 2.3% to $33.57.
Prices were boosted by reports that OPEC's output of crude declined by 270,000 barrels per day in February to 32,265 million barrels per day, according to a Bloomberg story citing JBC Energy.
European indices pared losses earlier in the day after the People's Bank of China cut its reserve requirement ratio by 50 basis points from 1 March, in a move to pump liquidity into its slowing economy.
The central bank has now made five RRR cuts since November 2014, which frees up capital by lowering the amount of back-up funds banks must hold centrally.
Investors also reacted to news that Eurozone inflation turned negative in February, raising expectations that the European Central Bank would implement further stimulus measures at its meeting on 10 March.
According to figures released by Eurostat, consumer prices fell 0.2% in the year to February, down from 0.3% in January. Economists had been expecting it to drop to zero.
The core rate of inflation, which strips energy, food, alcohol and tobacco, dropped to 0.7% from 1%. The ECB is targeting inflation of just below 2%.
In corporate news, Barclays was up 1.8% after saying it was evaluating strategic options for its African business following reports at the weekend that the bank was moving closer to an exit.
Standard Chartered gained 0.36% after Bernstein cut the price target on its Hong Kong listed stock, while HSBC slumped 1.44% after the same analysts trimmed their price target.
Roche Holding was 1.09% in the black after the pharmaceutical group said studies for one of its asthma drugs did not come to conclusive results.
Supermarket Morrisons rallied 5.64% after announcing that it has inked a supply agreement with Amazon.com that will mean hundreds of its products will be available to Amazon Prime Now and Amazon Pantry customers in the coming months.
AstraZeneca lost 2.6% after saying it has entered a licensing deal with China Medical System Holdings for the commercialisation rights in China to its hypertension medicine Plendil. |
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| | US Market Report | | Small caps news round-up Victoria Oil & Gas made a strong start to its financial year, updating the market on its six months to 30 November 2015 on Monday.The AIM-traded natural gas producer reported revenue of $18.9m (£13.6m) for the period, up from $11.6m in the six months to 30 November 2014.
A hunger for vehicle tracking drove growth at Quartix in the 2015 calendar year, with the company reporting some solid growth in its final results on Monday. The AIM-traded supplier of vehicle tracking systems to the fleet and insurance sectors saw group revenues increase by 28% during the period, to £19.7m.
Randall & Quilter completed the sale of specialist managing general agent Synergy - which provides a range of bespoke personal high net worth products - to Plum Underwriting on Monday. The AIM-traded company confirmed the upfront cash consideration was higher than the carried value of Synergy in the group's latest published accounts, though did not go into further detail.
Hydro International was in expansion mode on Monday, announcing it had entered into conditional agreements to acquire Hydro-Logic Ltd and the business of Hydro-Logic Services, collectively Hydro-Logic. The AIM-traded provider of environmentally sustainable water management solutions said Hydro-Logic was founded in 1985 by its current managing director, Rod Hawnt.
Reach4Entertainment revealed strong trading at the end of 2015 on Monday, as it warmed the market up for its final results for the calendar year, due before the end of May. The AIM-traded media and entertainment marketing company had previously reported encouraging interim and third quarter results, with that trading continuing well in the last quarter of the year, along with an expected seasonal uptick in revenues.
TechFinancials affirmed its commitment to the Asia Pacific market on Monday, announcing the opening of a new sales office in Hong Kong. The AIM-traded software developer of online trading solutions said the opening followed its announcement on 5 January, regarding the completion of a joint venture with Optionfortune Trade, to run a B2C binary options trading platform focused on Asia Pacific.
Windar Photonics lost a non-executive director on Monday, with the resignation of Niels Carlsen.
West Africa-focused gold developer Hummingbird Resources was brimming with confidence on Monday, releasing updated economic projections for its Yanifolia Gold Project in Mali. The AIM-traded company said at a gold price of $1,100 per ounce, there would be a 24% increase in its net present value to $109m, and its internal rate of return would increase from 37% to 42%. |
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| | Broker Tips | | Broker tips: ITV, Ultra Electronics, IAG Goldman Sachs downgraded ITV to 'neutral' from 'buy' and cut the price target to 297p from 329p on the back of a softer advertising outlook and ongoing rating weakness that it said could weigh on programming costs.
The bank noted that since being added to the 'buy' list on 12 October, 2009, the stock is up 432% versus the FTSE World Europe up 9.8%.
GS continues to the see the broadcaster as structurally well positioned compared to its peers, given its exposure to content (30% of revenue) and strong management.
It said that over time, ITV should benefit from the rising value of content and the convergence between telco and media, which makes it a potential M&A target.
However, in the near term, Goldman highlighted the risk to advertising and programming costs, which could materialise at the full year results this week.
It said soft ratings - the ITV audience is down 4%-5% in 2014/15 - the end of major shows and the change of the Director of Television could result in greater programming reinvestment in the near term.
The bank raised its estimates for programme costs by £12m to £1.05bn as it reckons ITV will reinvest to compensate for the end of programmes such as Downton Abbey or Mr Selfridge and the softness of other key shows, such as the X Factor.
GS cut its 2016 earnings per share estimate by 5% as a result to 17.8p, versus consensus of 18p.
It said that while the stock's valuation is not expensive, there is more limited near-term upside given the lack of major positive earnings momentum and the de-rating of US peers.
Ultra Electronics was issued a 'buy' rating and a target of 2,060p by Investec after the company reported its full year results.
The FTSE 250 firm reported a 1.8% rise in 2015 revenue to £726.3m. Underlying operating profit was up 1.6% to £120m, and underlying profit before tax was largely flat, moving up 0.4% to £112.4m.
Chief executive Rakesh Sharma said the UK Strategic Defence & Security Review and the two-year US federal budget brought some welcome stability late in the period, though the industry was still unsure how they would play out. He expects US defence spending to increase in a presidential election year but "these higher levels of spending will take time to benefit the mid-tier defence industry".
During the year, the group also completed its acquisition of the Electronic Products Division of Kratos Defense & Security Solutions, which was renamed as Ultra Electronics Herley. The company also introduced a new market segment structure and launched a Standardisation and Shared Services (S3) programme.
Investec said the 2015 results and guidance for 2016 were in line with its expectations. Net debt of £296m was better than the broker's expectation due to lower capital expenditure and an increased focus on working capital. However, the 4% increase in the full year dividend to 46.1p was 2% below Investec's forecasts.
"A new market-facing business structure, the launch of the S3 restructuring programme and the acquisition of Herley should help Ultra capture share in a recovering defence budget environment," said analyst Rami Myerson.
"We expect a return to organic growth and improving cash generation over the coming years to drive a re-rating of the shares. Buy."
The broker upped its full year 2016/2017 estimates for earnings before interest and tax, and earnings per share by less than 1%. Revenue forecasts for both periods were raised 2% to reflect a weaker sterling. However, the dividend estimate for 2016/17 was reduced by 4% and 7% respectively.
Credit Suisse stuck to its medium-term earnings forecasts for IAG on Monday, telling clients the company offered a "compelling" recipe for free cash flow.
Analysts Neill Glynn, Julia Pennington and Tim Ramskill kept their forecasts for the airline carrier´s earnings before interest and tax intact between 2016 and 2018 intact.
For 2016, they had penciled in EBIT of €3.6bn (£2.82bn), which was equivalent to 54% year-on-year growth and 11% ahead of the consensus estimate.
Free cash flow would benefit from a "limited encroachment" from competitors on BA, which would lead to pricing outperformance, with "benign" capacity growth in London-US/Europe looking "under-appreciated".
The latter was expected to grow by about 3% in 2016, which would ordinarily suggest "robust" pricing, without fuel tailwinds, the broker said.
In their opinion, markets were also ignoring the structural progress made by the carrier.
They pointed out how the company had "impressively" reduced unit costs, acquired Aer Lingus, agreed a Latam joint-business-agreement and grown closer to Qatar Airways.
Combined, those measures were worth €1.7bn in EBIT by 2020, they said.
Lastly, estimated 2016 free cash flow suggested the company had "ample scope" for cash distributions, the Swiss broker said in a research report sent to clients. | | |
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