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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 slide on falling oil prices despite ECB stimulus London stocks ended lower as a fall in oil prices offset a generous stimulus package from the European Central Bank.
Oil prices declines following reports that a meeting between global producers to discuss an output freeze is unlikely to take place on 20 March as Iran is yet to say whether it would take part in an agreement.
Brent crude dropped 2.64% to $40.01 per barrel and West Texas Intermediate declined 2.02% to $37.53 per barrel at 1628 GMT.
Meanwhile the ECB took more action than expected on Thursday to address prolonged low inflation and the global economic slowdown.
Analysts were surprised as the ECB slashed its main interest rate by 5 basis points (bps) to 0.00% and increased quantitative easing (QE) by €20bn.
The monthly purchases under the asset purchase programme will be expanded to €80bn starting in April. The market had priced in a €10bn increase.
The ECB also cut the deposit facility rate by 10bps to -0.40%, but the move was expected.
The decision to lower the marginal lending facility rate to 0.25% from 0.30%, however, was not anticipated.
Another surprise was that investment grade bonds issued by non-bank corporations will be included in the list of assets for regular purchases.
"The fact the ECB is still pursuing such extreme monetary policy paints a depressing picture of the European economy, and markets are beginning to question what central banks have left in the locker if the global economy slips back towards recession," said Laith Khalaf, senior analyst at Hargreaves Lansdown.
Elsewhere, China's consumer price index rose 2.3% in February from a year ago, beating analysts' forecasts for a 1.8% increase in line with the previous month's growth.
The key driver was a rise in food price inflation, supported by unusually colder weather and demand for the Chinese New Year celebrations.
Stateside, initial jobless claims fell to 259,000 in the week to 5 March from 277,000 the previous week, beating forecasts of 275,000.
In company news, Aviva rallied after revealing a 20% jump in annual operating profits, supported by the acquisition of Friends Life.
Shopping centre operator Intu Properties was also up after being upgraded to 'outperform' by Macquarie.
Direct Line slumped, having gone ex-dividend on Thursday. The company was due to pay 18p per share on 19 May, representing a dividend yield of 1.39%.
Morrison Supermarkets declined after the company said annual profits fell more than a quarter and like-for-like sales dropped 2.0%.
Hiscox slumped as it sold the Hong Kong division of its Asian business to Well Link Group for an undisclosed fee.
Ophir Energy gained as it reported a healthy cash balance in 2015 and said its deepwater liquefied natural gas Africa project, Fortuna, was likely to go ahead with final investment decision expected in the middle of this year. |
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| Market Movers
FTSE 100 (UKX) 6,036.70 -1.78%
FTSE 250 (MCX) 16,426.77 -0.99%
techMARK (TASX) 3,057.30 -1.29%
FTSE 100 - Risers
Intu Properties (INTU) 299.90p 1.49%
Aviva (AV.) 465.80p 1.35%
Randgold Resources Ltd. (RRS) 6,360.00p 1.11%
Shire Plc (SHP) 3,785.00p 1.07%
Schroders (SDR) 2,699.00p 0.52%
Fresnillo (FRES) 919.00p 0.44%
Legal & General Group (LGEN) 235.60p 0.43%
London Stock Exchange Group (LSE) 2,842.00p 0.32%
Imperial Brands (IMB) 3,703.00p 0.28%
Whitbread (WTB) 3,708.00p 0.19%
FTSE 100 - Fallers
Direct Line Insurance Group (DLG) 358.60p -9.19%
Ashtead Group (AHT) 787.00p -7.68%
Anglo American (AAL) 502.80p -5.19%
BHP Billiton (BLT) 790.50p -4.90%
Antofagasta (ANTO) 510.00p -4.58%
Barclays (BARC) 160.50p -4.58%
Standard Chartered (STAN) 448.50p -4.47%
Glencore (GLEN) 137.25p -4.19%
Royal Bank of Scotland Group (RBS) 221.80p -4.15%
GKN (GKN) 273.10p -3.67%
FTSE 250 - Risers
Savills (SVS) 691.00p 5.18%
DFS Furniture (DFS) 319.90p 3.96%
Entertainment One Limited (ETO) 149.80p 3.24%
Acacia Mining (ACA) 271.10p 2.50%
Sophos Group (SOPH) 220.60p 2.13%
Cairn Energy (CNE) 196.00p 2.03%
Amec Foster Wheeler (AMFW) 477.70p 1.90%
Auto Trader Group (AUTO) 375.50p 1.82%
Barr (A.G.) (BAG) 547.50p 1.77%
Grainger (GRI) 214.30p 1.76%
FTSE 250 - Fallers
OneSavings Bank (OSB) 256.10p -7.78%
Hiscox Limited (DI) (HSX) 915.00p -6.20%
Jupiter Fund Management (JUP) 384.40p -5.18%
Tullow Oil (TLW) 202.30p -5.16%
Countrywide (CWD) 357.40p -5.12%
B&M European Value Retail S.A. (DI) (BME) 269.80p -4.90%
Shawbrook Group (SHAW) 273.60p -4.67%
Morrison (Wm) Supermarkets (MRW) 192.90p -4.50%
Cobham (COB) 211.60p -4.25% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks end lower amid high volatility in banks European stocks finished the session with hefty losses after European Central Bank president Mario Draghi said the governing council did not see a need for further interest rate cuts at present, in turn boosting the value of the single currency, although some analysts still saw scope for further measures if needed.
Following Draghi's comments and increased worries about the impact which negative interest rates might have on lenders' margins and profitability, "it does seem more likely than not that Eurozone interest rates really have now reached their low," Dr. Howard Archer, chief UK+European economist at IHS Global Insight said in a research note sent to clients.
"It does look entirely possible though that the ECB could take further QE and liquidity measures should the downside risks to Eurozone inflation deepen further or even fail to ease."
Some analysts, a minority, expressed regret that the ECB had not moved towards a tiered system of interest rates, which some believe would help to protect banks' profit margins.
On 9 March, the International Monetary Fund's first deputy Managing Director, David Lipton, had warned against countries employing policies aimed at weakening their currencies.
The benchmark DJ Stoxx Europe 600 index finished down by 1.66% at 333.50 points and France's CAC 40 were both up 0.2%, while Germany's DAX was 0.3% higher.
A sector gauge of bank shares ended the session with losses of 0.22%, slipping by 0.34 points to 152.64 after hitting an intraday high above 160 points.
However, as of 14:42GMT, just after Draghi had begun speaking, the shares of all 30 lenders in the Euro Stoxx Banks Index had been trading higher, with the sector gauge registering an advance of 3.7%. In parallel, the Markit iTraxx Europe Index of credit-default swaps on the high-yield of 75 companies plummeted by over 40 basis points to 335.
West Texas Intermediate crude oil futures were down 2.4% to $37.38 a barrel and Brent crude down by 2.96% at $39.89 on the ICE, after a report indicated Iran was holding out from a meeting with other major oil producers to decide upon a freeze in their current levels of output.
The DJ Stoxx 600 Oil&Gas sector index closed with losses of 3.08% at 260.78 and that for Basic Resources off by 3.86% to 258.56.
Three-month copper futures edged down by 0.9% to $4,897.50 per metric tonne in LME trading.
In corporate news, Aviva was the standout gainer on the FTSE 100 after the insurer reported better-than-expected full year profit.
Societe Generale edged up as it announced plans to cut 550 jobs by 2020 in an attempt to streamline its operations and posted a drop in 2015 profit.
French supermarket operator Carrefour slipped despite posting a rise in full year operating profit.
German resources group K+S was in the red after it cautioned it would post a big drop in operating profit this year.
Shares in French media company Lagardere tumbled after disappointing results. |
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| | US Market Report | | US open: Stocks mixed after ECB move Wall Street was trading in a mixed fashion early on in the session, despite what most economists described as "bold" action from the European Central Bank to over-deliver on market expectations for monetary policy stimulus.
As of 15:49GMT the Dow Jones Industrials was lower by 1.81 points to 16,998.62, the S&P 500 up by 1.96 points at 1,991.22 while the Nasdaq Composite was off by just a touch, slipping lower by 0.86 points to 4,673.20.
In parallel, West Texas Intermediate crude oil futures were down 2.03% to $37.53 a barrel and Brent crude was 2.68% lower at $40.00.
According to reports citing Reuters, Iran was acting as a roadblock to a meeting between several of the world's major oil producers which was scheduled to take place in Russia, on 20 March.
The European Central Bank shifted all its main policy rates lower, increased the size of its monthly asset purchase programme by a larger-than-expected €20bn to €80bn and announced it would begin to invest in non-bank euro-denominated bonds.
Those announcements sent the yield on Spanish 10-year bond yields plunging by 20 basis points and the single currency promptly lower. However, the latter reversed its losses after Draghi said he did not foresee further interest rate cuts.
Initial weekly unemployment claims in the States dropped by 18,000 over the week ending on 5 March to reach 259,000, according to the Department of Labor.
That was well below the 275,000 the consensus was expecting.
"The key point here is that claims remain close to their cycle - and all-time - lows, signalling no distress at all in the labor market, despite the obvious severe weakness in the energy sector and related manufacturing. These sectors are very small and their woes are being offset by strength elsewhere," Ian Shepherdson, chief economist at Pantheon Macroeconomics said in a research note sent to clients.
In corporate news, Box, an online file sharing and content management service, posted a smaller-than-expected loss of 26 cents per share for the fourth quarter, on revenue of $85m.
Meanwhile, mobile payments company Square said gross payment volume increased 47% in the fourth quarter to $10.2bn.
Nasdaq said it would acquire International Securities Exchange for $1.1bn. |
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| | Broker Tips | | Broker tips: SIG, Rolls-Royce, G4S SIG's rating was retained at 'buy' but its target was lowered to 160p from 165p by Canaccord Genuity after the building products firm reported its full year results.
The group posted a 1.4% drop in revenue to £2.67bn on Wednesday, hurt by foreign exchange movements in Europe and weak trading.
Pre-tax profit increased 31.5% to £51.3m, but it reflected the previous year's profits being slashed due to costs associated with the disposal of businesses.
Chief executive Stuart Mitchell said that the company's full year had been "adversely affected" by market conditions. However, he said the company had taken steps to cut costs to support growth in 2016.
"While the group continues to face some challenges this year (minimal product price inflation, competitive backdrop and stretched balance sheet), we retain our Buy in view of an undemanding valuation and some offsetting benefits this year of currency gains, a good start to the year, cost savings and organic growth initiatives," said Canaccord analysts Aynsley Lammin and Matthew Walker .
"While we highlight the potential medium-term value in the shares, a sustained recovery in Europe and the UK, operating margins moving to over 4.5%, deleveraging and retaining more of the cost savings are required for the share price to see a sustained recovery."
The analysts said the target was lowered due to higher debt levels than previously assumed. Net debt at 31 December 2015 increased to £235.9m from £126.9m in 2014.
Canaccord expects earnings per share of 12.2p and 14.0p for 2016 and 2017 respectively. The 2016 estimate was left unchanged from prior projections but the 2017 was down from the previous 14.3p expected.
Shares in aerospace and defence group Rolls-Royce were in the red after Goldman Sachs downgraded the stock to 'neutral', removing it from the bank's Pan European buy list.
It noted that since being added to the list on 29 September 2015, the stock is up 10% versus the FTSE World Europe up 4.5%, despite consensus 2016 EBIT forecasts dropping 35%.
Goldman said Rolls significantly underperformed in the fourth quarter on the back of the November profit warning, but year-to-date the shares are up 23%, versus the FTSE World Europe down 2.3%.
"We continue to expect cash conversion to improve from 2017; however, given the share price performance so far through 2016, we think this, along with the prospect for EBIT improvement (from 2017E onwards), is now reflected in the share price."
The bank's 2016-18 EBIT forecasts drop 5%, 3% and 4%, respectively, driven by more significant headwinds in the Large Engine aftermarket and higher costs in the Marine division.
Goldman nudged its 12-month price target up to 725p from 711p.
Barclays downgraded G4S to 'equalweight' from 'overweight' and slashed the price target to 200p from 310p following the company's 2015 results on Wednesday.
The security firm said pre-tax profit fell to £78m from £128m the previous year as it highlighted contract provisions of £65m, restructuring of £44m, losses on businesses being sold or closed of £40m and non-cash charges of £106m relating to the amortisation/impairment of goodwill.
It also cautioned that it could lose a further £57m if the UK government decides to extend a contract to house asylum seekers in Britain.
Barclays said that while weakness in the shares makes it tempting to be contrarian and argue this is a buying opportunity, the reality is that a tougher outlook for emerging markets and the UK is likely to mean G4S's underlying performance remains sluggish.
In addition, it said the path to lower debt is a long one and likely to include a credit downgrade along the way.
"If we had the luxury of ignoring the near term challenges, the business should still offer defensive growth accompanied by self-help and the 12x PE is at the low end of those in the sector.
"However, trading challenges and a dented confidence in management's ability are likely to mean the shares stay cheap, for the time being."
The bank cut its 2016 earnings per share estimate to 16p from 18.1p and its 2017 forecast to 16.6p from 20.7p. |
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