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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 closes higher as oil prices gain The FTSE 100 closed higher on Friday as oil prices rose following reassuring comments from the International Energy Agency.
The International Energy Agency said there are signs that "prices might have bottomed out" and there "may be light at the end of what has been a long, dark tunnel".
The Paris-based organisation said in its monthly report that it expects that oil production outside the OPEC cartel will fall by 750,000 barrels a day this year -150,000 barrels a day more than it estimated last month - easing concerns about the supply glut.
At 1616 GMT, Brent crude rose 0.15% to $40.11 per barrel and West Texas Intermediate increased 0.99% to $38.22 per barrel.
Meanwhile, investors continued to digest Thursday's ECB policy announcement.
The ECB unexpectedly slashed its main interest rate by 5 basis points (bps) to 0.00% and increased quantitative easing by €20bn to €80bn per month, starting in April. The market had priced in a €10bn increase to asset purchases.
The ECB also cut the deposit facility rate by 10bps to -0.40% and the marginal lending facility rate to 0.25% from 0.30%.
Equities had closed in the red on Thursday despite the bigger-than-expected stimulus package but the markets seemed to have a more positive view on Friday.
"Overall it looks like the ECB has been given a vote of confidence, even if it took 24 hours for the result to come through," said Chris Beauchamp, senior market analyst at IG.
In the UK, the Office for National Statistics said the total trade deficit narrowed to £3.459bn in January from a revised £3.699bn in December.
The deficit in goods alone narrowed to £10.289bn from a revised £10.450bn, in line with economists' forecasts.
However, the goods trade deficit with the European Union widened to a record high of £8.090bn in January from £7.428bn as British imports increased.
The British Chambers of Commerce cut its forecasts for UK economic growth this year, blaming the global slowdown. The BCC has forecast gross domestic product will rise 2.2% in 2016 and increase 2.3% in 2017, compared to December projections for 2.5% growth this year and next.
"Our forecast should stand as a wake-up call," said Adam Marshall, acting director general of BCC. "The UK's economic performance is reasonably good when measured against our main competitors, but it's only mediocre when compared against long-term trends."
Across the Atlantic, import prices fell for an eighth straight month in February although less than analysts had expected. The Labor Department said import prices dropped 0.3% last month after a revised 1.0% decrease in January. Analysts had pencilled in a 0.7% slide.
In company news, Aviva's shares continued to gain a day after reporting a 20% increase in full year operating profit that was better than expected.
Old Mutual edged lower as the company said it will separate its four underlying businesses - Old Mutual Emerging Markets (OMEM), Nedbank, Old Mutual Wealth (OMW) and OM Asset Management (OMAM). The group also reported annual revenue fell 12% to £13.7bn and adjusted pre-tax operating profit rose 4% to £1.7bn, although it was up 11% at constant exchange rates.
Marks & Spencer slumped as Bank of America Merrill Lynch downgraded the stock to 'underperform' from 'neutral' and slashed the price target to 385p from 480p saying a recovery in apparel remains elusive.
Marshalls rallied after it posted a 57% rise in full year pre-tax profit to £35.3m on the back of an 8% jump in revenue as it completed the first phase of its plans to return to profits.
Pensions provider Just Retirement was also a high riser after it said six-month pre-tax profits rose to £26.1m compared to a £9.2m loss the same period a year ago.
Acacia Mining was weaker after UBS downgraded the stock to 'neutral' from 'buy' on the back of share price strength and uncertainty over the Bulyanhulu mine.
Looking ahead, the Federal Open Market Committee meets on 16 March. The Federal Reserve is widely expected to stand pat on rates but the announcement will be eyed for any clues on the path for interest rates.
The Bank of England will meet on 17 March and is also anticipated to keep policy unchanged. |
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| Market Movers
FTSE 100 (UKX) 6,138.03 1.68%
FTSE 250 (MCX) 16,597.98 1.30%
techMARK (TASX) 3,082.45 0.82%
FTSE 100 - Risers
Aviva (AV.) 494.70p 6.20%
St James's Place (STJ) 894.00p 4.75%
Hargreaves Lansdown (HL.) 1,273.00p 4.43%
Standard Chartered (STAN) 467.80p 4.30%
RSA Insurance Group (RSA) 452.80p 4.19%
CRH (CRH) 1,936.00p 4.14%
Hammerson (HMSO) 568.00p 4.12%
Barclays (BARC) 165.80p 3.69%
3i Group (III) 437.90p 3.67%
Royal Bank of Scotland Group (RBS) 229.60p 3.56%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 397.50p -2.26%
Old Mutual (OML) 181.90p -1.83%
Randgold Resources Ltd. (RRS) 6,310.00p -0.79%
Schroders (SDR) 2,689.00p -0.37%
Shire Plc (SHP) 3,781.00p -0.11%
Ashtead Group (AHT) 785.00p 0.00%
SABMiller (SAB) 4,220.50p 0.04%
United Utilities Group (UU.) 894.00p 0.28%
Rexam (REX) 612.00p 0.41%
Unilever (ULVR) 3,095.50p 0.45%
FTSE 250 - Risers
Marshalls (MSLH) 335.00p 11.11%
IP Group (IPO) 173.70p 6.50%
Vedanta Resources (VED) 332.70p 6.12%
Crest Nicholson Holdings (CRST) 526.50p 4.67%
Weir Group (WEIR) 1,037.00p 4.59%
Genus (GNS) 1,474.00p 4.54%
Hiscox Limited (DI) (HSX) 956.50p 4.25%
Henderson Group (HGG) 254.80p 4.08%
Amec Foster Wheeler (AMFW) 497.20p 4.08%
TR Property Inv Trust (TRY) 288.50p 3.78%
FTSE 250 - Fallers
Ted Baker (TED) 2,790.00p -2.89%
Restaurant Group (RTN) 396.90p -2.63%
OneSavings Bank (OSB) 249.40p -2.62%
Acacia Mining (ACA) 265.60p -2.32%
PayPoint (PAY) 717.50p -2.11%
Paddy Power Betfair (PPB) 9,320.00p -1.95%
Petrofac Ltd. (PFC) 929.00p -1.54%
Mediclinic International (MDC) 921.50p -1.39%
Circassia Pharmaceuticals (CIR) 259.30p -1.33% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Banks lead rally as investors digest ECB policy moves European stocks bounced back on Friday, with banks leading the charge as investors reassessed the implications of the European Central Bank's latest stimulus measures.
The benchmark DJ Stoxx Europe 600 index was up 2.62% by the close, Germany's DAX was 3.51% higher and France's CAC 40 was 3.27% firmer.
Banks were the standout gainers, with the Stoxx 600 index for the sector up 4.84% at 159.56, just a tad below the previous session's intra-day highs.
"Overall perhaps the eventual negative market reaction was due to the increasing realisation that this meeting might mark the point where focus shifts from easing being solely for the financial markets to one where it's aimed at improving credit in the economy.
"By association this may explain the significant rally in the Euro as markets feel that the game of trying to weaken the currency is shifting," Deutsche Bank's Jim Reid said to clients in a research note.
To take note of, on Friday ECB vice president Vitor Constancio took the unsual step of defending the monetary authority's policies in an article posted to the central bank's website. In his opinion, monetary policy was just about the only lever left to authorities if they wanted to buoy economic activity and inflation over the next two years.
Longer-term sovereign bond yields in the euro area periphery were also moving lower, as one might have expected after the ECB's announcement, although euro/dollar was little changed, drifting lower by just 0.01% to 1.1175 by the close of trading.
At the same time, West Texas Intermediate was up 2.02% to $38.62 a barrel and Brent crude was 0.79% stronger at $40.37. The Stoxx 600 oil and gas index advanced 2.56%.
The International Energy Agency said in its monthly report there are signs oil prices "might have bottomed out" and there is now "light at the end of what has been a long dark tunnel".
On Thursday, the European Central Bank slashed its main interest rate by 5 basis points to 0.00% and increased quantitative easing by €20bn to €80bn from April. Market participants had been expecting a €10bn increase.
In addition, the central bank cut the deposit facility rate by 10bps to -0.40% and lowered the margin lending facility rate to 0.25% from 0.30%.
Stocks flew higher on the news but soon reversed course as ECB chief Mario Draghi said in the press conference that policymakers were concerned that pushing rates too low could impact balance sheets, pouring cold water over prospects for further rate cuts.
"After initially surging on yesterday's ECB headlines they subsequently sold off hard on Draghi's 'no more rate cuts' comment (how very short-sighted)," said Mike van Dulken, head of research at Accendo Markets.
"They have since recovered after realising that Super Mario still delivered more than markets were anticipating (more QE, wider QE, more rate cuts, attractive LTROs) and, more importantly, is a man of his word, prepared to do 'whatever it takes'. So we may well be trading down for the week, but we are well off the lows (in some cases back just shy of highs) and with some bold central bank action safely banked."
In corporate news, Deutsche Bank was on the front foot despite warning that of a challenging first quarter.
London-listed pub chain JD Wetherspoon was also in the black after reporting a 6.2% increase in first half revenues but a drop in profit. |
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| | US Market Report | | US open: Stocks rally as oil prices edge higher US stocks rallied on Friday as oil prices rose and data showed import prices fell less than expected last month.
At 1430 GMT, the Dow Jones Industrial Average was up 0.27%, the S&P 500 rose 0.47% and the Nasdaq increased 0.26%.
Oil prices gained after the International Energy Agency (IEA) said in its monthly report that there are signs oil prices "might have bottomed out" and there is now "light at the end of what has been a long dark tunnel".
The IEA estimated that oil production outside the OPEC cartel will fall by 750,000 barrels a day this year - 150,000 barrels a day more than it estimated last month - easing concerns about the supply glut.
West Texas Intermediate jumped 1.66% to $38.48 per barrel and Brent crude increased 1.18% to $40.53 per barrel at 1357 GMT.
US import prices fell for an eighth straight month in February although less than analysts had expected. The Labor Department said import prices dropped 0.3% last month after a revised 1.0% decrease in January. Analysts had pencilled in a 0.7% slide.
Meanwhile, investors continued to digest Thursday's European Central Bank policy announcement.
The ECB slashed its main interest rate by 5 basis points to 0.00% and increased quantitative easing by €20bn to €80bn from April, which was more than the €10bn market participants had been expecting.
In addition, the central bank cut the deposit facility rate by 10bps to -0.40% and lowered the margin lending facility rate to 0.25% from 0.30%.
Stocks initially surged on the news but soon reversed course as ECB chief Mario Draghi said in the press conference that policymakers were concerned that pushing rates too low could impact balance sheets, denting prospects of further rate cuts.
"It's amazing what the concept of an extra €20 billion of QE working its way into the markets on a monthly basis can do for confidence," said Alastair McCaig, market analyst at IG.
"Expectations had been high, and to be fair the ECB delivered at the top of the range. Traders though are a cynical bunch, and the extent of stimulus measures was taken as a signal of how worried the ECB was about the current state of affairs in Europe, as opposed to how determined it was to help improve the outlook."
The next big focus for investors will be the rate announcement by the Federal Open Market Committee on 16 March.
The Federal Reserve is widely expected to stand pat on rates but the announcement will be eyed for any clues on the path for interest rates.
In corporate news, Ulta Salon Cosmetics & Fragrance shares surged after its fourth quarter numbers beat analysts' expectations.
Regeneron Pharmaceuticals edged higher after the biotechnology company said its rheumatoid arthritis drug had met its primary endpoint and was superior to a competitor's drug when it came to improving symptoms. |
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| | Broker Tips | | Broker tips: Imagination Technologies, M&S, Anglo American Imagination Technologies surged on Friday after N+1 Singer upgraded the stock to 'buy' from 'hold' and lifted the price target to 191p from 151p following a visit to the company's headquarters in Kings Langley.
In its last note, N+1 outlined a scenario where the group reduced research and development costs by a further £8.5m. It said on Friday that this scenario looked increasingly likely, hence the upgrade.
"Post the visit we remain convinced that the group's core platforms are well aligned with the emerging trends in the industry," the brokerage said.
N+1 Singer reckons the current trading environment will continue to be tough, but given the strength of the group's unique intellectual property, it said any material weakness in the share price could bring potential bidders for the company out of the woodwork.
It said Imagination was a highly attractive asset and expects any bid to be higher than its new target.
"We believe the group's IP has significant strategic value and that the new executive team is committed to maximising shareholder value."
Bank of America Merrill Lynch downgraded Marks & Spencer to 'underperform' from 'neutral' and slashed the price target to 385p from 480p saying a recovery in apparel remains elusive.
The bank downgraded its full year 2017 and 2018 earnings per share estimates by 5%, putting it 7% below consensus. This is based on the continued decline in like-for-like growth in the General Merchandise division and lower gross margin improvement.
Merrill reckons trading remained relatively subdued in the fourth quarter, especially in GM, and forecasts LFL sales growth of -2.8% in that division in Q4, with continued market share losses.
The bank said it expects new CEO Steve Rowe to give an honest assessment of the state of the company in May.
"In terms of opex, we see less flexibility to manage opex more aggressively next year, given the introduction of the national living wage in April 2016, and M&S's need to pay its staff more competitively."
Execution needs to be improved in many areas across the supply chain such as design and availability, and price points are out of kilter in some areas, especially across the core ranges, Merrill said.
It said that while the dividend yield of around 4.5% provides some support, there is limited scope for growth and Merrill sees better investment opportunities in the sector.
Exane BNP Paribas downgraded Anglo American to 'underperform' from 'neutral' on valuation grounds and to reflect challenges associated with restructuring plans.
It also downgraded South32 and Antofagasta to 'neutral' from 'outperform', both on vauation grounds.
The bank said sentiment on Anglo has changed drastically over the past month, with the shares more than doubling since their 20 January low.
"The market had probably priced excessive fears at the end of FY15; commodity prices have now stabilised and the group has partly reassured on its ability to avoid burning cash this year," Exane said.
Nevertheless, it reckons the shares have now run ahead of what the group can deliver short - term while significant headwinds remain, with current iron ore and platinum prices at odds whit fundamentals.
In addition, it said restructuring remains a challenge and there is a risk the company will disappoint on disposals again this year.
As far as Antofagasta is concerned, it said copper prices hold long-term upside and the company is well positioned with its low cost assets and strong balance sheets.
"However, we believe these features are now fully discounted after the recent bounce in the shares (+53% from January lows)."
The bank has a 430p price target on Anglo and 580p on Antofagasta.
Exane downgraded South32 but lifted the price target to 75p from 70p, saying it was a genuine restructuring story but this was priced in. |
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