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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 finishes higher as BoE keeps interest rates unchanged The FTSE 100 finished higher on Thursday as the Bank of England decided to keep interest rates unchanged.
The BoE unanimously agreed to maintain rates at 0.5% and leave the asset purchase programme at £375bn, as expected by analysts.
The decision to stand pat on policy comes amid concerns about weak wage growth, low inflation and a global economic slowdown. Political uncertainty surrounding Britain's 23 June referendum on its European Union membership was also taken into account.
"There appears to be increased uncertainty surrounding the forthcoming referendum on UK membership of the European Union," the BoE's Monetary Policy Committee said in the minutes of the March meeting.
"That uncertainty is likely to have been a significant driver of the decline in sterling. It may also delay some spending decisions and depress growth of aggregate demand in the near term."
The decision follows the same path taken by the Federal Reserve and the Bank of Japan this week to stand pat on policy measures.
The Fed said on Wednesday that it now expects to raise rates twice this year compared to December's prediction for four rate hikes.
Elsewhere, the Eurozone's consumer price index was confirmed at a 0.2% year-on-year fall in February. On the month, however, inflation was revised to 0.2% growth from a previous estimate of 1.4% deflation.
"Price growth has been marginal at best in recent months, and this was likely a factor behind the European Central Bank's surprise stimulus package last week," said Dennis de Jong, managing director at UFX.com.
"ECB president Mario Draghi has already significantly scaled back inflation projections, and he'll be concerned with the prospect that negative interest rates may be required to fend off a slide into deflation."
Stateside, initial jobless claims rose to 265,000 in the week to 12 March from 258,000 the previous week, the Labor Department revealed. Analysts had pencilled in 268,000 claims.
Manufacturing conditions in the Philadelphia region improved far more than expected in March, turning positive for the first time in seven months, according to the latest report from the Federal Reserve Bank of Philadelphia.
The diffusion index rose from a reading of -2.8 in February to 12.4, by far exceeding economists' expectations for a reading of -1.7.
Meanwhile, oil prices rallied with Brent crude rising 2.5% to $41.38 per barrel and West Texas Intermediate increasing 3.5% to $39.87 per barrel at 1631 GMT.
In company news, mining stocks including Anglo American, Glencore, Antofagasta, Fresnillo and BHP Billiton were the biggest risers as metal prices surged.
Rio Tinto was also higher after saying chief executive Sam Walsh will retire from the business on 1 July 2016 and will be succeeded by the chief executive of the copper and coal division Jean-Sébastien Jacques.
Barclays shares were in the red, as investing tycoon Terry Smith announced he was suing the bank for "atrocious" customer service, after it failed to complete a £330,000 transfer he was going to use for an investment.
Other banks including HSBC and Royal Bank of Scotland were also under the cosh.
OneSavings Bank surged after saying full year underlying profit before tax was up 52% to £105.9m, and loans and advances grew 31% to £5.1bn.
AG Barr and Britvic slumped after Chancellor George Osborne announced in Wednesday's Budget that the government will tax soft drinks manufacturers who put large amounts of sugar in their drinks. |
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| Market Movers
FTSE 100 (UKX) 6,188.33 0.21%
FTSE 250 (MCX) 16,827.86 0.45%
techMARK (TASX) 3,072.74 -0.75%
FTSE 100 - Risers
Fresnillo (FRES) 1,007.00p 9.99%
Anglo American (AAL) 540.90p 9.78%
Glencore (GLEN) 158.00p 9.49%
Antofagasta (ANTO) 537.50p 8.28%
BHP Billiton (BLT) 822.00p 7.68%
Randgold Resources Ltd. (RRS) 6,645.00p 7.61%
Rio Tinto (RIO) 2,034.00p 5.42%
Aberdeen Asset Management (ADN) 289.00p 4.45%
Rolls-Royce Holdings (RR.) 701.50p 3.85%
Hikma Pharmaceuticals (HIK) 1,881.00p 3.64%
FTSE 100 - Fallers
Worldpay Group (WI) (WPG) 275.10p -2.48%
Shire Plc (SHP) 3,568.00p -2.38%
Barclays (BARC) 160.60p -2.07%
easyJet (EZJ) 1,485.00p -2.04%
Carnival (CCL) 3,464.00p -1.93%
British American Tobacco (BATS) 4,042.00p -1.82%
HSBC Holdings (HSBA) 449.20p -1.75%
Inmarsat (ISAT) 917.50p -1.61%
InterContinental Hotels Group (IHG) 2,761.00p -1.60%
AstraZeneca (AZN) 3,946.50p -1.46%
FTSE 250 - Risers
OneSavings Bank (OSB) 309.50p 21.75%
Clarkson (CKN) 2,098.00p 10.54%
Evraz (EVR) 86.35p 6.93%
Centamin (DI) (CEY) 97.55p 6.50%
Acacia Mining (ACA) 272.30p 5.62%
Weir Group (WEIR) 1,082.00p 5.56%
Vedanta Resources (VED) 314.90p 5.39%
Marshalls (MSLH) 345.80p 5.11%
Ashmore Group (ASHM) 290.00p 5.07%
Ocado Group (OCDO) 298.40p 4.59%
FTSE 250 - Fallers
Barr (A.G.) (BAG) 512.50p -5.18%
Millennium & Copthorne Hotels (MLC) 399.80p -4.29%
St. Modwen Properties (SMP) 303.70p -3.34%
CLS Holdings (CLI) 1,490.00p -3.31%
Worldwide Healthcare Trust (WWH) 1,663.00p -3.26%
Jimmy Choo (CHOO) 130.90p -3.04%
Mitchells & Butlers (MAB) 266.20p -2.53%
Lookers (LOOK) 162.60p -2.46%
Playtech (PTEC) 814.00p -2.46% |
| | Award-winning ISA investing with The Share Centre | | We’re proud to have won ‘Self-select ISA provider of the year’ at the 2015 ADVFN Awards, due to our outstanding customer service, fixed account fees and dealing commission from £7.50 per deal.
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares drop as euro and Japanese yen snap higher European stocks reversed opening gains to trade lower as the euro and yen advanced against the US dollar, after being hit by the Federal Reserve's dovish stance on Wednesday.
The benchmark DJ Europe Stoxx 600 index slipped 0.09% to 340.68, Germany's DAX was 0.91% lower at 9.892.20 and France's CAC 40 was off 0.45% to 4,422.89. Europe's single currency gained 0.94% to 1.1320 versus the greenback.
London's FTSE 100 on the other hand advanced, propped up by sharp gains among miners.
For its part, the Bank of England left interest rates and the size of its asset purchase programme on hold at 0.5% and £375bn, as widely expected. The MPC noted the impact which uncertainty around the referendum was having on the economy which, predictably, but probably erroneously, led some observers to declare that it had entered into the political fray ahead of the referendum.
Oil prices were in the black, with West Texas Intermediate 3.63% firmer at $39.97 a barrel and Brent crude up 2.514% at $41.38.
Overnight on Wednesday, the Federal Reserve left the target range for the benchmark federal funds rate unchanged at 0.25% to 0.5%, as widely expected, but the accompanying statement was much less hawkish than expected.
The Fed, which lifted interest rates for the first time in nearly a decade back in December, said rate rises this year would be more gradual than previously thought, with two on the cards versus the four projected at the end of last year.
"Proceeding cautiously will allow us to verify that the labour market is continuing to strengthen given the economic risks from abroad," said Fed chairwoman Janet Yellen.
The Fed's decision was in contrast to recent moves from the Bank of Japan and the European Central Bank, both of which took interest rates into negative territory.
Stocks had opened in the black but the gains soon evaporated as the dollar was knocked by the Fed's dovish stance, with a stronger euro weighing on European exporters.
"The economic projections that accompanied the release betrayed the Fed's dovish turn. Forecasts for inflation were significantly worse than the last projections in December, and member "dot plot" estimations of interest rates had largely moved below 1%. The Fed has backed down from its earlier optimism and despite to raise rates above 1% this year, and last night's releases made this very clear," said Monex.
The euro also got a boost from data showing inflation in the Eurozone rose more than expected in February.
On a month-on-month basis, the consumer price index was up 0.2% versus a consensus estimate of a 0.1% rise and a big reversal from the 1.4% drop in January.
On the year, CPI remained in negative territory, at -0.2%, as forecast, according to the figures released by Eurostat.
The core rate, which strips out volatile items like fuel and food prices, printed at 0.8%, beating forecasts of 0.7%.
In corporate news, Deutsche Lufthansa slid after it forecast weak earnings growth for 2016.
Anglo American surged in London as metals prices pushed up, while Rio Tinto rose on news chief executive Sam Walsh will retire in July after three years in the job. |
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| | US Market Report | | US open: Stocks mixed after FOMC rate decision US stocks were mixed on Thursday as traders continued to weigh the Federal Reserve's policy announcement from the previous session.
At 1554 GMT, the Dow Jones Industrial Average rose 0.56%, the S&P 500 increased 0.36% but the Nasdaq fell 0.16%.
On Wednesday, the Federal Reserve left the target range for the benchmark federal funds rate unchanged at 0.25% to 0.5%, as widely expected, but the accompanying statement was less hawkish than anticipated.
The Fed, which lifted interest rates for the first time in nearly a decade back in December, now expects two rate rises in 2016, down from the four projected at the end of last year.
"Proceeding cautiously will allow us to verify that the labour market is continue to strength given the economic risk from abroad," said chairwoman Janet Yellen.
"Such caution is appropriate given short - term interest rates are still near zero, which means monetary policy has greater scope to respond to upside than downside changes in the outlook," she said.
The US central bank said that although the labour market was improving, it was still looking for inflation to reach its 2% target and reckoned the economy would continue to expand at a moderate pace.
Societe Generale now expects one rate hike in 2016.
In economic data, initial jobless claims rose to 265,000 in the week to 12 March from 258,000 the previous week, the Labor Department revealed. Analysts had penciled in 268,000 claims.
Manufacturing conditions in the Philadelphia region improved far more than expected in March, turning positive for the first time in seven months, according to the latest report from the Federal Reserve Bank of Philadelphia.
The diffusion index rose from a reading of -2.8 in February to 12.4, by far exceeding economists' expectations for a reading of -1.7.
Oil prices were in the black with West Texas Intermediate up 3.5% at $39.88 a barrel and Brent crude 2.4% firmer at $41.37.
In corporate news, shares in FedEx surged after its third-quarter results released late on Wednesday came in better than expected.
Office Depot rallied after The New York Post said Amazon.com might bid for its corporate business unit. |
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| | Broker Tips | | Broker tips: OneSavings Bank, UK housebuilders, InterContinental Hotels OneSavings Bank's shares surged on Thursday as Investec reiterated its 'buy' rating and target of 380p after the company reported a jump in full year profits.
The company reported underlying profit before tax was up 52% to £105.9m in 2015, and loans and advances grew 31% to £5.1bn.
The FTSE 250 firm's cost to income ratio was further reduced during the calendar year, to 26% from 28%, which the board put down to strong income growth and a focus on cost control and efficiency.
Underlying return on equity increased to 32% from 31%, and underlying basic earnings per share were up 43% to 34.8p from 24.4p. Its fully-loaded Common Equity Tier 1 capital ratio also strengthened, to 11.6% from 11.4%.
"We see OSB as a reassuringly predictable story which delivers extraordinary returns on a consistent basis," said Investec analyst Ian Gordon.
"As such, it is something of a mystery to us as to why analysts/investors have been so fickle; the stock fell c.40% in four months ahead of today's numbers!"
Gordon said the second half reported earnings per share (EPS) of 19.1p was 1% below Investec's "top-of-range" forecast of 19.36p but 22% ahead of Bloomberg consensus of 15.7p.
"As a reminder, we continue to believe that Aldermore (Buy) - our top pick - offers a more transparent, defensive and diversified story which, on a 12 month view is likely to deliver material outperformance against every UK bank in our coverage.
"However, OneSavings has now displaced it as the "cheapest", trading on just 7.5x 2015e EPS, or, perhaps more remarkably, just 5.5x 2017e."
HSBC initiated coverage of UK housebuilders saying the sector offers exposure to an area of real undersupply, with the UK government "largely pulling out all the stops to help".
It started Barratt Developments, Bellway, Berkeley, Bovis Homes, Crest Nicholson, Galliford Try, McCarthy & Stone, Persimmon, Redrow, and Taylor Wimpey all at 'buy'.
"In simple terms, for a sector that we predict in 2016 will be delivering an average 17% post-tax return on invested capital and a 20% return on equity, it instinctively does not seem right for it to be rated on an average 2016e price-to-earnings ratio of just over 10x with a 5% dividend yield.
"Indeed, by 2018 we estimate that some shares may offer dividend yields as high as 7%."
HSBC said that in world concerned about oversupplied situations globally, this sector offers the reassurance of the long build-up of an undersupply of UK housing versus new annual household formations.
It expects this situation to persist unless, post a potential Brexit, the UK is unable to come up with sensible working visa arrangements, and the 3 million non-British EU nationals simply become unwelcome and depart en masse.
The bank's key calls are Bellway for good value, Crest Nicholson for growth with income and Galliford for self-help.
As far as Redrow is concerned, HSBC said it was more positive than most, as the group's strategy deserves a much higher rating than it is currently being penalised with.
On Bellway and Redrow, it said the current valuations are penalising them for not having as high a dividend payout as the others in the sector and look very overdone given the growth opportunities available.
In addition, HSBC pointed to the UK government's numerous initiatives to help bridge the gap between supply and demand in the housing government, with Help to Buy being one of the key schemes.
It also highlighted the Starter Homes scheme and the Private Rented Sector initiative, which aims to increase investment by institutional investors in the PRS, where all the properties are built for rent, not sale.
InterContinental Hotels Group was under pressure after Morgan Stanley downgraded its rating on the stock to 'equalweight' from 'overweight' as the shares approach its 3,050p price target with a more balanced risk-reward.
MS noted the stock has enjoyed a fairly strong performance this year and its 2017 price-to-earnings ratio is now close to its US-listed peer multiples.
Still, it continues to believe the business is attractive.
"We have been long-term supporters of IHG. It has an attractive fee-based asset-light model, a large pipeline, strong free cash flow, and scope to continue to generate double-digit EPS growth," the bank said.
It pointed out that IHG will pay a $1.5bn special dividend in May - with a share consolidation, so structured as a 16% share buyback - and with continuing strong free cash flow MS estimates that it could retire an additional 40% of its market capitalisation by 2020.
Morgan Stanley said revenue per available room trends were mixed. US RevPAR is up 2.2% year-todate versus 2016 guidance of 2-5% for the listed US hoteliers, and the bank forecasts US RevPAR +4% in 2016.
"However, while we expect an acceleration from here, RevPAR trends disappointed in 2H15, Morgan Stanley economists have been becoming more cautious, and IHG's RevPAR has been underperforming peers." |
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