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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 rise on UK manufacturing data, rally in oil prices The FTSE 100 closed in positive territory on Wednesday after data on UK manufacturing and industrial production beat forecasts and as oil prices rallied.
UK manufacturing production in January fell 0.1% compared to a year ago and rose 0.7% compared to a month ago, beating forecasts for a 0.7% year-on-year drop and a 0.2% month-on-month increase.
Industrial production increased 0.2% in January on the year, ahead of analysts' estimates for zero growth. However, month-on-month figures were worse than expectations for a 0.4% rise, climbing 0.3%.
"For a much-maligned sector it was a welcome relief, especially given last week's woeful PMI, even if the report wasn't unequivocally good news, the mining and energy sectors continuing to struggle," said Connor Campbell, financial analyst at Spreadex.
Oil prices gained as government data showed US crude stockpiles rose in line with analysts' expectations. Crude stocks increased 3.9m barrels to a total 521.9m barrels in the week to 4 March as predicted, according to the Energy Information Administration.
Total motor gasoline stockpiles fell 4.5m barrels, and distillate fuel stocks dropped 1.1m barrels. Production figures were broadly unchanged.
"Oil inventories were up again, while production flatlined, but markets opted to just look at the drawdown in gasoline stockpiles," said IG's senior market analyst Chris Beauchamp.
"Cherry picking of data has long been a theme in stock markets, but now commodities appear to be playing along too."
Meanwhile, US wholesale inventories rose 0.3% in January, smashing estimates for a 0.2% decline.
On the downside, the National Institute of Economic and Social Research said UK economic growth slowed over the last three months. NIESR said its monthly estimates of GDP suggested UK economic output slowed to 0.3% in the three months to end-February, down from the 0.4% growth in the three months ending in January.
In company news, Prudential's shares surged after it posted an annual pre-tax profit of £4bn, up 22% on the previous year, boosted by strong performances at its British, US and Asian life insurance businesses.
Ashtead slumped after Credit Suisse downgraded the stock to 'underperform' from 'outperform' and slashed the price target to 770p from 1,300p.
The Restaurant Group was under the cosh after saying 2015 like-for-like sales faltered as the challenging trading conditions from the end of last year continue into 2016 and look set to linger for longer.
DS Smith rallied after saying in a trading update that volumes and financial returns continue to grow despite ongoing challenging market conditions.
Cairn Energy jumped as it said it was "delighted" with the results of a second successful test well out of three drilled offshore Senegal, with oil flowing at rates that bode well for the wider field.
SSE advanced after JPMorgan lifted its rating on the utility to 'overweight' from 'underweight' and upped the price target to 1,550p from 1,280p. |
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| Market Movers
FTSE 100 (UKX) 6,155.35 0.49%
FTSE 250 (MCX) 16,616.37 -0.23%
techMARK (TASX) 3,097.78 -0.11%
FTSE 100 - Risers
Prudential (PRU) 1,365.00p 2.90%
Glencore (GLEN) 143.25p 2.50%
SSE (SSE) 1,466.00p 2.16%
Royal Dutch Shell 'A' (RDSA) 1,694.50p 2.14%
Berkeley Group Holdings (The) (BKG) 3,000.00p 2.11%
Schroders (SDR) 2,691.00p 1.97%
Royal Dutch Shell 'B' (RDSB) 1,695.50p 1.92%
Taylor Wimpey (TW.) 176.40p 1.85%
DCC (DCC) 5,710.00p 1.78%
Reckitt Benckiser Group (RB.) 6,580.00p 1.70%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,364.00p -6.70%
Barclays (BARC) 168.20p -2.21%
Standard Chartered (STAN) 470.90p -2.00%
Aberdeen Asset Management (ADN) 270.50p -1.89%
St James's Place (STJ) 865.00p -1.70%
Shire Plc (SHP) 3,745.00p -1.29%
Lloyds Banking Group (LLOY) 69.77p -1.22%
Smith & Nephew (SN.) 1,130.00p -1.05%
Ashtead Group (AHT) 852.50p -1.04%
Severn Trent (SVT) 2,067.00p -1.01%
FTSE 250 - Risers
Cairn Energy (CNE) 192.10p 13.27%
Tullow Oil (TLW) 213.30p 3.54%
NMC Health (NMC) 936.00p 3.03%
Allied Minds (ALM) 359.70p 2.77%
Wizz Air Holdings (WIZZ) 1,809.00p 2.67%
Wood Group (John) (WG.) 653.00p 2.35%
Auto Trader Group (AUTO) 368.80p 2.33%
Euromoney Institutional Investor (ERM) 945.50p 2.33%
Telecom Plus (TEP) 919.00p 2.28%
Ophir Energy (OPHR) 85.20p 2.28%
FTSE 250 - Fallers
Restaurant Group (RTN) 422.00p -22.28%
G4S (GFS) 187.50p -11.85%
Mitchells & Butlers (MAB) 267.30p -7.83%
Evraz (EVR) 88.90p -6.12%
SIG (SHI) 137.00p -5.32%
TalkTalk Telecom Group (TALK) 239.50p -4.96%
Vedanta Resources (VED) 317.10p -4.69%
Vesuvius (VSVS) 325.00p -4.55%
OneSavings Bank (OSB) 278.40p -4.33% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks edge higher ahead of Draghi European stocks edged higher amid rising oil prices, as investors looked to Thursday's European Central Bank meeting for fresh catalysts.
The benchmark DJ Stoxx Europe 600 index was higher by 0.49% to 339.14, Germany's DAX by 0.31% and France's CAC 40 was up 0.49%.
Oil prices advanced after data from the US Energy Information Administration revealed the country's monthly oil production, at 9.3m barrels per day, hit its lowest level since November 2014 in December of last year.
West Texas Intermediate crude oil futures were up by 3.85% to $37.96 a barrel and those for Brent crude 3.2% firmer at $40.05.
"Equity markets have stemmed their declines and regained poise. This sees continuation of what the bulls hope turns out to be consolidation before another leg higher. The driver could be a run of supportive central bank updates (ECB, BoE, BoJ, Fed), beginning with the ECB tomorrow. Draghi wouldn't dare disappoint again would he?" said Mike van Dulken, head of research at Accendo Markets.
"The fact that European futures held up so well overnight is, in our view, reassuring in itself, suggesting optimism that a mix of bold action and soothing rhetoric will give bullish sentiment the fillip it needs after understandably waning lately."
Market participants were pricing in a 10 basis points cut to the deposit rate, an extension of asset purchases and maybe even the introduction of tiered interest rates.
In corporate news, Prudential was a high riser after the insurer reported a 22% rise in 2015 operating profit and lifted its dividend.
German power company E.ON dropped 3% after telling shareholders its 2015 loss doubled on impairment charges, the group's earnings before interest, tax, depreciation and amortisation did however beat analysts' expectations.
Credit Agricole was on the front foot after announcing plans to boost synergies and cost savings by 2019.
Shares in Zara and Bershka owner Inditex were in fashion as it posted a 5% jump in fourth quarter net profit.
On the downside, Deutsche Post nudged lower despite reporting record fourth quarter operating profit.
Beleaguered German car maker Volkswagen skidded on news the US Justice Department has sent the company a subpoena under a bank fraud law in its diesel emissions probe.
Meanwhile, luxury brand Burberry tumbled, giving back the gains it made in Tuesday's session as HSBC downgraded the stock to 'hold' from 'buy'. |
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| | US Market Report | | US open: Stocks rebound as oil prices rise ahead of key supply data US stocks rebounded on Wednesday as oil prices gained ahead of a report on US crude inventories.
The Dow Jones Industrial Average increased 0.33%, the S&P 500 rose 0.39% and the Nasdaq gained 0.37% at 1432 GMT.
Oil prices rose before key weekly supply data, with West Texas Intermediate crude up 1.5% to $37.07 per barrel and Brent up 1.5% to $37.07 per barrel.
The US Energy Information Administration releases data on crude inventories at 1530 GMT, which will be closely scrutinised by those concerned about the supply glut.
Data released earlier by the Mortgage Bankers Association showed total mortgage application volume in the US rose 0.2% last week in seasonally-adjusted terms. This compared to a 4.8% drop the previous week.
On the year, mortgage application volumes were up 20%.
Still to come on the macroeconomic calendar, wholesale inventories are due for release at 1500 GMT
Elsewhere, Europe's main indices were all firmly in the black as investors looked to Thursday's European Central Bank rate announcement. Market participants are pricing in a 10 basis points cut to the deposit rate and an extension and increase of monthly asset purchases.
On the corporate front, natural pet food company Blue Buffalo Pet Products surged as its fourth quarter results released late on Tuesday beat analysts' expectations.
Valeant Pharmaceuticals was also on the front foot on news the company is in talks about adding new board members.
Pfizer Inc edged higher as the pharmaceutical company announced that it has entered into a $5bn accelerated repurchase programme with Goldman Sachs to be settled during the second quarter of 2016.
Chipotle slumped after one of its restaurants in Massachusetts was shut down as four employees fell ill, possibly from norovirus. |
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| | Broker Tips | | Broker tips: Burberry, Centrica, SSE, RBS A weaker sterling will add to ,'s growth on both the top-line and bottom-line, but the recent rebound in the share price was "unwarranted", HSBC said.
Neither should investors expect anything more than excess cash to be returned and room to cut costs further was limited, analysts Antoine Beige, Erwan Rambourg and Anne-Laure Bismuth said in a research note.
Recent weakness in the pound would "mechanically" add 4% to sales and tack on another 10% to the fashion retailer's earnings before interest and tax, they said.
Remarks from Burberry boss Christopher Bailey that the company was "addressing how to optimise its capital structure" pointed to a willingness to return excess cash flows, equivalent to about £120-£150m per year, or approximately 2.0% of market capitalisation, rather than eating into its net cash position.
HSBC estimated the latter would stand at £673m by the end of the fiscal year 2016, in March.
On the back of all of the above the broker marked up its estimates between 2016 to 2018 by between 2.0% and 10%, but pointed out how currency movements alone had an impact of between 2%-7%, which was "significantly less than the share price movement".
"We believe the excessive de-rating of the stock has now been corrected."
Shares in the iconic fashion retailer were trading 18.4 times HSBC analysts' estimates for earnings per share for calendar year 2017, versus 16.7 times for LVMH and 15.0 for Richemont.
HSBC downgraded its recommendation on the stock to 'hold' from 'buy' but upped its target to 1,500p from 1,380p.
Utilities Centrica and SSE were among the top performers on the FTSE on Wednesday morning after JPMorgan Cazenove upgraded its ratings on the stocks.
The bank said UK merchant utilities have been buffeted in recent years by a number of headwinds, with energy consumption down, structural oversupply driving a collapse in commodity-based earnings, and interventionist regulation and policy settings muddying the waters.
But the bank reckoned the cycle was turning.
"The CMA's energy markets review will imminently conclude, reducing regulatory risk; generation markets look set to tighten and a proposal has been tabled to repair the capacity market.
"Underlying structural risks undoubtedly remain, but we see constructive evidence of earnings stabilisation."
As a result, it lifted SSE to 'overweight' from 'underweight' and upped the price target to 1,550p from 1,280p. The bank also upgraded Centrica, to 'neutral' from 'underweight', keeping the price target at 230p.
JPM said it prefers SSE's "defensive, cash-generative business mix", which underpins a sustainable cash-covered RPI-linked 6.3% yield.
"With energy supply risks receding, support for gas-fired generation in the works and spark spreads improving we see potential upside to our 15% total return expectations," it said.
On Centrica, it said that if commodities continue to recover, its significant operating leverage presents upside risk to the bank's current estimates.
JPM remained 'neutral' on Drax but cut the price target to 260p from 370p, highlighting uncertainty facing UK coal-fired generation in the current political and commodities environment.
Berenberg upgraded Royal Bank of Scotland to 'hold' from 'sell', keeping the target at 250p.
It said RBS has a strong core business, a solid capital position and a management team focused on cost-cutting and managing returns. "However, like a Russian doll, RBS's core value remains trapped in a larger, more challenged group."
Berenberg reckons the bank's core value may soon begin to emerge as non-core falls from 25% to 15% of risk-weighted assets by 2017.
"While losses from non-core, conduct and payment of the dividend access share are likely to erode tangible book value further during 2016, we now think this is reflected adequately in the 30% discount to our 2016E TBV."
Berenberg said RBS' history of deleveraging and its focus on corporate banking makes it less exposed than peers to more acute competitive pressure in UK retail lending.
In addition, it pointed out that while costs in the corporate and investment bank, Ulster and private banking are high, management is focused on reducing these and has a track record of delivering savings.
Berenberg expects it will take time for RBS to deliver on these plans, which will lead to some revenue erosion. It expects the core bank to generate 19p of earnings per share and 10% return on equity ROE by 2017.
"In the short - term, the final payment on the government's dividend access share and actions to close the pension deficit are expected to reduce TNAV by around £1.3bn and £1.6bn respectively. |
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