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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 miners rally The FTSE 100 closed in the black on Tuesday, bolstered by a rally in mining stocks as metal and oil prices jumped.
Miners were the biggest risers of the day with Antofagasta, Glencore and BHP Billiton in the lead as gold, silver and copper prices gained 1.62%, 4.44% and 2.02% on the Comex.
"The metals complex is flying, aided by the weaker dollar and also apparently because base metal buying is considered a decent hedge against the Chinese yuan," said Brenda Kelly, head of analysts at London Capital Group.
"Despite all the apparent risk on sentiment, silver prices are surging with gold prices also taking upside cues. The price ratio is now at a 2016 low. Silver's greater industrial use means it is more sensitive to the industrial cycle and potentially less of a haven than gold. Over the long term (100 years) the ratio has gone below 20 three times and neared 100 twice, so silver does look cheap relative to gold in some respects."
Oil prices were continuing to rebound from the heavy losses seen after the meeting of OPEC and non-OPEC producers in Doha on Sunday, which failed to yield an agreement to freeze production.
Brent crude rose 2.4% to $44.01 per barrel and West Texas Intermediate increased 3.4% to $41.18 per barrel at 1636 BST.
"The stability in oil prices has strengthened attitudes among traders who are developing a strong appetite for riskier assets. After an initial plunge in oil prices due to a failed meeting in Doha, oil prices recovered remarkably and this has served as a signal that no more adverse news can cause any major dents for oil," said Naeem Aslam, chief market analyst at AvaTrade.
According to analysts at Energy Aspects, the strike by workers in Kuwait's oil sector which has helped to buoy prices may last for between 10 to 15 days.
In economic data, German investor confidence came in better than expected for April, according to the latest survey from the ZEW Center for European Economic Research in Mannheim. The index of investor and analyst expectations rose to 11.2 from 4.3 in March, beating consensus estimates of 8.0.
US housing starts fell a little more than expected in March, according to the Commerce Department. Housing starts declined 8.8% from February to a seasonally-adjusted annual rate of 1.09m compared with expectations for a drop to 1.17m. This was a 14.2% increase from the same month in 2015.
On the company front, TUI was on the back foot, giving back some of the gains it made in the previous session after Berenberg upgraded the stock to 'buy' from 'hold' and nudged the price target up to 105p.
Paddy Power Betfair slipped, resuming the previous day's decline as the bookmaker's annual report revealed it paid former chief executive Andy McCue over €3.7m in 2015 in salary, benefits and shares.
Meggitt jumped after it reiterated its full-year revenue guidance as it said first-quarter trading has been in line with expectations.
Aveva advanced after the provider of engineering data and design software did its best to reassure the market ahead of its results next month, saying its numbers looked to be in line with forecasts. |
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| Market Movers
FTSE 100 (UKX) 6,405.35 0.82%
FTSE 250 (MCX) 17,039.57 0.89%
techMARK (TASX) 3,189.18 0.55%
FTSE 100 - Risers
Anglo American (AAL) 752.50p 8.49%
Antofagasta (ANTO) 494.00p 7.81%
Glencore (GLEN) 170.20p 7.69%
BHP Billiton (BLT) 964.50p 5.25%
Fresnillo (FRES) 1,061.00p 4.84%
Rolls-Royce Holdings (RR.) 696.50p 4.66%
Standard Chartered (STAN) 541.90p 3.61%
Ashtead Group (AHT) 846.50p 3.61%
GKN (GKN) 295.70p 3.28%
Rio Tinto (RIO) 2,333.00p 2.84%
FTSE 100 - Fallers
Mediclinic International (MDC) 900.50p -3.54%
Marks & Spencer Group (MKS) 433.30p -2.08%
Paddy Power Betfair (PPB) 9,330.00p -2.05%
TUI AG Reg Shs (DI) (TUI) 1,046.00p -1.78%
Barratt Developments (BDEV) 499.60p -1.46%
Severn Trent (SVT) 2,232.00p -1.20%
London Stock Exchange Group (LSE) 2,758.00p -1.15%
Provident Financial (PFG) 3,019.00p -1.02%
Taylor Wimpey (TW.) 171.40p -0.92%
Lloyds Banking Group (LLOY) 67.85p -0.88%
FTSE 250 - Risers
Aveva Group (AVV) 1,661.00p 9.06%
Clarkson (CKN) 2,398.00p 6.82%
Evraz (EVR) 144.00p 6.75%
Weir Group (WEIR) 1,196.00p 6.31%
Meggitt (MGGT) 413.60p 6.27%
Kaz Minerals (KAZ) 183.90p 5.39%
TalkTalk Telecom Group (TALK) 249.70p 5.14%
Tullow Oil (TLW) 224.20p 5.11%
CLS Holdings (CLI) 1,613.00p 4.88%
Telecom Plus (TEP) 866.00p 4.72%
FTSE 250 - Fallers
Supergroup (SGP) 1,223.00p -6.07%
Shawbrook Group (SHAW) 265.90p -5.04%
OneSavings Bank (OSB) 280.00p -3.78%
Aldermore Group (ALD) 186.10p -2.87%
St. Modwen Properties (SMP) 303.80p -2.78%
Laird (LRD) 362.00p -2.29%
UDG Healthcare Public Limited Company (UDG) 595.50p -2.06%
Thomas Cook Group (TCG) 91.85p -1.97%
BGEO Group (BGEO) 2,085.00p -1.79% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks jump as metals' prices, miners' shares surge European stocks rose on Tuesday, supported by a rebound in oil prices and a better-than-expected reading on German investor confidence.
The benchmark DJ Stoxx Europe 600 index was up 1.46% to 349.24, Germany's DAX was 2.27% stronger to 10,349.59 and France's CAC 40 was 1.32% firmer at 4,566.48.
At the same time, oil prices were in the black as a strike in Kuwait continued to disrupt the country's supplies. West Texas Intermediate was up 3.2% to $41.09 a barrel as of the close and Brent crude was 2.5% higher at $43.99.
Oil was continuing to rebound from the heavy losses seen after the meeting of OPEC and non-OPEC producers in Doha on Sunday, which failed to yield an agreement to freeze production.
The Stoxx 600 oil and gas index tacked on another 1.90% to reach 274.70, but basic resources were the standout gainers, with the sub-index for that sector up 4.55% to 304.22 as metals' prices advanced.
Three-month copper futures on the LME were 2.0% higher to $4,917.50 per metric tonne as of 16:35BST.
"The bulls are back in charge," said Joshua Mahony, market analyst at IG. "We are now in a position where sentiment is bullish by default and thus it seems like it will take something hugely significant to knock the indices off their stride. While this week does see the release of a handful of notable data points, none seem significant enough to alter the market mindset and as such, sentiment seems to be the most important factor driving markets, rather than economic data releases."
The latest survey from the ZEW Center for European Economic Research in Mannheim also helped to underpin sentiment, as it showed German investor confidence improved more than expected in April.
The ZEW index of investor and analyst expectations rose to 11.2 from 4.3 in March, beating consensus estimates of 8.0.
The index for current expectations, however, fell to 47.7 in April from 50.7, missing expectations of 51.0.
The indicator of economic sentiment rose to 21.5 from 10.6, comfortably ahead of forecasts for a reading of 13.9.
Pantheon Macroeconomics said: "A surprisingly strong headline, despite the dip in the current situation index, which we can safely ignore as long as the expectations gauge continues to rise."
In corporate news, French cosmetics company L'Oreal rallied as its first-quarter revenue surpassed analysts' expectations.
Roche Holdings nudged higher after it reported a 5% jump in first-quarter sales on the back of growing demand for its three breast cancer medicines.
Rio Tinto was on the front foot after it reported a 13% increase in first quarter iron ore production, but trimmed its guidance for next year.
Primark owner Associated British Foods also gained, after its first-half earnings came in better than expected thanks to a long-awaited improvement in its sugar business. |
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| | US Market Report | | US open: Stocks rise as investors shrug off fall in oil prices US stocks rose on Monday as investors seemed unfazed by a decline in oil prices after global producers failed to reach an agreement to freeze output.
At 1526 BST, the Dow Jones Industrial Average rose 0.29%, the S&P 500 increased 0.31% and the Nasdaq gained 0.32%.
Members and non-members of the Organization of the Petroleum Exporting Countries held talks in Doha on Sunday but did not come to an agreement to curb oil production which the market had been expecting.
The talks fell apart after Saudi Arabia reiterated that it would not cap output unless Iran agreed to do the same. Iran, which did not attend the negotiations, has been reluctant to come to such an agreement since it has recently been relieved of sanctions.
"This string of events almost suggests that the major players in the cartel had no real intention of curbing production, but simply exploited the explosive levels of volatility to manufacture speculative boosts in prices based on false expectations," said FXTM research analyst Lukman Otunuga.
"Sentiment remains bearish towards oil, and with market participants losing hope in the ability of OPEC to work together in battling the excessive oversupply in the markets; bearish investors have been provided a platform to install another round of selling. "
In more uplifting news, Kuwait's crude production dropped more than half on Sunday as thousands of its oil industry employees began an open-ended strike over government plans to cut wages. The nation's output was 1.1 million barrels a day, down from the usual 3 million it produces.
West Texas Intermediate crude fell 2.9% to $39.20 per barrel and Brent dropped 2.5% to $42.04 per barrel at 1532 BST.
In macroeconomic data, US homebuilders' confidence held steady in April. The National Association of Home Builders/Wells Fargo builder sentiment index was unchanged at 58, missing forecasts for a reading of 59.
On the corporate front, Morgan Stanley reported a 54% plunge in first quarter net profits as low oil prices hit the bank's trading business.
Netflix and IBM are due to report after the close.
Yahoo's shares edged lower as the deadline for preliminary bids for the company looms. |
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| | Broker Tips | | Broker tips: Premier Foods, Fresnillo, Ashmore Group Credit Suisse cut its price target on Premier Foods after coming off restriction on the stock, saying that management now had to show they made the right call after their "bold rejection of a potential offer from McCormick.
The Swiss bank retained its 'outperform' rating on the Mr Kipling and Oxo Cube maker but trimmed its earnings forecasts for the new financial year by 7%.
Management will need to deliver the revenue growth that formed the base of their rejection of the McCormick offer, but the fairly withering comment was that "2-4% looks an ambitious number for the company that hasn't yet delivered on the previous 1-2% target".
Premier Foods faces some short - term investment costs of delivering this growth, with marketing set to rise £6-8m in the new year, which extra costs led to the cut in estimates.
However, directors have confirmed 2015/16 profits were as expected, though Credit Suisse's tracking of retail channels via AC Nielsen suggested sales remain subdued.
The rate of innovation has been picking up materially, with the Paul Hollywood range of 'artisanal style' banking flour now being sold in four major retailers, while the tie-up with Japan's Nissin also brings opportunities, analysts said.
"Nissin's presence on the register and McCormick's interest will likely keep a speculative element to the shares, though we don't see the former other than a commercial partner, albeit with a 20% holding."
On valuation, analysts declared that the equity is "highly geared into stability/growth in EBITDA, albeit the group has yet to demonstrate this - but if it can we believe the upside remains significant".
Fresnillo's stock was downgraded to 'sell' from 'reduce' and its target left at 800p on Tuesday by Numis.
Numis said the miner reported a solid first quarter performance last week, "however, at 2.27x premium to net asset value and with significant risk associated with the execution of the development profile we believe that the shares are trading at above fair value moving into a period of seasonal weakness for the precious metals".
Fresnillo last Wednesday posted a 1.7% year-on-year fall in silver production to 12.2m ounces for the three months ended 31 March 2016, due to expected lower ore grade at the Saucito mine. The silver output included 1.2 million ounces from the Silverstream processing contract.
Gold output rose 26% to 230,000 troy ounces in the first quarter, bolstered by higher speed gold recovery from the Herradura and Noche Buena mines.
"Silver production was in line with our expectation but gold production was a 20% beat versus our expectation reflecting a higher speed of recovery and ore processed at Herradura," Numis said.
Fresnillo expects to produce between 49 million and 51 million ounces of silver and between 775,000 and 790,000 ounces of gold this year. The company has also guided for an improvement in the silver grade at the main Fresnillo mine to an average of 242 grams per tonne. A combination of the mining of lower grade areas and increased dilution saw the silver grade fall to 220g/t in 2014.
"We view the recovery in Q1 from 222g/t in Q4 2015 as a positive step which partially offset the planned decrease in grade at the Saucito mine," Numis said.
Peel Hunt downgraded Ashmore Group to 'hold' from 'buy' and retained its target at 270p after company reported its third quarter interims.
Total assets under management (AuM) at Ashmore rose 4% to $51.3bn in the third quarter compared with the previous quarter while net outflows slowed to $1.1bn.
The asset manager, which focuses on emerging markets, saw net outflows in blended debt, external debt, corporate debt, multi-asset and local currency.
The three months to the end of March saw strong returns from emerging markets assets as value was recognised and prices recovered from over-sold levels earlier in the period.
Peel Hunt said its current forecast is for pre-tax profit of £130.5m and earnings per share of 13.4p, broadly in line with consensus of £133m and 14.4p, respectively.
"Would expect to modestly upgrade this given rising AuM (versus our forecast of slight decline over the second quarter)," the analyst said.
"Also likely to be profit and loss benefit from US dollar strength versus pound and subsequent impact on cash balances. "
On the valuation, Peel Hunt said the stock has recovered strongly over last few months by 50% in three months and is now trading on December 2016 enterprise value/net operating profit after tax multiple of 16.4x, yielding 5.7%.
"Stock now needs forecasts to catch up, recommendation moves back to 'hold', target remains 270p." |
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