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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 finish lower as consumer confidence declines London stocks ended Friday in the red, after a raft of corporate earnings and a further fall into deflation for the eurozone in April.
At close, the FTSE 100 lost 1.27% to 6,241.89 and the FTSE 250 dropped 1.55% to finish at 16,801.55.
Lloyds Banking Group was under pressure after reporting a 6% drop in first-quarter underlying profit, although this was better than forecast as a reduction in impairment charges, PPI provisions and lower costs counterbalanced a small decline in income.
Anglo American bucked the trend, boosted by an agreement to sell its niobium and phosphates businesses in Brazil to China Molybdenum for a cash consideration of $1.5bn.
Shares in Restaurant Group were tumbling after the company warned over its annual profits, highlighting a further deterioration in trading conditions and announcing the departure of its chief financial officer.
Ophir Energy was another stock under pressure, after the firm revealed before markets opened that it had hit a serious stumbling block at the Fortuna floating liquefied natural gas project, offshore Equatorial Guinea, after it was unable to reach agreement with Schlumberger over an upstream participation arrangement.
Meanwhile, consumer prices in the eurozone fell more than expected in April, according to data released by Eurostat. Prices declined 0.2% on the year, having been steady at a 0.1% drop in March. This was a bigger fall than the 0.1% forecast by economists, with energy prices proving to be the biggest drag as they slid 8.6% on the year.
Core inflation rose 0.8%, missing expectations for a 1% increase.
"Underlying inflation continues to run away from the ECB's baseline rate of 2%," said Michael Hewson, chief market analyst at CMC Markets.
Eurozone economic growth data for the first quarter from Eurostat was more positive. Seasonally-adjusted gross domestic product rose 0.6% compared with the previous quarter when it grew 0.3%. This was stronger than the 0.4% growth pencilled in by economists.
Separately, Eurostat said the eurozone unemployment rate nudged down to 10.2% in March from 10.4% in February and 11.2% in the same month last year. This marked the lowest rate in the bloc since August 2011. Economists had been expecting the rate to remain unchanged at 10.3%.
"The burden of deflationary pressure grew on the ECB this morning as recent monetary policy action appears to not have filtered down into the bloc state. Inflation dropped below forecasts to -0.2% (y/y) in the same month Draghi's increase in Quantitative Easing commenced - not signalling the start he would have hoped for," said Alex Lydall of Foenix Partners.
In the UK, consumer confidence declined in April, according to a GfK survey. The sentiment index fell to -3 this month from 0 in March, worse than analysts' estimates of -1.
The number of Britain's mortgage approvals came to 71,357 last month, down from 73,195 in February, the Bank of England said. Analysts had pencilled in 74,400 approvals.
In the US, personal income came in at 0.4% growth for March, ahead of forecasts of 0.3% and a previous figure of 0.2%. Personal spending growth failed to meet expectations, however, coming in at 0.1% against a 0.2% consensus and a 0.2% reading last time.
University of Michigan's consumer confidence for April also disappointed, falling to 89.0 from a previous reading of 89.7 and an expected 90.0.
Oil prices began to slip as markets closed, with Brent crude losing 0.61% to $47.85 and West Texas Intermediate giving up 0.22% to $45.93 per barrel. |
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| Market Movers
FTSE 100 (UKX) 6,241.89 -1.27%
FTSE 250 (MCX) 16,801.55 -1.55%
techMARK (TASX) 3,059.33 -1.12%
FTSE 100 - Risers
Glencore (GLEN) 162.90p 4.12%
Randgold Resources Ltd. (RRS) 6,770.00p 3.75%
BT Group (BT.A) 443.20p 2.06%
Antofagasta (ANTO) 485.20p 1.93%
Shire Plc (SHP) 4,261.00p 1.77%
Paddy Power Betfair (PPB) 9,150.00p 1.72%
Fresnillo (FRES) 1,113.00p 1.64%
Anglo American (AAL) 763.40p 1.35%
Imperial Brands (IMB) 3,718.50p 0.84%
Direct Line Insurance Group (DLG) 361.90p 0.78%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 230.80p -5.72%
International Consolidated Airlines Group SA (CDI) (IAG) 525.00p -4.72%
Rolls-Royce Holdings (RR.) 669.50p -3.53%
Whitbread (WTB) 3,872.00p -3.49%
TUI AG Reg Shs (DI) (TUI) 991.00p -3.22%
HSBC Holdings (HSBA) 452.50p -3.18%
Standard Chartered (STAN) 553.60p -2.98%
ARM Holdings (ARM) 937.50p -2.85%
GKN (GKN) 278.70p -2.82%
easyJet (EZJ) 1,473.00p -2.77%
FTSE 250 - Risers
Centamin (DI) (CEY) 121.60p 8.09%
Rotork (ROR) 187.00p 4.24%
Acacia Mining (ACA) 350.30p 2.10%
John Laing Group (JLG) 212.50p 1.19%
HarbourVest Global Private Equity Limited A Shs (HVPE) 945.00p 1.07%
Unite Group (UTG) 634.00p 0.96%
Mitie Group (MTO) 272.50p 0.78%
Big Yellow Group (BYG) 806.00p 0.62%
Berendsen (BRSN) 1,184.00p 0.51%
Polymetal International (POLY) 709.00p 0.50%
FTSE 250 - Fallers
Restaurant Group (RTN) 274.50p -26.66%
Ophir Energy (OPHR) 75.35p -18.01%
Barr (A.G.) (BAG) 569.00p -7.40%
Telecom Plus (TEP) 931.00p -6.99%
Sports Direct International (SPD) 385.20p -6.50%
CLS Holdings (CLI) 1,582.00p -6.17%
Cobham (COB) 154.00p -5.58%
Senior (SNR) 217.90p -5.18%
Ocado Group (OCDO) 297.00p -5.14% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Risk appetite falls ahead of long weekend, US jobs report European stocks fell on Friday, ahead of the long weekend and next Friday´s all-important US jobs report, despite better than expected readings on economic growth and unemployment. Nevertheless, the euro area slipped further into deflation in April, according to the latest figures from Eurostat. The benchmark DJ Stoxx Europe 600 index was down 2.13% at 341.48, Germanys’ DAX surrendered 2.73% to end at 10,038.97 and France’s CAC 40 was 2.82% weaker. Putting a damper on the mood, strategists at Citidowngraded their view on global equities to 'underweight'. The recent more favourable market backdrop might probably persist for a bit more, the broker said, but it was concerned about the fundamentals for global economic growth and saw potential for a "slight deterioration" with what it termed as the split between real (inflation-adjusted) growth in gross domestic product and inflation. Up until now the reflation wave from China as authorities there eased, together with a more 'dovish' Federal Reserve, a softer US dollar and restraint in commodity supplies had driven better risk-appetite, Citi explained. Stocks kicked off the session by taking their lead from the US, where shares ended lower on Thursday as Apple slid after billionaire activist Carl Icahn said he had sold his entire stake in the company, with a stronger yen also weighing on stockmarkets around the world. Oil prices turned around to trade lower in the backhalf of the session, despite a weaker US dollar. West Texas Intermediate was down 0.634% to $45.74 a barrel and Brent crude was off by 0.61% at $47.85. According to Eurostat, the Eurozone´s unemployment rate nudged down to 10.2% from 10.4% in February and 11.2% in the same month last year. This marked the lowest rate in the bloc since August 2011. Economists had been expecting the rate to remain unchanged at 10.3%, which was what it was first estimated at for February. Pantheon Macroeconomics said this was “a much welcome and surprising decline” in the Eurozone unemployment rate. “Taken at face value, today’s data indicate that the cyclical recovery remains on track, lifted by domestic demand, and that the labour market continues to improve as a result.” Eurostat’s preliminary flash estimate of gross domestic product for the region was also encouraging, showing seasonally-adjusted first-quarter GDP rose 0.6% compared with the previous quarter when it grew 0.3%. This was stronger than the 0.4% growth pencilled in by economists. On a year-on-year basis, seasonally-adjusted GDP was unchanged, up 1.6%, versus expectations for a nudge down to 1.5%. On the downside, consumer prices declined 0.2% on the year in April, having been steady in March. This was a bigger drop than the 0.1% forecast by economists, with energy prices proving to be the biggest drag as they slid 8.6% on the year. On the corporate front, shares in AstraZeneca closed lower by 1% after reporting a drop in first-quarter earnings but a rise in revenue as core research and development costs increased, reflecting recent acquisitions. Sticking with pharmaceuticals, Sanofi was lower despite saying first-quarter sales rose and maintaining its full-year guidance, while peer Novo Nordisk nudged down after cutting its 2016 guidance. Royal Bank of Scotland was under the cosh after it said first-quarter losses more than doubled to £968m after it paid out a £1.2bn dividend to the UK government. Possible delays in the sale of its US unit Williams&Glynn might lead to a postponement of the lender´s return to dividend payments, analysts said. Education published Pearson slipped after posting a decline in first-quarter sales. British Airways and Iberia parent International Consolidated Airlines flew lower. Although the company reported a jump in first-quarter pre-tax profit, it said demand for flights had been hit by the Brussels terror attacks and the upcoming EU referendum. Shares in Spanish phone company Telefonica were in the red after it said first-quarter profit slumped due to the impact of currency movements while Swiss Re dropped despite posting better-than-expected first-quarter profits. Danske Bank gained ground after its first-quarter pre-tax profit came in ahead of analysts’ expectations. |
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| | US Market Report | | US open: Stocks slide as traders digest earnings and data US stocks were sitting lower on Friday, as traders digested corporate earnings and economic data.
At 1444 BST, the Dow Jones Industrial Average fell 0.31%, the S&P 500 shed 0.26% and the Nasdaq lost 0.20%.
Among corporate results, Chevron Corp.'s shares fell after reporting an adjusted profit in the first quarter that missed analysts' estimates.
Exxon Mobile gained after the oil producer reported a higher-than-expected first-quarter profit.
Amazon rallied after the online retailer's first-quarter profit surged past analysts' expectations. Profit came in at $513m as sales rose 28% to $29.1bn.
On the macro-economic data front, US personal spending rose by a seasonally-adjusted 0.1% versus expectations for a 0.2% increase, according to the Commerce Department. February's figure was revised up to a 0.2% gain from 0.1% previously.
Person income rose 0.4% in March after nudging up a downwardly-revised 0.1% the month before. Economists had been expecting a 0.3% increase.
The Chicago manufacturing purchasing managers' index fell to 50.4 in April from 53.6 in March, falling short of estimates for a reading of 53.6 but above the 50 level that separates an expansion from a contraction.
Consumer sentiment weakened in April, according to the final reading from the University of Michigan. The consumer sentiment index printed at 89.0 in April, down from the flash estimate of 89.7 and 91.0 in March. It was also weaker than the 95.9 reading in April of last year.
The current economic conditions index came in higher than the estimate of 105.5 at 106.7, compared to 105.6 in March and 107.0 in April 2015.
Still to come, the Baker Hughes US Rig Count will be released at 1800 BST.
Meanwhile, oil prices remained volatile with Brent crude down 0.10% to $48.09 per barrel and West Texas Intermediate up 0.34% to $46.19 per barrel at 1519 BST. |
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| | Broker Tips | | Broker tips: Pearson, Weir Group, RBS Numis reiterated a 'reduce' rating and target of 640p for Pearson on Friday after the education publisher reported its first quarter trading update.
The company reported a 4% drop in first quarter sales in underlying sales, reflecting expected weakness in assessment revenues in the UK and US which are weighted to the first half. Revenues were down 9% at constant exchange rates and headline sales declined by 6%.
Pearson said it was trading in line with expectations during the period with adjusted operating profit and adjusted earnings per share before the costs of restructuring still expected to be £580-£620m and 50p-55p respectively.
"The first quarter is the smallest quarter for Pearson and very small in the context of the year," Numis said.
"We remain comfortable with a 'reduce' recommendation on Pearson, no change to estimates, we retain a blended multiples based target of 640p."
Weir Group's shares rose on Friday after HSBC upgraded the oil and gas services stock to 'hold' from 'reduce' and raised the target to 1,150p from 750p.
HSBC said it expects the company to benefit from a pick-up in crude prices in 2017-18.
"We believe 2017-18 will see increased oil and gas activity, which drives our view of oil and gas margin expansion from low levels," the bank said.
"The company has said a Brent price of $45 for a prolonged period would be enough to kick start North American shale activity. Our HSBC oil and gas team forecasts $60/$75 per barrel as a long term (2017-18)."
Weir on Thursday said it expects first-half profits to be slightly ahead of market expectations, despite a decline in oil and gas activity, supported by cost-cutting and a "resilient" minerals division.
The engineering equipment firm reported a 47% year-on-year fall in orders for its oil and gas division. Original equipment orders dropped 40% while aftermarket orders slid 49%.
Weir said oil and gas markets have continued to slide despite the limited improvement in oil prices since February.
In North America, the division's biggest end market, the US land rig count has fallen by nearly 20% in the past two months. The market expects a 46% reduction in wells drilled in 2016.
Chief executive Keith Cochrane said: "The group remains focused on cost reduction measures which have helped to deliver first-quarter profits slightly ahead of our expectations.
"As a result, we expect first-half profits to be slightly ahead of market expectations. Our full-year expectations remain unchanged, reflecting the slower recovery now anticipated in oil and gas markets."
ShoreCap retained its positive stance on Royal Bank of Scotland following the lender´s latest results but flagged the possibility that setbacks in the sale of its William&Glynn unit might hinder the restart of dividend payments next year.
Analyst Gary Greenwood highlighted management´s remarks that market conditions for Capital Resolution had been "challenging" in the first quarter and how it had flagged up an increased risk of large single-name events which might hurt credit quality due to the uncertain macroeconomic environment.
Nevertheless, whilst RBS´s Core Tier 1 capital fell by 90 basis points to 14.6% it remained well above its minimum target of 13%, resulting in surplus capital on the balance sheet of about £4bn (34p per share), he added.
"While the results themselves are a little disappointing, these have been somewhat overshadowed by yesterday afternoon's announcement that there is a significant risk that the separation and divestment of Williams & Glyn will not be completed by the 31 December 2017 deadline that the Group has been set by regulators," Greenwood said in a research note sent to clients.
The successful divestment of that unit was a key hurdle for the restart of dividend payments.
Greenwood had pencilled in a final 2017 dividend of 4.7p rising to 13.3p in 2018, but said it remained to be seen how the rgulator would respond.
"We cannot hide our disappointment with both the results and the announcement of the ongoing delay to the divestment and separation of Williams & Glyn, which has frankly now become farcical, to say the least," the analyst added.
Nevertheless, he stuck by his 'positive' stance on the lender´s shares and his 'buy' recommendation but emphasised that his recommendation rested on RBS being able to overcome most of the issues needed to resume its dividend payments, including a sale of Williams&Glynn and settling outstanding claims linked to residential mortgage backed securities in the US.
Hence, he ranked RBS third in preference behind the likes of Lloyds and Barclays. |
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