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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 fall as oil prices reverse gains UK stocks closed in the red on Thursday as oil prices reversed gains after rising exports in Iraq fuelled concerns about an oversupplied market.
Oil exports from Iraq's southern rose to an average of 3.494 million barrels per day (bpd) in April, an official from the state-run South Oil Company revealed on Thursday. It was above the 3.286 million bpd average for March.
At 1653 BST, Brent crude fell 2.25% to $38.96 per barrel and West Texas Intermediate dropped 2.1% to $36.97 per barrel.
Meanwhile, three top officials from the European Central Bank said the central bank is willing to do whatever is needed to bring inflation back towards its 2% target.
ECB President Mario Draghi, deputy Vitor Constancio and the bank's chief economist Peter Praet separately expressed the central bank's willingness to do more if warranted amid global risks and prolonged low inflation.
Their remarks came as the ECB published an account of its 10 March policy meeting when it announced a slate of new measures including expanding the asset purchase programme and slashing key rates.
Earlier, the US saw the release of the Federal Reserve's 15-16 March policy meeting, which showed several policymakers argued against an interest rate hike in April amid the threat of slower global growth and low inflation.
However, others said an April rate increase was a possibility if economic data showed improvement in the moderate growth in output, further strengthening of the labour market, and inflation rising to 2% over the medium term.
"What many expected or wanted to see did come out in these minutes, but the matter of concern is that Fed members failed to show a solid front and came out looking fragmented, said Naeem Aslam, chief market analyst at Ava Trade.
Closer to home, Halifax revealed UK house prices rose 2.6% month-on-month in March, as second home owners and buy-to-let investors rushed in to purchase homes ahead of higher stamp duty charges in April. It compared to a 1.5% drop in February and beat analysts' forecasts of 0.9%.
Elsewhere, Chinese stocks declined on concerns that a three-month ban on large shareholders selling more than 1% of a company's total shares is about to expire. Worries that it will prompt a barrage of selling pressuring the overall market weighed on Chinese equities.
In company news, Marks & Spencer shares rallied after the retailer reported fourth quarter sales that exceeded analysts' estimates as sales at the troubled general merchandise unit fell less than anticipated.,
Payments processor Worldpay was under pressure after private equity groups Advent International and Bain Capital sold a 12.5% stake in the company.
Glencore fell after JP Morgan Cazenove downgraded the stock to 'neutral' from 'overweight' saying the agriculture unit stake sale brings to a close the catalyst-rich deleveraging story.
Pearson, Aviva, Lloyds and Taylor Wimpey were in the red as their shares went ex-dividend.
Supermarket Sainsbury's was on the front foot after Credit Suisse upgraded the stock to 'outperform' from 'underperform' and lifted the price target to 290p from 240p.
Chip designer ARM Holdings rose after South Korea's Samsung said it was forecasting a 10% increase in operating profit for the first quarter. ARM counts Samsung among its major customers. |
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| Market Movers
FTSE 100 (UKX) 6,130.66 -0.50%
FTSE 250 (MCX) 16,706.31 -0.95%
techMARK (TASX) 3,141.35 -0.08%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 6,575.00p 3.22%
Sainsbury (J) (SBRY) 287.20p 2.68%
Marks & Spencer Group (MKS) 431.50p 2.64%
Next (NXT) 5,505.00p 1.76%
United Utilities Group (UU.) 945.50p 1.72%
Severn Trent (SVT) 2,217.00p 1.51%
Vodafone Group (VOD) 222.75p 1.37%
ARM Holdings (ARM) 1,042.00p 1.26%
Inmarsat (ISAT) 993.00p 1.02%
AstraZeneca (AZN) 4,167.50p 0.97%
FTSE 100 - Fallers
Glencore (GLEN) 131.95p -5.82%
Berkeley Group Holdings (The) (BKG) 3,146.00p -5.13%
Pearson (PSON) 825.00p -4.95%
Lloyds Banking Group (LLOY) 64.82p -4.79%
Aviva (AV.) 422.00p -4.52%
Barratt Developments (BDEV) 549.00p -3.85%
Taylor Wimpey (TW.) 186.30p -3.82%
St James's Place (STJ) 873.50p -3.43%
Anglo American (AAL) 506.10p -3.14%
Persimmon (PSN) 2,072.00p -2.91%
FTSE 250 - Risers
Centamin (DI) (CEY) 99.05p 9.39%
Dunelm Group (DNLM) 948.50p 4.23%
Vedanta Resources (VED) 346.10p 4.22%
NMC Health (NMC) 1,120.00p 3.90%
Acacia Mining (ACA) 274.00p 3.79%
Sophos Group (SOPH) 222.00p 3.59%
St. Modwen Properties (SMP) 310.40p 3.12%
AA (AA.) 264.80p 2.72%
Evraz (EVR) 90.80p 2.02%
UDG Healthcare Public Limited Company (UDG) 620.00p 1.97%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 144.50p -9.63%
International Personal Finance (IPF) 259.10p -7.66%
Vesuvius (VSVS) 292.70p -6.66%
Allied Minds (ALM) 398.80p -6.16%
Zoopla Property Group (WI) (ZPLA) 244.90p -5.95%
Aldermore Group (ALD) 194.40p -5.68%
Redrow (RDW) 386.40p -5.43%
Crest Nicholson Holdings (CRST) 539.00p -4.26%
Homeserve (HSV) 425.60p -4.21% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Banks, Basic Resource stocks drag equity markets lower European stocks reversed early gains as oil prices turned came under selling pressure, with risk-appetite broadly lower across asset classes as investors focused on the negative narrative of a more gloomy global economic outlook after the latest European Central Bank and Federal Reserve minutes.
The benchmark DJ Stoxx Europe 600 index finished the session down by 0.77% or 2.55 points at 328.10, France's CAC skidded 0.90%, while Germany's DAX retreated 0.98%.
A dovish set of US Fed minutes appeared to trigger buying in Japan's yen, which by the afternoon was trading near its strongest levels versus the US dollar since about 18 months ago.
"No doubt there was some disappointment that in a speech overnight BOJ governor Haruhiko Kuroda said nothing new about Japan's economic outlook for monetary policy.
"But the real fear is that Japan's policymakers are losing control of the situation and will be unable to counter the yen's rally," said SpreadCo analyst David Morrison.
The Fed minutes revealed that policymakers discussed the possibility of a rate hike in April but the overall consensus was that the risks from a global economic slowdown meant a cautious approach was needed.
Capital Economics said: "Although the minutes acknowledge that a few officials were ready to raise interest rates in April, many thought that the Fed should proceed more cautiously, in particular because of worries about global downside risks.
For their part, a bevy of top ECB officials weighed in on Thursday with their views on monetary policy.
Speaking from Frankfurt, ECB vice-president Vitor Constancio said the monetary authority was ready to do "whatever is needed" to reach its inflation target.
Acting as a backdrop, West Texas Intermediate surrendered 2.23% to $38.95 a barrel and Brent crude was off by 2.22% to $36.93.
They were under pressure again after an official from the state-run South Oil Company in Iraq said exports from the country's southern ports have risen to an average of 3.494m barrels per day in April from 3.286m in March.
Spanish 10-year bond yields rose for a sixth consecutive day - increasing by one basis point to 1.5222% - whih was their longest streak since July 2012
In corporate news, London-listed pharmaceutical company Shire was on the front foot after expressing confidence that its takeover of US-based Baxalta will proceed as planned even with new rules from the US Treasury to block 'tax inversion' deals.
Peers GlaxoSmithKline and AstraZeneca were also higher as investors bet they might become bid targets following the collapse of the Pfizer-Allergan deal.
Retailer Marks & Spencer was also in the black after it posted a mixed fourth quarter update that beat analysts' expectations. |
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| | US Market Report | | US open: Stocks drop as oil declines and dollar takes a hit US stocks fell in early trade as oil prices slipped back and the dollar tumbled against the yen, although there was some better-than-expected news on the jobs front.
At 1540 BST, the Dow Jones Industrial Average was down 0.9%, the S&P 500 was 0.8% lower and the Nasdaq was off 1%.
At the same time, the rally in oil prices - sparked by Wednesday's better-than-expected data from the Energy Information Administration - lost steam as an official from the state-run South Oil Company in Iraq said exports from the country's southern ports rose to an average of 3.494m barrels per day in April from 3.286m in March.
West Texas Intermediate was down 1.2% to $37.29 a barrel and Brent crude was 1.7% weaker at $39.16.
In currency markets, the dollar tumbled to a 17-month low against the yen.
"After storming higher yesterday thanks to a surge in crude oil, US equities began today's session sharply lower," said David Morrison, senior market strategist at SpreadCo.
"Traders were spooked by the strength of the yen which saw the USD/JPY fall to its lowest level since October 2014. This was when Japan's policymakers extended their monetary stimulus programme in an effort to drive the currency lower to boost exports and inflation.
"Investors dumped stocks on the US open on fears that the BOJ has run out of ammunition when it comes to effectively loosening monetary policy. Another complication is that Japan takes over the chairmanship of G7 next month where all members have said they won't intervene to weaken their currencies. Japan's excessive debt-to-GDP ratio makes it particularly vulnerable to deflationary pressures which are increased by yen strength."
Meanwhile, investors continued to digest the minutes from the latest Federal Reserve meeting that came out late on Wednesday.
The minutes revealed policymakers discussed the possibility of a rate hike in April but the overall consensus was that the risks from a global economic slowdown meant a cautious approach was needed.
Amid the downbeat tone, a better-than-expected release on unemployment claims failed to provide any cheer.
Data from the Labor Department showed the number of Americans filing for unemployment benefits fell a little more than expected last week.
US initial jobless claims fell by 9,000 to 267,000 from the previous week's unrevised level, versus economists' expectations for a drop to 270,000.
This marked 57 consecutive weeks of initial claims below 300,000 - the longest streak since 1973.
In corporate news, Sprint Corp fell after announcing late on Wednesday that it has reached a deal with several bankrupt entities to sell and then lease back network assets which will then be used as collateral to raise $2.2bn.
Drugstore chain Rite Aid edged lower despite posting better-than-expected fourth quarter profit.
Shares in Pacific Sunwear tumbled after the retailer filed for bankruptcy protection.
Costco Wholesale Corp slid after releasing its March sales figures.
On the upside, Valeant Pharmaceuticals rallied after lenders gave the embattled drug company an extension on the filing of two key reports, removing the immediate threat of default.
Home goods retailer Bed Bath & Beyond pushed higher after its fourth quarter earnings and revenue surpassed analysts' forecasts.
McDonald's nudged a touch higher after saying its long-term chairman Andrew McKenna was stepping down.
Elsewhere, Fed Chair Janet Yellen will hold conversations with former chairmen Ben Bernanke and Alan Greenspan at the International House in New York City later in the day. |
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| | Broker Tips | | Broker tips: Burberry, Glencore, Zoopla RBC Capital Markets cut Burberry's rating to 'underperform' from 'sector perform' on Thursday, saying it expects the retailer's full year earnings in 2017-18 to be below the sector average.
However, the broker raised its price target to 1,300p from 1,275p as it said the luxury fashion group's "equity story is evolving towards a more moderate top-line growth profile".
RBC also increased its full year 2016-17 pre-tax profit forecasts by 2% and 7%, respectively, solely on favourable foreign exchange movements since mid-January.
"Management continues to do all the right things for the brand in the long term, but the combination of operating expenditure-deleverage, performance related pay reinstatement and a further drop in Japanese licensing revenue should lead to further margin pressure and below sector-average earnings before interest and tax (EBIT) growth in full year 2017-18," said RBC analysts Rogerio Fujimori, Richard Chamberlain, Piral Dadhania and Claire Huff.
Burberry's compound annual growth rate is expected to be 4% versus 8% for its luxury peer group.
RBC has forecast adjusted EBIT of £438m for 2017, up from a previous estimate of £409m, and £454m for 2018, compared to an earlier projection of £436m.
The analysts hailed Burberry's strategic focus on digital and said it continues to see the brand equity strengthening.
They also noted that management has been addressing legacy issues and investing in brand promotion.
"But this comes at a cost at times when demand for its all-important Chinese cluster is weak," the analysts warned.
Key risks include further weakening of the pound against other key currencies, bigger-than-expected cost cutting in 2017, a large share buyback and potential corporate activity, RBC said.
JP Morgan Cazenove reviewed its ratings on a number of metals and mining stocks as it took a look at the sector and recommended selling the recent rally.
The bank noted Chinese demand growth is slowing, oversupply is rising and previous super-cycles suggest spot prices could carry a further downside risk of around 33%.
"Our recommendations already reflect this bearish view, but as we move beyond typical Q1 seasonal demand strength and with the UK mining sector +42% from its January 2016 lows, we recommend selling the recent rally."
It downgraded Glencore to 'neutral' from 'overweight' with a 130p price target, saying the agriculture unit stake sale brings to a close the catalyst-rich deleveraging story.
"GLEN retains a strong free cash flow profile and valuation does not look particularly expensive; however, we believe downside risk to copper and zinc prices will drive negative earnings momentum over the next few months."
JP Morgan Cazenove downgraded Antofagasta to 'neutral' from 'overweight' and slashed the price target to 410p from 600p. It cut Kaz Minerals to 'underweight' from 'neutral' but lifted the price target to 125p from 105p and downgraded First Quantum Minerals to 'underweight' from 'neutral' but raised the price target to 300p from 140p.
The downgrades above reflect JPM's view of copper price downside risk.
JP Morgan said China's slowing commodity demand and significant expansion of supply in base metals, coal and iron ore over the past decade continue to push markets into oversupply that it expects to persist across 2016-17.
In addition, it said that despite weakening year-to-date, it expects the US dollar to remain relatively strong for the rest of the year, which is negative for the pricing power of commodity consumers.
"As a result, we expect commodity prices and producers' earnings momentum to resume their decline and we believe prices for most commodities will need to trade into the cost curve to incentivise capacity closures."
UBS has downgraded Zoopla to a 'neutral' recommendation from 'buy' due to continued competetive pressures from rival OnTheMarket, but left Rightmove at 'buy'.
UBS said its Evidence Lab research team had unearthed data on the UK property portal marketplace that indicated estate agency collective OnTheMarket had continued its momentum in 2016.
The research showed OnTheMarket grew 6.8%, ahead of Rightmove's 1.1% and Zoopla's 0.7%, as well as increasing its share of app downloads.
"We maintain our view that OTM is unlikely to be a major long-term player, but remain for the number two player Zoopla, which has been more impacted since OTM's launch."
Of the FTSE 250 pair, Rightmove's market leading position remains strong, UBS said, with year-on-year agent growth of 4.9% to March and leading app stats being supportive of this.
"Overall, we see the launch of OTM as having actually strengthened the position of Rightmove by making it a stronger number one in the segment, with Rightmove now having circa 65% more properties listed for resale than Zoopla."
But Zoopla is downgraded due to OTM's threat, having grown its share of agents in the first quarter, while Zoopla "continues to show no sign of a significant recovery in agents".
The quarter saw agent growth of 3.3% compared to OTM's growth rate of 18.5%. |
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