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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: Mining and energy stocks lead gains The FTSE 100 closed higher on Friday as mining and energy shares rallied.
Energy stocks benefited from a jump in oil prices while heavily-weighted miners bounced back from losses the previous day, despite weaker copper prices.
Anglo American, BHP Billiton, Rio Tinto, Shell and BP were all firmly in the black.
Oil prices gained on optimism about the US economy after Federal Reserve Chair Janet Yellen offered an upbeat view. At 1637 BST, Brent crude surged 5.5% to $41.75 per barrel and West Texas Intermediate soared 6.09% to $39.68 per barrel.
Speaking at a panel before former Fed Chairs Ben Bernanke, Paul Volcker and Alan Greenspan at the International House in New York on Thursday, Yellen touted the strength of the labour market and rebuffed suggestions that an economic bubble is about to burst.
"I certainly wouldn't describe this as a bubble economy," Yellen said, responding to Republican presidential contender Donald Trump's claims.
"The US economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December."
Closer to home, investors shrugged off disappointing UK data.
The Office for National Statistics said Britain's trade deficit in goods narrowed in February to £12bn after January's reading was revised sharply higher to £12.2bn. However, February's reading was higher than economists' forecasts for it to narrow to £10.2bn.
Meanwhile, UK industrial production unexpectedly declined in February by 0.3% month-on-month following a revised 0.2% increase in January, the ONS revealed.
"February's trade and industrial production figures add to the evidence that the economy has made an uninspiring start to the year and suggest that growth remains heavily unbalanced," according to Capital Economics.
Manufacturing production dropped 1.1% in February, more than the 0.2% dip expected by analysts and following a revised 0.5% rise in January.
"Chancellor George Osborne will have been expecting a slight drop in today's manufacturing production figures, especially amid the furore of steel giant Tata signaling their intention to close their Port Talbot plant, but the severity of the fall will have been surprising," said Dennis de Jong, managing director at UFX.com.
The NIESR has estimated the UK economy grew by 0.3% in the first quarter of 2016 after growth of 0.2% in the three months ending in February 2016. It marked the weakest rate of growth for the UK economy since the final quarter of 2012.
"The subdued growth in the first quarter of 2016 has been primarily driven by weakness in production industries, especially manufacturing," according to James Warren, research fellow at NIESR.
In the US, the Commerce Department said US wholesale inventories fell 0.5% in February, the sharpest decline since May 2013. Analysts had expected a 0.1% drop.
In company news, Marks & Spencer gained as Canaccord Genuity upgraded the stock to 'buy' from 'speculative buy' and raised its target to 475p from 460p following the retailer's fourth quarter trading update.
Experian was under the cosh after HSBC downgraded the stock to 'reduce' from 'buy' and cut the target to 1,140p from 1,290p.
Schroders was on the back foot after Exane BNP Paribas downgraded it to 'neutral' from 'outperform' and cut the price target 10% to 2,700p as it took a look at asset managers.
Tullow Oil declined as it said there has been damage to the turret bearing on a floating production storage and offloading (FPSO) unit at its Jubilee field in Ghana. However, the company does not expect this to have any significant impact on revenue.
Entertainment One advanced a day after the first trailer for its Ricky Gervais movie was released to the masses. The movie, David Brent: Life on the Road, is a spin-off from the popular BBC comedy series The Office. |
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| Market Movers
FTSE 100 (UKX) 6,204.41 1.10%
FTSE 250 (MCX) 16,829.72 0.69%
techMARK (TASX) 3,163.81 0.56%
FTSE 100 - Risers
Anglo American (AAL) 547.20p 8.12%
BHP Billiton (BLT) 760.50p 4.54%
Royal Dutch Shell 'A' (RDSA) 1,733.00p 3.99%
Royal Dutch Shell 'B' (RDSB) 1,740.50p 3.85%
Rio Tinto (RIO) 1,987.50p 3.65%
Glencore (GLEN) 136.80p 3.56%
BP (BP.) 350.35p 3.26%
Legal & General Group (LGEN) 233.80p 2.77%
Centrica (CNA) 232.70p 2.47%
Barclays (BARC) 150.70p 2.45%
FTSE 100 - Fallers
Experian (EXPN) 1,239.00p -1.27%
Shire Plc (SHP) 4,250.00p -1.00%
Schroders (SDR) 2,500.00p -0.95%
Berkeley Group Holdings (The) (BKG) 3,124.00p -0.70%
Rexam (REX) 617.50p -0.64%
BT Group (BT.A) 437.45p -0.59%
Associated British Foods (ABF) 3,368.00p -0.56%
AstraZeneca (AZN) 4,146.50p -0.50%
Kingfisher (KGF) 377.80p -0.50%
WPP (WPP) 1,639.00p -0.49%
FTSE 250 - Risers
Vectura Group (VEC) 174.50p 7.19%
Weir Group (WEIR) 1,054.00p 6.25%
AA (AA.) 281.00p 6.16%
Entertainment One Limited (ETO) 154.30p 5.83%
Acacia Mining (ACA) 287.90p 5.07%
Ashmore Group (ASHM) 290.40p 4.57%
PayPoint (PAY) 796.50p 4.32%
Ocado Group (OCDO) 348.10p 4.00%
Evraz (EVR) 93.90p 3.70%
Wood Group (John) (WG.) 611.00p 3.65%
FTSE 250 - Fallers
DFS Furniture (DFS) 300.80p -6.26%
Elementis (ELM) 223.90p -6.16%
Supergroup (SGP) 1,359.00p -4.30%
Greencore Group (GNC) 378.50p -3.54%
IP Group (IPO) 165.00p -3.51%
WH Smith (SMWH) 1,817.00p -3.25%
Kaz Minerals (KAZ) 142.70p -2.79%
Zoopla Property Group (WI) (ZPLA) 240.20p -2.16%
OneSavings Bank (OSB) 302.70p -1.78% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Oil and bank stocks pace gains European stocks rose on Friday, with gains in banks and oil stocks pacing gains as oil prices rebounded after the previous session's losses.
The benchmark DJ Stoxx 600 index finished the session with gains of 1.14%, ending the day higher by 3.37 points to 331.83, while Germany's DAX gained 0.96% and France's CAC 40 was 1.35% higher.
The Stoxx 600 Oil&gas sector gauge advanced 3.49% to 257.8 points and a sector index of bank stocks by another 2.11% to end the day at 137.47.
At the same time, oil prices were in the black, supported by comments from Federal Reserve Chair Janet Yellen overnight and hopes of an agreement by OPEC and non-OPEC members to cap output at the upcoming meeting in Doha.
West Texas Intermediate was up 5.72% to $39.52 a barrel and Brent crude was up 5.4% to $41.68.
"Relative calm has descended upon European markets, as yesterday's dash for safety seems to have abated," said IG analyst Joshua Mahony.
"Crude prices have clearly shifted into a more bullish gear to end out this week, with WTI breaking to a new April high. There will be a clear market repositioning ahead of the OPEC meeting in nine days' time, yet with continued mixed messages emanating from various sources, directional bias continues to change hands every other day."
In a speech on Thursday, Yellen - appearing on a panel at New York's International House with her predecessors Ben Bernanke, Paul Volcker and Alan Greenspan - assuaged concerns about a recession.
Yellen said the central bank's decision to hike rates in December was not a mistake, adding that the US economy had made good progress since the financial crisis.
"The US economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December," Yellen said.
German data helped lift the mood. Destatis said exports rose 1.3% month-on-month in February following a 0.6% decline in January and better than economists' expectations of a 0.5% increase.
In corporate news, Associated British Foods was a touch higher after agreeing to acquire the remaining stake in South African sugar producer Illovo Sugar it did not already own.
Air France-KLM flew higher after reporting a 4.6% jump in March passenger traffic.
FTSE 250 company Tullow Oil traded higher even after it confirmed damage to the turret bearing on a floating production storage and offloading (FPSO) unit at its Jubilee field in Ghana, but said this was unlikely to have a material impact on revenue.
AstraZeneca nudged lower after saying that it and Eli Lilly have decided to continue a pivotal clinical trial for a potential treatment for early Alzheimer's disease. |
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| | US Market Report | | US open: Stocks egde higher as oil prices rally US stocks gained on Friday as oil prices rallied after Federal Reserve Chair Janet Yellen said the US was headed for more economic growth.
At 1430 BST, the Dow Jones Industrial Average rose 0.60%, the S&P 500 increased 0.71% and the Nasdaq climbed 0.72%.
Speaking at a panel before former Fed Chairs Ben Bernanke, Paul Volcker and Alan Greenspan at the International House in New York on Thursday, Yellen touted the strength of the labour market and rebuffed suggestions that an economic bubble is about to burst.
"I certainly wouldn't describe this as a bubble economy," Yellen said, responding to Republican presidential contender Donald Trump's claims.
"The US economy has continued to progress in a satisfactory way. We continue to see good job performance, some evidence of inflation moving up, so that was our expectation when we raised rates in December."
Oil prices jumped on optimism about the US economy and hopes of an agreement between global producers at a meeting in Doha on 17 April. At 1414 BST, West Texas Intermediate crude surged 5.2% to $49.34 per barrel and Brent rose 4.6% to $41.36 per barrel.
In economic data, there is little on the agenda with the only notable release being the US wholesale inventories report at 1500 BST.
"Frustratingly there isn't much for the US index to work with this afternoon either, a speech from Fed vice-chair William Dudley arguably the only thing of note," said Connor Campbell, financial analyst at Spreadex.
In currency markets, the yen was softer after Japanese finance minister Taro Aso said he might act against what he called one-sided yen rises, having surged to a 17-month high versus the greenback in the previous session.
The dollar was down 0.31% versus the pound, flat against the euro and 0.55% firmer versus the yen.
On the corporate front, Gap was under the cosh after the retailer posted a drop in March sales late on Thursday.
Restaurant operator Ruby Tuesday plunged as its latest quarterly earnings missed expectations. |
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| | Broker Tips | | Broker tips: M&S, Experian, Schroders Marks & Spencer was upgraded to 'buy' from 'speculative buy' by Canaccord Genuity on Friday after the retailer reported its fourth quarter results.
Canaccord also raised its target on M&S to 475p from 460p, saying there was potential for a new strategic focus under new chief executive Steve Rowe to drive higher shareholder returns.
M&S on Thursday reported a 1.9% increase in group sales as an increase in food sales offset another decline in the struggling general merchandise division.
Food sales were up 4.0% in total but disappointingly flat on a like-for-like (LFL) basis, short of a consensus forecast of 0.5%.
Clothing and home sales, known as general merchandise (GM), were down 1.9% in total and 2.7% on a LFL basis. The consensus for LFL sales was a 3.5% decline.
Rowe vowed to revive the clothing business, admitting "this performance was not good enough".
"Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do."
Rowe, former M&S executive director of general merchandise, took over from Marc Bolland on Saturday and said he would continue to oversee the clothing division.
"This category has long been a drag on profit performance and sentiment, and will be addressed through a number of measures, some of which are already yielding some early signs of encouragement," said Canaccord analyst David Jeary.
"These include, but are not limited to, better prices, better fit, better availability and better customer choice (by reducing line proliferation). None of these are - or should be - earth-shattering revelations, but rather they are - or should be - core competencies for any clothing retailer."
Canaccord left its forecasts unchanged and said it will review them again after Rowe's strategic plan is presented in May.
It has estimated full year 2016 adjusted earnings before interest tax, depreciation and amortisation of £1.33bn, up slightly from the previous year's £1.31bn. Sales are expected to come in at £10.38bn, compared to £10.31bn in 2015.
HSBC downgraded Experian to 'reduce' from 'buy' and cut the price target to 1,140p from 1,290p.
It noted that Brazil's leading banks are working to create a Positive credit bureau, a move that creates significant medium-term uncertainty and will impair market expectations of longer-term growth.
"Brazil's largest commercial banks namely Banco do Brasil, Caixa Economica Federal, Itau, Unibanco, Bradesco and Banco Santander are working to set up a Positive credit bureau that will compete with Experian. These players will have a stake in the bureau," HSBC said.
It pointed out that several of these banks historically owned Serasa and eventually sold it to Experian.
In 2012, Experian paid $1.5bn for the remaining 29.9% stake of Serasa to the banks.
"We think this was a move by the banks to protect their market shares, avoid a potential increase in customer churn, and as a result keep the spreads in a fairly consolidated banking market such as Brazil."
HSBC said Experian was likely to argue that building up such a database will take time and in the near term, the move may not impact earnings.
"Further, at the time of the deal in 2012, Experian had signed both Positive and Negative data supply deals with the banks. The question becomes if the business is sustainable in the longer term? After all, the banks represent key data suppliers as well as customers for Experian in Brazil."
The bank said this market development poses a multiple de-rating threat. .HSBC had previously argued Experian shares could re-rate to 20x price-to-earnings multiple as the company delivered on management's strategy of capital discipline and a more defensive earnings profile than expected.
"However, given that the market is likely to adjust its longer term growth assumptions, we reduce our target multiple to 17x (CY 2016e, last 5 year average)."
At 1017 BST, Experian shares were down 1.8% to 1,233p.
Exane BNP Paribas downgraded Schroders to 'neutral' from 'outperform' and cut the price target 10% to 2,700p as it took a look at asset managers.
While it remains positive on the long-term investment case for Schroders, Exane said its weak flow and fund performance momentum, lack of near term operating leverage and the lower likelihood of a change in capital return policy have led it to downgrade.
Exane said its long-term positive stance was based on diversity across asset classes, clients and geographies; Schroders' exposure to multi-asset and wealth management and a strong pipeline of new funds/seeding.
"Nonetheless we see Schroders' diversity posing some short-term challenges, in particular for the £72bn of AUM coming from Asia-Pacific clients (split roughly equally between intermediary and institutional, though this includes AUM from Japan and Australia), given the market backdrop."
The French bank noted the region accounted for around 75% of group net flows in the first half of 2015.
"Schroders' relative fund performance has deteriorated over the past six months, leading us to see the risk/reward on the stock as balanced." |
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