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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 take a breather ahead of Fed speakers London´s top-flight index barely managed to close in the green, following the release of somewhat mixed economic data Stateside and ahead of speeches from two key Fed speakers, one later on Thursday and another on Friday.
The FTSE 100 was little changed by the close of trading, edging higher by 0.04% or 2.80 points to close at 6,265.65, with the domestic-facing FTSE 250 lower by 0.23% or 39.81 points at 17,192.83.
Speaking at the Peterson Institute, in Washington DC, after the close of markets, Federal Reserve governor Jerome Powell said an interest rate hike would be appropriate fairly soon, but said he wanted to see a "significant strengthening" in economic activity in the second quarter.
Data released earlier in the day showed that orders for US durable goods jumped by 3.4% month-on-month in April, easily outpacing forecasts for a rise of 0.3%. However, the figures were distorted by a near 65% surge in orders for civilian aircraft.
"On balance, this morning's report from the Census Bureau confirms that factory demand remained soft through Q1 and has yet to rebound. We do not expect to see a near-term turn around in the US manufacturing sector," Barclays´s Jesse Hurwitz said in a research report sent to clients.
Nevertheless, on the back of Thursday´s reading on durable goods and Wednesday´s release of the latest international trade in goods numbers the Federal reserve bank of Atlanta revised its tracking estimate for second quarter GDP in the US from 2.5% to 2.9%.
Markets were also eagerly awaiting a speech from Fed chair Janet Yellen herself scheduled for Friday.
Acting as a backdrop, and contrary to the expectations of some market partipants, Japanese officials refrained from making any official announcements at the meeting of G7 central bankers and finance ministers being held that same day in the city of Sendai.
However, primer minister Shinzo Abe reportedly warned his guests of the risk of a repeat of the last financial crisis if the proper economic policies were not adopted.
Miners, grocers and real estate stocks were at the top of the leaderboard on the back of repoirts that China´s central bank would maintain a slightly loose monetary policy and as the latest Brexit polls appeared to favour the 'Remain' camp slightly.
Front month Brent crude futures ended the day barely unchanged, rising by just 0.04% to $49.76 per barrel on the ICE after having traded above the $50 throughout the better part of the session.
Overnight, the president of the Federal Reserve bank of Dallas, Robert Kaplan, argued in favour of a rate hike "in the near future" but not necessarily at its mid-June meeting, so long as the economy evolved as expected.
He also said the risk of Brexit would be "a factor" at the Fed's 15 June policy meeting and noted the risk of a 'sell-off' in the pound should the UK opt to leave the European Union.
On that note, the results of the latest Ashcroft poll showed that 65% of those surveyed expected the 'Remain' camp to prevail versus the 35% who expected the opposite result.
Similarly, the results of the latest BMG Research poll, which was conducted on-line, revealed a small up-tick in the proportion of respondents who said they were backing the 'Remain' option, which rose by one percentage point to 44%.
Referendum anxiety takes its toll on investment
Uncertainty surrounding the 23 June referendum sent business investment in the UK 0.5% lower in the first three months of 2016, contributing to a slowdown in the economy from the 0.6% quarter-on-quarter pace seen in the final three months of 2015 to 0.4%, a second estimate from the Office for National Statistics revealed, bang in-line with estimates and the preliminary estimate.
The Confederation of British Industry's gauge of service sector firm confidence fell to its lowest mark in more than three years over the three months to May.
Gross mortgage borrowing in the UK was at £12bn in April, for a 12% rise versus a year ago, following March's spike in activity as borrowers raced to complete purchases ahead of the increase in Stamp Duty, according to the BBA.
A raft of companies went ex-dividend on Thursday, including Carnival, DCC, Whitbread, Amec Foster Wheeler and Inchcape.
Miners pace gains, banks see profit-taking
Miners were buoyed by reports in Chinese media, citing the People's Bank of China own analysts, that the monetary authority was intending to keep a slightly loose policy stance.
Banks on both sides of the Pond retreated following their recent strong run, although some analysts in the City were also referencing a report from the Financial Ombudsman showing that payment protection insurance remained the most complained about financial product, while complaints about packaged accounts and payday loans had surged.
Full year pre-tax profits at Tate & Lyle soared to £126m from 25m as revenues rose 1% to £2.35bn. Adjusted profit before tax was £67m higher at £193 largely as a result of net exceptional costs in the year of £50m.
United Utilities saw underlying profits drop 9% over the twelve months ending on 31 March to reach £604.1m, even as revenues edged up from £1,720.2m to £1,730m. The company declared a final dividend of 25.64p per share, taking the total for the year to 38.45p, for an increase of 2% - in line with its payout policy.
Six international oil firms including BP and Royal Dutch Shell Plc had tabled bids to operate Qatar's biggest offshore oil field, Reuters reported, citing two people familiar with the matter.
Pets at Home reported an increase in pre-tax profit for the year as revenue grew and the company expressed confidence over its outlook. For the 53 weeks to the end of March, statutory pre-tax profit edged up to £92.1m from £90.2m on revenue of £793.1m, up from £777.8m. Meanwhile, group like-for-like revenue grew 2.1% compared with 4.2% growth in the same period last year.
FTSE 250 car dealership Inchcape said on Thursday that it has made a good star to the year, in line with its expectations. In a trading update for 1 January to 25 May, the company said group revenue rose 12.8% at actual currency to £2.47bn, or an 11.7% increase at constant currency.
Daily Mail & General Trust shares tumbled as the company posted drop in first-half profit and warned that a weak print advertising market will hit margins in the media business.
B&M European Value Retail, the discounter chaired by Sir Terry Leahy, declared a special dividend as it posted final results showing strong sales, profits and cash generation. The FTSE 250 group, which floated almost two years ago, opened a record 79 UK stores in the UK and six Jawoll stores in Germany in the 52 weeks to 26 March, helping lift revenues increased by 23.6% to £2.04bn. |
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| Market Movers
FTSE 100 (UKX) 6,265.65 0.04%
FTSE 250 (MCX) 17,192.83 -0.23%
techMARK (TASX) 3,121.50 0.16%
FTSE 100 - Risers
Glencore (GLEN) 136.20p 2.10%
Sainsbury (J) (SBRY) 268.10p 1.98%
3i Group (III) 542.50p 1.88%
BHP Billiton (BLT) 852.70p 1.85%
Intu Properties (INTU) 303.60p 1.85%
Berkeley Group Holdings (The) (BKG) 3,379.00p 1.62%
Worldpay Group (WI) (WPG) 272.70p 1.56%
Mediclinic International (MDC) 868.00p 1.46%
Anglo American (AAL) 629.20p 1.45%
Johnson Matthey (JMAT) 2,882.00p 1.44%
FTSE 100 - Fallers
Carnival (CCL) 3,379.00p -3.15%
Royal Bank of Scotland Group (RBS) 248.30p -3.01%
Whitbread (WTB) 4,242.00p -2.62%
DCC (DCC) 6,355.00p -2.38%
Marks & Spencer Group (MKS) 390.60p -2.20%
easyJet (EZJ) 1,533.00p -1.48%
TUI AG Reg Shs (DI) (TUI) 1,042.00p -1.42%
Lloyds Banking Group (LLOY) 72.81p -1.26%
International Consolidated Airlines Group SA (CDI) (IAG) 544.50p -1.18%
United Utilities Group (UU.) 954.00p -1.14%
FTSE 250 - Risers
Pets at Home Group (PETS) 261.60p 4.93%
Aldermore Group (ALD) 218.60p 4.24%
OneSavings Bank (OSB) 321.00p 3.88%
PayPoint (PAY) 906.50p 3.72%
Thomas Cook Group (TCG) 75.20p 3.44%
Kaz Minerals (KAZ) 153.80p 3.22%
Acacia Mining (ACA) 323.60p 3.06%
Sports Direct International (SPD) 372.70p 2.98%
B&M European Value Retail S.A. (DI) (BME) 290.70p 2.98%
Polymetal International (POLY) 825.50p 2.93%
FTSE 250 - Fallers
Ibstock (IBST) 203.00p -9.25%
Restaurant Group (RTN) 353.30p -4.64%
Euromoney Institutional Investor (ERM) 977.00p -4.59%
Amec Foster Wheeler (AMFW) 451.60p -4.24%
Electra Private Equity (ELTA) 3,804.00p -3.82%
Lookers (LOOK) 146.90p -3.67%
Evraz (EVR) 116.60p -3.64%
Great Portland Estates (GPOR) 762.00p -3.36%
Mitchells & Butlers (MAB) 289.60p -3.27% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Auto shares pace gains European equities managed a higher close on Thursday despite weakness in the banking sector and a slide lower in Brent after prices breached the $50 a barrel mark - for the first time since November - earlier in the day.
The benchmark DJ Stoxx Europe 600 index finished the day just 0.1% or 0.35 points higher at 348.91, while Germany's DAX tacked on 0.66% to trade at 10,272.71 and France's CAC 40 rose 0.69% to 4,512.64.
Automobiles&parts stocks paced gains on the DJ Stoxx 600, with a gauge for shares in the sector advancing by 1.49% or 7.21 points to 490.23. The sector index for banks on the other hand ended down by 0.52% or 0.81 points at 154.89.
"Given that we have two major risk events for the markets in the coming weeks -EU referendum in the UK and possible rate hike from the Fed - I do wonder though whether this rally has the legs to build significantly on the moves of the last couple of days," said Craig Erlam, senior market analyst at Oanda.
Oil prices staged an early advance after data from the Energy Information Administration on Wednesday showed US crude supplies declined by 4.2m barrels for the week ended 20 May, compared with expectations of a 2.5m drop.
However, by the end of trading West Texas Intermediate crude oil futures had slipped 0.10% to $49.51 a barrel.
FXTM's chief market strategist, Hussein Sayed, said: "Whether the bullish trend still has legs or if an imminent correction is due remains a wild guess, as speculators over-exaggerate on the upside as they did recently on the downside. However, OPEC's meeting on June 2 remains the key risk factor in the short - term as markets are eager to know whether an agreement on a potential oil freeze will see the light."
In corporate news, shares in Banco Popular tumbled after the Spanish lender announced plans to raise up to €2.5bn through a share issue to strengthen its balance sheet. The news sent its stocks to its lowest level since 1992 on heft trading volumes. Peers Banco de Sabadell and Caixabank were also firmly in the red.
United Utilities edged lower after posting a drop in full-year profit, while Daily Mail and General Trust shares slumped after the company reported a decline in first-half profit and warned that a weak print advertising market will squeeze margins in the media business.
On the upside, London-listed food ingredients maker Tate & Lyle rose after reporting a surge in full-year profit. |
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| | US Market Report | | US open: Wall Street drifts lower ahead of Fed speakers Shares on Wall Street were drifting slightly lower in late morning trading in New York following the release of a mixed bag of economic data and ahead of a much awaited speech on the economy from Federal Reserve governor Jerome Powell.
The Dow Jones Industrial Average was trading down by 0.13% or 22.94 points at 17,808.57, while Nasdaq futures were off by 0.02% or 1.13 points to 4,893.76 and the S&P 500 slipped 0.05% or 1.12 points to 2,089.42.
Oil prices were off their best levels of the day but nonetheless higher after data from the Energy Information Administration on Wednesday revealed that US crude supplies declined by 4.2m barrels for the week ended 20 May, compared with expectations of a 2.5m drop.
West Texas Intermediate was up 0.22% to $49.67 a barrel while Brent crude was 0.34% firmer at $49.91. In parallel, the US dollar spot index was slipping 0.17% to 95.19.
"The major indices appear to be consolidating following two explosive sessions which have both seen triple digit gains for the Dow. The sharp move higher has taken many investors by surprise given the recent hawkish comments from Fed members which have raised the probabilities of a summer rate hike," said David Morrison, senior market strategist at SpreadCo.
Morrison said the equity rally was due in part to increased confidence in the US economy and hopes that it is strong enough to withstand further monetary tightening.
"However, all eyes are on the dollar now. If the greenback continues its recent rally this will put pressure on China and increase the possibility of a yuan devaluation. It should also put downside pressure on dollar-denominated commodities. But for now all seems well - particularly with near-month Brent crude back above $50 per barrel."
Orders for US durable goods rocketed 3.4% month-on-month in April, figures from the Department of Commerce revealed. Yet that was largely due to a 65% surge in orders for civilian aircraft.
So-called 'core' capital goods orders in fact fell by 0.8% (consensus: 0.3%) in comparison to the prior month, a poor omen for business investment.
Similarly, the National Association of Realtors´ pending home sales index jumped by 5.10% month-on-month in April - to reach its highest level since February 2006 - after a rise of 1.4% in March (consensus: 0.60%).
However, at least one well-regarded economist pointed to positive seasonal factors as the main reason behind the large increase seen in the index.
Despite the mixed economic data on offer on Thursday, the Federal Reserve Bank of Atlanta marked up its tracking estimate for second quarter economic growth Stateside from an annualised pace of 2.5% to 2.9%, comfortably above the pick-up that most economists were then expecting. |
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| | Broker Tips | | Broker tips: Barclays, Melrose, Electrocomponents Exane BNP Paribas upgraded Barclays to 'outperform' from 'neutral' and lifted the price target 19% to 220p, having already upped the stock two weeks ago, saying things were looking brighter and the fog is lifting.
Exane said Barclays' decision to cut the dividend and sell the African operations - announced in February - largely addresses the equity issue and gives more flexibility to improve efficiency in its capital base.
In addition, it said the earnings uplift as securities are extinguished is no longer a distant prospect.
Exane said it is now confident Barclays can boost earnings by about 20% and improve return on tangible equity by up to 2 percentage points over the next few years through debt restructuring alone.
UBS downgraded Melrose Industries to 'neutral' from 'buy' with an unchanged price target of 385p following the recent strong performance, saying the next deal is more reflected in the price.
The Swiss bank noted Melrose is up 33% year-to-date, outperforming its UK engineering coverage by 25% YTD. As a result, it has reached UBS's target.
"Melrose operates an unusual 'buy, improve, sell' business model and the current leverage to any future deal upside is high given the small nature of the continuing group.
"This is being factored into the share price today - we estimate that a c£2bn deal on which management double equity over 3-4 years is now being priced in."
RBC Capital Markets upgraded Electrocomponents to 'sector perform' from 'underperform' and lifted the price target to 270p from 185p, saying downside is limited.
The Canadian bank pointed out that full-year results were around 3% ahead of its forecasts, with a better performance on cost savings. |
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