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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 on mounting Brexit fears UK stocks finished lower on Monday as Brexit fears rose ahead of the next week's European Union referendum.
The pound regained ground against the dollar after falling earlier in the session as polls showed more Britons in favour of leaving the European Union before the 23 June referendum. At 1629 BST the pound rose 0.04% to $1.4262.
The ORB poll for the Independent showed 55.0% said they were now backing the option to leave the EU, against 45.0% who said they were supporting 'Remain'.
A poll by the Financial Times showed 'Leave' has taken the lead for the first time, at 46% versus the Remain camp's 44%.
"The elevated concerns and mounting anxiety ahead of the EU referendum vote on the 23rd of June has created a contagion, which continues to haunt investor attraction towards not only the Sterling but riskier assets," said FXTM research analyst Lukman Otunga.
"Volatility has intensified to unfathomable levels while uncertainty nears a peak following the conflicting polls which continue to leave the majority of investors on edge."
Meanwhile, oil prices rebounded from earlier lows as the dollar reversed gains. Brent crude rose 0.15% to $50.62 per barrel and West Texas Intermediate increased 0.18% to $49.16 per barrel at 1636 BST.
In economic data, Chinese industrial production held steady in May. Industrial output rose 6% in May from a year earlier, the National Bureau of Statistics said, in line with the previous month's growth and analysts' expectations.
Retail sales rose 10% year-on-year in May, missing forecasts for a 10.1% increase and following a 10.1% gain the previous month.
China's fixed asset investments, excluding rural, climbed 9.6% year-on-year in May compared to a 10.5% increase in April. Economists had pencilled in no change.
Among corporate stocks, banks were under pressure on Brexit worries with Lloyds, Standard Chartered and Barclays in the red.
G4S slumped after it emerged the security services company employed the suspect responsible for a mass shooting at a gay nightclub in Orlando, Florida that killed at least 50 people.
Aveva jumped after confirming it has received a revised and conditional proposal from Schneider Electric SE to combine with that company's Software Business in exchange for new Aveva shares and a significant cash payment.
Inmarsat edged higher as it formed a partnership with maritime broadband specialist SpeedCast International to roll out the satellite company's new Global Xpress (GX) service to around 2,000 vessels in five years. |
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| Market Movers
FTSE 100 (UKX) 6,059.64 -0.92%
FTSE 250 (MCX) 16,619.80 -1.23%
techMARK (TASX) 3,016.20 -0.78%
FTSE 100 - Risers
Fresnillo (FRES) 1,233.00p 1.57%
Royal Bank of Scotland Group (RBS) 217.20p 1.54%
Inmarsat (ISAT) 710.50p 1.00%
Randgold Resources Ltd. (RRS) 6,670.00p 0.68%
GlaxoSmithKline (GSK) 1,421.00p 0.53%
Rio Tinto (RIO) 1,951.50p 0.49%
GKN (GKN) 270.80p 0.22%
Royal Dutch Shell 'B' (RDSB) 1,795.00p 0.20%
Pearson (PSON) 797.50p 0.06%
Worldpay Group (WI) (WPG) 275.70p -0.04%
FTSE 100 - Fallers
Lloyds Banking Group (LLOY) 64.23p -4.21%
Sky (SKY) 895.50p -3.24%
Hargreaves Lansdown (HL.) 1,230.00p -3.00%
Admiral Group (ADM) 1,850.00p -2.89%
BT Group (BT.A) 410.95p -2.75%
Schroders (SDR) 2,485.00p -2.63%
Standard Chartered (STAN) 502.70p -2.56%
Aviva (AV.) 411.60p -2.35%
3i Group (III) 542.00p -2.25%
Barclays (BARC) 165.60p -2.24%
FTSE 250 - Risers
Aveva Group (AVV) 1,854.50p 9.67%
Centamin (DI) (CEY) 113.70p 3.36%
Petrofac Ltd. (PFC) 730.00p 0.62%
Beazley (BEZ) 356.00p 0.56%
Millennium & Copthorne Hotels (MLC) 421.30p 0.55%
Debenhams (DEB) 69.75p 0.50%
Victrex plc (VCT) 1,419.00p 0.50%
Acacia Mining (ACA) 346.40p 0.49%
GCP Infrastructure Investments Ltd (GCP) 120.00p 0.33%
John Laing Group (JLG) 215.50p 0.33%
FTSE 250 - Fallers
Ocado Group (OCDO) 226.00p -7.38%
Allied Minds (ALM) 326.20p -6.80%
International Personal Finance (IPF) 267.10p -5.32%
G4S (GFS) 178.40p -4.80%
Supergroup (SGP) 1,400.00p -4.63%
Paysafe Group (PAYS) 374.50p -3.97%
Kaz Minerals (KAZ) 142.30p -3.72%
Evraz (EVR) 121.70p -3.72%
Cranswick (CWK) 2,231.00p -3.50%
Amec Foster Wheeler (AMFW) 426.30p -3.36% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Brexit worries take their toll Losses in lenders' shares weighed on the main European equity benchmarks, as investors continued to move to factor-in a greater risk of Brexit as the latest poll results continued to roll-in.
The pan-European Stoxx 600 finished down by 1.84% or 6.12 points at 326.80, with banks leading industry decliners, ending down by 2.7%.
In London, the FTSE 100 lost 1.16% to finish at 6,044.97, Frankfurt's DAX was lower by 1.80% at 9,657.44 and in Paris the CAC 40 slipped 1.85% to 4,227.02.
An ORB poll for The Independent, released early in the evening on 10 June, put support for the 'Leave' camp. at ten full percentage points ahead of 'Remain'. Soon afterwards, Betfair announced the chances of the UK remaining inside the EU had shifted from 75.0% at the end of the previous week to 68.5%.
The declines in Europe followed on from a dire day in Asia, where Japan's Nikkei 225 ended the session in the red by 3.51%, alongside another 0.75% drop in the US dollar/yen to 106.17.
"Asian markets were tattered as investors are concerned about the spike in volatility, and this has impacted the mood in Europe," noted Think Forex UK chief market analyst Naeem Aslam.
"There are a few reasons for this - the strength in the Japanese yen has spooked investors over in Asia, while, the [Brexit] referendum is pressing investor appetite for riskier assets in Europe, and traders are wary about the upcoming Fed meeting this week in the US."
Investors were increasingly seeking shelter, rushing to both the safe-haven yen as well as government bonds in recent sessions, with prices pushing higher and yields much lower for the latter.
Falling bond yields are increasingly highlighting concerns over the profitability of the banking sector, with shares in Banco Popolare di Milano down 10.08% and Banca Monte dei Paschi di Siena falling 9.14% in Italy.
Germany's Commerzbank lost 3.99% and in France, Credit Agricole was off 3.34%.
The ten year German bund yield was up by less than one basis point on Monday at 0.024%, having hit fresh record lows of 0.01% in Friday trading.
Crude prices were also declining, with Brent crude last off 0.58% at $50.25 and West Texas Intermediate down 0.574% at $48.79.
In corporates, security firm G4S was down 5% after it emerged that Omar Matteen, the attacker in Sunday's shooting at a Florida nightclub, was an employee.
The company told the market it is cooperating with law enforcement in their investigation of the shooting, which left at least 50 people dead.
Deutsche Bank lost 3%, with a Frankfurt court expected to rule on carousel trade in emission certificates, with two Deutsche Bank employees accused of evading taxes when buying and selling certificates.
The world's largest cement maker LafargeHolcim lost 3.84% after it said it has identified another nine countries where it will make divestments it it can achieve favourable valuations, though it did not name the locations. |
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| | US Market Report | | US open: Investors opt for caution ahead of Fed meeting, EU referendum US investors were playing it safe on Friday afternoon, ahead of next week's US central bank policy meeting, not to mention the following week's EU referendum here in the UK.
As of 16:49 BST the Dow Jones Industrials was 0.50% or 90.50 points lower to 17,894.10, the S&P had lost 0.72% or 15.33 points to 2,100.04 and the Nasdaq Composite was down by 0.99% or 49.19 points at 4,909.45.
The yield on the benchmark 10-year US Treasury bond was down by four basis points to 1.65%, while that on the policy sensitive two-year note was down by two basis points at 0.75%.
Gold was again higher, albeit by the slightest of margins, with the COMEX-traded futures contract for August delivery edging higher by 0.02% to $1,273.00/oz..
Heading the other way, oil prices declined as the dollar strengthened with US crude falling back below $50 a barrel. A stronger dollar is seen to weaken demand for crude as it makes imports bought in the currency more expensive.
Front month West Texas Intermediate crude oil futures were down by 2.04% to $50.91 per barrel on NYMEX.
Optimism on the hiring front
The University of Michigan's consumer confidence index for the start of June drifted lower from 94.7 to 94.3.
Economists had been expecting a reading of 94.0.
"The stability in consumer sentiment supports the view that the slowdown in May job growth was not a reflection of a broad-based downturn across the economy. Should job growth bounce back, as we expect it will, sentiment and spending should be key beneficiaries," Barclays's Jesse Hurwitz said in a research note sent to clients.
Brexit concerns in the air
Adding to the cautious tone, worries about Britain's June 23 referendum on European Union membership intensified after Shadow Home Secretary Andy Burnham warned there was a "very real prospect" of a Leave vote.
Burnham's remarks came as the Labour Party on Friday claimed that leaving the EU could lead to £18bn of spending cuts and tax rises.
On the company front, Twitter shares fell trade after the social-media company on Thursday notified millions of users that their accounts are at risk of being taken over. A survey also showed Instagram was attracting more advertising than Twitter.
Tesla Motors slid after the electric car maker came under investigation for a potential defect in the suspension of its Model S.
H&R Block jumped after the tax-preparation specialist reported better-than-expected quarterly results. |
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| | Broker Tips | | Broker tips: Johnson Matthey, BHP Billiton, Spectris Johnson Matthey's rating was downgraded to 'hold' from 'add' but its target was raised to 3,138p by Numis after the company reported its full year results.
The speciality chemicals and sustainable technologies group last Thursday reported a 5% decrease in full year pre-tax profit to £418.2m, beating forecasts of £415m. Efforts to cut costs and an exceptional impairment and restructuring charge of £141m hit profits.
Net debt was reduced by £319.5m despite funding a special dividend of £304.5m.
Revenue rose 7% to £10,7m, boosted by a strong performance at its emission control technologies (ECT) business and progress in new business and fine chemicals. It offset sales declines in other parts of the group including process technologies and precious metal products.
The firm expects slightly higher earnings in the coming year, saying the regulatory push for cleaner vehicles would bolster demand although competition would be intense.
"Near term earnings per share growth looks unlikely to be scintillating, so the investment case needs to look more to the medium term drivers and the potential in Europe especially as Real World Driving Emission standards oblige original equipment manufacturers to use Johnson Matthey to develop far cleaner diesel vehicles," said Numis analyst Charles Pick.
"A major shift away from diesel vehicles in Europe would be costly, whilst automotive markets are cyclical and weak Chinese demand may remain a feature for some operations for some time to come.
Pick added: "Our target has been amended to 3138p (from 2995p) based on a suggested multiple of c.16x estimated calendar year 2017 diluted earnings per share of around 196.1p."
BHP Billiton has been rated as 'outperform' with a target of 1050p by Credit Suisse as it said the company's investment case still holds after the Samarco disaster.
"BHP Billiton's oil business is setting it apart from the sector peer group and the company recently outlined positive FY17 cost and volume guidance," Credit Suisse said.
Samarco Mineração SA a joint venture between BHP Billiton and Vale SA was held accountable for a November 2015 dam burst in Brazil that left 19 people dead and the town of Bento Rodrigues destroyed.
"While a significant and upmost serious issue, we do not think Samarco has the potential to undermine our overall positive view of the shares at this stage," said Credit Suisse, noting it awaited release of the more detailed full investigation into the tragedy.
"In our view, the incremental implications of this report are probably limited for BHP Billiton (but not positive), and we await release of the more detailed full investigation."
The brokerage said its modelling allowed for $1.0bn in cash outflows for BHP Billiton in coming years relating to Samarco over coming years, meaning this should cover $2bn in total expenses should the Samarco JV company not have sufficient cash available.
It added that with the full investigation into the causes of the disaster still not completed and released, it might be a "little premature to think that Samarco should be restarting operations anytime soon."
Credit Suisse added that BHP Billiton was well-funded.
"Under spot oil, iron ore and copper prices, and within the dividend and capital expenditure guidance, BHP Billiton should have $7bn-plus of free cashflow for the year to June-2017."
Spectris was navigating tough market conditions, like many of its peers, but management had also been restructuring the business to capture long-term secular growth in the markets which its serves, analysts at ShoreCap said, leading them to initiate the shares at a 'buy'.
Furthermore, although margins were at a low point, ShoreCap analysts Ben McSkelly and Robin Speakman, said they perceived a recovery back towards historic levels which would allow the specialist instrumentation and controls business to leverage a secular growth trend around the mid-single digit level through the cycle.
The company's new 'final assembler model', by which it outsources nearly 90% of is manufacturing, together with strict capital allocation, should allow margins to return to historical levels, the broker argued.
Valuation-wise the stock was also 'attractive', ShoreCap noted, offering investors "a strong (indeed inefficient, in our view) balance sheet", with a net cash position set to emerge over the next year or so.
In turn, that meant Spectris had the financial muscle necessary to be active in M&A, with a small bolt-on and strategic deals likely, with management having indicated a stronger move into services, according to McSkelly and Speakman. | | |
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