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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 close higher as Brexit worries subside The FTSE 100 ended higher on Friday as campaigning on the European Union referendum was suspended until Saturday following the death of a British MP.
Labour MP Jo Cox was shot and stabbed in her constituency town of Birstall near Leeds, allegedly by local resident Tommy Mair, who is reported to have shouted "Britain First" as he attacked her. There was a sense among market participants on Friday that the incident could sway public opinion back towards a Remain vote.
"One of the triggers for the change in market sentiment appears to be the suspension of Brexit campaigns following tragic killing of MP Jo Cox. The suspension of campaigns just means Brexit can temporarily move to the sidelines," CMC Markets analyst Jasper Lawler.
"The killer is reported to have said 'Britain First' before shooting the MP, who was a strong believer in Britain remaining in the European Union. If true, it could tarnish the image of pro-Brexit supporters."
Morgan Stanley said the probability of a vote to Remain in next Thursday's EU referendum stands at 55%, based on the expectation of a late swing in the polls. In this event, which is the bank's base case, it expects to see a stock rally that could push the FTSE 100 up 14% from its current level.
The pound bounced back 0.51% to $1.4276 at 1647 BST.
In the eurozone, European Central Bank Benoit Coeure said the bloc was at risk of suffering a "lost generation" because of high youth unemployment as he criticised European countries for poor implementation of reform recommendations.
ECB President Mario Draghi was also due to give a speech in late afternoon trade with investors looking out for any clues on policy.
In the US, Federal Reserve St. Louis president Jim Bullard said just one interest rate hike is needed through 2018 due to stagnant economic growth.
On the economic data front, US housing starts fell a little less than expected in May, according to data from the Commerce Department. Housing starts slipped 0.3% to a seasonally-adjusted annual rate of 1.16m versus expectations of a decline to 1.15m.
Meanwhile, oil prices recovered, with Brent crude up 2.5% to $48.44 per barrel and West Texas Intermediate up 2.4% to $47.38 per barrel at 1641 BST.
Among corporate stocks, banks were the best performers as worries about Brexit abated somewhat with Lloyds, Barclays and Royal Bank of Scotland in the black
Lloyds was the standout gainer, however, after announcing on Thursday that it had won a UK Supreme Court ruling, ending a long-standing dispute about whether it was within its rights to buy back high-yielding bonds at par value.
Housebuilders also advanced as fears about the EU referendum receded for the time being. Taylor Wimpey, Barratt Development and Berkeley Group jumped.
On the downside, precious metals miners Randgold Resources and Fresnillo were under pressure as investors took profits following recent gains, after the price of gold rallied.
National Grid was also under the cosh as MPs called for the company to be split up to create an American-style independent operator system. |
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| Market Movers
FTSE 100 (UKX) 6,008.96 0.98%
FTSE 250 (MCX) 16,388.08 2.22%
techMARK (TASX) 2,961.61 0.53%
FTSE 100 - Risers
Lloyds Banking Group (LLOY) 65.05p 6.01%
Standard Chartered (STAN) 524.40p 5.14%
Barclays (BARC) 165.75p 4.57%
Taylor Wimpey (TW.) 176.00p 4.45%
TUI AG Reg Shs (DI) (TUI) 1,001.00p 4.22%
Wolseley (WOS) 3,685.00p 4.15%
Anglo American (AAL) 636.50p 3.94%
Berkeley Group Holdings (The) (BKG) 3,065.00p 3.90%
Royal Bank of Scotland Group (RBS) 222.10p 3.69%
Persimmon (PSN) 1,935.00p 3.59%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 6,610.00p -4.55%
Unilever (ULVR) 3,069.00p -1.19%
Shire Plc (SHP) 3,956.00p -1.08%
Diageo (DGE) 1,767.50p -0.90%
British American Tobacco (BATS) 4,111.00p -0.83%
GlaxoSmithKline (GSK) 1,387.50p -0.82%
Fresnillo (FRES) 1,224.00p -0.73%
ARM Holdings (ARM) 968.00p -0.62%
Paddy Power Betfair (PPB) 8,630.00p -0.52%
Sage Group (SGE) 591.00p -0.51%
FTSE 250 - Risers
Shawbrook Group (SHAW) 243.40p 10.14%
International Personal Finance (IPF) 274.90p 9.83%
CLS Holdings (CLI) 1,545.00p 9.03%
Aldermore Group (ALD) 190.00p 8.57%
Melrose Industries (MRO) 414.40p 8.03%
Restaurant Group (RTN) 337.50p 7.59%
Crest Nicholson Holdings (CRST) 546.50p 7.05%
Ted Baker (TED) 2,714.00p 6.93%
Essentra (ESNT) 521.00p 6.63%
Riverstone Energy Limited (RSE) 870.00p 6.49%
FTSE 250 - Fallers
Evraz (EVR) 109.50p -5.77%
Centamin (DI) (CEY) 111.10p -3.89%
Acacia Mining (ACA) 336.80p -2.46%
Allied Minds (ALM) 337.70p -2.40%
Softcat (SCT) 340.00p -0.93%
Aveva Group (AVV) 1,605.00p -0.93%
The Renewables Infrastructure Group Limited (TRIG) 96.30p -0.93%
TalkTalk Telecom Group (TALK) 215.60p -0.92%
Brown (N.) Group (BWNG) 223.80p -0.89% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks bounce back, led by banks European stocks rose on Friday, underpinned by strong bank shares and firmer oil prices as worries about Brexit receded, at least for now.
The benchmark DJ Stoxx Europe 600 index gained 1.40% or 4.49 points to 325.78, Germany's DAX rose 0.85% or 80.89 points to 9,631.36 and France's CAC 40 advanced 0.98% or 40.82 points to 4,193.83.
Meanwhile, Greece's Athex Composite rallied 5.4% after Eurozone officials approved the payment of €7.5bn of aid. The payment was given the green light at a meeting of the European Stability Mechanism in Luxembourg on Thursday and will allow the troubled nation to make its July loan repayments.
It is part of the €86bn bailout that was agreed last year between Athens and international creditors in exchange for a series of economic overhauls.
That turned banks into the standout gainers in Europe, with the Stoxx 600 sub-index for the sector up 3.69%.
In commodity markets, oil prices recovered, with West Texas Intermediate up 2.75% at $47.52 a barrel and Brent crude up 3.0% to $48.65.
Markus Huber, a trader at City of London Markets, said: "Besides traders taking advantage of lower prices and sharply 'oversold' market conditions some are also convinced that the tragic killing of UK MP Jo Cox yesterday could have a negative impact on the strong momentum of the Leave campaign. Whilst sentiment has undergone somewhat of a shift in the past 24 hours it is way too early to say that the bottom is in place, instead with more polls being released in the next few days volatility is likely to tick higher once again as we are approaching next Thursday.
"Overall after yesterday's big move off the lows a much narrower trading-range appears likely with possibly some weakness towards the end of the day as traders are reluctant to keep too much of a risk exposure going into the weekend due to uncertainty regarding next week's referendum.
Morgan Stanley said in an equity strategy note that its base case was for the UK to remain in the EU, a scenario that could push the FTSE 100 up by as much as 14% from current levels.
In the event of a vote to Remain, the bank expects the FTSE 100 to move up to a range of between 6,500 and 6,800 and the Stoxx 50 to move up to 3,150-3,300.
MS pointed out that with European indices further below their three- and six-month averages than UK indices - perhaps reflecting concerns over political contagion into Europe or an expectation that a weaker pond would limit downside for UK indices - it is possible European stocks will rally harder than UK equities in the event of a Remain vote.
If the UK votes to stay in the EU, the MSCI Europe could rally 5%-10%, although a drop of between 15% and 20% might ensure in the case of a Brexit scenario, MS said.
In corporate news, Tesco was a little higher after confirming the sale of its Dobbies Garden Centres chain.
Shares in Spain's Gamesa jumped 5.61% after announcing it would merge its wind-turbine making operations with those of rival Siemens.
Ericsson AB was higher despite news it received a request from US authorities in 2013 to answer questions relating to its operations.
National Grid was under pressure after MPs said the electricity and gas network operator should be split up to create an American-style independent operator system. |
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| | US Market Report | | US open: Stocks fall amid Brexit worries US stocks fell on Friday, reversing the previous day's gains, as investors showed risk-aversion ahead of Britain's European Union referendum next week.
At 1546 BST the Dow Jones Industrial Average fell 0.35%, the S&P 500 dropped 0.38% and the Nasdaq declined 0.38%.
In Europe, the main indices were all over 1% higher as both sides of the referendum debate suspended campaigning until Saturday at the earliest following the murder of a British MP on Thursday.
Labour MP Jo Cox was shot and stabbed in her constituency town of Birstall near Leeds, allegedly by local resident Tommy Mair, who is reported to have shouted "Britain First" as he attacked her. There was a sense among market participants on Friday that the incident could sway public opinion back towards a Remain vote.
"One of the triggers for the change in market sentiment appears to be the suspension of Brexit campaigns following tragic killing of MP Jo Cox. The suspension of campaigns just means Brexit can temporarily move to the sidelines," said Lawler.
"The killer is reported to have said 'Britain First' before shooting the MP, who was a strong believer in Britain remaining in the European Union. If true, it could tarnish the image of pro-Brexit supporters."
On the economic data front, US housing starts fell a little less than expected in May, according to the Commerce Department. Housing starts slipped 0.3% to a seasonally-adjusted annual rate of 1.16m versus expectations of a decline to 1.15m.
Meanwhile, oil prices recovered, with West Texas Intermediate up 2.7% at $47.51 a barrel and Brent crude up 3.0% to $48.68.
In corporate news, Apple shares declined following reports that Beijing's Intellectual Property Office ruled that the iPhone 6 and 6S models are similar to Shenzhen Baili's 100C phone. This could lead to iPhone sales being halted in Beijing.
Microsoft nudged lower following news it was partnering with a cannabis industry software company. |
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| | Broker Tips | | Broker tips: Imperial Brands, Poundland, Astrazeneca RBC Capital Markets upgraded Imperial Brands to 'sector perform' from 'underperform' and lifted the price target to 3,700p from 2,900p.
The Canadian bank said Imperial's expected full-year 2017 dividend yield of 4.9% is the highest in its coverage and particularly attractive in the current low-yield environment.
RBC pointed out that since 2008 Imperial has delivered a dividend compound annual growth rate of 12%, consistently increasing its dividend per share by over 10% each year.
"We believe Imperial has become a stronger and more reliable business and expect increased exposure to the US, improved cash generation and deleveraging to underpin its investment grade credit rating as well as the current dividend policy."
RBC said the US market represents an attractive opportunity given its size, high affordability and solid price dynamics.
That said, the bank noted it was still early days and it will look for more supporting evidence that the Winston and Kool brands acquired by Imperial are on a sustainable trajectory.
Deutsche Bank downgraded Poundland to 'hold' from 'buy' but lifted the price target to 205p from 180p.
"Due to recent share price appreciation we now see limited fundamental upside and since Steinhoff does not like to 'pay for synergies' we therefore downgrade," the bank said.
On Wednesday, Steinhoff International confirmed it was considering a possible offer for the entire issued share capital of the London-listed discount retailer. The announcement was made without the consent of Poundland, which responded by issuing a statement advising its shareholders to take no action.
Steinhoff confirmed on Thursday that it has built a 23% stake in Poundland, which DB said has led to a significant expectation the business will be acquired in its entirety.
"Steinhoff's strong balance sheet, interest in the discount segment and other factors make a bid more likely than not."
Deutsche Bank noted the company's full-year results on Thursday were "materially in line with consensus expectations".
It said momentum remains disappointing with like-for-like sales declines in 1Q17 expected to continue.
DB argued that the integration of the 99p Stores has effectively become more expensive due to higher capex and working capital needs, while synergy guidance is unchanged.
"The incoming CEO gave some initial thoughts on priorities but insufficient to give us much greater comfort in a recovery in 2H and we lower forecasts 6-10%," the bank said.
HSBC reiterated a 'hold' rating on Astrazeneca after the US consumer watchdog increased its drug safety warning of the risk of acute kidney failure for the SGLT-2 inhibitors Farxiga and Invokana.
The US Food and Drug Administration (FDA) has revised the warnings in the labels of the oral drugs used for type II diabetes to include information about acute kidney injury and added recommendations to minimise this risk.
HSBC said Farxiga, produced by Astrazeneca, is likely to be competitively disadvantaged.
"We continue to forecast peak sales of $2.6bn in 2023e for Farxiga (excluding the fixed dose saxagliptin/dapaglifozin combination). Farxiga accounts for 549p of our 4,240p discounted cash flow-derived target," HSBC said.
Type II diabetes prescription medicine Jardiance was excluded from the FDA's warning, the bank noted. The drug is already widely expected to get the addition of cardiovascular benefit included on its label following an FDA Advisory Committee decision on 28 June. | | |
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