| | | | | | | Upcoming ADVFN Webinar - Thursday June 2nd at 1pm - Sabien Technology Group PLC - LSE:SNT A presentation on the progress of the company’s Growth Strategy over the last 12 months and future plans for continued growth in the UK and Overseas. Follow by Q and A Session.
Presented by Alan O'Brien, Managing Director, Sabien Technology Group PLC
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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: FTSE finishes flat after OPEC and ECB meetings The FTSE 100 was flat at the closing bell on Thursday as traders assessed the outcome of meetings of OPEC and the European Central Bank.
Oil prices fell after OPEC members failed to agree on output levels at their meeting in Vienna, although the need to draw inventories down from levels above the five-year average was acknowledged.
There were suggestions that the talks would seek some agreement on an output ceiling, but this looked unlikely as Iran, having just emerged from the yoke of international sanctions, was keen to boost production to generate much needed revenue and therefore would not agree to any cap.
At 1622 BST Brent crude fell 0.34% to $49.55 per barrel and West Texas Intermediate slid 0.55% to $48.74 per barrel.
Meanwhile, the Energy Information Agency said US crude inventories fell by 1.4m barrels in the week ended May 27 to 535.7m barrels.
ECB keeps policy unchanged
The ECB's Governing Council kept its policy unchanged - as expected by economists - holding interest rates at 0.0%, the marginal lending facility rate at 0.25% and the deposit facility rate at -0.40%.
In a press conference following the policy announcement, ECB President Mario Draghi said the central bank has revised its forecasts for inflation and economic growth in 2016 higher.
The ECB now expects the economy to grow 1.6% in 2016, compared to a March estimate of 1.4%. Inflation is expected to rise 0.2% in 2016, up from the prior estimate of 0.1%, reflecting an improvement in oil prices.
Draghi warned that eurozone inflation is likely to remain very low, or negative, for some time. He also said risks to the global economy are to the downside.
He cautioned that this month's British referendum on European Union membership was one of the downside risks to the economy.
US jobs data
The US private sector added 173,000 jobs in May, a touch lighter than the 175,000 forecast by economists, according to ADP. The April figure was revised up to show a 166,000 increase from 156,000.
The Labor Department said the number of Americans filing for unemployment benefits unexpectedly fell last week. US initial jobless claims fell by 1,000 to 267,000, versus expectations for an increase to 270,000. This marked 65 consecutive weeks of initial claims below 300,000 - the longest streak since 1973.
The labour market data comes ahead of Friday's non-farm payrolls report, which is expected to show expect US employers added 160,000 jobs in May the same as the previous month. The unemployment rate is expected to fall to 4.9% from 5.0%.
The Fed is monitoring the health of the labour market as it determines the timing of its next interest rate hike ahead of its 14-15 June policy meeting.
Closer to home, data showed the pace of UK construction slowed more than expected in May as many firms held off on placing orders until after the EU referendum on 23 June.
The Markit/CIPS UK construction purchasing managers' index fell to 51.2 from 52.0 in April, missing expectations for a reading of 51.9 but above the 50 level that separates an expansion from a contraction.
Companies
Johnson Matthey advanced as it reported a 6% increase in full year revenue and said performance in the 2016/17 fiscal year is expected to be ahead of 2015/16 and in line with current market expectations.
British Airways owner International Consolidated Group soared as the International Air Transport Association said industry profits are expected to jump by almost 12% in 2016 to $39.4bn, compared to $35.3bn last year thanks to lower oil prices.
Wolseley was under pressure after Canaccord Genuity downgraded the stock to 'hold' from 'buy' and slashed its target to 4,200p from 4,400p.
Marks & Spencer dropped after UBS cut its price target to 440p from 490p and reduced its guidance on pre-tax profit for fiscal year 2017 by 12% to £625m due to the company's plans to lower prices at its clothing business. The retailer also went ex-dividend on Thursday.
National Grid was another stock under the cosh after going ex-dividend.
Moneysupermarket.com slumped as Jefferies downgraded the stock to 'hold' from 'buy' and cut the price target to 312p from 440p. |
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| Market Movers
FTSE 100 (UKX) 6,185.61 -0.10%
FTSE 250 (MCX) 17,076.26 0.09%
techMARK (TASX) 3,125.15 0.42%
FTSE 100 - Risers
Johnson Matthey (JMAT) 2,996.00p 5.98%
Standard Chartered (STAN) 534.80p 2.39%
GKN (GKN) 282.20p 2.17%
Barratt Developments (BDEV) 585.00p 2.01%
Ashtead Group (AHT) 979.50p 1.93%
Next (NXT) 5,385.00p 1.70%
Persimmon (PSN) 2,072.00p 1.67%
Shire Plc (SHP) 4,449.00p 1.58%
Tesco (TSCO) 169.50p 1.53%
International Consolidated Airlines Group SA (CDI) (IAG) 533.00p 1.43%
FTSE 100 - Fallers
National Grid (NG.) 959.60p -4.56%
Marks & Spencer Group (MKS) 356.60p -3.86%
Taylor Wimpey (TW.) 192.40p -2.68%
DCC (DCC) 6,275.00p -1.34%
Sky (SKY) 939.00p -1.21%
Hargreaves Lansdown (HL.) 1,311.00p -1.21%
Lloyds Banking Group (LLOY) 70.53p -1.14%
RSA Insurance Group (RSA) 484.70p -1.12%
Wolseley (WOS) 3,786.00p -1.10%
Coca-Cola HBC AG (CDI) (CCH) 1,335.00p -0.96%
FTSE 250 - Risers
Dairy Crest Group (DCG) 568.00p 4.41%
Supergroup (SGP) 1,430.00p 4.00%
JRP Group (JRP) 145.40p 3.86%
AO World (AO.) 174.00p 3.57%
Allied Minds (ALM) 337.60p 3.43%
Ocado Group (OCDO) 278.50p 2.84%
Just Eat (JE.) 460.10p 2.66%
Bovis Homes Group (BVS) 1,006.00p 2.24%
RIT Capital Partners (RCP) 1,601.00p 2.23%
Hastings Group Holdings (HSTG) 184.90p 2.15%
FTSE 250 - Fallers
Moneysupermarket.com Group (MONY) 309.80p -6.40%
Investec (INVP) 447.30p -5.09%
Sophos Group (SOPH) 198.40p -4.20%
Evraz (EVR) 109.90p -3.00%
Marshalls (MSLH) 314.40p -2.66%
Laird (LRD) 345.50p -2.51%
Virgin Money Holdings (UK) (VM.) 352.00p -2.49%
HarbourVest Global Private Equity Limited A Shs (HVPE) 925.00p -1.91%
Tullett Prebon (TLPR) 326.20p -1.81% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Auto stocks pace gains European stocks finished the session on a mixed note despite the lack of any agreement by OPEC member countries to cap their oil output and little fresh news out of the European Central Bank´s policy meeting, as traders looked forward to Friday´s monthly US jobs report.
The benchmark DJ Stoxx Europe 600 index ended the day up by 0.07% or 0.23 points at 344.35 while Germany's DAX edged higher by 0.03% or 3.56 points to 10,208.00, while France's CAC 40 was 0.21% lower by the close of trading.
Auto stocks stood out, registering an advance of 1.11% or 5.38% to 488.87 on the back of slightly better-than-expected figures on US auto sales published on Wednesday and a small dip in the value of the single currency.
Oil prices initially moved lower shortly after midday after news broke that the Organisation of the Petroleum Exporting Countries had failed to reach any agreement on an oil output 'freeze', but were bolstered towards the close of trading by a bullish set of weekly US oil inventory figures.
As of 18:00 BST, West Texas Intermediate was higher by 0.51% to $49.26 a barrel while Brent crude was up by 0.82% higher at $50.13 on the ICE.
Mohammed Bin Saleh Al-Sada, Qatar's Minister of Energy and Industry and president of the OPEC conference, told delegates that world demand remained "healthy" and the market now appeared to be rebalancing as the lower oil price led to a scaling back of production and exploration.
Following the ECB governing council´s meeting in Frankfurt president Mario Draghi unveiled further details relating to the central bank´s current stimulus measures and left the door open to further easing should it be necessary, albeit while noting that downside risks had receded somewhat thanks to monetary policy action.
Data released by Eurostat showed producer prices in the Eurozone unexpectedly fell in April, highlighting the central bank's struggle to bring consumer price inflation back to its target of close to 2%.
Producer prices were down 0.3% in April from March, marking the biggest drop in over six years. Economists had been expecting prices to be up 0.1% after a 0.3% increase the month before. On the year, producer prices were down 4.4%.
Energy sector prices fell 1.1%, while non-durable consumer goods prices were 0.1% lower.
Excluding the decline in energy prices, producer prices were up 0.1% in April compared to a 0.1% drop in March.
In corporate news, Johnson Matthey rallied after the specialty chemicals firm posted a drop in full-year profit that met analysts' expectations and expressed confidence over the current year. |
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| | US Market Report | | US open: Stocks slide as OPEC fails to agree deal on output US stocks declined on Thursday after OPEC failed to agree a deal on output and as the US private payrolls report missed analysts' estimates.
At 1530 BST, the Dow Jones Industrial Average fell 0.30%, the S&P 500 dropped 0.34% and the Nasdaq slid 0.22%.
At the same time oil prices fell as OPEC members failed to agree on output levels at their meeting in Vienna, although the need to draw inventories down from levels above the five-year average was acknowledged.
There were suggestions that the talks would seek some agreement on an output ceiling, but this looked unlikely as Iran, having just emerged from the yoke of international sanctions, was keen to boost production to generate much needed revenue and therefore would not agree to any cap.
West Texas Intermediate crude dipped 1.5% to $48.27 per barrel and Brent declined 1.3% to $49.06 per barrel at 1532 BST.
Traders are also looking ahead to a report on US weekly crude inventories from the International Energy Agency at 1600 BST.
Meanwhile, data released by consultancy ADP said the US private sector added 173,000 jobs in May, a touch lighter than the 175,000 that was forecast by economists.
The April figure was revised up to show a 166,000 increase from 156,000.
Mark Zandi, chief economist of Moody's Analytics, said: "Job growth has moderated this spring as energy companies and manufacturers shed jobs. Retailers are also more circumspect in their hiring. Despite the recent slowdown, job growth remains strong enough to reduce underemployment."
The Labor Department said the number of Americans filing for unemployment benefits unexpectedly fell last week. US initial jobless claims fell by 1,000 to 267,000, versus expectations for an increase to 270,000. This marked 65 consecutive weeks of initial claims below 300,000 - the longest streak since 1973.
The labour market data comes ahead of Friday's non-farm payrolls report, which is expected to show expect US employers added 160,000 jobs in May the same as the previous month. The unemployment rate is expected to fall to 4.9% from 5.0%.
The Fed is monitoring the health of the labour market as it determines the timing of its next interest rate hike ahead of its 14-15 June policy meeting.
"Current market pricing suggests a 24% chance of a move in June, a drop from yesterday, but with
non-farm payrolls looming on Friday we could easily see the declining trend reversed if the figures look robust on most measures," said Chris Beauchamp, senior market analyst at IG.
In corporate news, shares in cloud storage company Box Inc tumbled after its billings for the quarter fell short of expectations late on Wednesday.
Home-builder Hovnanian Enterprises slumped after reporting second quarter earnings that fell short of analysts' expectations. |
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| | Broker Tips | | Broker tips: Wolseley, M&S, Moneysupermarket Wolseley's shares were under pressure on Thursday after Canaccord Genuity downgraded the stock to 'hold' from 'buy' and slashed its target to 4,200p from 4,400p.
"While we continue to see attractions (market share gains, margin expansion and more capital returns) on a medium term view, we are downgrading our rating to hold (from buy) and cutting our price target to £42 on the back of the recent loss of momentum in like-for-like sales growth, in the context of a relatively full valuation,"Canaccord analysts Aynsley Lammin and Matthew Walker said in a note to investors.
The building material supplier reported on Wednesday a 0.4% drop in like-for-like UK sales for the three months to April, due to weakness in the repairs, maintenance and improvement markets. Like-for-like sales in Central Europe fell 0.2%.
Wolseley's US business reported like-for-like revenue growth of 5%, but has also suffered from weak demand in the industrial market.
"While we expect LFL growth to improve for Q4 as a whole from the +1% of late, the momentum we expected to see in US trading is clearly not coming through as strongly as expected," UBS said.
"Price deflation continues to be an issue, particularly in the US, with no imminent change in these pricing trends expected."
The third quarter results come amid a restructuring of the group, which is now estimated will cost about £20m, up from the £15m it originally forecast. In March the company announced it was closing 15 branches in the UK as part of the restructuring.
The group said it was on track to deliver results in line with consensus expectations for the full year to July 2016. But UBS noted that Wolseley also seemed to signal that while it expected some improvement, it thought it was unlikely that like-for-like growth in the US would reach levels close to the guidance range of 5-6% growth over the coming months.
"Given the lack of visibility over the outlook for like-for-like growth, we would prefer to back off for now and look for a more attractive entry point."
Marks & Spencer had its 'buy' rating reiterated and target cut to 440p from 490p by UBS on Thursday.
UBS hailed chief executive Steve Rowe's strategy to revive the retailer's clothing business by reducing prices and improving the quality.
The newly appointed boss of M&S warned that profits in fiscal year 2017 would be dented as a result of the price cuts. Rowe said the company had lost £200m in clothing sales in the last three years and drastic measures were needed to turnaround the general merchandise division.
"The scale of the price cuts (15% reduction across 30% of the range) is significant enough for customers to notice and combined with less product overlap and brand simplification we expect to see the like-for-like sales improve once the price cuts annualise," said UBS analyst Adam Cochrane.
UBS cut its estimate on pre-tax profit for fiscal year 2017 by 12% to £625m. Like-for-like sales are now expected to drop 3%, compared to an earlier estimate for a 1% decrease, due to lower margins and higher operating expenditure.
"Our price target remains set under discounted cash flow and falls to reflect lower profit estimates," said Cochrane.
"We re-iterate our buy rating on M&S as we think the current share price more than reflects the downgraded guidance. We see greater upside risk at this stage given conservative guidance, potential sentiment improvement and healthy dividend yield."
Moneysupermarket.com was under the cosh on Thursday as Jefferies downgraded the stock to 'hold' from 'buy' and cut the price target to 312p from 440p.
The bank said it was updating its estimates after reviewing the latest data set from Hitwise, an online monitoring service which provides rankings of the world's most popular websites.
Jefferies said Hitwise was arguably the UK's most authoritative source of online data analytics for desktop and mobile traffic.
The bank said it was moving to hold "given Hitwise analysis showing a weak start to 2016, muted financial expectations, and the equity performance over the past 18 months".
"Over the last three years, there have been some meaningful moves in market share and MoneySupermarket.com is no longer the market leader, according to Hitwise at any rate," it said.
Jefferies cut its group revenue forecasts by around 6.5% for FY 2016/17/18, driven by low double-digit reductions in Insurance and Travel.
It also cut its adjusted earnings before interest, tax, depreciation and amortisation estimates by around 13% over the tree years.
Meanwhile, adjusted earnings per share estimates for FY16 and FY17 were reduced by around 12%. | | |
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