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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: Market fixated on looming referendum Stocks ended higher for a second day, with banks and insurers clocking in with the biggest gains as traders waited for Thursday's referendum.
The Footsie finished the day up by 0.73% or 45.24 points to 6,249.24.
The pound on the other hand was knocked lower from its intra-day highs after a poll for IG by Survation showed a strong gain for those backing a Brexit vote at Thursday's EU referendum.
The results of the Survation phone poll, published at 13:30 BST, showed the 'Remain' vote stayed at 45% compared to 44% for 'Leave', up two percentage points as the share of undecided voters shrank to 11%.
As of 16:55 BST cable was 0.17% lower at 1.4669, having an intra-day peak at 1.4670.
In comments posted to his Twitter account, US academic Nouriel Roubini warned that a decision to leave the UK could stall the British economy and tip it into recession.
Boosting investor sentiment throughout the day, a phone poll conducted by ORB on behalf of The Daily Telegraph revealed that 53% of respondents backed Remain, with 46% showing their support for 'Leave'. However, including undecided voters then Remain's lead was whittled down to just 49.0% against 47.0%.
A poll from YouGov carried out for The Times published on Monday evening put support for Remain at 44.0% and that for Leave at 42.0%.
According to Ladbrokes, the chances of a 'Remain' vote had shortened to 2/7, with about 95% of all bets over the previous 24 hours had been placed on voters rejecting Brexit.
On the data front, public sector net borrowing (excluding public sector banks) printed at £9.7bn for May (consensus: £9.5bn), less than the £10.1bn seen one year ago.
Following an upwards revision to April's tally of £1bn, UK state borrowings over the first two months of the fiscal year were 0.8% higher than a year before, versus a forecast from the Office for Budget Responsibility for a decline of 23.0% over all of fiscal year 2016/17.
The Confederation of British Industry's total orders balance improved from -8 in May to -2 in June (consensus: -10.0).
That indicated that the downturn in manufacturing had drawn to a close, but it remained difficult to be upbeat about the sector's outlook, analysts at Pantheon Macroeconomics said.
In corporate news, Whitbread served up a slight improvement in sales in the first quarter of the year as its Costa coffee shops bounced back from a slowdown in the preceding few months.
Group like-for-like (LFL) sales grew 1.8% as although Costa's sales were up 2.6%, the group's Premier Inn hotel chain saw LFL sales slow further to 2.1% from the rate seen in the fourth quarter.
BHP Billiton said it was targeting another $600m in coal production costs by the end of the 2017 financial year.
The mining group also increased its forecast for coal output for the current year to 43m tonnes, with plans to lift production to 46m tonnes in 2018.
"While cost compression has been evident across the industry, we continue to work hard under our new operating model to improve our performance," said BHP Billiton Minerals Australia president Mike Henry.
"Even in today's difficult environment, all of our operations remain cash positive."
Saga said it was on track to achieve its targets for the year ending 31 January 2017 and continues to make good progress against its strategic priorities.
Ahead of its annual general meeting at its headquarters in Folkestone, chief executive officer Lance Batchelor said: "We have made a good start to the year across our core trading divisions. We continue to focus on our strategic objectives and remain on track to deliver on the targets we set out at our preliminary results on 19 April 2016."
Defence company Chemring's shares were hit as it reported a wider loss for the first half and said it expects its full-year 2016 results to "slightly below" market expectations amid higher costs and a delayed contract.
Chemring's compiled consensus of analysts' forecasts was for FY16 underlying operating profit of £48.7m.
High-tech components manufacturer Senior led the fallers on the mid-cap index after it issued a pre-close trading update on Tuesday, in which it reiterated that margins in the aerospace division will be lower in the first half of 2016.
The FTSE 250 firm said activity in aerospace is anticipated to increase during the period in line with expectations, but margins will be lower as the ramp-up of new production programmes continues. |
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| Market Movers
FTSE 100 (UKX) 6,249.24 0.73%
FTSE 250 (MCX) 16,986.53 0.16%
techMARK (TASX) 3,046.41 -0.19%
FTSE 100 - Risers
Mediclinic International (MDC) 923.00p 3.42%
Intu Properties (INTU) 308.30p 3.28%
Standard Life (SL.) 331.40p 2.51%
Old Mutual (OML) 188.30p 2.45%
Barclays (BARC) 180.65p 2.15%
Capita (CPI) 1,068.00p 2.10%
RSA Insurance Group (RSA) 475.10p 2.08%
Ashtead Group (AHT) 1,043.00p 1.96%
Tesco (TSCO) 164.55p 1.92%
Whitbread (WTB) 4,117.00p 1.88%
FTSE 100 - Fallers
Informa (INF) 658.50p -2.01%
Anglo American (AAL) 660.20p -1.46%
Taylor Wimpey (TW.) 185.60p -1.28%
GKN (GKN) 284.30p -1.18%
Sky (SKY) 878.00p -1.07%
TUI AG Reg Shs (DI) (TUI) 1,019.00p -0.97%
Barratt Developments (BDEV) 562.00p -0.97%
Shire Plc (SHP) 3,976.00p -0.85%
Centrica (CNA) 213.70p -0.84%
Berkeley Group Holdings (The) (BKG) 3,218.00p -0.83%
FTSE 250 - Risers
Circassia Pharmaceuticals (CIR) 97.00p 6.59%
Softcat (SCT) 360.10p 5.73%
Evraz (EVR) 129.70p 5.45%
Allied Minds (ALM) 355.00p 4.41%
ICAP (IAP) 431.90p 4.20%
Hansteen Holdings (HSTN) 106.50p 3.90%
NMC Health (NMC) 1,187.00p 3.22%
Aberdeen Asset Management (ADN) 292.00p 2.93%
Telecom Plus (TEP) 1,032.00p 2.89%
SEGRO (SGRO) 452.20p 2.89%
FTSE 250 - Fallers
Senior (SNR) 196.70p -12.69%
Cairn Energy (CNE) 190.10p -4.85%
IMI (IMI) 969.50p -3.91%
Centamin (DI) (CEY) 106.50p -3.45%
Entertainment One Limited (ETO) 172.00p -3.43%
Euromoney Institutional Investor (ERM) 972.50p -3.14%
Kaz Minerals (KAZ) 135.40p -3.08%
Wetherspoon (J.D.) (JDW) 721.00p -2.96%
Daejan Holdings (DJAN) 5,485.00p -2.83% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks buoyed by Yellen, economic data European stocks saw moderate gains on Tuesday, supported by an upbeat reading on German investor confidence and gains on Wall Street as US Federal Reserve Chair Janet Yellen testified before a Senate committee.
The benchmark DJ Stoxx Europe 600 index finished up by 0.70%, France's CAC 40 was 0.61% higher and Germany's DAX was 0.54% firmer.
At the same time, oil prices retreated, with West Texas Intermediate down 1.52% at $49.21 a barrel and Brent crude down 1.56% to $49.88.
Stocks racked up strong gains on Monday as investors reacted to the latest referendum polls, which showed a swing in favour of the Remain camp.
On Tuesday, however, the polls were split down the middle, suggesting it was too close to call. An ORB poll for the Daily Telegraph put the Remain campaign in the lead by seven points, while a poll from YouGov for the Times gave the Leave camp a two-point lead.
Speaking before the US Senate´s Committee on Banking, Housing, and Urban Affairs, Yellen said that the recent improvement in household spending, together with underlying conditions that are favorable for the economy, led her to expect further improvements in the labor market and the economy more broadly over the next few years.
However, she also cautioned that those expecting the slowdown in productivity over recent years to continue might be correct.
"We would like to note that if the 'secular stagnation' hypothesis is correct, then the Fed's current hiking plans will need further downward adjustment. In fact, we could see the Fed take a pause for a sustained period of time," economists at Rabobank said in a research note sent to clients.
The upbeat tone in stocks on Tuesday was also underpinned by the latest survey from the ZEW Center for European Economic Research in Mannheim, which showed German investor confidence unexpectedly improved in June.
The current situation index rose 1.4 points to 54.5, beating expectations of a reading of 53.0. Meanwhile, the indicator of economic sentiment improved 12.8 points from the previous month to 19.2, smashing expectations of 5.0.
The indicator of economic sentiment for the Eurozone, meanwhile, was up 3.4 points to a reading of 20.2. Economists had expected a reading of 15.3.
Investors also digested news that Germany's Constitutional Court had cleared the European Central Bank's emergency bond-buying scheme.
Launched at the height of the Eurozone debt crisis in 2012 as part of ECB President Mario Draghi's commitment to do "whatever it takes" to preserve the euro, the Outright Monetary Transaction programme allowed the bank to buy the debt of financially-strained members, in secondary, sovereign bond markets.
In corporate news, Whitbread rallied after reporting an improvement in sales in the first quarter as its Costa coffee shops bounced back from a slowdown in the preceding few months.
BHP Billiton was a little lower after saying it was targeting another $600m in coal production costs by the end of the 2017 financial year.
Germany's Kion Group was under the cosh after the supplier of forklift trucks and warehouse equipment said it was buying US logistics company Dematic Corp for around $2.1bn. |
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| | US Market Report | | US open: Stocks smidgen higher as investors digest Yellen testimony US stocks were trading just a touch higher on Tuesday as investors digested the latest comments from Federal Reserve Chair Janet Yellen and kept an eye on any Brexit-related developments.
At 1530 BST, the Dow Jones Industrial Average and the Nasdaq were up 0.1% while the S&P 500 was 0.2% firmer.
At the same time, oil prices fell back. West Texas Intermediate and Brent crude were down 2.1% at $48.36 and $49.61 a barrel, respectively.
Stocks in Europe and the US racked up healthy gains on Monday as investors welcomed polls showing a swing in favour of the Remain camp in the EU referendum.
On Tuesday, market participants reacted to an ORB poll for the Daily Telegraph which put the Remain campaign in the lead by seven points, and a YouGov poll for the Times giving the Leave camp a two-point lead.
In addition, a phone poll by Survation for IG showed the Remain vote stayed at 45% compared to 44% leave, up two percentage points as the share of undecided voters shrank to 1%.
Aside from the UK referendum, the focus was on Yellen's semi-annual testimony before the Senate Banking Committee.
Yellen said on Tuesday that the Fed would take a cautious approach to hiking interest rates, closely monitoring financial developments.
She said she sees "considerable uncertainty" over the US economic outlook, also highlighting the potential impact of the UK referendum.
"In the current environment of sluggish growth, low inflation, and already very accommodative monetary policy in many advanced economies, investor perceptions of and appetite for risk can change abruptly," Yellen said. "One development that could shift investor sentiment is the upcoming referendum in the United Kingdom. A UK vote to exit the European Union could have significant economic repercussions."
She added: ""Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labour market will strengthen further, and whether inflation will continue to make progress toward our 2% objective."
Overall, the testimony contained nothing new in terms of hints on the timing of the next rate hike, largely repeating what Yellen said in the post-rate announcement press conference.
Pantheon Macroeconomics said the testimony was "more of the same, mostly, but an acknowledgment that they can't be certain inflation will rise".
Chief economist Ian Shepherdson said: "We still think September is the best bet for now, but we're persuadable that payrolls might not rebound quickly enough to allow them to act until December. And if the UK votes for Brexit, all bets are off."
In corporate news, software company Sabre Corp was in the red after saying chief executive Tom Klein will resign.
Elsewhere, Facebook shares were higher after its executives reiterated their interest in entering China.
Housebuilder Lennar Corp rose after it reported a better-than-expected quarterly profit, but car seller CarMax slumped as its first-quarter earnings missed expectations. |
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| | Broker Tips | | Broker tips: Premier Oil, ICap, Go-Ahead Analysts at Barclays re-jigged their recommendations on European Exploration and Production companies in order to take into account the recent rise in crude oil prices and improved investor sentiment regarding companies´ ability to execute to plan operationally.
In the process they upgraded their recommendation on shares of Ophir Energy and Premier Oil while downgrading stock in Det Norske, Genel and Ithaca Energy.
"Those two points appear to have been enough to see many investors revisit the sector with more forward-looking optimism in recent months and increasingly ascribe value to delivery of 2016 operational goals," the analysts said in a research note sent to clients on 21 June.
With crude oil futures having recovered to $50 per barrel, equity analysts at Barclays opted to 'mark-to-market' their price assumptions, increasing their 2016 Brent forecast to $44 a barrel and nudging their 2017 estimate from $55 a barrel to $57.
The broker also continued to factor in a gradual recovery in oil to $70 per barrel from 2018 onwards.
On the basis of the above, it rollowed forward its net asset value estimates by one year to the end of 2016. As a result, Ophir Energy was now their 'top-pick' and not DNO, Premier Oil was upgraded from 'equal-weight' to 'overweight' and Tullow Oil kept at 'overweight'.
Bank of America-Merrill Lynch upgraded ICAP to 'buy' from 'neutral' with an unchanged price target of 500p, saying the stock's recent underperformance has added valuation appeal to a compelling strategy.
It noted ICAP shares have dropped 19% this year, which is around 18% more than the All Share and attributed much of the weakness to macro/referendum concerns.
The bank said it continues to see ICAP as well placed, especially post the NEX separation. NEX is the company which will endure once ICAP sells the bulk of its voice assets to Tullett Prebon.
"We have supported the company's separation of its voice broking from the electronic assets (NEX Group), and believe that these businesses should have a vibrant future," BofA said.
Liberum upgraded Go-Ahead Group to 'buy' from 'hold' but trimmed the target to 2,740p from 2,860p.
It said the market's overreaction to the group's recent trading update presented a buying opportunity. | | |
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