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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 rise on referendum optimism but analysts cautious Britain's main equity indices gained ground on Thursday as voting for the EU referendum began in the UK amid torrential rain and as bookmakers' odds and opinion polls suggested Brexit would be avoided - although some analysts were less sure.
Let by rising commodities and financials stocks the FTSE 100 finished 76.91 points or 1.23% higher at 6,338.10 while the FTSE 250 climbed 289.97 points or 1.70% to end the day at 17,333.51.
Sterling was also shooting higher, rising to 1.4797 against the dollar, for a gain of 0.62% on the day, and down 0.05% versus the euro at 1.3015.
This was sparked by the odds of a Remain vote in the EU referendum rising to 86% from 77% overnight, according to Betfair. The implied probability of Brexit shifted from 22.7% to 17.2% in the space of a few minutes earlier on Thursday, the bookmaker said.
An Ipsos Mori phone poll for the Evening Standard newspaper released around the same time found 52% support for Remain, up five percentage points, versus 48% for Leave as the pro-Brexit camp lost five points.
"It's a measure of market nervousness that trading volumes are thin on just about everything today. This morning's moves really felt like a low-volume melt-up. Having said that, there are a few day traders buzzing in and out and a number took advantage of cable's early bounce to go short.
"But people are wary of holding anything overnight. But while the market has followed the punters and is betting on a vote to 'Stay', there are concerns that the risk of a 'Leave' vote has been understated. The polls are just too close to call for this level of complacency. The "undecideds" and dismal weather could make all the difference," David Morrison, chief market analyst at SpreadCo told clients.
In terms of data, the preliminary Eurozone composite PMI was down, as Manufacturing PMI was up and Services PMI down.
Stateside, Thursday's batch of data was rather mixed.
According to figures from the Commerce Department, new homes sales fell 6% from the revised April rate of 586,000 to a seasonally-adjusted annual rate of 551,000. Economists had been expecting a drop to 560,000. April's pace was revised down from 619,000.
On the flip-side, US initial jobless claims declined by 18,000 from the previous week's unrevised level to 259,000, beating expectations of a smaller drop to 270,000.
Oil prices continued to rise, with Brent crude 1.13% firmer at $50.42 a barrel and West Texas Intermediate up 0.968% at $49.61.
Corporate news was thin on the ground, but Tesco rallied in London after the supermarket operator's first-quarter results confirmed sales growth continued for the second successive period.
AstraZeneca was slightly higher after it confirmed disappointing news to investors on Thursday, with updated guidance from US regulators its FluMist Quadrivalent influenza vaccine is not used this coming season.
This was based on CDC vaccine effectiveness data from the last three flu seasons in the US, which indicated FluMist did not demonstrate statistically significant effectiveness in children aged between two and 17.
In the FTSE 250, packaging company DS Smith was a riser after it reported a small jump in full-year profit as revenue grew, partly thanks to acquisitions. |
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| Market Movers
FTSE 100 (UKX) 6,338.10 1.23%
FTSE 250 (MCX) 17,333.51 1.70%
techMARK (TASX) 3,096.63 0.98%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 528.00p 3.63%
Anglo American (AAL) 694.70p 3.61%
Antofagasta (ANTO) 438.20p 3.11%
Royal Dutch Shell 'B' (RDSB) 1,889.00p 3.08%
London Stock Exchange Group (LSE) 2,735.00p 3.05%
CRH (CRH) 2,094.00p 2.90%
Prudential (PRU) 1,358.50p 2.76%
Glencore (GLEN) 152.95p 2.75%
Barclays (BARC) 186.95p 2.72%
InterContinental Hotels Group (IHG) 2,723.00p 2.68%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 8,700.00p -4.55%
United Utilities Group (UU.) 932.50p -2.56%
Burberry Group (BRBY) 1,108.00p -2.21%
Diageo (DGE) 1,833.00p -0.52%
National Grid (NG.) 981.00p -0.28%
ARM Holdings (ARM) 1,019.00p -0.20%
Compass Group (CPG) 1,299.00p -0.15%
Severn Trent (SVT) 2,238.00p -0.09%
RSA Insurance Group (RSA) 483.70p -0.08%
Smith & Nephew (SN.) 1,161.00p 0.00%
FTSE 250 - Risers
Smith (DS) (SMDS) 410.10p 6.00%
Clarkson (CKN) 2,308.00p 5.53%
Tullow Oil (TLW) 267.90p 5.39%
Thomas Cook Group (TCG) 73.35p 5.01%
St. Modwen Properties (SMP) 334.70p 4.92%
Galliford Try (GFRD) 1,321.00p 4.84%
Evraz (EVR) 134.00p 4.69%
Savills (SVS) 775.00p 4.66%
Euromoney Institutional Investor (ERM) 1,063.00p 4.63%
Virgin Money Holdings (UK) (VM.) 366.40p 4.24%
FTSE 250 - Fallers
AO World (AO.) 154.80p -3.25%
Debenhams (DEB) 67.80p -2.73%
Metro Bank (MTRO) 2,100.00p -2.33%
Sophos Group (SOPH) 179.10p -1.86%
UBM (UBM) 581.50p -1.69%
Circassia Pharmaceuticals (CIR) 104.20p -1.23%
Ascential (ASCL) 259.80p -1.07%
Elementis (ELM) 206.60p -1.01%
OneSavings Bank (OSB) 333.90p -0.92%
CLS Holdings (CLI) 1,585.00p -0.69% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks jump as pound hits year-to-date high A buoyant mood prevailed in financial markets on Thursday, with European stocks and sterling sharply higher as the latest EU referendum polls put the Remain campaign just ahead.
The benchmark DJ Stoxx Europe 600 index closed up by 1.47% or 5.02 points to 346.34, while Germany's DAX and France's CAC 40 both ended the day nearly two percentage points higher, and London's FTSE 100 was 1.23% higher, trading at two-month highs.
Meanwhile, the pound hit an intraday $1.4947 - its best level thus far for 2016 - after the results of a poll by Ipsos Mori for the Evening Standard released at 1100 BST showed 52% of respondents supported the Remain campaign, with 48% on the Leave side. Sterling had hit a six-month high of $1.4846 in Asian trading.
"Another swing in opinion polls back towards remaining in the EU has sparked a six-month high for the British pound and a surge in UK and European stocks," said CMC Markets' Jasper Lawler.
"Investors who wanted to protect their portfolio against adverse moves in sterling or other UK assets will have done so already.
With a slight bias to a Remain vote, there is no need for any additional hedging trades and the lighter volume suggests day traders are sitting on their hands until the result is out."
As far as the pound is concerned, Rabobank said a clear victory for the Remain camp would spark a relief rally that would push cable through 1.50, while a Brexit would open the door to a sharp decline towards the 1.26 level.
Oil prices gained ground, with West Texas Intermediate up 0.768% at $49.51 a barrel and Brent crude 0.756% firmer at $50.26.
The mood in financial markets was also boosted by news late in morning trade that the odds of a Remain vote in the EU referendum at bookmaker Betfair had risen to 86% from 77%. Ten days ago, the odds of Remain stood at 66%.
Betfair spokesperson Naomi Totten said: "Remain has been backed hard again this morning with the price coming in from 1.3 (1/3 or a 77% chance) to 1.17 (2/13 or an 86% chance) on the back of £4m traded. There was nearly £10m traded on the day of the Scottish Referendum so the market will be worth watching closely as polling day continues."
Opinion polls released late on Wednesday were split. An Opinium survey gave the Leave campaign a one-point lead, at 45% to 44%, while a poll by TNS also showed Brexit was ahead at 43%, with Remain on 41%.
On the other hand, a ComRes survey for the Daily Mail and ITV News put Remain on 48% and Leave on 42%. Excluding undecided voters, it found remain leading Leave by 54% to 46%. Meanwhile, a YouGov poll gave Remain a two-point cushion, ahead of leave by 51% to 49%.
Voting in the EU referendum began at 0700 BST and will close at 2200 BST, with the results expected early on Friday.
With the focus firmly on the referendum, some disappointing Eurozone data came and went with little fuss.
Markit's flash eurozone composite purchasing managers' index fell to a 17-month low of 52.8 in June from 53.1 in May, below economists' expectations of a reading of 53.1.
The services PMI also fell in June, to an 18-month low of 52.4 from 53.3 in May, below forecasts of 53.4.
However, the manufacturing PMI rose to a six month high of 52.6 from 51.5 in May, above expectations of 51.5.
Corporate news was thin on the ground, but Tesco rallied in London after the supermarket operator's first-quarter results confirmed sales growth continued for the second successive period. |
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| | US Market Report | | US open: Stocks in the black as UK votes on Brexit Stocks on Wall Street advanced on Thursday as market participants bet the UK would vote to remain in the European Union in Thursday's referendum.
At 1530 BST, the Dow Jones Industrial Average and the S&P 500 were up 0.7%, while the Nasdaq was 0.8% firmer.
At the same time, oil prices gained ground. West Texas Intermediate was up 1.2% to $49.73 a barrel and Brent crude was up 1.3% at $50.51.
Meanwhile, stocks in Europe were firmer but off earlier highs, with the pound holding at the $1.4800 level, having hit fresh highs for the year after the results of a poll by Ipsos Mori for the Evening Standard showed 52% of respondents supported the Remain campaign, with 48% on the Leave side.
The overall tone in markets was underpinned by the latest UK referendum polls, which showed a lead for the Remain campaign.
An online poll carried out by market research firm Populus and revealed on Twitter earlier showed that support for the Remain campaign in the European Union referendum at 55%, with 55% in favour of leaving. Populus said it surveyed 4,700 respondents on Tuesday up until midnight on Wednesday.
Earlier, the results of an Ipsos Mori poll for the Evening Standard put Remain in the lead at 52% and Leave at 48%.
Late on Wednesday, an Opinium survey gave the Leave campaign a one-point lead, at 45% to 44%, while a poll by TNS also showed Brexit was ahead at 43%, with Remain on 41%.
On the other hand, a ComRes survey for the Daily Mail and ITV News put Remain on 48% and Leave on 42%. Meanwhile, a YouGov poll gave Remain a two-point cushion, ahead of leave by 51% to 49%.
Also helping to lift sentiment was news that Betfair's odds of a Remain vote had risen to 86% from 77%.
Despite the generally positive mood, stocks in Europe and the UK had started to ease back a little off their highs by afternoon trading, with market commentators arguing that volatility was likely and volumes were extremely low.
Traders said share trading across Europe was just a third of its normal level and two-thirds lower than average on the FTSE.
Craig Erlam, senior market analyst at Oanda, said: "Today's referendum on the UK's membership of the EU is arguably the biggest risk event of the year and with a number of polls suggesting the race is neck and neck, I would expect the markets to be quite volatile at times over the next 24 hours."
In corporate news, software company Red Hat was under the cosh, down 4.6% after it issued downbeat guidance for the year late on Wednesday.
Bank of America edged lower following reports the bank was moving closer to settling a case with US regulators.
Macy's racked up healthy gains after it said chief executive officer Terry Lundgren will step down next year.
On the macroeconomic from, data from the Labor Department showed the number of Americans filing for unemployment benefits fell more than expected last week.
US initial jobless claims declined by 18,000 from the previous week's unrevised level to 259,000, beating expectations of a smaller drop to 270,000.
Elsewhere, figures from the Commerce Department showed sales of new US single-family homes declined more than expected in May.
New homes sales fell 6% from the downwardly-revised April rate of 586,000 to a seasonally-adjusted annual rate of 551,000. Economists had been expecting a drop to 560,000. April's pace was revised down from 619,000. |
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| | Broker Tips | | Broker tips: BAE Systems, IAG, Debenhams Analysts at Berenberg pared their earnings estimates for BAE Systems, while highlighting the risk that the debate surrounding the UK's maritime defence budget might drive negative sentiment in the backhalf of 2016, which led them to downgrade their recommendation.
The June Defence Committee meeting had suggested potential slippage in the production phase of the Type 26 Combat Ship, although a later incremental award of £472m would likely bridge any initial impact of a production delay, the broker said.
Nonetheless, the possibility existed that the issue might drive negative sentiment towards the Aerospace and Defence contractor in the back-half of the year in so far as it fuelled concerns about an over-committed UK maritime budget.
In parallel, and following the company's 2015 preliminaries, analysts Charlotte Keyworth, Andrew Gollan and Ross Law lowered their
earnings estimates for the company in fiscal years 2016, 2017 and 2018 by between three to four percentage points.
As a result of all the above, the broker downgraded its recommendation on the shares from 'buy' to 'hold' and cut its target from 570p to 520p.
A break in the clouds of political uncertainty might allow European airline carriers' shares to recover some of the year-to-date drop, UBS said.
Investors have been eyeing downside risks to the earnings of companies in the space due to fuel price increases and capacity additions.
However, political uncertainty had also been a factor in the EU airlines index's approximate 17% year-to-date drop, with a 7% decline having come in just the last 30 days.
"We also think that political uncertainty has added to concerns and this overhang will reduce in the coming weeks. Perhaps investors' will find a renewed appetite for the airline space," analyst Jarrod Castle said in a research note sent to clients.
The analyst said he continued to be positive on RyanAir, IAG and Lufthansa, sticking with 'buy' ratings on all three stocks
Goldman Sachs lowered its near and medium-term earnings forecasts and target for department store-operator Debenhams.
Pointing to the likelihood of declines in the company's like-for-like sales and pressure on gross margins as a result of foreign exchange headwinds in fiscal years 2017 and 2018, the broker said "Debenhams' earnings growth outlook remains modest by European retail standards".
Like-for-likes would fall as a result of the company's clothing market online penetration rate, the broker said.
Those two factors led analysts Richard Edwards, Abhilash Mohapatra and Natasha de la Grense to the conclusion that the firm's earnings per share would be flat from here. | | |
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