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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 gain but analysts expect post-Brexit selloff to continue London stocks closed in positive territory on Tuesday after two days of falls in the aftershock of Brexit.
The FTSE ended up 2.45% to 6,128.72 and the pound rose 0.65% against the dollar at $1.33.
"Today has seen a welcome reprieve from the incessant fear and risk aversion that has dominated financial markets since Friday's unexpected referendum result," IG market analyst Joshua Mahony said.
"The question on everyone's lips is whether we have seen an end to the selling, with many seeing current prices as an opportunity to buy their favourite firms at a temporary discount. This selloff is unlikely to be over and perhaps the only thing that will truly raise risk appetite for good will be a faint glimmer of hope that we could see a second referendum."
In the latest news following Britain's decision to leave the European Union, chancellor George Osborne reiterated that the government would have to increase taxes and cut spending to deal with the economic fallout of Brexit.
European Commission president Jean-Claude Juncker said Britain must "clarify its position" on the terms of its departure from the EU as soon as possible. He said there would be no informal talks with the UK before its invoked Article 50 of the 2007 Treaty of Lisbon that starts formally the exit process.
"I want the UK to clarify its position. Not today, not tomorrow at 9am, but soon. We cannot allow ourselves to remain in a prolonged period of uncertainty," he said.
Meanwhile, an industry survey showed UK retail sales growth slowed ahead of last Thursday's EU referendum. The Confederation of British Industry's monthly retail sales balance for June fell to +5 from +7 in May. The survey was conducted between 26 May and 14 June.
In the US, the Commerce Department said first quarter gross domestic product increased 1.1%, beating consensus expectations of 1% growth and higher than the previously-estimated 0.8% increase. In the final quarter of 2015, real GDP rose 1.4%.
"Fed Chair Janet Yellen will be largely content with the GDP figures released today that reveal a US economy in decent health amid swirling global uncertainty," said Dennis de Jong, managing director at UFX.com.
"The UK's decision to vote to leave the EU last week has triggered market turmoil not seen since the dark days of 2008 and, while the US is likely to avoid bearing too much of the global burden, a strengthening dollar against the pound will have some knock-on effects."
US house price growth slowed just a touch in April, according to the S&P/Case-Shiller National Home Price Index, and the outlook is uncertain following Brexit and ahead of the US elections. The 20-City Composite Index was up 5.4%, down from 5.5% in March but in line with economists' estimates.
US consumer confidence improved in June with the Conference Board's sentiment index rising to 98.0 from 92.4 the previous month, exceeding analysts' estimates for a reading of 93.5.
Oil prices advanced with Brent crude up 1.2% to $47.76 per barrel and West Texas Intermediate up 1.5% to $47.06 per barrel. Prices were supported by the possibility that oil and gas workers in Norway could go on strike from Saturday if they do not agree a wage deal.
On the corporate front, Legal & General shares jumped after it announced the appointment of a new group chairman on Tuesday, confirming former Whitehall mandarin John Kingman as taking the up the post.
Housebuilders recovered from the initial shock of Britain's vote to leave the European Union even as Goldman Sachs said it now expects new build volumes in the UK to drop 10% and house prices to fall by 2% and 5% in 2016 and 2017 respectively. Shares in Taylor Wimpey and British Land rose.
Miners were lower as the price of the gold fell after investors sought a safe haven in the two days since the UK voted to leave the EU. Fresnillo and Randgold Resources were among the fallers.
Online grocer Ocado gained as the company said revenues and earnings grew in the first half of the year, reporting gross sales of £582.9m for the 24 weeks to 15 May on Tuesday, a 13.9% rise on £511.9m in the comparative period last year. |
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| Market Movers
FTSE 100 (UKX) 6,128.72 2.45%
FTSE 250 (MCX) 15,504.41 3.58%
techMARK (TASX) 3,049.80 3.23%
FTSE 100 - Risers
Hargreaves Lansdown (HL.) 1,150.00p 8.90%
Associated British Foods (ABF) 2,555.00p 8.72%
Land Securities Group (LAND) 989.00p 8.68%
Next (NXT) 4,745.00p 8.23%
Legal & General Group (LGEN) 178.00p 7.88%
ITV (ITV) 166.00p 7.79%
Prudential (PRU) 1,190.50p 7.74%
Barratt Developments (BDEV) 381.00p 7.51%
Lloyds Banking Group (LLOY) 54.95p 7.43%
Sage Group (SGE) 611.50p 6.72%
FTSE 100 - Fallers
Fresnillo (FRES) 1,449.00p -2.29%
Antofagasta (ANTO) 415.20p -1.87%
Randgold Resources Ltd. (RRS) 7,965.00p -0.87%
Paddy Power Betfair (PPB) 7,990.00p -0.87%
Whitbread (WTB) 3,391.00p -0.67%
Worldpay Group (WI) (WPG) 256.20p -0.50%
Royal Bank of Scotland Group (RBS) 173.80p -0.29%
Rexam (REX) 638.50p -0.23%
Carnival (CCL) 3,259.00p -0.15%
Kingfisher (KGF) 315.70p 0.32%
FTSE 250 - Risers
Circassia Pharmaceuticals (CIR) 94.00p 14.29%
Daejan Holdings (DJAN) 4,961.00p 12.47%
AO World (AO.) 135.40p 12.37%
IP Group (IPO) 134.70p 11.88%
Stagecoach Group (SGC) 218.80p 10.78%
NCC Group (NCC) 250.10p 10.27%
TR Property Inv Trust (TRY) 265.00p 9.64%
McCarthy & Stone (MCS) 167.30p 9.56%
Zoopla Property Group (WI) (ZPLA) 266.00p 9.02%
Virgin Money Holdings (UK) (VM.) 223.30p 8.82%
FTSE 250 - Fallers
Shawbrook Group (SHAW) 140.00p -14.16%
Centamin (DI) (CEY) 123.70p -4.92%
Acacia Mining (ACA) 423.50p -3.75%
SSP Group (SSPG) 274.50p -2.76%
CLS Holdings (CLI) 1,275.00p -2.15%
Dunelm Group (DNLM) 767.50p -1.54%
Crest Nicholson Holdings (CRST) 343.00p -0.58%
Hastings Group Holdings (HSTG) 165.00p -0.54%
Playtech (PTEC) 772.50p -0.32% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets attempt to clean up after Brexit Markets in Europe finished up on Tuesday and the two major currencies gained some ground, as investors picked up the pieces in the wake of Friday's market-shattering decision by the UK to exit the European Union.
The benchmark Stoxx Europe 600 was last up 2.58%, while Germany's DAX was 1.84% higher and France's CAC had added 2.55%.
In London, the FTSE 100 had picked itself up by 2.64%, while the more domestically-focused FTSE 250 - the worst hit by the Brexit vote - added 3.58%.
In Italy the FTSE MIB was ahead by 3.3% as that country's government considered a €40bn capital injection for banks.
The Stoxx 600 banks index, which has taken a hammering in the previous two sessions, was last up 2.36%.
Oil prices also advanced during the session - Brent crude was last ahead by 1.46% at $47.86 per barrel and West Texas Intermediate was up 1.72% at $47.14.
The lingering possibility of a strike in Norway underpinned crude prices throughout the day, as workers on oil and gas fields in the country could walk out from Saturday if a wage deal is not agreed.
On the currency front, sterling was making a small recovery after hitting fresh 31-year lows on Monday - it was last 0.65% up at $1.3311 per £1.00.
FXTM's chief market strategist, Hussein Sayed, said earlier that there seemed to be very little news to support the currency at present.
"David Cameron's proposal yesterday not to trigger Article 50 will only lead to a prolonged period of uncertainty, exposing the pound to more downside risk.
"I would say another 5-10% drop from current levels can't be ruled out in the next couple of weeks."
The euro was last trading up 0.19% at $1.1046,after hitting a three-month low against the greenback amid the Brexit fallout.
Chancellor George Osborne said on Tuesday that the UK will have to cut spending and raise taxes in response to Brexit, as EU leaders met in Brussels.
European Commission President Jean-Claude Juncker said that Britain must "clarify its position" on the terms of its departure as soon as possible.
Juncker said in a speech to the European Parliament that a prompt statement of the type of deal Britain wanted was necessary to end uncertainty.
He reasserted the EU's position, supported by France and Germany, that there would be no informal talks with the UK before it invoked Article 50.
"We can not allow a long period of uncertainty.
"There can be no secret negotiations. No notification, no negotiation," he said.
Despite the upbeat tone in financial markets, some analysts were sceptical that gains could be sustained.
"While equity volumes are picking up, they are still below average and so bargain-hunting may be helping as opposed to emergence of genuine support as markets adjust to a new normal and the prospect of the UK outside the EU," said Mike van Dulken, head of research at Accendo Markets.
In macroeconomic news from across the Atlantic, the third release of first-quarter US GDP growth came in at 1.1%, slightly higher than the 1.0% forecast and well ahead of the prior reading of 0.8%.
The S&P Case-Shiller Home Price Index was somewhat disappointing, coming in at 186.63 for April against a forecast of 186.71, though it was also ahead of the previous reading of 184.58.
US consumer confidence was well ahead of expectations at 98.0 for June, against expectations of 93.5 and well in front of 92.4 last time.
In corporates, defence and aerospace group Rolls-Royce was on the front foot after saying the UK's decision to leave the EU would not have an immediate impact on day-to-day business, adding that it remains committed to the UK "where we are headquartered, directly employ over 23,000 talented and committed workers and where we carry out a significant majority of our research and development".
Housebuilder Redrow was sharply higher after saying it expects pre-tax profit for the year to be above the top end of analysts' estimates, which currently stand at £240m. |
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| | US Market Report | | US open: Stocks gain after better-than-expected US GDP data US stocks rose on Tuesday as data showed the nation's economy slowed less than originally estimated in the first quarter.
At 1459 BST, the Dow Jones Industrial Average climbed 1.20%, the S&P 500 edged up 1.28% and the Nasdaq gained 1.75%.
At the same time, oil prices advanced, with West Texas Intermediate up 2.9% to $47.74 a barrel and Brent crude up 2.7% at $48.49. Prices were supported by the possibility that oil and gas workers in Norway could go on strike from Saturday if they do not agree a wage deal.
In economic data, the Commerce Department said first quarter US gross domestic product increased 1.1%, beating consensus expectations of 1% growth and higher than the previously-estimated 0.8% increase. In the final quarter of 2015, real GDP rose 1.4%.
"Fed Chair Janet Yellen will be largely content with the GDP figures released today that reveal a US economy in decent health amid swirling global uncertainty," said Dennis de Jong, managing director at UFX.com.
"The UK's decision to vote to leave the EU last week has triggered market turmoil not seen since the dark days of 2008 and, while the US is likely to avoid bearing too much of the global burden, a strengthening dollar against the pound will have some knock-on effects."
US house price growth slowed just a touch in April, according to the S&P/Case-Shiller National Home Price Index, and the outlook is uncertain following Brexit and ahead of the US elections. The 20-City Composite Index was up 5.4%, down from 5.5% in March but in line with economists' estimates.
US consumer confidence improved in June with the Conference Board's sentiment index rising to 98.0 from 92.4 the previous month, exceeding analysts' estimates for a reading of 93.5.
In corporate news, ReachLocal shares surged 169.09% after Gannett announced that it was buying the digital marketing company for $4.60 a share.
Shares of Tesla Motors rose after the electric car maker said on Monday that it will form a two-person committee of independent board members to evaluate its buyout offer for SolarCity.
Carnival Corp. jumped after the cruise operator reported fiscal second-quarter profit and revenue that beat analysts' forecasts.
Regulus Therapeutics slumped after the biopharmaceutical company late Monday said the Food and Drug Administration has placed its investigational new drug for the treatment of chronic hepatitis C virus infection on clinical hold. |
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| | Broker Tips | | Broker tips: Ocado, G4S, AB Foods Numis reiterated a 'buy' rating and target of 400p on Ocado Group on Tuesday after the online grocer reported growth in first half revenue and earnings.
The company posted a 5.7% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to £40.4m and revenue rose 14.1% to £584.2m.
The FTSE 250 firm saw profit before tax hit £8.5m, up from £7.2m, although cash and cash equivalents dropped to £52.7m from £70.4m by the end of the 24 week period.
Ocado chief executive Tim Steiner said "the market remains competitive with ongoing price deflation but our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate".
He said the company has been gaining share in the online grocery market, and expects this to continue.
Steiner added that testing of the company's new proprietary fulfilment and software solutions in its third facility in Andover was progressing well and they expected to move on from the test phase in the autumn post the quieter summer period.
"Regarding an international deal, there is no new news - Ocado states that it remains 'confident in its ability to sign multiple deals in the medium term', while it is in 'continued discussions with many potential international retailers to adopt the OSP'," Numis said.
"The lack of deal announcement, competition-led downgrades, and investor concerns around competition (albeit Amazon Fresh is having no impact on trading) look set to continue to weigh on the shares, but we retain our positive stance, continuing to believe that central fulfilment is the best model and that Ocado has the leading global solution."
Credit Suisse upgraded security services company G4S to 'outperform' from 'neutral' and lifted the price target to 210p from 200p, pointing to four main reasons for the move.
It said G4S would benefit greatly from sterling weakness, which the Swiss bank reckons will fall 10% across the board from its pre-referendum levels.
In addition, it argued that while the company has had more than its share of issues in recent years, the vast majority of its underlying business is stable and defensive.
CS said it expects asset sales over the next 18 months, which combined with improved working capital management, should lead to de-leveraging and free cash flow coverage of the dividend.
Finally it said that at 9.6x estimated 2017 price-to-earnings with a covered 5.4% dividend yield, the valuation is attractive.
"The key risks are that the asset sale process is delayed by market uncertainty resulting in a protracted period of high leverage and a 2016E dividend yield that is only just covered by FCF.
"We continue to see structural headwinds in the cash solutions business, which will only be partially offset by growth in cash outsourcing in the US. We capture this in our sum of the parts valuation."
Berenberg upgraded Primark owner Associated British Foods to 'buy' from 'hold' but cut the price target to 2,760p from 3,450p.
The bank noted shares have dropped more than 30% in the last three months and 20% in the last month alone, providing an entry point.
It argued that initially, fears were around trading momentum in the UK which was -1% at the first half due to the poor performance of the high street generally and unseasonable weather.
Berenberg said the company's third-quarter update on 7 July is likely to confirm such fears and guidance may come under pressure.
"While the current macroeconomic uncertainty revolving around Brexit (including wild FX movements with GBP -10% versus the US dollar in the last week affecting Primark's margins) does not help sentiment, we believe that with the shares now trading on 20x calendar 2017 P/E on our forecasts (27x average since 2014) this offers the best entry point in nearly three years." | | |
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