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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 ends higher on rally in mining stocks The FTSE 100 ended higher on Monday, bolstered by a rally in mining stocks as commodity prices rose.
Anglo American, Rio Tinto and BHP Billiton were the biggest risers on London's top tier index after gold prices climbed 0.40%, silver increased 0.55% and copper edged up 0.92% on the Comex.
Oil prices also gained as supply disruptions in Nigeria helped to soothe the global output glut. Analysts said a sharp fall in the dollar on Friday following worse-than-expected US non-farm payrolls report had also supported an increase in crude prices. A weaker dollar helps demand in the rest of the world as it makes oil imports traded in the currency cheaper.
The dollar, however, regained ground on Monday rising 0.05% against the euro, 0.42% versus the pound and 0.79% against the yen.
Housebuilders dominated the fallers on the FTSE after new Brexit polls showed more people want to leave the European Union ahead of Britain's referendum on 23 June.
Persimmon, Barratt Developments and Taylor Wimpey slumped on concerns about a possible Brexit hurting the sector.
A YouGov poll found 45% in the UK wanted to leave the EU, while 41% were in favour of staying. An Observer/Opinium poll also found the Leave campaign ahead by 43% to 40%.
Sterling dropped 0.38% to $1.4463 at 1633 BST.
"While I would expect more downside if the polls continue to show the 'Leave' campaign gathering momentum, the pound is likely to be very volatile in both directions over the next couple of weeks," said Craig Erlam, senior market analyst at Oanda.
"The polls are having a significant impact on the pound and some of them are sending very different messages. While support for 'Leave' is clearly growing, I still believe it will be a relatively comfortable win for 'Remain' on 23 June, albeit possibly not quite as comfortable as some will have hoped."
Across the Atlantic, investors are awaiting a speech by Federal Reserve chair Janet Yellen at the World Affairs Council of Philadelphia's luncheon at 1730 BST for clues on the next interest rate hike. Friday's weak non-farm payrolls report has led some economists to believe a rate increase at the 14-15 June policy meeting is unlikely.
"Yellen has recently said she expects a rate hike to come in the 'coming months'. One data point won't derail the Fed's expectation of gradually raising rates, but in the minds of the majority of the FOMC, likely pushes back the next rate rise to September," said Jasper Lawler, market analyst at CMC Markets.
Speaking in Finland, Boston Fed President Eric Rosengren said earlier on Monday that a rate hike was still likely, albeit not this month, despite the weak jobs report.
He said it was important to wait and see whether the weak jobs report was a reflection of a broader slowing in labour markets or just an anomaly.
In company news, Coca-Cola fizzed higher after stating it expected average annual revenue growth rate in the range of 4% to 5% on a currency-neutral basis in the medium term versus 2.9% in 2015.
EasyJet dipped after saying its load factor fell 0.1 percentage points to 91.5% in May after cancellations due to French air traffic control strikes and weather conditions.
Wolseley declined as JPMorgan Cazenove downgraded the stock to 'neutral' from 'overweight' and cut the price target to 4100p from 4300p on valuation grounds. |
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| Market Movers
FTSE 100 (UKX) 6,282.11 1.17%
FTSE 250 (MCX) 17,190.92 0.72%
techMARK (TASX) 3,142.81 0.51%
FTSE 100 - Risers
Anglo American (AAL) 686.60p 11.12%
Rio Tinto (RIO) 2,023.50p 6.78%
BHP Billiton (BLT) 889.20p 6.67%
Glencore (GLEN) 144.10p 6.23%
Antofagasta (ANTO) 451.10p 5.32%
Coca-Cola HBC AG (CDI) (CCH) 1,391.00p 4.43%
Johnson Matthey (JMAT) 3,063.00p 4.11%
Old Mutual (OML) 184.90p 3.76%
Mediclinic International (MDC) 916.50p 3.09%
BP (BP.) 368.40p 2.75%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 232.40p -2.02%
Persimmon (PSN) 2,027.00p -1.46%
Wolseley (WOS) 3,698.00p -1.28%
Inmarsat (ISAT) 706.50p -1.19%
Barratt Developments (BDEV) 571.50p -1.12%
Tesco (TSCO) 160.25p -1.08%
easyJet (EZJ) 1,508.00p -1.05%
Taylor Wimpey (TW.) 188.50p -1.05%
St James's Place (STJ) 895.50p -0.94%
Whitbread (WTB) 4,145.00p -0.88%
FTSE 250 - Risers
Vedanta Resources (VED) 406.00p 8.27%
Weir Group (WEIR) 1,265.00p 7.20%
Polymetal International (POLY) 892.00p 5.06%
Softcat (SCT) 378.50p 4.99%
Murray International Trust (MYI) 973.50p 4.68%
Amec Foster Wheeler (AMFW) 443.50p 4.57%
Drax Group (DRX) 307.20p 4.03%
Kaz Minerals (KAZ) 153.70p 3.99%
Serco Group (SRP) 112.10p 3.99%
Euromoney Institutional Investor (ERM) 972.00p 3.85%
FTSE 250 - Fallers
Indivior (INDV) 210.00p -10.68%
Shawbrook Group (SHAW) 276.80p -3.89%
AO World (AO.) 169.40p -3.20%
Savills (SVS) 759.00p -2.69%
Redrow (RDW) 403.90p -2.67%
Greencore Group (GNC) 330.00p -2.65%
Virgin Money Holdings (UK) (VM.) 344.90p -2.63%
Sophos Group (SOPH) 187.40p -2.45%
NCC Group (NCC) 282.80p -2.42% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | June rate hike now less likely, but a move in July is possible, Fed´s Bullard says The odds of the US central bank tightening policy again when its rate-setters next met had decreased after the release on 3 June of an "underwhelming" jobs report, the president of the Federal Reserve bank of Atlanta said.
He also believed it was better to move on interest rates after the release of good news on the economy and not the oppossite.
Nonetheless, in the same interview with The Wall Street Journal Bullard added: "I do want to keep an open mind" and "I don't want to prejudge the meeting."
Bullard was speaking on the last day before the 'quiet period' on policy-related remarks by officials kicked in ahead of the next Federal Open Market Committee meeting, on 15 June.
The central banker also said people needed to focus on the entirety of the most recent monthly jobs report.
America´s labour market had been "improving for a long time" and it might be that the days of 200,000-a month jobs gains was now over.
"But that's OK," he said.
In his interview, the central bank official also called on the Federal Reserve to be nimbler in its use of 'windows of opportunity' resulting from positive economic news to hike rates.
With that in mind, he backed scheduling press conferences with Fed chair Janet Yellen for every meeting.
Lastly, Bullard said a move on rates in July was possible and reiterated his stance that the Brexit referendum on 23 June was unlikely to be much of an issue for the US economy. |
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| | US Market Report | | US open: Stocks gain as oil prices rise ahead of Yellen speech US stocks advanced on Monday as oil prices jumped and as investors awaited a speech from Federal Reserve chair Janet Yellen.
At 1518 BST, the Dow Jones Industrial Average rose 0.54%, the S&P 500 increased 0.44% and the Nasdaq climbed 0.36%.
At the same time oil prices rallied after Exxon Mobil reported a pipeline failure and spill at its Torrance refinery near Los Angeles. Supply disruptions in Nigeria also propped up prices as it helped to soothe the global output glut.
West Texas Intermediate crude rose 2.4% to $49.83 per barrel and Brent increased 2.2% to $50.77 per barrel at 1525 BST.
Analysts said a sharp fall in the dollar on Friday following a worse-than-expected US non-farm payrolls report had also supported an increase in crude prices. A weaker dollar helps demand in the rest of the world as it makes oil imports traded in the currency cheaper.
The dollar, however, regained ground on Monday rising 0.05% against the euro, 0.42% versus the pound and 0.79% against the yen.
Meanwhile, a speech by Yellen will be dissected carefully for clues on the timing of the next interest rate hike. Friday's weak jobs report has led some economists to believe a rate increase at the 14-15 June policy meeting is unlikely.
"Yellen has recently said she expects a rate hike to come in the 'coming months'. One data point won't derail the Fed's expectation of gradually raising rates, but in the minds of the majority of the FOMC, likely pushes back the next rate rise to September," said Jasper Lawler, market analyst at CMC Markets.
Yellen is delivering a speech on the economic outlook and monetary policy at the World Affairs Council of Philadelphia's luncheon at 1730 BST.
Speaking in Finland, Boston Fed President Eric Rosengren said earlier on Monday that a rate hike was still likely, albeit not this month, despite the weak jobs report.
He said it was important to wait and see whether the weak jobs report was a reflection of a broader slowing in labour markets or just an anomaly.
On the corporate front, energy stocks edged higher on the increase in crude prices with Chesapeake Energy, Halliburton and Exxon Mobil in the black. |
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| | Broker Tips | | Broker tips: Shell, Cairn Energy, Wolseley Investors need not be overly-concerned about the risks to Royal Dutch Shell's dividend, although the likelihood of a projected $25bn share buyback over four years might be a wholly different question, analysts at SocGen said.
At its 7 June analysts meeting, the company would need to adress worries about its capital spending budget, its asset disposal programme and the sustainability of its dividend, analysts Irene Himona, Mehdi Ennebati, Yoann Charenton said in an extract from a research report sent to clients on the day before.
The fact that in 'cash-out' terms the oil major´s capital expenditure was already at between $25 to $28bn, as oppossed to headline budgeted capital investment of $30bn, meant the company´s guidance was already in-line with expectations, the analysts said.
Nonetheless, they believed markets were right to question Shell´s timeline of three years to complete its targetted $30bn in asset disposals.
As regards the dividend, if necessary Shell could opt to maintain its scrip dividend beyond next year and delay its $25bn four-year share buyback programme, they said.
Combined, those two measures would save the company $10bn a year in cash outflow - equivalent to a $20/barrel higher oil price, so closer to $70 per barrel - which in their opinion was "sufficient" for Shell to manage the balance sheet.
Ahead of the meeting with analysts, SocGen boosted its target on the shares from 1,660p to 1,900p and reiterated its 'buy' recommendation.
RBC Capital Markets downgraded Cairn Energy to 'sector perform' from 'outperform' and cut the price target to 250p from 260p until 2017 drilling plans are confirmed.
The Canadian bank said drilling success at the SNE field offshore Senegal has provided a welcome exception to recent drilling disappointments across the sector.
RBC said the results demonstrated unequivocally that SNE has the potential to be a major oil field with reservoirs capable of delivering commercial flow rates.
However, with limited news flow until drilling restarts in 2017, there is the potential for the stock to drift compared to leveraged peers, particularly in an improving oil price environment.
In the medium term, RBC reckons Cairn remains well placed to become the "go to" UK main list E&P stock given a strong balance sheet, production base and stated strategy to return value created by the drill bit to shareholders.
"However, establishing this, more fully formed, business will require time and production start-up from the Catcher (Cairn 20%, Premier Oil operated) and Kraken (Cairn 29.5%, EnQuest operated) fields H2/17," it said.
JPMorgan Cazenove downgraded Wolseley to 'neutral' from 'overweight' and cut the price target to 4,100p from 4,300p on valuation grounds.
"Prior to Q3, Wolseley had outperformed by 10% year to date. Despite the fact the stock was approaching what we viewed as fair value, it was our expectation that outperformance could continue, driven by an inflection in LFLs at Q3 and positive US news flow," the bank said,
However, it sad slower current growth reported last week has promoted it to cut its full-year 2017 earnings per share estimates by 2%.
JPM said that while the stock is down 8% in the last three days, there is still only 9% upside to its new target.
"Given that we do not view the valuation as particularly compelling and we struggle to think of near-term positive catalysts, we are downgrading." | | |
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