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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 close higher as oil prices surge The FTSE 100 closed higher on Tuesday as oil prices jumped and a speech by Federal Reserve chair Janet Yellen suggested an interest rate hike in June was off the table.
Oil prices continued to rally on supply disruptions in Nigeria and forecasts for falling US crude inventories.
West Texas Intermediate crude was up 0.85% to $50.12 per barrel and Brent was up 1.09% to $51.11 per barrel at 1540 BST.
The Bonny Light crude output in Nigeria has dropped an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, Reuters reported citing a source.
A report from the American Petroleum Institute at 2130 BST is expected to show US crude inventories fell 3.5 million barrels last week, helping to soothe concerns about the global supply glut.
A weaker dollar also supported the rise in crude prices - as it makes it cheaper for foreign buyers, increasing demand.
Meanwhile, Yellen said the US economy was making progress but kept quiet about the timing of another interest rate increase.
"I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run," Yellen said Monday during a speech in Philadelphia.
Her failure to mention the specific timing on interest rates hikes was seen by economists to signal that a rise was unlikely at the policy meeting next week, particularly after a much worse-than-expected US non-farm payrolls report on Friday.
"After last Friday's employment report and yesterday's speech by Yellen we have changed our call for the Fed's first rate hike this year to September," said Rabobank.
"The slowdown in the services sector, apparent not only in the employment report, but in the ISM Non-Manufacturing Survey as well, and Yellen's very cautious tone make a delay to September more likely than July. Our call for two hikes this year remains unchanged, and we still expect the second in December."
Closer to home, a new Brexit poll from The Telegraph and ORB showed 52% of those in the UK in favour of staying in the EU, compared to 40% who want to leave.
It contrasts with two polls from YouGov and Observer/Opinium on Monday which revealed more people in the Leave camp ahead of the 23 June referendum.
The pound rebounded from Monday's slide, rising 0.89% against the dollar to $1.4571, following the latest poll.
On the macroeconomic data front, Halifax said UK house prices rose more than expected in May as demand continued to outstrip supply. Prices increased 0.6% in May compared to a month ago, beating analysts' estimates for a 0.3% gain.
UK retail spending rose in May after two flat months as shoppers stocked up on clothing for the summer, the British Retail Consortium (BRC) said. Spending increased 1.4% in May compared to a year ago, in line with the 12-month average of 1.5%. On a like-for-like basis, excluding changes in the amount of retail space open to shoppers over the past 12 months, the BRC said sales grew 0.5% in May compared with a 0.9% fall in April. Analysts had pencilled in a 0.3% rise in May.
In the eurozone, Eurostat said the economy grew more rapidly in the first quarter than previously estimated. Gross domestic product rose 0.6% in the first quarter than in the final three months of 2015, and was 1.7% higher than the first three months of last year. Eurostat had previously estimated that the economy grew by 0.5% on the quarter, and 1.5% on the year. Analysts had expected no change to the estimates.
Among corporate stocks, retailers Burberry and Next were given a boost by the positive BRC retail figures.
A measure of oil producers, including Royal Dutch Shell and BP, gained on the back of an increase in crude prices.
Shell also said it was increasing the level of cost cuts from its merger with BG Group to $4.5bn from a previously stated $3.5bn.
Sports Direct advanced after boss Mike Ashley appeared before the Commons Business, Innovation and Skills Select Committee to address allegations of the ill-treatment of agency workers.
Anglo American was under the cosh after having its 'sell' rating reiterated in a note from UBS. Bloomberg also reported that BHP Billiton and Glencore are among the final bidders for Anglo's Australian metallurgical coal assets.
Tullet Prebon declined on news that Britain's competition watchdog is referring its planned purchase of ICAP's global hybrid voice broking and information business for a phase-2 investigation. |
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| Market Movers
FTSE 100 (UKX) 6,279.61 0.10%
FTSE 250 (MCX) 17,180.40 -0.01%
techMARK (TASX) 3,133.17 -0.22%
FTSE 100 - Risers
Royal Dutch Shell 'A' (RDSA) 1,756.00p 3.23%
Royal Dutch Shell 'B' (RDSB) 1,764.50p 3.07%
Burberry Group (BRBY) 1,102.00p 2.13%
Next (NXT) 5,470.00p 2.05%
DCC (DCC) 6,430.00p 1.66%
BP (BP.) 373.25p 1.32%
GKN (GKN) 282.10p 1.29%
Coca-Cola HBC AG (CDI) (CCH) 1,410.00p 1.15%
CRH (CRH) 2,105.00p 1.10%
Centrica (CNA) 206.00p 0.98%
FTSE 100 - Fallers
Anglo American (AAL) 665.50p -3.07%
Glencore (GLEN) 140.00p -2.85%
Antofagasta (ANTO) 440.10p -2.20%
Direct Line Insurance Group (DLG) 369.00p -1.76%
Prudential (PRU) 1,322.00p -1.75%
Smith & Nephew (SN.) 1,170.00p -1.68%
Tesco (TSCO) 156.80p -1.51%
Informa (INF) 674.00p -1.39%
SSE (SSE) 1,529.00p -1.35%
Mediclinic International (MDC) 904.50p -1.20%
FTSE 250 - Risers
Evraz (EVR) 127.30p 10.22%
Sports Direct International (SPD) 383.20p 5.39%
Tullow Oil (TLW) 253.00p 4.63%
Drax Group (DRX) 318.00p 3.62%
Vesuvius (VSVS) 338.90p 3.42%
Entertainment One Limited (ETO) 187.30p 3.20%
Weir Group (WEIR) 1,303.00p 3.00%
Amec Foster Wheeler (AMFW) 456.50p 2.93%
Cobham (COB) 142.10p 2.90%
Cairn Energy (CNE) 197.30p 2.39%
FTSE 250 - Fallers
Allied Minds (ALM) 342.80p -5.17%
Man Group (EMG) 128.50p -4.39%
Jimmy Choo (CHOO) 109.30p -4.12%
Ocado Group (OCDO) 259.20p -3.75%
Tullett Prebon (TLPR) 313.90p -3.47%
Genus (GNS) 1,497.00p -3.42%
Vedanta Resources (VED) 391.60p -3.24%
Euromoney Institutional Investor (ERM) 955.50p -2.90%
Shawbrook Group (SHAW) 269.00p -2.57% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets in the green as oil rises European markets managed to finish higher on Tuesday, having traded broadly in line for much of the afternoon sessions.
The Stoxx 600 was up 1.13% to 346.29, while France's CAC 40 added 1.27% to 4,479.39, Italy's FTSE MIB gained 1.99% to 17,975.49, and Germany's DAX was up 1.66% to 10,288.68.
In corporate news, German carmaker Porsche announced first quarter group profits of €661m, mainly as a result of the profits from its stake in Volkswagen AG.
Also in the automobile sector, Daimler AG announced it would reduce its headcount at three US plants and another in Mexico by 1,240.
The Stoxx 600 Oil and Gas sector index paced gains in oil, rising 2.61% as oil prices continued to float higher.
Both crude benchmarks were above the $50 mark as the continent clocked off, with Brent crude up 1.17% at $51.15 and West Texas Intermediate adding 0.92% to $50.15.
On Monday evening, Exxon Mobil reported a pipeline failure and spill at its Torrance refinery near Los Angeles. That came close on the heels of news of fresh attacks against the oil sector's infrastructure in the Niger Delta.
Fed chair Janet Yellen's speech on Monday evening was also very much on investors' minds.
Although the US central bank chief sounded an optimistic note on the outlook for America's economy, her remarks also appeared to preclude an interest rate hike at the Federal Open Market Committee's next policy meeting on 15 June, and quite plausibly also for July.
"Although Yellen said that she thinks the positive factors are outweighing the negative, she highlighted the downside risks to the economic outlook," analysts at Danske Bank said in a research note sent to clients.
Gross domestic product in the eurozone expanded at a 0.6% quarter-on-quarter clip over the first three months of the year, revised data showed, against a consensus of 0.5%.
German industrial production rose by 0.8% month-on-month in April, according to the Bundesministerium fr Wirtschaft und Energie - better than the 0.7% gain which economists had pencilled in.
Both factory and energy output increased by 1.1% month-on-month, with gains in the former led by a 2.2% jump in the production of capital goods.
The foreign trade deficit in France increased to -€5.2bn in April from -€4.2bn in March, against a consensus -€4.5bn. |
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| | US Market Report | | US open: Stocks rise on surge in oil prices, Yellen speech US stocks rose on Tuesday as oil prices surged and a speech by Federal Reserve chair Janet Yellen suggested an interest rate hike in June was off the table.
At 1526 BST the Dow Jones Industrial Average climbed 0.35%, the S&P 500 increased 0.27% and the Nasdaq grew 0.27%.
Oil prices continued to rally on supply disruptions in Nigeria and forecasts for falling US crude inventories.
West Texas Intermediate crude was up 0.85% to $50.12 per barrel and Brent was up 1.09% to $51.11 per barrel at 1540 BST.
The Bonny Light crude output in Nigeria has dropped an estimated 170,000 barrels per day (bpd) following attacks on pipeline infrastructure, Reuters reported citing a source.
A report from the American Petroleum Institute at 2130 BST is expected to show US crude inventories fell 3.5 million barrels last week, helping to soothe concerns about the global supply glut.
A weaker dollar also supported the rise in crude prices - as it makes it cheaper for foreign buyers, increasing demand. The dollar rose 0.09% against the euro but fell 0.68% against the pound and dropped 0.20% versus the yen.
Meanwhile, Yellen said the US economy was making progress but kept quiet about the timing of another interest rate increase.
"I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run," Yellen said Monday during a speech in Philadelphia.
Her failure to mention the specific timing on interest rates hikes was seen by economists to signal that a rise was unlikely at the policy meeting next week, particularly after a much worse-than-expected US non-farm payrolls report on Friday.
"After last Friday's employment report and yesterday's speech by Yellen we have changed our call for the Fed's first rate hike this year to September," said Rabobank.
"The slowdown in the services sector, apparent not only in the employment report, but in the ISM Non-Manufacturing Survey as well, and Yellen's very cautious tone make a delay to September more likely than July. Our call for two hikes this year remains unchanged, and we still expect the second in December."
Among corporate stocks, Valeant Pharmaceuticals slumped after saying it swung to a first quarter net loss of $1.08 and slash its estimate for 2016 earnings.
Shares in Ralph Lauren plunged after the company revealed a restructuring plan in an effort to lift profitability.
DryShips tumbled after the ocean transportation company disclosed in a filing that it defaulted on three bank loans.
HD Supply Holdings slid as it reported a first-quarter net loss of 7 cents per share.
FedEx gained after saying it has raised its quarterly dividend 60% to 40 cents a share. |
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| | Broker Tips | | Broker tips: LSE, Weir Group, Coca-Cola HBC Numis has reiterated a 'hold' rating at target of 2,700p on the London Stock Exchange Group (LSE) ahead of its merger with Deutsche Boerse.
The 21bn merger between the LSE and Germany's stock exchange was announced in mid-March and aims to generate cost synergies of €450m (354m) and revenue synergies of at least €250m (197m).
"We believe a merger with Deutsche Boerse could create significant value for LSE shareholders if completed as expected," Numis said.
"But whilst we see the obvious benefits from such a merger (namely cost and revenue synergies), we remain mindful of the challenges that would need to be overcome for it to complete (competition authorities, regulatory concerns, national pride) and the long list of failed merger and acquisition deals within this sector."
The UK and German governments have said they would block the deal if it was seen to hurt their domestic economies.
Numis said while a deal would be difficult to tie up, it estimated LSE could be worth up to 3,200p per share if the merger completes as expected and the targeted cost synergies are achieved.
"However, we still maintain our 'hold' recommendation and 2,700p/share target as we remain mindful of the numerous challenges that need to be overcome for such a deal to complete."
The broker added that it continues to favour LSE's "strong market position, favourable growth drivers and diversified revenue base" but the shares have had a "very strong run and are up with events in our view, especially given the downside risks should a deal not eventually be completed".
Weir Group shares gained on Tuesday after Canaccord Genuity raised its rating on the stock to 'hold' from 'sell' and its target to 1,200p from 800p.
Canaccord said given the rally in Weir's US peers, it believes the valuation for the UK oil and gas-focused engineering company is "likely to stay extended even if the fundamental case is difficult to see".
"The stock has in any case almost always traded at a premium to European oil services peers, in part because of its greater flexibility through downturns."
The analyst said Weir has a long track record of cash generation through good and bad times so it is hard to argue that the company should trade at a large discount to its peers in North America which are showing a notable increase in share prices. Schlumberger, Halliburton and National Oilwell Varco are among the US peers.
However, Canaccord said Weir is 25% exposed to the oil and gas sector, which has suffered a slump in crude prices amid a global supply glut.
"We continue to believe that fundamental over-capacity issues are likely to cap any recovery in pricing for the oil and gas supply chain for an extended period, even if volume recovers: and the capital expenditure outlook for the diversified majors in the sector strongly suggests there remains some way to go before this inventory is worked through."
Credit Suisse bumped up its target on shares of Coca Cola HBC following what it described as an "upbeat" investor seminar from the company on the previous day.
The bottling company outlined plans for revenues to grow by between 4% to 5% over fiscal year 2016 to 2020 and boost its margins from the 7.5% achieved in 2015 back to their levels from before the crisis, at 11%.
Analysts Sanjeet Aujla, Charlie Mills and Pavan Daswan estimated the improvement in margins would be more backend-loaded, towards 2018-2020, reaching 10% by fiscal year 2020. The analysts also called attention to the "inherent volatility" of the companys markets.
If CCH met those targets then on the basis of current exchange rates that could translate into a compound annual growth rate of 15% in earnings per share between 2016 and 2020, they said.
That led Credit Suisse to lift its target on the companys shares from 1,480p to 1,500p, while keeping its recommendation at 'neutral'.
The Swiss broker also pointed out the prospect for better pricing in Russia, easing deflation across Europe and the "good work" carried out by management on its cost base, which should allow for greater operational leverage if momentum on the top line was maintained. | | |
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