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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: resources, financials falter as crude eases, gilt yields fall London blue-chip stocks fell on Thursday led by a cluster of mining majors and followed by a string of financials, against a fabric of easing crude prices, gilt yields and soaring gold.
Angtofagasta, Glencore, BHP Billiton, and Anglo American led the pack, sold on concerns about China's economy and as copper fell. Financials RSA Insurance, Prudential, Standard Chartered and Legal & General followed. To the upside, US interest rates-sensitive utilities featured.
For its part, the Footsie saw the day out with losses of 69.93 points or 1.10% to end the day at 6,231.89.
At 16:29 BST, gold was up 0.78% to $1272 an ounce, but copper lost 1.67% to $202.7 an ounce. West Texas Intermediate was down 0.8% to $50.81 a barrel and Brent shed 0.7% to $52.14, this softness followed Wednesday's gains on a drop in weekly US oil inventories.
"Investors were fleeing risky assets like stocks preferring traditional havens like government debt, gold and the Japanese yen," said Jasper Lawler, market analyst at CMC Markets.
"The European Central Bank's purchase of corporate debt has driven yields lower across the bond spectrum. Jitters over a possible Brexit are adding to the lure of the UK's 'safest' asset," Lawler added.
UK 10-year gilt yields fell one basis point to a record low of 1.24% as British investors clamoured for the safety of government debt.
Earlier today, ECB president Mario Draghi warned of lasting economic consequences of years of weak output. Speaking in Brussels, he added that every effort was needed to be devoted to ensuring productivity was returned to potential.
"With years of weak growth eroding Eurozone productivity and potentially elevating the threat of irreversible damage, the European Central Bank remains under immense pressure to act swiftly," said FXTM research analyst Lukman Otunuga.
In other macro news out today, UK's total trade deficit fell to £3.29bn in April, from a downwardly revised £3.53bn in March, said Office for National Statistics. This was the lowest deficit since September and was better than the expected £3.55bn.
These numbers and the underlying detail were not seen as being welcome reading for UK Chancellor George Osborne as Britain's in-out European Union referendum on 23 June neared, said Dennis de Jong, managing director of UFX.com.
"Both the Leave and Remain camps will likely look to twist this data to their own ends," he said. In related news, Royal Institution of Chartered Surveyors said Brexit and higher buy-to-let tax concerns could see UK house prices weaken in the next few months.
Looking further afield, China's consumer price index rose 2.0% year-on-year in May, down from 2.3% growth the previous month. A reading of 2.2% had been anticipated by the market. The producer price index fell 2.8% in May, from a 3.4% dip in April. Views wee for a 3.2% fall.
Capital Economics' China economist, Julian Evans-Pritchard, expects consumer price inflation to remain near current levels for the rest of the year.
In the US, in the week to 4 June, the initial unemployment claims fell 4,000 to 264,000, the Department of Labor said. A print of 270,000 was expected. US wholesale inventories rose to $587.9bn at end-April, US Census Bureau said. This was up 0.6% from the revised March level and 0.9% higher on the year.
Meantime, back in London, shares in pay-TV operator Sky kicked higher as it inked a deal that will see the company broadcast Germany's Bundesliga football through to 2021 at an average rights cost of €876m a year, from €486m under the existing contract.
Home Retail Group gained after saying Argos' first-quarter sales grew by 2.6% to £868m. Like-for-like sales firmed 0.1%, with underlying like-for-like sales up about 1%. Vodafone slid on confirming it was merging with local subscription television provider Sky to create an integrated telecommunications and media group. Sky's shares rose.
RPC Group jumped after saying it had agreed a £261m deal to buy British Polythene Industries. Essentra, supplier of speciality plastic and packaging components, dropped after warning of lower full year adjusted operating profit amid challenging market conditions in filter products and project delays. |
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| Market Movers
FTSE 100 (UKX) 6,231.89 -1.10%
FTSE 250 (MCX) 17,111.59 -0.39%
techMARK (TASX) 3,094.55 -1.03%
FTSE 100 - Risers
Sky (SKY) 955.00p 2.85%
Carnival (CCL) 3,410.00p 1.76%
Randgold Resources Ltd. (RRS) 6,620.00p 1.38%
Fresnillo (FRES) 1,212.00p 1.17%
Marks & Spencer Group (MKS) 379.30p 1.01%
BT Group (BT.A) 425.25p 0.75%
Intu Properties (INTU) 304.50p 0.56%
Hammerson (HMSO) 583.00p 0.52%
Intertek Group (ITRK) 3,260.00p 0.40%
SSE (SSE) 1,547.00p 0.32%
FTSE 100 - Fallers
Antofagasta (ANTO) 423.40p -6.27%
Glencore (GLEN) 137.95p -5.32%
Vodafone Group (VOD) 219.75p -4.91%
BHP Billiton (BLT) 860.10p -4.54%
Anglo American (AAL) 666.00p -4.52%
Rio Tinto (RIO) 1,967.50p -3.55%
Johnson Matthey (JMAT) 2,975.00p -3.50%
Pearson (PSON) 820.00p -3.48%
RSA Insurance Group (RSA) 477.20p -2.31%
CRH (CRH) 2,098.00p -2.28%
FTSE 250 - Risers
Auto Trader Group (AUTO) 424.10p 5.37%
Melrose Industries (MRO) 403.20p 4.00%
Aveva Group (AVV) 1,750.00p 3.84%
Restaurant Group (RTN) 379.90p 3.73%
Allied Minds (ALM) 346.70p 3.62%
Indivior (INDV) 217.40p 3.52%
RPC Group (RPC) 843.00p 3.37%
DFS Furniture (DFS) 299.10p 2.42%
BGEO Group (BGEO) 2,588.00p 2.29%
Card Factory (CARD) 366.90p 2.26%
FTSE 250 - Fallers
Essentra (ESNT) 600.00p -27.71%
Petrofac Ltd. (PFC) 745.00p -5.11%
B&M European Value Retail S.A. (DI) (BME) 280.00p -4.85%
Aberdeen Asset Management (ADN) 271.70p -4.09%
esure Group (ESUR) 275.50p -3.83%
Weir Group (WEIR) 1,279.00p -3.48%
Amec Foster Wheeler (AMFW) 446.80p -3.27%
G4S (GFS) 185.50p -2.83%
Jimmy Choo (CHOO) 104.00p -2.80% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets sharply lower as sentiment turns negative Stocks in Europe closed down sharply on Thursday, with lower oil prices and commodity stocks stoking negative sentiment, and concerns about the health of the global economy growing.
The Stoxx 600 finished 1% lower after a choppy trading session, with all sectors ending up in the red.
In London, the FTSE 100 slipped 1.1%, while Germany's DAX lost 1.25% and France's CAC 40 fell 1%.
Markets in the region followed the lead of Asia, which were also down sharply on Thursday after a weaker dollar dragged on Japanese equities and South Korea's central bank unexpectedly cut interest rates to a record low.
Oil prices fell throughout the day, with traders taking their profits after a series of more positive sessions.
Brent crude was last down 1.14% at $51.92 per barrel and West Texas Intermediate lost 1.31% at $50.57.
Basic resources was the worst performing sector across the continent, losing 2.58% as copper prices dived south.
Glencore ended up with losses of more than 5% after it revealed an agreement to sell a 9.99% stake in its agricultural business to British Columbia Investment Corporation.
Antofagasta managed a 6.3% decline after a price target cut from Canaccord Genuity.
Plastics supplier Essentra sustained its swingeing loss, closing down 27.7% after issuing a profit warning before markets opened.
German utility E.ON ended 7.2% lower after approval from shareholders to spin off its conventional energy business.
Hotel operator Accor was down 2.8% after a price target slashing at the hands of Credit Suisse. |
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| | US Market Report | | US open: Stocks edge higher, alongside gains for crude Wall Street was sporting modest gains in early trading in New York, despite the release of a mixed report on the state of the country´s labour market.
As of 16:30 BST, the Dow Jones Industrials Average was rising by 0.31% or 55.67 points to 17,993.95, the S&P 500 was tacking on 0.22% or 4.71 points taking it to 2,116.88 and the Nasdaq Composite gained 0.21% or 10.20 points to 4,971.81.
Oil prices were holding higher despite the release of a rather neutral set of weekly statistics on commercial US oil inventories.
Crude stockpiles declined by 3.2m barrels, the Energy Information Administration reported, but that came alongside offsetting product builds.
West Texas Intermediate crude was up by 1.27% to $51.01 per barrel on the NYMEX and Brent gained 1.49% to $52.22 per barrel.
The US dollar spot index was 0.36% lower at 93.49.
The number of job openings in the US increased from 5.67m to 5.788m in April, matching the cycle-high hit in July 2015, according to the Bureau of Labor Statistics´s JOLTS survey. Economists had been expecting a reading of 5.675m.
However, hiring (5.092mn, previous: 5.29mn) slowed down significantly for a second month in a row in April, from 5.29m in March to 5.09m in April.
"This morning's report provides further support for the negative signal from May payrolls. That said, the information gain from the JOLTS data is marginal, as these data are revised by the BLS to be consistent with the establishment survey. Next month's payroll report, as well as weekly unemployment insurance data, will provide the next major indications on the state of US labor markets and the broader economy," Barclays´s Jesse Hurwitz said.
Meanwhile, US mortgage applications rose 9.3% in the week to 3 June, compared to a 4.1% fall the previous week, the Mortgage Bankers' Association revealed.
On the corporate front, Lululemon Athletica shares fell in in pre-market trade after the yoga clothing retailer reported a second-quarter sales forecast that was well below analysts' expectations.
Dave & Buster's Entertainment rallied as it raised its annual outlook and said the board approved a $100m share buyback plan.
UnitedHealth Group declined as it raised its quarterly dividend by 25%.
Gevo Inc. surged after saying on Tuesday the first two commercials flights using its renewable alcohol to jet fuel technology were used by Alaska Airlines.
From a sector standpoint the best performing industry groups were: Industrial&Metals (3.65%), Iron&Steel (3.63%) and Forestry&Paper (2.33%). |
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| | Broker Tips | | Broker tips: Antofagasta, RPC, Flybe Antofagasta shares dropped on Thursday as Canaccord Genuity downgraded the stock to 'hold' from 'buy' and lowered its target to 475p from 550p.
Canaccord said changes to the Chilean tax regime through 2018 may put pressure on Antofagasta's net margin and dividend.
"The company has a stated payout ratio of 35% now, but on our forecasts of a lower net margin going forward we think only a 2% dividend yield is likely through 2018," according to Canaccord analysts Tim Huff and Nick Hatch.
"We do not see the potential for Antofagasta to return to a +3% dividend yield until after 2018."
The analysts said while they see potential for operational progress in the coming three years at Antofagasta, tax pressures will weigh.
They said signs of a greater cost focus at the half year stage would be positive for the stock under Ivan Arriagada, who was appointed chief executive in April.
"While the stated strategy remains unchanged at Antofagasta, we see potential for Ivan to take on a greater cost focus in the coming 2-3 years.
"While the past four years have been focused on portfolio repositioning and necessary (but unpopular) capex spend in a downturn, Antofagasta could now be well positioned to deliver moderate volume growth and cost consolidation."
RPC Group's 'add' rating and target of 900p were reiterated by Numis after the plastics firm said it had agreed a £261m deal to buy British Polythene Industries (BPI).
RPC said it was launching a £90m share placing to part fund the acquisition. The company will pay BPI shareholders 470p a share in cash and 0.60141 of new RPC shares.
The offer is worth around 940p per British Polythene share, a 30% premium to the stock's closing price of 725.00p per share on Wednesday, RPC said.
"Strategically, the transaction provides a platform for the Group in the polythene films market, enhances polymer purchasing power and is in line with its Vision2020 growth strategy," Numis analyst Kevin Fogarty said.
"The acquisition is expected to be accretive to earnings per share in fiscal year 2017 and materially accretive thereafter and we will look to revise our forecasts for the group following today's analyst presentation."
Flybe shares fell almost 5% as Numis rated the stock as a 'buy' with a 132p target.
Numis said Flybe's reported pre-tax profit of £5.5m, from a £25.4m loss, was ahead of the brokerage's forecast for £3m.
This meant the regional airline had achieved an important milestone in its transformation, said analyst Wyn Ellis.
"Trading conditions in the sector were challenging during H2 and, in our opinion, the results demonstrate improved management controls and greater resilience, with a strengthened balance sheet and progress in key KPIs," Ellis said.
Numis noted that Flybe, looking ahead, had confirmed a challenging industry environment given the spectre of terrorist activity, industrial unrest in France, consumer uncertainty and the highest level of seat capacity growth in the European short-haul market for six years.
However, the airline had promised to remain disciplined in pricing, and that it would continue to focus on unit cost reduction and maintain its capacity discipline through continuing fleet transactions.
"Market conditions continue to be tough and we believe that the revenue environment has deteriorated in recent months," said Ellis in a research note.
"Flybe notes that it is already taking cost and capacity actions to support growth in FY 2017 and the profit and loss (statement) will also benefit from lower E195 costs, reduced fleet costs and a reduction in the unit fuel bill."
Numis had, reflecting the tougher industry revenue outlook, trimmed its FY 2017-estimated pre-tax profit forecast for Flybe to £21.7m, from £23m, with more modest progress now expected in FY 2018. | | |
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