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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 as Bank of England policy eyed London stocks gained on Wednesday as Theresa May succeeded David Cameron as Prime Minister and as investors awaited the Bank of England's policy decision.
Cameron urged May to ensure Britain remains close as possible to the EU after Brexit as he delivered his final Prime Minister's Questions on Wednesday.
The Conservative Party leader was to go to the Buckingham Palace later to officially tender his resignation to the Queen. May followed him to the Palace to be formally appointed his successor.
The pound reversed its earlier jump, falling 0.49% against the dollar at $1.3182.
"After all the political dramatics of late, it feels as though we have reached a conclusion with the appointment of Theresa May," said Joshua Mahony, market analyst at IG.
"However, the work starts now for May, who has arguably one of the shortest campaigns in British history, with the UK going from Cameron's resignation to Mays appointment in the space of 19 days. Markets will be watching carefully at the appointments being made, most notably for whether a new chancellor is appointed, with anti-Brexit hawk Phillip Hammond being touted."
The attention now turns to the Bank of England's policy decision on Thursday with many analysts expecting 25 basis point interest rate cut after the Brexit vote weakened the UK economic outlook.
Following Britain's decision to leave the European Union on 24 June, Governor Mark Carney said some easing of monetary policy may be needed over the summer to cushion the blow.
"To us, there seems little reason to wait on an interest rate cut front," said Howard Archer, chief UK and European economist at IHS Global Insight.
In economic data, China's trade surplus narrowed to $48.11bn in June from $49.98bn a month earlier as exports fell. Exports dropped 4.8% in June compared to a year ago following a 4.1% drop in May, according to the General Administration of Customs. Economists had expected a 5% decline. Imports decreased 8.4% year-on-year in June, more than the 6.2% slide expected by analysts, following a 0.4% fall in May.
Eurozone industrial production dropped 1.2% from April versus expectations of a 0.8% decline, according to Eurostat. Figures for April were revised up to show a 1.4% increase from a previous estimate of 1.1%.
US import prices rose less than expected in June as rising costs for petroleum products were offset by falling consumer and capital goods prices, according to the Labor Department. Import prices increased 0.2% last month after an unrevised 1.4% jump in May. Economists had expected a 0.5% increase.
Meanwhile, Dallas Fed President Robert Kaplan suggested a "slow, gradual, careful" approach to raising interest rates is very appropriate during a speech in Houston.
In commodities, oil prices fell as the Energy Information Agency revealed US weekly crude inventories fell less than expected. The EIA US crude supplies fell by 2.5m barrels for the week ended July 8, below the decline of 3.25m barrels expected by analysts polled by S&P Global Platts.
Separately, the International Energy Agency said a global supply glut was threatening market recovery.
On the company front, Burberry rallied after reporting a 3% like-for-like drop in retail sales in the first quarter, beating the 5% fall that had been forecast by market.
Rolls-Royce was another riser as news emerged from the Farnborough Airshow. Chief executive Warren East said the engine maker could boost its profitability by £1bn if tough targets, in addition to cost cuts already identified by the company, can be hit.
Housebuilder Barratt Developments was one of the big fallers, caught up in a sector-wide retreat, as it told Reuters it could reduce the rate at which it builds houses due to a possible slowdown from Brexit.
Playtech gained as it said it was buying 90% of sports betting software maker Best Gaming Technology for €138m in cash.
Transport operator Go-Ahead was under the cosh a day after London mayor Sadiq Khan called for the Southern Rail franchise to be withdrawn from the company after months of delays and cancellations. |
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| Market Movers
FTSE 100 (UKX) 6,670.40 -0.15%
FTSE 250 (MCX) 16,774.38 -0.19%
techMARK (TASX) 3,305.64 0.25%
FTSE 100 - Risers
Burberry Group (BRBY) 1,279.00p 6.32%
Antofagasta (ANTO) 506.00p 4.12%
Rolls-Royce Holdings (RR.) 750.00p 3.59%
CRH (CRH) 2,238.00p 2.43%
Centrica (CNA) 232.70p 2.29%
Admiral Group (ADM) 2,046.00p 2.10%
Paddy Power Betfair (PPB) 8,630.00p 1.83%
St James's Place (STJ) 840.00p 1.76%
Hikma Pharmaceuticals (HIK) 2,549.00p 1.76%
Kingfisher (KGF) 329.10p 1.73%
FTSE 100 - Fallers
GKN (GKN) 275.30p -3.06%
ITV (ITV) 184.90p -3.04%
Berkeley Group Holdings (The) (BKG) 2,620.00p -2.67%
Schroders (SDR) 2,507.00p -2.64%
Royal Bank of Scotland Group (RBS) 177.40p -2.53%
Barclays (BARC) 145.10p -2.32%
Anglo American (AAL) 814.70p -1.90%
easyJet (EZJ) 1,123.00p -1.66%
Lloyds Banking Group (LLOY) 55.32p -1.65%
Legal & General Group (LGEN) 185.80p -1.64%
FTSE 250 - Risers
Playtech (PTEC) 848.50p 3.98%
Ladbrokes (LAD) 124.00p 3.33%
Moneysupermarket.com Group (MONY) 270.70p 3.28%
Shawbrook Group (SHAW) 169.80p 3.16%
NMC Health (NMC) 1,151.00p 2.77%
DFS Furniture (DFS) 216.30p 2.76%
Evraz (EVR) 162.00p 2.34%
Rank Group (RNK) 233.30p 2.32%
Drax Group (DRX) 355.70p 1.98%
Dignity (DTY) 2,837.00p 1.98%
FTSE 250 - Fallers
CLS Holdings (CLI) 1,332.00p -7.50%
International Personal Finance (IPF) 313.60p -3.92%
Euromoney Institutional Investor (ERM) 1,021.00p -3.77%
Kaz Minerals (KAZ) 139.00p -3.74%
Millennium & Copthorne Hotels (MLC) 407.00p -3.67%
P2P Global Investments (P2P) 815.50p -3.49%
JRP Group (JRP) 107.20p -3.42%
Go-Ahead Group (GOG) 1,884.00p -3.24%
Marshalls (MSLH) 258.40p -3.22% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drift lower European stocks edged mostly lower, with the UK in focus again as Theresa May takes over from David Cameron as Prime Minister.
The benchmark Stoxx Europe 600 index slipped by 0.13% or 0.43 points to end the day at 335.83, Germany's DAX finished the session 0.33% lower and France's CAC 40 edged up by 0.09%, seeing the day out from the 4,335.26 point level.
At the same time, oil prices registered a sharp spill after a stellar performance on Tuesday. West Texas Intermediate was down 3.95% at $45.02 a barrel and Brent crude was 4.1% weaker at $46.58 after the US Department of Energy reported that oil inventories Stateside fell by a smaller than expected 2.5m barrels a day last week.
Data from the American Petroleum Institute on Tuesday also weighed on crude oil futures, after it showed US crude inventories rose by 2.2m barrels in the week to July 8 to 523.1m, versus analysts' expectations for a 3m barrel drop.
Rebecca O'Keeffe at Interactive Investor said: "The last few weeks have seen markets rally strongly as investors assume the most positive outcome for assets, with limited Brexit risks combining with the investor assumption that global central banks will do whatever it takes to ease market concerns and stimulate the market - including the view that the Fed will not hike rates any time soon. In effect, this has created a situation where the global equity market has been operating on the premise that they can have their cake and eat it too!"
In corporate news, pharmaceuticals giant AstraZeneca was trading a little higher after saying it has entered into an agreement with Sandoz and its affiliates to resolve litigation relating to Faslodex (fulvestrant).
Luxury retailer Burberry jumped despite reporting declines across all three its regions, which led to a 3% like-for-like drop in retail sales in the first quarter.
Alstom was higher after the French train maker posted a 9% rise in quarterly sales, while UniCredit shares lost ground even after the bank sold minority stakes in two of its units.
French hotels group Accor rallied after announcing late on Tuesday that it will separate its HotelInvest unit and sell a stake in the subsidiary.
Poundland surged 12% after it agreed South Africa's Steinhoff Holdings could buy the remaining shares in the London-listed discount retailer it does not already own for 222p per share in cash, valuing it at £597m.
French supermarket operator Groupe Casino was on the back foot after saying second-quarter sales were up 3.8% on a like-for-like basis.
Housebuilder Barratt Developments was also weaker, caught up in a sector-wide slump despite saying full-year pre-tax profit would rise around 20% to £680m.
Data released earlier by Eurostat showed Eurozone industrial production fell 1.2% in May from April versus expectations of a 0.8% decline. Energy production fell 4.3%, capital goods slid 2.3% and durable consumer goods output was down 1.4%.
Meanwhile, figures for April were revised up to show a 1.4% increase from a previous estimate of 1.1%. |
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| | US Market Report | | US open: Stocks waver after two-day rally US stocks struggled for direction on Wednesday following a two-day rally.
At 1527 BST, the Dow Jones Industrial Average was flat, the S&P 500 fell 0.04% and the Nasdaq rose 0.04%.
The S&P and the Dow closed on Tuesday at record highs, boosted by a jump in energy shares and better-than-expected second quarter earnings from Alcoa.
On Wednesday's agenda, US import prices rose less than expected in June as rising costs for petroleum products were offset by falling consumer and capital goods prices, according to the Labor Department. Import prices increased 0.2% last month after an unrevised 1.4% jump in May. Economists had expected a 0.5% increase.
"Recently, US import prices have been dragged down by two major factors: the decline in oil prices and dollar strength," said Barclays Research.
"With the effects of lower oil prices and past appreciation of the dollar having largely waned, the renewed weakness in import prices is a concern. Although we caution against over-interpreting import price data, this weakness is worth monitoring carefully, as it likely reflects soft demand, either domestically or internationally."
Meanwhile, Dallas Fed President Robert Kaplan suggested a "slow, gradual, careful" approach to raising interest rates is very appropriate during a speech in Houston. He said global headwinds mean monetary policy should remain modestly, but not wildly, accommodative. At 2300 BST, Philadelphia Fed President Harker will give a speech on the economic outlook at the 2016 World Class Summit in Philadelphia.
Elsewhere, China's trade surplus narrowed to $48.11bn in June from $49.98bn a month earlier as exports fell. Exports dropped 4.8% in June compared to a year ago following a 4.1% drop in May, according to the General Administration of Customs. Economists had expected a 5% decline. Imports decreased 8.4% year-on-year in June, more than the 6.2% slide expected by analysts, following a 0.4% fall in May.
Meanwhile, oil prices fell after the International Energy Agency (IEA) said a global supply glut was threatening market recovery. In its oil market report for July, IEA said OPEC crude output rose by 400,000 barrels per day in June to an eight-year high of 33.21m barrels per day, including newly re-joined Gabon.
Separately, the Energy Information Agency said weekly US crude inventories fell by 2.5m barrels to 521.8m barrels in the week to 8 July.
Brent crude dropped 2.6% to $47.23 per barrel and West Texas Intermediate fell 2.3% to $45.74 per barrel at 1545 BST.
Still to come, the Federal Reserve releases its Beige Book at 1900 BST and the Monthly Budget Statement is due at the same time.
On the company front, Juno Therapeutics gained after the drugmaker late Tuesday said it would resume a drug trial of a potential leukemia treatment. |
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| | Broker Tips | | Broker tips: Inmarsat, GVC Holdings, ASOS Broker Jefferies reiterated its 'buy' recommendation on Inmarsat, sparked by reports that AirAsia has chosen the satellite company as a 'connectivity provider' for the carrier's newly announced Airbus fleet.
AirAsia announced at the Farnborough Air Show on Tuesday that it had ordered 100 A321neo planes from Airbus, with industry experts suggesting on social media that an "L-band" service has been chosen for the in-flight connectivity.
"Given AirAsia has been working with roKKi since 2014 for its in-flight connectivity service, and roKKi is powered by Inmarsat's SwiftBroadband service, it appears to us that Inmarsat has been chosen," Jefferies said.
This gives welcome visibility on medium term L-band growth for the FTSE 250 company.
"While not a plank to the all-critical Global Xpress revenue guidance, it is nonetheless welcome visibility on future growth," analysts said, with it positioning Inmarsat well with AirAsia for the point at which the carrier looks to move to a higher throughput service.
Jefferies set a 1,245p price target on Inmarsat's shares, well above their near-800p level on Wednesday.
GVC Holdings shares gained on Wednesday as Canaccord Genuity reiterated a 'buy' rating on the stock and lifted its target to 680p from 615p.
In a trading update, the online gambling company reported 11% increase in like-for-like revenue in the six months to 30 June, supported by favourable results in the Euro 2016 football tournament and particularly strong growth in both wagering and gaming in the second quarter.
With the acquisition of Bwin.party completed on 1 February, GVC will gain a premium listing on the full list of the London Stock Exchange in August and looks likely to be added to the FTSE 250 at the next quarterly review.
The trading statement from GVC, ahead of its interim results announcement in September, confirmed total net gaming revenue (NGR) on a reported-currency pro forma basis, which treats revenue as if Bwin had been acquired in January, was up 8% to €439m. Or on a reported basis, as Bwin in fact joined a month later, it was up 223% to €388m.
"Management is clearly beginning to drive meaningful revenue synergies from the bwin.party acquisition, on top of its targeted €125m of cost savings," said Canaccord analyst Simon Davies.
"GVC has the makings of an extraordinary turnaround story. bwin.party generated a 7.5% compound annual revenue decline in the period 2010 to 2015, but it has now reported three consecutive quarters of strong growth."
Davies added that GVC has been the "star performer" in the online gaming sector, with shares up 67% since the start of December and 34% year-to-date.
"The shares trade on a 2017 enterprise value/earnings before interest, tax, depreciation and amortisation of just 8.1x, a free cash flow yield of 8.1% and price-earnings ratio of 10.9x."
However, he warned that GVC is approaching a period of integration risk, with the transition of GVC sportsbook customers over to the bwin platform in the next few months.
Canaccord expects gross win margins to normalise in the second half and said third quarter wagering activity could be affected by the "customer unfriendly results" from the Euros.
Berenberg has reiterated its 'buy' rating on ASOS and raised its target to 5,100p from 4,100p after the fashion retailer reported better-than-expected third quarter revenues.
ASOS on Tuesday reported a 30% rise in total sales for the four months to 30 June and said it expects full-year sales growth to be at the upper end of the 20-25% range.
Total retail sales grew to £500.5m from £386m in 2015, beating analysts' expectations of around 23% growth.
Sales in the UK were up 28%, while sales in the US rose 53% and EU sales advanced 32%.
In the rest of the world, sales were up 16%, while international retail sales grew 31%.
Berenberg said ASOS significantly outperformed consensus revenue expectations despite challenging conditions across the sector.
"On an underlying basis, management guidance cautiously implies a slowdown in the fourth quarter of 2016 and fiscal year (FY)2017, although to date its UK and EU performance has not been negatively affected by Brexit-related uncertainty plaguing many of its retail peers," Berenberg said in a note to investors. | | |
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