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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 flat after mixed economic data The FTSE finished flat on Friday as traders sifted through a batch of mixed economic data.
"A flat finish to the week might seem like a defeat for investors, but a 1% gain since Monday for the FTSE 100 shows just how resilient the rally has been," said Chris Beauchamp, senior market analyst at IG.
Equities had started off the day on the back foot after a terror attack in Nice that left at least 84 people dead. A truck was driven into crowds celebrating Bastille Day in Nice, in what President Francois Hollande called an attack of "an undeniable terrorist nature". Shares in travel and leisure stocks fell on the news, including Carnival, Thomas Cook, TUI and easyJet.
First Group's cautious outlook added to worries in the travel sector after the transport operator said domestic uncertainty after the EU referendum will impact results. The company reported a 1.4% drop in first quarter revenue in constant currency, with revenue growth in First Student, First Transit and First Rail offset by decreases in First Bus and Greyhound.
On the upside, Chinese data came in better than expected, including economic growth figures. China's gross domestic product growth of 6.7% was better than the 6.6% analysts had been expecting and was in line with the previous quarter's growth. The government is targeting an annual GDP between 6.5% and 7% for this year.
Retail sales in China rose 10.6% in June from a year ago, beating forecasts for a 9.9% increase. China industrial production data also exceeded estimates, rising 6.2% year-on-year in June against forecasts for a 6.0% gain.
Closer to home, construction output in the UK slumped in May ahead of the EU referendum, according to the latest figures from the Office for National Statistics. Output fell by 2.1% in May from April, which was much steeper than the 1% decline expected by economists. Construction output had risen by 2.8% in April.
Eurozone inflation rose in line with expectations in June at an annualised 0.1%, compared to a 0.1% drop in May, Eurostat confirmed in its final estimate on Friday. The European Central Bank is targeting inflation of just below 2% and is under pressure to address a prolonged period of low consumer prices.
On the Brexit front, Prime Minister Theresa May has told First Minister Nicola Sturgeon she is "willing to listen to options" on Scotland's future relationship with the European Union but appeared unwilling to consider a second referendum on the nation's independence.
Stateside, US inflation remained unchanged in June at an annualised 1.0%, missing forecasts for 1.1% growth, the Labor Department revealed.
US retail sales rose 0.6% in June from the previous month versus expectations of a 0.1% gain, the Commerce Department said.
Dennis de Jong, managing director at UFX.com, said: "Last week's US non-farm payroll data shocked the market by coming in much better than expected, and the trick was repeated by today's retail sales figures.
"Fed Chair Janet Yellen will be delighted to see the retail sector remain buoyant, as it was feared by some observers that consumers might keep their wallets close to their chests amid significant global uncertainty."
US industrial rose 0.6% in June following a 0.3% decline in May, beating analysts' expectations of 0.3% growth amid strong auto and utility production. Manufacturing output was up 0.4% month-on-month, mostly due to an increase in motor vehicle assemblies, exceeding forecasts for a 0.3% increase.
The Empire Manufacturing index -a reading of New York-area manufacturing conditions - was less positive, falling to 0.55 in July from 6.01 in May.
The University of Michigan consumer confidence index also dropped, falling to 89.5 in July from 93.5 the previous month. Analysts had expected no change.
In company news, asset manager Ashmore got a boost as Goldman Sachs upgraded its stance on the stock to 'buy' from 'neutral' and raised the price target to 420p from 310p.
Shares in healthcare company BTG reversed losses after on Thursday saying it would make little gain from the collapse of the pound as its currency hedging contracts would negate the potential revenue benefits from the stronger dollar.
Housebuilders also rebounded including Persimmon and Barratt Developments. |
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| Market Movers
FTSE 100 (UKX) 6,665.00 0.16%
FTSE 250 (MCX) 16,705.18 -0.49%
techMARK (TASX) 3,297.22 0.16%
FTSE 100 - Risers
Intertek Group (ITRK) 3,601.00p 1.64%
Ashtead Group (AHT) 1,128.00p 1.62%
Persimmon (PSN) 1,571.00p 1.42%
Worldpay Group (WI) (WPG) 282.10p 1.29%
GlaxoSmithKline (GSK) 1,649.00p 1.26%
Johnson Matthey (JMAT) 3,141.00p 1.22%
British American Tobacco (BATS) 4,835.00p 1.14%
ITV (ITV) 188.80p 1.12%
Babcock International Group (BAB) 959.00p 1.11%
Hikma Pharmaceuticals (HIK) 2,535.00p 1.08%
FTSE 100 - Fallers
easyJet (EZJ) 1,139.00p -2.73%
Fresnillo (FRES) 1,858.00p -2.57%
Carnival (CCL) 3,473.00p -2.28%
Marks & Spencer Group (MKS) 323.50p -2.12%
St James's Place (STJ) 848.00p -2.02%
RSA Insurance Group (RSA) 478.30p -1.79%
Direct Line Insurance Group (DLG) 339.00p -1.77%
Tesco (TSCO) 165.50p -1.75%
Morrison (Wm) Supermarkets (MRW) 181.20p -1.58%
Sainsbury (J) (SBRY) 227.90p -1.47%
FTSE 250 - Risers
Ashmore Group (ASHM) 349.30p 6.46%
NCC Group (NCC) 304.30p 4.93%
Paragon Group Of Companies (PAG) 271.00p 4.27%
BTG (BTG) 670.50p 3.95%
Pendragon (PDG) 34.23p 3.48%
Marshalls (MSLH) 255.00p 2.78%
Regus (RGU) 290.50p 2.51%
Ibstock (IBST) 135.80p 2.49%
TalkTalk Telecom Group (TALK) 221.10p 2.27%
Entertainment One Limited (ETO) 196.00p 1.55%
FTSE 250 - Fallers
Countrywide (CWD) 246.10p -5.31%
Shawbrook Group (SHAW) 166.50p -5.24%
NMC Health (NMC) 1,071.00p -5.22%
Hochschild Mining (HOC) 229.10p -4.50%
Thomas Cook Group (TCG) 63.70p -4.35%
Kaz Minerals (KAZ) 134.10p -3.94%
Ascential (ASCL) 254.10p -3.82%
Saga (SAGA) 196.50p -3.82%
Polypipe Group (PLP) 227.00p -3.69% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Travel stocks hit by Nice attack European equity markets fell on Friday, with travel and leisure issues under pressure following a terror attack in Nice and mixed economic data Stateside.
The benchmark Stoxx Europe 600 finished 0.17% or 0.58 points weaker at 337.92, Germany's DAX was off by 0.01% or 1.40 points to 10,066.90 and France's CAC 40 was 0.3% weaker by the end of trading to 4,372.51.
Oil prices reversed early losses to trade higher. West Texas Intermediate was up 0.803% at $46.05 a barrel, while Brent crude was 0.92% higher to $47.81.
Accendo Markets' Mike van Dulken said: "The subject of terrorism is sure to dominate headlines today, with attention also sure to focus on what this means for the evolving shape of the political landscape in France and the US (Le Pen, Trump sure to gain more support), not to mention how the UK views this in light of having just voted to leave the EU."
On Thursday night, a man drove a truck into a crowd of revellers who were celebrating Bastille Day in Nice, France, leaving at least 84 people dead and around 18 in critical condition. The attacker - a 31-year old French-Tunisian who was known to police but not on the terrorism watch list - was killed, and President Francois Hollande has now extended the state of emergency by a further three months.
In the States, US retail sales volumes jumped by 0.6% month-on-month in June, easily outstripping a consensus forecast for a gain of 0.1%.
On the other hand, the University of Michigan's gauge of US consumer confidence was unchanged at 1.0% year-on-year in June (consensus: 1.1%).
Travel and leisure stocks were under pressure after the attack, with French hotels group Accor and airlines EasyJet and Air France-KLM all in the red.
Meanwhile, the Stoxx 600 travel & leisure index gave up 1.23%.
In individual company news, Swatch shares tumbled after the Swiss watch maker reported a large drop in first-half profit.
Swedish clothing retailer Hennes & Mauritz edged higher after it said sales rose 8% in June, beating analysts' expectations.
Elsewhere, Monsanto was trading up after German drug and agrichemical company Bayer sweetened its offer for the company by $3 to $125 per share.
On the data front, Eurostat confirmed in its final estimate that inflation in the euro bloc rose in line with expectations in June at an annualised 0.1% compared to a 0.1% drop the month before.
Low fuel and gas prices continued to provide a drag on inflation, offsetting increased prices at restaurants, cafes, rents and tobacco.
Also on Friday, investors were sifting through Chinese data releases. Figures from the National Bureau of Statistics showed the world's second-largest economy expanded by 6.7% on the year, steady from the previous quarter and a touch ahead of economists' expectations of 6.6% growth.
Compared to the first quarter, gross domestic product was up 1.8%. The Chinese government has a growth target of 6.5% to 7% for this year.
"We can thank the continuous efforts by the People's Bank of China, which introduced various different stimulus measures to achieve that figure," said Naeem Aslam, chief market analyst at Think Markets.
Other data from the National Bureau of Statistics showed industrial production in China rose 6.2% in June from a year earlier, up from 6.0% growth in May.
Meanwhile, fixed-asset investment rose 9% year-on-year between January and June down from 9.6% growth in the first five months of the year. |
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| | US Market Report | | US open: Stocks waver on mixed economic data, earnings US stocks wavered on Friday as investors weighed mixed economic data and results from major lenders Wells Fargo and Citigroup.
At 1516 BST the Dow Jones Industrial Average rose 0.11%, the S&P 500 increased 0.2% but the Nasdaq fell 0.07%.
Oil prices rebounded as Chinese economic data came in better than expected with West Texas Intermediate up 1.19% to $46.23 per barrel and Brent crude up 1.29% to $47.99 per barrel at 1518 BST.
China's gross domestic product growth of 6.7% was better than the 6.6% analysts had been expected and was in line with the previous quarter's growth. The government is targeting an annual GDP between 6.5% and 7% for this year.
Stateside, US inflation remained unchanged in June at an annualised 1.0%, missing forecasts for 1.1% growth. On a month-on-month comparison, CPI rose at the same rate in June as the previous month by 0.2%, missing forecasts for a 0.3% gain.
Excluding food and energy, inflation rose 2.3% year-on-year in June, compared to estimates for the consumer price index to remain unchanged at 2.2%. Core CPI on a month-on-month basis increased 0.2% in June, in line with estimates and unchanged from May.
US retail sales rose more than expected in June, according to data from the Commerce Department. Sales increased 0.6% from the previous month versus expectations of a 0.1% gain. On the year, retail sales rose 2.7%.
Dennis de Jong, managing director at UFX.com, said: "Last week's US non-farm payroll data shocked the market by coming in much better than expected, and the trick was repeated by today's retail sales figures.
"Fed Chair Janet Yellen will be delighted to see the retail sector remain buoyant, as it was feared by some observers that consumers might keep their wallets close to their chests amid significant global uncertainty."
US industrial rose 0.6% in June following a 0.3% decline in May, beating analysts' expectations of 0.3% growth amid strong auto and utility production. Manufacturing output was up 0.4% month-on-month, mostly due to an increase in motor vehicle assemblies, exceeding forecasts for a 0.3% increase.
The Empire Manufacturing index -a reading of New York-area manufacturing conditions - was less positive, falling to 0.55 in July from 6.01 in May.
The University of Michigan consumer confidence index also dropped, falling to 89.5 in July from 93.5 the previous month. Analysts had expected no change.
On the corporate front, Citigroup shares gained after the lender reported second quarter results that exceeded forecasts.
Wells Fargo & Co. shares fell as it reported a drop in second-quarter profit that were in line with expectations.
US Bancorp advanced after posting an increase in second quarter profit as both loans and deposits rose.
PNC Financial Services Group shares climbed as it reported a fall in second quarter earnings that were better than analysts' estimates.
Travel and leisure stocks were under the cosh after a terror attack in Nice that has left at least 84 people dead. A truck was driven into crowds celebrating Bastille Day in Nice, in what President Francois Hollande called an attack of "an undeniable terrorist nature". Shares in International Consolidated Airlines, TUI and easyJet fell on the news. |
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| | Broker Tips | | Broker tips: William Hill, RELX, Ashmore Group William Hill's shares fell on Friday as Canaccord Genuity reiterated a 'hold' rating and cut its target to 301p from 340p.
The betting group has warned about a poor results from horse racing at Cheltenham, tighter regulation, and teething problems with its strategy of taking more technology in-house, Canaccord noted.
In March, William Hill said it expected operating profit for this year to fall to between £260m and £280m, from £291m last year.
"And now the Brexit vote looks likely to have some impact on consumer confidence, driving further downgrades in Retail," said Canaccord's Simon Davies.
Davies said William Hill's retail offer has improved while the UEFA Euro 2016 will give first half profits a boost. However, he said the technology challenges in its online offering and poor summer weather will not have helped.
"...Online should remain relatively resilient (if it can resolve ongoing technology challenges), but while Australia will benefit from the weaker pound, it faces its own intensifying regulatory challenges which continue to dampen growth. Overall, it looks set for a second consecutive year of double-digit Earnings declines."
Canaccord has reduced its 2016 earnings before interest, tax, appreciation and amortisation (EBITDA) forecast from £272.3m to £259.6m, driving pre-tax profit down from £236.2m to £223.4m and earnings per share (EPS) down to 22.5p from 21.3p,
The 2017 estimate for pre-tax profit and EPS was also cut to £233.4m from £249.6m and 23.2p from 24.8p.
"It reports interim results on 5 August, and we project flat revenues (£803.1m) and EBITA down 19% to £125.4m," Davies said.
Asset manager Ashmore got a boost on Friday as Goldman Sachs upgraded its stance on the stock to 'buy' from 'neutral' and raised the price target to 420p from 310p.
The bank cited four main reasons for the upgrade: improving industry flow trends, strong fund performance, lower exposure to UK investors and positive FX tailwind.
It said investor demand for emerging market debt has strengthened this year, with last week's flow into Hard Currency Debt the largest since March 2015.
"Our economists also see potential for EM countries to lower interest rates from current levels, suggesting the supportive macroeconomic backdrop may continue for some time."
It pointed out that Ashmore's hard currency and local currency strategies have reported strong performances relative to peers over three and five years. "We believe this will help the group to benefit from the acceleration of flows into EM debt funds that we expect."
GS also noted that less than 10% of Ashmore's assets under management are sourced from UK investors, which it reckons will insulate the group from the slowdown in UK fundraising it expects in the near term. It said two-thirds of assets are sourced from Asia, the US or Middle East.
Finally, it said around 60% of Ashmore's AUM is held in assets denominated in US dollars.
"With much of the group's costs denominated in GBP, we expect the recent depreciation in sterling to drive a strong translational P&L benefit for the group. In addition, given the depreciation, we expect Ashmore to report material one-off gains on its balance sheet cash and seed capital holdings."
UBS initiated its coverage of RELX Group on Friday with a 'buy' rating and a 1,600p price target.
"Having conducted a deep-dive analysis of the group, our valuation implies a 17% total shareholder return (including buybacks)," the bank said.
"A shift to recurring electronic revenues backed by unique datasets should enable it to leverage a fixed cost based with limited inflation, driving earnings before interest and tax (EBIT) growth. "
UBS said a high free cash flow conversion should also facilitate the information and analytics in mergers and acquisitions and capital management to enhance shareholder returns.
The banks sees additional upside potential if sterling continues to depreciate, with just 8% of revenues GBP-denominated.
"Proprietary research underpins our view that RELX can deliver 7% underlying fiscal year 2016-2018 earnings per share compound annual growth rate, enhanced to 12% CAGR by a weak GBP."
Asset manager Ashmore got a boost on Friday as Goldman Sachs upgraded its stance on the stock to 'buy' from 'neutral' and raised the price target to 420p from 310p.
The bank cited four main reasons for the upgrade: improving industry flow trends, strong fund performance, lower exposure to UK investors and positive FX tailwind.
It said investor demand for emerging market debt has strengthened this year, with last week's flow into Hard Currency Debt the largest since March 2015.
"Our economists also see potential for EM countries to lower interest rates from current levels, suggesting the supportive macroeconomic backdrop may continue for some time."
It pointed out that Ashmore's hard currency and local currency strategies have reported strong performances relative to peers over three and five years. "We believe this will help the group to benefit from the acceleration of flows into EM debt funds that we expect."
GS also noted that less than 10% of Ashmore's assets under management are sourced from UK investors, which it reckons will insulate the group from the slowdown in UK fundraising it expects in the near term. It said two-thirds of assets are sourced from Asia, the US or Middle East.
Finally, it said around 60% of Ashmore's AUM is held in assets denominated in US dollars. | | |
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