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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 after upbeat jobs report London stocks gained on Wednesday after an upbeat UK jobs report offset a slump in mining shares.
The unemployment rate in the three months to May fell to 4.9% from 5.0% in the previous quarter, surprising analysts' who had expected no change, the Office for National Statistics revealed.
UK employers added 176,000 jobs during the period, well above the 71,000 expected and following a 55,000 increase in the three months to April.
Average weekly wages grew in line with forecasts by 2.3%, unchanged from the prior quarter's growth. However, weekly wages excluding bonuses slowed to 2.2% growth from a previous 2.3%, missing estimates for a 2.4% gain.
The claimant count rate in June was an unchanged 2.2%, as expected. Jobless claims last month rose 400, compared to forecasts for a further 3,500 and May's 12,200 increase.
While the labour market continued to strengthen in the months prior to the 23 June EU referendum, economist Sam Tombs at Pantheon Macroeconomics said the resilience won't last.
"Indeed, timelier data show signs of weakness; the claimant count rose by 12.2K month-to-month in May and a further 0.4K in June, and the three-month average level of job vacancies fell in June to its lowest level since November," he said.
He added: "The tendency for the labour market to lag the economy also means that the referendum's impact will take several months to emerge."
Another report showed UK households' financial perceptions worsened substantially in July following Brexit. Markit's UK Household Finance Index fell from 44.8 in June to 44.3 in July, marking the second-strongest drop since January 2016.
However, income from employment grew at the fastest pace since the survey began in 2009, and 56% of households expect the Bank of England will cut interest rates.
In other UK news, the Bank of England´s updated Agents' Summary of Business Conditions survey for July found there was no clear evidence of a "sharp general slowing" in economic activity post-Brexit. While uncertainty rose markedly after the referendum outcome, firms were looking to continue business as usual.
Elsewhere, Eurozone consumer confidence fell markedly in July, data from the European Commission showed. The flash estimate showed the eurozone consumer index weakened by 0.7 points to -7.9 this month, compared with last month's figure of -7.2.
Meanwhile, oil prices rebounded after government data showed a drop in US weekly crude inventories. Crude oil stockpiles fell by 2.34m barrels during the week ending on 15 July, according to the Energy Information Administration, beating forecasts for a drop of 2.0m barrels.
Brent crude rose 0.61% to $46.95 per barrel and West Texas Intermediate increased 0.37% to $46.95 per barrel at 1624 BST.
Among corporate stocks, miners were the biggest fallers on the FTSE 100 as metal prices dropped.
"Some investors are no doubt concerned that, despite a longer-term environment that looks more congenial for mining firms, current elevated valuations leave little room for disappointment," said Chris Beauchamp, senior market analyst at IG. "Still, given a few more days of declines we might see investors looking to buy into weakness, once the newsflow from the sector dries up."
Anglo American shares were also dragged lower after the miner cut its full-year copper production guidance.
Fresnillo was caught up in a sector-wide selloff despite strong first-quarter production leading to full year gold guidance being raised.
BHP Billiton declined as it posted its operational review for the year to end-June, confirming it exceeded full-year production guidance for petroleum, copper and metallurgical coal, and achieved record full-year production at Western Australia Iron Ore.
On the upside, Admiral Group shares jumped as UBS upgraded the stock to 'buy' from 'neutral' and raised the target to 2,339p from 1,840p.
Real estate investors and housebuilders gained, including Land Securities and Persimmon, a day after a report by the Centre for Economics and Business Research (Cebr) consultancy suggested loosening the rules for funding availability for housebuilding. |
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| Market Movers
FTSE 100 (UKX) 6,731.86 0.51%
FTSE 250 (MCX) 17,031.02 0.74%
techMARK (TASX) 3,420.01 0.83%
FTSE 100 - Risers
St James's Place (STJ) 898.00p 4.54%
Legal & General Group (LGEN) 197.30p 3.08%
Sage Group (SGE) 697.00p 3.03%
Admiral Group (ADM) 2,099.00p 2.64%
Standard Chartered (STAN) 617.50p 2.61%
WPP (WPP) 1,696.00p 2.54%
GKN (GKN) 287.40p 2.50%
Land Securities Group (LAND) 1,100.00p 2.42%
Persimmon (PSN) 1,650.00p 2.42%
Lloyds Banking Group (LLOY) 56.77p 2.42%
FTSE 100 - Fallers
Anglo American (AAL) 777.70p -4.41%
Fresnillo (FRES) 1,823.00p -2.88%
Randgold Resources Ltd. (RRS) 8,710.00p -2.57%
BHP Billiton (BLT) 926.40p -2.33%
Glencore (GLEN) 176.35p -1.97%
Antofagasta (ANTO) 481.70p -1.73%
Rio Tinto (RIO) 2,339.00p -1.60%
Tesco (TSCO) 161.15p -1.59%
Next (NXT) 5,040.00p -0.98%
BT Group (BT.A) 389.40p -0.80%
FTSE 250 - Risers
Electrocomponents (ECM) 283.10p 9.56%
Ibstock (IBST) 143.70p 6.76%
DFS Furniture (DFS) 222.00p 5.51%
Hill & Smith Holdings (HILS) 1,041.00p 5.47%
Workspace Group (WKP) 711.00p 4.64%
JD Sports Fashion (JD.) 1,228.00p 4.16%
Card Factory (CARD) 314.00p 4.15%
NCC Group (NCC) 333.00p 4.03%
Cranswick (CWK) 2,361.00p 3.69%
OneSavings Bank (OSB) 216.60p 3.64%
FTSE 250 - Fallers
Polymetal International (POLY) 1,045.00p -5.77%
Thomas Cook Group (TCG) 61.45p -3.98%
Hochschild Mining (HOC) 213.80p -3.74%
Ashmore Group (ASHM) 342.10p -3.36%
TalkTalk Telecom Group (TALK) 215.70p -3.14%
Vedanta Resources (VED) 501.00p -3.00%
Virgin Money Holdings (UK) (VM.) 231.40p -2.53%
SIG (SHI) 104.80p -2.51%
Redefine International (RDI) 42.98p -2.32% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks up on corporate sentiment European stocks managed to end the day in the green on Wednesday as investors welcomed encouraging corporate releases from the likes of SAP and Volkswagen.
The benchmark Stoxx Europe 600 index was last up 1.04%, Germany's DAX was up 1.61% and France's CAC 40 was 1.15% firmer.
At the same time, oil prices were marginally up, with West Texas Intermediate last ahead by 0.53% at $45.69 a barrel and Brent crude up 0.85% at $47.06.
Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor said: "European markets are tracking slightly higher as the focus of attention turns to company earnings. With equity markets having rallied so far, so fast there have been signs of recent profit taking, so positive earnings news could provide much needed momentum for the wider market.
"However, with such high expectations already being built into current market levels, any miss on corporate earnings could prove very costly."
Corporate news helped to underpin the tone on Wednesday.
German car maker Volkswagen was sharply higher after the company's first-half earnings topped estimated, while German software company SAP rallied after its second-quarter results beat analysts' expectations.
Burberry was a touch higher after the luxury retailer announced a share buyback programme up to a maximum of £100m.
Severn Trent nudged up after the water company said trading in the first half was line.
On the downside, precious metals miner Fresnillo was in the red, having made small gains earlier after upping its full-year gold production forecast.
Miner BHP Billiton was under the cosh after releasing a mixed production update, while Eurotunnel was also in the red as it cut its outlook on the back of a weak pound following the UK's decision to leave the European Union.
On the data front, figures released earlier by the Federal Statistical Office showed German producer prices rose 0.4% on the month in June, unchanged from May and beating economists' expectations of a 0.2% increase. |
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| | US Market Report | | US open: Stocks rally on better-than-expected corporate earnings US stocks rallied on Wednesday, boosted by better-than-expected corporate earnings.
At 1509 BST the Dow Jones Industrial Average climbed 0.10%, the S&P 500 increased 0.21% and the Nasdaq edged up 0.65%.
Meanwhile, crude-oil prices were trading lower ahead of US weekly crude inventories data from the Department of Energy at 1530 BST. West Texas Intermediate crude fell 1.5% to $44.75 per barrel and Brent dropped 1.2% to $46.08 per barrel.
With a lack of economic data on the calendar, corporate earnings dominated the agenda on Wednesday.
In particular, Morgan Stanley was in focus after reporting second quarter results that beat analysts' forecasts with earnings per share of 75 cents and revenue of $8.9bn. Shares jumped after the results. Earnings already out this week from sector peers JPMorgan, Citigroup and Goldman Sachs have all topped estimates.
Microsoft was also a high riser as results released late on Tuesday surpassed estimates, with fourth-quarter earnings per share of 69 cents and revenue of $22.64bn.
Oilfield services company Halliburton edged higher after stronger-than-expected second-quarter results.
Tupperware bucked the trend, however, down just under 1% after it said second-quarter earnings and revenue fell compared to a year earlier, although the numbers were in line with analysts' forecasts.
Intel, American Express and eBay are slated to report after the closing bell. |
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| | Broker Tips | | Broker tips: Vodafone, Admiral, Henderson Vodafone Group was given a boost on Wednesday after Deutsche Bank reiterated a 'buy' rating and lifted its target to 310p from 300p.
Ahead of Vodafone's first quarter interims on Friday, Deutsche Bank said the company continues on an "improving growth path" in Europe with both volume and price trends encouraging.
The bank expects organic service revenue of 1.9% in the first quarter, which would mark a slowdown on the fourth quarter's 2.5%. The last quarter benefitted from accounting changes and the leap year.
"These benefits no longer accrue in the first quarter, which further suffers due to roaming rate reductions," Deutsche Bank analysts said.
"Whilst individual markets may move backwards near-term (e.g. UK) we view the broad trend for further top-line recovery in fiscal year 2017 alongside a healthy yield, as likely to boost Vodafone's rating."
Deutsche Bank noted that Europe's mobile traffic growth accelerated in the fourth quarter by 0.3 percentage points (pp) to 49.0% year-on-year while unit revenue trends improved by 0.5pp to a drop of 33.6% year-on-year.
It marked the fourth consecutive quarter of improvement in unit revenues, which the bank said is "supportive for further growth with Vodafone's top line highly sensitive to small, even offsetting, changes in the price-volume mix".
Europe's mobile service revenue growth was still negative with a 1.1% decline in the fourth quarter but a 1pp improvement on the previous period. "We expect a return to mobile growth during fiscal year 2017, though the UK's contribution will deteriorate in the first half."
The bank's GBP estimates for the full year 2017 have risen by 5% for earnings before interest, tax, depreciation and amortisation, 10% for earnings per share and 6% for dividends per share. However, estimates traded in euro terms are slightly lower. Chief risks are foreign exchange movements and any increase in competition, Deutsche Bank said.
Admiral Group shares gained on Wednesday as UBS upgraded the stock to 'buy' from 'neutral' and raised the target to 2,339p from 1,840p.
UBS said it believes the motor insurance company's major growth drivers - International and Home businesses - are currently undervalued. The bank said International and Home could add 12-33% to 2020 group net income.
"We estimate £50m-£139m of earnings potential based on conservative bottom up assumptions," said UBS analyst James Shuck.
"This has the potential to boost core earnings growth in UK motor from 3% to 7-12% with a broadly equal contribution from Home, International Insurance and International price comparison."
The two businesses are expected to begin delivering from as early as the second quarter, according to UBS, with Home in particular benefiting from a new policy system and rapid growth in price comparison websites.
UK car insurers have been the best performing sub-sector in 2016, UBS said, adding that its re-rating is due to defensive characteristics, yield attractions and a rising rate environment.
"We now expect greater appreciation of the growth opportunity, ultimately driving near term earnings surprises and further multiple expansion."
Henderson Group's shares fell on Wednesday as RBC Capital downgraded its rating on the stock to 'underperform' from 'sector perform' and lowered its target to 210p from 270p.
RBC said while it believes the investment management company remains a well-managed business, its current valuation premium to peers is "too wide" given a weak flow outlook for the rest of 2016 and material earnings downgrades on poor performance fee generation.
The broker expects a earnings per share compound annual growth rate decline of 5.7% in calendar years 2015-2017, which lags the peer average for a 2.9% fall.
"Further, due to the reductions to our forecasts, we now expect it to take until 2018 for Henderson's EPS to recover to the 2015 level," RBC said.
RBC forecasts weak retail flows through the rest of 2016 on uncertainty following Britain's vote to leave the European Union on 24 June and due to high redemptions from the Henderson Global Investors UK Property fund.
Institutional flows are also expected to remain subdued, since uncertainty on the macro outlook is likely to continue to delay investment decisions, RBC said.
"Overall, we now expect 2016 to be the first full year of net outflows since 2012, at -£2.4B. We expect a flow recovery thereafter, and if this does not occur our forecasts and price target would be at risk."
RBC reduced its underlying pre-tax profit forecasts by 12%, 16% and 18% in 2016, 2017 and 2018, respectively.
Based on analysis of Henderson's performance fee generating funds, RBC also cut its 2016 performance fee forecast by over 50%, to the lowest level since 2012. | | |
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