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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 eke out small gain London blue-chip stocks closed higher on Tuesday as the reporting season kicked into gear.
The FTSE 100 lost some of its early fizz to finish the day up by 0.21% or 13.90 points at 6,724.03, driven up by news from BT, GKN, and Mondi which outweighed further subsidence in the housebuilding sector, while the FTSE 250 dipped 0.13% to close at 17,069.10.
Sterling struggled for direction after an early drop in the wake of comments from Bank of England policymaker Martin Weale that suggested his economic outlook for the UK had changed, adding to the near-certainty that the central bank will introduce a stimulus package in next month's meeting to counteract poor growth expectations.
Traders were also focused on the Bank of Japan (BoJ) and US Federal Reserve's meetings this week, with growing concerns that the BoJ might disappoint with its level of stimulus on Friday.
"Equities are positive this morning, holding on to recent highs but lacking conviction with event-risk lurking through Friday," said Mike van Dulken, head of research at Accendo Markets.
"Asian markets saw concern creep in that expectations for stimulus from the BoJ and hawkish rhetoric from the Fed may have been too high. The BoE's Weale may have offset this somewhat by suggesting recent UK data urges him to vote for a rate cut next week, to keep the global stimulus train chugging, but Cable has since bounced. And a weaker USD is not helping the commodity space, especially oil."
In corporate news, SABMiller fizzed up the leaderboard as it has received a new, final takeover offer of 4,500p from Anheuser-Busch InBev after the collapse of the pound and pressure from a group of new activist shareholders. However this effervescence quickly evaporated as major shareholder Aberdeen Asset Management said the terms of the deal remained "unacceptable".
AB InBev returned to the table in the morning with a £79bn all-cash offer and a partial share alternative, available for approximately 41% of the FTSE 100 company's shares, consisting of 0.483969 unlisted shares and 465.88 in cash for each SABMiller share. ABI had previously offered 4,400p. But Aberdeen and other activist shareholders that have joined the register recently are extremely concerned that the deal's inclusion of a partial share alternative will favour SABMiller's two biggest shareholders, US tobacco company Altria and BevCo, which between them own 40.38% of the brewer.
BT Group was a top riser as regulator Ofcom report confirmed the positive news that the company will not have to completely chop off its Openreach infrastructure arm, though it will have to become a distinct company with its own board, own staff and separate branding. As a legally separate company within BT Group, with its own 'articles of association' and a majority of independent directors who are not appointed by or connected to BT, the company would be obliged to consult formally with customers such as Sky and TalkTalk on large-scale investments.
Also near the top of the FTSE 100 risers was engineer GKN despite it reporting a drop in first-half pre-tax profit and saying it expects to book a charge in the second half of the year as it looks to cut costs. For the six months ended 30 June, pre-tax profit fell 14% to £182m on sales of £4.24bn, up 17% from the same period last year. Earnings per share fell 4% to 9.5p but the company lifted its interim dividend to 2.95p per share from 2.90p. Chief executive Nigel Stein said: "This is a good set of first half results with GKN continuing to make underlying progress in line with our expectations. Each division has continued to deliver against our strategy."
Mondi Group also gave its shares a lift as it updated the market on its half-year earnings expectations. The FTSE 100 firm said it anticipates basic underlying earnings per share of 73 to 77 euro cents, up from 67.8 cents a year ago, and basic earnings per share of the same 73 to 77 cent range, well up from 60.3 cents last year. Mondi said basic headline earnings per share should also fall within the same range, compared with 60.1 cents in the comparative period.
Among Tuesday's fallers BP reported a steeper than expected fall in profits for the second quarter but said it was drawing a line under the liabilities for the Deepwater Horizon oil disaster at $61.6bn. An underlying replacement cost profit of $720m in the three moths to the end of June was down 45% from the same period last year, though at the reported level the loss before tax of $3.38bn for the second quarter was less than half its comparative from 2015.
"The negative reaction in the share price could have been worse when put into the context of the 10% oil price decline in July," said analyst Jasper Lawler at CMC Markets, "but BP finally drawing a line under its Deepwater Horizon oil spill liabilities was a source of relief. BP's downstream business continues to be the main bread-winner but a warning that refining margins would stay under pressure worried investors this couldn't be maintained. The upstream business did return to profitability since oil prices rebounded from lows earlier this year."
Tesco, Sainsbury and Morrison were also on the back foot after a report from Kantar Worldpanel showed the 'Big Four' supermarkets, also including Walmart's Asda, had lost further market share to discounters and seen sales drop in the weeks following the Brexit vote. |
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| Market Movers
FTSE 100 (UKX) 6,724.03 0.21%
FTSE 250 (MCX) 17,069.10 -0.13%
techMARK (TASX) 3,429.14 0.26%
FTSE 100 - Risers
Provident Financial (PFG) 2,748.00p 5.69%
Mondi (MNDI) 1,531.00p 4.29%
GKN (GKN) 301.00p 3.83%
Fresnillo (FRES) 1,867.00p 3.66%
BHP Billiton (BLT) 951.00p 3.25%
BT Group (BT.A) 399.70p 3.15%
Rio Tinto (RIO) 2,423.00p 3.08%
Hikma Pharmaceuticals (HIK) 2,641.00p 2.80%
Randgold Resources Ltd. (RRS) 8,685.00p 1.58%
TUI AG Reg Shs (DI) (TUI) 924.50p 1.48%
FTSE 100 - Fallers
Tesco (TSCO) 155.50p -4.07%
Barratt Developments (BDEV) 405.30p -3.27%
Berkeley Group Holdings (The) (BKG) 2,545.00p -3.12%
easyJet (EZJ) 989.50p -2.99%
Taylor Wimpey (TW.) 144.90p -2.82%
Persimmon (PSN) 1,588.00p -2.46%
ITV (ITV) 184.80p -2.27%
Dixons Carphone (DC.) 336.10p -2.18%
Sainsbury (J) (SBRY) 223.10p -2.06%
Royal Bank of Scotland Group (RBS) 187.00p -1.84%
FTSE 250 - Risers
Hochschild Mining (HOC) 252.30p 11.19%
Virgin Money Holdings (UK) (VM.) 266.00p 8.70%
Ibstock (IBST) 157.20p 5.50%
SEGRO (SGRO) 436.10p 3.59%
Centamin (DI) (CEY) 156.50p 3.44%
Kaz Minerals (KAZ) 140.30p 3.01%
Fidelity China Special Situations (FCSS) 160.70p 2.68%
Evraz (EVR) 162.30p 2.59%
OneSavings Bank (OSB) 206.80p 2.38%
CYBG (CYBG) 256.20p 2.11%
FTSE 250 - Fallers
Man Group (EMG) 112.80p -7.84%
Capital & Counties Properties (CAPC) 280.60p -5.33%
Countryside Properties (CSP) 219.80p -5.05%
Savills (SVS) 657.00p -3.67%
Greencore Group (GNC) 310.80p -3.33%
Bellway (BWY) 1,945.00p -2.99%
Card Factory (CARD) 299.60p -2.98%
Allied Minds (ALM) 360.00p -2.86%
Victrex plc (VCT) 1,532.00p -2.85% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares end on a high note ahead of central bank policy meetings European stocks ended the session higher on Tuesday as investors sifted through more earnings reports ahead of key central bank meetings scheduled for later in the week.
The benchmark Stoxx Europe 600 index ended the session up by 0.10% or 0.33 points to 341.26, France's CAC 40 edged 0.15% higher to end at 4,394.77 and Germany's DAX closed up by 0.49% or 49.52 points to see the day out from 10,247,76.
At the same time, oil prices were in the red. West Texas Intermediate was down 0.536% at $42.90 a barrel.
In corporate news, BP pushed lower after it posted a drop in second-quarter profit but maintained its dividend.
Mediaset shares tumbled amid reports Vivendi wants a revised pay-TV deal, while Commerzbank was on the back foot after reporting a drop in second-quarter profit and its capital buffer.
Michelin nudged a touch lower after it said first-half profit rose 9% despite a drop in sales.
On the upside, SABMiller edged higher after Anheuser-Busch InBev lifted its offer for the company.
BT Group was in the black after Ofcom said its infrastructure arm, Openreach, should be forced to become a distinct company with its own board, own staff and separate branding to give it independence from the larger group.
Faurecia rallied after the French car parts supplier reported a 56% jump in first-half net income.
Investors were looking ahead to interest rate announcements from the Federal Reserve on Wednesday and the Bank of Japan on Friday.
Michael Hewson, chief market analyst at CMC Markets, said: "There seems to be an expectation that perhaps this week's Federal Reserve rate meeting could well come across as slightly more hawkish than markets were pricing a week ago.
"While the odds of an autumn rate rise still remain quite slim the fact remains that the percentage odds of a move on rates in the months from September until the year end haven't shifted that much since the 13th June. Given recent data this would appear to suggest that the balance of probabilities for a move by the end of the year has shifted somewhat towards the upside, and that markets could be becoming complacent about it."
Meanwhile, Bank of America Merrill Lynch said it does not expect the BoJ to adopt 'helicopter money' but it does expect it to double its ETF purchases. |
| | US Market Report | | US open: Stocks nudge higher amid earnings avalanche US stocks edged tentatively higher in early trade amid an avalanche of earnings as investors awaited the outcome of the Federal Reserve's two-day policy meeting on Wednesday.
At 1445 BST, the Dow Jones Industrial Average was up 0.1%, the S&P 500 was 0.2% firmer and the Nasdaq was 0.3% higher.
Investors waded through a veritable deluge of earnings news.
DuPont was in the black after the chemicals and seeds producer posted an 8.5% increase in second-quarter profit.
Under Armour rallied after the sports clothing retailer posted a drop in second-quarter earnings that met expectations.
United Technologies was also on the front foot after it reported a decline in second-quarter profit but lifted its guidance for the year.
Caterpillar gained ground on better-than-expected second-quarter numbers, although it cut its outlook for 2016 sales and profits.
Starwood Hotels was little changed after saying it swung to a loss in the second quarter.
On the downside, McDonald's shares were under the cosh after the company's second-quarter sales growth in the US failed to impress.
Verizon Communications edged lower following mixed second-quarter earnings, while 3M slipped after it posted a drop in quarterly profit and cut its outlook for 2016.
After the closing bell, market participants will eye third-quarter results from technology giant Apple, with analysts expecting earnings of $1.39 per share, down from $1.85 the year before. Meanwhile, revenue has been pencilled in at $42.1bn versus $49.6bn a year earlier.
The Federal Reserve's rate announcement is due on Wednesday. Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "We expect the Fed to maintain the status quo and to join the wait-and-see camp amid post-Brexit uncertainties.
"The FOMC will likely emphasise the importance of future economic data and deliver a dovish accompanying statement to grant its support to the markets. The S&P500 and the Dow could surf on a fresh wave of cheap money, should the Fed leaves the punchbowl on the table."
On the data front, house prices in the US rose less than expected in May, according to the S&P/Case-Shiller National Home Price Index.
The S&P/Case-Shiller 20-City Composite index was up 5.2%, down from a 5.4% increase in April and missing consensus expectations for 5.5% growth.
Portland, Seattle and Denver reported the highest year-over-year gains among the 20 cities over each of the last four months.
In May, Portland led the way with a 12.5% year-over-year price increase, followed by Seattle at 10.7%, and Denver with a 9.5% increase. |
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| | Broker Tips | | Broker tips: EasyJet, ARM Holdings, Hochschild Mining EasyJet flew lower on Tuesday as Liberum downgraded its stance on the stock to 'sell' from 'hold' and slashed the price target to 930p from 1,050p following the company's third-quarter update last week.
It said the airline's refusal to give any profit guidance just 10 weeks before the end of its financial year said much about the uncertain environment and the sensitivity of earnings to close-in summer bookings.
Liberum said disruption headwinds should fade next year, but yield pressure from excess industry capacity and potentially fragile consumer confidence may not.
"The group's long-term fundamentals remain attractive, but we fear further short-term pain from earnings downgrades."
EasyJet report a drop in a drop in revenue per seat and total revenue for the third quarter amid difficult trading that was hit by the terror attack in Brussels and the Egyptair tragedy.
For the quarter ended 30 June, total revenue per seat was down 8.3% at constant currency or 7.7% on reported basis to £54.54, while total revenue fell by 2.6% to £1.196bn as increased seat capacity was offset by the impact on yield of overall market capacity and cancellations as a result of external events.
The load factor - which gauges how full flights are - rose to 92% from 91.7% in the third quarter of 2015.
Berenberg downgraded ARM Holdings to 'hold' from 'buy' as it lifted the price target to 1,700p from 1,400p on the company's pending deal with Softbank.
"This is our bull-case scenario price target and thus we move the rating from buy to hold," the bank said.
Berenberg said it reckons the proposed acquisition of ARM by Softbank announced last week will go through, and that any counterbid was unlikely to be successful because any bid for ARM from customers such as Apple, Samsung, Qualcomm and China, or from cloud computing players such as Facebook, Google and Amazon, would come up against regulatory hurdles.
"If a customer wanted to buy ARM, it would need to gain approval from the regulators in a number of different regions, and its competitors would likely oppose such a deal," the bank said.
Based on its conversations with investors, Berenberg said they were happy with the price and that a counterbid is not waiting around the corner.
"Prior to the deal announcement, we believe that sentiment was quite negative on ARM on the back of a slowdown in smartphone volume growth - and ARM was yet to see significant demand for its chips from the server and networking market."
Berenberg said the price offered gives ARM credit for continuous smartphone cycle, server and networking market share gains.
Hochschild Mining surged on Tuesday as Numis upgraded its stance on the stock to 'buy' from 'hold' and lifted the price target to 290p from 220p.
The brokerage said the company's second-quarter production results were ahead of its expectations thanks to better grades at the Inmaculada mine.
"These were a good set of results and highlight the ongoing operational turnaround by the company since the commissioning of Inmaculada in 2015," it said.
Numis upgraded its 2016 production estimates on the back of the update and the upgraded guidance and lifted its FY earnings per share forecasts from $0.07 to $0.11, which is above consensus of $0.09.
Hochschild said last week that production for 2016 would be higher than previously estimated as it noted a big jump in gold and silver output for the first half. | | |
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