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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 claw back gains as oil prices rise UK equities finished higher on Thursday, rebounding from an earlier decline, as oil prices regained strength.
The FTSE 100 was in the red earlier in the session as a number of corporate stocks went ex-dividend including Ashtead, AstraZeneca, Barclays, Berkeley Group, BT, GlaxoSmithKline, Fresnillo, Man Group, Royal Dutch Shell, Lloyds, Rio Tinto and Standard Chartered, among others.
"Ex-dividend day on the FTSE 100 has seen the index lag behind its peers, but it has doggedly clawed back losses as the broader equity market enjoys yet more gains," said Chris Beauchamp, senior market analyst at IG.
At the same time oil prices rebounded after the International Energy Agency forecast crude markets would rebalance in the next few months following several years of overproduction. However, the Paris-based organisation also lowered its forecast for global oil demand in 2017.
"Today's IEA report paints a more downbeat picture for oil demand heading into year-end than it did in its July update," said Michael Hewson, chief market analyst at CMC Markets UK.
"...the downgrade to demand by the IEA has raised concerns that lower oil prices could well be with us for a little while longer, great news for consumers, not so much for oil exporters, and oil company share prices that have rallied on the basis that oil prices are on their way back up again."
Brent crude rose 2.8% to $45.35 per barrel and West Texas Intermediate increased 2.8% to $42.92 per barrel at 1617 BST.
In economic data, the Labor Department revealed US initial jobless claims dropped by 1,000 last week to 266,000 from the previous week's revised level of 267,000. Economists had been expecting a decline to 265,000.
Meanwhile, a survey by the Royal Institution of Charted Surveyors (Rics) showed British house price growth slowed in the month following the UK's vote to leave the European Union.
Its headline price balance - a leading indicator of other house price indexes - fell to +5 in July from +15 in June, its lowest level since April 2013. Analysts had forecast a reading of +6.
Housebuilders and real estate investment stocks were under pressure following the report with shares in Berkeley Group, Travis Perkins, British Land and Land Securities lower.
Travis Perkins was also dragged down by a Barclays downgrade. The bank lowered its rating on the stock to 'underweight' from 'equalweight' and cut its target to 1,400p from 1,950p, saying Brexit will have a larger impact on the business than the market expects, which will hit the valuation.
Card Factory slumped as it reported that the retail environment had been "challenging" in the first half as sales were lower than normal.
On the upside, TUI gained after it said revenues shrank in the third quarter but the travel group was still confident of hitting its full year targets.
Coca-Cola HBC rallied after the soft-drink bottler reported a 2.4% increase in first half net sales revenue. |
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| Market Movers
FTSE 100 (UKX) 6,914.71 0.70%
FTSE 250 (MCX) 17,807.56 0.61%
techMARK (TASX) 3,527.98 0.45%
FTSE 100 - Risers
Coca-Cola HBC AG (CDI) (CCH) 1,681.00p 7.00%
TUI AG Reg Shs (DI) (TUI) 1,041.00p 2.87%
Intertek Group (ITRK) 3,663.00p 2.69%
British American Tobacco (BATS) 4,985.00p 2.60%
Unilever (ULVR) 3,641.50p 2.48%
Glencore (GLEN) 200.00p 2.43%
3i Group (III) 640.00p 2.40%
DCC (DCC) 7,040.00p 2.33%
Standard Life (SL.) 351.00p 2.21%
BP (BP.) 432.30p 2.20%
FTSE 100 - Fallers
Direct Line Insurance Group (DLG) 377.00p -4.07%
Old Mutual (OML) 216.90p -3.81%
Berkeley Group Holdings (The) (BKG) 2,515.00p -3.75%
BT Group (BT.A) 399.30p -2.23%
Travis Perkins (TPK) 1,526.00p -2.18%
British Land Company (BLND) 649.00p -1.96%
ITV (ITV) 197.30p -1.60%
Tesco (TSCO) 156.55p -1.48%
Worldpay Group (WI) (WPG) 307.00p -1.44%
Land Securities Group (LAND) 1,087.00p -1.36%
FTSE 250 - Risers
DFS Furniture (DFS) 258.90p 15.58%
TalkTalk Telecom Group (TALK) 235.60p 7.14%
PayPoint (PAY) 1,030.00p 4.46%
Regus (RGU) 309.90p 3.27%
Tullett Prebon (TLPR) 360.50p 3.15%
Kaz Minerals (KAZ) 164.60p 2.94%
Hastings Group Holdings (HSTG) 212.00p 2.86%
Greencore Group (GNC) 340.00p 2.75%
Britvic (BVIC) 627.00p 2.70%
Tullow Oil (TLW) 221.30p 2.69%
FTSE 250 - Fallers
Aldermore Group (ALD) 141.50p -7.88%
Card Factory (CARD) 298.50p -6.78%
Derwent London (DLN) 2,742.00p -2.73%
Man Group (EMG) 113.60p -2.32%
Countrywide (CWD) 232.90p -2.31%
St. Modwen Properties (SMP) 275.00p -2.17%
OneSavings Bank (OSB) 225.60p -2.13%
Paysafe Group (PAYS) 408.00p -1.73%
Shawbrook Group (SHAW) 200.40p -1.72%
Grafton Group Units (GFTU) 527.50p -1.68% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares edge higher amid summer lull European stocks edged higher on Thursday as oil prices recovered and investors continued to sift through earnings.
The benchmark Stoxx Europe 600 index was up 0.78% or 2.68 points to 346.66, Germany's DAX advanced 0.86% to 10,742.84 and France's CAC 40 was 1.17% firmer.
Meanwhile, oil prices came off their lows, having fallen sharply after data from the US Energy Information Administration on Wednesday showed a build in crude inventories and following record Saudi Arabian production.
West Texas Intermediate crude oil futures jumped 4.09% to $45.93 a barrel and Brent crude rose 3.96% to end the day at $43.43.
Oanda's Craig Erlam said: "At a time of relatively little news flow, traders are again focused on the movements in oil and whether we're going to see another move back to the levels seen earlier this year.
In corporate news, Zurich Insurance and Belgium's KBC racked up strong gains after they posted better-than-expected second-quarter results.
Henkel pushed up after the German consumer products company said second-quarter profit increased 8%.
Thyssenkrupp was on the back foot after it reported a 34% drop in third-quarter profit, while German utility RWE also lost ground after it said earnings in the first half of the year tumbled.
Tui Group advanced after it said revenues shrank in the third quarter but the travel group was still confident of hitting its full year targets.
Soft drink bottler Coca-Cola HBC rallied after saying first-half net sales revenue grew 2.4%.
Legal & General edged down after agreeing the sale of its Cofunds investment platform to Aegon for £140m.
Miner and commodity trader Glencore edged higher even after it reported a drop in production in the first half - with the exception of nickel and agricultural products - and lifted its full-year copper guidance.
Old Mutual was under pressure as its first-half results fell short of expectations. |
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| | US Market Report | | US open: Stocks track gains in Europe as investors eye oil prices US stocks rose on Thursday, tracking gains in Europe as investors kept an eye on oil prices and processed weekly jobs data.
At 1448 BST, the Dow Jones Industrial Average increased 0.4%, while the S&P 500 and the Nasdaq gained 0.2%.
Oil prices were also sitting higher after the International Energy Agency forecast crude markets would rebalance in the next few months following several years of overproduction. However, Paris-based IEA also lowered its forecast for global oil demand in 2017.
Brent crude rose 1.12% to $44.55 per barrel and West Texas Intermediate increased 1.02% to $42.14 per barrel at 1456 BST.
Earlier, oil prices fell after data from the US Energy Information Administration on Wednesday showed an unexpected build in weekly crude inventories and following record Saudi Arabian production.
"At a time of relatively little news flow, traders are again focused on the movements in oil and whether we're going to see another move back to the levels seen earlier this year," said Craig Erlam, senior market analyst at Oanda.
He added: "The meeting between OPEC members next month on the sidelines of the International Energy Forum in Algeria will be key for prices now, although I remain sceptical about whether anything meaningful will come out of it, especially as reports emerge that Saudi Arabia is pumping at record levels and Iran is increasing production at a faster rate than expected."
In economic data, the Labor Department revealed the number of Americans filing for unemployment benefits fell pretty much in line with expectations last week.
US initial jobless claims dropped by 1,000 from the previous week's revised level of 267,000. The figure was revised down by 2,000. Economists had been expecting a decline to 265,000.
The four-week moving average of new claims was 262,750, up 3,000 from the previous week's average, which was revised down by 500 to 259,750. The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.
In company news, Macy's shares jumped after it reported second-quarter sales and earnings that topped analysts' expectations.
Kohl's also surged after posting a surprise increase in quarterly profits as gross margins grew at the retailer.
Alibaba Group Holdings rallied as it revealed a better-than-expected rise in quarterly revenue despite a slowdown in its main market of China.
Shake Shack Inc. slumped after the burger chain late on Wednesday reported weak sales growth in the second quarter. |
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| | Broker Tips | | Broker tips: Staffline, Worldpay, Travis Perkins Berenberg raised Staffline Group's rating to 'buy' from 'hold' and its target to 1,250p from 900p on Thursday.
Immediately after the UK's vote to leave the European Union on 24 June, Berenberg had downgraded the Staffline to 'hold' as it felt "uncertainty about the UK economic and political outlook would generate headwinds for both the recruitment division and the PeoplePlus division".
"Now that the dust has started to settle, the political outlook appears somewhat clearer and Staffline has reported a solid set of first half 2016 numbers, we feel that 'hold' rating was too downbeat," said Berenberg.
Staffline, which specialises in logistics, e-retail, manufacturing, driving, food processing and white collar recruitment, last month reported a 39.5% jump in first half revenue to £414.7m, driven by its Staffing business. Underlying profits before tax soared 50.5% to £15.2m and the interim dividend was raised 40% to 10.5p.
"Given the clear long-term track record of the firm, the focus on temporary recruitment in less cyclical areas of the economy and good progress made in reducing leverage at the business, we upgrade the stock back to Buy with a price target of 1,250p," Berenberg said.
The broker said while it continues to believe uncertainty has increased following Brexit and ahead of the Welfare to Work review, the shares remain 40% below peak despite no change in consensus earnings forecasts.
"We feel this potentially underestimates the scale of the business that management is trying to build."
Berenberg added: "The high level of uncertainty surrounding the business outlook and hiring was one of the principal reasons behind our early July downgrade. However, Staffline has confirmed it has traded well since Brexit and that its focus on blue-collar temporary workers in less cyclical industries should provide resilience versus recruitment peers."
Worldpay shares dropped on Thursday as Jefferies lowered its rating on the stock to 'hold' from 'buy' and cut its target to 325p from 340p.
Jefferies said while the payment processing company's first half results on Tuesday were "strong", growth looks set to decelerate in the second half.
Worldpay reported a 6% rise in first half pre-tax profits to £168.6m on the back of a 10% increase in revenue to £2.1bn.
The group maintained its full-year guidance and said it was "well positioned to deliver a good performance" in the second half.
"While the UK's vote to leave the EU has resulted in increased uncertainty, we do not expect it to have a material effect on Worldpay's trading performance," chief executive Phil Jansen said.
Looking ahead, Jefferies believes there will also be tough strategic decisions to be made, particularly in the US.
Worlday's market share is less than 10% in the US. The company tried to sell is US business before its IPO last year but failed to do so.
"Management is now planning to invest in eCommerce solutions for its domestic US SME base, which is even more competitive than the UK, the latter having proved tricky for online penetration," said Jefferies.
"Our view remains that the SME offline base in the US should be divested."
Global e-commerce renewals will also hold back divisional growth in the second half, Jefferies warned.
The division posted a 25% increase net revenue, boosted by transaction volume growth.
"But, management stresses that these growth rates should not be extrapolated forward due to: (i) retention in first half 2016 of volume that was delayed in migrating off the WPG platform to lower-cost local acquirers; and, (ii) contract renewals in Global eCom, two global technology companies in particular, which are at lower transaction rates going forward," Jefferies said.
While the company expects no further benefits in 2016 of interchange rates, Jefferies believes the guidance does not tally with the timing of fee changes.
The group's guidance implies the rate changes were fully implemented months in advance of the EU legislation coming into force.
"Rate changes were phased in by Visa and MasterCard, but Visa's credit card interchange rate changes did not happen until 9 December 2015.
"Worldpay should, therefore, see an incremental benefit on its bundled contracts, which are about half of UK net revenue, while c.1/3 of UK transaction value is from credit card transactions. Management has been surprisingly unwilling to provide further disclosure on this point."
Barclays downgraded Travis Perkins to 'underweight' from 'equalweight' and slashed the price target to 1,400p from 1,950p saying the UK's vote to leave the European Union will have a large impact on the business than the market expects, which will hit the valuation.
"The combination of earnings risk, likely valuation downside and the potential for a lengthy period of uncertainty in the UK leads us to downgrade to an 'underweight' rating."
The bank said it now assumes a slowdown in the UK leads to around 1% like-for-like sales growth in the second half of this year, down from around 3% in in the first half and flat LFLs in 2017, with around 3% EBITA growth in 2016 and a 5% drop in 2017.
"This is considerably lighter than the 30% decline in EBITA seen from 2007-09 but nonetheless puts us 5% below Reuters consensus for 2017 and 7% below for 2018 (adjusted for only those who have updated numbers post the EU referendum result).
"If we take Travis's average historical 12x price-to-earnings multiple we estimate the market is pricing in LFL growth of around 3% for 2017."
Still, Barclays insisted that it likes the company's medium-term strategy and said the 'underweight' rating was not a result of it doubting strategy. | | |
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