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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 finish higher, cable slides London stocks finished in the green on Monday as oil prices jumped on hopes OPEC will stabilise the market at a meeting in September.
The FTSE 100 ended up 0.36% to 6,941.19 points.
The pound fell 0.32% against the dollar at $1.2879 ahead of UK inflation data due on Tuesday.
At the same time, oil prices surged with Brent crude rising 2.2% to $48.06 per barrel and West Texas Intermediate increasing 2.4% to $45.60 per barrel at 1621 BST.
"Crude prices are ripping higher today, with Brent reaching a new monthly high in anticipation of a potential output freeze from the September OPEC meeting," said IG market analyst Joshua Mahony.
"However, the reality of the matter is that Saudi Arabia is likely to scupper any potential deal once more given its unwillingness to sacrifice market share to the US."
In economic data, Japan's economy hardly grew in the April to June quarter, weighed by exports and business investment.
The economy grew 0.2% on an annualised basis, down from 2% in the first three months of the year. Meanwhile, private consumption nudged up just 0.2%, down from 0.6% growth the quarter before.
"The BoJ has found few things to cheer about in recent years, and with today's poor growth data coupled with yen fuelled disinflation, the BoJ look likely to ease once more as a result," said Mahony.
In the UK, Rightmove data showed asking prices for homes in England and Wales fell 1.2% on the month in August, the biggest fall since November, following a 0.9% decline in July. On the year, prices rose 4.1% in August but it marked a slowdown from July's 4.5% year-on-year growth.
Rightmove blamed Brexit worries and a quieter summer holiday period for the monthly decline.
In the US, the Empire State manufacturing index for August fell to negative 4.2 from 0.55 in July. Economists had expected a reading of 2.
The National Association of Home Builders said US builder confidence rose in August as positive job growth in July offset weak GDP reports. The index for builder sentiment increased two points to 60 from a downwardly-revised reading of 58 in July, as expected by analysts.
Among corporate stocks, oil producers gained on the back of the increase in crude prices. Royal Dutch Shell and BP were among the risers.
Paddy Power Betfair was also higher after its rival William Hill rejected an improved offer from Rank Group and 888 Holdings over the weekend.
Housebuilders were in the red, including Berkeley Group Holdings and Travis Perkins, following the weak Rightmove data on house prices.
Bovis Homes was also lower despite posting growth in profit and revenue for the first half, as it said it was too early to gauge the impact of Brexit.
Countryside Properties slumped after J.P. Morgan downgraded the stock to 'neutral' from 'overweight' as part of a sector-wide review.
Clarkson shares advanced even as it reported a drop in first half underlying pre-tax profit on flat revenue.
Entertainment One surged amid reports that ITV was planning to raise its bid for the company as it emerged that private equity firm KKR is considering making an offer. |
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| Market Movers
FTSE 100 (UKX) 6,941.19 0.36%
FTSE 250 (MCX) 17,941.85 0.11%
techMARK (TASX) 3,555.26 0.60%
FTSE 100 - Risers
Paddy Power Betfair (PPB) 9,805.00p 2.35%
Hikma Pharmaceuticals (HIK) 2,324.00p 2.15%
Mediclinic International (MDC) 1,119.00p 1.91%
Anglo American (AAL) 872.70p 1.84%
Ashtead Group (AHT) 1,247.00p 1.71%
Legal & General Group (LGEN) 215.90p 1.36%
Persimmon (PSN) 1,735.00p 1.34%
GlaxoSmithKline (GSK) 1,713.50p 1.33%
Capita (CPI) 1,016.00p 1.30%
Fresnillo (FRES) 1,988.00p 1.27%
FTSE 100 - Fallers
Berkeley Group Holdings (The) (BKG) 2,493.00p -1.81%
Tesco (TSCO) 157.80p -1.68%
Royal Bank of Scotland Group (RBS) 193.10p -1.63%
Lloyds Banking Group (LLOY) 54.50p -1.62%
Marks & Spencer Group (MKS) 348.80p -1.61%
Glencore (GLEN) 193.00p -1.61%
easyJet (EZJ) 1,086.00p -1.36%
Travis Perkins (TPK) 1,540.00p -0.96%
Sainsbury (J) (SBRY) 235.40p -0.93%
International Consolidated Airlines Group SA (CDI) (IAG) 403.90p -0.91%
FTSE 250 - Risers
Entertainment One Limited (ETO) 255.00p 6.78%
Clarkson (CKN) 2,140.00p 5.16%
Ibstock (IBST) 182.30p 5.07%
NMC Health (NMC) 1,288.00p 4.55%
Sophos Group (SOPH) 247.80p 3.81%
Paysafe Group (PAYS) 416.50p 3.79%
Rank Group (RNK) 215.10p 3.36%
IP Group (IPO) 183.90p 3.14%
Ted Baker (TED) 2,521.00p 2.73%
Fidelity China Special Situations (FCSS) 173.70p 2.66%
FTSE 250 - Fallers
William Hill (WMH) 320.00p -4.11%
Sports Direct International (SPD) 297.90p -3.53%
Countryside Properties (CSP) 234.30p -3.50%
Redrow (RDW) 335.30p -2.98%
Ascential (ASCL) 243.90p -2.44%
Bovis Homes Group (BVS) 817.00p -2.27%
Pagegroup (PAGE) 359.10p -2.26%
Circassia Pharmaceuticals (CIR) 96.45p -2.13%
Daejan Holdings (DJAN) 5,575.00p -2.11%
Brown (N.) Group (BWNG) 186.50p -2.05% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares end on a mixed note amid holiday-thinned trading volumes European stocks ended on a mixed note on Monday, amid low volumes, with many traders in Europe away from their desks for the Assumption Day holiday.
The benchmark Stoxx Europe 600 index was marginally lower, drifting 0.01% lower to 346.05, France's CAC 40 was down 0.05% and Germany's DAX was up 0.24%.
At the same time, oil prices were firmer. West Texas Intermediate jumped 2.584% to $45.67 a barrel after Russia reiterated it was open to agreeing on a production freeze with OPEC members so long as it was not a temporary measure, although some analysts voiced scepticism that any deal would truly have an impact on production levels.
"[...] With Iran at or near its short-term capacity [a deal to freeze output] is not out of the question," analysts at SocGen said in a research note sent to clients.
Nevertheless, an agreement would only serve to bolster sentiment, they added, because Russia, Iraq and Iran were "maxed out or close to it" and Saudi output would diminish anyhow following its seasonal peak in Summer.
"So a freeze would not have any impact on actual crude supply," SocGen said.
Investors were also digesting data released overnight showing that Japan's economy hardly grew in the April to June quarter, weighed by exports and business investment.
The economy grew 0.2% on an annualised basis, down from 2% in the first three months of the year and missing expectations of 0.7% growth. Meanwhile, private consumption nudged up just 0.2%, down from 0.6% growth the quarter before.
Markus Huber, a trader at City of London Markets, said: "Whilst the latest Japanese economic growth data have failed to meet expectations not everybody is viewing this necessarily as massively negative instead it appears rather likely that the government will take additional steps to boost growth rather sooner than later.
"Fairly typical for a Monday there is only a very limited amount of economic data scheduled to be released.
"Overall sentiment remains positive with traders still seeing more room to the upside, although volume is likely to be below average partially due to some countries celebrating Assumption Day."
In corporate news, Swedish retailer H&M rose after it said sales in July increased 10%.
Belgian pharmaceuticals company UCB surged after a US court confirmed the validity of a patent related to its Vimpat epilepsy drug.
William Hill was in retreat after rejecting an improved cash-and-shares offer from Rank Group and 888 Holdings received over the weekend.
Bovis Homes also moved lower despite posting growth in profit and revenue for the first half, as it said it was too early to gauge the impact of Brexit.
FTSE 250 security firm G4S rallied after saying that Tim Weller will succeed Himanshu Raja as chief financial officer after Raja retires from the board and steps down from the role on 1 October. Weller will join the company from oilfield services group Petrofac, where he held the same role.
Entertainment One surged amid reports that ITV was planning to raise its bid for the company as it emerged that private equity firm KKR is considering making an offer. |
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| | US Market Report | | US open: Stocks rise as oil prices gain US stocks gained on Monday as oil prices edged higher and investors shrugged off weaker-than-expected manufacturing data.
The S&P 500 edged up 0.1% to 2,186, the Dow Jones Industrial Average gained 0.2% 18,619 and the Nasdaq Composite climbed 0.2% to 5,243.
Oil prices also rallied on hopes of action by OPEC to stabilise the market ahead of a meeting next month. West Texas Intermediate crude rose 1.5% to $45.21 per barrel and Brent increased 1.3% to $47.61 per barrel at 1449 BST.
In economic data, the Empire State manufacturing index for August fell to negative 4.2 from 0.55 in July. Economists had expected a reading of 2.
"Overall, we think manufacturing is now expanding slowly, but no boom is in prospect," said Pantheon Macroeconomics.
Meanwhile, the National Association of Home Builders said builder confidence rose in August as positive job growth in July offset weak GDP reports. The index for builder sentiment increased two points to 60 from a downwardly-revised reading of 58 in July, as expected by analysts.
Earlier, Japanese data showed the nation's economy hardly grew in the April to June quarter, weighed by exports and business investment.
The economy grew 0.2% on an annualised basis, down from 1.9% in the first three months of the year. Meanwhile, private consumption nudged up just 0.2%, down from 0.6% growth the quarter before.
"The BoJ has found few things to cheer about in recent years, and with today's poor growth data coupled with yen fuelled disinflation, the BoJ look likely to ease once more as a result," said IG market analyst Joshua Mahony.
In corporate news, Apple shares rose following a press report over the weekend that it isn't likely to repatriate overseas assets.
Honeywell International Inc. gained amid reports it its nearing a deal to buy JDA Software Group Inc. |
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| | Broker Tips | | Broker tips: Persimmon, Restaurant Group, Cobham UK housebuilding shares have fallen 25% since Britain voted to leave the European Union and the sector has priced in a 5% drop in house prices, J.P. Morgan Cazenove said on Monday
"However, while we think it's prudent to assume that transaction numbers will fall during 2017 (although trends have been solid so far), we see no warning signs that house prices are likely to decline UK-wide," J.P. Morgan said.
"We are more bearish on London and see scope for double-digit price declines, although even under this scenario we expect relatively modest earnings impact."
The broker said it continues to view dividends as highly sustainable and sees an average of 15% upside to price targets.
J.P. Morgan upgraded Persimmon to 'overweight' from 'underweight', to "reflect both our view that dividends could still beat, and a preference for balance sheet strength and ex-London".
In contrast it downgraded Countryside Properties to 'neutral' from 'overweight' as a "relative call after a period of strong performance".
Canaccord Genuity has raised its rating on Restaurant Group to 'buy' from 'hold' and lifted its target to 550p from 276p.
The broker said the upgrade on the owner of Garfunkels follows the replacement of chief executive Danny Breithaupt with Andy McCue, former chief of Paddy Power. The ousting of the CEO comes after a string of profit wanrings and a share price collapse.
"New CEO Andy McCue was CEO of Paddy Power where he embedded a new growth strategy which delivered record revenues and profits, as well as playing a main role in the merger with Betfair," Canaccord said.
Canaccord said the executive team has also been strengthened by the appointment of Barry Nightingale as chief financial officer and Spencer Ayers as new managing director for its Frankie & Benny's business.
Looking ahead to the company's strategic review on 26 August, Canaccord said: "We highlight a checklist of actions that investors should expect to read in the review: exit poorly performing sites, continue to develop the brand portfolio, reposition Frankie & Benny's, reduce and re-direct capex, improve digital marketing capability, reduce the overheads, review returns to shareholders including share buybacks."
Canaccord said the problems Restaurant Group faces are "not unique" but believes that the business is "fixable".
"Maturing brands inevitably require constant innovation and occasional reinvention and there are many positive case studies in the market that suggest it can be done."
Barclays downgraded Cobham to 'equalweight' from 'overweight' saying it expects several unquantifiable bumps along the way in the next six months and sees cleaner yet equally compelling value to be had elsewhere in its coverage.
The bank said that while the logic behind rebalancing away from defence was sound at the time, commercial markets have softened significantly since then, while pure-play defence peers have re-rated to all-time highs.
It said the rights issue further dented sentiment and in turn valuation multiples, meaning the stock still looks cheap, but the the impending management change cannot be ignored in the near term.
"We remain compelled by Cobham's valuation, this is still the highest margin defence company on the planet trading at just 12.6x FY16E P/E, with a 4.8% dividend yield and a free cash flow of yield of around 7%, yet it trades at a P/E discount of around 30% to comparable US defence peers. Clearly the risk/reward looks to be skewed to the upside on a 12 month view," the bank said.
Barclays said that while management remains cautiously optimistic in the company just about attaining the second half plan, this is unlikely to be sufficient to see that valuation gap close materially more than it has already as around 30% of revenues are exposed to non-aerospace and defence 'commercial' end markets, offering a lesser degree of safety than the pure-play defence peers.
"With the balance sheet now addressed the underlying story at Cobham should be a cleaner one. Should management be able to deliver their revised guide, confidence will slowly be restored in this 16% margin, highly cash generative technology business with high barriers to entry." | | |
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