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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 end lower after mixed inflation data London stocks closed in the red on Tuesday after mixed UK and US inflation figures.
Data from the Office for National Statistics (ONS) showed the UK consumer price index (CPI) rose to 0.6% when compared to the same month last year, up from the 0.5% in June that economists expected to be maintained.
Rising petrol prices and upward moves in the prices of second hand cars, food, alcoholic beverages and hotel rooms were the main contributors to the rise in CPI.
However, core CPI, which excludes more volatile prices such as fuel and food, fell to 1.3% in July from the 1.4% year-on-year rise the month before. Economists had expected no change.
The pound rose 0.73% against the dollar to $1.2974 at 1609 BST.
"The Office for National Statistics has pointed out that although CPI inflation is now at its highest level since November 2014, it is still low in historic terms," said IG market analyst Joshua Mahony.
"The figure was slightly more than economists had expected, but it doesn't yet move the dial for the Bank of England's monetary policy makers, who have arguably shifted their focus to growth and jobs in the wake of the referendum result."
The Bank of England, which is targeting 2% inflation, expects consumer prices to increase as a weaker pound post Brexit makes imports more expensive.
In the US, CPI rose 0.8% year-on-year in July, down from 1.0% the previous month, according to the Labor Department. Economists had forecast a 0.9% increase. The easing in inflation was driven by a 1.6% drop in the energy index.
Core inflation, which excludes volatile energy and food prices, slowed to 2.2% year-on-year growth in July from 2.3% in June, surprising analysts who had expected no change.
The dollar was weaker against major currencies following the report, helping to push oil prices higher. Brent crude rose 0.22% to $48.46 per barrel and West Texas Intermediate increased 0.54% to $45.99 per barrel at 1612 BST.
"Today's underwhelming price growth figures follow on the heels of some disappointing data out of the US which will have Janet Yellen and her colleagues at the Fed re-evaluating their interest rate policy," said Dennis de Jong, managing director at UFX.com.
However, New York Federal Reserve president William Dudley told Fox Business News an interest rate hike might be on the table at the September meeting.
Meanwhile, data from the Commerce Department showed US housing starts rose past forecasts in July, climbing 2.1% in July to 1.21m compared to estimates for a 0.8% decline to 1.18m.
Building permits, on the other hand, dipped by 0.1% to 1.152m in July, missing forecasts for a 0.6% gain to1.160m.
Another report, from the Federal Reserve, showed industrial output rose 0.7%month-on-month following a 0.4% gain in June, beating expectations of a 0.3% increase.
On the company front, shares in airlines easyJet and International Consolidated Airlines fell following a four-day rally in oil prices.
BHP Billiton rallied despite reporting a record loss in the year to the end of June and slashing its dividend as weaker commodity prices, write-downs and the dam disaster in Brazil took their toll.
Chilean copper mining colossus Antofagasta gained after it reported lower first-half revenue but said it had improved earnings and kept its dividend flat thanks to some heavy cost-cutting.
A gauge of other miners were also in the black, including Glencore, Rio Tinto and Anglo American.
Hochschild Mining advanced as it swung to a first half pre-tax profit of $60.3m against a loss of $43.4m loss the previous year.
BGEO Group, formerly Bank of Georgia Holdings, declined even as it reported a 20% increase in underlying first half profit in line with expectations. |
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| Market Movers
FTSE 100 (UKX) 6,893.92 -0.68%
FTSE 250 (MCX) 17,852.56 -0.43%
techMARK (TASX) 3,515.49 -1.04%
FTSE 100 - Risers
Antofagasta (ANTO) 559.50p 8.85%
Rio Tinto (RIO) 2,486.50p 2.09%
Glencore (GLEN) 196.90p 2.02%
Anglo American (AAL) 890.00p 1.98%
CRH (CRH) 2,516.00p 1.37%
Barratt Developments (BDEV) 442.00p 1.19%
BHP Billiton (BLT) 1,051.00p 0.82%
London Stock Exchange Group (LSE) 2,891.00p 0.70%
Imperial Brands (IMB) 4,143.00p 0.66%
Taylor Wimpey (TW.) 153.80p 0.46%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 337.90p -3.12%
BAE Systems (BA.) 521.00p -2.34%
easyJet (EZJ) 1,063.00p -2.21%
International Consolidated Airlines Group SA (CDI) (IAG) 394.30p -2.11%
St James's Place (STJ) 959.00p -2.09%
National Grid (NG.) 1,081.00p -1.91%
Next (NXT) 5,385.00p -1.82%
Legal & General Group (LGEN) 211.70p -1.81%
Shire Plc (SHP) 5,065.00p -1.75%
Prudential (PRU) 1,419.00p -1.63%
FTSE 250 - Risers
Hochschild Mining (HOC) 316.90p 7.75%
Cairn Energy (CNE) 204.00p 4.62%
NMC Health (NMC) 1,330.00p 3.26%
CMC Markets (CMCX) 276.20p 3.25%
Amec Foster Wheeler (AMFW) 533.50p 3.09%
Euromoney Institutional Investor (ERM) 1,116.00p 2.95%
Vedanta Resources (VED) 546.50p 2.92%
Ashmore Group (ASHM) 367.70p 2.71%
Countrywide (CWD) 244.50p 2.43%
Tullow Oil (TLW) 234.00p 2.36%
FTSE 250 - Fallers
BGEO Group (BGEO) 2,807.00p -5.20%
Millennium & Copthorne Hotels (MLC) 422.50p -3.85%
JD Sports Fashion (JD.) 1,272.00p -3.71%
Spectris (SXS) 1,931.00p -3.45%
CLS Holdings (CLI) 1,355.00p -3.21%
OneSavings Bank (OSB) 225.10p -3.06%
Sophos Group (SOPH) 240.30p -3.03%
DFS Furniture (DFS) 252.40p -2.96%
Shawbrook Group (SHAW) 192.00p -2.93% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets end on a down note European stocks edged lower on Tuesday as investors digested a weaker-than-expected reading on German economic sentiment, with miners bucking the trend following well-received results from BHP Billiton and Antofagasta.
The benchmark Stoxx Europe 600 index was down 0.79% to 343.82, France's CAC 40 was down 0.83% and Germany's DAX was 0.58% weaker.
At the same time, oil prices reversed earlier losses to trade higher, with West Texas Intermediate up 1.38% at $46.38 a barrel and Brent crude up 1.3% to $48.96.
In corporate news, miner BHP Billiton edged higher despite reporting a record loss in the year to the end of June and slashing its dividend as weaker commodity prices, writedowns and the dam disaster in Brazil took their toll.
Chilean copper mining colossus Antofagasta surged after it reported lower first half revenue but said it had improved earnings and kept its dividend flat thanks to some heavy cost cutting.
Linde was on the front foot after confirming it was in preliminary talks with US industrial gases maker Praxair about a possible merger.
International infrastructure group Balfour Beatty was a bit firmer after being awarded a $697m contract to undertake electrification of the 52-mile Caltrain rail corridor between San Francisco and San Jose, in preparation for the future operation of high speed trains.
On the downside, Swiss lift maker Schindler was lower after it cut the top end of its revenue growth outlook for the year.
Oil services firm Wood Group was higher as it posted a drop in profit and revenue for the first half amid "challenging" conditions in the oil and gas market but reaffirmed its outlook for the full year.
AstraZeneca nudged lower after saying it has completed a licensing agreement with LEO Pharma, a specialist in dermatology care, for the global licence to monoclonal antibody tralokinumab in skin diseases.
On the data front, German investor confidence improved less than expected in August, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.
The index of investor and analyst expectations rose to 0.5 in August from -6.8 the month before, but this fell short of estimates for a reading of 1.8.
However, the current expectations index beat economists' forecasts for a reading of 50.0, printing at 57.6 compared to 49.8 in July.
ZEW President Professor Achim Wambach said: "The ZEW Indicator of Economic Sentiment has partly recovered from the Brexit shock. Political risks within and outside the European Union, however, continue to inhibit a more optimistic economic outlook for Germany. |
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| | US Market Report | | US open: Stocks fall as inflation figures miss forecasts US stocks fell on Tuesday as data showed inflation slowed more than expected in July.
At 1503 BST, the Dow Jones Industrial Average dropped 0.25% to 18,589.52 points, the S&P 500 shed 0.32% to 2,183.23 and the Nasdaq declined 0.34% to 5,244.32.
In contrast, oil prices gained on a weaker dollar, with West Texas Intermediate crude up 0.3% to $45.90 a barrel and Brent 0.1% firmer at $48.41.
The US consumer price index rose 0.8% year-on-year in July, down from 1.0% the previous month, according to the Labor Department. Economists had forecast a 0.9% increase. The easing in inflation was driven by a 1.6% drop in the energy index.
Core inflation, which excludes volatile energy and food prices, slowed to 2.2% year-on-year growth in July from 2.3% in June, surprising analysts who had expected no change.
The dollar was weaker against major currencies following the report, falling 0.72% against the pound, 0.77% versus the euro and 0.81% against the yen.
"Today's underwhelming price growth figures follow on the heels of some disappointing data out of the US which will have Janet Yellen and her colleagues at the Fed re-evaluating their interest rate policy," said Dennis de Jong, managing director at UFX.com.
"For much of the summer it had appeared that an interest rate hike was due sooner rather than later. However, with the fall-out from Brexit, volatility in the financial markets and weakening demand fuelling global uncertainty, many now believe Yellen will likely stick rather than twist for the time being."
Yet, New York Federal Reserve president William Dudley told Fox Business News an interest rate hike might be on the table at the September meeting.
The Fed releases on Wednesday the minutes of its 26-27 July policy meeting, which may offer clues on the timing of the next interest rate hike.
Meanwhile, data from the Commerce Department showed US housing starts rose past forecasts in July, climbing 2.1% in July to 1.21m compared to estimates for a 0.8% decline to 1.18m.
Building permits, on the other hand, dipped by 0.1% to 1.152m in July, missing forecasts for a 0.6% gain to1.160m.
Another report from the Federal Reserve showed industrial output rose 0.7% following a 0.4% gain in June, beating expectations of a 0.3% increase.
Manufacturing production climbed 0.5% in July, below estimates for a 0.2% increase and following a 0.3% increase in June.
On the corporate front, Dick's Sporting Goods shares jumped after the company raised its full year forecast and reported better-than-expected second quarter results.
Home Depot was a touch higher after the retailer's earnings and revenue for the second quarter came in more or less in line with analysts' expectations. |
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| | Broker Tips | | Broker tips: UK engineers, EnQuest, IG Group Rotork, Spectris and Halma were under the cosh on Tuesday after HSBC downgraded its ratings on both stocks as it took a look at UK engineers.
The bank cut Rotork to 'reduce' from 'hold' and trimmed the target to 180p from 200p, pointing to poor visibility and margin pressures.
It said the company faces further margin pressure in its key oil and gas exposed business division.
It said while the recent rise in oil prices lowers the risk for Rotork's high oil and gas exposure, high exposure to mid/downstream activities will only see the positive impact in the longer term.
HSBC downgraded Spectris to 'reduce' from 'buy' and cut the price target to 1,700p from 2,000p, saying the stock has reached the top of its valuation trading range since its recent strong rally - it's up 29% since the 2015 results on 16 February.
In addition, it said weak trading patterns could persist in the near term while acquisition activity to fuel growth may be limited.
Still, HSBC said it continues to believe Spectris will be a beneficiary of growing global productivity demand, coupled with acquisition potential to enhance earnings in the long term.
Finally, the bank downgraded Halma to 'hold' from 'buy' saying the valuation now looks too rich, but lifted the price target to 1,050p from 975p.
HSBC said Halma has proved resilient through the economic cycle with demand driven by increasing health, safety and environmental legislation.
It also highlighted the group's compelling track record and noted it has delivered double-digit earnings compound annual growth rate over the last 20 years with at least a 5% dividend increase every year for the last 36 years.
Canaccord Genuity cut its rating on Enquest to 'hold' from 'buy' and lowered its price target to 32p from 50p on Tuesday.
The oil and gas company on Monday said it is in talks to farm out a 20% working interest in the Kraken development to Delek Group.
The deal would reduce Enquest's ownership of Kraken from 70.5% to 50.5%, and in exchange Delek will share the project capital expenditure from 1 January 2016.
"In terms of balance sheet management, we think this deal - if it completes - makes good sense," said Canaccord.
"However, with no upfront entry costs for Delek, the terms have a negative impact on our asset valuation."
Canaccord believes a deal could help reduce net debt. EnQuest has about $2.1bn total debt facilities.
The broker said without the farm-out it thinks the company would be "very close to exceeding its debt capacity, a risk that would naturally increase if the project were to suffer delays from the current mid 2017 target for first oil and/or oil prices were lower than our assumption".
"Consequently, while the Delek transaction does not look to be an appealing value proposition for EnQuest, it does provide some much needed balance sheet buffer room in the short - term."
Canaccord sees a good chance that a deal will be completed given the differing attractions to both parties. "For now, pending more detail and announcement that the farm-out is binding, we reduce our target to 32p/share (from 50p) and we reduce our rating to 'hold' from 'buy'."
Liberum upgraded IG Group to 'buy' from 'hold' and lifted the price target to 986p from 770p.
The brokerage said IG's full-year 2016 results surprised on the upside, not with the modest earnings per share beat but with the "incredibly strong" growth in new accounts opened. As a result, it has upped its EPS forecasts for 2017 and 2018 by 6% and 12%, respectively.
Liberum pointed out that the number of new accounts opened was up 42% year-on-year and 21% ahead of expectations. It said this bodes well and gives it cause to suggest IG is returning to growth after a three year period of broadly flat active client and EPS growth.
"Trading remains highly correlated to market volatility but the underlying growth opportunity looks promising. After a strong run there is no need to rush but the investment case merits further attention.
"We have not changed our view that IG's trading remains deeply correlated to market volatility and thus investors may wish to carefully choose their point of entry. However, we have more comfort in the underlying growth story than we have had for over four years." | | |
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