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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 taper as sterling, commodity prices lose traction UK stocks whimpered to a lower close on Friday as sterling lost traction on renewed Brexit fears and commodity prices headed south.
The spectre of the Lisbon Treaty's Article 50 rose once more, following a media report that claimed UK Prime Minister Theresa May was sympathetic to starting Britain's EU divorce by next April at the latest.
"The pound renewed its plunge into the red this Friday," said Spreadex financial analyst Connor Campbell in a note, referring to the media report. The ensuing pall saw sterling dive lower after lunch.
At about 16:16 BST, sterling was down 0.49% to $130.884, down 0.8% to 1.3062 yen and lower 0.48% to €1.1542. Same time, gold faltered 0.59% to $1349.20 an ounce.
Collectively, this dampened both the FTSE 100 and FTSE 250. Wall St was mostly lower, as were key indices in Europe.
Miners fell after Glencore, also hurt by Macquarie cutting its view on the shares to 'neutral' from 'outperform,' albeit with a 200p target, from 180p, ahead of its interims next week
KAZ Minerals nudged north as Credit Suisse upgraded the stock to 'outperform' from 'neutral' and lifted the price target to 250p from 165p, citing receding development risks.
Otherwise, blue-chip home builders were notable among fallers, piloted by Taylor Wimpey, Persimmon and Barratt Developments on jitters surrounding the UK housing market's outlook.
"The big question," wrote IG's Josh Mahony, "is whether sterling's fall will also drive renewed foreign interest in UK housing, thus mitigating any fears of a crash in house prices."
Overall, Mahony opined that it was clear the "overstretched nature of the FTSE means traders are happy to wait for another opportunity to buy the dips."
Both in the UK and across the Atlantic, all eyes are on next week's Jackson Hole speech by US Federal Reserve chair Janet Yellen, and pundits are already pondering what precisely that might bring.
"There is little space for manoeuvre, with any hawkish comment from Yellen likely to be seen through cynical eyes given the perception of can-kicking in 2016 to date," Mahony said.
Against this backcloth oil prices were mixed much of the day, but, by about 16:31 BST, West Texas Intermediate had shed 0.31% to $48.07 a barrel as Brent had lost 0.9% to $50.43 a barrel. This spurred Shell and BP's respective share prices lower.
On the economic front, UK public sector net borrowing hit a £1bn surplus in July, from £1.2bn a year ago, Office for National Statistics said. A surplus of £1.6bn was expected.
German producer prices ticked higher in July, Destatis said. The index of producer prices for industrial products was up 0.2% after a 0.4% rise in June and May. A 0.1% rise was expected.
Back to the stocks indices, other sectors heading south included pharmaceuticals, commercial property, consumer goods, leisure and utilities, among others.
Centrica advanced as Barclays raised its target from 240p to 245p with an 'equal weight' rating, and separately Legal & General continued to slide a day after going ex-dividend.
EasyJet flew higher on rumours of a possible £16 a share takeover offer from private equity or founder Stelios Haji-Ioannou or a New York firm.
William Hill shares jumped after Rank and 888 Holdings quit their bid plans late Thursday, investors also liking the bookie's full-year operating profit guidance hike. |
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| Market Movers
FTSE 100 (UKX) 6,858.95 -0.15%
FTSE 250 (MCX) 17,870.75 -0.00%
techMARK (TASX) 3,513.30 0.14%
FTSE 100 - Risers
Lloyds Banking Group (LLOY) 55.24p 2.54%
easyJet (EZJ) 1,105.00p 2.50%
Centrica (CNA) 237.00p 1.41%
Morrison (Wm) Supermarkets (MRW) 194.50p 1.20%
InterContinental Hotels Group (IHG) 3,365.00p 1.17%
Sage Group (SGE) 735.50p 0.89%
Mediclinic International (MDC) 1,099.00p 0.83%
British American Tobacco (BATS) 4,868.50p 0.71%
Shire Plc (SHP) 5,065.00p 0.70%
London Stock Exchange Group (LSE) 2,889.00p 0.66%
FTSE 100 - Fallers
Glencore (GLEN) 189.15p -3.59%
Taylor Wimpey (TW.) 153.40p -2.48%
BHP Billiton (BLT) 1,054.00p -1.95%
Ashtead Group (AHT) 1,205.00p -1.95%
Standard Chartered (STAN) 624.80p -1.65%
Persimmon (PSN) 1,749.00p -1.58%
Worldpay Group (WI) (WPG) 300.60p -1.44%
Legal & General Group (LGEN) 205.90p -1.15%
Antofagasta (ANTO) 564.50p -1.14%
Anglo American (AAL) 870.00p -1.14%
FTSE 250 - Risers
Kaz Minerals (KAZ) 194.60p 8.11%
William Hill (WMH) 314.70p 3.83%
esure Group (ESUR) 263.90p 2.80%
Metro Bank (MTRO) 2,400.00p 2.78%
PayPoint (PAY) 1,005.00p 2.66%
Genus (GNS) 1,863.00p 2.64%
Diploma (DPLM) 888.00p 2.54%
Sophos Group (SOPH) 244.70p 2.51%
Go-Ahead Group (GOG) 1,913.00p 2.46%
Balfour Beatty (BBY) 260.00p 2.40%
FTSE 250 - Fallers
Ibstock (IBST) 165.90p -3.83%
JRP Group (JRP) 86.00p -3.37%
Cairn Energy (CNE) 203.40p -3.00%
Tullow Oil (TLW) 234.00p -2.34%
Pagegroup (PAGE) 346.70p -2.17%
International Personal Finance (IPF) 270.00p -2.10%
Evraz (EVR) 150.30p -2.08%
Redefine International (RDI) 43.63p -1.96%
Fidessa Group (FDSA) 2,511.00p -1.95% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks end week on a down note European stocks slipped on Friday, with little in the way of corporate or macroeconomic news to drive markets as investors continued to keep an eye on oil prices.
The benchmark Stoxx Europe 600 index was down 0.81% to 340.14, Germany's DAX was 0.55% lower and France's CAC 40 was off 0.82% to end the day at 4,400.52.
At the same time, oil prices wavered between gains and losses, taking a breather following solid gains this week that saw prices hit bull market territory on Thursday amid hopes an output freeze will be agreed at the OPEC meeting next month.
West Texas Intermediate was off by 0.021% at $48.21 a barrel and Brent crude was down 0.6% at $50.60.
IG analyst Joshua Mahony said: "Essentially the announcement of a meeting in September has seen Brent turn from a bear market to a bull market in 16 days. The Saudis have been talking up the prospects of a deal, and now need to deliver on that or we could see a rapid retreat in the oil price."
Corporate news was thin on the ground.
AP Moeller-Maersk was on the front foot after the group said it is still considering several options in its strategic review following a media report it was looking into a two-way split into an energy and transport company.
BMW shares were in the red after Goldman Sachs downgraded the stock to 'neutral' from 'buy' and cut the price target on valuation grounds.
In London, William Hill rallied after Rank Group and 888 Holdings abandoned their proposed tie-up with the bookmaker, which said on Thursday that it now expects operating profit for 2016 to be at the top end of the previously guided range of £260m to £280m.
Data released earlier by Destatis showed German producer prices ticked higher in July.
The index of producer prices for industrial products was up 0.2%, following a 0.4% increase in June and May. Economists had been expecting the index to nudge up 0.1%.
Compared to July 2015, the index of producer prices was down 2%, which was a touch less steep than the 2.1% drop pencilled in by economists. |
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| | US Market Report | | US open: Stocks drop as traders monitor oil prices, weigh earnings US stocks were lower on Friday as oil prices wavered and traders waded through corporate earnings.
At 1449 BST, the Dow Jones Industrial Average fell 0.56% to 18,492.79 points, the S&P 500 dropped 0.54% to 2,175.28 points and the Nasdaq declined 0.42% to 5,218.10.
At the same time, oil prices were volatile as the dollar strengthened and investors looked ahead to an unofficial OPEC meeting next month, with hopes of a deal on stabilising the market. Brent crude fell 0.09% to $50.84 per barrel and West Texas Intermediate increased 0.37% to $48.40 per barrel at 1430 BST.
The dollar was higher against other major currencies, rising 1.01% against the pound, increasing 0.30% versus the euro and climbing 0.38% against the yen.
Meanwhile, the Baker Hughes oil rig count data at 1800 BST will be closely eyed. An eighth consecutive weekly rise may further alleviate some of the upward pressure on oil prices.
In the absence of any other US data, the market also continued to mull the Federal Reserve's July meeting minutes, which showed policymakers were divided on the timing of the next interest rate hike.
"On a quiet Friday, focus will remain on the oil market and the Fed as traders try to dissect the wide ranging views of policy makers in order to anticipate when the next rate hike will actually happen.
"We had more comments from policy makers on Thursday but once again, there was no consistent messages and John Williams - who earlier in the week sent the dollar into a tailspin after suggesting that the inflation target should be higher, which suggested there was little desire to raise rates - claimed there should be a hike sooner rather than later.
"Meanwhile we also heard from a couple of his colleagues - William Dudley and Robert Kaplan - and again the message wasn't necessarily consistent with Dudley reiterating that the US economy is strong, as displayed by the labour market data, while Kaplan claimed that while there is some room for manoeuvre on interest rates, it's limited. With other messages from policy makers being more inconsistent again, it's no surprise that the markets are changing their mind on the timing of the next hike on almost a daily basis."
Corporate results were also in focus.
Footlocker shares advanced after reporting second quarter results that beat expectations. In the six months ended 30 July, earnings rose to $127m or 94 cents a share, from $119m or 84 cents a share in the same period last year.
Deere & Company rallied as the maker of agricultural machinery reported a 1.3% increase in earnings per share in the third quarter to $1.55, surpassing estimates of 95 cents.
Estee Lauder declined as it revealed quarterly net income fell to $93.5m from $153m a year earlier, due to restructuring and other charges. The beauty products manufacturer also predicted fiscal 2017 adjusted profit which fell short of analysts' forecasts. |
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| | Broker Tips | | Broker tips: Gem Diamonds, Glencore, KAZ Minerals RBC Capital Markets downgraded Gem Diamonds to 'sector perform' from 'outperform' and slashed the price target to 130p from 170p.
The bank said the investment thesis for Gem revolves around the Letseng mine in Lesotho.
It said the Ghaghoo mine in Botswana is a drag on valuation, consumes cash and will struggle to generate decent returns even on its written-down value.
"Letseng, on the other hand, continues to achieve sound prices and is moving into an area which should produce more large stones.
"But higher capex ($16.7m) for a new fleet workshop due to the pushback of the Satellite pit and near-term caution about rough prices have contributed to our lower price target and downgraded recommendation."
RBC said the medium-term outlook for rough diamond demand and prices appears sound provided demand in China recovers.
In addition, it said the market for Letseng goods appears to be well-based and it sees relatively stable prices for the output.
Macquarie downgraded its recommendation on shares of Glencore to 'neutral', telling clients that the commodity trader's "impressive debt reduction is now largely priced-in".
However, analysts Alon Olsha and James Oberholzer bumped up their target on the stock from 180p to 200p.
The company quickly set itself apart from its peers with its debt reduction plans, despite being greeted with some incredulity by markets, the analysts said. Just over ten months on no other outfit has slashed its gearing as quickly or by as much as Glencore and the scope for a further reduction remains high, Olsha and Oberholzer said in a research note sent to clients and dated 18 August.
"Indeed, we believe that management's credibility has been restored and even burnished by solid execution of their realistic and value-preserving crisis plan."
Macquarie forecast the trader would be able to cut its net debt to $16.8bn for fiscal year 2016, to just below the company's guidance of between $17bn-$18bn. However, should the firm manage to hive off its Vasilkovskoye gold mine then net debt could fall to as low as $15.0-15.5bn.
For its part, the broker only expected a streaming deal for Vasilkovskoye.
Nevertheless, following the sale of an approximately 10% stake in agricultural unit disposals has dried up. That was in part a result of improved market conditions and thus better free cash flow, which meant the pressure on Glencore to divest assets had lessened, according to the analysts.
"Nevertheless, fewer asset sales reduce the number of stock catalysts and limit the scope for guidance-beating debt reduction, in our view."
With a view to the company's interims on 24 August, Macquarie said the key areas to focus on would be its marketing EBIT guidance, an update on asset sales and guidance on when it expects to resume the roughly 500kt of zinc output cut last year.
The latter would be be important to influencing zinc market sentiment and the outlook for fiscal year 2017 earnings, Macquarie said.
Credit Suisse upgraded KAZ Minerals to 'outperform' from 'neutral' and lifted the price target to 250p from 165p saying development risks are receding.
"Our concerns around KAZ have centred around execution risks at the two main growth projects and funding risks due to high levels of debt. Both are diminishing in our view and, alongside better than expected earnings we upgrade to outperform."
CS said it remains cautious on copper prices over the next 12 months but pointed out that a third of KAZ revenues are from gold/silver/zinc, cash costs are low and copper production is set to double in the next two years.
The bank noted that the first of the two major projects, Bozshakol, is close to reaching commercial production, and the ramp-up has largely gone to plan.
Meanwhile, Aktogay has a very similar design and scale and the lessons learned from Bozshakol should lead to a similar ramp-up period through 2017.
"Cost performance at the projects and existing mines was better than expected in H116 and we have reduced our unit cost estimates over the forecast period (we previously had a buffer above company guidance)."
On Thursday, KAZ reported a rise in first-half earnings and said its new Bozshakol project is on track for commercial output in the second half.
For the six months to the end of June, the copper miner said core profit rose to $115m from $88m in the same period last year. Pre-tax profit surged to $91m fro $2m last year. | | |
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