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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: Miners lead stocks lower as oil prices plunge London stocks fell on Wednesday, led by mining shares, as oil prices tanked and as traders sifted through mixed economic data.
The FTSE 100 closed down by 39.28 points or 0.58% at 6,781.51. The pound rose 0.31% against the dollar to $1.3121.
At the same time, oil prices fell after official data showed weekly crude inventories rose more than expected, adding to worries about the global supply glut. The Energy Information Administration said crude inventories increased by 2.3m barrels last week to 525.9m barrels, more than the forecast for a 1.3m gain.
Brent crude plunged 2.5% to $47.10 per barrel and West Texas Intermediate dropped 3.1% to $44.94 per barrel at 1609 BST.
IG market analyst Joshua Mahony said: "The ghost of oversupply has not been laid to rest, indeed it seems to be returning with a vengeance. A rising US dollar and falling oil prices would potentially be a dangerous combination, threatening to unwind the gains made in equity markets over the summer. OPEC needs to do something, and quickly, but given their inability to reach a compromise, any action is still unlikely."
Mining stocks were the biggest fallers on the FTSE as analysts at Clarksons Platou Securities said iron ore prices could drop below $50 a metric ton before the year-end, although their peers at Macquarie appeared to be more sanguine.
Anglo American, Fresnillo and Antofagasta shares nevertheless declined.
Analysts at Maquarie reaffirmed their view that iron ore prices would stabilise closer to $50 per tonne, pointing to a recent pick-up in the total shipping rate for iron ore to back-up their assessment.
BHP Billiton slumped on news it is set to strip chief executive Andrew Mackenzie of his annual bonus following the publication of a report into failures at the mining group's Brazilian joint venture that led to last year's collapse of a dam that killed 19 people.
Going the other way, banking stocks rallied following reports Deutsche Bank and Commerzbank had held talks on a potential merger but concluded it wasn't a viable option.
Barclays, HSBC, Lloyds and Royal Bank of Scotland were on the FTSE 100 leader-board.
Elsewhere, Restaurant Group shares fell as Citigroup downgraded its stance on the stock to 'sell' from 'neutral' and cut the price target to 320p from 350p.
Grafton Group edged lower as the builders merchant warned of a challenging backdrop in UK merchanting.
On the data front, GfK's headline UK consumer confidence index rose five points to -7 in August, which was slightly above consensus expectations of -8 but still well below the 12-month average of -1.
All five measures used to calculate the index increased in August, with the index of major purchases up nine points at +7 and the personal financial situation index up one point to 0.
In contrast, UK business confidence dipped in August, according to a survey. The Lloyds Business Barometer fell to 16% in August from 29% in July amid worries about Brexit affecting the economic outlook.
Nationwide revealed UK house price growth accelerated in August at 5.6% year-on-year and 0.6% month-on-month, compared to July's 5.2% year-on-year and 0.5% month-on-month gains.
In the Eurozone, the flash estimate of inflation came in lower than expected for August. Eurostat said inflation was stable compared with July at 0.2%, which was below economists' expectations of 0.3%, as prices of food, industrial goods and services rose less than the previous month. Core inflation - which strips out energy - was down to 0.8% from 0.9%, below estimates for it to remain unchanged.
Stephen Brown, European economist at Capital Economics, said: "The unchanged headline inflation rate in August highlights the fact that price pressures in the Eurozone remain weak and boosts the case for more monetary easing from the ECB."
The euro area unemployment rate came in at 10.1%, steady compared to June and down from 10.8% in July last year. It fell short of analysts' expectations for a nudge down to 10%.
In the US, private employers added 177,000 jobs in August, more than the 175,000 expected by analysts, the ADP revealed. July was revised to194,000 jobs from a previous estimate of 179,000.
The report comes ahead of the US Labor Department's non-farm payrolls report, which will be closely scrutinised after Federal Reserve chair Janet Yellen said the next interest rate hike depends on the strength of incoming data.
"The afternoon's main piece of data, the ADP non-farm employment change figure, failed to provide investors with much guidance for either Friday's government-released number or the likely timeline of a Fed rate hike," said Connor Campbell, financial analyst at Spreadex.
US pending home sales rose more than expected in July, but June's figure was revised down, according to data from the National Association of Realtors (NAR).
The NAR's monthly index increased 1.3% to 111.3 in July from a downwardly-revised 109.9 in June, beating expectations for a 0.7% jump.
Separately, data showed economic activity in the Chicago area deteriorated more than expected in August.The Chicago Purchasing Managers' index fell to 51.5 from 55.8 in July, led by a large setback in order backlogs and a deceleration in new orders. Economists had been expecting a smaller decline to 54.0. |
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| Market Movers
FTSE 100 (UKX) 6,781.51 -0.58%
FTSE 250 (MCX) 17,732.77 -0.64%
techMARK (TASX) 3,442.45 -0.63%
FTSE 100 - Risers
Berkeley Group Holdings (The) (BKG) 2,672.00p 2.97%
TUI AG Reg Shs (DI) (TUI) 1,063.00p 2.31%
Tesco (TSCO) 166.35p 1.87%
Barclays (BARC) 172.25p 1.83%
Standard Life (SL.) 364.50p 1.67%
Direct Line Insurance Group (DLG) 369.00p 1.54%
Standard Chartered (STAN) 642.00p 1.47%
Babcock International Group (BAB) 1,046.00p 1.36%
HSBC Holdings (HSBA) 564.30p 1.22%
Marks & Spencer Group (MKS) 344.70p 1.09%
FTSE 100 - Fallers
Fresnillo (FRES) 1,606.00p -4.97%
BHP Billiton (BLT) 989.90p -4.86%
Anglo American (AAL) 779.80p -4.61%
Antofagasta (ANTO) 494.70p -3.28%
Randgold Resources Ltd. (RRS) 7,150.00p -2.85%
International Consolidated Airlines Group SA (CDI) (IAG) 383.00p -2.49%
Bunzl (BNZL) 2,358.00p -2.28%
Travis Perkins (TPK) 1,665.00p -2.17%
Royal Dutch Shell 'A' (RDSA) 1,860.50p -2.13%
Rio Tinto (RIO) 2,301.00p -2.11%
FTSE 250 - Risers
St. Modwen Properties (SMP) 285.50p 4.07%
Safestore Holdings (SAFE) 372.30p 2.62%
Aldermore Group (ALD) 163.50p 2.00%
Polypipe Group (PLP) 293.80p 1.90%
P2P Global Investments (P2P) 837.50p 1.89%
Wizz Air Holdings (WIZZ) 1,597.00p 1.78%
CMC Markets (CMCX) 284.40p 1.75%
DFS Furniture (DFS) 270.90p 1.73%
Homeserve (HSV) 566.00p 1.71%
Unite Group (UTG) 626.50p 1.70%
FTSE 250 - Fallers
Grafton Group Units (GFTU) 547.50p -9.95%
Allied Minds (ALM) 324.80p -7.49%
Restaurant Group (RTN) 372.50p -5.93%
Polymetal International (POLY) 1,053.00p -5.56%
Hochschild Mining (HOC) 240.60p -5.54%
Carillion (CLLN) 260.20p -4.41%
Inmarsat (ISAT) 771.00p -4.22%
Centamin (DI) (CEY) 148.50p -3.76%
Vedanta Resources (VED) 491.70p -3.68%
Tullow Oil (TLW) 217.90p -3.67% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed amid poor economic data European stocks were mixed on Wednesday as investors digested some uninspiring eurozone inflation and unemployment data, ahead of Friday´s key US jobs report and weighed down by a fall oil prices.
The benchmark Stoxx Europe 600 index closed , Germany's DAX was 0.61% weaker and France's CAC 40 was down 0.43%. Milan´s FTSE Mibtel on the other hand gained 0.31%.
Oil prices were in a funk following a second consecutive week of increasing stockpiles in the States. West Texas Intermediate was down 3.7% to $44.71 a barrel while Brent crude was 2.8% lower at $47.04.
In terms of sectors, miners were under pressure after analysts at Clarksons Platou Securities said iron ore prices could drop below $50 a metric ton before the year-end. The Stoxx 600 basic resources index fell 2.7%.
In corporate news, Commerzbank and Deutsche Bank racked up healthy gains after Germany's Manager Magazin reported that DB had in the past looked at the possibility of a merger with Commerzbank. However, Deutsche's chief executive later dismissed the idea.
Nevertheless, the Stoxx 600 gauge of bank stocks gained 1.79%.
Iliad was on the front foot as the French phone carrier posted a rise in first-half sales and earnings.
French telecommunications company Bouygues was also in the black as it said net profit in the second quarter increased and stuck to its full-year revenue and earnings targets.
888 Holdings rallied as favourable sports results and strong casino winnings lifted its first-half numbers, helping to make up for its failed plot to buy William Hill.
Diploma edged higher as it said underlying sales grew 2% in the year to September, with acquisitions and the weak pound helping to lift statutory revenues 14%.
FTSE 250 builders merchant Grafton Group tumbled as it reported a rise in first-half pre-tax profit as revenue grew thanks in part to strong performances in the Netherlands and Ireland, but warned of a challenging backdrop in UK merchanting.
On the macroeconomic front, data from Eurostat showed the eurozone unemployment rate was unchanged in July.
The unemployment rate came in at 10.1%, steady compared to June and down from 10.8% in July last year. It fell short of analysts' expectations for a nudge down to 10%.
Meanwhile, inflation in the block came in lower than expected for August, according to a flash estimate by Eurostat, which could prompt the European Central Bank into action.
Year-over-year consumer price inflation was stable compared with July at 0.2%, which was below economists' expectations of 0.3%, as prices of food, industrial goods and services rose less than the previous month. |
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| | US Market Report | | US open: Stocks fall as investors shrug off upbeat private payrolls data US stocks fell on Wednesday as investors shrugged off better-than-expected private payrolls data and looked ahead to the more important non-farm payrolls report.
The Dow Jones Industrial Average shed 0.27% to 18,409.44 points, the S&P 500 dropped 0.26% to 2,170.49 and the Nasdaq slipped 0.20% to 5,212.59 points at 1530 BST.
At the same time oil prices fell as data showed weekly crude inventories rose more than expected, with West Texas Intermediate crude down 0.91% to $45.93 per barrel and Brent down 1.17% to $47.81 per barrel at 1536 BST. The Energy Information Administration said crude inventories increased by 2.3m barrels last week to 525.9m, more than the forecast for a 1.3m gain.
US private employers added 177,000 jobs in August, more than the 175,000 expected by analysts, the ADP revealed. July was revised to194,000 jobs from a previous estimate of 179,000.
The report comes ahead of the US Labor Department's non-farm payrolls report, which will be closely scrutinised after Federal Reserve chair Janet Yellen said the next interest rate hike depends on the strength of incoming data.
"The afternoon's main piece of data, the ADP non-farm employment change figure, failed to provide investors with much guidance for either Friday's government-released number or the likely timeline of a Fed rate hike," said Connor Campbell, financial analyst at Spreadex.
"Coming in at 177k the reading was a tad higher than the 174k expected, but a fair bit lower than the upward-revised 194k from last month. As shown by that revision it is difficult to use the ADP figure as an accurate gauge for the actual non-farm jobs report, with it usually failing to pre-emptively reflect the kind of swings seen in the Friday-favourite. "
Boston Fed President Eric Rosengren said on Wednesday at an event in China that the central bank was close to achieving its employment and inflation target, hinting that policy tightening is on the horizon.
In contrast, Chicago Fed President Charles Evans suggested he was in no rush to tighten policy while speaking at the same event.
Meanwhile, US pending home sales rose more than expected in July, but June's figure was revised down, according to data from the National Association of Realtors (NAR).
The NAR's monthly index increased 1.3% to 111.3 in July from a downwardly-revised 109.9 in June, beating expectations for a 0.7% jump. The index is now at its second-highest level this year after April's 115.0.
Separately, data showed economic activity in the Chicago area deteriorated more than expected in August.
The Chicago Purchasing Managers' index fell to 51.5 from 55.8 in July, led by a large setback in order backlogs and a deceleration in new orders. Economists had been expecting a smaller decline to 54.0.
On the company front, Palo Alto Networks Inc. shares fell after the cybersecurity firm late Tuesday issued a downbeat outlook on the current quarter.
AeroVironment Inc. slumped after the drone maker reported a 23% drop in quarterly revenue. |
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| | Broker Tips | | Broker tips: Restaurant Group, AB Foods, Petrofac Restaurant Group shares fell on Wednesday as Citigroup downgraded its stance on the stock to 'sell' from 'neutral' and cut the price target to 320p from 350p.
The bank said that while there may be valuation support on a sum-of-the-parts basis, the company still faces significant trading headwinds, with limited near-term positive catalysts.
"Whilst we think recent management appointments of a new CFO and CEO are positive steps in the group's rehabilitation, we suggest there could be further store closures and exceptional costs as new management looks to revitalise the leisure operations."
"Restaurant Group's share price has bounced over 50% of late. Given this significant move, and our view that the group faces ongoing operational headwinds, we downgrade the stock to sell."
Last week, Restaurant Group said it swung to a pre-tax loss in the first half on the back of restructuring costs as it announced the closure of outlets.
In the 27 weeks ended 3 July, the group posted a loss before tax of £22.5m compared to a pre-tax profit of £38m the year before.
Meanwhile, like-for-like sales were down 3.9%, and Restaurant Group said it plans to exit 33 underperforming sites immediately as it reckons they are incapable of generating adequate returns.
Berenberg downgraded its rating on Associated British Foods to 'hold' from 'buy' but lifted its target to 3,000p from 2,760p on Wednesday.
The broker said AB Foods shares are up 25% since hitting a post-Brexit vote low of 2,350 on 27 June when Berenberg upgraded the stock to 'buy' to reflect an "absurdly" low valuation of 20x price-earnings ratio in comparison to mid-2015 levels of over 30x.
"FX movements aside, little had changed in the underlying business during the period and indeed the outlook for group profits was being supported by a significant step-up in world sugar prices over the last year," Berenberg said.
On Berenberg's new forecasts, ABF trades on 25x calendar year 2017 price-earnings ratio, which the broker believes is "fair" for a 9% three-year forward earnings per share (EPS) compound annual growth rate.
In its third quarter update in early July, AB Foods said the UK's exit from the European Union will have limited impact on its business.
Since the referendum, the main impact on the group has been related to foreign exchange with the pound down 10% against the dollar and the euro. As a result ABF said it "no longer expects" to see a decline in the group's EPS due to the positive translation effect of profits outside the UK and no material impact on margins.
Berenberg estimates the group will also benefit from an increase in sugar profit.
The broker expects about 45% of AB Food's total sugar volumes and 35% of divisional sales come from its European operations.
"World sugar prices have increased by over 60% from the seven-year low levels in September 2015 supported by the prospect of a global supply deficit due to El-Nino-related dry conditions in some key markets."
Berenberg believes the company can achieve €550 per tonne on average, which would support an estimated £165m earnings before interest and tax in sugar for 2017.
"Our EPS forecasts increase by 3-5% in the outer years reflecting our expected increased Sugar profit impact and 3% growth in 2016.
"On a relative basis, the stock is trading on a 75% premium to the market compared to its 65% average premium since 2010 and on a 30% premium to European consumer staples compared to the its 25% average since 2010."
Deutsche Bank reiterated a 'hold' rating on Petrofac and raised its target to 900p from 770p on Wednesday.
The bank said the oil and gas services company is "slowly getting back on course but end market recovery remains elusive".
Petrofac's end markets offer little evidence of any pickup despite projects supposedly moving closer to realising awards, Deutsche Bank said.
Deutsche Bank said since there is a scarcity of awards, focus remains on reducing capital intensity and net debt via the disposal of Integrated Energy Services assets. Petrofac has exited the Berantai RSC contract in Malaysia and the Ticleni PEC contract in Romania to refocus on its core markets and reduce net debt.
"But these processes are unwieldy and likely to drag, weighing on earnings and crucially sentiment," the bank said.
"The valuation isn't stretched but getting back to its roots is slow and signs of an end market pickup is unclear,' hold'." | | |
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