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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 rally as traders assess earnings and data London stocks gained on Tuesday as traders waded through corporate earnings and mixed economic data.
Standard Life shares jumped after it reported an 18% increase in operating profit before tax for the first half thanks to diversification, as its assets under management grew. The insurer and asset manager declared an interim dividend of 6.47p per share, up 7.5% on the first half of last year.
Worldpay rallied after it posted a rise in first-half underlying earnings and pre-tax profit amid strength in all its businesses, as it declared a maiden interim dividend of 0.65p per share.
Legal & General shares headed in the opposite direction as the company painted a gloomy outlook due to uncertainty on the economy, financial markets and politics post Brexit. The FTSE 100 firm posted a mixed set of half year results, which included a slowdown in new client funds at the investment arm.
Meanwhile, banks were in the black as the Competition and Markets Authority ordered UK high street lenders to launch an open banking digital system for the customers by early 2018 to boost competition. Barclays and Royal Bank of Scotland were among the risers.
EasyJet flew higher after Cantor Fitzgerald upgraded the stock to 'buy' from 'hold' and lifted the price target to 1,300p from 1,200p.
Morrison Supermarket and Ocado gained on a new deal between the two. Morrison's has agreed to take 30% capacity of Ocado new customer fulfilment centre in Erith by 2018, bought a new 'store pick' software licence and eased previous restrictions on the online specialist working with other UK supermarkets.
On the macro-economic data front, the UK trade deficit widened in June as imports outpaced exports. The Office for National Statistics said the UK's deficit in goods trade widened to £12.4bn in July from £11.5bn in June. Economists had pencilled in a deficit of £10.1bn.
The ONS also revealed that UK industrial production remained stable on a month-to-month basis in the run-up to the Brexit vote. Industrial production in June rose by a slight 0.1%, in line with estimates and rebounding from the revised previous 0.6% decline the month before. On the year production increased 0.9% in June, missing forecasts for 1.3% growth and slowing from the previous month's 1.5% gain.
Since the ONS data largely covered the pre-EU referendum period, analysts took more interest in the July Retail Sales Monitor from the British Retail Consortium. The BRC-KPMG measure of like-for-like retail sales values rebounded to 1.1% year-over-year in July, thrashing the consensus forecast for a 0.7% decline.
"Although the month's warmer weather may have provided some support, the main takeaway was that, despite last week's gloomy consumer confidence data, thus far Brexit doesn't appear to have had a material impact on retail sales," said Martin Beck, senior economic advisor to the EY ITEM Club.
The latest estimates on UK gross domestic product (GDP) from the National Institute of Economic and Social Research (NIESR) were also in focus as they showed economic growth halved in the last three months, adding credence to predictions that the economy will contract in the third quarter and then fall into recession.
The NIESR calculated that GDP grew by 0.3% in the three months ending in July, down from 0.6% in the three months to end-June and short of consensus City forecasts for a 0.4% increase.
In the US, wholesale inventories rose a revised 0.3% in June, up from the initial estimate for no change, the Commerce Department said. May was also revised to a 0.2% gain from the previous estimate of a 0.1% increase.
The Labor Department said US productivity fell 0.5% in the second quarter, well below forecasts for a 0.4% increase and following a 0.6% drop the previous quarter.
The National Federation of Independent Business index on US small business optimism rose slightly to 94.6 in July from 94.5 in June, beating expectations for an unchanged reading.
In commodities, oil prices rose with Brent crude up 0.02% to $45.40 per barrel and West Texas Intermediate up 0.2% to $43.14 per barrel at 1641 BST. |
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| Market Movers
FTSE 100 (UKX) 6,852.79 0.64%
FTSE 250 (MCX) 17,679.79 0.70%
techMARK (TASX) 3,519.60 0.48%
FTSE 100 - Risers
Standard Life (SL.) 340.10p 6.78%
Royal Bank of Scotland Group (RBS) 193.00p 4.49%
easyJet (EZJ) 1,078.00p 3.75%
TUI AG Reg Shs (DI) (TUI) 1,016.00p 3.73%
Standard Chartered (STAN) 669.00p 3.02%
Worldpay Group (WI) (WPG) 309.00p 2.52%
Marks & Spencer Group (MKS) 338.70p 2.51%
Smiths Group (SMIN) 1,322.00p 2.48%
Barclays (BARC) 161.20p 2.41%
Tesco (TSCO) 158.10p 2.26%
FTSE 100 - Fallers
Legal & General Group (LGEN) 206.70p -5.23%
Carnival (CCL) 3,600.00p -2.07%
Sky (SKY) 898.00p -1.10%
Aviva (AV.) 418.50p -1.06%
Antofagasta (ANTO) 525.50p -1.04%
Paddy Power Betfair (PPB) 9,180.00p -0.60%
3i Group (III) 631.00p -0.47%
Travis Perkins (TPK) 1,558.00p -0.45%
Direct Line Insurance Group (DLG) 392.30p -0.38%
ITV (ITV) 198.80p -0.35%
FTSE 250 - Risers
Amec Foster Wheeler (AMFW) 521.00p 11.71%
Entertainment One Limited (ETO) 217.50p 9.90%
Ocado Group (OCDO) 293.00p 6.04%
Spirax-Sarco Engineering (SPX) 4,348.00p 6.00%
Tullow Oil (TLW) 220.20p 4.61%
Debenhams (DEB) 58.45p 4.56%
Petrofac Ltd. (PFC) 820.00p 4.33%
Marshalls (MSLH) 283.60p 4.00%
Polypipe Group (PLP) 265.20p 3.23%
Restaurant Group (RTN) 371.90p 3.13%
FTSE 250 - Fallers
SIG (SHI) 100.60p -6.07%
PayPoint (PAY) 989.00p -3.51%
JRP Group (JRP) 99.15p -2.51%
Sophos Group (SOPH) 226.30p -2.50%
Hastings Group Holdings (HSTG) 200.00p -2.44%
Galliford Try (GFRD) 988.00p -2.27%
Aberdeen Asset Management (ADN) 328.20p -2.21%
Tullett Prebon (TLPR) 351.50p -2.01%
Pendragon (PDG) 32.92p -1.99%
Genus (GNS) 1,901.00p -1.91% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Dax enters 'bull' market led by Munich Re, car-makers European stocks added to their recent gains as investors sifted through the latest batch of earnings reports, although traders noted the reduced trading volumes in their comments sent to clients.
The benchmark Stoxx Europe 600 index was up 0.92% or 3.14 points by the close at 344.67, while Germany's DAX powered ahead 2.50% to finish at 10,692.90 and France's CAC 40 was 1.19% firmer.
Frankfurt´s Dax was a notable gainer, closing at its best level of 2016 and in so-called 'bull market' territory after rising by 22% from its February lows. Carmakers paced gains on the heels of strong Chinese car sales figures, alongside a sharp rise in Munich Re stock on the back of its latest quarterly financials.
The Stoxx 600 Autos & Parts gauge advanced 2.16% to close at 493.16.
At the same time, oil prices drifted lower, with West Texas Intermediate down 0.444% at $42.78 a barrel and Brent crude off by 0.76% to $45.05.
Jasper Lawler, an analyst at CMC Markets, said: "markets are drifting listlessly higher amidst lower summer volumes towards the end of earnings season and no major market-moving data."
On the corporate front, telecoms company Altice surged after posting a jump in second-quarter core earnings, while Standard Life gained ground after saying operating profit before tax rose 18% in the first half thanks to diversification, as its assets under management grew.
Reinsurer Munich Re jumped 6% after its second-quarter profit exceeded analysts' expectations.
Morrisons pushed higher after the supermarket agreed a new deal with Ocado, ending their profit-sharing agreement but with the grocer taking roughly 30% capacity of the online specialist's new Customer Fulfilment Centre ("CFC") in Erith and increasing its Morrisons.com non-food range.
Payments processor Worldpay rallied after it reported a rise in underlying earnings and pre-tax profit amid strength in all its businesses and declared a maiden interim dividend of 0.65p per share, while Spirax-Sarco advanced after posting a jump in interim pre-tax profit.
On the downside, Pandora slid after the jewellery maker's second-quarter sales missed analysts' expectations.
Legal & General was under pressure despite posting an increase in first-half headline adjusted operating profit. |
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| | US Market Report | | US open: Stocks gain as traders digest data US stocks advanced on Tuesday as oil prices rose and investors digested mixed economic data.
The Dow Jones Industrial Average increased 0.17%, the S&P 500 gained 0.15% and the Nasdaq rose 0.26% at 1510 BST.
Oil prices also gained with West Texas Intermediate crude rising 0.87% to $43.40 per barrel and Brent crude climbing 0.50% to $45.62 per barrel at 1513 BST.
US wholesale inventories rose a revised 0.3% in June, up from the initial estimate for no change, the Commerce Department said Tuesday. May was also revised to a 0.2% gain from the previous estimate for a 0.1% gain.
Meanwhile, the Labor Department said US productivity 0.5% in the second quarter, well below forecasts for a 0.4% increase and following a 0.6% drop the previous quarter.
Productivity, which measures how much an employee produces in an hour of work, has been a major issue for the US economy over the past few years.
The data follows the non-farm payrolls report, which came in much better than expected on Friday with 255,000 jobs added to the economy in July, compared to forecasts of 185,000.
Separately, the National Federation of Independent Business index on US small business optimism rose slightly to 94.6 in July from 94.5 in June, beating expectations for an unchanged reading.
On the corporate front, Valeant Pharmaceuticals shares jumped after the drugmaker reiterated its full year guidance and said it would reorganise after reporting a wider loss in the latest quarter.
Resolute Energy jumped after the oil and gas company reported a narrower second quarter loss. |
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| | Broker Tips | | Broker tips: EasyJet, Rentokil, Meggitt EasyJet flew higher on Tuesday after Cantor Fitzgerald upgraded the stock to 'buy' from 'hold' and lifted the price target to 1,300p from 1,200p.
The brokerage said EasyJet's low-cost business model is resilient and has generated strong profits and taken significant market share in previous difficult macroeconomic environments.
It noted the stock is down 40% year-to-date due to concerns about trading, disruption to operations and Brexit.
"But we think that these concerns are overdone and the stock is oversold. We believe that travel spend across Europe will be more resilient than some investors fear.
"Moreover, EasyJet can use its financial strength to discount aggressively and build share. Our conservative forecasts build-in a weaker pricing scenario."
Cantor added that the stock is trading at a 24% discount to its five-year average price-to-earnings.
Credit Suisse raised its target on Rentokil to 235p from 225p on Tuesday and reiterated an 'outperform' rating for the pest control business.
The Swiss bank lifted its earnings per share estimates on Rentokil for fiscal years 2016-2018 by 3-5%, reflecting foreign exchange benefits, a lower tax rate and lower interest charge.
"We think that a stable set of core businesses (notably Pest Control and Hygiene) and strong cash generation will allow it to continue to reinvest excess cash into M&A, particularly in the Pest Control division," said Credit Suisse.
Pest Control now accounts for over 50% of revenues, including the recent acquisition on Residex.
Credit Suisse also believes Rentokil could take market share in the North American market as it benefits from its scale and brand relative to the numerous smaller operators and deepens its penetration within the National Accounts market.
"As market share grows we expect the underlying business to continue to grow margins."
Meggitt shares gained on Tuesday as JP Morgan upgraded the aerospace engineer to 'neutral' from 'underweight' and raised its target to 445p from 395p.
The upgrade came shortly after news that activist investor Elliott Capital Advisors bought a 5.2% stake in the business which last week reported a plunge in pre-tax profits amid a challenging market.
"We upgrade the stock to 'neutral' and increase our multiples-based December 2016 price target to 445p from 395p, reflecting the higher possibility of either: (1) internal changes in Meggitt's strategy; or (2) merger & acquisition activity," JP Morgan said. | | |
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