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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: FTSE closes lower as pound surges London stocks closed in the red on Thursday as an upbeat report on UK manufacturing sent the pound higher, amid weak data out from the US and China.
The FTSE 100 ended down 0.52% to 6,745.97 points.
The pound jumped 1.18% against the dollar to $1.3293 and increased 0.87% versus the euro to $1.1877 in afternoon trade after data showed UK manufacturing activity improved more than expected in August.
The Markit/CIPS UK manufacturing purchasing managers' index climbed to a 10-month high of 53.3, recovering from the 41-month low of 48.3 hit in July following the EU referendum. Economists had been expecting a reading of 49.0. A level above 50.0 signals an expansion in sector activity while a reading below that indicates a contraction.
"Perhaps the big news of the day was the UK's manufacturing PMI, which soared in August and saw traders rush to buy the pound," said IG's chief market analyst Chris Beauchamp.
"Mark Carney might be feeling a little bit nervous about his decision to go for QE so soon after Brexit, but for the mid-cap index the reading was a cause for rejoicing and a reason to buy up anything and everything connected with the UK economy."
Meanwhile, the International Monetary Fund warned in a report that it will likely downgrade its 2016 global growth forecasts again in early October due to the knock-on effects of Brexit and a slower-than-expected rate of expansion in the US. However, the Fund said financial markets had stabilised after the turmoil seen in the days after the UK's EU referendum on 23 June.
Elsewhere, China's official manufacturing PMI rose to 50.4 in August from 49.9 a month earlier. Analysts had expected no change to the reading.
The Caixin China manufacturing PMI, a separate private gauge of activity in the sector, dropped to 50.0 in August from 50.6 in July.
The official PMI for non-manufacturing was also released, showing a drop to 53.5 in August from 53.9 in July.
In the Eurozone, Markit's final eurozone manufacturing PMI came in at 51.7 in August, marking a three-month low. This was down from the flash estimate of 51.8 and July's reading of 52.0.
Stateside, Markit's final manufacturing PMI fell to 52.0 in August from 52.9 the month before and the flash estimate of 52.1.
Separate figures from the Institute for Supply Management showed growth in the US economy's manufacturing sector slipped a lot more than expected in August, moving into contraction territory. The ISM index of national factory activity fell to 49.4 from 52.6 in July, missing expectations for a reading of 52.0.
More positively, the US weekly jobless claims rose less than expected. The Labor Department said initial jobless claims increased 2,000 to a seasonally adjusted 263,000 in the week ended 27 August, compared to analysts' forecasts of 265,000. The previous week's reading was unrevised.
On the corporate front, housebuilders rallied with Berkeley, Taylor Wimpey, Persimmon and British Land all sharply higher, a day after Nationwide revealed that UK house prices rose more than expected in August despite Brexit uncertainty. Traders also attributed the sector's strength to the strong UK manufacturing figures out earlier in the session.
Berkeley Group rose as investors shrugged off the news it was likely to drop out of the FTSE 100.
Dixons Carphone was boosted as Deutsche Bank, which rates the stock at 'buy', said it was well placed to weather any potential consumer weakness in the UK and continue to see significant growth in its services strategy.
On the downside, Hikma Pharmaceuticals slumped as it went ex-dividend, followed by BHP Billiton.
AstraZeneca was in the red after saying it has completed its commercialisation agreement with Aspen Global Incorporated, for rights to its global anaesthetics portfolio outside the US. |
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| Market Movers
FTSE 100 (UKX) 6,745.97 -0.52%
FTSE 250 (MCX) 17,849.63 0.66%
techMARK (TASX) 3,419.89 -0.66%
FTSE 100 - Risers
GKN (GKN) 325.30p 4.60%
Berkeley Group Holdings (The) (BKG) 2,775.00p 3.85%
Taylor Wimpey (TW.) 165.60p 2.67%
Persimmon (PSN) 1,870.00p 2.52%
ITV (ITV) 205.50p 2.39%
3i Group (III) 629.00p 2.36%
Lloyds Banking Group (LLOY) 60.64p 2.17%
easyJet (EZJ) 1,129.00p 2.17%
Hammerson (HMSO) 591.50p 1.98%
Associated British Foods (ABF) 3,100.00p 1.94%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 2,078.00p -2.90%
Vodafone Group (VOD) 223.35p -2.83%
GlaxoSmithKline (GSK) 1,599.50p -2.41%
Royal Dutch Shell 'B' (RDSB) 1,900.00p -2.16%
Royal Dutch Shell 'A' (RDSA) 1,820.50p -2.15%
BP (BP.) 418.75p -2.14%
Mediclinic International (MDC) 1,002.00p -1.96%
AstraZeneca (AZN) 4,821.00p -1.79%
TUI AG Reg Shs (DI) (TUI) 1,046.00p -1.60%
Centrica (CNA) 228.90p -1.59%
FTSE 250 - Risers
Allied Minds (ALM) 344.30p 6.00%
Sports Direct International (SPD) 315.00p 5.95%
Diploma (DPLM) 880.00p 5.90%
IP Group (IPO) 200.00p 5.26%
Safestore Holdings (SAFE) 390.70p 4.94%
Workspace Group (WKP) 718.50p 4.66%
Mitchells & Butlers (MAB) 268.00p 4.24%
Hochschild Mining (HOC) 250.80p 4.24%
PayPoint (PAY) 1,021.00p 4.18%
Brewin Dolphin Holdings (BRW) 275.30p 3.85%
FTSE 250 - Fallers
Ascential (ASCL) 255.00p -3.77%
JRP Group (JRP) 94.95p -3.11%
Vectura Group (VEC) 127.00p -3.05%
Stagecoach Group (SGC) 220.80p -2.99%
CMC Markets (CMCX) 277.60p -2.39%
Grafton Group Units (GFTU) 535.00p -2.28%
Tullett Prebon (TLPR) 373.80p -2.02%
G4S (GFS) 226.30p -1.86%
Evraz (EVR) 126.00p -1.56% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Weak global factory data weighs on stocks European stocks started the month of September on a mixed note, with miners providing support as investors digested some mixed Chinese data and a poor reading on US manufacturing ahead of a key report on the state of America´s jobs market due the next day.
The benchmark Stoxx Europe 600 index edged higher by 0.04%, Germany's DAX was 0.55% lower and France's CAC 40 was up 0.03%. In terms of sectors, the Stoxx 600 basic resources index was up 0.88% as metals prices bounced back in most cases.
Weaker than expected factory data Stateside cut short a rally in crude oil futures from the previous session's losses. West Texas Intermediate was down 2.76% at $43.50 a barrel and Brent crude was down 2.63% to $45.69.
"September, officially one of the worst months for stock markets, begins with a bang this year," said Lee Wild, heady of equity strategy at Interactive Investor.
"Friday's US jobs report is the first piece of major data, and its significance cannot be understated. A higher number will likely trigger an increase in US interest rates in three weeks' time, the first since December, putting equity markets under pressure.
Stocks have already struggled this week as traders take money off the table, just in case there's a nasty surprise. And that's probably wise given the unpredictable nature of August payrolls. Talk is that 200,000 or more makes higher rates this month a dead cert."
An official survey in China showed factory activity in the world's second-largest economy grew at its fastest rate in nearly two years last month.
The official purchasing managers' index rose to 50.4 in August from 49.9 in July, marking its best level since October 2014. It was also ahead of economists' expectations for an unchanged reading.
However, the Markit/Caixin PMI fell to 50 in August from 50.6 in July, missing expectations for a reading of 50.1.
Finally, the official services PMI declined to 53.5 from 53.9 the month before.
Back in Europe, Markit's final eurozone manufacturing purchasing managers' index came in at 51.7 in August, marking a three-month low.
This was down from the flash estimate of 51.8 and July's reading of 52.0.
Still, the PMI has now signalled growth for 38 consecutive months, marking a continuation of its survey-record unbroken sequence above the 50.0 stagnation mark.
Chris Williamson, chief business economist at IHS Markit said: "Eurozone manufacturers reported a wavering performance in August, with signs that growth could slow further in coming months. The rate of expansion dipped to a three-month low but is at least holding up in the face of the uncertainty caused by the UK's vote to leave the EU. The survey indicates that factory production is growing at a steady though unexciting annual rate of just under 2%.
"There is some suggestion of a Brexit impact, however, and growth may wane further in September after new orders growth slipped to a one-and-a-half year low."
The news Stateside was worse, with the equivalent ISM PMI retreating from a reading of 52.6 in July to 49.4 in August (Consensus: 52.0). Data on construction spending for July and second quarter unit labour costs were also worse than anticipated.
In corporate news, distiller Pernod Ricard racked up healthy gains as it posted a rise in full-year profit but said sales of its two largest brands dropped.
Shares in Roche slipped after the Swiss drug maker said its cancer immunotherapy Tecentriq extends survival in lung cancer.
Radiation therapy equipment maker Elekta rallied as its first-quarter core profit beat analysts' expectations.
FTSE 250 recruiter Hays was in the red despite reporting a rise in profit for the year to the end of June as net fee income grew. |
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| | US Market Report | | US open: Stocks waver on mixed economic data US stocks were mixed on Thursday as traders weighed worse-than-expected manufacturing data against a better-than-expected report on weekly jobless claims.
At 1510 BST, the Dow Jones Industrial Average rose 0.1% to 18,402.04 points, the S&P 500 fell 0.04% to 2,169.95 points and the Nasdaq increased 0.14% to 5,221.80 points.
Oil prices plummeted after official data on Wednesday showed weekly crude inventories rose more than expected, adding to worries about the global supply glut. West Texas Intermediate crude dropped 1.08% to $44.22 per barrel and Brent declined 1.14% to $46.36 per barrel at 1514 BST.
On the data front, the Labor Department said initial jobless claims increased 2,000 to a seasonally adjusted 263,000 in the week ended 27 August, compared to analysts' forecasts of 265,000. The previous week's reading was unrevised.
Continuing jobless claims rose by 14,000 to 2.16m in the week ended 20 August.
"The low level of initial claims shows that workers are not losing their jobs in large numbers, while the low level of continuing claims indicates that those workers who do get laid off are likely finding employment and are therefore leaving the unemployment insurance rolls, outside of the manufacturing states mentioned above," said Barclays Research.
The figures come ahead of the all-important US non-farm payrolls report on Friday, which will be closely monitored after Federal Reserve chair Janet Yellen said the next interest rate hike depends on the strength of incoming data.
Meanwhile, Markit's final US manufacturing purchasing managers' index fell to 52.0 in August from 52.9 the month before and the flash estimate of 52.1.
Still, it remained above the 50.0 mark that separates contraction from expansion.
Separate figures from the Institute for Supply Management showed growth in the US economy's manufacturing sector slipped a lot more than expected in August, moving into contraction territory.
The ISM index of national factory activity fell to 49.4 from 52.6 in July, missing expectations for a reading of 52.0.
Elsewhere, China's official manufacturing PMI rose to 50.4 in August from 49.9 a month earlier. Analysts had expected no change to the reading.
The Caixin China manufacturing PMI, a separate private gauge of activity in the sector, dropped to 50.0 in August from 50.6 in July.
The official PMI for non-manufacturing in China was also released, showing a drop to 53.5 in August from 53.9 in July.
In corporate news, Campbell Soup shares plunged after reporting an unexpected drop in quarterly profit and providing a full year outlook that fell short of market forecasts.
Vera Bradley shares jumped as the luxury handbag maker posted quarterly revenue and net income that beat analysts' estimates.
Cloud computing software firm Salesforce.com slumped after issuing weaker-than-expected guidance for the current quarter late on Wednesday. |
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| | Broker Tips | | Broker tips: Lancashire Holdings, Grafton Group, Gym Group RBC Capital Markets upgraded Lancashire Holdings to 'sector perform' from 'underperform' and lifted the price target to 625p from 500p.
"Whilst we had always seen Lancashire as a high quality underwriting operation, company-specific issues at the end of 2015 led to our 'underperform' rating. We believe that these issues are now behind us and upgrade," the Canadian bank said.
RBC said it sees less severe premium declines going forward. It pointed out that last year was particularly difficult for the group as premiums fell 30%. A large part of this drop due to energy insurance pricing and premiums coming off materially following the fall in the oil price.
However, RBC reckons pricing in energy insurance is likely to have bottomed out given the price declines seen at the end of 2015 and beginning of this year and some of the large losses seen in the market year to date.
"We now believe that Lancashire will be more willing to defend its premium base than our previous expectation and now see premiums falling less rapidly."
RBC highlighted the departure of a number of senior staff at Lancashire subsidiary Cathedral since the end of 2015 and said the insurer has since hired a number of individuals with excellent industry CVs.
"Although some of the new underwriters will not join the business until later in the year, we expect that Cathedral should be able to defend its premiums to a greater extent than we had previously expected."
Grafton Group's shares dropped on Thursday as Canaccord Genuity cut its rating on the stock to 'hold' from 'buy' and lowered its target to 595p from 640p.
The builders merchant on Wednesday reported a 8% rise in first half pre-tax profit to £62.8m as revenue grew 13% to £1.2bn, thanks in part to strong growth in the Netherlands and Ireland. However, the company warned of a challenging backdrop in UK merchanting.
"Grafton has a strong balance sheet and is seeing strong recovery in both sales and margins in Ireland," Canaccord said.
"However, the group posted a disappointing UK margin performance and the UK macro outlook remains unclear. While Selco (fixed price format business model within UK Merchanting) is performing well in the UK, the planned step up in Selco branch openings will result in an incrementally higher negative profit impact in the near term."
The broker added that the traditional merchant business models in the UK Merchanting division, mainly Plumbase, are performing less well in a competitive market.
In the near term the broker expects the UK market will remain competitive and the group's organisational restructuring will take time to come through.
However, Canaccord believes over the medium term the group has a "strong position in many of its markets and the shares offer value, assuming it successfully improves the financial performance of its weaker UK businesses".
In the meantime the share price is expected to remain volatile until the macro outlook into 2017 become clear.
Canaccord reduced its estimates for earnings per share in 2016 and 2017 to 41.8p and 42.4p from an earlier forecast of 44.8p and 47.2p, respectively.
"With earnings now expected to be broadly flat in 2017, we do not see why the group should trade at a premium to sector peers and cut our price target to 595p (from 640p) and downgrade our rating to 'hold' (from 'buy')."
The Gym Group's shares were given a lift after Numis reiterated a 'buy' rating and target of 275p, saying the business has an "impressive record of profitable growth".
"The Gym Group is growing rapidly in the UK with a disruptive model based on an affordable, flexible subscription offer and the intelligent use of technology," Numis said.
"It has established itself as a leader in a vibrant low-cost segment which has revolutionised the fitness market in the UK by both growing the market and taking share from traditional operators."
The company, which listed on the London Stock Exchange in November, reported on Wednesday a rise in half year revenue as it swung to a profit and announced a maiden interim dividend.
In the six months to the end of June, revenue rose 25.1% from the same period last year to £36.1m as adjusted pre-tax profit came in at £4.6m versus a loss of £0.8m.
The group declared a maiden interim dividend of 0.25p per share.
The firm opened six new gyms in the period, taking its total estate to 80. It also saw a 19.4% increase in membership numbers versus the previous year to 424,000.
"Recent interims (31 Aug) were encouraging and confirmed Gym's strong trading momentum. Structural growth opportunities for low-cost gym operators (where Gym is the strong market No.2) continue to be very promising, in our view," Numis said. | | |
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