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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: Chinese data delivers boost to miners London stocks finished on a mixed note as metals' prices advanced on the back of stronger than expected Chinese economic data, aiding the Footsie, and investors took heart from solid jobs data at home.
The FTSE 100 index saw the day out with a gain of 19.36 points or 0.29% to 6,684.99, although the FTSE 250 drifted lower by 6.40 points or 0.04% to 17,654.64, with shares in challenger banks Shawbrook and CYBG acting as the biggest drag on the latter.
Oil prices fell back again, with West Texas Intermediate down by 2.2% to $43.94 a barrel while Brent crude retreated 1.9% to trade at $46.20 by the closing bell.
Weakness in the energy patch was attributed to fresh US government data published on Wednesday revealing a 35,000 barrel increase in US oil output to 8.493m barrels a day.
UK employment levels are weathering the early post-Brexit period, official figures showed, with the unemployment rate remaining unchanged at 4.9% in August, with jobless claims rising and average weekly earnings growth slipping only slightly.
Office for National Statistics (ONS) data showed the claimant count rose by a bigger-than-expected 2,400 after July's first drop in five months, though this had little effect on the claimant count rate of 2.2%.
"Today's UK jobs report for July supports holding off for now, with unemployment and earnings data showing no initial hit from Brexit," said analyst Craig Erlam at Oanda.
"Of course, this typically takes a little longer so we wouldn't expect to see anything significant at this point. The small increase in the claimant count is a small concern although unless a trend forms, we shouldn't get carried away with it. We've had a number of small increases over the last year as the pace of labour market improvement has slowed. This could just be another example of the slowdown."
With positive data emanating from China, including money supply and bank loan growth, Glencore led a cabal of commodities giants to the top of the FTSE leaderboard.
As of 1653 BST December 2016 copper futures on the COMEX were trading up by 2.45% $2.1530 a pound.
Housebuilders including Taylor Wimpey and Berkeley were lower after new housing minister Gavin Barwell gave a strong indication of a material shifting in housing policy, hinting that controversial Starter Homes scheme will be scrapped and the government will pursue policies to expand the public sector and private sector rental markets.
Analyst Robin Hardy at Shore Capital, who pointed out that housebuilders instead used the various government stimulus measures to create a golden trading environment with substantial benefits for margins, returns, cash flow and dividends, said the new policy direction "likely to see a change in the dynamics of the house builders' profitability especially if there is any adjustment to the scope and scale of Help-to-Buy".
However, construction group Galliford Try was topping the 250 list as it hoisted its dividend 21% after posting a record annual profit thanks to strong growth at its housebuilding and regeneration units.
Elsewhere, Compass Group gained ground after JPMorgan Cazenove upgraded the stock to 'overweight' from 'neutral'.
Going the other way, Ocado lost another 8%, sinking to its lowest point in a month after a downgrade to 'underperform' from 'neutral' from analysts at Exane.
Telecommunications company Sky nudged a touch lower after saying it has invested £1m in the Drone Racing League (DRL), which includes a distribution deal to show the league on the Sports Mix channel from October.
FTSE 250 homeware retailer Dunelm was little changed after reporting a rise in full-year profit and revenue as it grew its market share despite increasing competition, and lifted its dividend. |
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| Market Movers
FTSE 100 (UKX) 6,684.99 0.29%
FTSE 250 (MCX) 17,654.64 -0.04%
techMARK (TASX) 3,456.61 0.44%
FTSE 100 - Risers
Anglo American (AAL) 806.30p 2.87%
Glencore (GLEN) 181.45p 2.49%
RSA Insurance Group (RSA) 509.00p 2.23%
Hikma Pharmaceuticals (HIK) 2,144.00p 2.14%
Admiral Group (ADM) 1,981.00p 2.06%
3i Group (III) 627.50p 1.87%
AstraZeneca (AZN) 4,952.00p 1.75%
Fresnillo (FRES) 1,639.00p 1.67%
Antofagasta (ANTO) 488.40p 1.60%
Shire Plc (SHP) 4,875.00p 1.44%
FTSE 100 - Fallers
easyJet (EZJ) 1,084.00p -4.41%
Taylor Wimpey (TW.) 149.70p -2.35%
Persimmon (PSN) 1,748.00p -2.35%
Marks & Spencer Group (MKS) 321.80p -2.13%
Berkeley Group Holdings (The) (BKG) 2,576.00p -1.90%
Burberry Group (BRBY) 1,251.00p -1.81%
Barratt Developments (BDEV) 474.60p -1.80%
Dixons Carphone (DC.) 365.90p -1.77%
Sky (SKY) 826.50p -1.43%
Paddy Power Betfair (PPB) 8,860.00p -1.17%
FTSE 250 - Risers
Galliford Try (GFRD) 1,215.00p 7.43%
Hochschild Mining (HOC) 269.70p 5.48%
Softcat (SCT) 331.60p 4.05%
Ultra Electronics Holdings (ULE) 1,769.00p 3.63%
Euromoney Institutional Investor (ERM) 1,104.00p 3.56%
Vectura Group (VEC) 137.30p 3.47%
Genus (GNS) 1,950.00p 3.34%
Polymetal International (POLY) 1,000.00p 2.62%
Just Eat (JE.) 544.50p 2.54%
Pets at Home Group (PETS) 247.20p 2.23%
FTSE 250 - Fallers
Ocado Group (OCDO) 257.00p -7.55%
PayPoint (PAY) 1,000.00p -3.85%
Shawbrook Group (SHAW) 234.20p -3.78%
CYBG (CYBG) 249.40p -3.71%
Debenhams (DEB) 58.35p -3.63%
Brown (N.) Group (BWNG) 192.20p -3.17%
Redrow (RDW) 390.00p -3.01%
Pendragon (PDG) 30.57p -2.98%
Bellway (BWY) 2,213.00p -2.85%
Crest Nicholson Holdings (CRST) 457.40p -2.68% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks drift lower as oil prices slip European stocks drifted lower on Wednesday as oil prices slipped, with luxury stocks under pressure following disappointing news from Richemont and Hermes.
The benchmark Stoxx Europe 600 index edged 0.09% lower, Germany's DAX slipped 0.08% and France's CAC 40 dropped 0.39%.
In parallel, oil prices retreated with West Texas Intermediate down 2.014% to $43.93 a barrel and Brent crude off by 2.01% at $46.17.
IG's Joshua Mahony said: "Markets are beginning to show signs of stabilisation, following on from a surge in volatility sparked on Friday. The heightened sensitivity to Fed rhetoric should cool as we enter a blackout period ahead of next week's policy meeting."
In corporate news, Bayer pushed higher following reports that US seeds company Monsanto has accepted a sweetened takeover offer from the German chemicals and drugs firm of $128 a share.
Construction group Galliford Try jumped as it hoisted its dividend 21% after posting a record annual profit thanks to strong growth at its housebuilding and regeneration units.
Elsewhere, Compass Group gained ground after JPMorgan Cazenove upgraded the stock to 'overweight' from 'neutral'.
On the downside, however, luxury stocks were under the cosh, with Richemont in the red after the Cartier-maker said operating profit in the first half was likely to drop by 45%. Meanwhile, Hermes was also weaker after saying it was abandoning annual sales growth forecasts from 2017 as a result of the uncertain trading environment.
Telecommunications company Sky nudged a touch lower after saying it has invested £1m in the Drone Racing League (DRL), which includes a distribution deal to show the league on the Sports Mix channel from October.
FTSE 250 homeware retailer Dunelm was little changed after reporting a rise in full-year profit and revenue as it grew its market share despite increasing competition, and lifted its dividend.
On the data front, figures from Eurostat showed industrial production in the 19 countries that share the euro was down 1.1% from June compared to a 0.8% rise the month before and missing expectations for a 0.9% fall.
The production of capital goods declined by 1.7%, while energy production was 1.4% lower and durable consumer goods production fell 0.7%. The production of intermediate goods was down 0.5% while production of non-durable consumer goods was unchanged.
On the year, industrial production in the euro bloc was 0.5% lower, which was ahead of analysts' expectations of a 0.7% drop. |
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| | US Market Report | | US open: Stocks in the black as M&A activity provides a boost US stocks were firmer in early trade following heavy losses in the previous session as M&A activity provided a boost.
At 1515 BST, the Dow Jones Industrial Average was up 0.3%, the S&P 500 was 0.4% higher and the Nasdaq was up 0.6%.
Meanwhile, oil prices moved back into the red, having been higher earlier as they rebounded from weakness on Tuesday. West Texas Intermediate was down 1.3% to $44.32 a barrel while Brent crude was off 1.4% at $46.42.
Prices had fallen sharply in the previous session after the International Energy Agency downgraded its forecast for global oil demand for this year and the next and rebalancing the oil market would take longer than previously thought.
CMC Markets' Michael Hewson said: "With the US central bank now in blackout period ahead of the decision next Wednesday there is little in the way of positive drivers helping underpin the market at this time, despite some better than expected Chinese economic data earlier this week.
"On the plus side we won't have to listen to the arguments over whether Fed policymakers think they should or shouldn't raise rates when they convene to meet next week, though it is clear that despite the rebound in the US dollar over the past few days it would be a major surprise if the Fed did anything at all next week."
On the corporate front, deal news helped to underpin the mood somewhat. Shares in US seeds giant Monsanto rallied after it agreed to be bought by German chemicals and drugs firm Bayer for $128 per share in an all-cash transaction that will create a company worth $66bn.
Clinical-stage biotechnology company Vitae Pharmaceuticals rocketed 158% after it agreed to be bought by Allergan for $21 per share in cash, for a total transaction value of about $639m.
Herbalife racked up healthy gains after activist investor Carl Icahn suggested the company would be better off going private. |
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| | Broker Tips | | Broker tips: Ocado, HSBC, Compass Ocado was trading sharply lower on Wednesday after Exane BNP Paribas downgraded the stock to 'underperform' from 'neutral', keeping the price target at 215p, as it pointed to margin pressure and said the market's expectations for profitability were too high.
The bank said its gross margin assumption was the most important it makes in its Ocado model and once again, it expects it to be down in the second half.
Exane said that with the next couple of years burdened by new distribution centre costs, earnings progression will fall short of market expectations. "More importantly that weak earnings development may cause a potential new partner to return to their spreadsheet and think again."
"With enough volume, Ocado may have the world's most efficient food picking model but it needs big basket shoppers with good gross margin to make a profit. Gross margin however is dictated by painful industry forces and Waitrose's pricing policy (even if it can't dictate Ocado's prices directly)."
In addition, Exane said progress in earnings before interest and taxes was likely to be subdued in the next three to four years.
"Because we doubt that the gross margin tension we've seen in recent periods will unwind quickly and that new capacity costs will impinge cost to serve, we doubt that group EBIT will see meaningful development."
The bank said it was also worth noting that part of the Morrisons.com partnership income will drop out in 2018 too. It pointed out that this was worth around £5m a year, although it is partially compensated for by growth at Morrisons.com.
JPMorgan Cazenove upgraded Compass Group to 'overweight' from 'neutral' and lifted the price target to 1,580p from 1,380p.
"With the 20.5% year-to-date rally predominantly reflecting 12.3% FX upgrades, a marked underperformance since July, and the stock still trading in line with consumer staples on 18.7x CY18e price-to-earnings, we upgrade Compass shares to an overweight rating."
The bank said Compass was likely to have delivered its smallest buyback on record in the year to September 2016, at only £99m or 0.4% of market capitalisation.
However, JPM sees £460m of free cash headroom in full-year 2017.
JPMorgan reckons Compass can continue to deliver 6-7% constant currency earnings per share growth driven by 4.5% organic growth and around 10 basis points of margin improvement.
"Ongoing improvements in new business and retention should cushion any further deterioration in LFL, and we are neither worried about employment volumes (2006-2015 contribution 0%) nor food deflation risks (excellent track record, contract pricing also includes labour)."
UBS downgraded HSBC to 'neutral' from 'sell' but nudged up the price target to 540p from 535p, with modest capital downside offset by dividend yield.
The bank noted HSBC's share price is up 17% in sterling since early August, adding $25bn to its market cap and prompting investor interest in the stock.
This puts HSBC's forward price-to-earnings at its highest level since 2010, which UBS said was a healthy premium to relevant peers such as the Eurobanks sector and Citi.
"We see little in the operating environment and conversations with investors to justify a further re-rating of the stock in the near term."
UBS said HSBC was not a 'sell' however, with recent results confirming progress on costs and sufficient confidence on capital to confirm plans to pay a 51 cents per share future dividend and launch a $2.5bn share buyback paid from the proceeds of the Brazilian disposal. |
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