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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 rise as BoE stands pat on policy The FTSE 100 ended higher on Thursday as the Bank of England decided to keep policy unchanged and as UK retail sales data came in better than forecast.
The BoE voted unanimously to leave interest rates at 0.25% and the asset purchase programme at £435bn, in a move expected by analysts.
The Bank left the door open to further rate cuts but noted that recent economic data had been more positive than anticipated in the aftermath of the Brexit vote.
"We expect the BoE to cut by 15bp from 0.25% to 0.10% in November, but it is a close call and will be data-dependent," said Dankse Bank.
In other UK news, the Office for National Statistics revealed UK retail sales fell less than expected in August. Sales dropped 0.2% on a monthly basis, better than the 0.4% decline forecast by the economists but a sizeable slowdown after a strong July, where sales have been revised up from 1.4% to 1.9%.
The annual rate of growth slowed slightly to 6.2% from a revised 6.3% but was much higher than the estimated 5.4%.
"Retail sales held up well in August following a strong July - yet another piece of evidence which shows the economy has fared better than expected since June's referendum," said Ben Brettell, senior economist at Hargreaves Lansdown.
In the eurozone, inflation was confirmed at 0.2% in August, unchanged from July and as expected by analysts, according to data from Eurostat.
Across the Atlantic, the Commerce Department revealed US retail sales fell 0.3% in August, more than the 0.1% drop expected by analysts and following an upwardly revised 0.1% increase a month earlier. It marked the first decline since March.
Separately, US industrial production fell 0.4% in August after rising a revised 0.6% in July, data from the Federal Reserve showed. Economists had been expecting a 0.2% decline.
Manufacturing output was also down 0.4% in August, reversing its increase in July, while the index for utilities fell back 1.4%.
"The weakness in retail sales and industrial production in August underline that the rebound in third-quarter GDP growth could be weaker than previously hoped, which is another reason for the Fed to pass on raising interest rates next week," according to Capital Economics.
Company-wise, high street fashion stalwart Next was under the cosh after posting a drop in first-half profit and highlighting challenging trading since July.
Supermarket chain Wm. Morrison was on the front foot after it reported a jump in first-half profit.
Soft drink bottler Coca-Cola HBC was also bubbling higher after analysts at Credit Suisse upgraded their recommendation and lifted their target on the shares given the attractive topline growth and earnings potential.
Hargreaves Lansdown slumped as its stock went ex-dividend and Liberum downgraded the company to 'sell' from 'buy' due to further downside risks.
Informa traded higher after announcing plans to buy Penton Information Services for £1.2bn.
Electronics distributor Electrocomponents surged after saying it expects to post a significant increase in first-half pre-tax profit following stronger-than-anticipated trading.
Shares in JRP Group, the newly merged Just Retirement and Partnership Assurance, gained as the retirement service provider raised its target for synergies from the deal as it delivered benefits ahead of schedule. The FTSE 250 company said it expects to achieve yearly savings of at least £45m by the end of 2018, a 13% increase on its prior prediction having so far made £15m since April's £1.6bn merger. |
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| Market Movers
FTSE 100 (UKX) 6,732.12 0.88%
FTSE 250 (MCX) 17,756.59 0.71%
techMARK (TASX) 3,472.73 0.63%
FTSE 100 - Risers
Morrison (Wm) Supermarkets (MRW) 208.10p 7.49%
Tesco (TSCO) 169.65p 4.92%
Informa (INF) 726.00p 4.69%
RSA Insurance Group (RSA) 530.50p 4.22%
Coca-Cola HBC AG (CDI) (CCH) 1,727.00p 3.85%
Standard Life (SL.) 343.40p 2.66%
Sainsbury (J) (SBRY) 240.30p 2.21%
Diageo (DGE) 2,118.50p 2.15%
BHP Billiton (BLT) 1,002.00p 2.11%
Compass Group (CPG) 1,470.00p 2.08%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 1,273.00p -5.28%
Next (NXT) 4,957.00p -4.86%
Marks & Spencer Group (MKS) 313.10p -2.70%
Royal Bank of Scotland Group (RBS) 194.40p -1.52%
Associated British Foods (ABF) 2,726.00p -1.20%
Paddy Power Betfair (PPB) 8,805.00p -0.62%
British Land Company (BLND) 619.00p -0.56%
Randgold Resources Ltd. (RRS) 7,390.00p -0.54%
Intu Properties (INTU) 285.50p -0.52%
Centrica (CNA) 227.90p -0.48%
FTSE 250 - Risers
JRP Group (JRP) 115.00p 18.19%
Electrocomponents (ECM) 350.00p 15.97%
Ocado Group (OCDO) 272.80p 6.15%
Circassia Pharmaceuticals (CIR) 95.20p 5.78%
RPC Group (RPC) 901.00p 5.50%
NCC Group (NCC) 345.20p 5.31%
Acacia Mining (ACA) 500.00p 3.31%
Indivior (INDV) 330.30p 3.19%
Diploma (DPLM) 883.50p 2.97%
IP Group (IPO) 187.80p 2.90%
FTSE 250 - Fallers
Hochschild Mining (HOC) 255.20p -5.20%
Sports Direct International (SPD) 291.20p -4.90%
Inmarsat (ISAT) 715.50p -3.11%
Assura (AGR) 57.55p -2.87%
Big Yellow Group (BYG) 733.50p -2.52%
McCarthy & Stone (MCS) 170.30p -2.01%
OneSavings Bank (OSB) 265.00p -1.85%
Brown (N.) Group (BWNG) 188.80p -1.67%
Workspace Group (WKP) 683.00p -1.23%
Caledonia Investments (CLDN) 2,452.00p -1.13% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets finish higher as BoE stands pat European stocks turned a little higher on Thursday, struggling for direction as investors continued to mull over central bank policy.
The Stoxx Europe 600 index was last up 0.62% at 340.52, France's CAC 40 added 0.2% to 4,379.07 and Germany's DAX was 0.61% higher at 10,442.10.
In the UK, the FTSE 100 was up 0.85% at 6,730.30 after the Bank of England stood pat on rates and left its asset purchase programme unchanged, as widely expected.
Mike van Dulken, head of research at Accendo Markets, said central bank updates are continuing "to burden investors desperate for more stimulus to keep the accommodative policy market party going or at least signals that tighter policy is not imminent.
"All the while macro data remains mixed and concerns grow about both a waning potency of existing stimulus and fresh options running dry."
Meanwhile, oil prices steadied after falls earlier in the week, with West Texas Intermediate last up 0.71% to $43.91 a barrel and Brent crude 1.55% higher at $46.57.
On the corporate front, Swedish retailer H&M was under the cosh, falling 4.28% after it posted a rise in August sales that fell significantly short of analysts' expectations.
EDF was also in the red, down 1.65% after the UK gave the go ahead to the Hinkley Point C nuclear power station.
High street fashion stalwart Next was 4.88% lower after posting a drop in first-half profit and highlighting challenging trading since July.
On the upside, GlaxoSmithKline nudged 0.17% higher, reversing earlier losses, after saying its shingles vaccine proved highly successful in a trial among elderly patients.
France's Zodiac Aerospace was a high riser, adding 6.03% after it reported better-than-expected revenues for the full year.
UK supermarket chain Wm. Morrison was on the front foot by 7.59% after it reported a jump in first-half profit, while Informa traded 4.9% higher after announcing plans to buy Penton Information Services for £1.2bn.
On the data front, inflation in the eurozone was confirmed at 0.2% in August, unchanged from July, according to Eurostat.
For the European Union, inflation came in at 0.3%, up from 0.2% the month before.
The lowest annual rates were registered in Croatia, Bulgaria and Slovakia, with the highest rates in Belgium, Sweden and Estonia.
Food, alcohol and tobacco prices rose 1.3%, down slightly from a 1.4% increase in July. Meanwhile, energy prices fell 5.6%, which was less than the 6.7% drop seen in July.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "The EZ consumer price index was held back by a dip in core inflation last month, and a marginally lower rate of increase in food prices, which offset a continuing reduction in energy price deflation.
"Overall, we think the August data marks a temporary pause in the upward momentum which began in Q2, and see higher inflation ahead. The core rate should edge higher in the next six-to-12 months, and base effects will boost the year-over-year rate in energy prices further."
In the US, the number of Americans filing for unemployment benefits increased less than expected last week, according to data from the Labor Department.
US initial jobless claims rose 1,000 from the previous week's unrevised level of 259,000, versus expectations for a jump to 265,000. |
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| | Broker Tips | | Broker tips: Dunelm, Hargreaves Lansdown, CCH Canaccord Genuity on Thursday lowered its rating on Dunelm to 'hold' from 'buy' but raised its target to 920p from 875p after the homeware retailer reported its full year results.
The broker said there are short-term costs for Dunelm ahead of delivering its long-term objectives for doubling market share. Its long-term goal will require "substantial development of many aspects of the business, including range development, store format and operations, channel penetration, and IT & logistics infrastructure", Canaccord said.
"Capital expenditure and depreciation have been and remain on a rising trend, and in line with recent years, operating cost growth looks set to exceed top line sales growth for at least another two years.
"Unlike past years, the potential for mitigation from gross margin expansion looks more muted, and with Q1 trading under pressure from hot weather depressing footfall, to cite CEO John Browett's words, Dunelm is facing 'another tough year'."
Dunelm reported in the 52 weeks to 2 July pre-tax profit rose to £128.9m from £121.4m in the 52 weeks to 27 June 2015, on revenue of £880.9m, up 7.1% from the year before.
The company recommended a final dividend of 19.1p per share compared to 16p in 2015 and giving a full-year dividend of 25.1p per share, up 16.7% from the prior year. In addition, the company paid a special dividend of 31.5p per share during the year.
Canaccord cut its estimates for 2017 pre-tax profit by 5% and its forecast for 2019 by 9%, reflecting more modest like-for-like gross margin assumptions, the expectations of operating cost growth and the uncertainty surrounding Brexit.
However, the broker said underlying cash generation remains strong and it continues to forecast an annual return of capital to shareholders at £65m per year or 32p per share, which more than doubles the ordinary dividend yield.
"Dunelm remains a quality company with very strong cash generation. Our forecasts still deliver earnings growth against a more uncertain consumer backdrop, albeit at a reduced rate, while its targeted investment programme acts as a drag on operating margin over our forecast horizon."
Liberum downgraded Hargreaves Lansdown to 'sell' from 'buy' pointing to further downside risks.
The brokerage said that while there is no doubting the company's "formidable" track record and the strength of the business model, trading on a price-to-earnings of 36x with the prospect of consensus downgrades and significant industry headwinds, the risk/reward is unfavourable.
It pointed out that full-year 2016 results were 4-5% ahead of expectations, helped by a more positive market movement than originally expected, with group net income margin slightly ahead of Liberum's forecasts at 0.56%.
However, the cut to base rates means Hargreaves will now earn significantly less income from clients' cash balances.
Liberum noted guidance for FY17 was to expect a margin of 0.35%-0.45% and said it now assumes 0.40%, down from 0.53%.
"Guidance was not forth
Analysts at Credit Suisse upgraded their recommendation beverage bottler Coca-Cola HBC (CCH) and lifted their target on the shares given its attractive top-line growth and EBIT potential.
Faster growth in asset turns should also drive stronger returns on invested capital, analysts Sanjeet Aujla, Laurent Grandent, Pavan Daswani and Clay Crumblis said in a research note sent to clients.
CCH also offered better visibility on margins via cost synergies and was expected to deliver higher organic growth than peers such as CCEP, because of its more attractive footprint in geographies with greater consumption on a per capita basis.
The bottler's low level of gearing - with net debt to EBITDA standing at just 1.3 - also meant it was better positioned to "redeploy" its balance sheet through cash returns and mergers and acquisitions.
"We believe CCH and CCEP could both participate in further consolidation of the Coca-Cola bottling network, and in particular both could exploit opportunities in Africa," the analysts said.
The broker also said it preferred shares in CCH over those of CCEP on account of its organic growth profile and near-term balance sheet optionality.
Credit Suisse upped its recommendation on CCH from 'neutral' to 'outperform' and hiked its target from 1600p to 1950p.
coming for FY18, however, our forecast assumes 0.25%. If the Bank of England reduces further, possibly to 0.10%, that would result in a further loss of £11-13m per annum in FY18 & FY19, an additional 4-5% downgrade to earnings," it said.
"All things being equal, we would need to see the shares at about 1100p before we became buyers," it said. |
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