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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 end higher as traders eye OPEC meeting in Algeria London stocks rose on Wednesday as investors kept an eye on the unofficial OPEC meeting in Algeria and assessed economic data.
Oil prices wavered as a deal on a production curb at the OPEC meeting in Algeria on Wednesday seemed unlikely after Saudi Energy Minister Khalid al-Falih said he sees no chance of such an agreement.
Data from the Energy Information Administration showed US crude inventories fell by 1.9 million barrels in the week to 23 September to 502.7 million barrels. The drawdown in crude stocks was offset by a 2 million barrel build in gasoline stockpiles.
The American Petroleum Institute on Tuesday revealed a surprise fall of 752,000 barrels to 506.4m last week.
At 1630 BST, Brent crude fell 0.02% to $45.96 per barrel and West Texas Intermediate dropped 0.22% to $44.57 per barrel.
Meanwhile, Bank of England deputy governor Minouche Shafik said in a speech at Bloomberg's Most Influential Summit in London that "there is no doubt in my mind that the UK is experiencing a sizeable economic shock in the wake of the referendum".
Shafik said once Article 50 is triggered and the UK formally leaves the European Union, the prospect of trade barriers will hurt economic growth.
Elsewhere, European Central Bank President Mario Draghi urged governments to implement structural reforms at the first ECB Annual Research Conference in Frankfurt.
"... we know that if interest rates are to rise safely away from the lower bound, we need structural reforms to raise potential output in the euro area and boost long-run interest rates," he said in a prepared speech.
In the US, Federal Reserve chair Janet Yellen spoke before the House Financial Services Committee about financial regulation on Wednesday. In a prepared speech, she focused on banks, saying lenders were well capitalised but remain challenged by weak interest income.
However, in response to one congressman's questions she indicated that should things continue on their current course then policy accommodation will need to be removed, albeit "probably not that much".
The US also saw the release of durable goods orders data from the Commerce Department, which showed an unchanged reading in August following a 3.6% increase in July. Economists had been expecting a 1.5% decline last month.
In corporate news, Sky shares gained as Exane BNP Paribas said it was its preferred UK TV play.
Smiths Group shares jumped as it reported a better-than-expected drop in full year pre-tax profit.
Supermarket retailer Sainsbury's was under the cosh after it reported a drop in like-for-like sales in the second quarter, blaming industry-wide falling food prices.
UK Mail Group surged after Deutsche Post agreed to buy the integrated mail and parcel operator for 440p per share, valuing the company at £242.7m.
Shares in post office rival Royal Mail declined as the deal threatens its dominance over the market.
Tritax Big Box slid after the property investment trust announced plans to raise about £150m in a discounted share placing, subscription and open offer in order to make further acquisitions.
ICAP dipped after Citigroup downgraded the stock to 'neutral' from 'buy' and cut the price target to 490p from 530p.
Kennedy Wilson Europe Real Estate was a high riser after launching a share buyback programme to manage its balance sheet and take advantage of future investment opportunities. |
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| Market Movers
FTSE 100 (UKX) 6,842.55 0.51%
FTSE 250 (MCX) 17,780.00 0.86%
techMARK (TASX) 3,498.77 0.69%
FTSE 100 - Risers
Sky (SKY) 882.00p 4.07%
Smiths Group (SMIN) 1,440.00p 3.82%
Rio Tinto (RIO) 2,525.50p 2.66%
Dixons Carphone (DC.) 365.80p 2.58%
Travis Perkins (TPK) 1,537.00p 2.47%
easyJet (EZJ) 1,031.00p 2.18%
Taylor Wimpey (TW.) 153.70p 2.13%
Barratt Developments (BDEV) 493.60p 1.94%
BHP Billiton (BLT) 1,097.00p 1.81%
WPP (WPP) 1,819.00p 1.79%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 241.10p -3.87%
Royal Mail (RMG) 486.20p -3.34%
Worldpay Group (WI) (WPG) 292.40p -1.42%
Imperial Brands (IMB) 3,930.00p -1.26%
Burberry Group (BRBY) 1,387.00p -1.14%
HSBC Holdings (HSBA) 571.60p -0.95%
Shire Plc (SHP) 5,108.00p -0.68%
Associated British Foods (ABF) 2,586.00p -0.50%
InterContinental Hotels Group (IHG) 3,121.00p -0.45%
Reckitt Benckiser Group (RB.) 7,181.00p -0.40%
FTSE 250 - Risers
Evraz (EVR) 164.00p 4.39%
Grafton Group Units (GFTU) 488.90p 4.24%
Diploma (DPLM) 875.50p 4.23%
AA (AA.) 297.00p 4.21%
Brown (N.) Group (BWNG) 187.00p 4.00%
Kennedy Wilson Europe Real Estate (KWE) 980.00p 3.81%
Phoenix Group Holdings (DI) (PHNX) 867.50p 3.46%
Inchcape (INCH) 658.50p 3.38%
Howden Joinery Group (HWDN) 432.10p 3.27%
Vesuvius (VSVS) 352.60p 3.19%
FTSE 250 - Fallers
International Personal Finance (IPF) 256.00p -3.69%
ICAP (IAP) 460.10p -3.68%
Tritax Big Box Reit (BBOX) 138.90p -3.27%
Barr (A.G.) (BAG) 504.50p -2.61%
Tullett Prebon (TLPR) 341.00p -2.40%
Acacia Mining (ACA) 484.60p -2.16%
Ted Baker (TED) 2,456.00p -1.41%
Stagecoach Group (SGC) 207.20p -1.33%
Indivior (INDV) 305.40p -1.20%
Card Factory (CARD) 307.20p -1.06% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks bounce back as traders wait on OPEC European stocks rose on Wednesday, boosted by stronger oil prices and decent gains in the banking sector as Deutsche Bank recovered from recent losses.
The benchmark Stoxx Europe 600 index gained 0.70% to 342.57, while Germany's DAX advanced 0.74% to 10,438.34 and France's CAC 40 added 0.77% to end the session at 4,432.45.
Crude oil futures were firmer as investors kept an eye on the OPEC meeting in Algeria, with West Texas Intermediate up 2.32% to $45.73 a barrel and Brent crude up 2.81% to $47.30. Prices were underpinned by data from the US Department of Energy revealing a fall in commercial oil stockpiles of 1.9m barrels in the week to 23 September.
Furthermore, reports referencing Libyan officials surfaced after the closing bell in London which indicated that OPEC producers might yet reach an agreement between them on Wednesday, sending crude oil futures higher.
A recovery in Deutsche Bank shares helped to underpin the tone following two days of heavy losses, after chief executive John Cryan reassured investors that the bank had not asked for state aid to help settle a $14bn fine from the US Department of Justice over the mis-selling of mortgage-backed securities.
The Stoxx 600 banks index gained 0.57%.
The recovery also came as the German lender's wholly-owned subsidiary Deutsche Holdings agreed to sell Abbey Life to Phoenix Group for £935m in cash.
Commenting on Wednesday's events, Capital Economics's Jennifer McKeown said: "Today's relatively positive news about Deutsche Bank adds to the evidence that it is not the next Lehman Brothers for the global financial system and that its troubles are unlikely to trigger a German recession. But recent developments have highlighted the fragility of the euro-zone banking sector yet again and suggest that weak lending growth will continue to weigh on the region's prospects."
Royal Bank of Scotland was in the black after it agreed to pay $1.1bn (£846) to settle two legal claims that it allegedly mis-sold mortgage securities in the run-up to the 2008 financial crisis.
Deutsche Post edged higher after announcing an agreement to buy integrated mail and parcel operator UK Mail Group for 440p per share, valuing the company at £242.7m. UK Mail surged 43% on the news.
TUI rallied after the travel firm upped its 2015/2016 profit guidance.
Investors were also digesting comments from European Central Bank chief Mario Draghi who said in a speech opening an ECB research conference that Eurozone governments should implement growth-boosting overhauls to allow interest rates to rise safely above zero.
Draghi said: "We know that if interest rates are to rise safely away from the lower bound, we need structural reforms to raise potential output in the euro area and boost long-run interest rates."
Later in the session, during testimony to the US House of Representatives' Financial Services Committee, Fed chief Janet Yellen indicated that should things continue on their current course then policy accommodation will need to be removed, albeit "probably not that much". |
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| | US Market Report | | US open: Stocks fall as investors digest data, eye Fed speeches US stocks were mostly lower on Wednesday as investors digested durable goods data and eyed speeches from Federal Reserve officials.
At 1545 BST the Dow Jones Industrial Average fell 0.03% to 0.05% to 18,217.58 points, the Nasdaq dipped 0.15% to 5,297.24 points, while the S&P 500 was down 0.17% to 2,156.11 points.
Meanwhile, oil prices advanced as investors kept an eye on the unofficial OPEC meeting in Algeria, with West Texas Intermediate up 1.2% to $45.24 a barrel and Brent crude up 1.3% to $46.59.
Prices were underpinned by data from the Energy Information Administration which showed US crude inventories fell by 1.9 million barrels in the week to 23 September to 502.7 million barrels.
Earlier, the American Petroleum Institute on Tuesday revealed a surprise fall of 752,000 barrels to 506.4m last week.
US durable goods orders were unchanged in August, the Commerce Department revealed, following a 3.6% increase in July. Economists had been expecting a 1.5% decline last month.
"Although durable goods orders were unchanged in August, the details of the report were weak," according to Capital Economics.
"It now appears that equipment investment contracted in the third quarter, which means the risks to our estimate that third-quarter GDP growth was 2.5% are now skewed to the downside."
Elsewhere, Federal Reserve chair Janet Yellen spoke before the House Financial Services Committee about financial regulation on Wednesday. In a prepared speech she focused on banks, saying lenders were well capitalised but remain challenged by weak interest income. Yellen said the US central bank is considering stress tests requiring more capital from the country's biggest lenders.
St Louis Fed President Jim Bullard and Chicago Fed President Charles Evans were due to make opening remarks at the St Louis Fed's conference on communication banking. Cleveland Fed President Loretta Mester was also scheduled to speak on the economic outlook and policy.
In corporate news, Nike was weaker after it reported better-than-expected quarterly revenue and profit late on Tuesday but weaker-than-forecast future orders.
Mattress company Tempur Sealy International tumbled after downgrading its guidance for 2016.
Deutsche Bank AG's US-listed shares recovered after news the troubled German lender is selling an insurance business amid worries about the bank's legal troubles in the US.
Alphabet Inc. declined after Wedbush downgraded Google's parent company to 'underperform', citing worries about a new approach for the company's search ads. |
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| | Broker Tips | | Broker tips: Petrofac, Bonmarche, ICAP Petrofac got a boost on Wednesday as Goldman Sachs upgraded the stock to 'buy' from 'neutral' and lifted the price target to 1,066p from 912p.
It said the upgrade was driven by Petrofac's geographic exposure, which is predominantly geared to the Middle East and by the current backlog for 2017, which stands at 87%. In addition, it pointed to scope for additional contract awards driven by the Middle East.
The bank also highlighted the potential for free cash flow improvement from 2017. GS said it expects capex to start falling from 2017, which would lead to a FCF yield of about 10%/14% in 2017/18.
"Given the low level of contracts awards year-to-date, we believe that any meaningful contract (over $500mn) is likely to be taken positively by the market, particularly as one of the key areas on which investors focus for E&C companies is contract awards."
"Petrofac management has mentioned that it will focus on reducing its capital intensity as well as investments within the Integrated Energy Services segment: should the company succeed in doing so, and at the same time reduce its net debt, this is also likely to be taken positively."
Goldman Sachs said key downside risks include a low level of contract awards, execution problems on projects leading to lower margins than anticipated, and deteriorating levels of net debt.
Clothing retailer Bonmarche shares was under the cosh on Wednesday after Canaccord Genuity cut its rating to 'hold' from 'buy' and lowered its target to 90p from 160p.
The company last week issued a profit warning after reporting poor sales of its autumn range in September due to recent hot weather. Bonmarche said its full year profit before tax is likely to fall within a range between £5m & £7m. It also expects first half like-for-like (LFL) sales will drop 8%.
"Given the volatile trading conditions and potential wider-scale clothing sector discounting to monetise excess inventory, we have erred towards the conservative end of this guidance," Canaccord said.
"Management has a good track record on managing operating costs in relation to top line evolution, but the severity of first half's LFL declines cannot be fully mitigated by such measures."
Canaccord added that the company's shares could be helped by a return to more seasonal weather patterns and a favourable reaction to new chief executive Helen Connolly's plans when laid out eventually.
The broker said the new profit before tax guidance is a "major disappointment" even if driven primarily by weather.
"With trading volatile, and in the absence of the new CEO's plans, we believe it prudent to assume a modest rate of pre-tax profit recovery going forward.
"On any further reduction to our fiscal year 2017 EBITDA forecast we would potentially be forecasting a technical breach of the sole covenant on the undrawn revolving credit facility, which on our revised forecasts remains just above the minimum 1.5:1 adjusted EBITDAR to net finance charges ratio."
ICAP shares dropped on Wednesday as Citigroup downgraded the stock to 'neutral' from 'buy' and slashed the target to 490p from 530p.
The broker is set to be renamed NEX Group Plc once it sells its global broking business to Tullett Prebon Plc for £1.1bn.
"NEX Group is going to be a capital-lite, cash-generative entity with lower ongoing regulatory capital requirements," Citi said.
"This, we think, will enable it to maintain good operating cash flow conversion levels and to pay a sustainable dividend policy of around 60% for fiscal year 2018 and beyond."
For 2017, Citi believes the company can maintain its 22p DPS, based on the current business mix and the cash on its balance sheet that will remain after the disposal.
Citi also lowered its average daily volume foreign exchange (FX) estimates for its FX business EBS, which account for 50% of NEX's earnings.
Citi added that it acknowledges US elections in November and a possible US rate hike in December will be catalysts for heightened FX volatility.
"However, notwithstanding this, we believe consensus expectations for full year 2017 EBS revenues are too high." |
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