| | | | | | | Bargain Blue Chips Your guide to the best investments this quarter This special report asks whether the current dip is a buy opportunity and highlights some of the key stocks that could play a leading role in boosting the index back to last year's all-time record highs above 7100. Download this exclusive report to find out why a good run of UK macro data has been taken badly by the markets, what key event in September could pump them up once more, and which stocks to watch in the coming months. Losses can exceed deposits | | |
| | 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 Carney defends stimulus measures The FTSE 100 ended higher on Wednesday as Bank of England Governor Mark Carney defended the central bank's decision to boost stimulus measures.
Carney was questioned by a panel of lawmakers on the Treasury Select Committee on whether the Bank was too aggressive with policy following the UK's vote to leave.
The BoE last month decided to cut interest rates to 0.25% and increase its asset purchases.
However, since the policy decision data has shown recovery in UK's services, manufacturing and construction industries.
"I absolutely feel comfortable in the decision that I supported and the committee took in August to supply monetary policy stimulus," Carney said.
He added that he was "absolutely serene" about the Bank's preparations for the impact from the Brexit vote.
Carney also said there was scope for further stimulus if needed.
IG market analyst Joshua Mahony said: "While the devaluation of the pound has arguably been the biggest post-referendum stimulant, today's hearings at least provided the markets with confidence that the MPC are unlikely to pull back despite improvements."
Elsewhere, UK industrial and manufacturing data was also in focus. UK industrial production rose 0.1% on the month in July, according to the Office for National Statistics, beating expectations for a 0.2% decline.
In contrast, manufacturing output declined 0.9% in July, worse than the 0.3% fall anticipated by economists.
The pound weakened against the dollar in response to the data, falling 0.63% to $1.3355.
Meanwhile, Prime Minister Theresa May said she would not give a "running commentary" on Brexit negotiations and "reveal our hand prematurely" to the EU. At the first Prime Minister's Questions (PMQs) since the summer recess, May refused to say whether the country will stay in the European single market.
On the corporate front, shares in industrial equipment rental company Ashtead Group advanced after it said revenue increased as it benefited from weak sterling in the first quarter, while it expects full-year results to be ahead of expectations.
SSE was boosted by an upgrade to 'buy' at Bank of America Merrill Lynch, while Randgold Resources gained as Berenberg initiated coverage of the stock at 'hold'.
Housebuilders were under the cosh, led lower by Barratt Developments following the release of results for the year to 30 June. Barratt said total completions rose 5.3% to 17,319, revenue was up 12.7% to £4.24bn and profit from operations grew 15.9% to £668.4m.
Shares in payments processor Worldpay slumped on as it emerged that private equity firms Advent International and Bain Capital LLP sold a bigger-than-expected stake in the company through their Ship Global 2 & Cy SCA vehicle.
Aerospace and defence group Rolls-Royce slid after Exane BNP Paribas downgraded the stock to 'underperform' from 'neutral' with an unchanged price target of 530p, citing little valuation support versus peers. |
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| Market Movers
FTSE 100 (UKX) 6,839.61 0.20%
FTSE 250 (MCX) 18,045.98 0.24%
techMARK (TASX) 3,467.97 0.40%
FTSE 100 - Risers
Ashtead Group (AHT) 1,297.00p 3.10%
Royal Dutch Shell 'B' (RDSB) 1,976.00p 1.93%
Royal Dutch Shell 'A' (RDSA) 1,896.00p 1.83%
Antofagasta (ANTO) 511.50p 1.69%
Glencore (GLEN) 186.30p 1.66%
Aviva (AV.) 441.90p 1.66%
Randgold Resources Ltd. (RRS) 7,735.00p 1.64%
Anglo American (AAL) 840.20p 1.62%
International Consolidated Airlines Group SA (CDI) (IAG) 405.20p 1.58%
Fresnillo (FRES) 1,719.00p 1.48%
FTSE 100 - Fallers
Berkeley Group Holdings (The) (BKG) 2,695.00p -3.16%
Barratt Developments (BDEV) 491.70p -3.02%
Taylor Wimpey (TW.) 159.50p -2.51%
Worldpay Group (WI) (WPG) 287.40p -2.38%
Persimmon (PSN) 1,832.00p -2.03%
Mediclinic International (MDC) 997.50p -1.92%
Severn Trent (SVT) 2,402.00p -1.88%
TUI AG Reg Shs (DI) (TUI) 1,027.00p -1.82%
Dixons Carphone (DC.) 374.30p -1.53%
BT Group (BT.A) 389.10p -1.49%
FTSE 250 - Risers
Vectura Group (VEC) 143.20p 12.84%
Metro Bank (MTRO) 2,645.00p 6.44%
Weir Group (WEIR) 1,614.00p 4.53%
Drax Group (DRX) 319.10p 3.84%
Shawbrook Group (SHAW) 238.00p 3.84%
OneSavings Bank (OSB) 270.20p 3.80%
Paragon Group Of Companies (PAG) 322.50p 3.20%
Morgan Advanced Materials (MGAM) 301.90p 3.04%
Evraz (EVR) 137.00p 3.01%
Vedanta Resources (VED) 516.50p 2.89%
FTSE 250 - Fallers
CMC Markets (CMCX) 243.00p -12.31%
Sports Direct International (SPD) 320.40p -8.35%
Just Eat (JE.) 538.50p -5.44%
Thomas Cook Group (TCG) 71.60p -4.28%
IG Group Holdings (IGG) 912.00p -3.49%
Redrow (RDW) 407.00p -2.75%
Synthomer (SYNT) 359.90p -2.44%
Softcat (SCT) 326.00p -2.40%
Marshalls (MSLH) 297.60p -2.23% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks edge higher after disappointing German data European stocks edged higher at the close on Wednesday as investors digested some disappointing German data and looked ahead to Thursday's rate announcement from the European Central Bank.
The benchmark Stoxx Europe 600 was last up 0.24% at 350.31, Germany's DAX was 0.62% 10,752.98 higher and France's CAC 40 was up 0.61% at 4,557.66.
At the same time, oil prices advanced. West Texas Intermediate was up 1.17% at $45.36 a barrel while Brent crude was up 1.15% at $47.81.
On the macro front, data from Destatis showed German industrial output fell 1.5% on the month in July, which was the biggest decline since August 2014. Economists had been expecting a 0.2% increase.
Pantheon Macroeconomics said the figures were "ugly but also likely tainted by Brexit".
"Even with the upward revisions of the June data, this is a poor report which suggests that German manufacturing fell out of bed in the beginning of Q3. It is reasonable to assume that Brexit was a key contributor to the decline, but we won't know until we see whether month-to-month output rebounds next month; we think it will."
In corporate news, Volkswagen was in the black by 1.36% following a media report the car maker was in advanced talks with China Anhui Jianghuai Automobile to produce electric vehicles.
Industrial equipment rental company Ashtead Group rallied by 3.7% after it said revenue increased as it benefited from weak sterling in the first quarter, while it expects full-year results to be ahead of views.
On the downside, Air France-KLM and Lufthansa flew lower by 1.26% and 1.85% respectively as Deutsche Bank downgraded its outlook for the stocks.
Sports Direct tumbled by 10.01% after it said it expects earnings to fall 21% this year but added that, contrary to much media speculation, founder Mike Ashley was not planning to take the company private any time soon.
Housebuilder and property developer Barratt Developments was 1.83% weaker amid disappointment over the dividend, as it said total completions in the year to the end of June rose 5.3% to 17,319 and revenue rose 12.7% to £4.24bn.
Hargreaves Lansdown was just in the green by 0.35%, reversing earlier losses after the investment management firm reporting a jump in full-year profit as asset under administration grew, with traders attributing the decline to profit-taking. The company also announced on Wednesday that its chief executive Ian Gorham was stepping down.
Shares in payments processor Worldpay slumped by 2.71% as it emerged that private equity firms Advent International and Bain Capital LLP sold a bigger-than-expected stake in the company through their Ship Global 2 & Cy SCA vehicle. |
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| | US Market Report | | US open: Stocks mixed as Fed speakers eyed US stocks were mixed on Thursday as investors awaited further hints on interest rate hikes from Federal Reserve speakers.
At 1452 BST, the Dow Jones Industrial Average fell 0.12% to 18,515.14 points, the S&P 500 dropped 0.07% to 2,184.93 points but the Nasdaq rose 0.03% to 5,277.63 points.
At the same time oil prices fell with West Texas Intermediate crude down 0.04% to $44.79 per barrel and Brent down 0.19% to $47.17 per barrel.
Traders are looking ahead to testimonies from Richmond Fed President Jeffrey Lacker and Kansas City Fed President Esther George at the House Financial Services Panel on 'Governance, Monetary Policy and Economic Performance' during the session.
San Francisco Federal Reserve President John Williams late on Tuesday said it "makes sense" to raise interest rates at a gradual pace, "preferably sooner rather than later".
Meanwhile, Apple's product announcement in San Francisco at 1800 BST will be closely monitored as many expect the tech giant to unveil an update on its next iPhone release.
Also of interest, the Fed's Beige Book is due to be published at 1900 BST.
The Labor Department revealed the number of job openings rose by 228,000 to 5.9 million on the last business day of July. The number of separations, which includes people quitting and getting laid off, was little changed from June. The number of hires was also broadly unchanged.
Elsewhere, Chipotle Mexican Grill shares rose after Bill Ackman's Pershing Square Capital Management said late on Tuesday that it has bought a 9.9% stake in the company. |
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| | Broker Tips | | Broker tips: Aviva, European airlines, Weir Group UBS upgraded Aviva to 'buy' from 'neutral' on Wednesday and raised its target to 505p from 395p, saying the insurance firm is positioned to deliver a "sector leading" dividend.
Aviva is likely to offer a risk-adjusted dividend as Solvency II (S2) legislation is set to drive a shift in the relative attractiveness of dividend strategies across the sector, UBS said.
"This is supported by double-digit growth, around 7% yield (fiscal year 2018) which is above consensus and critically, lower risk under S2 than peers which is under-appreciated, in our view.
"Management guidance implies double-digit dividend per share growth through increasing pay-out to 50% by 2017 and earnings per share growth >0%. This will screen at the top-end of UK life peers and pay-out flexibility implies lower reliance on earnings growth to drive this."
UBS said insurers face the challenge of S2 leading to the reassessment of risk to dividends as disclosure emerges post fiscal year 2016 on transitional capital, matching adjustment and other items within S2 ratios.
However, UBS said it expects over time the market will pay a premium for insurers funding dividends sustainably from capital build rather than capital buffers.
"Aviva screens well on this basis with S2 dividend cover at the top-end of peer range and robust buffers to withstand shocks including credit rating migration."
European airline stocks flew lower on Wednesday as Deutsche Bank downgraded its ratings on Ryanair, EasyJet, Air France-KLM and Lufthansa, saying forward-looking data is "simply too weak".
DB said it looks like winter will be challenging for the airlines, with capacity data suggesting intra-European growth of around 8% over the next six months - levels that are at decade highs.
The same is true on the transatlantic, where capacity is growing around 9% over winter.
"History suggests adjustments to overcapacity can take at least six months. This time the adjustment may take even longer. In short-haul, EasyJet and Ryanair are unlikely to give up attractively priced delivery slots (indeed Ryanair's CEO said it would only give up its 787s in an "Armageddon" scenario).
"In long-haul the question is whether there are any channels other than North America that can absorb material capacity redeployment."
Deutsche Bank said demand was unlikely to be able to support these levels of capacity.
"We believe corporate travel budgets remain extremely constrained and early indications suggest only a mixed September bounce-back in activity. Airline promotional activity also seems unseasonably high which is generally not a good sign. Ramifications post-Brexit and the upcoming US elections may also temper traffic."
The bank downgraded Air France-KLM and Lufthansa to 'sell' from 'hold', EasyJet and Ryanair to 'hold' from 'buy' and kept International Consolidated Airlines Group at 'buy'.
Deutsche said IAG and RYA are still its preferred stocks in the space. It reckons IAG has been sold off far too aggressively on Brexit concerns, adding that management continues to actively pursue structural cost reform of every line item.
As far as Ryanair is concerned, it said the company has unmatched cost control in the space and digital developments that are sector-leading.
"We firmly believe it is a medium-term winner, but in the short - term we see its significant capacity addition finally resulting in lower-than-expected pricing."
As far as Air France and Lufthansa are concerned, it said that with the "happy days" of oil-based gains over, thoughts will again turn to whether the airlines can kick-start structural cost reform.
Deutsche said EasyJet is struggling to keep its cost base from inflating and yields unfortunately seem to be continually under pressure from FX and external events.
Morgan Stanley upgraded its recommendation on Weir Group, telling clients the mining cycle was stabilising and that miners´ ability to spend was set to improve, with capital expenditures on replacement described as a "sweet spot".
Combined with forecasts for an inflection in the rig count in 2017 and 2018 the broker´s estimates for earnings per share at Weir were now 11% and 33% ahead of consensus, respectively.
"Miners'ability to fund capex - set to improve: At spot rates (and MSe base case forecasts) miner post-dividend cash flows are on track to be positive in 2016 for the first time in 4 years and will be close to peak levels in 2019/20, leaving scope to raise dividends and/or investment in growth (ie capex). We believe this sets the scene for a sustained earnings recovery in mining equipmentnames," analysts Robert J Davies and Ben Uglow said in a research report published on 6 September at 2003 BST. | | |
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