| | | | | | | 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 end higher on M&A news while ECB disappoints London stocks erased some of their early gains on Thursday after the European Central Bank shot down hopes of further quantitative easing.
The FTSE 100 ended up 0.18% to 6,858.70 points.
Micro Focus International topped the FTSE 100 after agreeing a $8.8bn merger with Hewlett Packard's software business lifted investor sentiment. The UK company will issue American Depository Shares to shareholders in Hewlett Packard Enterprise, which was spun out of its more famous hardware parent in October 2015, so that once the deal is complete the US corporation's shareholders will own 50.1% of the combined entity, with both companies remaining listed.
"The initial positive reaction across every sector of the FTSE 100 to the Micro Focus deal was because it's a good sign for the continued growth of UK business and technology post-Brexit. British firms still have the confidence to buy overseas assets despite the drop in Sterling," said CMC Markets analyst Jasper Lawler.
However, the FTSE scaled back its rally somewhat after the ECB said it hadn't discussed expanding its asset purchase programme. The central bank decided to keep the monthly asset purchases at €80bn until March 2017 and also left all key interest rates unchanged.
The ECB downgraded its economic growth and inflation forecasts for 2017 in light of Brexit but said the changes to its estimates were "not substantial enough to warrant a change in policy".
Elsewhere, China data showed exports fell 2.8% in August, compared to economists' estimates for a 4.0% decline and the previous month's 4.4% decrease. Imports rose 1.5%, exceeding forecasts for a 5.7% drop and following a 12.5% slide in July, the General Administration of Customs revealed.
The trade surplus came to $53.05bn last month, down from $52.31bn in July, although below economists' forecasts of $59.40bn.
In the US, data from the Labor Department showed jobless claims unexpectedly fell to a two-month low last week. Initial jobless claims dropped by 4,000 to 259,000 in the week to 3 September, surprising analysts who had predicted claims would rise to 265,000 from an unrevised 263,000 the previous week.
Closer to home, Chancellor Phillip Hammond announced he would deliver his first Autumn Statement on 23 November. It will reveal the government's taxation and spending plans as well as its assessment of the UK economy in the wake of Brexit.
In other UK news, the Royal Institution for Chartered Surveyors said in a report that confidence in the housing market has recovered moderately from its post-Brexit wobbles but numbers of both buyers and sellers remained in negative territory.
The August residential housing market survey showed a slight increase in its past-price indicator after falling for five months in a row, with a balance of 12% more surveyors reporting an increase in prices, up from 5% previously.
Meanwhile, oil prices jumped after data from the Energy Information Administration showed weekly crude inventories fell 14.5m barrels to 511.4m barrels last week.
Earlier, China data showed crude oil imports rose to their highest level of the year in August. Data from the American Petroleum Institute fuelled the rally after revealing a 2.1 million-barrel drop in inventories
Brent crude gained 3.3% to $49.64 per barrel and West Texas Intermediate edged up 3.5% to $47.16 per barrel at 1653 BST.
In company news, education publisher Pearson was under the cosh after US peer John Wiley & Sons slid nearly 7% on Wednesday following the release of disappointing first-quarter results.
Admiral and Standard Life were in the red as they went ex-dividend.
Airline stocks IAG and EasyJet flew higher after EZJ's chief executive officer Carolyn McCall said financial markets had overreacted to the UK's decision to leave the European Union.
Dixons Carphone advanced after it said group revenue in the first quarter grew 9% on the year, while like-for-like revenue improved 4% in the 13 weeks to 30 July.
Rio Tinto gained after RBC Capital Markets bumped the stock up to 'outperform' form 'sector perform' saying it provides the most attractive valuation in the sector, along with "best in class" growth.
Thomas Cook was flying higher as it launched its joint-venture with Chinese conglomerate Fosun in Shanghai called Thomas Cook China, which will offer 90 high-end holiday packages to more than 40 international and domestic destinations.
CMC Markets continued its fall after warning n Wednesday that first half profits would be lower than last year due to what it said was a lower value of client trades on depressed levels of market volatility. |
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| Market Movers
FTSE 100 (UKX) 6,858.70 0.18%
FTSE 250 (MCX) 18,194.08 0.74%
techMARK (TASX) 3,492.94 0.57%
FTSE 100 - Risers
Micro Focus International (MCRO) 2,243.00p 14.73%
International Consolidated Airlines Group SA (CDI) (IAG) 422.10p 3.97%
Dixons Carphone (DC.) 389.00p 3.96%
easyJet (EZJ) 1,197.00p 3.73%
Provident Financial (PFG) 3,044.00p 2.91%
Royal Bank of Scotland Group (RBS) 202.10p 2.59%
Anglo American (AAL) 858.90p 2.23%
Lloyds Banking Group (LLOY) 58.86p 2.15%
Barclays (BARC) 173.05p 1.94%
BHP Billiton (BLT) 1,015.50p 1.65%
FTSE 100 - Fallers
Pearson (PSON) 797.00p -7.70%
Mediclinic International (MDC) 964.50p -3.31%
Burberry Group (BRBY) 1,285.00p -2.36%
Admiral Group (ADM) 2,011.00p -2.33%
Rolls-Royce Holdings (RR.) 750.00p -2.22%
Whitbread (WTB) 4,184.00p -1.71%
GKN (GKN) 320.40p -1.42%
Standard Life (SL.) 356.50p -1.36%
Hikma Pharmaceuticals (HIK) 2,149.00p -1.29%
Fresnillo (FRES) 1,697.00p -1.28%
FTSE 250 - Risers
Micro Focus International (MCRO) 2,243.00p 14.73%
Thomas Cook Group (TCG) 76.05p 6.14%
International Personal Finance (IPF) 288.90p 5.25%
ICAP (IAP) 497.80p 5.09%
Sophos Group (SOPH) 262.00p 4.93%
Intermediate Capital Group (ICP) 636.50p 4.52%
Aldermore Group (ALD) 175.90p 4.08%
Marshalls (MSLH) 310.00p 3.92%
TalkTalk Telecom Group (TALK) 210.00p 3.91%
BGEO Group (BGEO) 3,119.00p 3.83%
FTSE 250 - Fallers
NMC Health (NMC) 1,368.00p -2.98%
Phoenix Group Holdings (DI) (PHNX) 848.50p -2.81%
CMC Markets (CMCX) 236.30p -2.76%
Hastings Group Holdings (HSTG) 214.20p -2.59%
Polymetal International (POLY) 1,049.00p -2.24%
Dechra Pharmaceuticals (DPH) 1,354.00p -2.17%
Genus (GNS) 1,913.00p -1.95%
Meggitt (MGGT) 471.10p -1.90%
NCC Group (NCC) 325.90p -1.78% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares slip on lack of ECB action European stocks wavered and then fell back as the European Central Bank held off from announcing any further stimulus at its policy meeting, as some observers - but not all - had anticipated.
The benchmark Stoxx Europe 600 index ended lower by 0.33% to 349.32, Germany's DAX ended down 0.72% and France's CAC 40 was 0.34% lower.
Nonetheless, by the close of play all the main equity benchmarks had come off their intra-day lows, with the Stoxx 600 gauge of bank stocks gaining 1.17%.
Oil&Gas shares on the other hand were hardly benefited from a jump higher in oil futures, with the Stoxx 600 sector gauge edging higher by just 0.21%.
West Texas Intermediate crude oil futures advanced 3.98% to $47.38 a barrel and Brent crude was 3.69% firmer at $49.82.
The tone was underpinned by better-than-expected Chinese trade data, which showed imports rose 1.5% in August compared to a year ago - their first increase since late-2014 - versus forecasts of a 4.9% decline. This was also a big improvement on the 12.5% fall seen in July. Meanwhile, exports dropped 2.8% (consensus: -4.0%) following a 4.4% slide the month before.
Contrary to some forecasts, although the likes of Barclays or Morgan Stanley called it right, the ECB opted to stay put both on rates and as regards the possible extension of its asset purchases beyond 2017.
"While the ECB remained very much in "wait and see" mode at its September meeting, we believe further action is more likely than not," Dr. Howard Archer, chief European+UK economist at IHS Global Insight said in a research report sent to clients.
"There were several indications in both the statement and in Mr. Draghi's comments that the ECB is fully prepared to take further stimulative action to ensure that inflation returns to its targeted level of "below, but close to, 2%" over the medium term," Dr. Archer said.
ECB boss Mario Draghi did call for those countries with space to use fiscal stimulus (public sector spending, that is) to do so.
In corporate news, electronics retailer Dixons Carphone rose after it said group revenue was up 9% year-on-year in the first quarter and like-for-like revenue improved 4% in the 13 weeks to 30 July.
Micro Focus International surged after agreeing an $8.8bn deal to merge with Hewlett Packard's software business, which includes a $400m return of value to the FTSE 100 company's' shareholders. |
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| | US Market Report | | US open: Stocks fall as ECB disappoints US stocks fell on Thursday as the European Central Bank disappointed the market by saying it hadn't discussed further quantitative easing at this month's policy meeting.
At 1608 BST the Dow Jones Industrial Average fell 0.18% to 18,496.04 points, the S&P 500 dropped 0.12% to 2,183.68 points and the Nasdaq declined 0.35% to 5,265.42 points.
At the same time oil prices gained as data from the Energy Information Administration showed weekly crude inventories fell 14.5m barrels to 511.4m barrels last week.
Earlier, China data showed crude oil imports rose to their highest level of the year in August. Data from the American Petroleum Institute fuelled the rally after revealing a 2.1 million-barrel drop in inventories
West Texas Intermediate crude jumped 3.4% to $47.14 per barrel and Brent crude advanced 3.1% to $49.54 per barrel.
In the eurozone, the ECB downgraded its economic growth for 2017 to 1.6% from its estimate in June of 1.7%, amid risks following the UK's vote to leave the European Union. The central bank also nudged down its inflation forecast for next year to 1.2% from 1.3%.
"For the time being, the changes are not substantial enough to warrant a change in policy," Draghi said. "There is no question about the will to act, or the ability to do so."
The ECB's Governing Council decided to keep all of its key interest rates unchanged, in a move widely expected by analysts. The monthly asset purchase programme was also left at €80bn until March 2017.
President Mario Draghi admitted the ECB had not discussed expanding the asset purchase programme but reiterated that it would "act by using all the instruments available within our mandate" if warranted.
The euro rose 0.23% against the dollar to $1.1265.
Across the Atlantic, data from the Labor Department showed US jobless claims unexpectedly fell to a two-month low last week. Initial jobless claims dropped by 4,000 to 259,000 in the week to 3 September, surprising analysts who had predicted claims would rise to 265,000 from an unrevised 263,000 the previous week.
"Yet more evidence that whatever has dampened companies' hiring plans has not made them so nervous that they feel the need to lay off staff," said Ian Shepherdson, chief executive of Pantheon Macroeconomics.
In China, the General Administration of Customs said exports fell 2.8% in August, compared to economists' estimates for a 4.0% decline and the previous month's 4.4% decrease.
Imports rose 1.5%, exceeding forecasts for a 5.7% drop and following a 12.5% slide in July.
The trade surplus came to $53.05bn last month, down from $52.31bn in July, although below economists' forecasts of $59.40bn.
On the corporate front, Barnes & Noble shares dropped after reporting a quarterly fall in sales and lowering its guidance for the year.
Hewlett Packard Enterprises slumped after the company late on Wednesday said it agreed an $8.8bn merger deal with Micro Focus International. |
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| | Broker Tips | | Broker tips: Genus, RSA, Experian Numis placed its rating and target on Genus 'under review' on Thursday, after the animal genetics company reported its full year results.
Genus posted a 7% increase in adjusted pre-tax profit to £49.7m, driven by strong performances in Genus PIC and Genus Asia, particularly China.
However, revenue at the group was down 3% to £388.3m on the back of lower bovine volumes in tough dairy markets and lower porcine by-product and up-front sales. It missed the Factset consensus forecast for revenue of £397.4m.
Chief executive Karim Bitar said the group expects to increase research and development in 2017. Overall Bitar sees the company performing in line with market expectations as reported numbers benefit from favourable exchange rates.
Numis has put the stock 'under review' from a previous rating of 'hold'.
"In summary, investment in R&D continues, which is expected to limit near term underlying earnings growth but deliver strategic value in the medium to long term," the broker said.
HSBC upgraded RSA Insurance to 'buy' from 'hold' and raised the price target to 595p from 520p despite the strong share price performance.
The bank noted RSA shares are up 19% year-to-date, outperforming the FTSE 100 index and the DJ Stoxx Insurance index by 9% and 36%, respectively.
"We upgrade the shares given we see more scope for management actions around the legacy portfolio, debt restructuring, cost savings and a further improvement in attritional loss ratios."
"The capital position is comfortable while there is more scope for EPS upgrades if the management team achieves its 2018 ambitions, increases cost targets or restructures debt further."
HSBC downgraded Hastings to 'reduce' from 'hold' and upped the price target to 193p from 185p.
It said while the company remains a beneficiary of rate increases in the UK motor insurance segment and is well-placed to achieve its IPO targets, it is concerned about consensus earnings estimates.
In addition, it said the stock screens expensive trading at 15% above its new target.
The bank kept Admiral at 'hold' given the lack of upside and as it awaits more disclosure on the company's UK home segment.
It retained Direct Line at 'reduce', pointing to declining earnings during 2015-18 despite the group being a beneficiary of rate increases in the UK motor segment.
HSBC held Esure at 'buy' saying it has a comfortable capital position and should experience around 17% compound annual growth rate in 2015-18 operating earnings.
Goldman Sachs upgraded Experian to 'buy' from 'neutral' and lifted the price target to 1,845p from 1,452p saying it now sees around 20% upside to the stock.
The bank expects Experian's organic growth rate to accelerate moderately from 4.6% in 2016 to 4.8% in 2017 and 5.2% in 2018 on the back of strong delivery in North America and easier comps in Brazil.
This should be combined with gradually improving EBITA margins as new businesses mature and expand margins, while the high-margin Brazil operation is expected to gradually recover, GS said.
Goldman said it would expect the stabilisation of the Brazilian economic outlook to act as a positive catalyst. Its economists forecast Brazilian GDP to accelerate to +2.2% by the fourth quarter of next year from -3.8% in the second quarter of 2016.
"We expect improving sentiment on growing recognition that the growth in US credit services could be much more secular, rather than cyclical, as growth is driven by particular verticals that benefit from secular, rather than cyclical, expansion (eg healthcare). | | |
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