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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 rally as China inflation improves, Tesco/Unilever resolve issues London stocks closed in the green on Friday following better-than-expected Chinese inflation data and after Tesco resolved its pricing dispute with Unilever.
China's consumer price index rose 1.9% year-on-year in September following a 1.3% increase in August. Economists had pencilled in a 1.6% gain.
Producer prices climbed 0.1% last month, beating forecasts for a 0.4% drop and following August's 0.8% decline.
"If yesterday's deterioration in Chinese exports pointed towards the potential for further easing from the PBoC, today's surprise spike in both consumer and producer prices does the opposite, proving that the inflation picture is on the right track," said IG's Joshua Mahony.
Closer to home, Tesco was a top riser on the FTSE 100 after Unilever said issues surrounding the supply of its leading brands including Marmite to the supermarket have been resolved.
The two companies were at loggerheads after Unilever said it wanted to raise its prices by about 10% to compensate for the plunge in the value of the pound.
Bank of England Governor Mark Carney on Friday said inflation will likely rise on products such as food due to the fall in the value of the pound amid Brexit worries. He said the sterling's fall "helps the economy adjust" but admitted it would be harder on consumers. He also said the BoE was willing to "tolerate a bit of an overshoot" on the 2% inflation target to avoid unnecessary unemployment and support economic growth.
In other UK news, construction output unexpectedly fell in August, according to the Office for National Statistics.
Construction output fell 1.5% on the month, following revised growth of 0.5% in July. Analysts had expected a 0.2% increase.
In the US, retail sales rose 0.6% in September, as expected by analysts, following a revised 0.2% fall in August, the Commerce Department revealed.
Elsewhere, a survey from the University of Michigan found consumer sentiment in the US unexpectedly deteriorated in October, dropping to its lowest level since last September and the second-lowest in the past two years.
The preliminary reading of the consumer sentiment index fell to 87.9 from 91.2 in September and 90.0 in October last year. Economists had been expecting a reading of 91.9.
Federal Reserve chair Janet Yellen was due to speak in Boston at 1700 BST, with investors hoping she'll provide hints on whether the central bank will raise interest rates this year.
US earnings were also in focus. JP Morgan Chase, Citigroup and Wells Fargo racked up healthy gains as their third-quarter numbers beat forecasts.
Among London-listed corporate stocks, mining shares fell as metal prices dropped. Antofagasta, Randgold Resources and Fresnillo slid.
Capita rallied despite being handed down a €1.15m fine by the Central Bank of Ireland for breaching "the most fundamental of regulatory requirements".
The company offered unauthorised investment services to customers over a nine-year period, creating unnecessary market, investor and customer risks, the Central Bank said.
Provident Financial slumped after it confirmed its performance during the third quarter was in-line with management's own expectations but said its online, short-term loans business Satsuma will no longer make a profit this year.
Man Group surged after the hedge fund manager said funds under management rose 6% in the quarter ended 30 September to $80.7bn, with net inflows of $1.3bn, and announced an agreement to acquire asset manager Aalto Invest Holding AG.
William Hill gained after shareholder Parvus Asset Management said late on Thursday that it opposed the bookmaker's £4.5bn merger with Canada's Amaya. Parvus, which owns a 14% stake in the company, said the deal had "limited strategic logic and would destroy shareholder value". It added that William Hill should consider a sale of the company.
Shares in temporary power supplier Aggreko were under pressure after Peel Hunt downgraded the stock to 'reduce' from 'hold' and cut the price target to 900p from 1,200p. |
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| Market Movers
FTSE 100 (UKX) 7,013.55 0.51%
FTSE 250 (MCX) 17,980.18 0.58%
techMARK (TASX) 3,544.04 0.36%
FTSE 100 - Risers
Tesco (TSCO) 203.70p 4.41%
Mediclinic International (MDC) 914.50p 3.27%
Marks & Spencer Group (MKS) 326.50p 2.29%
Pearson (PSON) 832.50p 2.27%
Informa (INF) 662.00p 2.24%
Barclays (BARC) 170.15p 2.19%
Capita (CPI) 590.50p 2.16%
International Consolidated Airlines Group SA (CDI) (IAG) 379.40p 2.13%
BHP Billiton (BLT) 1,208.50p 2.07%
Burberry Group (BRBY) 1,530.00p 2.00%
FTSE 100 - Fallers
Antofagasta (ANTO) 520.00p -3.61%
Randgold Resources Ltd. (RRS) 6,800.00p -3.27%
Fresnillo (FRES) 1,620.00p -2.76%
Ashtead Group (AHT) 1,315.00p -2.38%
Polymetal International (POLY) 849.50p -1.56%
Unilever (ULVR) 3,545.50p -1.42%
Provident Financial (PFG) 3,036.00p -1.40%
Glencore (GLEN) 228.25p -1.13%
DCC (DCC) 6,940.00p -1.07%
Persimmon (PSN) 1,706.00p -0.99%
FTSE 250 - Risers
Man Group (EMG) 123.70p 13.80%
PayPoint (PAY) 1,168.00p 10.50%
Tullow Oil (TLW) 280.80p 5.80%
William Hill (WMH) 313.40p 4.82%
Serco Group (SRP) 136.30p 4.52%
Drax Group (DRX) 311.00p 3.53%
Entertainment One Limited (ETO) 232.80p 3.51%
Vedanta Resources (VED) 635.00p 3.34%
Grafton Group Units (GFTU) 510.50p 3.07%
ICAP (IAP) 469.50p 3.01%
FTSE 250 - Fallers
Centamin (DI) (CEY) 144.40p -3.28%
Domino's Pizza Group (DOM) 330.60p -3.08%
Countrywide (CWD) 196.50p -2.82%
Acacia Mining (ACA) 453.90p -2.66%
Aggreko (AGK) 940.00p -2.59%
Ibstock (IBST) 157.70p -2.29%
Debenhams (DEB) 54.95p -2.14%
Assura (AGR) 58.55p -2.01%
Moneysupermarket.com Group (MONY) 277.00p -1.95% |
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| | US Market Report | | Small cap round up AIM-listed live events agency Aeorema Communications's full-year revenue fell slightly as a result of a "challenging market", in part caused by Brexit uncertainty while it gained the MailOnline website as a client. For the year ended 30 June, revenues fell slightly by 7% to about £4.58m, compared to last year, which resulted in an 11% fall in pre-tax profit to £340,165.
Maritime domain awareness technology provider SRT Marine Systems announced on Friday that it has received an initial order and first payment for the supply of AIS vessel monitoring transceivers for deployment in Saudi Arabia. The AIM-traded firm said the order will be shipped during the current financial year.
Connected devices and internet-of-things platform provider LightwaveRF announced on Friday it has entered into an agreement with its principal shareholder, Committed Capital Financial Services, for a loan of £150,000. The AIM-traded firm said the loan is secured against anticipated research and development tax credits and carries a coupon of 1.25% per month.
E-procurement software provider EU Supply announced on Friday that it has signed an addendum to the agreement with the Minister for Public Expenditure and Reform in Ireland to develop certain enhancements to the Irish Government's national eProcurement platform. The AIM-traded firm said the platform is powered by the its CTM platform and in use by over 2,500 public sector bodies in Ireland.
AIM-listed Elegant Hotels Group, an operator of six upscale hotels and a beachfront restaurant in Barbados, reported that it had agreed a new management contract in Antigua while experiencing low bookings due to political uncertainties in the UK arisen from the Brexit result. In a trading update for the year ended the 30 September, the company said it agreed, in principle, to bring a 123-room luxury hotel in Antigua into its portfolio under a management contract, the company's first hotel outside Barbados. |
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| | Broker Tips | | Broker tips: Hansteen, Mondi, Weir JP Morgan Cazenove has initiated coverage of property investor Hansteen with a 'neutral' rating and target of 125p.
The investment bank said it expects Hansteen to benefit from stable property values and rents along with the recent weakness in the pound. JP Morgan predicts a £250m uplift due to lower sterling against the euro.
The pound, the acquisition of minority stakes and debt refinancing drive JP Morgan's 2016 estimate for earnings per share of 6.6p and adjusted net asset value of 128p.
While the bank expects 0.5% rental growth, it sees limited capital growth.
JP Morgan added: "In our view, current discounts of 13% to JP Morgan's estimated fiscal year 2016 net asset value and 7% to gross asset value - versus historical discounts of 14% and 8%, respectively - are not cheap on an asset value basis.
"However, the combination of a 5.5% 2016 dividend yield and stable income outlook should support the shares."
Hansteen held a diversified £1.7bn portfolio in the first half at a gross yield of 7.6%, comprising about 500 industrial assets, serving 5,270 tenants in the low-end to middle of the market with average annual rent of £39.9 per square metre (sqm) on a 10-year average and capital value of about £418 per sqm.
The average vacancy rate has been 15% over the past 10 years. Lease lengths are short at two to three years, and retention is high at about 80%.
JP Morgan said while the company offers an attractive dividend, the stock is fully valued on historical price to net asset value ratio.
JPMorgan Cazenove downgraded paper and packaging group Mondi to 'neutral' from 'overweight' following the company's third-quarter numbers on Thursday.
The bank said that while the long-term investment case is intact, a lack of catalysts suggests there is no need to rush.
"Mondi remains a well-run company with a clear strategy and supportive balance sheet (M&A optionality, dividend yield 3% FY16e) and we ultimately expect it to benefit from strong cash flow generation and targeted internal capital investment," JPM said.
"However, short - term factors (forex, forestry gain comps) and a lack of near term catalysts (price hikes across main grades unlikely in next 3-6 months) lead us to become more cautious on the near-term upside."
JPM said Mondi's main currency exposures - the South African rand, the Russian roble and the Polish zloty - are volatile, making forecasting difficult.
However, it looks likely that the benefit over the next nine months could be weaker versus gains seen year-to-date.
"If these remain at spot into FY17 this would result in a negative €2m impact for FY17 - not much and forex may yet move in Mondi's favour, but this looks unlikely to provide the same boost as in YTD FY16."
UBS downgraded Weir to 'neutral' fro 'buy' but lifted the price target to 1,830p from 1,500p saying much of the positives are now priced into the stock.
The bank noted Weir is supported by a recovering oil price (and US rig count) as well as FX.
"The key driver is the oil & gas recovery, in our opinion, and we do expect a strong medium-term recovery. However, we are downgrading to neutral as a lot already looks to be in the price for this - our analysis suggests that around 60% growth in the oil & gas business sales is already being priced in."
UBS said this is above its 2017-18 estimates, but to give context noted that it would only be around a third recovery towards the 2014 peak.
The Swiss bank upped its 2016 earnings per share estimate by 8% to 66.8p, its 2017 estimate by 12% to 77.2p and its 2018 forecast by 11% to 88.3p. It pointed to recent supportive FX moves and said it now assumed a stronger 2016 performance in Minerals, which has stabilised well in recent trading. |
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