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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 finish lower after weak UK industrial report London stocks finished lower on Monday as oil prices slumped and data showed a sharp drop in monthly UK industrial orders.
The FTSE 100 closed down 0.49% to 6,986.40 points while the pound dipped 0.29% to $1.2199.
"Now that the pound has stopped its freefall (for now at least), perhaps the index as a whole is beginning to look a tad overpriced," said IG's chief market analyst Chris Beauchamp.
"Certainly, it has shown little inclination to get back to its recent highs, with ongoing Brexit uncertainty making the UK less attractive versus a eurozone economy that appears, on the basis of today's PMI numbers, to be looking much more attractive."
IHS Markit's 'flash' Eurozone composite purchasing mangers' index jumped to 53.7 in October from 52.6 in September, ahead of forecasts of 52.8 and above the 50 level that separates an expansion from a contraction.
The manufacturing PMI rose to 53.5 in October from 52.6 a month earlier, beating expectations of 52.7. The services PMI climbed to 53.5 from 52.5, compared to an estimated 52.4.
Closer to home, however, the Confederation of British Industry's monthly industrial orders balance fell to -17 in October from -5 in September, well below the consensus of -5. Although CBI said manufacturing output and orders grew in the last quarter.
"Manufacturers' are optimistic about export prospects and export orders are growing, following the fall in sterling," said CBI's chief economist Rain Newton-Smith.
"However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead."
Also weighing on UK-listed shares, strategists at JP Morgan downgraded their view UK stocks from 'overweight' to 'neutral'.
The same investment bank lifted its view on Eurozone shares to 'overweight' from 'neutral'.
In the US, Markit's PMI rose to 53.2 in October from a three-month low of 51.5 in September, surpassing estimates for a reading of 51.5.
James Bullard, President of the Federal Reserve Bank of St. Louis and voting member of the Federal Open Market Committee, said low interest rates will likely be the normal over the next two to three years. His remarks on Monday came ahead of next week's policy meeting.
Meanwhile, oil prices were under pressure as Iraqi oil minister Ali al-Luaibi said the nation wanted to be exempt from an OPEC deal to cut production.
Brent crude dipped 0.8% to $51.34 per barrel and West Texas Intermediate declined 0.99% to $50.35 per barrel at 1635 BST.
On the company front, easyJet flew higher after UBS upgraded its recommendation to 'buy' from 'neutral' but trimmed the target to 1,050p from 1,070p. "Shares are pricing in material future value destruction - we don't think this will be the case," said UBS analyst Jarrod Castle.
Schroders was also firmer, after it announced that Robin Stoakley - the managing director of its UK intermediary business - is stepping down after 15 years.
Petra Diamonds advanced as it reported a 30% increase in first quarter production to 1,097,523 carats.
British American Tobacco was lower after Fitch warned the proposed merger with Reynolds would put the group's A- credit rating at risk.
Cobham slumped after it cut its trading profit guidance to £255-275m, including favourable currency impacts, due to softer conditions in the wireless and satellite communications markets. |
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| Market Movers
FTSE 100 (UKX) 6,986.40 -0.49%
FTSE 250 (MCX) 17,860.52 -0.41%
techMARK (TASX) 3,433.55 -1.40%
FTSE 100 - Risers
Provident Financial (PFG) 3,089.00p 2.80%
DCC (DCC) 6,705.00p 1.90%
easyJet (EZJ) 931.50p 1.42%
Standard Life (SL.) 341.40p 1.40%
Schroders (SDR) 2,845.00p 1.39%
International Consolidated Airlines Group SA (CDI) (IAG) 404.80p 1.28%
Whitbread (WTB) 3,843.00p 1.26%
Antofagasta (ANTO) 525.00p 1.25%
Prudential (PRU) 1,401.00p 1.16%
Aviva (AV.) 445.30p 1.09%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 1,854.00p -2.78%
Anglo American (AAL) 1,065.50p -2.61%
Randgold Resources Ltd. (RRS) 6,985.00p -2.38%
United Utilities Group (UU.) 933.00p -2.20%
Burberry Group (BRBY) 1,463.00p -2.14%
Shire Plc (SHP) 4,945.50p -2.13%
AstraZeneca (AZN) 4,851.00p -2.04%
Fresnillo (FRES) 1,613.00p -2.00%
Associated British Foods (ABF) 2,475.00p -1.86%
National Grid (NG.) 1,047.00p -1.83%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 148.20p 6.01%
Senior (SNR) 180.50p 3.44%
B&M European Value Retail S.A. (DI) (BME) 244.60p 2.56%
Riverstone Energy Limited (RSE) 1,235.00p 2.15%
Entertainment One Limited (ETO) 237.00p 1.85%
CYBG (CYBG) 275.90p 1.85%
Man Group (EMG) 125.00p 1.79%
JRP Group (JRP) 125.60p 1.70%
Rathbone Brothers (RAT) 1,833.00p 1.55%
Investec (INVP) 497.80p 1.45%
FTSE 250 - Fallers
Cobham (COB) 139.70p -13.01%
NCC Group (NCC) 211.10p -3.61%
Aveva Group (AVV) 1,922.00p -3.37%
Ocado Group (OCDO) 268.30p -3.32%
Phoenix Group Holdings (DI) (PHNX) 855.00p -3.28%
Supergroup (SGP) 1,368.00p -3.18%
WH Smith (SMWH) 1,528.00p -3.05%
Hunting (HTG) 525.00p -2.60%
Berkeley Group Holdings (The) (BKG) 2,393.00p -2.45%
William Hill (WMH) 287.70p -2.38% |
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| | US Market Report | | US open: M&A news bolsters main market averages A bevy of news on the mergers and acquisitions front pushed the main Wall Street averages higher at the start of trading.
As of 1456 BST the S&P 500 was rising 0.49% or 10.38 points to 2,151.53, the Dow Jones Industrial Average by 0.47% to 18,231.88 points and the Nasdaq Composite by 0.87% to 5,303.00.25 points.
Oil prices, on the other hand, fell as Iraqi oil minister Ali al-Luaibi said it wanted to be exempt from an OPEC deal to cut production. Comments from Iran's deputy oil minister Amir Hossein Zamaninia saying Tehran would encourage other OPEC members to join an output freeze had helped to stem losses earlier in the session.
West Texas Intermediate crude dropped 1.07% to $50.31 per barrel and Brent crude slid 0.82% to $51.36 per barrel at 1459 BST.
On the data front, US manufacturing came out of the doldrums in October, according to the results of a widely-followed survey.
IHS Markit's purchasing managers' index for the US factory sector picked up from 51.5 in September to a reading of 53.2 in October, easily outpacing forecasts for a reading of 51.5.
Chris Williamson, Chief Business Economist at IHS Markit said: "Manufacturing showed further signs of pulling out of the malaise seen earlier in the year, starting the fourth quarter on a solid footing.
"Both output and new orders are rising at the fastest rates for a year amid increasingly widespread optimism that demand will pick up again after the presidential election, which has been commonly cited as a key factor that has subdued spending and investment in recent months."
In a speech on Monday morning, Stateside, St.Louis Fed president James Bullard said the central bank only needed to raise rates one more time to bring it very close to the appropriate level for short-term interest rates suggested by a so-called modified Taylor-rule.
Charles Evans and Jerome Powell were scheduled to speark later in the session.
In another speech, New York Fed president William Dudley did not make any policy-relevant remarks.
AT&T shares were under pressure in pre-market trade after its proposed $85bn takeover of Time Warner generated scepticism from Democrats and Republicans on Sunday. Time Warner shares, however, rose.
Republican candidate Donald Trump has said he would block the takeover. Democrat candidate Hillary Clinton did not comment on the proposed deal but has expressed misgivings about big mergers in the past. Senator Bernie Sander said on Twitter that the administration should "kill" the Time Warner takeover as it would mean higher prices and fewer choices for consumers.
"AT&T is already the third largest cable provider, so there is a feeling that this kind of consolidation can only be negative for consumers in both prices and range of content," said IG's Joshua Mahony.
"A Senate hearing in November will be the next hurdle to overcome if this deal is to become a reality."
Elsewhere, shares in B/E Aerospace Inc. jumped after Rockwell Collins Inc. on Sunday announced a $6.4bn deal to merge the two aerospace suppliers.
Genworth Financial Inc. gained after agreeing to be bought by Chinese investment firm, China Oceanwide Holdings Group for $2.7bn.
TD Ameritrade announced it would buy-out rival Scottrade for $4bn.
Kimberly-Clark shares were lower after the maker of Huggies diapers lowered its full-year sales forecasts.
VF Corp. also lowered its annual sales guidance after it posted third quarter revenues of $3.49bn, down from the $3.53bn seen one year ago and below the $3.63bn penciled in by analysts.
T-Mobile US on the other hand saw third quarter adjusted earnings per share jump to 27 cents, coming in well ahead of the 21 cents seen by the Wall Street consensus.
From a sector standpoint the best performing industrial groups were: Mobile Telecommunications (3.46%), Real estate services (1.86%) and Tires (1.50%). |
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| | Broker Tips | | Broker tips: Acacia Mining, Petra Diamonds, Rathbone Brothers Acacia Mining's shares rose on Monday as Deutsche Bank reiterated a 'buy' rating and lifted its target to 580p from 570p, citing progress on the company's turnaround.
The miner last Friday reported it swung to a pre-tax profit for the third quarter and said full-year gold production is now expected to be about 5% higher than the top end of the previous output guidance.
Gold production jumped 25% to 204,726 ounces and sales of the commodity increased 24% to 206,488 ounces in the third quarter. Gold was sold at $988 per ounce, down 16% on the same quarter a year ago.
Production was driven by a strong performance at North Mara, which delivered output of 112,523 ounces, offsetting disruptions at the Bulyanhulu mine and slightly lower production at Buzwagi.
Acacia also reiterated its full year all-in costs guidance at the bottom of the $950-980 per ounce range, compared to $1,112 per ounce in 2015.
"Acacia's turnaround story is progressing well and the group increased its cash balance by another US$18m, during the quarter, to U$302m," said Deutsche Bank.
"This should help in periods of more muted gold price performance, we maintain our 'buy' rating."
Deutsche noted that Acacia's earnings before interest tax depreciation and amortisation of $125m was materially higher than its $100m estimate, primarily due to the low-cost ounces coming from North Mara. It was also $104m higher than the third quarter of 2015.
"With total capital expenditure of $53m during the quarter and minor changes in working capital, the free cash flow of $43m was another positive outcome," Deutsche said.
"We forecast full year 2016 free cash flows of $192m. The group pays 15% to 30% of the free cash flow as dividends."
However, the bank said it sees downside risks include lower gold prices, higher-than-expected costs and taxes, and volatility in the Tanzanian shilling.
Deutsche also highlighted the risk related to Barrick Gold, which could further sell down its 64% majority stake in Acacia.
Canaccord Genuity reiterated a 'buy' rating and target of 165p on Petra Diamonds after the miner reported its first quarter trading update.
Petra reported a 30% increase in production to 1,097,523 carats for the three months to 30 September, boosted by an increased contribution from undiluted ROM ore, improving ROM grades and additional tailings production from Kimberley Ekapa Mining.
First quarter revenue was $94.7mi from 745,447 carats sold, compared to nil in the first quarter of last year as no tender was held.
Net debt at period end was $463.9m - up from $384.8m at the start of the period, but within expected levels and excluding cash from the October diamond tender.
Chief executive Johan Dippenaar said the group continues to expect full year production of 4.4 to 4.6 Mcts, in line with earlier guidance.
Canaccord expects the full year to be weighted towards the second half when increasing volumes of higher grade ROM ore are produced.
Petra said new caves being installed at Cullinan and Finsch are starting to deliver undiluted ore and will result in a continued increasing ROM grade profile and improved product mix.
"These results were very much in line with expectations, and we see no need to change our fiscal year 2017 estimates," Canaccord said.
"We currently forecast full-year earnings before interest, tax, depreciation and amortisation of $274m, net profit of $82m and earnings per share of 15.2 cents."
Investment and wealth manager Rathbone Brothers remains the quality play in the sector and justifies a premium rating relative to peers, Numis said on Monday.
Numis reiterated a 'buy' rating and target of 2,350p on the stock after the company last week announced plans to raise about £38m via a share placing with institutional investors. The capital raise will fund the expected near-term requirements associated with changes the firm is making to its defined benefit (DB) pension scheme.
"We believe the decision to raise additional capital is prudent and provides the group with additional financial flexibility; something not to be begrudged in our view given the current uncertain market environment and the potential for further mergers and acquisitions," Numis said.
"We continue to favour Rathbones as we believe its conservative operating model combined with the industry's numerous structural growth drivers will generate earnings growth of at least 10% pa over the medium to long term."
Rathbones last Thursday posted a trading update for the three months to 30 September on Thursday, with total funds under management (FUM) sitting at £33.2bn at period end - up 8.5% from £30.6bn on 30 June.
The FTSE 250 firm compared it to an increase of 6.1% in the FTSE 100 Index and 5.2% in the FTSE WMA Balanced Index in the three month period.
Net operating income was £65.9m for the period, up 18.5% from £55.6m in the third quarter of 2015.
The group has also decided to close its DB pension scheme as the recent collapse in bond yields resulted in a sharp increase in the deficit to £58m from £32m in the first half.
Numis noted that while the decision to close this scheme is expected to generate higher regulatory capital requirements of around £20m in the near-term, the board believes it will be outweighed by longer-term benefits including reduced ongoing contributions and lower capital requirements.
"We favour Rathbones as we believe its reputable brand, steady investment performance and established network helps it generate one of the most consistent organic FUM growth rates across the industry," the broker added. |
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