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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 pound weakens against dollar The FTSE 100 ended Thursday's session higher even as the pound weakened against the dollar on worries about future UK economic growth, with banks tracking gains on yields for longer-dated Gilts.
London's top tier index closed up 0.41% to 6,986.57 points while the pound fell 0.69% to $1.2162.
Gross domestic product rose 0.5% quarter-on-quarter in the three months to September, slowing from 0.7% in the quarter to June, the Office for National Statistics revealed.
However, it was considerably higher than the 0.3% economists had expected.
Compared to a year ago, third quarter GDP increased 2.3% following a 2.1% year-on-year increase in the second quarter. Analysts had expected no change to the annualised figure.
It was the first ONS release on GDP to cover a full quarter since the UK voted to leave the European Union on 23 June. However, many analysts believe the economy faces a further slowdown in 2017 when Prime Minister Theresa May invokes Article 50, which would trigger the formal Brexit process.
Connor Campbell, financial analyst at Spreadex said the slide in the pound suggests that "despite the positive surprise across the third quarter investors are still worried about Britain's growth prospects, especially in 2017".
Acting as a backdrop, the yield on the benchmark 10-year Gilt jumped 10 basis points to 1.25% - and hit a post-Brexit high of 1.29% at one point during the session.
Elsewhere, data showed a decline in Chinese industrial profit growth last month. Figures released earlier by the National Bureau of Statistics revealed profits in September were up 7.7% to 577.1bn yuan, slowing significantly from a 19.5% increase in September.
In the US, data from the Labor Department showed that initial jobless claims declined by 3,000 to 258,000 from an upwardly-revised 261,000, economists had expected a drop to 255,000.
This was the 86th consecutive week of initial claims below 300,000 - the longest streak since 1970.
The Commerce Department revealed orders for US durable goods, products such as cars and computers which are designed to last more than three years, fell 0.1% to £227.3bn in September from the previous month, which was close to the 0.0% consensus.
The US pending home sales index rose 1.5% month-on-month to 110.0 in September, according to the National Association of Realtors', compared to a 2.4% drop in August. Analysts had expected a 1.1% increase.
Meanwhile, oil prices rose after the Energy Information Administration late on Wednesday said crude inventories fell 553,000 barrels in the week ended 21 October. Brent crude jumped 1.08% to $50.53 per barrel and West Texas Intermediate gained 1.06% to $49.71 per barrel at 1640 BST.
Barclays was the standout gainer after reporting a rise in third-quarter pre-tax profit as it benefited from a strong performance in its fixed trading division.
Information and analytics company Relx Group advanced after saying its outlook remains unchanged and it expects underlying revenue, profit and earnings to increase for the full year.
Lloyds was on the front foot as the government cut its stake in the bank to just under 9%, or 6.42bn shares from 7.1bn previously. It also received a positive endorsement from analysts at UBS who nudged their target on the stock higher.
On the downside, airlines flew lower. International Consolidated Airlines Group slumped after Societe Generale downgraded its stance on the British Airways and Iberia parent company to 'hold' from 'buy' and cut the price target to 420p from 500p.
Peer easyJet also lost ground.
BT Group was under the cosh following the release of its second-quarter results amid concerns about its pension deficit, which grew to £9.5bn from £6.2bn.
Barratt Developments, Wolseley and Provident Financial declined as their shares went ex-dividend. |
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| Market Movers
FTSE 100 (UKX) 6,986.57 0.41%
FTSE 250 (MCX) 17,581.32 -0.50%
techMARK (TASX) 3,399.00 -0.36%
FTSE 100 - Risers
Barclays (BARC) 190.50p 4.79%
Lloyds Banking Group (LLOY) 57.50p 2.90%
ITV (ITV) 172.10p 2.81%
Sky (SKY) 820.50p 2.43%
Relx plc (REL) 1,462.00p 2.31%
Royal Dutch Shell 'B' (RDSB) 2,170.50p 1.64%
Royal Dutch Shell 'A' (RDSA) 2,081.50p 1.61%
Next (NXT) 4,806.00p 1.61%
Reckitt Benckiser Group (RB.) 7,319.00p 1.60%
Imperial Brands (IMB) 3,938.00p 1.48%
FTSE 100 - Fallers
Barratt Developments (BDEV) 438.90p -7.77%
AstraZeneca (AZN) 4,614.50p -3.40%
Wolseley (WOS) 4,209.00p -3.31%
Provident Financial (PFG) 2,964.00p -2.53%
British Land Company (BLND) 578.00p -2.45%
easyJet (EZJ) 921.00p -2.44%
International Consolidated Airlines Group SA (CDI) (IAG) 413.20p -2.25%
BT Group (BT.A) 379.25p -2.15%
Land Securities Group (LAND) 985.00p -1.89%
Dixons Carphone (DC.) 315.50p -1.77%
FTSE 250 - Risers
Fidessa Group (FDSA) 2,465.00p 7.36%
Kaz Minerals (KAZ) 302.10p 6.82%
Vesuvius (VSVS) 365.10p 4.85%
Rank Group (RNK) 196.40p 4.75%
Euromoney Institutional Investor (ERM) 1,044.00p 3.37%
CLS Holdings (CLI) 1,573.00p 3.35%
FirstGroup (FGP) 111.70p 3.14%
Debenhams (DEB) 55.35p 3.07%
Brown (N.) Group (BWNG) 192.40p 2.67%
Ocado Group (OCDO) 280.70p 2.37%
FTSE 250 - Fallers
Amec Foster Wheeler (AMFW) 465.90p -20.43%
Berendsen (BRSN) 1,030.00p -16.33%
Galliford Try (GFRD) 1,210.00p -7.28%
Petrofac Ltd. (PFC) 828.00p -4.72%
Shawbrook Group (SHAW) 227.40p -3.07%
Sophos Group (SOPH) 224.40p -3.03%
Henderson Group (HGG) 231.50p -2.89%
Petra Diamonds Ltd.(DI) (PDL) 153.90p -2.59%
NCC Group (NCC) 197.40p -2.42%
Virgin Money Holdings (UK) (VM.) 326.30p -2.31% |
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| | US Market Report | | US open: Stocks climb as earnings season continues US stocks climbed on Thursday, as the quarterly earnings season continued with a wave of results from Twitter, Tesla, and ConocoPhillips.
At 1458 BST, the Dow Jones Industrial Average rose 0.11% to 18,218.95 points, the S&P 500 increased 0.11% to 2,141.71 points and the Nasdaq was up 0.22% to 5,261.96 points.
Oil prices advanced after data from the Energy Information Administration revealed that crude inventories fell 553,000 in the week ended 21 October, as doubts continue whether OPEC would agree to a cut in supply.
Brent crude rose 0.597% to $50.29 a barrel and West Texas Intermediate was up 0.405% to $49.38 at 1502 BST.
Shares were up 4.13% in Tesla Motors as the carmaker reported that it made a surprise profit and better than expected revenue, whereas shares in Ford Motor Company were down 1.6% after it said its third quarter profit fell 56% due to recall costs, but its 26 cents per share operating profit exceeded expectations.
Twitter edged a further 1.38% as it beat profit and sales expectations but said it was to cut 9% of its workforce amid uncertainty over a potential takeover.
Oil and gas explorer ConocoPhillips' shares rose 3.44% as it reported that its 66 cents per share quarterly adjusted loss was narrower than expected of 68 cents.
Meanwhile, data from the Labor Department showed that initial jobless claims declined by 3,000 to 258,000 from an upwardly-revised 261,000, economists had expected a drop to 255,000.
This was the 86th consecutive week of initial claims below 300,000 - the longest streak since 1970.
The Commerce Department said orders for US durable goods, products such as cars and computers which are designed to last more than three years, fell 0.1% to £227.3bn in September from the previous month, which was close to the 0.0% consensus.
Paul Sirani, chief market analyst at Xtrade, said: "Demand for durable goods was choppy a few months back and September's unexpected dip isn't great news for Federal Reserve chair Janet Yellen.
"Business spending and consumer confidence in shelling out on those big-ticket items isn't exactly soaring at the moment and this is one area holding back the world's largest economy. September's numbers add to the mixed outlook for the US.
He added that Friday's GDP price index could be a better indicator of whether the road leading towards a December interest rate hike remains open.
Results from technology giants, Alphabet, Amazon and Linkedin are due after market closes.
Connor Campbell, a financial analyst at Spreadex, said the potential for drama would come after the close as Alphabet's third quarter results could have a notable bearing on the Dow Jones' performance during Friday's session. |
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| | Broker Tips | | Broker tips: IAG, Antofagasta, Ryanair Societe Generale downgraded its stance on British Airways and Iberia parent International Consolidated Airlines to 'hold' from 'buy' and cut the price target to 420p from 500p.
The bank said that while IAG has built a strong track record over recent years, over-delivering on cost-cutting and synergies, the market overestimates its earnings generation capabilities and the transatlantic market is becoming more competitive.
SocGen said it was cutting its earnings forecasts, mainly on the back of ongoing sterling weakness.
In addition, it highlighted "several worrying developments over recent months", including uncertainty about the prospects for the British economy following the Brexit vote in June.
SocGen pointed out that British Airways contributes almost 75% of group profit. "The transatlantic market is becoming more competitive, as non-alliance carriers are expanding aggressively. And, most importantly, weak sterling will impair BA's profitability (as the fuel bill is paid in US dollars) and will, on top, have a (translation) effect on group profits reported in euros," it said.
The French bank also argued that the market forecast of flat earnings in full-year 2017 looks unrealistic. "We expect underlying margin pressure at BA, and unless the pound massively recovers from here, the translation effect will definitely weigh on earnings. Recall that IAG issued a profit warning on the day after the Brexit vote. Effects in its underlying business were not visible yet on that day, but the pound had fallen some 10%."
UBS upgraded Antofagasta, a Chilean copper mining company, from 'sell' to 'neutral' even after the company released a weaker than expected production target for fiscal year 2017, albeit at the same time lowering the price target from 520p to 500p.
"After the release of weaker than expected FY17 production guidance we do not see material negative stock-specific catalysts on the horizon and believe the near-term copper price outlook is balanced," said UBS analyst Daniel Major.
The expensive valuation alone is no longer enough to warrant a 'sell' rating following the shares significant underperformance in fiscal year 2016 and the lack of 'clean' copper plays.
Year-to-date stock in Antofagasta fell 12% versus a 35% gain for Bloomberg´s mining index, Major pointed out.
Major believed that the company faced structural changes from grade decline and ore hardness at Los Pelambres, but said the market was becoming increasingly aware of these challenges.
Disappointing full-year guidance for 2017 production and capital expenditures highlights the continued structural medium-term issues that the company and the Chilean copper industry face. After incorporating new guidance, the analyst downgraded his earnings estimate for 2017 and projected negative free cash flow (FCF) for the miner.
He also saw "modest" downside risk to the full-year 2016 production guidance of 710 kilotons (kt), which may be offset by slightly lower net cash costs.
Copper has materially underperformed the major mined commodities in the full year 2016 with robust demand growth offset by stronger-than-expected supply growth, mostly due to fewer disruptions. Looking into 2017 supply growth is set to slow and the analysts expect demand to remain stable. Supply constraints are likely to drive deficits and higher prices in the medium-term.
The Swiss broker trimmed its net present value (NPV) estimate for the company´s cash flows by approximately 5% to reflect weaker guidance.
Nonetheless, for those looking for leverage to copper price upside the analyst expressed his preference for Glencore and KAZ Minerals.
JP Morgan Cazenove on Thursday said Ryanair remains its "top pick" of European airlines as it took a look at the sector.
The bank reiterated an 'overweight' rating on the budget airline and lifted its target to €15.25 from €14.25.
Wizz Air is JP Morgan's second choice of airlines. Its rating was also left at 'overweight' and its target raised to 2,075p from 1,950p.
"Both stocks are rated 'overweight' given long-term potential to expand market share on the back of industry leading unit cost performance," JP Morgan said.
"While we project greater absolute upside potential for Wizz, progress is presently challenged by restrictions on expansion of non-EU holdings. It also faces a relative fuel cost headwind and potentially expanded focus from Ryan Air in Eastern Europe."
On International Airlines Group, owner of British Airways, JP Morgan said it is one of the most exposed airlines to the Brexit vote. It recommended an 'underweight' rating and cut the target to €5.00 from €5.60 on its shares traded on the Bolsa de Madrid exchange. |
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