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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 fall ahead of Fed, BoE policy announcements London stocks declined on Tuesday as investors sifted through a barrage of manufacturing data and looked ahead to US and UK central bank decisions this week.
The FTSE 100 closed down 0.53% to 6,917.14 points.
The pound dropped 0.11% versus the dollar at $1.2229 as Bank of America Merrill Lynch warned sterling could reach $1.15 by the first three months of next year when formal Brexit negotiations are expected to begin.
The currency rose on Monday following news that Bank of England governor Mark Carney will remain in his post until 2019, which is a year longer than he was expected to stay on.
The BoE is due to deliver its policy announcement on Thursday while the Federal Reserve reveals its decision on Wednesday. Both central banks are expected to stand pat on interest rates but investors will be searching for any hints on the next course of action in their policy statements.
Earlier, the Bank of Japan and the Reserve Bank of Australia kept their monetary policies unchanged.
On the data front, the UK manufacturing sector deteriorated more than expected in October.
The Markit/CIPS UK manufacturing purchasing managers' index fell to 54.3 from 55.5 in September, missing expectations for a reading of 54.5. Still, it remained well above its long-run average of 51.5 and higher than the 50 level that separates an expansion from a contraction.
China's official manufacturing PMI rose to 51.2 in October from 50.4 in September, surprising analysts who had expected a reading of 50.3.
The Caixin China manufacturing PMI also climbed to 51.2 in October from 50.1 a month earlier, beating forecasts for no change.
Chinese service activity expanded further with the official PMI rising to 54.0 last month from 53.7 in September.
In the US, Markit's final manufacturing PMI came in at 53.4 in October, up from an initial reading 53.2 and 51.5 in September.
The ISM's headline manufacturing index rose to 51.9 from 51.5 in September, beating forecasts for a reading of 51.7.
In contrast, US construction spending declined 0.4% in September on the month to a seasonally-adjusted $1.15bn, according to the latest figures from the Commerce Department. It missed economists' expectations for a 0.5% increase.
Meanwhile, oil prices edged higher on a weaker dollar, with Brent crude up 0.20% to $48.71 per barrel and West Texas Intermediate up 0.02% to $46.87 per barrel at 1607 GMT.
In company news, Royal Dutch Shell shares jumped after reporting third quarter profits that beat expectations.
Fellow oil giant BP slumped after it said underlying third-quarter profits halved compared to last year, although the fall was not as bad as feared.
Moneysupermarket surged as it said it was on track to meet forecasts for a record year after a resurge in insurance offset a flat period for credit card and loan switching in the third quarter.
Barratt Developments, Taylor Wimpey, Bovis, Rightmove and Crest Nicholson were boosted by a report that China's second-biggest property developer is in talks to buy privately-owned UK housebuilder Cala in a deal that could be worth as much as £700m.
Asia-focused Standard Chartered was sitting lower after the bank swung to a third-quarter profit, but the numbers missed analysts' expectations.
BTG was under the cosh after RBC Capital Markets downgraded its rating on the pharmaceuticals company to 'sector perform' from 'outperform' and cut its target to 790p from 910p. |
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| Market Movers
FTSE 100 (UKX) 6,917.14 -0.53%
FTSE 250 (MCX) 17,523.30 -0.12%
techMARK (TASX) 3,332.08 -1.03%
FTSE 100 - Risers
Polymetal International (POLY) 938.50p 5.33%
Fresnillo (FRES) 1,718.00p 4.76%
Royal Dutch Shell 'B' (RDSB) 2,199.00p 3.97%
Taylor Wimpey (TW.) 146.80p 3.60%
Royal Dutch Shell 'A' (RDSA) 2,110.50p 3.53%
Barratt Developments (BDEV) 469.10p 3.39%
Dixons Carphone (DC.) 324.00p 2.96%
Travis Perkins (TPK) 1,364.00p 2.33%
Persimmon (PSN) 1,733.00p 2.30%
Randgold Resources Ltd. (RRS) 7,395.00p 2.14%
FTSE 100 - Fallers
Standard Chartered (STAN) 673.30p -5.42%
BP (BP.) 462.05p -4.48%
Shire Plc (SHP) 4,527.50p -2.63%
Smith & Nephew (SN.) 1,156.00p -2.28%
Lloyds Banking Group (LLOY) 56.06p -2.10%
Sage Group (SGE) 707.00p -2.01%
Barclays (BARC) 186.70p -1.89%
Intertek Group (ITRK) 3,356.00p -1.81%
Intu Properties (INTU) 270.60p -1.78%
United Utilities Group (UU.) 923.50p -1.76%
FTSE 250 - Risers
Moneysupermarket.com Group (MONY) 288.90p 10.31%
Hill & Smith Holdings (HILS) 1,057.00p 5.28%
Bovis Homes Group (BVS) 797.00p 5.21%
Supergroup (SGP) 1,400.00p 4.01%
Caledonia Investments (CLDN) 2,417.00p 3.91%
AO World (AO.) 163.70p 3.87%
Vedanta Resources (VED) 741.00p 3.85%
Rightmove (RMV) 3,875.00p 3.75%
Crest Nicholson Holdings (CRST) 420.70p 3.39%
Acacia Mining (ACA) 535.50p 3.28%
FTSE 250 - Fallers
BTG (BTG) 621.50p -5.55%
Savills (SVS) 657.00p -5.33%
Allied Minds (ALM) 330.00p -2.94%
Rotork (ROR) 198.10p -2.89%
Virgin Money Holdings (UK) (VM.) 319.60p -2.86%
Hunting (HTG) 489.50p -2.78%
Aggreko (AGK) 780.00p -2.68%
SEGRO (SGRO) 425.70p -2.63%
Pennon Group (PNN) 813.00p -2.58% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks finish lower on jitters ahead of central bank decisions European stocks closed in the red on Tuesday as investors looked ahead to this week's central bank meetings and digested a batch of manufacturing figures.
Germany's DAX fell 1.30% to 10,526.16 points, France's CAC 40 dropped 0.86% to 4,470.28 points, Italy's FTSE MIB shed 1.32% to 16,898.28 points and Spain's IBEX 35 dipped 1.12% to 9,040.70 points.
Investors were likely to be cautious ahead of rate decisions from the Federal Reserve and the Bank of England on Wednesday and Thursday, respectively.
Earlier, both the Bank of Japan and the Reserve Bank of Australia stood pat on their monetary policies.
IG's Joshua Mahony said: "Overnight announcements from the BoJ and RBA saw two of the four central bank decisions this week err on the side of caution. In much the same way as we expect the Fed to remain steady on rates, with the election uncertainty looming, the same story goes for everyone else, with the outcome sure to significantly alter the state of play for currencies, bonds, commodities and stock valuations."
On the economic data front, China's official manufacturing purchasing managers' index increased to 51.2 in October from 50.4 the month before. A reading above 50 indicates expansion.
The Caixin manufacturing PMI edged up to 51.2 in October from 50.1 in September. Both readings beat forecasts.
In the UK, the Markit/CIPS manufacturing PMI fell to 54.3 from 55.5 in September, missing expectations for a reading of 54.5. Still, it remained well above its long-run average of 51.5.
In the US, Markit's final manufacturing PMI came in at 53.4 in October, up from an initial reading 53.2 and 51.5 in September.
The ISM's headline manufacturing index rose to 51.9 from 51.5 in September, beating forecasts for a reading of 51.7.
In contrast, US construction spending declined 0.4% in September on the month to a seasonally-adjusted $1.15bn, according to the latest figures from the Commerce Department. It missed economists' expectations for a 0.5% increase.
Meanwhile, oil prices edged higher on a weaker dollar, with Brent crude up 0.20% to $48.71 per barrel and West Texas Intermediate up 0.02% to $46.87 per barrel at 1607 GMT.
On the corporate front, the energy sector was in focus as oil giants BP and Shell reported their earnings.
BP was under the cosh after it said underlying third-quarter profits halved compared to last year, although the fall was not as bad as feared.
However, Royal Dutch Shell fared a lot better, racking up solid gains as its third-quarter profits beat analysts' expectations.
Tyre maker Nokian rallied after posting a 2% rise in third-quarter operating profit while consumer goods group Orkla was also in the black after reporting better-than-expected core operating profit for the third quarter.
Moneysupermarket surged as it said it was on track to meet forecasts for a record year after a resurge in insurance offset a flat period for credit card and loan switching in the third quarter.
Asia-focused Standard Chartered slumped after the bank swung to a third-quarter profit, but the numbers missed analysts' expectations. In the quarter ended 30 September, underlying pre-tax profit came in at $458m from a $139m loss in the same period a year ago, but it was below the $520m analysts had pencilled in. |
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| | US Market Report | | US open: Markets falter ahead of Wednesday's Fed meeting US equities faltered on Tuesday, as data revealed that the manufacturing sector grew steadily ahead of the Federal Reserve's meeting on Wednesday, when the central bank is expected to stand pat on interest rates.
The Dow Jones Industrial Average fell 0.09% to 18,126.50 points, S&P 500 declined 0.14% to 2,123.18 points and the Nasdaq was also down 0.14% to 5,181.85 points at 1500 GMT.
Oil prices rebounded after a 4% decline on Monday due to doubts over OPEC's planned production cut to ease supply.
Brent crude was up 0.43% to $48.82 per barrel and West Texas Intermediate crude climbed 0.19% to $46.95 per barrel at 1450 GMT.
Philip Marey, senior US strategist at Rabobank, said: "Hiking only a week before the elections seems unlikely, therefore a December hike remains our baseline scenario. However, the decision to hike may not be unanimous, which could have a perverse effect on yield levels, especially at the longer end of the curve."
The country's manufacturing sector grew in October as the Institute of Supply Management's index rose to 51.9 from 51.5 in September, above the 50 level that indicates an expansion. This was above analyst forecasts of 51.7.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "After a decidedly mixed bag of regional reports, this is a decent result, confirming that the August drop in the index was a one-time fluke rather than the start of a weakening trend.
"Admittedly, the key new orders index dipped by three points to 52.1, and that will make it harder to keep the headline at its current level over the next few months, but strong import demand from China should prevent any further dip in orders, they seem more likely to rebound."
In contrast US construction spending unexpectedly declined in September as it fell 0.4% to a seasonally-adjusted $1.15bn, missing economists' expectations for a 0.5% increase. On the year, construction spending was 0.2% lower.
Meanwhile, economic data from China was better-than-expected and sent Asian shares higher earlier.
The manufacturing purchasing managers' index increased to 51.2 in October from 50.4 the month before, which was the highest level since July 2014, as the Caixin manufacturing PMI edged up to 51.2 from 50.1.
In corporate news, US shares in Royal Dutch Shell rose 4.56% as the oil behemoth exceeded expectations for third quarter earnings, but cautioned against an uncertain outlook due to weak oil prices.
Car maker Fiat Chrysler's shares were up 0.27% to as it reported a 10% fall in sales year-on-year in October, although this was countered with strong truck sales. |
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| | Broker Tips | | Broker tips: Centamin, Ladbrokes Coral, Amec Foster Wheeler Numis on Tuesday lowered its recommendation on Centamin to 'hold' from 'add' and left its target at 170p following the recent rally in the share price.
Centamin on Monday said it expects 2016 gold production to be towards the upper end of its guidance of between 520,000 and 540,000 ounces as it reported a 41% increase in output in the third quarter to 148,674 ounces.
The miner reported earnings before interest, tax, depreciation and amortisation of $122m compared to $31m a year ago. Numis had expected EBIDTA of $109m.
Centamin finished the period with no debt and $388m of cash. "Centamin is well positioned to either increase the level of distribution or to fund the development of its exploration assets in West Africa without new external funds," Numis said.
Numis also noted that Centamin has started with the development of a new decline at the Sukari mine, Cleopatra, which the broker believes will increase operational flexibility.
It could also account for production of up to 180,000 ounces per year, assuming similar grades and recoveries like other areas at Sukari, Numis added. "Ultimately management hope to be able to mine up to 1m tonnes per year from this area of Sukari."
As Ladbrokes Coral completed its merger and began its first day of trading as a combined entity on Tuesday, analysts gave their initial takes on the stock, which will trade under the ticker LCL.
Morgan Stanley put the bookmaking group, which begins life with a market cap of close to £2.6bn, on a 'overweight' rating and set a price target of 190p, with expectations that the merged business will deliver a compound annual growth rate in earnings per share between 2017 and 2019 of 23% driven by online growth, merger synergies and strong cash generation.
Ladbrokes Coral has guided to synergies of around £65m from the merger, while the Ladbrokes business has been improving thanks to strategic changes begun last year.
"We benchmark to its closest peer William Hill and see higher growth, similar UK retail exposure, a larger online business and a significant valuation discount," Morgan Stanley said, citing significant hidden value in online and overseas revenues.
The investment bank sees upside risks to the £65m synergy target, margin upside in online, strong cash generation, and rising returns to shareholders but warns of a potential £100m bear case hit if the UK government clamps down on fixed-odds betting terminals, with other regulatory risks in Australia and Italy.
Shore Capital said the base case scenario is for group earnings before interest, tax, depreciation and amortisation (EBITDA) to build from pro-forma £375m and earnings per share of 10p towards £500m and EPS of 15p by 2018.
But, as it slapped a 'buy' recommendation on the shares, ShoreCap sees a bull case scenario where the enlarged business eliminates gap with peers in cost and revenue per shop and improves its online margin towards 30%, with EBITDA building to circa £650m and EPS of 23p.
"Our analysis suggests that Ladbrokes Coral is worth circa 180p per share based on our central case assumptions rising to over 220p per share on our bull case assumptions," the broker said.
At opening price of 134p Ladbrokes Coral trades on 8.0 times 2017 forecast EBITDA, with an implied valuation of 3.0 times EBITDA.
"We see significant upside from here on all but draconian restrictions on machine play," ShoreCap's analysts concluded.
Amec Foster Wheeler was under the cosh on Tuesday as Barclays downgraded the stock to 'equalweight' from 'overweight' and cut the price target by 17% to 500p.
Barclays pointed out that the group is currently undergoing a much deeper introspection than previously expected, in a market worse than expected, with the process not likely to be finalised until March 2017.
"This process will include divestments and likely investments, not only in the business systems and processes, but also potentially inorganically. As such, despite the company articulation of a GB£100m cost saving programme, a degree of uncertainty has been added to the investment case."
The bank said the level of investment needed is unclear and the capital structure needed has been called into question.
Barclays gave Amec credit for releasing an update in October rather than "muddling to an unsatisfactory update" in November, as planned.
"By laying itself bare, it opened itself to criticism of over promising too early, a fair comment in our opinion. That said, there was no clarity on the potential scope of the company post the reorganisation at the August update as well, yet the market accepted it."
Shares in the oil services company tumbled last week after it said it expected further declines in the oil and gas market and postponed its planned capital markets day as it needs more time to come up with a strategy.
"The issue is with potential balance sheet actions now. Potentially needed is that the restructuring is not confined to organic cash flows. Hence, what investors will pay for exposure to the still uncertain future is now harder to define. As such, like the company, we feel it prudent to step back," Barclays said. | | |
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