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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: FTSE finishes lower as pound strengthens on Brexit news The FTSE 100 closed Friday's session in the red as the pound strengthened against the dollar on reports some MPs are prepared to vote against triggering the formal Brexit process.
London's top tier index fell 1.43% to 6,730.43 points, while the pound rose 0.21% versus the dollar and was changing hands at $1.2581.
Sterling received a boost after Liberal Democrat, Labour and SDLP MPs told the BBC they are willing to vote against invoking Article 50 in Parliament. Lib Dem leader Tim Farron said his party would oppose Brexit unless promised a second referendum on the UK's deal with the European Union.
"The pound was expected to rise on last week's realisation that Article 50 is now in the hands of Brexit-sceptic MPs, and with the US election now out of the way, we are seeing that pound rebound take shape," said IG's Johsua Mahony.
"Much like a weakening euro was perceived to be good for UK stocks, today's pound rally is doing little to help the FTSE, which has suffered more than most."
S&P Global said a so-called "hard Brexit", in which Britain loses its access to the single market, is the most likely outcome of negotiations. S&P's chief sovereign credit officer Mortiz Kraemer said it is hard see how a hard Brexit can be avoided unless both sides become more flexible.
"Nothing today suggests that a common quest for compromise will overcome the gulf that now looks as wide as the English Channel," Kraemer said.
In economic data, UK construction output hit its lowest level in four years in July to September. The Office for National Statistics said construction volumes fell by 1.1% in the third quarter compared to the April to June period, marking the weakest performance since the third quarter of 2012. Still, this was less steep than the 1.4% drop expected.
Data from Destatis confirmed German inflation was at a two-year high in October. Consumer prices last month rose 0.2% from September and 0.8% from October last year, which is its highest level since October 2014. Meanwhile, the annual rate of inflation came in at 0.7%. This was in line with consensus and the original estimate.
In the European Union, consumer prices were up 0.2% on the month and 0.7% compared to October 2015.
Stateside, consumer sentiment improved more than expected in November, hitting its highest level since mid-2016, according to data released on Friday. The University of Michigan's preliminary US consumer sentiment index rose to 91.6 in November from 87.2 the month before and 91.3 in the same month last year, beating expectations for a reading of 87.5.
Meanwhile, oil prices plunged after OPEC said its production increased by 240,000 barrels a day in October, reaching an average of 33.64 million barrels per day. Brent crude dropped 3.2% to $44.39 per barrel and West Texas Intermediate declined 3.1% to $43.28 per barrel at 1649 GMT.
Among corporate stocks, miners were under pressure as prices of gold, silver and copper dropped. Fresnillo and Randgold Resources were among the biggest fallers.
Shares in BT Group bounced back from a three-year low on Thursday, as the telecommunications company barred Deutsche Telekom from selling its 12% stake in the company.
EasyJet's shares rose after Berenberg started the budget airline at 'buy' with a 1,250p price target.
Standard Chartered was weaker on its exposure to emerging markets, which could be hindered on protectionist policies affecting emerging markets under Donald Trump's leadership.
Royal Dutch Shell slumped as it announced plans to invest $10bn in Brazil over five years and as oil prices retreated.
SIG plummeted as the building products distributor issued a profit warning and announced that its chief executive has stepped down, as its like-for-like, third quarter sales fell. Jefferies downgraded SIG to 'hold' from 'buy' and slashed the price target to 90p from 140p following the profit warning.
Tullow Oil's shares were under the cosh as Canaccord Genuity downgraded its rating to 'sell' from 'hold' but raised its target to 230p from 220p.
Cranswick advanced after Liberum upgraded the stock to 'buy' from 'hold' saying the recent de-rating offers a buying opportunity. |
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| Market Movers
FTSE 100 (UKX) 6,730.43 -1.43%
FTSE 250 (MCX) 17,444.97 -1.21%
techMARK (TASX) 3,309.46 -1.28%
FTSE 100 - Risers
BT Group (BT.A) 361.00p 3.78%
Marks & Spencer Group (MKS) 327.20p 3.28%
Next (NXT) 5,040.00p 3.05%
Severn Trent (SVT) 2,177.00p 2.21%
Associated British Foods (ABF) 2,598.00p 2.16%
Sainsbury (J) (SBRY) 235.20p 2.04%
easyJet (EZJ) 1,055.00p 1.64%
Taylor Wimpey (TW.) 145.60p 1.61%
Hammerson (HMSO) 551.00p 1.57%
United Utilities Group (UU.) 879.00p 1.56%
FTSE 100 - Fallers
Fresnillo (FRES) 1,435.00p -8.95%
Randgold Resources Ltd. (RRS) 5,955.00p -6.73%
Standard Chartered (STAN) 617.20p -6.34%
Smiths Group (SMIN) 1,374.00p -4.98%
Polymetal International (POLY) 836.50p -4.94%
Mondi (MNDI) 1,517.00p -4.65%
Royal Dutch Shell 'B' (RDSB) 2,038.00p -4.57%
Royal Dutch Shell 'A' (RDSA) 1,949.00p -4.37%
Rolls-Royce Holdings (RR.) 740.50p -3.89%
BAE Systems (BA.) 590.50p -3.51%
FTSE 250 - Risers
Daejan Holdings (DJAN) 5,610.00p 3.69%
Countryside Properties (CSP) 237.40p 3.46%
Sports Direct International (SPD) 320.70p 3.02%
Euromoney Institutional Investor (ERM) 1,122.00p 2.97%
Cranswick (CWK) 2,213.00p 2.88%
Workspace Group (WKP) 682.00p 2.87%
IP Group (IPO) 153.10p 2.63%
Countrywide (CWD) 202.30p 2.28%
Kaz Minerals (KAZ) 359.80p 2.22%
AO World (AO.) 169.70p 2.17%
FTSE 250 - Fallers
SIG (SHI) 90.50p -21.85%
Acacia Mining (ACA) 452.30p -9.45%
Ashmore Group (ASHM) 298.80p -8.96%
Centamin (DI) (CEY) 141.10p -7.17%
Aberdeen Asset Management (ADN) 288.40p -7.03%
IMI (IMI) 915.50p -6.29%
Tullow Oil (TLW) 246.80p -6.05%
Hochschild Mining (HOC) 246.80p -5.87%
Amec Foster Wheeler (AMFW) 425.40p -5.61% |
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| | US Market Report | | US open: Stocks pause for breath, fund managers cautious Stocks paused for breath following two days of sharp gains as analysts continued to adjust to the changing market landscape following the presidential election results.
Indices fell across the board with the Dow Jones was down by 0.25%, S&P 500 by 0.50% and Nasdaq by 0.30% at 1528 GMT.
Financial Analyst Connor Campbell at Spreadexcommented: "The markets remained a mess this Friday afternoon, a variety of different post-election interpretations causing the trading boards to become increasingly splashed with red."
He added that despite the Dow Jones failing to build on yesterday's "historic high" it may regain ground after the European markets close as it "has consistently proved it has spare pockets of fuel late into the last few US sessions."
Campbell's observations were confirmed by the results Bank of America-Merrill Lynch 'flash' Fund Managers Survey, released the day before, showing investors had mostly chosen to sit on their cash piles following Trump's victory, with the remainder evenly split between those who increased their liquidity as a precaution and those who deployed some of it.
Some asset classes, such as bonds and cyclicals, had also already reached so-called 'overbought' levels, BofA-Merrill said.
Oil prices took a hit, with Brent crude oil futures falling 2.27% to $44.82 per barrel and West texas intermediate down by 2.41% to $43.61.
Federal Reserve Vice Chairman Stanley Fischer spoke at the Central Bank of Chile on Friday outlining the central bank's plan for monetary policy going forward.
According to Fischer, the US has almost reached its goals for maximum employment and price stability, strengthening the case for raising interest rates. He also said the case for removing accommodation is "quite strong".
Consumer sentiment in the US improved more than expected in November, hitting its highest level since mid-2016. The University of Michigan's preliminary consumer sentiment index rose to 91.6 in November from 87.2 the month before and 91.3 in the same month last year, beating expectations for a reading of 87.5.
US economist at Capital Economics Andrew Hunter is however sceptical of the findings. "This index hasn't been a very good guide to consumption growth recently, and we suspect that growth of closer to 2% is more realistic, especially if the election result ends up having a more adverse impact on confidence than the pre-election data suggest," said Hunter.
The dollar which was down against the pound earlier got a boost from the consumer sentiment date, rising by 0.34% against the pound. It however fell 0.12% against the yen, and against the Euro by 0.28%.
In corporate news, JC Penney's shares took a dive after the company cut its sales forecast for this year.
Walt Disney share price went up as its fourth quarter profits rose by 10% to $1.77bn, but failed to deliver on analysts' expectations.
Nvidia rallied after it said late on Thursday that third-quarter profit more than doubled.
Dow Jones - Risers
Walt Disney Co. (DIS) $96.98 2.13%
Procter & Gamble Co. (PG) $83.81 1.02%
Cisco Systems Inc. (CSCO) $31.24 0.76%
General Electric Co. (GE) $30.60 0.62%
Apple Inc. (AAPL) $108.40 0.57%
Unitedhealth Group Inc. (UNH) $146.80 0.46%
International Business Machines Corp. (IBM) $160.82 0.37%
Nike Inc. (NKE) $50.57 0.36%
Visa Inc. (V) $82.15 0.34%
Goldman Sachs Group Inc. (GS) $201.53 0.33%
Dow Jones - Fallers
E.I. du Pont de Nemours and Co. (DD) $68.88 -2.92%
Pfizer Inc. (PFE) $32.55 -2.81%
Merck & Co. Inc. (MRK) $63.83 -1.75%
Exxon Mobil Corp. (XOM) $85.83 -1.40%
Caterpillar Inc. (CAT) $92.33 -1.20%
Chevron Corp. (CVX) $106.66 -1.05%
Johnson & Johnson (JNJ) $118.42 -0.94%
Wal-Mart Stores Inc. (WMT) $70.76 -0.88%
United Technologies Corp. (UTX) $107.52 -0.82%
JP Morgan Chase & Co. (JPM) $76.09 -0.73%
S&P 500 - Risers
Nvidia Corp. (NVDA) $84.53 24.73%
Qorvo, Inc. (QRVO) $53.48 3.72%
Vornado Realty Trust (VNO) $95.32 3.10%
Sl Green Realty Corp. (SLG) $104.91 3.09%
Western Union Co. (WU) $20.47 2.66%
Ford Motor Co. (F) $12.24 2.51%
Walt Disney Co. (DIS) $96.98 2.13%
Kohls Corp. (KSS) $51.98 1.98%
Ventas Inc. (VTR) $58.99 1.95%
H&R Block Inc. (HRB) $22.47 1.93%
S&P 500 - Fallers
Diamond Offshore Drilling Inc. (DO) $15.21 -8.04%
Archer-Daniels-Midland Co. (ADM) $41.75 -7.59%
Alexion Pharmaceuticals Inc. (ALXN) $117.27 -7.57%
Centene Corp. (CNC) $52.06 -6.08%
Newmont Mining Corp. (NEM) $32.59 -6.03%
Murphy Oil Corp. (MUR) $27.21 -5.22%
Transocean Ltd. (RIG) $9.97 -5.05%
Pioneer Natural Resources Co. (PXD) $170.46 -5.00%
Alcoa Corporation (AA) $27.71 -4.78%
Mosaic Company (MOS) $26.92 -4.64% |
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| | Broker Tips | | Broker tips: Tullow Oil, SIG, Dairy Crest Tullow Oil's shares were under the cosh on Friday as Canaccord Genuity downgraded its rating to 'sell' from 'hold' but raised its target to 230p from 220p.
Canaccord said the issues Tullow highlighted in its 9 November trading update on the Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana, raise a "hint of concern" and the scale of projected net debt was substantially more than it had expected.
"More generally, we remain concerned about the concentration of cashflow generation in Ghana," Canaccord said.
"Over the next two years we expect over 70% of the company's production to come from Ghana, where operating costs are relatively low, derived from less than 20 production wells in Jubilee and TEN."
In its trading update for the period 27 July to 9 November, Tullow said the production ramp-up at TEN to end-October was hurt by issues with water injection systems. The annualised gross production for TEN in 2016 is now expected to be 15,000 barrels of oil per day.
The business expects to exit the year with net debt at around $4.9bn.
Canaccord said the scale of net debt and the outlook for the oil price provides the "greatest hurdle to investment in our view".
"We anticipate net debt reducing to around $4.5bn at year end 2017 at our current $60 per barrel assumption, and under that scenario we expect the planned refinancing in '17 to go relatively smoothly," the broker said.
"But at $50 per barrel our projected net debt would be $4.65bn and under those conditions we believe that the lenders would be inclined to extract more value from the company and equity holders."
Canaccord said despite its concerns on oil prices and debt, Tullow appears more robust than some of its highly leveraged peers. However, the broker concluded that it is not enough to be an attractive investment, short of significant sustained OPEC production cuts.
Jefferies downgraded SIG to 'hold' from 'buy' and slashed the price target to 90p from 140p after the company issued a profit warning and announced the surprise departure of its chief executive officer Stuart Mitchell.
SIG said on Friday that it now expects underlying pre-tax profit for the year ending 31 December to be between £75m and £80m, which is down from £87.4m last year and below consensus estimates of £90m. It attributed the expected decline in part to weaker-than-expected trading conditions since the EU referendum.
Jefferies said the new guidance range is 12% to 18% below its previous estimate and cut its full-year 2016 pre-tax profit estimate by 18% to £75.3m.
"With the announcement of a change of CEO and CFO in the space of one month, uncertainty around the start date of the incoming CFO and the search for a new CEO starting today, there is no current guidance for FY2017. We have therefore cut our FY2017 estimates to match the existing board's guidance for FY2016, a cut of 26% from £101.7m to £76m."
Jefferies said that in the face of such uncertainty, it can no longer recommend that investors buy the shares.
"Whether wishing to buy or sell shares, we advise waiting until the dust has settled in order to more accurately appraise the future cashflows on which the valuation is ultimately based."
JPMorgan Cazenove downgraded Dairy Crest to 'neutral' from 'overweight' as the stock has surpassed its 600p price target.
The bank said Dairy Crest's results on Thursday showed the group achieved positive volume growth in its key brands in the first half, despite a decline in the flagship Cathedral City cheese brand.
"This was achieved against a deflationary backdrop and with some operational teething problems in functional ingredients," JPM said.
It cut its pre-tax profit estimate for full-year 2017 by 2% to £61.5m to reflect a reduced contribution from functional ingredients. However, it lifted its forecast for FY18 by 1% to £68.4m to reflect increased margin expectations.
Dairy Crest said on Thursday that adjusted pre-tax profit in the first half rose 19% to £19.1m as the group underwent a restructuring. |
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