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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: Miners propel FTSE 100 higher as industrial metals surge London equities ended Tuesday on a sharply higher note with major miners storming ahead in tandem with soaring industrial metals prices, and followed by a string of banks and insurers.
US interest rate-touch utilities were firmly higher, too.
FTSE 100 closed the session up 0.62% to 6,819.72. In the US, the Dow Jones, S&P 500 and Nasdaq Composite were all racing ahead.
While Comex-listed gold was down, London Metals Exchange-quoted three-month industrial metals zinc and aluminum rose about 1.6%, with copper up more than 2% and tin up over 3%.
This translated into confidence-driven gains in metals diggers, with Anglo American, Glencore and BHP Billiton figuring at the top of the risers' ladder.
Utilities such as Centrica, SSE and further back United Utilities were notably firmer, too. The market is pricing in a US interest rate hike in December, and is also expecting cartel OPEC to cap production when it meets in Vienna on 30 November.
Oil prices have suffered from volatility in the face of a chronic crude glut, but Tuesday's hopes nonetheless boosted the shares of both Royal Dutch Shell and BP. Both were well behind miners.
FXTM Research analyst Lukman Otunuga cautioned that investors should "remain diligent as OPEC could be exploiting oil's sensitivity" to create speculative boosts in prices.
"With the lingering oversupply anxieties and fears of slowing demand still weighing on sentiment, upside gains on oil could be capped moving forward," Otunuga said.
"OPEC may be playing a dangerous game if investors are left disappointed with another 'Doha failure' potentially deepening the oversupply woes in 2017."
Positive economic data
UK public sector net borrowing improved more than expected in October. The monthly budget shortfall was cut from £6.4bn in the year ago period to £4.8bn, Office for National Statistics said. The market was looking for an improvement to £6.7bn.
In other news, Confederation of British Industry's (CBI) monthly survey of manufacturers showed the balance of total orders improved to -3 in November, from -17 in October, well above the long run average of -20.
Elsewhere, Capital Economics' China Activity Proxy index showed China's country's GDP growth accelerated from 5.6% in September to 6.0% year-on-year in October, its fastest pace since February 2014.
Corporate news
Shares in Hikma Pharmaceuticals rose after it signed a development and licensing agreement with Vectura for its generic salmeterol product (VR730) for the treatment of asthma and chronic obstructive pulmonary disease.
AstraZeneca edged higher after it said it would resume enrolment for a new cancer drug trial after the US Food and Drug Administration lifted a partial clinical hold on the enrolment of new patients with head and neck cancer.
International distribution and outsourcing group Bunzl ticked just a touch higher as it entered into agreements to buy two businesses in France and Denmark for an undisclosed sum.
Shares in Lloyds Banking Group were in the black as the UK government cut its stake in the bank to just under 8%.
Food services company Compass Group was on the back foot despite posting a rise in full-year pre-tax profit, while Kingfisher declined as the home improvement retailer said sales kept improving in the third quarter, but like-for-like sales growth slowed due to further softness in France. |
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| Market Movers
FTSE 100 (UKX) 6,819.72 0.62%
FTSE 250 (MCX) 17,679.06 0.86%
techMARK (TASX) 3,281.89 -0.44%
FTSE 100 - Risers
Anglo American (AAL) 1,208.00p 7.62%
Glencore (GLEN) 282.45p 5.33%
BHP Billiton (BLT) 1,334.00p 4.92%
Admiral Group (ADM) 1,967.00p 3.85%
Centrica (CNA) 202.50p 3.74%
Rio Tinto (RIO) 3,073.00p 3.49%
Standard Life (SL.) 353.40p 3.09%
Antofagasta (ANTO) 702.00p 3.01%
Old Mutual (OML) 192.00p 2.95%
Direct Line Insurance Group (DLG) 356.00p 2.74%
FTSE 100 - Fallers
Compass Group (CPG) 1,326.00p -4.67%
Babcock International Group (BAB) 945.00p -4.64%
Fresnillo (FRES) 1,282.00p -3.61%
Kingfisher (KGF) 358.00p -3.16%
Randgold Resources Ltd. (RRS) 5,815.00p -3.16%
AstraZeneca (AZN) 4,205.50p -2.77%
Polymetal International (POLY) 762.00p -2.56%
Shire Plc (SHP) 4,601.50p -2.35%
Mediclinic International (MDC) 730.50p -2.21%
Intertek Group (ITRK) 3,178.00p -2.03%
FTSE 250 - Risers
Rotork (ROR) 226.60p 13.07%
BGEO Group (BGEO) 3,135.00p 12.00%
Evraz (EVR) 262.80p 9.27%
Vedanta Resources (VED) 852.50p 6.10%
Inmarsat (ISAT) 742.00p 5.85%
Mitie Group (MTO) 201.00p 5.79%
Aldermore Group (ALD) 211.80p 5.43%
Paragon Group Of Companies (PAG) 362.00p 4.59%
Petra Diamonds Ltd.(DI) (PDL) 155.20p 4.09%
OneSavings Bank (OSB) 337.50p 3.76%
FTSE 250 - Fallers
Entertainment One Limited (ETO) 214.50p -12.73%
Acacia Mining (ACA) 407.80p -7.93%
TalkTalk Telecom Group (TALK) 164.00p -4.09%
Mitchells & Butlers (MAB) 265.20p -3.40%
Halma (HLMA) 971.00p -3.38%
Hochschild Mining (HOC) 222.50p -3.30%
CYBG (CYBG) 285.70p -3.05%
Centamin (DI) (CEY) 132.50p -2.93%
Essentra (ESNT) 382.90p -2.64% |
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| | US Market Report | | US open: Stocks climb as investors anticipate oil production cut US stocks climbed on Tuesday with the Dow Jones Industrials topping the 19,000 point mark for the first time ever, while oil prices rallied ahead of a widely-anticipated suply cut from several of the world´s main producers.
The Dow Jones Industrial Average jumped 0.27% to 19,007.82 points, the S&P 500 rose 0.21% to 2,202.76 points, and the Nasdaq was up 0.38% to 5,389.10 points at 1521 GMT.
Spreadex's Connor Campbell said: "The one big event this afternoon was the striking, however brief, 19,000 by the Dow Jones. Though it has only managed a 0.2% to 0.3% rise after the bell that was all it took to take the US index above that landmark level, a price is has teased ever since its initial rampage post-election.
"As to what is actually sending it higher despite the dollar taking half a percent back off the pound, it seems that Trump's promise to exit the Trans-Pacific Partnership agreement might have caused investors to cheer the potential safeguarding of jobs in the US (whether or not that will be the result is another discussion altogether)."
Oil prices continued to rally amid expectations that OPEC member states would agree to slash production, along with non-OPEC Russia, at the cartel's next meeting on 30 November.
A report citing a Nigerian delegate who said that all OPEC members were likely to "be on board by the end of the day" following a second day of technical meetings saw West Texas Intermediate hit an intraday high at $49.20 a barrel.
However, a report later in the day form Bloomberg, referencing 'sources', indicated that Iran, Iraq and Indonesia had reservations regarding a proposed 4.5% production cut by all members except Libya and Nigeria.
Gold on Comex was flat at $1,209.70 per troy ounce as the US dollar edged higher.
In currency markets, the dollar climbed 0.23% against the yen to 111.08, was edged higher by 0.55% versus sterling to 0.8048 and up 0.1% against the euro to 0.9418.
On the data front, the National Association of Realtors revealed that in October existing home sales rose to the highest in nearly a decade, due to increased demand.
Sales of previously owned homes were at a seasonally adjusted annual rate of 5.6m, 2% higher than in September and 5.9% higher than a year ago. This exceeded forecasts of 5.42m.
In corporate news, cyber-security company Palo Alto Networks tumbled 12.81% as it reported late on Monday that quarterly revenue growth slowed.
Shares in Dollar Tree soared 10.05% as the discount chain store owner beat expectations.
Third quarter income rose to $171.6m, or 72 cents per share from $81.9m, or 35 cents and earned 81 cents per share, above the forecast 78 cents.
Campbell Soup's shares edged higher by 3.22% as its profit topped third quarter forecasts. Net income increased to $292m, or 94 cents per share, from $194m , or 62 cents per share,last year.
Excluding certain items, the company earned $1 per share, beating expectations of 95 cents.
Shares in Barnes & Noble surged 11.89% as the bookseller's second quarter loss was smaller than expected.
Net loss was $20.4m, or 29 cents per share, wider than $27.2m, or 36 cents last year, but bested the consensus forecast for 39 cents. Sales were down 4% to $858.5m. |
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| | Broker Tips | | Broker tips: Inmarsat, Essentra, European media Inmarsat got a boost as Deutsche Bank initiated coverage of the stock at 'buy' with a 1,030p price target.
"We acknowledge that the ISAT thesis centres on the concept of inflight communication gaining real traction and at present there are mixed views, but we see scope for ISAT unlocking value given the size of the market.
"We have carried out bottom-up analysis of the market potential for in-flight communication and about 40% of our target relates to the European aviation opportunity. Given ISAT has underperformed the Telco sector by 16% year-to-date, we see current levels as a good entry to gain exposure to strong growth."
DB noted that Inmarsat has underperformed the telco sector by 16% year-to-date, so at current levels it represents a good entry point to gain exposure to strong growth, with an attractive 6.1% dividend yield.
The bank argued that the big driver for Inmarsat is the in-flight opportunity, both Global Xpress and the European network, although this is also where uncertainty lies.
DB said it was 2% below consensus in terms of group earnings before interest, taxes, depreciation and amortisation in 2017/18, adding that it is comfortable with its position given the in-flight opex ramp-up.
"Consensus has progressively moved down in recent months and we think we are towards the end of the earnings downgrade cycle. Furthermore we think that investors recognise the 'over-optimism' from some of our sell side peers."
Numis downgraded its stance on Essentra to 'add' from 'buy' and cut the price target to 470p following the company's profit warning on Monday.
The brokerage said the profit warning - the second this year - indicates the scale of the challenges facing new chief executive officer Paul Forman.
It said the profit downgrade of around £20m for 2016 is split about 75% Packaging and 25% Filters.
Numis cut its 2016 earnings before interest, taxes and amortisation forecast by 14% to £139.3m, which is within management's £137-142m range. It also downgraded 2017 and 2018 EBITA forecasts by 20-25%, reflecting a more cautious view on future revenue and profit progression.
"Whilst we believe there are few near-term catalysts for a re-rating, we maintain our view on the longer-term attraction of Essentra's packaging and distribution businesses, the opportunity for the new CEO to simplify the group, and note the yield support from the maintained dividend," Numis said.
Credit Suisse updated its ratings and initiated on stocks in the European media sector.
The Swiss bank upgraded RELX from 'neutral' to 'outperform' and bumped up the price target to 1,600p from 1,370p. It said the company's high-quality assets with market-leading positions have led to improving organic growth which should be sustained. In addition, it pointed to cyclicality, almost no advertising exposure and a pragmatic approach to capital allocation.
CS initiated coverage of Sky was at 'outperform' with a price target of 980p. Whilst the analysts acknowledged legitimate concerns over competition from incumbents like BT and over the top players who broadcast their media over the internet, they argued that these threats are overdone. CS said its proprietary survey shows the high degree of complementarity between OTT and Sky.
"The group is defensive, we see opportunities outside the UK and in mobile and believe being underweight post the recent underperformance and given weaker sterling is unwise."
Credit Suisse started WPP at 'outperform' with a 2,000p price target. The bank said it likes the platform agnostic, globally diverse nature of the Global Advertising Agency space and expects low single-digit organic growth with modest margin expansion. However, it highlighted challenges including price pressures from zero-based budgeters, competition from consultants in digital and the industry debate around transparency.
The bank reiterated its 'neutral' stance on Daily Mail and General Trust but lifted the price target to 830p from 750p. With uncertainty around the new chief executive's strategy, still-challenged end markets and structurally declining print, the analysts reckoned the current valuation looks fair.
CS downgraded UBM from 'outperform' to 'neutral' but the price target was raised from 725p to 755p. It said the company is the only pure play asset of scale in the attractive events sub-sector but post a re-rating the valuation is broadly fair given below-peer group growth.
The bank initiated Informa at 'neutral' rating with a 700p price target. New management is mid-way through a turnaround focusing on US events and improving performance in its other divisions, however, execution risks mean the valuation fairly reflects its earnings per share growth profile.
Credit Suisse downgraded education publisher Pearson from 'neutral' to 'underperform' and the price target dropped to 740p from 840p. Whilst consensus is around 11% behind company guidance, multiple headwinds, poor visibility and a history of profit warnings leaves the group's valuation looking too steep. |
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