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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 closes lower as oil prices plunge ahead of OPEC meeting The FTSE 100 closed in the red on Tuesday as oil prices retreated on doubts OPEC will reach a deal to curb production at a meeting in Vienna.
London's top tier index fell 0.40% to 6,772 points.
Brent crude plunged 4.7% to $46.05 per barrel and West Texas Intermediate slumped 4.7% to $44.96 per barrel at 1641 GMT.
Indonesia's energy minister told reporters in Vienna that he's "not optimistic" that OPEC will reach a deal at its meeting on Wednesday.
IG market analyst Joshua Mahony said: "As we approach tomorrow's crucial OPEC meeting, the impact of an increasingly volatile crude market will play a significant part in dictating sentiment throughout financial markets.
He added: "Despite an initial consensus, a deal feels as far away as ever, with members continuing to conduct an intricate game of political poker, utilising the media to further their cause.
"It is becoming increasingly evident that some of the more prominent OPEC members care more about holding on to market share than helping raise the price of oil. Hence, despite agreeing to a production cut, we have seen the likes of Saudi Arabia, Iraq and Iran all continue to raise production."
Investors are also cautious ahead of Italy's referendum on Sunday. Italians will be asked to decide whether to accept a package of constitutional reforms put forward by centre-left Prime Minister Matteo Renzi, who has said he would resign if the proposals are rejected.
Market participants are concerned that if this results in a 'no' vote, political uncertainty will ensue, making the task of sorting out non-performing loan issues at the country's banks even more difficult.
In economic data, UK mortgage approvals and levels of unsecured consumer credit rose more than expected in October, according to the Bank of England.
The BoE said that 67,518 mortgages for house purchases had been approved last month, up from 63,594 in the preceding month and August's 18-month low of 61,381, as well as topping the 65,000 consensus forecast. Total consumer credit rose to ?1.62bn in October, from ?1.48bn the month before and above the ?1.50bn consensus estimate.
Stateside, the Commerce Department raised its estimate on third quarter US economic growth. Gross domestic product grew at an annual rate of 3.2%, up from an earlier estimate of 2.9% and beating consensus expectations for 3% growth. This compared to 1.4% in the second quarter and marked the strongest reading in two years.
In the Eurozone, the European Commission's headline economic sentiment index edged up to 106.5 in November from a revised 106.4 in October, missing economists' expectations for a reading of 107.0.
The EC said the virtually unchanged sentiment resulted from a mild deterioration in industry confidence and stable readings in services, which offset more upbeat assessments of construction and retail trade managers, as well as consumers.
In corporate news, oil producers were under pressure on the drop in crude prices including BHP Billiton, BP and Royal Dutch Shell.
A fall in metals prices, led by copper, saw investors migrate out of Antofagasta, Fresnillo, BHP Billiton, Rio Tinto, Anglo American and Randgold.
Healthcare provider Mediclinic edged lower after Jefferies cut its target on the stock to 741p from 812p.
BT Group recovered from earlier losses arising from Ofcom's ruling that it must legally separate from its Openreach infrastructure arm due to its failure to satisfy the regulator's competition concerns.
BT made a move late on Monday to try and prevent the enforced spin-off with the appointment of a former director of the telecoms regulator, Mike McTighe, as chairman of Openreach.
FTSE 250 real estate investment trust Shaftesbury slipped after it posted a drop in profit for the year to the end of September but a rise in revenue, and expressed confidence in its outlook.
On the upside, housebuilders rallied on the back of the positive BoE data on mortgage approvals. Shares in Persimmon, Taylor Wimpey and Barratt Developments gained.
Pork and poultry producer Cranswick advanced after reporting a jump in first-half pre-tax profit and revenue. |
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| | Market Movers
FTSE 100 (UKX) 6,772.00 -0.40%
FTSE 250 (MCX) 17,532.06 0.08%
techMARK (TASX) 3,275.19 -0.04%
FTSE 100 - Risers
ITV (ITV) 171.20p 2.70%
Next (NXT) 4,936.00p 2.41%
Micro Focus International (MCRO) 2,129.00p 2.31%
Barratt Developments (BDEV) 476.10p 2.28%
Taylor Wimpey (TW.) 149.40p 2.05%
Persimmon (PSN) 1,723.00p 1.89%
Royal Mail (RMG) 464.60p 1.84%
Dixons Carphone (DC.) 335.40p 1.79%
Ashtead Group (AHT) 1,511.00p 1.75%
International Consolidated Airlines Group SA (CDI) (IAG) 444.50p 1.74%
FTSE 100 - Fallers
Antofagasta (ANTO) 696.00p -4.46%
Fresnillo (FRES) 1,234.00p -3.44%
BHP Billiton (BLT) 1,313.50p -3.03%
Mediclinic International (MDC) 703.00p -2.70%
Anglo American (AAL) 1,204.50p -2.63%
Rio Tinto (RIO) 3,067.00p -2.32%
Royal Dutch Shell 'A' (RDSA) 1,949.00p -2.04%
Randgold Resources Ltd. (RRS) 5,845.00p -2.01%
BP (BP.) 443.25p -1.99%
Royal Dutch Shell 'B' (RDSB) 2,031.50p -1.95%
FTSE 250 - Risers
SSP Group (SSPG) 371.00p 8.54%
BH Macro Ltd. GBP Shares (BHMG) 2,084.00p 6.11%
Go-Ahead Group (GOG) 2,094.00p 3.97%
Laird (LRD) 150.20p 3.73%
Berkeley Group Holdings (The) (BKG) 2,517.00p 3.67%
TalkTalk Telecom Group (TALK) 162.00p 3.12%
Bellway (BWY) 2,484.00p 2.52%
FirstGroup (FGP) 104.70p 2.45%
Tullett Prebon (TLPR) 440.00p 2.33%
Ocado Group (OCDO) 276.70p 2.29%
FTSE 250 - Fallers
AO World (AO.) 162.40p -5.03%
Henderson Group (HGG) 233.40p -3.71%
Hunting (HTG) 495.10p -3.68%
Virgin Money Holdings (UK) (VM.) 307.00p -3.22%
Kaz Minerals (KAZ) 363.90p -2.75%
Weir Group (WEIR) 1,738.00p -2.74%
Ashmore Group (ASHM) 277.00p -2.70%
Aberdeen Asset Management (ADN) 267.80p -2.55%
Countrywide (CWD) 169.80p -2.53%
Tullow Oil (TLW) 262.80p -2.41% |
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| | US Market Report | | US open: Stocks nudge higher as oil retreats ahead of OPEC meeting US stocks inched up on Tuesday as data showed that the economy expanded more than expected in the third quarter, but oil prices retreated as uncertainty grew over an OPEC-led production cut.
The Dow Jones Industrial Average nudged higher by 0.02% to 19,100.96 points, the S&P 500 crept up 0.5% to 2,202.84 points, and the Nasdaq rose 19% to 5,379.06 points at 1521 GMT.
In commodity markets, gold on the Comex declined by 0.5% to $1,187.80 per troy ounce at 1505 GMT.
Oil prices slid as non-OPEC Russia confirmed it will not attend the cartel's meeting in Vienna on Wednesday, although it said a meeting of the group and non-affiliated producers could take place at a later stage.
Meanwhile, Indonesia's energy minister said he was "not optimistic" that OPEC would agree to cap production.
Brent crude was weaker by 3.83% to $46.46 per barrel and West Texas Intermediate edged lower by 3.9% to $45.31 at 1505 GMT.
In currency markets, the dollar was up 0.65% against the yen to 112.67, but fell 0.02% against the euro to 0.9422 and slipped 0.68% against sterling to 0.7999.
On the data front, the Commerce Department revealed that the American economy grew at the fastest rate in two years due to strong consumer spending.
Gross domestic product gained at annualised rate of 3.2% in the third quarter, more than the 3% forecast and the 2.9% initially reported.
Spreadex's Connor Campbell said neither the Dow Jones Industrial Average nor the dollar paid much attention to the third quarter GDP news, probably due to both having likely priced in December's anticipated interest rate hike from the Federal Reserve.
While the Conference Board's consumer confidence survey in November increased to 107.1 from 100.8 in October, which was ahead of the 101.5 forecast.
In company news, shares in Tiffany & Co. ticked higher by 6.4% as the jeweller reported a surprise jump in sales for first time in two years, as Japan and China offset the sales decline in the US.
Third quarter net sales edged up 1.2% to $949.3m, compared to last year, against analysts' expectations of a fall to 923.7m.
Whereas shares in Shoe Carnival plunged 10.67% after its quarterly results released late on Monday missed expectations and the retailer cut its annual guidance.
Its earnings forecast was cut to $1.46-$1.51 a share on revenue between $1.002bn-$1.006bn, from a previous forecast of $1.58-$1.65 on revenue between $1.012bn-$1.016bn.
Quarterly profit rose 3% to $9.7m, or 54 cents a share, and revenue rose 1.8% to $274.5m. Analysts expected earnings of 56 cents a share and revenue of $278.3m. |
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| | Broker Tips | | Broker tips: M&S, WPP, UK banks Investec downgraded Marks & Spencer to 'sell' from 'hold' and cut the price target to 290p from 315p.
"Mr Rowe's strategy to reshape UK space/International is effectively a five-year restructuring story with poor near term profit and cash visibility, implemented against a consumer backdrop which looks set to deteriorate," the brokerage said.
Investec reckons the five-year plan could deliver 25% incremental earnings before interest and taxes, but this will be back-end weighted with execution risk as it is dependent on the property market.
The brokerage said it expects any profit benefits - which are unlikely until full-year 2021/22 - and ongoing operational self-help to be reinvested in "steadying the ship".
"Restructuring costs effectively mean additional cash returns are off the agenda," said the brokerage, adding that it now expects negative total shareholder return.
Investec cut its FY2017 pre-tax profit estimate to 603.4m from 623.1m and its earnings per share estimate to 29.7p from 30.5p.
It noted the shares trade on a 7% discount to their 10-year average forward price-to-earnings of 12.4x and said this discount should be wider given the risks of a consumer slowdown.
Investec's news target is based on a 20% discount to the 10-year average forward PE.
JP Morgan Cazenove on Tuesday left its rating on WPP Group at 'overweight' but cut its rating to 2,032p from 2,075p.
"We remain bullish on WPP as 1) organic revenue growth and earnings appear well supported; 2) our analysis shows little correlation between its share price with the 10-year US Treasury bond yields; and 3) valuation remains attractive," JP Morgan said.
"We have a high degree of confidence in WPP's ability to deliver earnings growth of at least +9% compound annual growth rate over the next two years and with a 8.2% equity free cash flow yield the shares remain cheap."
JP Morgan said exposure to worse trading conditions in emerging markets, which accounts for 31% of revenues, is a concern. However the bank sees a relatively easy comparative base from the second quarter of 2017 with the two-year stack of quarterly organic revenue growth in emerging markets reducing from a run-rate of 7-8% to 4-5% at the second quarter of 2016.
JP Morgan also noted that WPP is $5.3bn net new business positive as of end September 2016 with further important wins in the current quarter supporting growth next year including Walmart, Fox and Toyota Europe.
Credit Suisse initiated coverage on a number of UK banks on Tuesday, as it noted the regulatory agenda is heating up, starting with the stress test results on Wednesday, for which it reckons banks are "reasonably well placed".
It started Barclays at 'outperform' with a 260p price target, saying it presents the most significant re-rating potential as visibility on group return on tangible equity improves and the restructuring benefit to the common equity tier 1 is better understood.
CS said it is 14% and 20% ahead of consensus in terms of its profit before tax estimate for FY17 and FY18, respectively, reflecting a strong third quarter performance and a less severe deterioration in Barclays UK.
CS initiated Standard Chartered and RBS at outperform with 515p and 180p price targets, respectively.
It said StanChart's valuation assumes an 8% return on equity is possible despite the need to grow the top line 20%. "We expect continued EPS downgrades to weigh on the shares."
On RBS, it said: "The number of downside risks to EPS and capital (plus the significant share overhang) places this as a relative underperform."
Credit Suisse started Lloyds Banking Group and HSBC at 'neutral' with price targets of 65p and 600p, respectively.
It said for Lloyds, worries about Brexit are overdone but a significant re-rating is unlikely without a material surprise on dividend per share.
It noted Lloyds shares fell 36% to under 48p in the weeks after the Brexit vote and have since recovered to -18%, broadly in line with RBS. |
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