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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 ends higher as markets eye US election The FTSE 100 closed in the green on Tuesday as investors awaited the outcome of the US presidential election and weighed economic data.
London's top tier index rose 0.53% to 6,843.13 points while the pound increased 0.10% versus the dollar at $1.2409.
Oil prices wavered after OPEC said demand for crude could peak within 13 years if the Paris climate agreement targets are enforced. Separately, OPEC secretary general Mohammed Barkindo said at a conference in Abu Dhabi that members of the cartel will come to an agreement in Vienna later this month to curb output.
Brent crude fell 0.08% to $46.11 per barrel while West Texas Intermediate climbed 0.11% to $44.94 per barrel at 1626 GMT.
Meanwhile, all eyes are on the US election with the latest polls and many analysts pointing to a win by Democratic candidate Hillary Clinton over Republican rival Donald Trump.
According to the last RealClearPolitics average of polls, Clinton had a three-point lead over Trump. IG's binary market prices an 81.5% chance Clinton will win, from 74% at the weekend.
IG's Chris Beauchamp said: "The Brexit vote has taught us to expect significant volatility, especially as key swing states come in, with thinner overnight markets likely to intensify the moves. It promises to be an interesting few hours."
On the data front, the Office for National Statistics said UK manufacturing production rose 0.6% in September compared to a month ago, up from August's 0.2% increase. Economists had expected a 0.4% increase.
In contrast, UK industrial production fell 0.4% in September for the second consecutive month, the ONS said, versus the consensus estimate for a flat reading.
"Looking ahead, the upbeat tone of the latest business surveys suggests that the manufacturing sector will sustain its recent strength in the final quarter," said Ruth Gregory, UK economist at Capital Economics.
"Indeed, the fall in the pound appears to be performing its role as a 'shock absorber' in the wake of the Brexit vote, by improving the competitiveness of domestic producers."
Data from the British Retail Consortium and KPMG showed UK like-for-like sales increased 1.7% in October, up from the 0.4% rise the month before.
The National Institute of Economic and Social Research said it estimates gross domestic product in the UK rose 0.4% in the three months to October after 0.5% growth in the three months ended September.
GDP is forecast to rise 2.0% in 2016 and 1.4% in 2017 while consumer price inflation is estimated to reach 3.8% next year as a weaker pound after Brexit makes imports more expensive.
Elsewhere, China exports and imports fell more than expected in October. Exports fell 7.3% from a year earlier while imports shrank 1.4%, according to official data. Economists had expected a 6% decline in exports and a 1% drop in imports. The trade surplus widened to $49.06bn in October from $41.99bn, missing forecasts of $51.70bn.
German industrial output dropped 1.8% on the month in September, with manufacturing output down 1.7% and construction output down 1.5%, according to Destatis. Analysts had been expecting a smaller drop of 0.6% in total output.
The adjusted trade surplus in Germany came in lower than expected at €21.3bn in September, compared to €22.2bn in August.
In company news, Associated British Foods was the standout gainer after it reported a rise in full-year revenue as it expanded the selling space of Primark and benefited from the weakening of the pound, although like-for-like sales were lower.
Private healthcare company Mediclinic was on the front foot after Renaissance Capital lifted its stance on the stock to 'buy' from 'hold'.
Budget airline EasyJet flew higher despite Numis cutting its price target on the hold-rated stock to 1,050p from 1,200p ahead of its full-year prelims next week.
Retailer Marks & Spencer was under the cosh after holding its interim dividend flat as first-half profits plunged as new chief executive Steve Rowe closed the defined benefit pension scheme and announced a £550m investment plan to close 113 stores I the UK and overseas.
Tobacco company Imperial Brands was weaker after it reported a drop in profit for the year to end of September, but said revenue rose and upped its dividend by 10%.
Royal Bank of Scotland was on the back foot after agreeing to refund around £400m of fees to smaller business customers hit by failings at the bank's former Global Restructuring Group subsidiary, while also launching a new complaints process to be overseen by a retired High Court judge. |
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| Market Movers
FTSE 100 (UKX) 6,843.13 0.53%
FTSE 250 (MCX) 17,447.79 -0.06%
techMARK (TASX) 3,300.66 -0.03%
FTSE 100 - Risers
Associated British Foods (ABF) 2,631.00p 5.71%
BHP Billiton (BLT) 1,277.50p 4.58%
Antofagasta (ANTO) 589.00p 4.25%
Mediclinic International (MDC) 931.50p 2.70%
Anglo American (AAL) 1,152.50p 2.67%
Old Mutual (OML) 197.60p 2.17%
easyJet (EZJ) 1,016.00p 2.16%
Mondi (MNDI) 1,611.00p 1.96%
CRH (CRH) 2,650.00p 1.84%
Rio Tinto (RIO) 2,872.00p 1.66%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 331.00p -5.16%
Imperial Brands (IMB) 3,689.50p -2.98%
Barratt Developments (BDEV) 454.50p -1.62%
Persimmon (PSN) 1,663.00p -1.48%
London Stock Exchange Group (LSE) 2,732.00p -1.12%
Travis Perkins (TPK) 1,350.00p -1.03%
International Consolidated Airlines Group SA (CDI) (IAG) 440.80p -1.01%
Shire Plc (SHP) 4,522.00p -0.83%
Smith & Nephew (SN.) 1,135.00p -0.79%
Rolls-Royce Holdings (RR.) 718.50p -0.76%
FTSE 250 - Risers
Evraz (EVR) 208.40p 5.15%
Tullett Prebon (TLPR) 406.50p 2.76%
Beazley (BEZ) 372.50p 2.62%
Unite Group (UTG) 571.50p 2.05%
Atkins (WS) (ATK) 1,559.00p 1.96%
Investec (INVP) 508.00p 1.91%
Aldermore Group (ALD) 187.00p 1.80%
Grainger (GRI) 222.10p 1.69%
Lancashire Holdings Limited (LRE) 737.50p 1.58%
Aberdeen Asset Management (ADN) 311.30p 1.57%
FTSE 250 - Fallers
AO World (AO.) 159.00p -5.53%
Jardine Lloyd Thompson Group (JLT) 980.50p -3.97%
Sports Direct International (SPD) 313.80p -3.45%
Tullow Oil (TLW) 257.30p -3.34%
Paysafe Group (PAYS) 417.10p -3.05%
McCarthy & Stone (MCS) 169.00p -2.76%
JRP Group (JRP) 116.90p -2.50%
IP Group (IPO) 140.30p -2.43%
Rank Group (RNK) 195.80p -2.25%
Laird (LRD) 135.90p -2.23% |
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| | US Market Report | | US open: Investors wary on election day as they await president Clinton or Trump US markets opened warily on Wednesday as Americans headed to the polls, while investors tentatively awaited the new tenant of 1600 Pennsylvania Avenue.
The Dow Jones Industrial Average decreased 0.22% to 18,219.63 points, the S&P 500 declined 0.27% to 2,125.78 points and the Nasdaq tripped 0.3% to 5,150.72 points at 1501 GMT.
Oil prices retreated as OPEC said if the Paris climate agreement's targets are enforced, demand for oil could peak within 13 years.
Brent crude fell 1.02% to $45.68 per barrel and West Texas Intermediate was down 0.87% to $44.50 at 1455 GMT.
Gold Comex advanced 0.13% to $1,281 per ounce at 1448 GMT.
Naeem Aslam, chief market analyst at Think Markets, said: "Gold is again flirting with the 200-day moving average and traders cannot decide which way it will move. The chances of this moving towards the upside are higher if Donald Trump wins the election.
"However, if Hillary Clinton wins the election, the downward move may not be that harsh as the next question will be what the Federal Reserve will do with respect to their interest rate? The market is pricing in that there is an over 80% chance that a rate hike will take place if Clinton wins the election and in our opinion that is already baked in the price. Hence the downside is limited."
According to the RealClearPolitics average of polls, Clinton currently has a three-point lead over rival Donald Trump.
Connor Campbell, financial analyst at Spreadex, said: "The day only really got duller as it went on, the US open bringing little to the party bar a bit more election anxiety. Falling around 40 points after the bell the Dow Jones understandably couldn't build on yesterday's explosive growth, not yet at least. The US index is still sitting above 18200, a fairly regular perch for the Dow across the last 2 months, and looks unlikely to do much until the first exit polls start to dribble out this evening.
"And what of the JOLTS job openings I hear you cry? Well, they came in at a lower than expected, but higher than last month, 5.49m, securing the attention of pretty much no-one."
The Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS) revealed there were 5.486m job openings in September, below expectations of 5.508m. The share of layoffs and discharges of total employment fell to 1.1%, the lowest level since 2001.
The quit rate, the number of people who had resigned from their job divided by the number of employees, remained flat at 2.1%
In corporate news, shares plunged 20.1% in Canada-based Valeant Pharmaceuticals after it slashed its outlook for revenues and earnings for the year, as it struggles in nearly all parts of its business.
The drug maker reported third quarter adjusted earnings per share of $1.55, compared to $2.41 last year and below expectations of $1.76.
Pharmacy owner CVS Health's shares plummeted 13.07% after it also cut its earnings guidance, due to slow prescription growth, as it reported third quarter revenue of $44.6bn, below the forecast of $45.3bn. |
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| | Broker Tips | | Broker tips: HSBC, Ryanair, Aveva Barclays left its rating on HSBC at 'equal weight' and raised its target to 600p from 550p after the bank reported its third quarter results.
HSBC on Monday posted a 86% drop in third quarter pre-tax profits to $0.84bn, while revenue fell 37% to $9.5bn, both on a reported basis.
Profits were hit by several exceptional items, including a $1.7bn loss from the disposal of its Brazil bank, $1.0bn of restructuring costs, $1.4bn of negative movements in its own debt as credit spreads tightened and $0.5bn of UK customer redress charges, together with a $658m drag from the strengthening US dollar.
However, the Brazil sale allowed HSBC to complete almost two thirds of a $2.5bn share buyback as well as maintain its ongoing dividend.
The bank's balance sheet was also in better shape, thanks to a change in capital requirements for Chinese bank BoCom, allowing the common equity tier-1 capital ratio to increase by nearly two percentage points to 13.9%.
"A much stronger reported capital position increases our confidence that HSBC will be able to deliver the $3.5bn of share buybacks that we previously estimated for 2017 and also raises the prospect of more than $8bn further capital return in the medium term," said Barclays.
"Despite a current 13.9% CET1 ratio, this seems dependent on global and regional regulatory requirements being clarified and the ability of HSBC's regional businesses to throw off excess capital."
Barclays said the earnings outlook for HSBC remains "less inspiring" as it is cautious on assuming a continuation on the positive third quarter revenue trends seen in the Global Banking and Markets, and Wealth Management businesses. However, continued tight cost control remains a positive, Barclays added.
"Reflecting some improvement in medium-term return on tangible equity and greater confidence in capital return we raise our price target to 600p (from 550p), retaining an equal weight rating."
Ryanair shares ascended on Tuesday as JP Morgan Cazenove reiterated an 'overweight' rating and target of €15.25, saying the company remains its "top airlines pick".
The budget airline on Monday reported an 8% increase in second quarter net profit to €912m as sales rose 2% to €2.4bn.
The Irish carrier also initiated another share buyback at €550m, to be carried out through February 2017, in an effort to soothe investors' worries after the company issued a profit warning last month.
A slump in sterling following the Brexit vote was cited in the company's warning that profit growth will slow this year to a range of €1.3bn to €1.35bn, compared to a previous estimate of €1.375bn to €1.425bn.
However, Ryanair has signalled confidence in its long-term passenger forecast. It now expects to carry 200 million passengers a year by March 2024, or 20 million more than previously expected by that time.
"Ryanair remains our top airlines pick on the back of growing unit cost leadership, scale, and track record of effective execution," said JP Morgan.
The bank said the quarterly results were in line with estimates. JP Morgan added that it does not expect material revisions to its fiscal year 2017 net income estimate which sits within the guidance range.
"Longer-term, we see scope for upside to base case estimates in light of faster projected growth and development of additional revenue streams."
Numis on Tuesday reiterated an 'add' rating on Aveva and a target of 2,050p after the engineering software provider swung to a profit in the first half.
In the six months to the end of September, the group made a pre-tax profit of £5.5m compared to a £800,000 loss the year before, as revenue edged up 3% to £84.3m. Aveva pointed out that in 2015, reported profit was hit by the professional adviser costs associated with the aborted transaction with Schneider Electric.
As far as revenue is concerned, it said the weakening of the pound in the aftermath of the Brexit vote has had a favourable impact.
Aveva lifted its interim dividend by 117% to 13p per share following the board's decision to re-weight the total dividend more heavily towards the interim dividend than in previous years.
Numis said Aveva's first half was in line with expectations, helped by cost control and a strong currency tailwind.
"In our view Aveva remains a top quality business with some challenging end markets," Numis analysts David Toms and Will Wallis said. |
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