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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 recover from shock of Trump presidency London stocks recovered from the initial shock of Donald Trump being elected US President, as it made an interest rate hike by the Federal Reserve seem less likely this year.
The FTSE 100 initially fell on the news of Trump's presidency but finished the session up 1.0% to 6,911.84 points, led by mining, industrial and pharmaceutical stocks. The pound held onto its gains against the dollar throughout the session, rising 0.63% to $1.2457 at 1541 GMT.
Shares of drug companies, including Hikma Pharmaceuticals and Shire, were lifted higher by the US election result. A win by Democratic candidate Hillary Clinton was seen as bad for the sector because she had wanted to increase regulation and combat high drug prices.
Ashtead and CRH advanced on the back of Trump's comments about raising infrastructure spending.
Mining shares, including Randgold Resources, Fresnillo and Glencore, were boosted by a jump in gold prices as investors fled to safety in light of the US election outcome.
"The immediate flight to safety as Trump's victory became clear saw gains for the likes of gold and the yen, at the expense of the Mexican Peso, the dollar and stocks," said IG's Joshua Mahony.
"However, markets swiftly regained composure with many investors realising that they simply do not know what this means for the US economy. Markets hate uncertainty, yet for now they have to live with that, given the election of one of the most unpredictable Presidential candidates in history."
The analyst added that investors have cheered the prospect of the Fed holding off on raising interest rates in December given the heightened uncertainty a Trump presidency brings.
"However, with the stock market weakness largely dissipating and a new President who has called the Fed corrupt for keeping the rates low to facilitate Clinton's campaign, there is reason to believe December could still be live," Mahony said.
On the downside of corporate stocks, Sainsbury's slumped after it cut its interim dividend 10% as underlying profits fell the same amount despite revenues increasing as the decline in like-for-like sales eased off in recent months.
Global information services company Experian was also on the back foot after the release of its half-year results, with 5% organic revenue growth to $2.24bn, which was in line with its board's target range.
On the economic data front, the UK trade deficit widened to £5.2bn in September from £3.8bn in August, according the Office for National Statistics. Economists had expected a deficit of £3.9bn.
Exports fell by £0.2bn while imports rose by £1.2bn, with the wider gap driven by a record £8.7bn deficit with the European Union.
While the pound has fallen sharply since the Brexit vote, the ONS said there was little direct evidence so far of its impact on trade.
In China, the consumer price index increased an annualised 2.1% in October, as expected by analysts, following 1.9% growth the previous month, the National Bureau of Statistics said.
The producer price index jumped 1.2% year-on-year compared to just 0.1% in September and estimates of 0.8%, boosted by an increase in the price of industrial commodities, including rising coal prices.
Meanwhile, oil prices wavered following the US election result but quickly recovered despite data from the Energy Information Administration showing crude inventories Stateside rose by 2.4m barrels in the week through 4 November, more than the 1.3m barrel increase expected by analysts.
Brent crude rose 0.88% to $46.45 per barrel and West Texas Intermediate increased 1.05% to $45.46 per barrel at 1652 GMT. |
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| Market Movers
FTSE 100 (UKX) 6,911.84 1.00%
FTSE 250 (MCX) 17,590.99 0.82%
techMARK (TASX) 3,371.79 2.16%
FTSE 100 - Risers
Ashtead Group (AHT) 1,385.00p 11.51%
Fresnillo (FRES) 1,771.00p 10.69%
Antofagasta (ANTO) 641.50p 8.91%
Shire Plc (SHP) 4,897.00p 8.29%
Rio Tinto (RIO) 3,068.50p 6.84%
Glencore (GLEN) 270.25p 6.84%
BAE Systems (BA.) 585.00p 6.75%
Hikma Pharmaceuticals (HIK) 1,764.00p 6.07%
CRH (CRH) 2,810.00p 6.04%
Wolseley (WOS) 4,540.00p 5.75%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 238.70p -6.58%
Experian (EXPN) 1,467.00p -3.30%
SSE (SSE) 1,527.00p -3.17%
DCC (DCC) 6,190.00p -2.44%
WPP (WPP) 1,685.00p -2.43%
Associated British Foods (ABF) 2,573.00p -2.28%
Relx plc (REL) 1,373.00p -2.14%
Imperial Brands (IMB) 3,610.50p -2.13%
Unilever (ULVR) 3,311.00p -2.10%
British American Tobacco (BATS) 4,480.00p -2.10%
FTSE 250 - Risers
Hill & Smith Holdings (HILS) 1,158.00p 8.73%
Worldwide Healthcare Trust (WWH) 2,114.00p 8.24%
Weir Group (WEIR) 1,725.00p 7.88%
Balfour Beatty (BBY) 281.30p 7.33%
Kaz Minerals (KAZ) 318.60p 7.09%
Evraz (EVR) 222.40p 6.72%
Cobham (COB) 157.60p 6.49%
Centamin (DI) (CEY) 164.30p 6.34%
Hochschild Mining (HOC) 280.30p 6.17%
Elementis (ELM) 250.30p 6.15%
FTSE 250 - Fallers
Tate & Lyle (TATE) 659.00p -11.90%
International Personal Finance (IPF) 278.80p -4.98%
Aveva Group (AVV) 1,698.00p -4.34%
Smurfit Kappa Group (SKG) 1,738.00p -4.08%
Inmarsat (ISAT) 761.00p -3.79%
Laird (LRD) 130.30p -3.77%
DFS Furniture (DFS) 225.80p -3.55%
Templeton Emerging Markets Inv Trust (TEM) 590.00p -2.80%
Euromoney Institutional Investor (ERM) 1,038.00p -2.54%
JPMorgan Emerging Markets Inv Trust (JMG) 721.50p -2.24% |
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| | US Market Report | | US open: Stocks unexpectedly rally as Donald Trump is elected president US markets unexpectedly rallied as a property tycoon and former reality TV star, come Republican nominee, bewildered pollsters to become president elect on Wednesday.
After surprising victories in key states such as Florida, Ohio and Iowa, Donald Trump became the 45th US president.
As he neared victory, Asian markets were in the red, but after Trump's first speech, which was considered more presidential and less maverick, global markets calmed which trickled from US equity futures to the FTSE.
The Dow Jones Industrial Average rose 0.22% to 18,373.90 points, the S&P 500 climbed 0.12% to 2,142.09 points and the Nasdaq edged higher 0.05% to 5,196.19 points at 1458 GMT.
Gold futures on Comex advanced 0.77% to $1,284.30 per troy ounce at 1458 GMT.
However, oil prices retreated as Brent crude fell 0.15% to $45.97 per barrel and West Texas Intermediate was down 0.33% to $44.83 at 1454 GMT.
In currency markets, the dollar was down 0.68% versus the yen at 104.44, while the Mexican peso was also paring losses somewhat after plunging to its worst level ever against the greenback earlier.
The pound was up for a change by 0.22% against the dollar to 1.24.
Mark Taylor, chief executive of Selftrade, an online investment and share dealing platform, said markets were largely down across the board, a far cry from the volatility after the Brexit vote as the dollar and sterling are back on an even keel, and the FTSE 100 rallied. Learning from Brexit, investors remained calm.
"It is extremely difficult to predict how the next few hours, days and weeks will play out, but it is likely the market will remain volatile and there will be significant currency fluctuations. While the dollar has remained relatively calm, all eyes will be on the Federal Reserve''s decision in December on whether or not to hike rates. It's unclear at this stage if Trump is perceived by the currency markets to be protectionist and anti-trade, or pro-business and growth. This strongest trend at the moment is emerging market weakness.
He said with the upcoming referendum in Italy, followed by elections in France and Germany, and further uncertainty around Brexit that investors may want to sit tight and see what happens.
Connor Campbell, financial analyst at Spreadex said: "Fuelled by pharmaceuticals (relieved they won't have a Hillary Clinton government putting pressure on drug prices), miners and anything that may benefit from Trump's promised big infrastructure spend the Dow Jones, an index that was threatening to fall 800 points earlier in the day, actually managed a 20 point rise after the opening bell.
"The dollar also saw a sharp recovery; it now sits just under 1.24 against the pound, and has taken back 0.7% against the euro while shrinking its losses against the yen to around a quarter of what they were."
Campbell added that it was too early to tell what Trump has in store, even if Wednesday confounded market expectations.
In corporate news, shares in HCA Holdings, an operator of healthcare facilities, plunged 16.95% as Mizuho cut its rating to 'neutral' from 'buy'.
Shares in miner Freeport-McMoRan soared 6.53% as the price of copper hit a 52 week high. |
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| | Broker Tips | | Broker tips: Elementis, Amec Foster, Pennon Elementis shares were given a boost on Wednesday after Berenberg raised its rating on the stock to 'buy' from 'hold' and raised the target to 270p from 200p.
The upgrade comes after the specialty chemicals company said in a trading update that it expects full year earnings to be in line with expectations after a third quarter 38% jump in personal care sales offset a 4% decline sales at both its chromium and oilfield drilling businesses.
"Since our downgrade to 'hold' in April, consensus 2016 and 2017 earnings estimates for Elementis have fallen by 20%, primarily on 700 basis point earnings before interest and tax margin compression in the chromium division," Berenberg said.
"Q3 results, with 38% growth in personal care and abovemarket growth in coatings additives, mark the turning point in this cycle of downgrades. Elementis will, in our view, generate the best organic growth of UK chemicals in 2017 (circa 5% versus circa1%)."
Berenberg also expects the chromium business to recover given that emerging market producers may run out of spare capacity in 2017 and an increase in oil prices is seeing a corresponding rise in the Russian Ruble and Kazakhstani Tenge against the dollar.
The broker also predicts reduced competition and a rise in chromite prices to boost EBIT margins by 180 basis points to 19.5% in 2017.
Berenberg estimates the personal care business will outperform the market with growth rates moving from 10% to "mid-to-high teens".
Reflecting assumed improved sales growth in personal care, Berenberg raised its earnings per share estimates for fiscal years 2016 to 2018 by an average of 5%.
Macquarie upgraded Amec Foster Wheeler to 'neutral' from 'underperform' but cut the price target to 400p from 420p, with the stock now sufficiently de-rated after last month's disappointing trading update.
"In our view, the time has come to close out underweight positions and we upgrade our recommendation to neutral.
"Near-term catalysts for underperformance are slim and the current multiple is far more reflective of the challenges that are faced in turning around the company," it said.
Macquarie said it has better digested last month's update and downgraded its Clean Energy revenue assumption for next year.
It now expects this to fall 24%, compared to 8% previously, and said this is "more in tune with commentary of a significant decline" in Solar revenues.
Overall, ex-Global Power Group, it reckons group revenues will decline by 9% in 2017.
Macquarie said it could not rule out a dividend cut.
Due to weakening FX, it expects that post disposals, Amec will still have net debt/EBTIDA of 2.4x, above the 2.0x it has historically said it is comfortable with.
"To get down to that level, net debt would need to fall by a further £130m and cutting the dividend would get them towards this (£85m annual saving)," it said.
Pennon bucked the downtrend on Wednesday as Credit Suisse lifted its rating on the stock to 'neutral' from 'underperform' and upped the price target to 800p from 790p.
"We upgrade to neutral, as we see a lack of immediate downside risks with near-term upside to consensus earnings per share."
CS pointed out that Pennon has been the worst-performing UK utility year to date, as it noted recyclate prices have risen sharply and Pennon should benefit from sterling weakness.
Pennon has underperformed the MSCI European Utilities index by around 14%, UK regulated peers by around 11% and the FTSE 100 by approximately 15%.
"We see this driven by an increased awareness and focus on risks in the waste business. We see significant medium-term pricing risk in energy from waste, but this will take some time to materialise.
"Following recent underperformance and recyclate price improvement we now see upside risks to an underweight position on a 12-month view."
Credit Suisse said it is not clear that Pennon will capture all of the upside associated with the recent rally in paper prices, given its risk sharing mechanisms in place with an increasing number of customer contracts. |
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