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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 rise as BoE votes unanimously to keep policy unchanged London shares gained on Thursday after the Bank of England voted unanimously to keep policy unchanged.
The FTSE 100 finished up 0.72% to 6,99.01 points.
The Monetary Policy Committee decided to leave interest rates at 0.25% and the asset purchase programme at £435bn, in what were widely expected moves by analysts.
In the minutes of the policy meeting, the Bank said little has changed since November's inflation report. However, the Bank said inflation may overshoot its 2% target by less than it forecast in November in light of the recent appreciation in Sterling.
The BoE reiterated that it was ready to tighten or loosen policy if needed to respond to any changes in the economic outlook as Brexit deliberations continue.
"The December MPC minutes do little to change the view that interest rates are likely to stay at 0.25% through 2017," said Howard Archer, chief UK and European economist at IHS Global Insight.
"Indeed, it currently looks more likely than not to us that the Bank of England will be keeping monetary policy unchanged for a prolonged period (maybe out to 2020). We believe the Bank of England will be pretty tolerant on the probable appreciable inflation overshoot given the prolonged, highly uncertain outlook that the UK economy is likely to face as the government negotiates the exit from the EU."
In other UK news, retail sales growth slowed in November from the previous month's 14-year high as an increase in fuel prices offset strong Black Friday sales.
Retail sales, including fuel, rose 5.9% compared to the same month a year ago, slowing from October's 7.2% annualised rise, the Office for National Statistics said. The decline was in line with expectations.
In the US, the consumer price index edged up 0.2% in November, as expected, from the 0.4% rise in the previous month.
In the 12 months to November the index increased 1.7%, also as anticipated, from 1.6% in October
Initial jobless claims fell 4,000 to a seasonally adjusted 254,000 in the week ended 10 December, slightly below the 256,000 expected, the Labor Department said. Continuing unemployment claims rose by 11,000 to 2.02m in the week ended 3 December.
The NAHB housing market index rose to a nine-year high to 70 in December, from 63 the prior month, and beat expectations of 64.
Meanwhile, investors continued to digest the Federal Reserve's decision to raise interest rates for the first time in a year on Wednesday.
The Fed raised rates to between 0.50% and 0.75% from 0.25% to 0.50% and signalled that more interest rate increases were on the cards for next year than it had at the meeting in September. A further three hikes were projected in 2018, followed by another three in 2019.
The dollar surged following the announcement and continued to rise throughout Thursday's session. The greenback was up 1.29% against the pound, 1.46% versus the euro and 1.12% versus the yen at 1638 GMT.
In response to a stronger dollar, oil prices retreated with Brent crude down 0.78% to $53.48 per barrel and West Texas Intermediate down 1.4% to $50.33 per barrel at 1645 GMT.
On the company front, British Gas owner Centrica pushed up after lifting its earnings outlook for the full-year.
GVC Holdings rallied as the FTSE 250 sports betting and gaming group said it expects pro-forma net gaming revenue for the year to the end of December and adjusted earnings to be at the upper end of forecasts.
A gauge of mining shares slumped as metal prices fell with Fresnillo, Randgold Resources and Antofagasta among the top fallers.
Aggreko got a boost as Deutsche Bank upped its stance on the temporary power provider to 'buy' from 'hold' and lifted the price target to 1,000p from 780p noting the company was approaching the end of four years of negative earnings momentum.
Hochschild Mining was under the cosh after saying its Pallancata mine in Peru had temporarily stopped production due to a road blockade by members of a local community.
Marston's was weaker as its stock went ex-dividend. |
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| | The 12 stocks of Christmas On the fifth day of December Ian Forrest, our investment research analyst, gave investors 12 companies he thinks could benefit from the festive season: Sainsbury’s
The supermarkets will be battling it out for our attention this Christmas and Sainsbury’s will be a strong contender to benefit. Particularly so given that in September the company completed the acquisition of Home Retail, owner of Argos, in a move that is viewed as an attempt to improve its online presence and compete with the likes of Amazon. Given the fierceness of competition in the sector, Sainsbury continues to perform well at the checkout with market share currently standing at 16.3%. William Hill
Bookmaker William Hill is already positioning itself to benefit... Read More... |
| Market Movers
FTSE 100 (UKX) 6,999.01 0.72%
FTSE 250 (MCX) 17,764.86 0.47%
techMARK (TASX) 3,323.00 0.78%
FTSE 100 - Risers
Centrica (CNA) 231.20p 5.62%
Royal Bank of Scotland Group (RBS) 227.00p 4.42%
International Consolidated Airlines Group SA (CDI) (IAG) 450.70p 3.87%
GKN (GKN) 330.90p 3.60%
Barclays (BARC) 229.45p 3.47%
Coca-Cola HBC AG (CDI) (CCH) 1,667.00p 3.22%
easyJet (EZJ) 1,007.00p 2.70%
Lloyds Banking Group (LLOY) 64.37p 2.57%
InterContinental Hotels Group (IHG) 3,532.00p 2.44%
Persimmon (PSN) 1,728.00p 2.37%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 5,470.00p -7.91%
Fresnillo (FRES) 1,114.00p -5.59%
Antofagasta (ANTO) 683.50p -5.20%
Anglo American (AAL) 1,154.50p -3.99%
Polymetal International (POLY) 777.00p -3.54%
BHP Billiton (BLT) 1,312.00p -3.21%
Mediclinic International (MDC) 724.00p -2.75%
Glencore (GLEN) 272.05p -2.68%
Rio Tinto (RIO) 3,088.50p -2.49%
Associated British Foods (ABF) 2,669.00p -1.55%
FTSE 250 - Risers
GVC Holdings (GVC) 663.00p 7.80%
Aggreko (AGK) 917.50p 4.68%
WH Smith (SMWH) 1,510.00p 4.35%
Playtech (PTEC) 795.50p 3.72%
Thomas Cook Group (TCG) 87.45p 3.31%
PayPoint (PAY) 907.00p 3.19%
Auto Trader Group (AUTO) 403.10p 3.09%
SIG (SHI) 98.90p 3.02%
JRP Group (JRP) 140.70p 3.00%
Victrex plc (VCT) 1,897.00p 2.82%
FTSE 250 - Fallers
Centamin (DI) (CEY) 114.90p -11.95%
Acacia Mining (ACA) 360.30p -9.34%
Hochschild Mining (HOC) 224.10p -7.78%
Petra Diamonds Ltd.(DI) (PDL) 147.00p -6.96%
Marston's (MARS) 133.20p -4.38%
Redefine International (RDI) 37.63p -4.22%
NCC Group (NCC) 176.80p -4.17%
Kaz Minerals (KAZ) 378.20p -3.59%
Hastings Group Holdings (HSTG) 229.10p -3.13%
Kennedy Wilson Europe Real Estate (KWE) 956.50p -2.65% |
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| | US Market Report | | US open: Markets higher as investors mull Fed rate hike US stocks were on the front foot on Thursday as investors mulled the second interest rate hike by the Federal Reserve in a decade, while a stack of data was released.
The Dow Jones Industrial Average was up 0.52% to 19,895.54, the S&P 500 increased 0.51% to 2,264.66, and the Nasdaq gained 0.48% to 5,462.54 at 1526 GMT.
The Fed unanimously raised rates by 25 basis points to a target range between 0.50% and 0.75% and expects further three hikes next year. It also approved a 0.25% increase in the discount, or primary credit, rate to 1.25% from 1%.
Elsewhere, the Bank of England left interest rates on hold at 0.25%, but warned that the reserve bank could respond in either direction to the risks around inflation and growth next year.
Connor Campbell, financial analyst at Spreadex, said: "The dollar only looked more juiced-up this afternoon, the currency continuing to bully its global peers following the Fed's rate hike last night.
"Despite the rampant performance of the dollar the Dow Jones is eyeing a fresh all-time high, climbing around 100 points this Thursday to once again cross the 19,900 mark. The index took the briefest of pauses following the Fed's hawkish statement, but is already back on track to hit 20,000 before the year is out."
The dollar was up 1.05% to 118.27 against the yen, rose 1% to 0.9586 versus the euro, and was higher by 0.65% to 0.8011 versus sterling.
Meanwhile, oil prices retreated as Brent crude fell 0.69% higher at $53.53 a barrel and West Texas Intermediate was lower by 1.37% to $50.35 at 1441 GMT.
Gold on Comex was dropped 2.77% to 1,131.50 per troy ounce.
On the data front, the consumer price index edged up 0.2% on November as expected, from the 0.4% rise in the previous month.
In the 12 months to November the index increased 1.7%, also as anticipated, from 1.6% in October.
Initial jobless claims fell 4,000 to a seasonally adjusted 254,000 in the week ended 10 December, slightly below the 256,000 expected, while continuing unemployment claims rose by 11,000 to 2.02m in the week ended 3 December.
Employers added 178,000 jobs in November, roughly in line with average monthly increase this year.
The current account balance dropped to $113bn in November from $118.3bn the previous month, and more than the $11.6bn forecast.
The Empire State manufacturing index jumped to a reading of nine in December, higher than the four expected and more than the 1.5 last month. While the Philadelphia Fed index soared to 21.5 in December form 7.9 in November and significantly more than the 9.1 forecast.
The NAHB housing market index rose to a nine-year high to 70 in December, from 63 the prior month, and beat expectations of 64.
In corporate news, Yahoo was weaker by 3.45% after the technology company said that more than one billion user accounts may have been affected by a 2013 hack. |
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| | Broker Tips | | Broker tips: Sky, Sports Direct, Aggreko UBS reiterated a 'buy' rating on Sky and raised the target to 1,370p from 1,310p on Thursday after Rupert Murdoch proposed a deal to a full takeover of the broadcaster.
Murdoch's Twenty-First Century Fox on Friday announced a preliminary deal to buy the rest of the shares in Sky it does not already own for $14bn.
The deal comes five years after a phone hacking scandal at Murdoch's now defunct tabloid newspaper News of the World disrupted his previous attempt to buy Sky.
UBS said it believes Sky shareholders could push for a higher offer price on strong second quarter results in January 2017 showing improvement in UK key performance indicators and satisfactory outcomes for the Champions League and Series A rights auctions.
"While the independent board of directors for Sky has agreed to the offer price of 1075p, the board can change its recommendation at any time up until the formal offer documents for the extraordinary general meeting are published, typically after regulatory approval for the deal is granted," UBS analyst Polo Tang said.
"Our view is that EPS for Sky is about to inflect after a period of heavy investment and that EPS should reach more than 100p by 2020."
UBS raised its target to factor in the upside from Sky's recent launch into mobile. The bank raised its longer-term earnings before interest, tax and amortisation estimates by 2-3%.
"Near term, there is upfront investment from the launch of mobile but the bulk of these costs was already implicitly embedded into UBS estimates/consensus forecasts," Tang said.
"At a 1075p offer price, Sky trades on 16.3x calendarised EPS for 2017E falling to 13.4x in 2018 and 11.1x in 2019."
Canaccord Genuity has maintained its rating on Sports Direct at 'sell' but has lowered its price target to 160p from 231p due to the company's expensive expansion plans.
Sports Direct is planning to change its strategy from being a heavily discounting third-party branded product towards becoming the "Selfridges of sports retail" through freehold flagship stores.
"The cost of implementing this strategy will be high and we have adjusted our capex, depreciation and interest cost forecasts to reflect this," said the bank.
According to the company, it intends to spend potentially in excess of £300m of its own resources and a bank facility of £788m to invest on property asset acquisitions over the next two to four years.
Guidance for the full year 2017 capital expenditure is now £480m and depreciation and amortisation is expected to be £130m, up from the bankers' previous valuations of £93m and £130m.
The broker's underlying earnings before interest, tax ,depreciation and amortisation (EBITDA) forecasts have not changed materially, but the increase in depreciation guidance, as well as higher interest costs drives a 10-18% reduction in full year 2017-2019 profit before tax estimates.
"The net result is that our price target falls from 231p to 160p. We are taking management's guidance on costs at face value without assuming any resultant upside to trading. This may be harsh, but given the turmoil in the business to date and early stages of the new strategy it is hard to be more optimistic."
Aggreko got a boost on Thursday as Deutsche Bank upped its stance on the temporary power provider to 'buy' from 'hold' and lifted the price target to 1,000p from 780p noting the company is approaching the end of four years of negative earnings momentum.
The bank estimated that between 2012 and 2016, Aggreko's trading profit will have declined by almost 40%, mostly driven by the roll-off of certain one-off contracts, pricing pressure and a drag from oil and gas.
"While risks still remain for 2017E, mainly with the well flagged contract renewals in Argentina, we expect an inflection in earnings momentum in 2018E. We see upside with a return to earnings growth," DB said.
It sees the company returning to earnings growth in 2018 thanks to improved oil and gas activity, the 1GW of order intake in Power Solutions year-to-date and a lower drag from contract re-pricing, resulting in some margin stability. |
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