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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 finish higher as pound weakens The FTSE 100 ended slightly higher as the pound weakened against the dollar on fresh Brexit jitters.
London's top tier index rose 0.38% to 7,043.96 points.
The pound fell 0.35% against the dollar at $1.2351 following reports that EU Brexit negotiators were insisting the UK should agree to its exit from the bloc before Brussels could offer a transitional deal.
The news came after International Trade Secretary Liam Fox has indicated he is open to a transitional deal.
Meanwhile, oil prices were up, with West Texas Intermediate rising1.15%% to $53.68 a barrel and Brent crude 1.57% higher at $55.80.
At the same time, investors were digesting a series of events that took place late on Monday.
A truck ploughed into a Christmas market in Berlin, killing 12 people and injuring 48 in what is suspected to have been a terrorist attack.
In Turkey, the Russian ambassador was shot dead by an off-duty policeman who appeared to be protesting Russia's involvement in Aleppo, while in Zurich, three people were injured in a gun attack at a mosque.
Market participants also mulled over policy announcements from the Bank of Japan and the Reserve Bank of Australia.
The BoJ kept its monetary policy unchanged on Tuesday, as expected, maintaining its target for a negative 0.1% interest on some excess reserves and the 0% 10-year government bond yield.
However, the BoJ sounded a more upbeat note on the economy, underpinning expectations that its next move will be a hike rather than a cut to interest rates.
"Global markets received a pleasant surprise on Tuesday following the Bank of Japan's more upbeat view of its economy which reinforced expectations of a potential interest rate increase in the New Year," said FXTM research analyst Lukman Otunuga.
"The yen's persistent weakness could boost inflation in Japan by elevating import costs and such remains supportive for overall economic growth. Although the BoJ has ended the year on a positive note, the lurking fears of inflation which is still under the golden 2% target may be a cause for concern in 2017."
Meanwhile, the Reserve Bank of Australia also stood pat on interest rates, as expected, at a historic low of 1.5%, and hinted that it was happy to keep rates where they are for the moment. The RBA stopped short of mentioning a recession but suggested the door was open to a rate cut in the New Year.
Closer to home, the CBI reported that the balance of retailers reporting a year-on-year increase in retail sales volumes climbed to a 15-month high of +35% in December from +26% in November, beating forecasts of +20%.
"A buoyant December CBI Distributive Trades survey - covering the last week of November (including Black Friday) and the first two weeks of December - points to consumers splashing out in the run-up to Christmas, thereby maintaining a strong fourth quarter performance and boosting hopes that GDP growth has held up well," said Howard Archer, chief UK and European economist at IHS Global Insight.
Archer said consumers are still benefiting from relatively decent purchasing power and high employment.
However, with a weaker post-Brexit pound set to push inflation higher, purchasing power is likely to dwindle, Archer said.
In corporate news, Lloyds Banking Group was in the black after announcing the acquisition of credit card business MBNA from Bank of America for £1.9bn.
Pharmaceutical giant GlaxoSmithKline ticked higher after saying it achieved positive results from a phase three HIV study, which assessed the efficiency of a two-drug regimen.
Electra Private Equity edged up after saying it will receive around £106m from the sale of its stake in Innovia by investment manager Epiris LLP.
Digital payment systems provider Paysafe surged after announcing plans to begin an inaugural share buyback programme of up to £100m.
On the downside, Randgold Resources and Fresnillo were on the back foot as gold and silver prices fell. |
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| | The US after Trump election, and a letter from America A lot are horrified, others may just not like to admit to it. I have just returned from a trip to Utah, a state that voted for Donald Trump, I was there for a conference, but I thought I would share with you what I learned. The headlines might proclaim there are two Americas. There is the version consisting of the coastal regions on the west and north east and various pockets in-between, they voted Clinton, and then there is the large part of the interior that voted Trump. A letter from America But I learned that even in the midst of the most conservative state in the United States, the attitude towards the idea of a Trump presidency was pretty similar to the attitudes I hold, which, to put it gently, is not that positive.Of course, opinion is mixed, as it is in the UK over Brexit, and people voted the way they did for multiple reasons. Just as some people voted Brexit as a vote against immigration, while others voted for Brexit as they are pro-immigration but don't see why immigration policy should be tilted in favour of Europeans, the motivations for why people voted the way they did were numerous. Read More... |
| Market Movers
FTSE 100 (UKX) 7,042.87 0.37%
FTSE 250 (MCX) 17,766.42 -0.09%
techMARK (TASX) 3,332.36 -0.25%
FTSE 100 - Risers
Carnival (CCL) 4,145.00p 3.03%
Barclays (BARC) 227.70p 2.54%
Lloyds Banking Group (LLOY) 63.94p 2.22%
Prudential (PRU) 1,592.50p 2.08%
Mediclinic International (MDC) 753.00p 1.96%
Ashtead Group (AHT) 1,560.00p 1.69%
Glencore (GLEN) 272.65p 1.58%
Rio Tinto (RIO) 3,097.00p 1.54%
Royal Bank of Scotland Group (RBS) 226.30p 1.43%
Legal & General Group (LGEN) 243.80p 1.33%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 1,819.00p -2.26%
Fresnillo (FRES) 1,090.00p -2.15%
Babcock International Group (BAB) 936.50p -1.27%
Randgold Resources Ltd. (RRS) 5,635.00p -1.23%
Croda International (CRDA) 3,169.00p -1.22%
Sky (SKY) 985.00p -1.01%
BT Group (BT.A) 368.15p -0.88%
Associated British Foods (ABF) 2,681.00p -0.85%
Micro Focus International (MCRO) 2,139.00p -0.70%
Shire Plc (SHP) 4,570.00p -0.70%
FTSE 250 - Risers
Paysafe Group (PAYS) 360.60p 5.41%
Safestore Holdings (SAFE) 344.90p 3.89%
HarbourVest Global Private Equity Limited A Shs (HVPE) 1,152.00p 3.78%
Essentra (ESNT) 459.00p 2.98%
Fisher (James) & Sons (FSJ) 1,603.00p 2.43%
Fidessa Group (FDSA) 2,302.00p 2.36%
Evraz (EVR) 218.00p 2.35%
Petrofac Ltd. (PFC) 874.00p 2.04%
Aberdeen Asset Management (ADN) 258.90p 1.93%
Ferrexpo (FXPO) 139.40p 1.83%
FTSE 250 - Fallers
Polypipe Group (PLP) 308.10p -4.17%
Hochschild Mining (HOC) 190.20p -3.74%
Nostrum Oil & Gas (NOG) 408.00p -3.45%
Halma (HLMA) 912.50p -3.39%
Renishaw (RSW) 2,492.00p -2.88%
Keller Group (KLR) 803.50p -2.67%
John Laing Group (JLG) 269.70p -2.64%
Clarkson (CKN) 2,005.00p -2.53%
CLS Holdings (CLI) 1,557.00p -2.44% |
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| | US Market Report | | US open: Stocks in the green as dollar rebounds; Dow flirts with 20,000 US equity markets were in the green on Tuesday as the dollar rebounded and the Dow flirted with the 20,000 mark.
The blue-chip index has recently been within touching distance of hitting the target but has pulled back.
The Dow Jones Industrial Average added 0.44% to 19,969.89, the S&P 500 rose 0.31% to 2,269.58, and the Nasdaq gained 0.35% to 5,476.29 at 1506 GMT.
Meanwhile, the dollar was up 0.47% versus sterling to 0.8108, 0.28% against the euro to 0.9640, and 0.85% versus the yen to 118.09.
Earlier, the euro fell to its lowest level since 2003 against the greenback, falling 0.5% to $1.0355, while the differential between German and US 10-year yields widened to 1989 levels.
Michael Hewson, chief market analyst at CMC Markets, said: "The dollar has once again swept all before it, rising the most against the yen after the Bank of Japan left interest rates unchanged, while updating its economic outlook for the Japanese economy.
"The rebound appears to have accelerated in the last 24 hours in the wake of yesterday's speech by Federal Reserve chair Janet Yellen to students in Baltimore where she waxed lyrical about the health of the US jobs market. This bullishness on her part would appear to suggest that more rate rises could well be on the way in fairly short order, and in so doing has pushed the dollar index to new 14-year highs."
Elsewhere in Europe, the main indices were firmer after the Italian government said it will seek parliamentary approval to borrow up to €20bn to support its banking sector and potentially rescue Banca Monte dei Paschi di Siena. If the bank is unable to arrange a private sector bailout, a state rescue may come as early as this week.
Investors also largely shrugged off news of three attacks in Europe on Monday. A truck ploughed into a Christmas market in Berlin, killing twelve people and injuring 48 in what is suspected to have been a terrorist attack.
In Turkey, the Russian ambassador was shot dead by an off-duty policeman who appeared to be protesting Russia's involvement in Aleppo, and in Zurich, three people were injured in a gun attack at a mosque.
In oil markets, Brent crude rose 1.64% to $55.84 a barrel and West Texas Intermediate was up 1.13% to $53.67 at 1450 GMT.
Gold on Comex decreased 1.16% to 1,129.50 per troy ounce.
In corporate news, Conatus Pharmaceuticals rocketed 164.29% after it announced a licensing deal with Swiss drugmaker Novartis for a liver disease treatment late on Monday.
Carnival was up 1.6% as the cruise company beat forecasts for fourth quarter earnings and revenue, while Blackberry gained 3.7% after earnings surprised analysts, but revenue missed forecasts.
General Mills dipped 2.68% as the food company's earnings fell 9%, missing forecasts and as it lowered its outlook for the year.
Darden Restaurants rose 0.42% as the company's second quarter profit and revenue grew, boosted by sales from the Olive Garden chain.
Facebook was in focus after the European Commission accused the company of providing misleading or incorrect information during its 2014 investigation of its $19bn planned acquisition of WhatsApp. |
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| | Broker Tips | | Broker tips: Pets at Home, Petrofac, Aldermore Numis has initiated coverage of Pets at Home with an 'add' rating and target of 256p, saying the company is a "market leader with a strong track record".
"Despite the meaningful near-term challenges facing the business, we believe the scale, quality and visibility of the long term growth opportunity, led by the capital-light roll-out and maturity of its Services division, should support a material premium to the General Retailers," Numis said.
The broker added that Pets at Home has grown to become the largest specialist retailer of pet food, pet products and pet-related services in the UK. The quality of its overall customer proposition has supported "solid and consistent growth" along with ongoing market share gains and a "robust" financial history, Numis said.
However, the cost inflationary pressures of the National Living Wage and foreign exchange headwinds are weighing on near-term earnings.
First half pre-tax profit grew 3.9% but would have been 8% if excluding the effects of the increase in minimum wage requirements and a weaker pound.
"Indeed, we see the longer-term structural growth drivers underpinning the Pets at Home equity story - new space, maturity, Services growth, and underlying operational leverage - as very much intact," Numis said.
Numis believes the rollout and maturity of the Services operations as well as the opening of more stores could add an incremental £95m of earnings before interest and tax at group level, almost doubling its current pre-tax profit.
The target represents a 44% premium to the general retail sector and underpins the 'add' recommendation, which Numis said it is "happy to support despite the significant near-term challenges facing the business (slower current trading, tougher consumer outlook, online competition, foreign exchange, national living wage), given the high quality longer-term opportunity".
Canaccord Genuity on Tuesday reiterated a 'hold' rating on Petrofac but raised the target to 900p from 850p.
The broker said Petrofac has an "impressive record" from its initial public offering in 2007, showing resilience through the oil industry's 2008-09 crisis.
Petrofac's core Middle East North Africa-CIS lump-sum engineering and construction business has performed reliably year after year, with steady profits despite swings in order intake and customer sentiment, Canaccord said.
"The group chose to diversify into a range of other activities: operations & maintenance (O&M), upstream projects, and North Sea lump-sum work; whilst its record in these investments is much better than is generally perceived (Malaysia & O&M have gone very well) there have been several high-profile misses, leading to a series of profit warnings since 2014," Canaccord said.
"With the decision to largely exit these positions we believe the chance of further such warnings is now limited."
Canaccord said there, however, remains some legacy issues, including its Stella project, five Mexican contracts and a part-complete construction vessel and a cancelled contract on its deepwater multi-purpose offshore vessel JSD 6000.
The group's strategy beyond this retrenchment remains an open question, Canaccord said.
"The original arguments for diversification rested on stretching Petrofac's undoubted capabilities and track record into new markets, but also on the observation that the core MENA-CIS business was unlikely to grow much further.
"We don't think much has changed: Petrofac still enjoys a c.20% market share of in those parts of that market it currently addresses."
The broker added: "This core addressable market has grown beyond original expectations, but it is unlikely to deliver Petrofac's aspirations for revenue growth in the medium term.
"Whilst there have been some hints of the future strategy - notably going more into downstream and petrochemicals, and exploring further Asian markets - we don't as yet see a clear future path."
Canaccord raised its earnings per share forecast by 2016 by 20% but lowered its estimate by 1% in 2017 following Petrofac's trading update last week.
Petrofac said full year net profit is expected to be about $410m in 2016, in line with previous guidance.
"We are on track to deliver positive results in 2016 in line with guidance reflecting record revenues, solid operational performance across all of our businesses and the delivery of significant cost savings," said CEO Ayman Asfari in a statement.
Deutsche Bank upped its price target on challenger bank Aldermore to 257p from 194p as it reiterated its 'buy' rating on the stock.
It noted the shares are up 38% since the beginning of September amid an improved perception of the UK economy and following a better-than-expected third quarter.
"We think there is still upside from here, driven in particular by falling funding costs," Deutsche said.
"On today's advertised deposit rates, we estimate a flow cost of deposits of around 1%, compared with 1.8% at 1H16. We expect the majority of this benefit to flow through over the next two years, helping offset asset pricing pressure and providing Aldermore with a stronger buffer against falling margins than other UK peers." |
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