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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 on hopes of Monte dei Paschi bailout, further ECB stimulus London stocks were sitting higher on Wednesday as hope of a bailout of Italy's Banca Monte dei Paschi di Siena lifted investor sentiment.
The FTSE 100 closed up 1.81% to 6,902.23 points.
Shares in Banca Monte dei Paschi di Siena rose after La Stampa reported that Italy could ask for a €15bn European Stability Mechanism loan to help not just Paschi but also some of the country's other struggling banks.
The news gave the rest of the sector a lift with shares in HSBC, Royal Bank of Scotland and Standard Chartered in the black.
Meanwhile, the Italian parliament on Wednesday gave its final approval to the government's 2017 budget. Prime Minister Matteo Renzi is expected to hand in his resignation at 1800 GMT.
Elsewhere, equities were boosted by optimism that the European Central Bank will announce an extension of its bond-buying quantitative easing programme on Thursday, when it is due to make its latest policy announcement.
In economic data, the Office for National Statistics revealed UK industrial production in October fell 1.3% compared to September, following on from a 0.4% drop a month ago, while production fell 1.1% versus October last year. Economists had forecast a 0.2% month-on-month rise and a 0.5% annual increase.
Manufacturing production fell 0.4% versus the consensus estimate for a 0.8% rise, while month-on-month the figure dropped 0.9% versus 0.2% forecast.
UK house price growth rose a modest 0.2% month-on-month in November to £218,002, following a 1.5% increase in October, according to Halifax.
In the three months to November, prices were 6.0% higher than in the same period in 2015, having slowed to a three-year low of 5.2% for the three months to October.
The National Institute of Economic and Social Research has estimated UK economic growth remained flat in the three months ending in November. NIESR said its estimate suggested gross domestic product grew by 0.4% in the three months ending in November 2016, as it did in the preceding three months to October.
German industrial production rose less than expected in October, according to figures released by Destatis. Industrial production was up 0.3% from September, when it dropped a revised 1.6%, missing expectations for a 0.8% increase.
In the US, crude inventories fell by 2.4m barrels last week to 485.8m barrels, the Energy Information Administration said on Wednesday.
A day earlier, the EIA raised its oil output forecast for this year and next amid speculation OPEC's deal to cut production from January will bolster US shale production. The EIA lifted its 2016 domestic output forecast to 8.86 million barrels a day from 8.84 million projected in November. It increased its estimate for 2017 to 8.78m barrels a day from 8.73m previously.
At 1628 GMT Brent crude fell 0.84% to $53.46 per barrel and West Texas Intermediate declined 1.19% to $50.33 per barrel.
Among corporate stocks, Rio Tinto surged after Credit Suisse upgraded the stock to 'outperform' from 'neutral' and lifted the price target to 3,600p from 2,750p as it switched its preference from BHP Billiton.
GKN also got a broker note boost as Bank of America-Merrill Lynch upgraded its stance on the shares to 'buy' from 'neutral' and upped the price target to 365p from 350p.
On the downside, WPP lost ground following reports the US Justice Department is investigating claims advertising agencies are rigging the bidding process for contracts on producing commercials in order to persuade clients to use their in-house production units over independent companies.
Unilever was also under the cosh as JPMorgan Cazenove downgraded it to 'neutral' from 'overweight' on a weaker top line as it took a look at the European food/household and personal care stocks.
Shire also got hit by a broker note as UBS cut the stock to 'neutral' from 'buy' and pushed the target down to 5,000p from 5,600p.
Bunzl retreated as Goldman Sachs cut its price target to 2,200p from 2,400p, maintaining its 'neutral' rating. |
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| Market Movers
FTSE 100 (UKX) 6,902.23 1.81%
FTSE 250 (MCX) 17,625.53 0.99%
techMARK (TASX) 3,230.16 0.22%
FTSE 100 - Risers
Rio Tinto (RIO) 3,221.50p 6.62%
Anglo American (AAL) 1,252.00p 4.81%
International Consolidated Airlines Group SA (CDI) (IAG) 435.10p 4.77%
Lloyds Banking Group (LLOY) 62.27p 4.69%
GKN (GKN) 318.40p 4.50%
St James's Place (STJ) 985.00p 4.40%
Standard Chartered (STAN) 684.70p 4.22%
Old Mutual (OML) 195.60p 4.10%
Prudential (PRU) 1,649.00p 4.07%
Ashtead Group (AHT) 1,617.00p 3.92%
FTSE 100 - Fallers
Shire Plc (SHP) 4,357.00p -4.47%
WPP (WPP) 1,647.00p -2.77%
Pearson (PSON) 784.50p -1.07%
Croda International (CRDA) 3,135.00p -1.01%
Bunzl (BNZL) 2,007.00p -0.94%
Worldpay Group (WPG) 256.60p -0.85%
Unilever (ULVR) 3,111.00p -0.77%
AstraZeneca (AZN) 4,007.00p -0.76%
Imperial Brands (IMB) 3,391.50p -0.40%
Provident Financial (PFG) 2,831.00p -0.25%
FTSE 250 - Risers
Ladbrokes Coral Group (LCL) 127.10p 7.08%
IG Group Holdings (IGG) 513.00p 5.75%
Evraz (EVR) 238.90p 5.34%
BGEO Group (BGEO) 3,278.00p 5.30%
Essentra (ESNT) 426.10p 4.98%
Ocado Group (OCDO) 277.70p 4.63%
Restaurant Group (RTN) 345.10p 4.29%
Capital & Counties Properties (CAPC) 296.60p 4.14%
Paysafe Group (PAYS) 366.90p 3.82%
SSP Group (SSPG) 375.20p 3.82%
FTSE 250 - Fallers
Indivior (INDV) 295.90p -4.89%
Carillion (CLLN) 246.10p -3.90%
Auto Trader Group (AUTO) 384.70p -2.68%
G4S (GFS) 224.10p -2.35%
Greencore Group (GNC) 270.40p -2.24%
Ultra Electronics Holdings (ULE) 1,929.00p -1.83%
Genus (GNS) 1,781.00p -1.83%
Tullow Oil (TLW) 305.40p -1.80%
Aldermore Group (ALD) 224.50p -1.75%
Renishaw (RSW) 2,404.00p -1.63% |
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| | US Market Report | | US open: Stocks mostly higher on hope of rescue for Italy's banks US equity markets were mostly higher on Wednesday on the coattails of its European peers which advanced on the hope of bailout for its struggling banks.
The Dow Jones Industrial Average rose 0.06% to 19,263.88 points, the S&P 500 crept up 0.02% to 2,212.77 points, but the Nasdaq fell 0.17% to 5,3324 points at 1515 GMT.
In Europe, the main indices were all firmly in the green, including Milan's FTSE MIB index which was up 1.44%, amid hopes of a state bailout for Italy's third largest lender, Banca Monte dei Paschi di Siena.
Investors were also betting that the European Central Bank will announce an extension of its bond-buying quantitative easing programme on Thursday when it makes its latest rate announcement.
Shares in Monte dei Paschi di Siena surged 8.99% after La Stampa reported that Italy could ask for a €15bn European Stability Mechanism loan to help it and other beleaguered Italian banks.
Connor Campbell, market analyst at Spreadex, said: "The continued lack of fuss following the Italian referendum result, combined with the prospect of a Monte dei Paschi bailout (potentially as soon as this week), has led the European indices to a bevy of highs this afternoon.
"All this European optimism had little effect on the Dow Jones, which managed a mere 15 point rise after the bell. Nevertheless, even such slender growth would still see the index on track to close at yet another record high despite the proximity of a long-awaited rate hike from the Federal Reserve (which, if market predictions prove to be correct, should arrive a week today)."
Elsewhere, the Bank of Canada kept interest rates at 0.5% as expected.
In currency markets, the dollar was trading down 0.19% to 0.9312 versus the euro, but rose 0.01% to 114.03 against the yen and was up 0.56% to 0.7932 versus sterling.
In commodity markets, oil prices retreated as the Energy Information Administration increased its domestic output forecast to 8.78m barrels a day for 2017, from the 8.73m projected in November. It also raised the 2016 forecast to 8.86m from 8.84m.
Brent crude was down 1.03% to $53.38 per barrel, while West Texas Intermediate was lower by 1.17% to $50.34 at 1435 GMT.
Gold on Comex rose 0.8% to 1,179.50 per troy ounce at 1424 GMT.
On the corporate front, the maker of Jack Daniel's whiskey Brown-Forman slid 0.81% as it cut its revenue outlook as sales fell. The company took of 1% on the its forecast and now expects sales to grow between 4-5% this year, after sales second quarter sales, after taxes dropped 2.8% to $830m, compared to last year.
Handbag retailer Vera Bradley dove 9% as it also lowered its full year outlook after comparable sales fell 5.7% in the third quarter. It revised its full-year forecast to earnings of 62 cents to 65 cents a share on revenue of $486m to $491m. |
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| | Broker Tips | | Broker tips: Shire, GKN, IG Group UBS downgraded Shire to 'neutral' from 'buy' and cut the price target to 5,000p from 5,600p saying a tougher environment for expensive orphan drugs was likely to constrain performance.
This, and other issues such as low return on invested capital and the 2023 Vyvanse patent expiry, offset around 11% non-GAAP earnings per share compound annual growth rate from 2016 to 2021, impressive rare disease research and development and the great launch of the dry eye drug, Xiidra.
In addition, the bank said Shire's hemophilia business faces potential competition, which may have two effects.
The company's established drugs may be slowly out-competed by news drugs, and the new drugs may destabilise the current oligopoly, prompting more price competition between established drugs.
"Shire looks cheap on a medium-term price-to-earnings growth basis, but, in our hands, expensive-to-fair on a discount cash flow basis even if we lower beta to bring weighted average cost of capital closer to the sector average."
GKN got a boost as Bank of America Merrill Lynch upgraded its stance on the stock to 'buy' from 'neutral' and upped the price target to 365p from 350p.
"As we move into 2017, we believe GKN provides one of the strongest earnings growth profiles in the sector, through both organic improvement and restructuring," Merrill said, adding that the valuation has been weighed on by deteriorating sentiment in aerospace & autos end markets.
However, the bank said the stock's discount to peers has grown too wide and is now attractive. It noted the shares are now trading a 33% discount to the benchmark Stoxx 600 index 12 months forward versus its 10-year average discount of 14%.
"We think this valuation discount is extreme, and is an attractive entry point in the context of the strong earnings growth we expect relative to the rest of the sector."
BofA ML said it sees top-line deceleration but bottom line acceleration. It said organic growth in Aerospace should remain low single digit organic 2017-18, as military improves and civil deteriorates. However, it sees a stronger earnings profit as the company continues to improve profitability on A350XWB and Fokker margins.
"Despite slower IHS' production outlook, Driveline should continue to outperform the market, in our view, and earnings should benefit from the group-wide restructuring programme and non-repeat of exceptional cost."
Citigroup downgraded IG Group to 'neutral' from 'buy' and chopped the price target to 470p from 950p after the Financial Conduct Authority announced plans on Tuesday to tighten the rules around contract for difference products.
"We see the move by the FCA as having put the introduction of leverage limits on the regulatory table. We do not believe this was something being considered by other regulators: rather, we have seen other EU regulators use their powers to ban specific firms where they deem appropriate, rather than make sweeping changes to the whole industry."
Citi said the 38 % drop in the IG share price on the back of the news was justified as it noted that key proposals include leverage limits, restrictions on financial promotions and enhanced disclosure requirements.
The bank pointed out that spreadbetting and contracts for difference accounted for 51% of group revenue in FY16. It cut its full-year 2018 earnings per share estimate to 37p from 55.5p to reflect a drop of around 30% in UK revenue year-on-year from FY17 to FY18.
Citi said the introduction of leverage limits will lead to reduced trading activity, at least in the short - term. |
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