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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 open: Stocks edge higher, buoyed by Chinese inflation data UK stocks are seeing small gains, tracking overnights gains on Wall Street that saw the Dow Jones Industrials and S&P 500 establish fresh record highs and after stronger than expected readings on Chinese consumer and producer prices.
That followed the European Central bank´s latest policy moves which left economists a tad divided as to whether they in fact constituted a tightening or an easing of policy; although in the end equity traders appeared to opt for the latter of the two possible interpretations.
In government debt markets it was another story, with 10-year bonds from various euro area periphery countries coming under selling presure.
Commenting on the day´s events, Jim Reid at Deutsche Bank had this to say: "So still lot of QE for 2017 but now they've tapered once and if inflation prospects edge up by the time we get to the second half we'll likely see a lot of speculation as to a more aggressive slow down in purchases. So a lot now rests on euro inflation in 2017 and we think yesterday's news gives plenty of ammunition for our increased [interest] rate volatility story from our 2017 outlook."
For his part, Michael Hewson, Chief Market Analyst at CMC Markets UK, commented: "Looking at the wider picture all the ECB has done is reduce the monthly asset purchase amount back to the levels it was in March this year, when they were still some concerns that deflation was becoming entrenched. This is clearly not the case now with EU CPI at 31 month highs and therefore the governing council feels comfortable with the idea of reverting back to the original program amount.
"The resultant sell-off in the euro speaks to the fact that ECB and Fed policy are likely to be divergent for much longer than bond markets were pricing in 24 hours ago, while the spike in yields speaks to the fact that we could well see further upwards pressure on inflation."
Acting as a backdrop, on Friday morning Chinese price data released overnight revealed that consumer prices in Asia´s largest economy rose at a 2.3% year-on-year pace in November, up from 2.1% in October (consensus: 2.2%).
Factory gate inflation accelerated even more quickly, with the country´s producer price index rising at a 3.3% clip year-on-year, a five-year high, up from 1.2% in the month before, with industrial commodity price increases the main culprit.
Visible trade and construction output data for the month of October in UK were scheduled for release later in the session, followed by the latest reading on US consumer confidence later in the day.
Achtung Bitte, UK spreadbetters respond to BaFin plans
UK spreadbetters reacted to German market regulator BaFin´s announcement it was planning to clampdown on contracts-for-difference trading. Under the new proposals, CfD providers would need to ensure retail clients cannot lose more money than is deposited in their account. CMC Markets said this functionality was already available to its clients in Germany and on the basis of the consultation paper, there are no other requirements from BaFin including no leverage limits, and where retail clients' risk is limited to their deposits, there is no prohibition on marketing, distribution and sale of CfDs.
Textile services company Berendsen confirmed its UK Cleanroom business was being investigated by the Competition and Markets Authority (CMA). In a statement, the company said the probe related to a joint venture to which a Berendsen subsidiary was a party, including in relation to agreements entered into by the joint venture in May 2012.
International originator, active investor and manager of infrastructure projects, John Laing Group, posted a pre-close update for the year to 31 December on Friday.The FTSE 250 firm said primary Investment activity remained strong in each of its three geographical regions of Asia Pacific, North America and Europe - including the UK.Total investment commitments to date were £181m, in line with guidance for 2016, while total realisations agreed to date in 2016 were £255m.
Landscape products group Marshalls said on Friday that it is confident of meeting its expectations for 2016 as it reported a rise in revenue for the 11 months to 30 November. Revenue grew 3% to £375m, with sales in the domestic end market, which represent around 31% of group sales, up 10% compared with the prior year period. Marshalls said UK revenue since the half year is up 4% compared with 2015 and was particularly strong in the domestic end market, where sales in the five months to the end of November were 15% higher.
Electra Private Equity posted its preliminary results for the year to 30 September on Friday, with a net asset value per share of 5,149p, representing a total return of 35% for the year. The FTSE 250 firm's share price was 4,310p, a total return of 36% for the year, compared with 17% for the FTSE All-Share Index. Its investment return was £751m, or 46% on the opening portfolio. |
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| Market Movers
FTSE 100 (UKX) 6,940.56 0.13%
FTSE 250 (MCX) 17,716.94 0.20%
techMARK (TASX) 3,262.35 0.69%
FTSE 100 - Risers
Intertek Group (ITRK) 3,320.00p 2.09%
Smith & Nephew (SN.) 1,152.00p 1.95%
Sky (SKY) 803.50p 1.77%
Paddy Power Betfair (PPB) 8,325.00p 1.77%
Shire Plc (SHP) 4,399.50p 1.59%
Worldpay Group (WPG) 261.90p 1.16%
Informa (INF) 658.00p 1.15%
GlaxoSmithKline (GSK) 1,475.50p 1.06%
United Utilities Group (UU.) 888.50p 1.02%
Severn Trent (SVT) 2,123.00p 1.00%
FTSE 100 - Fallers
Capita (CPI) 453.50p -6.55%
Travis Perkins (TPK) 1,412.00p -1.74%
Barclays (BARC) 235.30p -1.55%
Lloyds Banking Group (LLOY) 61.85p -1.47%
Babcock International Group (BAB) 925.00p -1.39%
Taylor Wimpey (TW.) 154.20p -1.09%
Royal Mail (RMG) 457.90p -0.91%
easyJet (EZJ) 1,000.00p -0.70%
Prudential (PRU) 1,617.00p -0.65%
Standard Life (SL.) 369.20p -0.62%
FTSE 250 - Risers
Derwent London (DLN) 2,681.00p 3.83%
Bodycote (BOY) 622.00p 3.24%
CMC Markets (CMCX) 108.00p 2.56%
Electra Private Equity (ELTA) 4,685.00p 1.89%
Ladbrokes Coral Group (LCL) 125.80p 1.78%
Great Portland Estates (GPOR) 649.00p 1.72%
Greencore Group (GNC) 222.60p 1.69%
BGEO Group (BGEO) 3,371.00p 1.63%
BTG (BTG) 566.00p 1.62%
Smith (DS) (SMDS) 425.40p 1.50%
FTSE 250 - Fallers
Euromoney Institutional Investor (ERM) 1,006.00p -10.18%
Countryside Properties (CSP) 223.50p -2.74%
Sports Direct International (SPD) 281.50p -2.53%
Berendsen (BRSN) 822.50p -2.08%
Capital & Counties Properties (CAPC) 295.20p -2.02%
Crest Nicholson Holdings (CRST) 463.80p -1.95%
Marshalls (MSLH) 311.30p -1.80%
Berkeley Group Holdings (The) (BKG) 2,831.00p -1.67%
John Laing Group (JLG) 270.20p -1.49% |
| | UK Event Calendar | | Friday December 02
INTERIMS
Berkeley Group Holdings (The)
INTERIM DIVIDEND PAYMENT DATE
Games Workshop Group, Hargreave Hale AIM VCT 2, Hilton Food Group, Laird, Marshalls, Mission Marketing Group, Octopus Apollo VCT, Scottish Mortgage Inv Trust, UK Mail Group , William Hill
QUARTERLY PAYMENT DATE
Boeing Co
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Non-Farm Payrolls (US) (13:30)
PMI Construction (09:30)
Producer Price Index (EU) (10:00)
Unemployment Rate (US) (13:30)
FINALS
Urban&Civic
ANNUAL REPORT
LXB Retail Properties
SPECIAL DIVIDEND PAYMENT DATE
Best of the Best, Octopus Apollo VCT, Octopus Eclipse VCT 1
EGMS
Public Joint Stock Company Severstal GDR (Reg S)
AGMS
AXA Property Trust Limited, DFS Furniture, Quadrise Fuels International
FINAL DIVIDEND PAYMENT DATE
Abcam, Ashmore Group, Genus, James Halstead, Kier Group, Manchester & London Investment Trust, Swallowfield |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks edge higher as investors continue to digest ECB European stocks nudged higher in early trade as investors continued to mull over the implications of the extension of the European Central Bank's stimulus plan.
At 0850 GMT, the benchmark Stoxx Europe 600 index was up 0.2%, Germany's DAX was 0.1% firmer and France's CAC 40 was 0.3% higher.
Meanwhile, oil prices were in the black ahead of a meeting of OPEC and non-OPEC members on Saturday to discuss production. West Texas Intermediate was up 1.2% to $51.48 a barrel and Brent crude was 1.3% higher at $54.42.
Spreadex's Connor Campbell said: "After Thursday's ECB excitement things look a lot quieter this morning, the European market failing to move from the highs hit in the aftermath of Mario Draghi's announcement.
"The DAX, still at a 12 month peak, slipped 0.1% after the bell, while the CAC barely budged; the euro was similarly sluggish, failing to improve on the $1.06 level if fell to yesterday, though it did take 0.2% back off the pound. There isn't really much to move the eurozone indices this Friday - the most prominent catalyst for change would be news on Italian banking situation, but given that the country asked the ECB to give it until January to work out what to do with Monte dei Paschi that may not be forthcoming."
Stocks rallied on Thursday after ECB chief Mario Draghi said the central bank would keep buying government bonds through next year, albeit at lower amounts each month from April.
The ECB said it will buy €60bn a month in government bonds from April 2017 until December 2017, compared to €80bn currently.
In corporate news, Electrolux shares rose after the Swedish home appliance maker said it expects demand for its products to slow next year.
Digital security group Gemalto racked up healthy gains after announcing an agreement to buy 3M's identity-management business for $850m.
On the economic front, figures from Destatis showed Germany's trade surplus was a little smaller than expected in October, with exports up 0.5% from the previous month and imports 1.3% higher. Analysts had been expecting exports to rise 1% and imports 0.9%.
The seasonally-adjusted trade surplus narrowed to €20.5bn from €21.1bn in September, versus expectations of €21.5bn. |
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| | US Market Report | | US close: Dow Jones, S&P 500 again at record highs Wall Street pushed onwards with several of its main stockmarket indices hitting fresh record highs as the European Central Bank announced it will extend its quantitative easing programme but taper its purchases after March 2017.
The Dow Jones Industrial Average rose 0.33% or 65.19 points to 19,614.81, the S&P 500 was up 0.22% to 2,246.19 points and the Nasdaq gained 0.44% to 5,417.36 points.
In commodity markets, oil prices advanced ahead of a Saturday meeting in Vienna between OPEC and non-OPEC members which may result in a further cut in production.
West Texas Intermediate advanced 96 cents to $50.84.
In Europe, the continent's main indices were firmly in the green while the euro fell against the dollar as the ECB extended its bond-buying programme until December 2017, but will start to taper the scheme by scaling back quantitative easing from April to €60bn per month, down from €80bn.
It also left interest rates unchanged at 0.00%, while rates in the marginal lending facility and deposit facility were also maintained at 0.25% and -0.4% respectively.
Ranko Berich, head of market analysis at Monex Europe, said tapering appears to be the ECB simply turning monetary policy off its emergency setting to reflect the diminished risk of deflation.
"The bottom line remains that core inflation in the eurozone is not improving yet, as Mario Draghi himself clearly acknowledged. The ECB's staff projections underlined just how weak the outlook for inflation currently is. As such, monetary policy must remain exceptionally loose.
"The curve steepening seen across European sovereign yields shows the ECB did its job today, reassuring markets that although rates will be low in the medium term, this will restore growth and inflation in the long-term. The question, of course, is what happens if global inflation dynamics change in 2017, due to higher oil prices and a potentially big spending Trump administration?
"The Federal Reserve is likely to lead the monetary response to such a development due to the tight labour market in the US, but if the ECB has to deal with an improvement in the inflation outlook its response could prove far more significant globally."
In currency markets, the dollar jumped 1.06% to 0.9399 versus the euro, rose 0.4% to 114.22 against the yen and was up 0.18% to 0.7934 versus sterling.
Meanwhile, the Labor Department revealed that the number of Americans filing for first-time unemployment benefits fell last week after a five month high, suggesting that the economy is expanding.
US joblessness decreased by 10,000 to a seasonally adjusted 258,000 for the week ended 3 December.
In corporate news, Hovnanian Enterprises dropped 3.28% as the housebuilder reported a fall in fourth quarter earnings.
Profit tanked 12.6% to £22.29m, or 0.14 cents per share, compared to the same period last year. |
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| | Newspaper Round Up | | Friday newspaper round-up: Food prices, McDonald's, Brexit Britain's final salary pension funds have slashed their ownership of stock-market listed companies to just 7% of their total holdings following a huge shift in recent years to overseas stock markets and government bonds. The move away from owning UK stocks emphasises how dependent Britain's estimated 13.5 million past and present final salary scheme members have become on returns from shares in US, continental and emerging market companies to generate a retirement income. - Guardian
Food prices will rise unless the government ensures EU citizens can work in the UK after Brexit, according to industry groups representing the major supermarkets and food manufacturers, including the owner of Marmite. The open letter to the government is signed by 30 food and drink industry bodies, including the Food and Drink Federation, which represents major suppliers, including Marmite maker Unilever and Mr Kipling owner Premier foods; the British Retail Consortium, which counts Tesco, Sainsbury's, Asda and Morrisons among its members, and the National Farmers Union. - Guardian
The British economy has received a post-Brexit vote of confidence from one of America's best known companies after McDonald's announced it will move its non-US operations to London, abandoning its base in Luxembourg. The fast-food giant has chosen the UK to establish a new holding company to collect hundreds of millions of pounds a year in royalties from its international franchise operations. - Telegraph
The long-feared moment of bond tapering in the eurozone has arrived. The comfort blanket is being pulled away - gently - for the first time since the region first crashed into a debt crisis. The European Central Bank has tried to cushion the blow with dovish rhetoric and a glacially slow exit but there is no denying that monetary policy has reached a critical turning point. "The ECB has delivered an unwelcome surprise," said Luigi Speranza from BNP Paribas. - Telegraph
Businesses plan to cut back on investment and wages next year to protect profits after Brexit, according to the Institute of Chartered Accountants in England and Wales. In its latest economic forecast, built on the views of corporate clients, the ICAEW argues that investment will fall sharply and pay will expand at its slowest pace in four years as unemployment creeps up. - The Times
The European and US authorities are examining Glencore's Rosneft deal for a possible violation of sanctions against Russia, an American official has said. Glencore and Qatar are in advanced talks to buy a €10.2 billion stake in the state-controlled oil producer, from the Russian government. Rosneft, which produces one barrel in every 20 globally, was put under economic sanctions by the EU and the US in 2014 in response to Russia's actions in Ukraine. - The Times | | |
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