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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: Focus on UK CPI, Fed's Yellen Stocks began Tuesday's session moving lower, with traders in a defensive crouch ahead of key risk events scheduled for later in the day.
Without a doubt, the day's key event was to be the US central bank chief's testimony at 1500 GMT before the US Senate Banking Committee, though UK traders will be focused on inflation data due mid-morning.
As of 0823 GMT the Footsie was down by 0.23% or 16.71 points at 7,260.07.
For Michael Hewson, chief market analyst at CMC Markets UK: "With Fed chief Janet Yellen due on Capitol Hill later today to testify to US lawmakers, markets appear to be betting that she won't say anything too substantive one way or the other on the US economy, playing the data dependence card and in the process keeping the Fed's options open for a March rate rise."
Also weighing on sentiment perhaps at the start of trading was news that Donald Trump's national security adviser Michael Flynn had stepped down from his post overnight amid allegations of improper contacts with the Russian embassy in Washington DC before he took up his new position.
His resignation came as the new US administration was in the midst of preparations of key summits with other countries, beginning with Europe that same week.
Closer to home, Tuesday's other key event would be the January monthly inflation report from the Office for National Statistics, which economists expected would show consumer price inflation rising from 1.6% in December to 1.9% last month.
Hewson weighed in on that too, saying: "Today's inflation data will once again reopen the debate as to the wisdom of the Bank of England's emergency rate cut in August, particularly since inflationary pressures were already rising in the lead-up to that decision and the central bank easing policy served to amplify them.
"One of the more surprising features to come from the Bank of England's recent quarterly inflation report was the reluctance of the Monetary Policy Committee to raise its inflation forecast from the current 2.8%, despite once again raising its growth forecast for 2017, this time by another 0.6% to 2%."
Acting as a backdrop, consumer prices in China picked up from a 2.1% year-on-year pace in December to 2.5% (consensus: 2.4%) in January - a 32-month high.
"Consumer and producer price inflation both accelerated last month. But we expect both to peak soon and think hopes for a sustained reflation in China will be disappointed," commented Julian Evans-Pritchard, China economist at Capital Economics.
Change underway at Rolls Royce
Rolls-Royce posted a record £4.6bn pre-tax loss but revealed better than expected underling profits and said its transformation programme was well underway with cost-cutting at the top end of expectations. For 2017 the engine maker said it expected "modest" performance improvements and targeted free cash flow to be "similar to 2016".
TUI's first quarter loss narrowed and revenue grew as the Anglo-German travel group said this left it confident of growing underling earnings 10% for the full year. The company plans to make further disposals as part of its growth strategy, as on Monday TUI announced it would sell Travelopia, its portfolio of specialist travel brands to KKR for around £325m, and is talks with Etihad for the sale of TUI Fly.
Anglo American said its Kumba Iron Ore operation would report underlying earnings of $438m for the year ended 31 December 2016 compared with $238m a year earlier. The operation was put up for sale last year as part of a restructuring.
Retailer Next has announced that John Barton will be retiring as non-executive chairman and stepping down from the board on 1 August, to be succeeded by Michael Roney, the former chief executive of Bunzl. Barton, who became a member of the board in 2002, was appointed deputy chairman in 2004 and chairman in 2006. The company said he has made "an outstanding contribution" over the last 15 years and "his leadership, experience and wise counsel have been tremendously valuable over that time".
Acacia Mining returned to profit in the final quarter of 2016 as it said 2017 gold production would increase to between 850,000-900,000 ounces at lower costs of $880-$920 per oz. The final dividend of 8.4 cents a share for a total dividend of 10.4 cents, was more than double 2015's 4.2 cents and came as fourth quarter pre-tax profits rose to $62m compared with a loss of $131.9m last year.
Productivity-enhancing instrumentation and controls company Spectris announced its full year results for the 12 months to 31 December on Tuesday, with 13% growth in reported sales to £1.35bn, though sales growth was only 1% at constant exchange rates, with a 2% like-for-like sales decline.The FTSE 250 firm's adjusted operating profit improved 11% to £200.8m, though currency again had a major influence, with operating profit down 2% at constant exchange rates and off 6% on a like-for-like basis. Spectris' board confirmed a 5% increase in the full-year dividend to 52p. |
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| Market Movers
FTSE 100 (UKX) 7,256.52 -0.31%
FTSE 250 (MCX) 18,706.66 -0.28%
techMARK (TASX) 3,338.69 -0.30%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 1,181.00p 2.07%
Antofagasta (ANTO) 898.50p 1.70%
Capita (CPI) 521.00p 1.46%
BHP Billiton (BLT) 1,390.50p 0.76%
Fresnillo (FRES) 1,535.00p 0.72%
Convatec Group (CTEC) 240.60p 0.67%
Randgold Resources Ltd. (RRS) 7,455.00p 0.61%
Pearson (PSON) 654.50p 0.54%
Marks & Spencer Group (MKS) 336.70p 0.48%
Mediclinic International (MDC) 832.00p 0.42%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 725.50p -1.96%
AstraZeneca (AZN) 4,595.00p -1.19%
Anglo American (AAL) 1,393.00p -1.17%
CRH (CRH) 2,755.00p -1.08%
Hargreaves Lansdown (HL.) 1,379.00p -1.08%
Burberry Group (BRBY) 1,621.00p -0.98%
BAE Systems (BA.) 610.00p -0.97%
Taylor Wimpey (TW.) 174.20p -0.91%
Barratt Developments (BDEV) 509.00p -0.88%
Associated British Foods (ABF) 2,518.00p -0.87%
FTSE 250 - Risers
Acacia Mining (ACA) 495.60p 6.65%
Spectris (SXS) 2,488.00p 2.64%
Shawbrook Group (SHAW) 264.40p 2.16%
Drax Group (DRX) 386.60p 2.03%
Hochschild Mining (HOC) 275.30p 1.66%
Kaz Minerals (KAZ) 591.50p 1.11%
Virgin Money Holdings (UK) (VM.) 332.40p 1.03%
AO World (AO.) 160.90p 1.00%
Polymetal International (POLY) 992.00p 0.97%
Brown (N.) Group (BWNG) 225.10p 0.72%
FTSE 250 - Fallers
Mitchells & Butlers (MAB) 245.30p -4.29%
John Laing Group (JLG) 264.30p -2.83%
Ted Baker (TED) 2,790.00p -2.48%
Rank Group (RNK) 205.30p -2.42%
Greggs (GRG) 1,013.00p -1.94%
Keller Group (KLR) 870.00p -1.86%
SSP Group (SSPG) 403.20p -1.71%
Daejan Holdings (DJAN) 6,495.00p -1.59%
Millennium & Copthorne Hotels (MLC) 430.30p -1.51% |
| | UK Event Calendar | | Tuesday 14 February
INTERIMS
A&J Mucklow Group
QUARTERLY EX-DIVIDEND DATE
Schlumberger Ltd.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (GER) (07:00)
Industrial Production (EU) (10:00)
Producer Price Index (US) (13:30)
FINALS
Rolls-Royce Holdings, Spectris
SPECIAL DIVIDEND PAYMENT DATE
GVC Holdings
EGMS
Global Ports Investments GDR (REG S), JSC KazMunaiGaz Exploration Production GDR (Reg S)
AGMS
Baronsmead Venture Trust, F&C Capital & Income Inv Trust, Pressure Technologies, RWS Holdings, TUI AG Reg Shs (DI)
UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)
FINAL DIVIDEND PAYMENT DATE
Third Point Offshore Investors Limited, Third Point Offshore Investors Ltd. GBP Shares
|
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks tick lower amid earnings as investors eye Yellen European stocks ticked lower in early trade as investors sifted through corporate releases and looked ahead to a speech by Federal Reserve Chair Janet Yellen .
At 0855 GMT, the benchmark Stoxx Europe 600 index, Germany's DAX and France's CAC 40 were all down 0.1%.
Meanwhile, oil prices were a little firmer, with West Texas Intermediate and Brent crude up 0.5% to $53.18 a barrel and $55.91, respectively.
David Morrison, senior market strategist at SpreadCo, said: "The focus now turns to Fed Chair Janet Yellen and her testimony before the Senate Banking Committee in Washington later today. Investors will be listening out for any clues as regards the timing of rate hikes for the rest of this year. Back in December members of the FOMC produced its quarterly Summary of Economic Projections. In this the consensus coalesced around a forecast of 75 basis-points worth of tightening in 2017. This suggests three 25 basis point hikes.
"Now, Dr Yellen may want to prepare the markets for the possibility of a hike next month. This would give her the flexibility to make four hikes this year, or avoid suggesting that the Fed would make three in a row. But earlier this month data showed that wage pressure inflation was tepid and that persuaded many investors that the Fed may not be in any great hurry to raise rates this year. On top of this the CME FedWatch Tool shows investors assign just a 13% probability of a March hike."
In corporate news, aerospace and defence group Rolls-Royce fell after it posted a record annual loss of £4.6bn following a £671m corruption fine and amid the collapse of the pound.
HeildelbergCement was also on the back foot despite saying earnings and sales rose sharply in the fourth quarter.
On the upside, TUI AG advanced as it reported a narrower loss for the first quarter.
Credit Suisse gained ground despite reporting a bigger-than-expected loss for the fourth quarter following its settlement with US authorities, as it announced plans to cut 5,500 jobs.
Frozen baked goods maker Aryzta surged after announcing a management shake-up and potential asset sales.
Earlier, data from China showed prices grew at their fastest pace in January in more than two years, underpinned by rising energy prices and Lunar New Year demand for food.
China's consumer price index was up 2.5% from the previous year, compared with a 2.1% jump in December, according to the National Bureau of Statistics.
Meanwhile, the producer price index hit a fresh five-year high last month, up 6.9% year-on-year and beating expectations, compared with a 5.5% rise in December.
The German economy grew less than expected in the fourth quarter, according to data released by Destatis on Tuesday.
Gross domestic product rose 0.4% on the previous quarter on a seasonally-adjusted basis, missing economists' expectations of 0.5% growth.
Growth was driven by a pickup in domestic demand, as government spending rose significantly from the third quarter, while construction investments were also strong.
For 2016 as a whole, the growth rate was confirmed at 1.9%, marking the strongest rate in half a decade. |
| | Banking Sector Outlook for 2017 | | In the first of a two-part series, this report covers the sector and its main players ahead of a barrage of full year results releases. We take an in-depth look at how US & UK Banks fared during 2016, reporting dates and forecasts for 2017, and what early US results have shown us. Get your copy of the Banking Sector Outlook for 2017 today! Losses can exceed deposits |
| | US Market Report | | US close: Stocks end higher as investors bet on Trump US equity markets ended in the black on Monday, with indices hitting record highs as investor sentiment continued to be buoyed by Donald Trump's tax-cut promises.
The Dow Jones Industrial Average ended up 0.7% to 20,412.16, the S&P 500 rose 0.5% to 2,328.25 and the Nasdaq added 0.5% to 5,736.96.
Meanwhile, oil prices settled lower, with West Texas Intermediate down 1.8% to $52.90 a barrel and Brent crude down 2% to $55.58 as an OPEC report showing high compliance with last year's production cut deal was overshadowed by rising US crude output.
Baker Hughes said in its weekly report that over the last month, US oil drillers have added the most drilling rigs since 2012, with a total of 591 rigs.
Sentiment continued to be underpinned by Trump's pledge last week of a "phenomenal" tax announcement, as investors bet his tax reform plans and softer regulatory environment will boost economic growth and corporate profits.
As a result, financials put in a strong performance, also lifted by news that ex-Goldman Sachs top brass Steve Mnuchin was within hours of being confirmed as Treasury secretary.
"Trump's agenda of financial deregulation will likely have another supporter in the form Mnuchin. Mnuchin and [director of the White House National Economic Council] Gary Cohn will be a more 'internationalist' influence on Trump, potentially putting a lid the President's penchant for currency wars and trade tariffs," said CMC Markets' Jasper Lawler.
The benefit to Wal"l Street of having an ex-Goldman Sachs banker as Treasury Secretary is pretty self-evident. In extension, it would make sense for Mnuchin to fill key positions at the treasury with his people, namely other Wall Streeters. Senior Goldman Sachs banker Jim Donovan as well as Justin Muzinich, a former Morgan Stanley worker are reportedly being considered for key positions."
Last week, Trumped wrapped up a visit from Japanese Prime Minister Shinzo Abe and on Monday, after his meeting with Canadian Prime Minister Justin Trudeau, the US President went some way towards assuaging investors' fears when he said he will only be "tweaking" his trade relationship with the country.
In corporate news, Verizon Communications fell after the wireless carrier started selling unlimited data plans again for the first time since 2011.
On the upside, Teva Pharmaceutical Industries rose after quarterly revenue and earnings beat analysts' expectations but the company swung to a loss.
BHP Billiton gained after the miner declared a force majeure due to a strike at its copper mine in Chile, which sent copper prices to 20-month highs on supply concerns. |
| | Newspaper Round Up | | Tuesday newspaper round-up: BAE Systems, Co-op buyers, Ocado, Toshiba BAE Systems is poised to confirm Charles Woodburn as its new chief executive in a widely anticipated move that marks a generational shift at the defence giant. Mr Woodburn, 45, who joined BAE Systems last year as its chief operating officer, has long been viewed as the heir apparent to Mr King, who has led the company since 2008. - Telegraph
Smaller lenders are circling Co-operative Bank looking to pick up bargains as it emerged that the stricken lender could have to raise almost £1bn in order to bolster its finances. OneSavings Bank and buy-to-let lender Paragon are interested in parts of the Co-op, but with Co-op seeking a buyer for all of its business, potential buyers could include Clydesdale, Banco Sabadell, Santander or private equity firms such as Cerberus. - The Times
The US national security advisor, Michael Flynn, resigned late on Monday night amid a flow of intelligence leaks that he had secretly discussed sanctions with the Russian ambassador to Washington and then tried to cover up the conversations. The resignation, with the Trump era less than four weeks old, is the latest and most dramatic convulsion in the most chaotic start to an administration in modern US history. - Guardian
A London council has signed a 15-year contract with a property developer to build housing in what is thought to be one of the first deals of its kind. Hammersmith and Fulham council is attempting to tackle the housing crisis by signing a 50-50 joint venture with Stanhope as councils try to build affordable housing for residents. - The Times
Toshiba is expected to confirm that it is withdrawing from new nuclear projects outside Japan, dealing a blow to plans for a new power station in the UK. The Japanese company has been reviewing its investment in overseas nuclear projects and is expected to make an announcement on Tuesday. - Guardian
One of Britain's most influential investors has demanded an overhaul of the way the country's largest infrastructure businesses are run, saying that reform could lead to lower prices. Hermes Investment Management said that utilities from water companies to electricity suppliers, as well as other major infrastructure providers, needed to improve corporate governance, which could help bring prices down if it meant utility businesses were better managed. - The Times
Ocado could be out of spare cash to execute an international licensing deal, according to an analyst who adds that short-term payouts to the online food retailer's management may be unwarranted. In a bearish note to clients, Bruno Monteyne, of Bernstein, has questioned how Ocado, which delivers groceries from Waitrose and Wm Morrison, would finance any deal to license its proprietary technology to third-party overseas retailers. - The Times
3i, the owners of Agent Provocateur, are close to securing a buyer for the troubled lingerie chain. Advisers to the company, which took control of the firm in 2007, are understood to have drawn up a shortlist of three suitors, which includes former La Senza owner Lion Capital, specialist turnaround group Endless and French women's fashion brand Etam. - Mail
Pharmaceutical company Kaléo - already under fire for raising the price of an overdose antidote - now plans to put an alternative to the EpiPen on the market for more than seven times the cost of the leading $608 drug. Kaléo's epinephrine injector, used to stop severe allergic reactions, will go on sale for $4,500 for a pack of two beginning on 14 February. - Guardian
Dyson has opened a research and development operation in Singapore that will result in hundreds of engineering jobs being created in Asia. The home appliances group said that the SG Technology Centre was part of a £330 million investment in which new products would be designed using artificial intelligence, so-called "machine learning" and software development. - The Times | | | | To advertise in the Euro Markets Bulletin please contact [email protected] |
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