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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: Resources weakness, US tax-reform hangover and ex-divs punish FTSE Equities in London were punished lower on Thursday as pronounced weakness among mining and oil majors, a US tax-reform hangover, and a bundle of ex-dividend shares all told against the FTSE.
The FTSE 100 closed the second to last session of the week down 0.71% to 7,237.17, and the FTSE 250 ended down 0.21% to 19,636.64. Indices in Europe and the US were mostly down as well.
"European markets are experiencing what can only be described as a post-tax reform hangover today, and as with all hangovers investors should really have seen this one coming," said Michael Hewson, chief market analyst at CMC Markets UK.
"It was never particularly likely that the (Donald) Trump administration was going to be able to deliver on the expectations of the market and so it has been proved, though the effect on the US dollar hasn't been particularly marked," said Hewson.
Chris Beauchamp, chief market analyst at IG, opined that as the session wound down it was getting quite messy.
"The FTSE 100 is at the lows of the day, while European markets have given up their limited gains and the US (aside from the Nasdaq) has turned southwards as well," he said.
"The latest attempt to get the Trump bounce moving again has barely got off the ground; disappointment with the tax plan is palpable, and if it weren't for the looming end of the month, markets would probably be a quite a bit lower."
Overall, weakness in metals and particularly oil prices weighed on the FTSE 100. European markets shrugged off a European Central Bank that was less than effusive about the recovery in the euro zone.
ECB kept its policy interest rates unchanged, as expected. It restated these might yet be cut and that QE could be extended beyond their end-December 2017 expiry, if needed.
Connor Campbell, financial analyst at Spreadex, said the ECB had provided a minor distraction from the Trump fallout this afternoon.
"The main (ECB) takeaway was that the central bank believes the region needs a 'substantial degree of monetary accommodation' to reach its inflation targets," he said.
Blue-chip news and ex-dividends
ITV, Rolls-Royce, Legal & General, Antofagasta, Relx, Fresnillo, Informa, Elementis, William Hill, National Express, Senior and UBM all retreated as their stock went ex-dividend.
BP has agreed to sell its 50% stake in the Shanghai SECCO Petrochemical Company Ltd to Gaoqiao Petrochemical Co Ltd, a 100% subsidiary of China Petroleum & Chemical Corporation (Sinopec), BP's joint venture partner, for a total of $1.68bn.
Housebuilder Persimmon was in the black after it said current forward sales revenue, including legal completions taken to date, was up 11% to £2. 56 bn, adding that it was confident on future prospects.
AstraZeneca was on the back foot after it posted a drop in first-quarter sales, while WPP also declined after it said sales slowed in the first quarter due to major account losses.
Lloyds Banking Group bucked the trend, rallying after it reported that profits doubled in the first three months of the year.
Taylor Wimpey nudged a touch higher as it set aside £130m for a leasehold scandal.
Healthcare provider Mediclinic International rocketed on news that Adu Dhabi has waived 20% of the co-payment for Thiqa health insurance card holders.
Schroders lost ground even as the fund manager reported a 5% jump in assets under management and administration for the first quarter.
Prudential, St James's Place and Aviva were initiated at 'outperform' at Credit Suisse, while Legal & General was rated a new 'underperform'. |
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| Market Movers
FTSE 100 (UKX) 7,237.17 -0.71%
FTSE 250 (MCX) 19,636.64 -0.21%
techMARK (TASX) 3,480.84 -0.25%
FTSE 100 - Risers
Mediclinic International (MDC) 859.00p 17.51%
Kingfisher (KGF) 335.80p 2.75%
Persimmon (PSN) 2,340.00p 2.36%
Lloyds Banking Group (LLOY) 68.97p 2.31%
Johnson Matthey (JMAT) 3,000.00p 1.69%
Taylor Wimpey (TW.) 201.60p 1.56%
Hargreaves Lansdown (HL.) 1,406.00p 1.52%
Whitbread (WTB) 4,050.00p 1.43%
Next (NXT) 4,303.00p 1.41%
London Stock Exchange Group (LSE) 3,391.00p 1.28%
FTSE 100 - Fallers
Legal & General Group (LGEN) 246.90p -5.44%
BHP Billiton (BLT) 1,153.50p -4.75%
ITV (ITV) 210.50p -4.06%
Fresnillo (FRES) 1,436.00p -3.82%
Glencore (GLEN) 299.65p -3.15%
Antofagasta (ANTO) 818.50p -2.79%
Rio Tinto (RIO) 3,030.00p -2.63%
International Consolidated Airlines Group SA (CDI) (IAG) 548.50p -2.58%
WPP (WPP) 1,680.00p -2.44%
BP (BP.) 442.65p -2.42%
FTSE 250 - Risers
Berendsen (BRSN) 867.50p 5.54%
Spire Healthcare Group (SPI) 337.10p 4.82%
Allied Minds (ALM) 162.90p 3.49%
St. Modwen Properties (SMP) 365.00p 2.99%
Ibstock (IBST) 226.90p 2.90%
Kaz Minerals (KAZ) 492.10p 2.71%
Nex Group (NXG) 617.50p 2.40%
NMC Health (NMC) 1,955.00p 2.20%
Essentra (ESNT) 536.00p 2.10%
Dixons Carphone (DC.) 333.30p 1.99%
FTSE 250 - Fallers
Fidessa Group (FDSA) 2,400.00p -8.08%
Vedanta Resources (VED) 666.00p -7.37%
Weir Group (WEIR) 1,945.00p -6.63%
Amec Foster Wheeler (AMFW) 548.50p -4.77%
Wood Group (John) (WG.) 770.50p -4.11%
Ferrexpo (FXPO) 151.70p -3.80%
Petrofac Ltd. (PFC) 823.50p -3.74%
Entertainment One Limited (ETO) 239.50p -3.62%
Hochschild Mining (HOC) 250.50p -3.58% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: ECB pours cold water on expectations of policy shift European stocks declined for the first time in seven days despite the European Central Bank sounding a more confident note on the single currency bloc's economy.
The Stoxx Europe 600 index drifted 0.24% lower to 387.80 with miners leading the losses as metal prices fell. Germany's DAX lost 0.23% to 12,443.79 and France's CAC was 0.31% weaker at 5,271.70.
A gauge of Basic Resource companies' shares within the Stoxx 600 lost 2.75%, while another linked to lenders' shares dropped 0.88%.
Meanwhile, Brent crude was down 2.31% to $50.65 per barrel and West Texas Intermediate fell 2.5% to $48.42, following news that two Libyan oilfields with a combined putput of 390,000 barrels a day had restarted production.
Traders at Sucden Financial cited the drop in oil prices which triggered sell-stops on crude and gains for the US dollar as drivers of the weakness in Basic Resources, with losses for banks attributable to fading prospects of a hike in the ECB's deposit rate.
ECB chief Mario Draghi sounded a more confident note on the euro area economy, but cautioned that risks from overseas had increased even as underlying inflation was only seen rising gradually over the medium-term.
"The risks surrounding the euro area growth outlook, while moving towards a more balanced configuration, are still tilted to the downside and relate predominantly to global factors," said Draghi.
One source-based report prior to Thursday's meeting had indicated that many within the ECB Governing Council were mulling dropping a small hint in June of an upcoming shift in the policy stance.
Yet according to Draghi no such discussions took place today, sending the single currency lower by 0.30% to 1.0871.
Unpeturbed, Philippe Gudin and Antonio Garcia Pascual at Barclays Research told clients: "In June we expect a change to a less dovish and more symmetric forward guidance that would open the door for depo rate hikes in 2018. In particular, we would expect modifications possibly to both the forward guidance on rates and on QE by removing the explicit reference in the statement to a scenario with lower rates and/or higher QE."
Dr. Howard Archer, chief European + UK economist at IHS Markit believed any change would have to wait until after the next German elections.
Earlier in the day, data revealed that consumer optimism in Europe's largest economy was on the rise. GfK's consumer confidence index rose to 10.2 in May from 9.8 the month earlier and was ahead of the 9.9 reading expected.
Meanwhile, a lack of detail meant the Trump administration's US tax announcement on Wednesday failed to get investors excited. Corporation tax is to be slashed to 15% from 35%, the seven tax brackets will be reduced to three and the alternative minimum tax would be cut, with nearly all of the current tax deductions eliminated.
In corporate news, Deutsche Bank fell 3.28% after the lender missed revenue expectations but posted a rise in profit.
Deutsche Lufthansa dropped 5.21% despite the German airline swinging to a €25m first-quarter profit.
Bayer AG gained 4.12% after the German pharmaceutical posted 38% rise in first quarter profit and raised its outlook for the year. |
| | US Market Report | | US open: Stocks edge higher despite doubts over Trump tax plans Stocks managed to hold onto slight gains at the open as investors continued to mull over the White House's tax cut plans announced the night before amid a barrage of largely as expected economic data.
As of 1434 GMT the Dow Jones Industrials was higher by 0.05% to 20,985.87, alongside gains of 0.27% in the Nasdaq Composite to 6,041.22 and a rise of 0.07% for the S&P 500 to 2,389.24.
However, news that the White House was not going to pursue an exit from NAFTA, opting instead for a renegotiation, was likely a relief for many operators.
On Wednesday, US stocks ended slightly lower as investors were left disappointed by the lack of specifics in Trump's tax reform announcement. As widely expected, the announcement included plans to cut corporate tax to 15% from 35% and reduce the top individual tax rate to 35% from 39.6%.
Yet the US administration's proposals did not include specifics on the costing of the cuts.
Among other things, that led some to speculate that they might not be 'deficit neutral' and therefore not permanent, expiring in 10 years' time instead.
Also worth noting, the proposals in effect ditched plans for a Border Adjustment Tax as a means of financing the fiscal expansion, contrary to the wishes of many Republicans.
Acting as a backdrop, durable goods orders undershot market forecasts, rising by 0.7% month-on-month in March (consensus: 1.2%), although the 'miss' was offset by upwards revisions to figures for the prior month.
The headline read prompted Ian Shepherdson, chief economist at Pantheon Macroeconomics to say: "Doubtless this report will spark another round of hand-wringing over the gap between the soft and hard data, but the weather might well have materially depressed these numbers and we want to see what happens in the next couple of months before reaching any firm conclusions."
Initial weekly jobless claims increased by 14,000 during the week ending on 22 April to hit 257,000, coming in above the 245,000 expected by analysts.
In corporate news, shares in PayPal Holdings jumped 8.06% after its earnings late on Wednesday beat expectations and the company announced a $5bn stock-repurchase plan.
Stock in Ford Motor dropped after posting a 35% fall in first quarter net income in comparison to the year ago level as the carmaker's bottom line was hit by safety recall expenses.
Dow Chemical on the other hand slipped despite reporting both and top line figures which exceeded analysts' forecasts.
American Airlines fell like a stone with its retreating nearly 7% despite an in-line set of revenue figures for the first three months of the year, as the carrier announced a pay rise for its crew members. |
| | Broker Tips | | Europe close: ECB pours cold water on expectations of policy shift European stocks declined for the first time in seven days despite the European Central Bank sounding a more confident note on the single currency bloc's economy.
The Stoxx Europe 600 index drifted 0.24% lower to 387.80 with miners leading the losses as metal prices fell. Germany's DAX lost 0.23% to 12,443.79 and France's CAC was 0.31% weaker at 5,271.70.
A gauge of Basic Resource companies' shares within the Stoxx 600 lost 2.75%, while another linked to lenders' shares dropped 0.88%.
Meanwhile, Brent crude was down 2.31% to $50.65 per barrel and West Texas Intermediate fell 2.5% to $48.42, following news that two Libyan oilfields with a combined putput of 390,000 barrels a day had restarted production.
Traders at Sucden Financial cited the drop in oil prices which triggered sell-stops on crude and gains for the US dollar as drivers of the weakness in Basic Resources, with losses for banks attributable to fading prospects of a hike in the ECB's deposit rate.
ECB chief Mario Draghi sounded a more confident note on the euro area economy, but cautioned that risks from overseas had increased even as underlying inflation was only seen rising gradually over the medium-term.
"The risks surrounding the euro area growth outlook, while moving towards a more balanced configuration, are still tilted to the downside and relate predominantly to global factors," said Draghi.
One source-based report prior to Thursday's meeting had indicated that many within the ECB Governing Council were mulling dropping a small hint in June of an upcoming shift in the policy stance.
Yet according to Draghi no such discussions took place today, sending the single currency lower by 0.30% to 1.0871.
Unpeturbed, Philippe Gudin and Antonio Garcia Pascual at Barclays Research told clients: "In June we expect a change to a less dovish and more symmetric forward guidance that would open the door for depo rate hikes in 2018. In particular, we would expect modifications possibly to both the forward guidance on rates and on QE by removing the explicit reference in the statement to a scenario with lower rates and/or higher QE."
Dr. Howard Archer, chief European + UK economist at IHS Markit believed any change would have to wait until after the next German elections.
Earlier in the day, data revealed that consumer optimism in Europe's largest economy was on the rise. GfK's consumer confidence index rose to 10.2 in May from 9.8 the month earlier and was ahead of the 9.9 reading expected.
Meanwhile, a lack of detail meant the Trump administration's US tax announcement on Wednesday failed to get investors excited. Corporation tax is to be slashed to 15% from 35%, the seven tax brackets will be reduced to three and the alternative minimum tax would be cut, with nearly all of the current tax deductions eliminated.
In corporate news, Deutsche Bank fell 3.28% after the lender missed revenue expectations but posted a rise in profit.
Deutsche Lufthansa dropped 5.21% despite the German airline swinging to a €25m first-quarter profit.
Bayer AG gained 4.12% after the German pharmaceutical posted 38% rise in first quarter profit and raised its outlook for the year. | | | | To advertise in the Euro Markets Bulletin please contact [email protected] |
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