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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: FTSE lower as UK, US growth in Q1 disappoints, sterling up Stocks in London drifted to a lower close on Friday as a rise in sterling weighed on blue chips and both UK and US preliminary economic growth data disappointed investors on both sides of the Atlantic.
The FTSE 100 closed down 0.46% to 7,203.94, and the FTSE 250 finished down 0.11% to 19,615.36. April's loss of 1.6% for the top flight index was its biggest since November 2016.
In parallel, share indices in Europe and on Wall St were mixed.
"Markets were left a little unsure which way to turn after an upturn in corporate profits was met with data showing decelerating economic growth," said London Capital Group's Jasper Lawler.
Official figures showed the UK economy slowed significantly in first-quarter 2017. GDP growth was 0.3% in the first three months of the year, missing expectations for 0.4% growth and slower than the 0.7% growth seen in the final quarter of last year.
In the US, GDP expanded 0.7% in the first quarter of 2017, preliminary official data showed. That was wide of the 1.2% growth that economists had expected and less than the 2.1% rise seen over the previous quarter.
CMC Markets UK's Michael Hewson said stocks were limping into the long weekend as the transatlantic GDP data fell short of expectations.
"It's turned out to be a decent month for European markets in the wake of this week's Macron bounce, with strong gains across the board," said chief market analyst Hewson.
However, after Monday's surge stocks had really struggled for direction.
"The under-performing FTSE 100 has not only had a disappointing week, it's also had a disappointing month, giving up all of its March gains in the process, as a rebound in the pound, weak basic resources, and some weakness in the banks weigh on the index."
IG chief market analyst Chris Beauchamp said the week had ended on a cautious note as both the UK and US economic growth figures disappointed.
"What started off so well for stock markets has turned into a week of mixed fortunes, despite further evidence from earnings season that US firms are doing well."
"It wouldn't be a Friday afternoon without an outlandish rumour, and the 2% bounce in Morrisons provides that in spades. Ostensibly Amazon is going to buy up the northern supermarket," said Beauchamp.
"This seems like an unnecessary amount of effort for Amazon, which has crushed far larger US firms and looks set to remake the UK grocery market with Amazon fresh."
Looking more closely at the FTSE 100, banks, financials, utilities and property were among the bigger fallers, while miners and oil majors performed comparatively well.
In corporate news, Barclays fell heavily despite saying profits more than doubled in the first quarter, the bank also announcing it was booking a one-off £884m charge on its Africa business.
Fellow lender Royal Bank of Scotland gained as it posted its first quarterly profit since 2015, with total income and margins improving. Net profit was £259m, from a £968m loss.
Old Mutual nudged higher as it said its wealth management saw 6% growth in first quarter funds under management and it announced the appointment of Tim Tookey as its chief financial officer. |
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| Market Movers
FTSE 100 (UKX) 7,203.94 -0.46%
FTSE 250 (MCX) 19,615.36 -0.11%
techMARK (TASX) 3,474.67 -0.18%
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 265.40p 4.74%
Antofagasta (ANTO) 838.00p 2.38%
Morrison (Wm) Supermarkets (MRW) 239.90p 2.35%
International Consolidated Airlines Group SA (CDI) (IAG) 560.00p 2.10%
BHP Billiton (BLT) 1,175.00p 1.86%
Anglo American (AAL) 1,106.50p 1.70%
Carnival (CCL) 4,766.00p 1.66%
Kingfisher (KGF) 341.30p 1.64%
Randgold Resources Ltd. (RRS) 6,805.00p 1.57%
Micro Focus International (MCRO) 2,588.00p 1.45%
FTSE 100 - Fallers
Barclays (BARC) 212.05p -5.31%
Mediclinic International (MDC) 821.00p -4.42%
Royal Mail (RMG) 402.50p -3.92%
Standard Chartered (STAN) 723.30p -2.71%
Hargreaves Lansdown (HL.) 1,378.00p -1.99%
WPP (WPP) 1,653.00p -1.61%
DCC (DCC) 7,130.00p -1.59%
Vodafone Group (VOD) 199.05p -1.53%
Hikma Pharmaceuticals (HIK) 1,937.00p -1.48%
Barratt Developments (BDEV) 579.50p -1.45%
FTSE 250 - Risers
Drax Group (DRX) 323.00p 6.28%
Renishaw (RSW) 3,415.00p 5.63%
Ferrexpo (FXPO) 158.10p 4.22%
Evraz (EVR) 216.60p 4.13%
Vedanta Resources (VED) 691.50p 3.83%
Aldermore Group (ALD) 258.40p 3.36%
Entertainment One Limited (ETO) 246.30p 2.84%
Balfour Beatty (BBY) 291.80p 2.71%
Weir Group (WEIR) 1,991.00p 2.37%
Kaz Minerals (KAZ) 503.50p 2.32%
FTSE 250 - Fallers
Virgin Money Holdings (UK) (VM.) 317.30p -4.63%
Allied Minds (ALM) 157.20p -3.81%
McCarthy & Stone (MCS) 184.40p -3.35%
Berendsen (BRSN) 839.00p -3.29%
Stagecoach Group (SGC) 203.50p -2.72%
Kennedy Wilson Europe Real Estate (KWE) 1,039.00p -2.26%
Galliford Try (GFRD) 1,434.00p -2.25%
Derwent London (DLN) 2,944.00p -2.10%
Auto Trader Group (AUTO) 401.10p -2.08% |
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| | US Market Report | | US open: Weak Q1 GDP weighs on stocks, economists sanguine Wall Street was set to limp into the weekend following a weak reading on first quarter economic growth, although the Nasdaq Composite was climbing further into record territory on the back of positive results from the biggest of the so-called FANG stocks.
As of 15:59 GMT the Dow Jones Industrials was lower by 0.09% to 20,961.38, as the S&P 500 slipped 0.08% to 2,386.72 and the Nasdaq Composite gained 0.08% to 6,053.35.
The American economy expanded at an annualised clip of 0.7% over the first three months of 2017, down from the 2.1% clip seen in the preceding three months and the 1.2% advance economists had been expecting.
A slowdown in household spending to just 0.3% was the main driver of the weakness in GDP, even as investment in business structures jumped by 22.1%, their biggest rise since early 2014.
"That weakness, in our view, is likely to prove transitory. Warm weather reduced utilities consumption, motor vehicle purchases declined to a more sustainable rate, and early in the quarter, tax refunds were delayed. These factors combined with the timing of the Easter/Passover holiday (in April this year) and a weak March employment report likely weighed on consumption growth," said economists at Barclays Research.
Consumer confidence in the world's largest economy slipped in April to a reading of 97.0 from 98.0 in the month before (consensus: 98.5), although a subindex tracking their expectations nudged higher.
In corporate news, shares in Google parent Alphabet jumped as its first-quarter results after the close on Thursday beat analysts' expectations, while Amazon was also in the back as it said profit rose more than 40% in the first quarter to $724m. Amazon.com and Facebook also pleased investors with their latest figures.
On the downside, however, Microsoft and Intel fell as their quarterly revenues missed expectations.
Starbucks was also under the cosh after its quarterly revenues fell short of analysts' forecasts.
Shares in oil major Exxon Mobil were on the up despite a mixed set of first quarter numbers, with EPS for the latest three-month stretch printing at 95 cents (consensus: 84 cents) even as top line growth fell short of analysts' forecasts.
Aside from corporate news, geopolitical tensions were on investors' minds after President Donald Trump told Reuters that a "major, major conflict" could be on the cards with North Korea.
Market participants were also faced with a potential government shutdown this weekend. Government funding expires on Saturday, but Congress is widely expected to pass a one-week spending bill to keep the government going for now.
Dow Jones - Risers
Chevron Corp. (CVX) $106.51 0.98%
Exxon Mobil Corp. (XOM) $81.98 0.88%
United Technologies Corp. (UTX) $119.28 0.42%
Microsoft Corp. (MSFT) $68.47 0.30%
3M Co. (MMM) $196.39 0.14%
Caterpillar Inc. (CAT) $102.76 0.08%
Boeing Co. (BA) $183.36 0.08%
JP Morgan Chase & Co. (JPM) $87.57 -0.05%
Coca-Cola Co. (KO) $42.97 -0.09%
Cisco Systems Inc. (CSCO) $33.72 -0.10%
Dow Jones - Fallers
Intel Corp. (INTC) $36.06 -3.66%
Verizon Communications Inc. (VZ) $46.20 -1.01%
E.I. du Pont de Nemours and Co. (DD) $79.42 -0.89%
Home Depot Inc. (HD) $154.89 -0.79%
American Express Co. (AXP) $79.71 -0.77%
Travelers Company Inc. (TRV) $121.56 -0.49%
Nike Inc. (NKE) $55.21 -0.48%
Walt Disney Co. (DIS) $115.36 -0.41%
Procter & Gamble Co. (PG) $87.33 -0.41%
McDonald's Corp. (MCD) $140.34 -0.38%
S&P 500 - Risers
Royal Caribbean Cr (RCL) $108.23 7.69%
Cerner Corp. (CERN) $64.48 7.36%
Southwestern Energy Co. (SWN) $8.13 5.93%
Alphabet Inc. Class A (GOOGL) $930.90 4.43%
Alphabet Inc. Class C (GOOG) $912.53 4.38%
Regeneron Pharmaceuticals Inc. (REGN) $379.61 3.54%
Phillips 66 Common Stock (PSX) $80.36 2.96%
Goodyear Tire & Rubber Co. (GT) $36.45 2.82%
Newmont Mining Corp. (NEM) $33.79 2.67%
Honeywell International Inc. (HON) $133.08 2.46%
S&P 500 - Fallers
Synchrony Financial (SYF) $28.50 -13.77%
Host Hotels & Resorts Inc. (HST) $18.34 -4.68%
KLA-Tencor Corp. (KLAC) $99.14 -4.30%
VF Corp. (VFC) $55.37 -4.29%
Frontier Communications Co. (FTR) $1.84 -3.66%
Intel Corp. (INTC) $36.06 -3.66%
Mohawk Inds Inc. (MHK) $230.26 -3.61%
Starbucks Corp. (SBUX) $59.16 -3.49%
Skyworks Solutions Inc. (SWKS) $100.63 -3.43%
Qorvo, Inc. (QRVO) $68.71 -3.39%
Nasdaq 100 - Risers
Cerner Corp. (CERN) $64.48 7.36%
Idexx Laboratories Inc. (IDXX) $170.79 4.93%
Alphabet Inc. Class A (GOOGL) $930.90 4.43%
Alphabet Inc. Class C (GOOG) $912.53 4.38%
Regeneron Pharmaceuticals Inc. (REGN) $379.61 3.54%
Amazon.Com Inc. (AMZN) $939.71 2.32%
Western Digital Corp. (WDC) $87.31 1.86%
Facebook Inc. (FB) $150.05 1.59%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $53.49 1.54%
Priceline Group Inc (PCLN) $1,849.86 0.76%
Nasdaq 100 - Fallers
KLA-Tencor Corp. (KLAC) $99.14 -4.30%
Baidu Inc. (BIDU) $180.46 -3.94%
Intel Corp. (INTC) $36.06 -3.66%
Starbucks Corp. (SBUX) $59.16 -3.49%
Skyworks Solutions Inc. (SWKS) $100.63 -3.43%
QUALCOMM Inc. (QCOM) $51.60 -3.04%
Expedia Inc. (EXPE) $133.19 -2.21%
O'Reilly Automotive Inc. (ORLY) $251.51 -2.21%
Seagate Technology Plc (STX) $41.37 -2.20%
TripAdvisor Inc. (TRIP) $44.16 -2.08% |
| | Broker Tips | | Broker tips: Drax, Stagecoach, Micro Focus Drax surged on Friday as Barclays upgraded the stock to 'overweight' from 'equalweight' and lifted the price target to 410p from 400p saying post-results weakness was unjustified.
It noted the shares have dropped 20% since the mid-February results, underperforming the Stoxx Europe 600 utilities index by 24%, seemingly "on little more than disappointment that Drax didn't immediately announce a new higher dividend policy", but instead said it would consult with shareholders over 1H17.
"We understand Drax's consultation is a genuine attempt to balance priorities of growth capex and increased returns to shareholders. We thus see no justification for the scale of Drax's recent share price reversion, and upgrade," the bank said.
In addition, Barclays argued that post-results regulatory changes and acquisitions are positives.
Analysts at HSBC downgraded their recommendation and lowered their target on shares of Stagecoach, in light of the company's "high levels" of off-balance sheet debt together with continued concerns around its rail franchise and UK bus operations.
The recommendation was taken down a notch from 'Hold' to 'Reduce' and the target was cut from 205.0p to 200.0p.
HSBC's specific concerns around Stagecoach are on top of the sector's shared woes of high variability in companies' earnings streams and continued "difficult" trading conditions, with the best opportunities probably to be had overseas.
"In summary, it's simple: The UK is a difficult market and the best opportunities for operators appear to be abroad. New rail franchises may offer opportunities, but existing ones are a risk," the analysts said.
Deutsche Bank initiated coverage of Micro Focus International at 'buy' with a 2,900p price target.
DB noted the company's strategy is to acquire mature software assets at attractive valuations with significant scope for operational and cost improvement.
It said Micro Focus has refined its approach over the past 10 years and intends to maintain its focus on leveraged inorganic growth for the foreseeable future. | | | | To advertise in the Euro Markets Bulletin please contact [email protected] |
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