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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: Shares end on mixed note as BoE turns a shade more hawkish Equities in London struggled and failed to cast off a heavy coat of ex-dividend stocks, with Bank of England's so-called 'Super Thursday' chiming in to erode already mediocre sentiment.
The FTSE 100 closed up by 0.02% to 7,386.63, and the second-tier FTSE 250 ended down 0.41% to 19,795.69.
Bank held its core interest rate at 0.25% on a vote of 7-1, as expected, but upped its inflation forecast for 2017 to 2.7%, from 2.4%.
Its target is about 2%.
Andrew Goodwin at Oxford Economics said that: "May's edition of 'Super Thursday' was unusually low-key, with the MPC making only minor changes to its forecasts and giving a clear impression that it is likely to remain firmly in 'wait-and-see' mode for some time yet.
"However, the Committee was keen to send a message that, assuming its baseline forecast plays out and Brexit is "smooth", it believes that markets have become too bearish about the likely path of interest rates towards the end of the forecast horizon. This is consistent with our long-held view that after a first hike in H2 2019, rates will rise by 50bp a year thereafter."
This and disappointing UK trade balance, production and housing-market data out mid morning weighed on sterling, which failed to boost blue chips thanks in part to an ex-dividend surfeit.
"You'd think, with the BoE stating that interest rates may rise faster than expected, that sterling would be pretty happy," said Connor Campbell of Spreadex.
"You'd be wrong," the financial analyst exclaimed, adding the market disliked a parallel central bank forecast for average UK earnings growth of just 2% this year.
"In a rare sight the FTSE took no joy in the pound's fall, the UK index itself shedding 0.2% to lurk just the wrong side of 7400," said Campbell.
All of this was alongside falls in the Dow, S&P 500 and Nasdaq in the US, and drops in Europe's Euro Stoxx 50, Germany's Dax and France's Cac 40.
To take note of, overnight Boston Federal Reserve chief Eric Rosengren sounded a hawkish note, telling an audience that three more interest rate hikes were still justified in the States this year.
Michael Hewson, chief market analyst at CMC Markets UK, noted European stocks had struggled for direction all day, thanks to a lack of positive drivers.
"It would appear that while political risk has subsidised investors remain far from convinced that further upside can be sustained," he said.
This was without further evidence of a positive pickup in the economic numbers, said Hewson.Looking more closely at trade in London, Centrica, Sainsbury's, Admiral, Merlin, BP, Saga, Carillion, Ibstock and Aberdeen Asset Management all went ex-dividend.
Overall among blue chips, utilities, financials and supermarkets did poorly for the most part, but miners, several pharams and commercial property did okay.BT Group fell as it posted a big drop in annual profits, and said it was stepping up its cost-cutting programme by axing 4000 jobs, while also revealing it was trimming executive pay.
Hikma Pharmaceuticals and Vectura tumbled after saying US regulators had decided not to approve their generic copy of GlaxoSmithKline's lung drug Advair due to "major" issues with its application.Paper and packing group Mondi was under pressure after it said first-quarter underlying operating profit fell 6% to €252m. |
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| Market Movers
FTSE 100 (UKX) 7,386.63 0.02%
FTSE 250 (MCX) 19,795.69 -0.41%
techMARK (TASX) 3,540.01 -0.43%
FTSE 100 - Risers
Fresnillo (FRES) 1,503.00p 5.03%
Randgold Resources Ltd. (RRS) 7,150.00p 3.62%
Standard Chartered (STAN) 752.50p 2.46%
Antofagasta (ANTO) 778.00p 2.30%
Intu Properties (INTU) 279.90p 2.00%
Burberry Group (BRBY) 1,649.00p 1.48%
Royal Dutch Shell 'B' (RDSB) 2,195.00p 1.22%
Mediclinic International (MDC) 839.50p 1.14%
HSBC Holdings (HSBA) 678.00p 1.06%
Anglo American (AAL) 1,052.00p 1.01%
FTSE 100 - Fallers
Hikma Pharmaceuticals (HIK) 1,804.00p -7.77%
Centrica (CNA) 192.20p -5.41%
BT Group (BT.A) 297.85p -4.50%
ITV (ITV) 189.00p -3.67%
Admiral Group (ADM) 2,038.00p -3.23%
Sainsbury (J) (SBRY) 265.00p -2.47%
Next (NXT) 4,302.00p -2.25%
International Consolidated Airlines Group SA (CDI) (IAG) 598.00p -1.73%
Mondi (MNDI) 2,000.00p -1.67%
Pearson (PSON) 709.00p -1.66%
FTSE 250 - Risers
Polymetal International (POLY) 1,035.00p 3.97%
Euromoney Institutional Investor (ERM) 1,076.00p 2.97%
Hochschild Mining (HOC) 259.40p 2.81%
Tritax Big Box Reit (BBOX) 146.30p 2.74%
B&M European Value Retail S.A. (DI) (BME) 353.20p 2.61%
Acacia Mining (ACA) 406.70p 2.42%
Sanne Group (SNN) 646.00p 1.89%
Centamin (DI) (CEY) 157.40p 1.61%
Grainger (GRI) 266.50p 1.60%
Kennedy Wilson Europe Real Estate (KWE) 1,050.00p 1.55%
FTSE 250 - Fallers
Vectura Group (VEC) 132.10p -8.83%
Pets at Home Group (PETS) 164.50p -7.58%
Carillion (CLLN) 206.50p -6.81%
Supergroup (SGP) 1,570.00p -4.91%
Hill & Smith Holdings (HILS) 1,322.00p -4.69%
Grafton Group Units (GFTU) 755.00p -4.67%
Go-Ahead Group (GOG) 1,844.00p -3.96%
Dunelm Group (DNLM) 616.50p -3.07%
Capita (CPI) 560.00p -2.95%
Halfords Group (HFD) 363.50p -2.91% |
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| | US Market Report | | US open: Hawkish Fedspeak, company results weigh on Wall Street Hawkish Fedpseak overnight pushed Wall Street off its lofty perch against a backdrop of sharp share price falls for Macy's and Snapchat which appeared to dent sentiment.
As of 1625 BST the Dow Jones Industrials was down by 0.40% to 20,856.54, while the S&P 500 was slipping 0.50% to 2,387.63 and the Nasdaq Composite losing 0.54% to 6,095.67.
Speaking on Wednesday evening, the president of the Federal Reserve bank of Boston, Eric Rosengren, said three more interest rate hikes were still in appropriate in 2017.
Combined, the news from the Fed and the latest company results appeared to give investors looking for reasons to continue buying into the market pause for thought.
On a related note, analysts at Bank of America-Merrill Lynch pointed out how the S&P 500's forward price-to-earnings ratio - at 17.5 - was at its highest since 2004 and 15% above its long-term average.
"The S&P 500 trades at a 13-year high. Stocks looks cheap vs. bonds but stretched vs. history; large is cheaper than small," BofA-ML said.
From a sector standpoint, the worst performing industry groups were: Travel&Leisure (-3.50%), Retail REITs (-2.22%) and Real Estate Services (-2.10%).
In economic news, initial weekly unemployment claims dipped by 2,000 to 236,000 over the week ending on 6 May (consensus: 245,000).
Meanwhile, producer prices rebounded in April, increasing at a 0.5% month-on-month clip (consensus: 0.2%).
Macy's stock was ground underfoot by investors, falling 13%, after posting first quarter earnings per share of 24 cents, leaving analysts looking for EPS of 35 cents startled.
Snap shares were down a whopping 19% on the heels of its maiden earnings release as a publicly-listed outfit.
The company went public on 3 March at $17 per share, before quickly rising as high as $29. After Thursday's losses, Snap now sits at $18.66 per share. |
| | Market Analysis 11/05/2017 Today’s highlights: Gains seen around the world - Nasdaq breaks another record: Despite the other main indices on Wall Street zigzagging this week, the Nasdaq has shown steady gains, notching another all-time high when markets closed yesterday. The S&P 500 also closed in the green, while the Dow Jones registered losses.
- Snap Inc. drops 25%: The social network shared its first earnings report since its IPO, showing a loss of $2.2 billion, resulting in its share dropping by 25% in after-hour trading.
- Oil prices jump 3%: Following a statement by Saudi Arabia saying it will cut production further, and a significant weekly drop in US stockpiles, the black gold had its highest single-day price increase in a year.
- British Pound could be volatile today: The Bank of England will be sharing its Inflation Report, Monetary Policy Summary, and Official Bank Rate at...
Read More... |
| | Broker Tips | | Broker tips: TalkTalk, Centrica, Aldermore RBC cut its target on TalkTalk shares, telling clients the firm's plans to fix its falling subscription and revenue per user numbers will take time.
The target revision from 225.0p to 185.0p came on the heels of the mobile telephony and broadband services provider's profit warning.
In a research report published on Thursday, but dated 10 May, the broker said TalkTalk's subscriber adds appeared to have turned a corner in the fourth quarter.
Additions totalled 22,000, likely helped by reduced 'churn' as its fixed low-price plans drove customers to lock-in lower prices.
However, in turn that is driving part of the drop in its average revenues per user, the broker pointed out.
"With c.36% of retail customers now on FLPP, there is scope for further ARPU weakness, though we believe the subs numbers should start to build slowly from here."
JPMorgan Cazenove downgraded British Gas owner Centrica to 'underweight' from 'overweight' and slashed the price target to 180p from 265p, highlighting the "unsettling reality" of UK supply market changes.
The bank said that despite the strength of Centrica's UK supply operations, two issues have arisen recently which concern it.
Firstly, it sees significant downside from the price regulation of Centrica's Standard Variable Tariff customer base. Its initial view of the damage to earnings per share was negative, but manageable at -10% to -20. However, the bank's analysis of Ofgem's regulated prepayment meter tariffs points to a deeper EPS erosion at up to -42%.
The bank said it has carried out a full review of Ofgem's PPM tariff materials, which has alarming implications for Centrica's supply margins. "For instance, if regulated price caps were in place in 2016 we estimate that dual fuel bills would have been a full £100/customer lower on average for the Big 6."
Shares in Aldermore are far too cheap, said analysts at Investec, describing the challenger bank's first quarter 2017 performance as "exceptionally strong" and "outstanding".
Investec's Ian Gordon reiterated his 'buy' recommendation and 290.0 target.
Gordon said he welcomed the skew in the lender's growth towards "low-risk" buy-to-let mortgages even though that is where gross yields are below the group average.
The analyst adds that the move down the risk curve means that consensus impairment forecasts remained too high. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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