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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 100 driven higher by gains in mining, oil stocks Blue-chip stocks in London hit a new record high on Monday, the same as in Germany and on Wall St, as big mining and oil giants improved with the prices of resources.
The heavyweight mining sector was riding high thanks to improvements in the prices of gold, silver and copper, while oil advanced on hopes of Opec extending its output pledge into 2018, thanks to comments by the energy ministers of Saudi Arabia and Russia.
"The best performers have been in the basic resource sector which has been enjoying a bit of a technical rebound after heavy declines in the past few weeks," said Michael Hewson, chief market analyst at CMC Markets UK.
"There is a case for speculating that part of the rebound is down to the announcement of the new $900bn Chinese Silk Road investment plan," said Hewson.
It was hoped this would deliver improved trade and infrastructure links to the rest of Asia, Europe and Africa, over the course of the next few years. However, he added it was unlikely to be enough to suggest a sustained rally for miners.
"Oil prices have also taken another leg higher after weekend comments from Russia and Saudi Arabia about the need to extend the output freeze into next year," said Hewson.
The FTSE 100 closed up 0.26% to 7,454.37 - and an intra-day high of 7,460.26 - even as the FTSE 250 slipped 0.06% to 19,751.01. Across the Atlantic Ocean, Wall St was advancing, while over the English Channel it was the Dax which notched up a fresh record high.
"Markets seem to be enjoying the signs that incumbent governments are set for victory in upcoming elections," said Jasper Lawler, senior market analyst at London Capital Group.
"A surge in energy company shares helped the UK's FTSE 100 join the German Dax index in making a fresh record high on Monday."
This was on the back of German Chancellor Angela Merkel's Christian Democrat party enjoying a surprise victory in German regional elections at the weekend.
"France was the big populist risk which has passed. French President Macron named Edouard Phillipe as Prime Minister, another graduate of the elite ENA school."
Returning to London, IG analyst Chris Beauchamp was a little wary about the new record high for the FTSE 100.
"What should worry FTSE bulls is that the index is exhibiting similar characteristics to the S&P 500 - namely that the rally is being powered by smaller and smaller numbers of rising stocks each day.
"This doesn't mean a correction is around the corner, but it does raise the prospect of a reckoning that could be ugly," he said.
"The last time we saw this was in October, when a spike to 7,120 was followed by a swift 6% fall. Latecomers to this rally should tread carefully, lest they find themselves holding the bag."
In the news, it was mining stocks such as Anglo American, Glencore, BHP Billiton and Antofagasta leading the FTSE 100 higher, with support from oil giants BP and Shell.
Also among the risers were some banks, other financials, airlines and a good number of property stocks.
Thomson travel owner TUI was on the back foot as it said losses grew in the first half but expressed confidence it can grow underlying earnings 10% this year.
Vodafone said it has agreed to transfer 35% of its indirect shareholding in Safaricom to Vodacom Group, its sub-Saharan African subsidiary, for 226.8m new Vodacom shares. |
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| Market Movers
FTSE 100 (UKX) 7,454.37 0.26%
FTSE 250 (MCX) 19,751.01 -0.06%
techMARK (TASX) 3,591.14 -0.09%
FTSE 100 - Risers
Anglo American (AAL) 1,074.50p 3.22%
Glencore (GLEN) 294.00p 3.16%
Standard Chartered (STAN) 766.90p 2.86%
Barclays (BARC) 210.60p 2.28%
BHP Billiton (BLT) 1,190.50p 2.28%
Antofagasta (ANTO) 791.50p 2.26%
Rio Tinto (RIO) 3,024.00p 1.82%
Persimmon (PSN) 2,394.00p 1.44%
Mondi (MNDI) 2,043.00p 1.44%
Micro Focus International (MCRO) 2,500.00p 1.42%
FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 1,133.00p -4.79%
Next (NXT) 4,264.00p -1.86%
Direct Line Insurance Group (DLG) 350.70p -1.65%
Imperial Brands (IMB) 3,662.50p -1.47%
Royal Mail (RMG) 424.90p -1.30%
Shire Plc (SHP) 4,689.50p -1.28%
Intu Properties (INTU) 275.60p -1.22%
Hikma Pharmaceuticals (HIK) 1,738.00p -1.19%
Admiral Group (ADM) 2,011.00p -1.18%
Rolls-Royce Holdings (RR.) 854.00p -1.10%
FTSE 250 - Risers
Sophos Group (SOPH) 366.00p 7.27%
Hochschild Mining (HOC) 264.80p 4.05%
Kaz Minerals (KAZ) 462.60p 4.03%
Ferrexpo (FXPO) 164.50p 3.72%
Weir Group (WEIR) 1,913.00p 3.46%
Tullow Oil (TLW) 201.10p 3.08%
Nostrum Oil & Gas (NOG) 489.70p 2.92%
Wizz Air Holdings (WIZZ) 1,943.00p 2.80%
Vedanta Resources (VED) 631.00p 2.60%
AO World (AO.) 149.70p 2.53%
FTSE 250 - Fallers
Vectura Group (VEC) 124.60p -4.81%
Allied Minds (ALM) 144.10p -4.57%
Thomas Cook Group (TCG) 92.40p -3.65%
Indivior (INDV) 323.20p -3.49%
Moneysupermarket.com Group (MONY) 338.30p -2.95%
Vesuvius (VSVS) 558.00p -2.28%
Berendsen (BRSN) 832.00p -2.23%
JRP Group (JRP) 128.80p -1.98%
Paysafe Group (PAYS) 471.10p -1.87%
Petra Diamonds Ltd.(DI) (PDL) 131.90p -1.86% |
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| | US Market Report | | US open: Gains for WTI send S&P 500 back into record territory Action from Russia and Saudi Arabia to prop up oil prices boosted shares of oil service and marine transport firm and saw the S&P 500 move back into record territory.
At 1523 BST, the Dow Jones Industrial Average was up by 0.33% to 20,965.07 as the S&P 500 tacked on 0.41% to stand at 2,400.68 and the Nasdaq Composite climbed 0.34% to 6,141.73.
Oil prices rallied after Saudi Arabia's energy minister Khalid al-Falih and Russian energy minister Alexander Novak said in Beijing that a joint deal to cut crude supplies would be extended until the end of March 2018 from the middle of this year.
West Texas Intermediate crude oil futures was up 2.9% to $49.26 a barrel as a result and Brent crude was 2.6% higher at $52.22.
Although some traders were skeptical that such a deal would suffice, Capital Economics was not.
On Monday, its analysts told clients: "We estimate that if OPEC simply rolls over its cuts until March 2018, the market will be in an average deficit of about 1m bpd over the period."
That should be enough to drain oil stocks among OECD nations by roughly 360.0m barrels, far more than the 250m barrel depletion necessary to return inventories to their five-year average, they said.
Prices for copper and steel were also given a boost as Chinese President Xi Jinping said over the weekend that the 'One Belt, One Road' infrastructure initiative will get financing of $78bn as Beijing looks to strengthen infrastructure and trade links with the rest of the world.
With the focus firmly on oil, investors shrugged off geopolitical tensions after North Korean tested another ballistic missile over the Sea of Japan at the weekend and weaker-than-expected retail sales, industrial production and fixed asset investment data from China.
The 'Empire State' manufacturing index retreated from a reading of 5.2 in April to -1.0 for May, easily undershooting forecasts for a reading of 7.0.
In parallel, the NAHB's index of homebuilder confidence rose from a reading of 68.0 for April to 70.0 in May.
In corporate news, Goldman Sachs lifted its target on Apple's shares from $164 to $170 on expectations the company will launch a superpremium smartphone in September - with a $1,000 price tag per set.
If proved correct, the new target would equate to a $900bn market capitalisation for the Cupertino, California-based firm.
Shares of Apple however were lower.
Moody's announced it would buy Bureau van Dijk for $3.3bn and Thermo Fisher drug ingredients-maker Patheon for $5.2bn.
JP Morgan revised its target for shares of Johnson&Johnson from $133 to $140 while Morgan Stanley downgraded Tesla to 'equalweight'. |
| | Market Analysis 12/05/2017 Today’s highlights: Indices low while oil and gold show gains - Wall Street closes lower: All three major indices finished in the red at the end of yesterday’s trading day. Macy’s earnings report missed predictions, causing its stock to tank 17%.
- Boeing stock drops following 737 problem: Aviation powerhouse Boeing saw its stock price drop yesterday, after announcing it is suspending flights for its 737 Max model due to an engine problem. While prices recovered after the announcement, they fell slightly again after-hours.
- Asia seen lower: Indices in Asia were trading lower this morning, with the ASX 200 and Nikkei losing 0.87% and 0.57% respectively.
- Volatility expected for US Dollar today: CPI and Retail reports will be released at 12:30 GMT today. These reports..
Read More... |
| | Broker Tips | | Broker tips: Gemfields, Dignity, Ibstock Analysts at Macquarie sounded a positive note on Gemfields's stock despite what it said was the short-term issue of lower grade production.
On 12 May, the precious gems miner lowered its 2017 production guidance from between 30.0m to 35.0m carats to a range of 20.0m to 25.0m, due to lower than expected mining grades at its Kagem and Montepuez operations.
However, at both mines, and especially so at Montepuez, the outfit had "significant" scope to shift production from lower to higher grade zones, the broker said.
"So total output in carats is not so much a concern to us relative to carat quality and consistent product mix."
As for the decision to withdraw from purchasing the Coscuez emerald mine in Colombia, while a minor loss it would allow Gemfields to refocus on other highly prospective exploration assets in Ethiopia and elsewhere.
The company's significant inventory of rough and polished stones, in excess of $100.0m, also meant it had a strong financial cushion, which in turn reassured Macquarie about its ability to refinance if necessary.
"Gemfields remains a highly differentiated, global leader in the gemstones industry. Over 2017, operational setbacks have hampered the shares but we remain confident in the three-year growth plan to nearly double production of rubies and emeralds. The shares remain attractively priced at ~0.5x NAV, and we maintain an Outperform rating."
Investec upgraded funeral provider Dignity to 'buy' from 'hold' following the company's first-quarter update, in which it reported a 15% jump in revenue as deaths rose 7%.
The brokerage said Dignity has made a "strong" start to the year. "Whilst Q1 16 presents a weak comparator, a situation which we expect to unwind over the year, the results are more impressive when viewed relative to Q1 15 (the strongest quarter in ten years)," it said.
It added that with acquisition activity remaining high, strong growth in pre-arranged funerals and robust average prices, Dignity is well placed to meet expectations.
Investec said that with the death rate assumed to revert to a more normal level over the course of full-year 2017, it expects 2% revenue growth on a 2% decline in deaths with an EBIT margin of 33%.
Consensus is too conservative on Ibstock, analysts at Barclays said, reiterating their 'overweight' recommendation on the shares with an improved target of 285.0p.
To make their case, analysts Pierre Rousseau and Nabil Ahmed pointed to strong new build activity and a better than initially expected price/cost differential in Britain.
"Beyond the superior industry features (tight supply-demand balance, industry discipline and unprecedented public support), Ibstock has very promising development projects which should all address attractive market opportunities and enhance profitability," they added. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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