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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: Stocks retreat for second day as retail revives pound London stocks ended Thursday down near where they finished last week as a stronger pound and worries about the stability of the US administration knocked them back from the record highs earlier in the week.
Bouncing back slightly from the worse of mid-session losses, the FTSE 100 closed 67 points lower, down 0.9% at 7,436.42, while the second-tier FTSE 250 lost almost 82 points or 0.4% to finish at 19,691.64.
Early losses followed the overnight plunge on Wall Street as investors reported that Donald Trump's former national Security adviser Michael Flynn and other of the President's advisers sent at least 18 calls and e-mails to Russian officials or related people during the last seven months of the presidential elections.
Overnight, the US Department of Justice appointed former FBI director Robert Mueller as special counsel to lead the investigation into Russian interference into the 2016 presidential elections.
On a cautionary note, Craig Erlam, senior market analyst at Oanda, wrote: "While I don't believe at this stage that these reports regarding Trump will jeopardise his agenda, markets must reflect the challenges he now faces which ultimately make it more difficult.
"At the very least, this distraction may delay the implementation of his plans which the markets won't like."
Chris Beauchamp at IG added that the bounceback later in the London session came as further developments around Trump have not yet materialised.
"The rally is small, and in no way really changes the bearish picture that was created yesterday - once options expiry and the weekend is out of the way there is a high probability that the selling will resume.
"Longer-term, this is still a dip, and one that will be bought in due course, but there seems to be an awful lot more downside to come. The bottom line is that faith in the Trump rally has been shaken, if not yet quite destroyed, and it is unlikely to return any time soon," he said.
Adding to the headwinds for London's benchmark index, where around three quarter of earnings are generated overseas, the pound was pumped above the $1.30 level by much stronger than expected UK retail sales data.
The Office for National Statistics reported retail sales soared 2.3% month-on-month in April, speeding past analysts' forecasts for an increase of 1.1%.
Analysts at Barclays - who had penciled in a rise of just 0.8% - warned of distortions in the data due to the shift in the timing of Easter this year, as well as conspicuously strong sales in the 'other' component of non-store retail sales.
As if that were not enough, a drop of 1.8% for Brent to $51.27 saw investors book profits on the largest listed oil outfits, such as BP and Shell. Shell was the biggest faller as its shares also went ex-dividend.
Base metals prices were also weaker, with three-month LME copper trading lower from $5,624 a metric tonne on Wednesday to $5,540 a tonne, while the risk-on mood hit gold and therefore shares in Randgold.
Ashtead, which generates almost 90% of revenue in the US and so has been one of the biggest beneficiaries of Trump's pledge to ramp up infrastructure spending, was a major faller.
Also on the downside, credit checking company Experian retreated as it said profit for the year to the end of March rose 11% and announced a $600m share buyback for full-year 2018.
Petrofac continued to fall following the news last week that it is being investigated for money laundering and other offences by the Serious Fraud Office. It announced that board member Jane Sadowsky had resigned with immediate effect, having only been with the company since November.
Energy network operator National Grid posted final results showing operating profit rising 14% to £4.67bn on an adjusted basis, though this was boosted by 'over-recoveries' that are above the regulated allowance and will need to be returned in future.
Among the mid-caps, pubco Mitchells & Butlers fell for a second day, as analysts gave their feedback following results on Wednesday. JP Morgan held its 'neutral' rating but cut its forecasts, while Deutsche Bank focused on new cost headwinds that will mean flat profits for coming years and the ongoing uncertainty around the future pension contribution.
Pub owner and brewer Marston's was also on the back foot after it said it has agreed to buy the Charles Wells brewing business for a cash consideration of £55m plus seven managed pubs for another £13m, which will be financed by the placing of 9.9% of its issued share capital.
Burberry led the FSTE 100 risers as the fashion house reported annual profits at the upper end of expectations and promised investors a new £300m share buyback.
Shire shares rallied as the biopharmaceutical group said phase 3 results for its lanadelumab treatment for hereditary angioedema showed a significant reduction in the monthly attack rate.
Royal Mail was also stronger after it posted a 25.5% jump in full-year pre-tax profit as revenues nudged higher, although the group did caution that sales in the UK are likely to fall, which saw shares tail off later in the session.
Commercial laundry group Berendsen led the 250 top movers rocketed after rejecting a £2.05bn offer from French textile services firm Elis SA, while Euromoney was on the front foot following the release of its interim results, in which it said revenue rose 5% while adjusted pre-tax profit increased to £49.1m from £46.9m. |
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| Market Movers
FTSE 100 (UKX) 7,436.42 -0.89%
FTSE 250 (MCX) 19,691.64 -0.41%
techMARK (TASX) 3,562.74 -1.00%
FTSE 100 - Risers
Burberry Group (BRBY) 1,718.00p 4.69%
Centrica (CNA) 200.90p 3.88%
Merlin Entertainments (MERL) 516.50p 1.97%
Marks & Spencer Group (MKS) 382.60p 1.89%
Royal Bank of Scotland Group (RBS) 263.40p 1.86%
DCC (DCC) 7,535.00p 1.76%
Shire Plc (SHP) 4,814.50p 1.75%
SSE (SSE) 1,492.00p 1.63%
Sainsbury (J) (SBRY) 273.20p 1.52%
Mediclinic International (MDC) 871.00p 1.46%
FTSE 100 - Fallers
Royal Dutch Shell 'B' (RDSB) 2,161.00p -3.98%
Royal Dutch Shell 'A' (RDSA) 2,108.50p -3.50%
Randgold Resources Ltd. (RRS) 7,275.00p -2.61%
Provident Financial (PFG) 3,078.00p -2.47%
Mondi (MNDI) 1,978.00p -2.27%
Land Securities Group (LAND) 1,092.00p -2.24%
AstraZeneca (AZN) 5,140.00p -2.19%
Old Mutual (OML) 191.90p -2.14%
HSBC Holdings (HSBA) 664.20p -2.08%
Experian (EXPN) 1,660.00p -2.01%
FTSE 250 - Risers
Berendsen (BRSN) 1,048.00p 21.13%
Euromoney Institutional Investor (ERM) 1,216.00p 8.67%
Cairn Energy (CNE) 209.10p 5.71%
JRP Group (JRP) 134.40p 4.51%
Dunelm Group (DNLM) 615.00p 3.97%
SSP Group (SSPG) 472.50p 3.21%
Paysafe Group (PAYS) 480.90p 3.04%
TalkTalk Telecom Group (TALK) 179.50p 2.81%
Nex Group (NXG) 627.00p 2.79%
Allied Minds (ALM) 146.10p 2.53%
FTSE 250 - Fallers
Mitchells & Butlers (MAB) 241.00p -6.59%
Keller Group (KLR) 863.50p -5.78%
Petrofac Ltd. (PFC) 661.50p -5.70%
Ferrexpo (FXPO) 158.60p -4.88%
Marston's (MARS) 137.00p -4.86%
Renishaw (RSW) 3,387.00p -4.48%
Dairy Crest Group (DCG) 590.00p -4.22%
BTG (BTG) 644.00p -4.10%
Clarkson (CKN) 2,757.00p -3.84% |
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| | US Market Report | | US open: Stocks stabilise amid better than expected data Stocks rebounded as the negative newsflow out of Washington eased and following the release of somewhat better than expected data on the jobs market and factory activity in the US mid-Atlantic region.
As of 1536 BST the Dow Jones Industrials was higher by 57.29 points at 20,664.74, alongside a gain for the S&P 500 of 0.44% to 2,367.42.
From a sector standpoint the best performance is being seen in the following industrial groups: Personal products (2.60%), Semiconductors (1.68%) and Computer Hardware (1.52%).
Initial weekly US unemployment claims decreased by 4,000 during the latest reference week to reach 232,000 (consensus: 240,000).
Ian Shepherdson, chief US economist at Pantheon Macroeconomics, said the third consecutive week of initial claims below 240,000 was "noteworthy".
It chimed with his expectation that non-farm payrolls would expand at a greater than 200,000 person clip, on average, over the next few months.
In parallel, the Philly Fed's manufacturing index gauge jumped from a reading of 22.0 in April to 38.8 for May (consensus: 18.8).
Nonetheless, called attention to the disparity between the strong headline reading on company sentiment and the weaker details contained in the rest of the survey.
Thursday´s spate of economic indicators saw the yield on the benchmark 10-year US Treasury note tread water at 2.22%.
Acting as a backdrop, overnight Reuters reported that former national Security adviser Michael Flynn and other Trump advisers sent at least 18 calls and e-mails to Russian officials or related people during the last seven months of the presidential elections.
That followed news that the US Department of Justice appointed former FBI director Robert Mueller as special counsel to lead the investigation into Russian interference into the 2016 presidential elections.
Nonetheless, the same sources who told Reuters of those contacts reportedly said no evidence of wrongdoing or collusion between Trump's campaign and Russia had been seen in the communications reviewed thus far.
Still on the economic calendar for later on Thursday was a speech from Cleveland Fed president Loretta Mester at 1915 BST.
Shares of index heavyweight Wal Mart advanced after the retailer posted 1.4% growth in like-for-like sales for the latest quarter, the 11th consecutive rise.
Stock in Ralp Lauren was moving lower even after the company reported much better-than-expected first quarter earnings per share of 89 cents, versus the analyst consensus calling for 78 cents. |
| | 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: ABF, Sophos Group, Tullow Oil Analysts at Goldman Sachs raised their target on shares of Associated British Foods, pointing to the company's differentiated positioning and potential upside from its Click & Collect model to back up their case.
The investment bank also emphasised the fact that, unlike peers, higher input costs were already baked into its estimates for fiscal year 2017 gross margins.
Together with a roughly 10% rate of growth in space and a return to expansion for like-for-like sales to 1%, that would drive increases of about 13% in operating profits for each year between 2017 and 2021.
On the back of the above, Goldman marked its target on the shares up from 3,000p to 3,200p, while reiterating a 'buy' recommendation.
Ahead of the company's next trading update, scheduled for 6 July, Goldman cited two main risks investors should watch out for.
The first of those was strength in the pound, because 57% of the firm's sales originate form beyond the UK, followed by the risk of any further deterioration in the European clothing market which could drive a lower EBIT performance at ist Primark unit.
Analysts at Deutsche Bank hiked their target on shares of Sophos Group on the heels of management's upbeat medium-term guidance and given the company's "highly predictable" subscription-based model.
In particular, the analysts highlighted how the security software and hardware outfit's business model was based on compounding growth from existing customers, given its subscription-based model.
Management had guided towards "solid" growth in billings out to fiscal year 2020 which it saw coming in at $1bn, for a compound annual growth rate of 17%, with free cash flow expected to clock in with a CAGR of 20% over that same time span.
Operating margins were also seen improving by between 100 to 150 basis points per year.
"Given the company's highly predictable subscription-based business model, we think these targets are well underpinned," analysts Alex Tout and Steve Goulden said in a research note sent to clients.
Canaccord Genuity trimmed its target on shares of Tullow Oil after revising their short-term 'price deck' for the price of Brent lower.
Analyst Charlie Sharp said the broker was now projecting Brent to trade at $55, $57.5 $62.5 in 2017, 2018 and from 2019 onwards, respectively.
That was down from forecasts for $57.5 and $62.5, respectively, beforehand.
Those revisions offset news of the outfit's drilling success in Kenya with the Emekuya-1 well, which allowed it to extend Greater Etom area of the south Lokichar basin.
"The Etom area is proving to be a good picking ground for additional resources in Tullow's Kenyan acreage (with a working interest of 50%), and with an extended drilling campaign and Early Oil Production (trucking of stored oil first, leading to trucking of 2,000 bopd from already drilled wells in Q4 '17), we expect further resource uplift and more 'hard' data to assist in the wider area development planning," Sharp said.
Estimating the appropriate value of that well was complex but the analyst raised his upside potential resource risking from 30% to 40%, boosting his estimate of the total gross risked resources available from that project to 1.5bn barrels, versus 930m previously. |
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