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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: Simmering geopolitics still weighing on FTSE London stocks closed lower on Tuesday, but losses were restrained as investors largely shrugged off a disappointing reading on the UK services sector and despite continuing tensions on the Korean peninsula.
The FTSE 100 was down 0.52% to 7,372.92, back in the red after a pop higher earlier as the pound slipped after the services data. However, the currency soon recovered and by the London close was trading up 0.52% against the euro at 1.0927 and 0.63% higher versus the greenback at 1.3014.
European markets were all down on the day, with Germany being the exception, as the DAX closed 0.18% higher to 12,123.71. The CAC 40 was down 0.34% to 5,086.56 and the the IBEX 35 was also lower at 10,179.80. Negative services PMI figures may have played their part here with Germany having the only tick higher.
The UK's services sector activity slumped to an 11-month low last month, with the IHS Markit UK services purchasing managers' index falling to 53.2 in August from 53.8 the month before, a little short of the 53.5 that the market expected.
Services companies said subdued client demand and heightened uncertainty about the domestic economic outlook was weighing on growth.
New order volumes increased at the second slowest rate since last September, with a number of service providers commented that fragile business confidence had led to delayed spending decisions among clients.
Weaker growth was most evident in consumer-facing sectors such as hotels, restaurants and other personal services, Markit said.
Chris Williamson, chief business economist at IHS Markit, said: "While robust manufacturing performance suggests the economy may be rebalancing towards goods production, aided by the weaker currency, the slowdowns in services and construction send warning signals about the health of the domestic economy."
There were a couple of bright spots on the data front, however. The latest figures from the British Retail Consortium revealed that like-for-like sales rose 1.3% last month compared to a 0.9% drop in August 2016.
On a total basis, sales were up 2.4% in August versus a 0.3% decline in the same month last year. This marked the strongest growth recorded by the BRC since Easter, above the three- and 12-month averages of 1.9% and 1.6%, respectively.
In the latest developments on the Korean peninsula, according to the South China Morning Post, which cited Chinese diplomatic analysts, the Asian giant was likely to support further sanctions against the Hermit Kingdom, including slashing its oil exports to the North Asian nation, but not fully, so as to avoid the collapse of its ally.
Acting as a backdrop, overnight Seoul had reportedly broached with Washington the possibility of deploying a US aircraft carrier and strategic bombers to the region. The American president had reportedly also granted the South access to more powerful warheads that could be deployed on its own missiles.
Retail shares got a boost, with Marks & Spencer and Next both higher.
Meanwhile, data released before the session kicked off showed China's services sector expanded at a faster pace last month. The Caixin China services purchasing managers' index rose to 52.7 from 51.5 in July, marking the highest reading in the last three months. Mining stocks were boosted by the news earlier in the session, but by midday most of the gains in the sector had evaporated.
Elsewhere, M&A news helped to provide some cheer, with Aveva up a whopping 25.73% after it agreed a merger with the software arm of France's Schneider Electric where the UK company's existing shareholders will own 40% of the business.
FTSE 250 housebuilder Redrow rallied after it reported a 26% jump in full-year pre-tax profit as it hiked its dividend by 70% and upgraded its guidance. FTSE 100 peer Barratt Developments followed suit, trading up just over 1%.
Oilfield services group Petrofac gushed higher after announcing the award of a €340m contract with a subsidiary of Russia's Gazprom, while DS Smith was down 0.81% despite reporting an "encouraging" start to the financial year, with trading in line with expectations.
In broker action, Merlin Entertainments was given a leg up by a positive note from Morgan Stanley, while Hunting was lifted by an upgrade to 'buy' at Canaccord Genuity.
Insurer Admiral was under the cosh after Berenberg downgraded the stock to 'sell'.
Infrastructure and support services company Stobart Group climbed slightly. It reported good progress in the first half and said delays in the commissioning of certain third party biomass stations in the energy business impacted short-term volumes and said it was taking longer than originally planned to introduce additional airlines to operate from London Southend Airport. |
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| Market Movers
FTSE 100 (UKX) 7,372.92 -0.52%
FTSE 250 (MCX) 19,726.83 0.15%
techMARK (TASX) 3,428.59 0.60%
FTSE 100 - Risers
Merlin Entertainments (MERL) 467.00p 2.10%
Paddy Power Betfair (PPB) 7,110.00p 2.01%
Severn Trent (SVT) 2,275.00p 1.11%
Marks & Spencer Group (MKS) 324.20p 1.06%
Barratt Developments (BDEV) 624.00p 1.05%
Next (NXT) 4,267.00p 0.95%
Whitbread (WTB) 3,773.00p 0.94%
BAE Systems (BA.) 610.50p 0.91%
Sainsbury (J) (SBRY) 235.80p 0.73%
United Utilities Group (UU.) 912.50p 0.66%
FTSE 100 - Fallers
Provident Financial (PFG) 800.00p -6.54%
Carnival (CCL) 5,165.00p -3.55%
Reckitt Benckiser Group (RB.) 7,092.00p -2.72%
Fresnillo (FRES) 1,628.00p -2.16%
easyJet (EZJ) 1,156.00p -2.12%
Micro Focus International (MCRO) 2,207.00p -1.69%
CRH (CRH) 2,699.00p -1.64%
Smurfit Kappa Group (SKG) 2,331.00p -1.60%
SEGRO (SGRO) 532.00p -1.57%
Admiral Group (ADM) 1,890.00p -1.51%
FTSE 250 - Risers
Aveva Group (AVV) 2,414.00p 25.73%
Evraz (EVR) 330.00p 6.04%
Redrow (RDW) 647.00p 4.35%
Euromoney Institutional Investor (ERM) 1,123.00p 3.98%
Tullow Oil (TLW) 160.60p 3.95%
Victrex plc (VCT) 2,300.00p 3.60%
Hunting (HTG) 416.20p 3.30%
Wood Group (John) (WG.) 609.50p 3.22%
Sophos Group (SOPH) 534.00p 3.19%
Bovis Homes Group (BVS) 1,071.00p 3.18%
FTSE 250 - Fallers
Acacia Mining (ACA) 188.80p -6.63%
Inmarsat (ISAT) 687.50p -6.53%
SSP Group (SSPG) 534.00p -3.96%
Hochschild Mining (HOC) 281.90p -3.36%
Beazley (BEZ) 487.70p -3.33%
Restaurant Group (RTN) 315.00p -2.57%
McCarthy & Stone (MCS) 160.40p -2.49%
Lancashire Holdings Limited (LRE) 665.00p -2.28%
Metro Bank (MTRO) 3,366.00p -2.12% |
| | Market Analysis 05/09/2017 Today’s highlights: Markets react to North Korean tension - North Korea continues to pressure global markets: After reporting a successful nuclear test, North Korea continued to provoke the world today, as it moved an intercontinental missile to its coast. While there was no trading in the US yesterday, markets could react to the growing geopolitical tension today.
- Asia seen lower: Markets in the East reacted to the North Korean situation, with many leading indices, including the Nikkei, trading lower. In contrast, Chinese indices were seen higher, including the China50 index.
Read More... |
| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks dragged down by Korea uncertainty Stocks ended off their best levels of the session as Russian president Vladimir Putin questioned the efficacy of further sanctions against Pyongyang, which some observers said echoed similar resistance from China, warning of the risk of a catastrophe.
Despite that, there was some speculation in the media that China might be tempted to cut oil exports to Pyongang, albeit not completely.
Against that backdrop, the benchmark Stoxx 600 retreated 0.13% or 0.47 points to 373.71, alongside a gain of 0.18% or 21.50 points to 12,123.71 for the German Dax while the Cac-40 was slipping 0.34% or 17.41 points to 5,086.56.
The Stoxx 600 Autos & Parts subindex was among the best performers, climbing 0.89% to 548.06 with the euro higher by 0.19% to 1.1921 alongside.
Speaking on the sidelines of an emerging markets summit in Xiamen, China, Putin claimed that "they'll eat grass, but they won't abandon their programme unless they feel secure," Interfax reported.
Indeed, given the regime now had nuclear weapons, a confrontation could lead to a "global catastrophe and a huge number of casualties", Putin said.
Commenting on the situation in markets, Craig Erlam, senior market analyst at Oanda, said: "The expectation that a diplomatic solution will not be found in the near-term is likely to result in underlying caution remaining for now.
"With more flare ups likely, I expect we'll see repeated episodes of safe haven flows, which should mean Gold, the Swiss franc and the yen (barring any attack on Japan) remain well supported. As far as today is concerned, we are seeing a slight unwinding of some of these while the yen remains well bid."
In the latest developments on that distant peninsula, according to the South China Morning Post, which cited Chinese diplomatic analysts, the Asian giant was likely to support further sanctions against the Hermit Kingdom, including slashing its oil exports to the North Asian nation, but not fully, so as to avoid the collapse of its ally.
Acting as a backdrop, overnight Seoul had reportedly broached with Washington the possibility of deploying a US aircraft carrier and strategic bombers to the region. The American president had reportedly also granted the South access to more powerful warheads that could be deployed on its own missiles.
In economic news, a revised reading from IHS Markit saw the survey compiler's purchasing managers' index for the euro area's service sector in August marked down from a preliminary print of 54.9 to 54.7, versus an end of July reading of 55.4. In turn, that meant the final reading for the composite factory and service sector PMI in August was unchanged at 55.7, versus a preliminary reading of 55.8.
"The summer months have seen eurozone economic growth moderate only slightly from the rapid pace seen in the spring. The solid PMI readings for July and August set the scene for another strong GDP number for the third quarter, with the surveys running at a level historically consistent with 0.6% growth," said Chris Williamson, chief business economist at IHS Markit.
On the corporate front, France's Schneider Electric inked a deal to combine with Aveva Group, with its shareholders holding a 60% stake in the resulting firm.
Danish toy manufacturer Lego was also making headlines after disclosing its intention to cut its staff by 8%. In parallel, the Danish firm reported a 5% drop in half-year sales to €14.9bn.
German automaker Volkswagen reportedly put the €1.5bn sale of Italian motorcycle unit, Ducati, on ice. |
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| | US Market Report | | US open: Stocks slip as traders get first chance to react to events in Korea Wall Street's main stockmarket averages were lower at the start of the shortened trading week as markets tried to guess the endgame of the tensions on the Korean peninsula, with some traders in the US getting their first chance to react to news of North Korea's hydrogen bomb test over the Memorial Day weekend.
As of 1640 BST, the Dow Jones Industrial Average was down by 0.69% or 150.97 points at 21,834.58, alongside a 0.53% or 13.20 point drop for the S & P 500 to 2,463.56 and a 0.63% or 40.70 point fall in the Nasdaq Composite to 6,394.59.
In parallel, the yield on the benchmark 10-year US Treasury note retreated eight basis points to 2.09%, alongside a 0.75% rise in front month gold futures om COMEX to $1,340.30/oz..
From a sector standpoint, the worst performance was being seen in the following industrial groups: Recreational services (-2.88%), Mortgage finance (-2.54%) and Elctronic office equipment (-2.14%).
Richard Perry at Hantec Markets said: "As the US returns from Labor Day, market sentiment remains cautious with tensions over North Korea still at the forefront of traders' minds. The US is looking for the UN to take a hard line with North Korea, whilst in the immediate proximity South Korea continues to prepare for military manoeuvres. Markets retain their safe haven bias from trading yesterday. This means that assets such as gold, the yen and the Swiss franc are all still performing well."
In fresh Korea news, even ahead of next National Congress of the Chinese Communist Party, in October, the South China Morning Post cited diplomatic analysts according to whom Beijing might be open to cutting energy supplies to Pyongyang, albeit not by enough to topple the regime.
To take note of as well, in remarks at the Economic Club of Chicago, Fed governor Lael Brainard indicated that recent low readings on inflation might not be transitory, which would require a slower pace of interest rate increases.
Meanwhile, on the corporate front, stock of United Technologies was lower after the company agreed to buy airplane parts maker Rockwell Collins for $23bn.
US-listed shares of Cellectics were sharply lower after the Food and Drug Administration said the company had to put a cancer drug trial on hold.
Going the other way, stock of Insmed skyrocketed after the firm announced a phase 3 trial for rare lung disease had met its primary endpoint. |
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