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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 higher on UK budget Shares closed higher on Wednesday as investors sifted through corporate releases as well as the Autumn Budget. The FTSE 100 was up 0.10% by the close to 7,419.02, while the pound was climbing 0.01% against the euro at 1.1279 and 0.42% versus the dollar at 1.3295. European markets were mixed on Wednesday with the DAX down 1.16% to 13,015.04, the CAC 40 0.25% lower at 5,352.76 and the IBEX 35 bucking the trend to close 0.21% higher at 10,013.90. The key points of the Chancellor's Autumn budget included: no stamp duty payable for first time buyers of properties worth up to £300,000, a 'freeze' on alcohol and fuel duties and an increase in the higher tax rate threshold to £46,350. For lower income households, the National Living Wage was due to rise in April 2018 by 4.4% from £7.50 per hour to £7.83. On the employment front, another 600,000 people were forecast to be in work by 2022. Something for everyone in the budget, but on the downside the Office for Budget Responsibility (OBR) downgraded the UK growth outlook for 2017 from 2% to 1.5% and taht for 2018 from 1.6% to 1.4%. Andrew Goodwin at Oxford Economics said: "The Budget was framed by large revisions to the OBR's growth and borrowing forecasts. Though we agree that growth will remain soft by historical standards, we suspect that the OBR's new projections will prove to be too gloomy, so even the reduced headroom against the fiscal rules should prove to be plenty. "In terms of measures, the Chancellor bucked the traditional approach for the first Budget of a new Parliament by announcing a net loosening of fiscal policy. Housing was the focus of policy attention, although a headline cut in stamp duty for first-time buyers may not have the hoped-for effect." Broker commentary lent a helping hand in London, with Kingfisher and Reckitt Benckiser racking up healthy gains after upgrades from Jefferies and JPMorgan, respectively, while EasyJet flew higher after Investec bumped the stock up to 'buy'. Informa and Qinetiq were also in the black after upgrades from Kepler Cheuvreux and Berenberg. Meanwhile, Sage reversed earlier losses to trade higher after saying it kept revenue growth and margins above its annual target and announcing that the launch of its Business Cloud software suite would enable it to "accelerate momentum" in 2018. GlaxoSmithKline ticked lower after saying that its ViiV Healthcare joint venture has been given approval for its Juluca treatment by the US Food and Drug Administration the first complete HIV treatment in the US to include only two drugs. Housebuilder and regeneration partner Countryside Properties rallied after it posted a rise in annual operating profit as revenue and completions grew amid strong demand. Upper Crust owner SSP surged after it reported a rise in full-year profit and announced a special dividend of around £100m. On the downside, Thomas Cook tanked after the travel company released its full-year results, which showed margins declined due to a more competitive market in holidays to Spain. FTSE 100 peer TUI was also in the red. Water and waste management company United Utilities climbed after saying profit rose 10% in the first half as it increased revenue and cut costs, though management again raised concerns about looming new regulatory controls. Business information and events group Euromoney dropped after posting a rise in annual profit and announcing the sale of its stake in Dealogic. Motorway barrier maker Hill & Smith was in reverse gear despite reporting trading in the period from 1 July to the end of October was in line with its expectations, but that some road schemes had been pushed back into next year. Nostrum Oil & Gas slumped after Panmure Gordon cut the stock to 'hold'. |
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| | Market Movers FTSE 100 (UKX) 7,419.02 0.10%
FTSE 250 (MCX) 20,013.86 0.35%
techMARK (TASX) 3,480.76 0.33% FTSE 100 - Risers Kingfisher (KGF) 322.60p 4.57%
Fresnillo (FRES) 1,349.00p 4.33%
Shire Plc (SHP) 3,752.00p 3.30%
Standard Chartered (STAN) 744.10p 2.92%
Tesco (TSCO) 194.40p 2.86%
Morrison (Wm) Supermarkets (MRW) 215.80p 2.76%
Old Mutual (OML) 195.60p 2.41%
Centrica (CNA) 163.30p 1.94%
SSE (SSE) 1,367.00p 1.86%
St James's Place (STJ) 1,170.00p 1.74% FTSE 100 - Fallers Barratt Developments (BDEV) 610.00p -3.71%
Berkeley Group Holdings (The) (BKG) 3,652.00p -2.61%
Paddy Power Betfair (PPB) 8,540.00p -2.29%
Prudential (PRU) 1,877.00p -1.98%
Persimmon (PSN) 2,624.00p -1.91%
Ashtead Group (AHT) 1,900.00p -1.86%
Taylor Wimpey (TW.) 193.30p -1.83%
Burberry Group (BRBY) 1,736.00p -1.42%
Standard Life Aberdeen (SLA) 423.60p -1.40%
Royal Bank of Scotland Group (RBS) 269.50p -1.35% FTSE 250 - Risers Acacia Mining (ACA) 198.00p 8.63%
SSP Group (SSPG) 658.00p 8.40%
QinetiQ Group (QQ.) 218.00p 8.19%
Ultra Electronics Holdings (ULE) 1,195.00p 4.64%
Tullow Oil (TLW) 173.40p 4.58%
Big Yellow Group (BYG) 812.50p 4.17%
Ferrexpo (FXPO) 264.90p 4.05%
Telecom Plus (TEP) 1,259.00p 3.79%
Polymetal International (POLY) 926.50p 3.23%
Virgin Money Holdings (UK) (VM.) 277.00p 3.19% FTSE 250 - Fallers Thomas Cook Group (TCG) 111.50p -8.38%
Nostrum Oil & Gas (NOG) 340.70p -5.39%
BTG (BTG) 732.00p -5.06%
McCarthy & Stone (MCS) 161.20p -4.05%
Bellway (BWY) 3,480.00p -2.47%
SIG (SHI) 165.00p -2.42%
Victrex plc (VCT) 2,542.00p -2.34%
Bovis Homes Group (BVS) 1,108.94p -2.12%
Nex Group (NXG) 570.00p -2.06% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Shares end near session highs Stocks finished near their best levels of the day, possibly influenced by the latest German poll results which might help coax the country's politicians to return to the negotiating table in order to help thrash out a stable government coalition - or face the voters again. Snap polls conducted on 20 November showed voter support for Germany's Free Democrats slip, with a poll from Infratest showing a sharp 13 point decline to 32% in voters' support for FDP leader Christian Lindner, analysts at Citi pointed out to clients. At the weekend, the FDP walked out of coalition talks, possibly setting the stage for new elections, although speaking on Monday afternoon Chancellor Angela Merkel didn't quite rule out governing in minority, although it was patently not her preferred option. By the close, the Stoxx 600 was higher by 0.44% or 1.71 points to 388.10, alongside a rise of 0.83% or 108.88 points to 13,167.54 for the German Dax and a 0.48% or 25.70 point advance for the Cac-40 to 5,366.15. In parallel, the single currency was up by 0.12% to 1.1745 while front month Brent crude futures were trading up by 0.01% to $62.28 a barrel on the ICE. Commenting on the price action in markets, David Madden at CMC Markets said: "Stocks in Europe are in positive territory as optimism is seeping into the markets. Despite the sluggish start equities got off to today, the sentiment turned positive, and now they are firmly in positive territory. "Carmakers like Volkswagen, Daimler and BMW are underpinning the rally in the DAX. Yesterday Volkswagen announced plans to invest €40 billion in electric vehicle technology. It wouldn't be a surprise if others in the sector follow suit. Today, the VDA, the German Association of the Automotive Industry claimed that it will enjoy record output in 2018." Also boosting sentiment were reports Westminster had offered Brussels to double the size of its divorce bill to £40bn, which might allow Brexit talks to proceed. There was little out in terms of economic data for traders to chew on. On that note, Switzerland's trade surplus slipped from 2.8bn Swiss francs in September to 2.4bn for October, according to the Federal Customs Administration. The above aside, there was only the result of the Belgian central bank's consumer confidence survey for November at 1500 GMT left on the agenda. German construction outfit Hochtief was in the spotlight after announcing it had clinched a €15bn syndicated bank facility to finance the purchase of Abertis. Shares of Mediaset ended lower even after JP Morgan lifted its recommendation on the shares from 'underweight' to 'neutral'. |
| | US Market Report | | US open: Shares hold ground ahead of FOMC minutes Wall Street is holding its ground following the record highs set the day before, albeit amid lighter than usual trading volumes ahead of the Thanksgiving Holiday on Thursday, with investors looking to the release of the minutes of the most recent meeting of the Federal Open Market Committee. At 1742 GMT, the Dow Jones Industrial Average was down by 0.29% or 68.10 points at 23,522.73, alongside a 0.09% or 2.34 point dip for the S&P 500 to 2,597.16 while the Nasdaq Composite was eking out a gain of 0.05% or 3.61 points to 6,866.09. From a sector standpoint, the strongest areas of the market were: Aluminium (1.95%), Fixed line telecommunications (1.76%) and Electronic office equipment (1.74%). On Tuesday, all three indices hit record highs as tech stocks rallied, with the likes of Facebook, Netflix and Amazon all in the black. Ahead of the FOMC minutes, Konstantinos Anthis at ADS Securities said: "This morning the dollar Index dropped below the 94.00 mark extending its pullback after the gains we saw on Monday. Today it might get some support from the FOMC minutes release that should reaffirm traders' conviction that the US central bank will raise rates again in December. "A rate hike next month is fully priced in by now however given the lack of any other catalysts and with dollar traders desperate for something positive to latch on to, there might be scope for the dollar to recover today. The instruments to look for opportunities are the Japanese yen and gold." For the most part, Wednesday's batch of economic data releases were in-line with market forecasts. The key report on Wednesday was the University of Michigan's final reading on US consumer sentiment for the month of November, which was revised higher from a preliminary reading of 97.8 to 98.5 (consensus: 98.2). "In contrast to the media buzz about approaching cyclical peaks and an aging expansion, with the implication of greater uncertainty about future economic trends, consumers have voiced greater certainty about their expectations for income, employment, and inflation. "[...] Overall, the data signal an expected gain of 2.7% in real consumption expenditures in 2018, and more importantly for retailers, the best runup to the holiday shopping season in a decade," said Richard Curtin, the survey's chief economist. Elsewhere, the Department of Labor reported a 13,000 person drop in initial jobless claims for the week ending on 18 November to reach 239,000 (consensus: 240,000). Durable goods orders on the other hand fell by a sharp 1.2% month-on-month in October (consensus: 0.3%), the Department of Commerce reported, dragged down by large declines in the oft-volatile orders for civilian and defence aircraft. However, excluding transportation equipment orders in fact rose by 0.4% on the month, just as expected. On corporate front, Hewlett Packard was weaker after the company said late on Tuesday that chief executive Meg Whitman was leaving and issued a disappointing first-quarter outlook. Salesforce shares were lower - but just off their record highs - after the CRM specialist posted slightly stronger than forecast third quarter sales of $2.68bn but alongside guidance for the following three months that fell short of expectations. Elsewhere, stock in Deere & Co was a top gainer after the tractor-maker posted a 79% jump in profits for the fourth quarter. Rockwell Automation was also in focus after it rejected an unsolicited buyout bid from Emerson. |
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| | Broker Tips | | Broker tips: Reckitt Benckiser, QinetiQ, EasyJet JP Morgan has upgraded its view on shares of Reckitt Benckiser, with its analysts pointing to potential upside in the firm's earnings per share in fiscal year 2020 and the potential for shifts in the company's portfolio of assets to unlock value. After running various scenario analyses, JP Morgan concluded that the shares' valuation could range between 6400p and 9000p. Yet in any case, the 6% reduction in the analyst consensus for Reckitt's EPS in 2018 over the past six months meant there was now scope for "short-term relief" to 7500p. Indeed, that was now the broker's new target, versus 6,900p previously. In parallel, JP Morgan upgraded its recommendation on the shares from 'neutral' to 'overweight'. Regarding the outlook for earnings, JP Morgan believed Reckitt could return to like-for-like growth of roughly 3% - in-line with its peers - from the fourth quarter of 2017. However, the analysts conceded there was some uncertainty surrounding the 'timing' of savings from the acquisition of Mead and potential additional costs in the Home/Hygiene division. That might weigh on the company's EPS in fiscal year 2018. On the other hand, JP Morgan said it saw upside of between 5% and 8% when looking out to fiscal year 2020.
QinetiQ shares have been "disproportionately" affected by wider bearishness on the sector after the profit warning from peer Ultra Electronics, said Berenberg, upgrading to 'buy' from 'hold'.
Berenberg, which cut its target to 235p from 310p, said it believes UK aerospace and defence stocks "are experiencing wide-ranging short activity, creating real opportunity". QinetiQ now looks attractive within the sector and in a wider market context on the basis of a valuation of 12 times 2020 expected earnings, good cash flow visibility and net cash of £200m that is around 20% of its market cap. Occupying a niche research & development space in the UK defence market with multi-year contracts on a £2bn funded backlog, QinetiQ's offerings are largely shielded from the pressures in the UK defence market that have sent investors packing from the sector, said analyst Charlotte Keyworth, suggesting it is shorter-cycle products that under the most acute near-term demand pressure. The 3% organic growth at Qinetiq's interims was "encouraging" in an environment where peers such as Ultra Electronics, BAE Systems and Cobham are struggling to grow. As a normally highly cash-generative business, Keyworth looks beyond peak capex of £90m next year and sees normalised levels returning in the 2020 fiscal year, where the company will generate a 7.3% free cash flow yield, "which looks appealing". |
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