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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 dip even as pound slips, UK data in focus The top flight index closed marginally lower on Thursday even as the pound slipped, with the latest readings on retail sales and UK GDP in focus. The FTSE 100 dipped 0.02% to finish the session at 7,417.24, while the pound was down 0.43% against the euro at 1.1224 and 0.18% lower versus the dollar at 1.3301. European markets were overall positive with the DAX down 0.05% to 13,008.55, albeit with the CAC 40 up 0.50% at 5,379.54 and the IBEX 35 0.19% firmer to 10,032.80. Figures released from the Office for National Statistics (ONS) confirmed that Britain was the slowest growing G7 economy this year. A second estimate of UK GDP showed the economy grew 0.4% in the third quarter compared to the second, as was indicated in the initial reading. Compared to the third quarter last year, ONS also confirmed GDP was 1.5% higher, again as stated in its initial estimate. The ONS report came a day after the Chancellor's Budget statement included a newly downgraded forecast from the Office for Budget Responsibility (OBR) for GDP to grow 1.5% in 2017, falling to 1.4% in 2018. Pantheon Macroeconomics said: "Looking ahead, we continue to expect quarter-on-quarter GDP growth to fade to 0.2% in Q4, as households' spending slows again. The squeeze on real wages still has further to run, while the MPC's rate hike will reduce disposable income and encourage households to save more. "We hold out little hope for a revival in net trade or investment in the near-term, given the still-huge uncertainty about the UK's trade ties with the rest of the world." On a cheerier note, the Confederation of British Industry's (CBI) quarterly distributive trades survey found that 39% of respondents reported a rise in sales volumes in November compared to a year ago, while 13% said they were down, giving a balance of +26%. This compared to -36% in October and was well ahead of analysts' expectations of +5%. However, prices pressures were evident, with average selling prices rising at their fastest pace since May 1991 in the year to November. In corporate news, Centrica tanked as it warned annual profit will be lower than market expectations due to poor performance at its business energy supply division. Pub group Mitchells & Butlers tumbled after it reported a drop in full-year profit as it highlighted inflationary cost headwinds and cancelled its interim dividend. GlaxoSmithKline firmed up after saying that it and partner Innoviva have filed a supplemental New Drug Application with the US Food and Drug Administration for the use of Trelegy Ellipta (fluticasone furoate/umeclidinium/vilanterol) for an expanded indication. Cineworld fell despite reporting a 10.6% jump in revenue for the period from 1 January to 19 November. SIG moved higher despite Canaccord Genuity cutting the stock to 'hold', while National Grid, Vodafone, Carnival, TalkTalk, and Vedanta Resources were all weaker as their stock went ex-dividend. On the upside, Severn Trent nudged up as it lifted its forecast for regulatory bonuses after a strong first half of the year, where sales increased 3.7%, underlying earnings per share by 7.7% and dividend by 6.2% to 34.63p. Residential landlord Grainger edged higher after exchanging contracts with Blackswan Property to forward-fund and acquire a private rented sector build-to-rent development at Gilder's Yard in Birmingham. Actuator manufacturer Rotork advanced as it said group order intake in the third quarter increased 12%, while revenue was up 5.1%, while Paragon Banking Group was in the black after posting a rise in full-year profit thanks to growth across its business lines. |
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| | Market Movers FTSE 100 (UKX) 7,417.24 -0.02%
FTSE 250 (MCX) 20,166.54 0.76%
techMARK (TASX) 3,550.89 2.01% FTSE 100 - Risers Mediclinic International (MDC) 523.00p 3.24%
Sage Group (SGE) 806.00p 3.07%
ITV (ITV) 152.40p 2.42%
Berkeley Group Holdings (The) (BKG) 3,730.00p 2.00%
easyJet (EZJ) 1,376.00p 1.93%
Taylor Wimpey (TW.) 196.60p 1.86%
Barratt Developments (BDEV) 621.00p 1.80%
Diageo (DGE) 2,615.00p 1.30%
Ferguson (FERG) 5,350.00p 1.23%
United Utilities Group (UU.) 792.00p 1.21% FTSE 100 - Fallers Centrica (CNA) 138.00p -15.49%
Babcock International Group (BAB) 683.00p -3.26%
National Grid (NG.) 866.10p -2.83%
Johnson Matthey (JMAT) 3,068.00p -2.32%
Vodafone Group (VOD) 225.40p -1.46%
Morrison (Wm) Supermarkets (MRW) 213.10p -1.25%
Reckitt Benckiser Group (RB.) 6,428.00p -1.11%
Standard Chartered (STAN) 735.60p -1.08%
HSBC Holdings (HSBA) 731.80p -0.95%
Micro Focus International (MCRO) 2,685.00p -0.81% FTSE 250 - Risers Ibstock (IBST) 244.40p 4.67%
Fisher (James) & Sons (FSJ) 1,622.00p 3.71%
Ultra Electronics Holdings (ULE) 1,231.00p 3.01%
Equiniti Group (EQN) 298.10p 2.93%
UDG Healthcare Public Limited Company (UDG) 870.50p 2.17%
William Hill (WMH) 283.80p 2.09%
Bodycote (BOY) 894.00p 2.05%
Aggreko (AGK) 871.50p 2.05%
Clarkson (CKN) 2,917.00p 1.82%
888 Holdings (888) 254.70p 1.76% FTSE 250 - Fallers Mitchells & Butlers (MAB) 240.29p -6.59%
AA (AA.) 154.20p -2.77%
Brown (N.) Group (BWNG) 273.60p -2.66%
TalkTalk Telecom Group (TALK) 152.80p -2.55%
Cineworld Group (CINE) 653.00p -2.54%
Greencore Group (GNC) 191.80p -2.29%
Pets at Home Group (PETS) 180.30p -2.22%
3i Infrastructure (3IN) 198.03p -2.21%
P2P Global Investments (P2P) 766.00p -2.17% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks finish near highs, China woes and euro gains weigh on German shares Stocks finished near their best levels of the day, having mounted a comeback following early weakness that was attributed to an overnight drop in Chinese equities on the heels of continued upwards pressure on bond yields in the Asian giant. Very strong readings from euro area surveys of manufacturing and service sector conditions were the chief factor behind the recovery in shares, alongside reports that Germany's main political parties might be making headway in crafting a stable government. "Of course we want to help Germany and we haven't ruled out anything," Karl Lauterback from Germany's Socialist SPD party told ZDF television in an interview. Lauterback also said a 'grand coalition' with Chancellor Merkel's centre-right CDU/CSU was one of the options on the table - as a last resort. Against that backdrop, at the closing bell the benchmark Stoxx 600 had edged 0.02% or 0.16 points higher to 387.12, alongside a 0.50% or 26.78 point jump for the Cac-40 to 5,379.54. Stocks on the euro area periphery were also on the up, with Spain's Ibex 35 gaining 0.19% or 18.90 points at 10,032.80. Germany's Dax on the other hand was again the weakest of the Continent's main equity benchmarks, slipping 0.05% or 6.49 points to 13,008.55, alongside a 0.27% rise in euro/dollar to 1.1852. Overnight, the Shanghai Stock Exchange's Composite Index gave back 2.29% to close at 3,351.92, its sharpest one-day fall since mid-2016. The losses came on the heels of another move in 10-year Chinese government bond yields above the 4.0% mark. However, accumulated losses in that Chinese benchmark during the past month were a rather more mundane 0.85% and it was still 3.42% over the preceding 12 months. To take note of as well, the minutes of the US central bank's last policy meeting, released overnight, did little to lift the mist of uncertainty which had recently blanketed forecasts for further rate hikes in the States in 2018. Commenting on the content of those minutes, Michael Hewson, chief market analyst at CMC Markets UK, said: "A December rate move remains a done deal in the eyes of the markets. It's what comes after that which is becoming less clear." On the economic front, IHS Markit's preliminary composite purchasing managers' index for Eurozone manufacturing and services sector activity jumped to a 79-month high of 57.5 in November (consensus: 55.9), from 56.0 for October. "Jobs are being created at the fastest rate since the dot-com boom, yet despite this increase in operating capacity firms are struggling to meet demand. Backlogs of uncompleted work are growing at the fastest rate for over a decade, often resulting in a sellers' market as customers struggle to source goods and services. Prices are consequently rising at an increased rate," said Chris Williamson, chief business economist at IHS Markit. Traders on the other hand appeared to barely react to the minutes of the European Central Bank's last policy meeting, which showed several rate-setters had backed delinking the governing council's forward guidance from the requirement of a a sustained pick-up in core inflation. That, some analysts said, might pave the way for a stop to asset purchases towards the end of next year. A better than expected reading on Belgian business confidence in November - sometimes a lead indicator of the IFO institute's German gauge - was apparently also ignored. As an aside, in an interview with La Repubblica, Italy's economy minister said his country's economy might grow by more than 1.5% in 2017. Meanwhile, in corporate news, Thyssen Krupp was firmly in focus after the steel giant posted a 30% jump in its full-year operating profits. French spirits-maker Remy Cointreau on the other hand was under the cosh despite reporting an 11.8% rise in its first half like-for-like operating profits. |
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| | 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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Top of the stocks Number of Deals Bought Number of Deals Sold |
| | 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". | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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