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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: Footsie climbs as Shell pleases The top flight index closed higher on Tuesday, with Anglo-Dutch pair Shell and Unilever impressing with their strategy updates but investors having mixed feelings about the Bank of England's stress test results. By the London close, the FTSE 100 was up 1.04% to 7,460.65, while the pound was down 0.61% against the dollar at 1.3238 and 0.45% lower against the euro at 1.1186. European markets were also upbeat with the DAX up 0.46% to 13,059.53, the CAC 40 0.57% firmer at 5,390.48 and the IBEX 35 climbing 0.81% to 10,144.40. Earlier, the Bank of England said none of the seven high street banks needs to strengthen its capital position as a result of its stress tests, the first time this has happened since tests were launched in 2014. In the test, banks incurred hypothetical losses of around £50bn in the first two years of the stress, which, the Bank said, would have wiped out the common equity capital base of the UK banking system ten years ago. Although none of the banks failed the stress tests, Barclays and Royal Bank of Scotland fell below their systemic reference points, which are the capital ratios required to withstand any shocks to the financial system without needing a bailout. But analysts at Exane BNP Paribas said the outcomes of this stress scenario "are somewhat negative for the UK domestic banks" and "raises questions over the speed to dividend normalisation". Stocks in the banks were all lower apart from HSBC, with Lloyds leading the retreat, followed by Barclays. Analyst Mike van Dulken at Accendo Markets said equities were extending their positive start to the week, as sentiment was supported UK Banks passing the latest stress tests. "A stronger USD also plays a part on a combination of pre-released text from next Fed Chair Powell, ahead of his appearance in front of the Senate Banking committee, and hopes of tax reform. All the while we await Thursday's OPEC make or break update on production cut extension," he said. While the OECD revised down its growth forecast for the UK to 1.5% this year, from 1.6%, in line with recent OBR forecasts, the organisation upped its forecasts for 2018, to 1.2% from 1%. Top of the FTSE leaderboard was Royal Dutch Shell after saying it will begin paying a cash dividend again in the fourth quarter of this year as a strategy update from the oil giant saw cash flow targets and pledge to continue cutting debt. Fellow Anglo-Dutch giant Unilever, ahead of its annual strategy event, said the current year remained on track and said its review of its dual-headed legal structure was ongoing but that it considered a share unification with a single share class "would be in the best interests of Unilever and its shareholders as a whole". Comments from Unilever that cost savings and budgeting programmes were "delivering faster than planned" and would be reinvestment in brands, boosted advertising group WPP, for which the consumer goods colossus is one of its biggest clients. Budget airline EasyJet flew higher after upgrades from Kepler Cheuvreux and Societe Generale, while insulation specialist SIG was boosted by upgrade to 'buy' at Jefferies and Cineworld rose after Numis lifted it to 'buy'. Shares in Ocado surged as much as 20% after the online grocery retailer said has signed an agreement with Groupe Casino to develop its Smart Platform in France. West End real estate developer Shaftesbury was in the black as it posted a jump in full-year profit and beat consensus forecasts for its net asset value. Food producer and supplier Cranswick rallied as it reported a rise in profit and revenue for the first half and hiked its dividend by 15%, while Provident Financial climbed as the doorstep lender announced boardroom changes after the death of chair Manjit Wolstenholme. On the downside, heavily-weighted miners declined as copper prices fell, with Glencore, BHP Billiton and Antofagasta all on the back foot. Irish food company Greencore was slightly in the red, but had erased most of its early losses after it posted a 74% drop in pre-tax profit for the year to the end of September. Pets at Home tumbled on the back of its interim results and as it announced CEO Ian Kellett will step down from the role, to be replaced by Peter Pritchard, who is currently CEO of the retail division. AstraZeneca lost its early gains after saying that the European Medicines Agency has accepted a variation to the Marketing Authorisation Application for Tagrisso, while UDG Healthcare was weaker despite reporting a 17% increase in full-year profit. Associated British Foods climbed despite a Morgan Stanley downgrade but recovered to positive territory by midday, while Dixons Carphone fell by just over 2% after a downgrade from Stifel. |
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| | Market Movers FTSE 100 (UKX) 7,460.65 1.04%
FTSE 250 (MCX) 20,026.19 0.73%
techMARK (TASX) 3,496.79 0.90% FTSE 100 - Risers Royal Dutch Shell 'A' (RDSA) 2,408.00p 3.99%
Worldpay Group (WPG) 432.60p 3.94%
Royal Dutch Shell 'B' (RDSB) 2,455.00p 3.71%
Babcock International Group (BAB) 685.00p 3.16%
Reckitt Benckiser Group (RB.) 6,641.00p 3.04%
Mondi (MNDI) 1,800.00p 2.97%
WPP (WPP) 1,301.00p 2.60%
ITV (ITV) 155.00p 2.51%
Old Mutual (OML) 200.00p 2.46%
Mediclinic International (MDC) 539.00p 2.37% FTSE 100 - Fallers Convatec Group (CTEC) 190.00p -2.46%
Persimmon (PSN) 2,540.00p -1.89%
Anglo American (AAL) 1,405.00p -1.75%
Glencore (GLEN) 352.00p -1.68%
Rolls-Royce Holdings (RR.) 870.00p -1.42%
Paddy Power Betfair (PPB) 8,675.00p -1.31%
Antofagasta (ANTO) 933.00p -1.27%
Lloyds Banking Group (LLOY) 64.83p -1.01%
Barratt Developments (BDEV) 595.00p -1.00%
BHP Billiton (BLT) 1,379.50p -0.93% FTSE 250 - Risers Ocado Group (OCDO) 309.60p 20.84%
Cranswick (CWK) 3,276.00p 8.58%
Cineworld Group (CINE) 695.00p 6.11%
IP Group (IPO) 148.00p 5.92%
Genus (GNS) 2,326.00p 5.20%
SIG (SHI) 172.40p 4.80%
Ultra Electronics Holdings (ULE) 1,276.00p 4.42%
Fisher (James) & Sons (FSJ) 1,629.00p 4.02%
RPC Group (RPC) 964.50p 3.82%
FirstGroup (FGP) 106.90p 3.70% FTSE 250 - Fallers Pets at Home Group (PETS) 160.60p -10.63%
Sophos Group (SOPH) 607.00p -6.04%
TalkTalk Telecom Group (TALK) 142.10p -5.96%
Dignity (DTY) 1,746.00p -5.93%
Kaz Minerals (KAZ) 765.00p -4.55%
TBC Bank Group (TBCG) 1,535.00p -3.59%
Vedanta Resources (VED) 730.50p -3.24%
Hansteen Holdings (HSTN) 138.00p -3.23%
UDG Healthcare Public Limited Company (UDG) 838.50p -3.02% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks track record gains on Wall Street Stocks on the Continent pushed higher, tracking fresh record highs on Wall Street after US Federal Reserve chair nominee Jerome Powell told a panel of Senators there were not yet signs of economic 'overheating' in US wage data. At the closing bell, the benchmark Stoxx 600 was up by 0.56% or 2.15 points to 387.02, alongside a gain of 0.46% or 59.33 points to 13,059.53 for the German Dax and a 0.57% or 30.39 rise on the Cac-40 to 5,390.48. In parallel, euro/dollar was trading down by 0.22% to 1.1875, as the US dollar gained in the wake of Powell's remarks at the Senate hearing. Consumers retrench in Catalonia, spiking national retail sales data On the economic front, investors were digesting mixed readings on the consumer in the euro area's second and fourth largest economies, with a sharp drop in retail sales figures in the latter reflecting the worsening political climate in Catalonia. Spanish retail sales dipped by 0.1% year-on-year in October, official data showed, after falling by 1.1% on the month. That reading was far less than the 2.3% on the year rise that economists had anticipated. Retail sales in Catalonia shrank by an outsized 3.9% year-on-year, the worst reading from all the main Spanish regions for that month aside from the North African city of Melilla. French consumer confidence on the other hand was boosted in November by households' improved outlook for their future financial situation and standard of living, INSEE reported. Thus, the French statistics office's headline consumer confidence gauge rose from a reading of 100.0 for October to 102.0 in November (consensus: 101.0). Over in Germany, GfK reported that its consumer climate gauge for the Eurozone's largest economy was unchanged at a reading of 10.7 for December. Meanwhile, the European Central Bank reported that a slowdown in the rate of expansion of the money supply in the Eurozone from a year-on-year pace of 5.2% for September to 5.0% in October (consensus: 5.1%). Credit granted to the private sector on the other hand picked up from a 2.8% clip to 2.9%. Later in the session, markets participants would be tuning into US Fed chair candidate Jerome Powell's testimony before the Senate banking committee. Repsol stock gained as S&P upgraded its rating on the oil exploration outfit's long-term debt to BBB. In parallel, Siemens Gamesa powered to the top of the leaderboard in Madrid with share bouncing nearly 10% two new turbine models. |
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| | US Market Report | | US open: Stocks hit new highs as Powell testifies Wall Street's main stock market indices are all setting fresh record highs with traders pushing financials higher as traders listened in on the White House's choice for new Fed chair's testimony before the Senate. Ahead of that, as of 1646 the Dow Jones Industrials was ahead by 0.54% or 126.78 points to 23,707.52, alongside a 12.94 point advance on the S&P 500 to 2,614.30 and a 0.25% or 17.43 point rise in the Nasdaq Composite to 6,896.66. From a sector standpoint, the best areas of the stockmarket were: Recreational products (5.09%), Tires (2.72%), Media agencies (1.68%) and Banks (1.67%). In his testimony before the US Senate's banking committee, Jerome Powell said there were not yet signs of overheating in the wage data. Later on, he would add that some, but not all, labour market indicators were at full-employment. At another moment during the hearings, he also told the committee that he believed bank sector regulations were already tough enough. "'Turnaround Tuesday' has seen the FTSE 100 and European markets move higher once again, while in the US the big three have all scored new record highs. "The second half of November is, once again, proving to be a boon for stocks, while those with an eye on the coming month will note with satisfaction that the average December gain since 1976 for the S&P 500 is around 1.8%," said Chris Beauchamp, chief market analyst at IG. Tuesday's batch of economic data releases was mixed. Significantly, the Census Bureau revealed a 6.5% jump in the country's foreign trade on goods to reach $68.3bn (consensus: -$65.3bn), as export growth slipped but demand for imports ramped up. That saw economists at Barclays Research mark down their tracking estimate for third quarter GDP growth from 2.8% to 2.3%. Later on, the Conference Board reported that its consumer confidence gauge climbed from 126.2 points for October to 129.5 in November (consensus: 123.5). House price data for September on the other hand came in a tad shy of expectations, with the FHFA's house price index notching up a rise of 0.3% month-on-month (consensus: 0.5%). On the corporate side of things, stock in Viking Therapeutics gave back initial gains even after disclosing positive results from a mid-stage trial for a hip fracture treatment. Retailers were still in focus on the heels of a report from Adobe Systems pegging online sales on Cyber Monday at $6.59bn, for a 16.8% increase on the year-ago period and the most ever. In another sector, chicken wings, Bloomberg reported that private equity outfit Roark Capital had tabled an improved bid for Buffalo Wild Wings worth $2.4bn or $157 a share, which was up from $150 previously. Meanwhile, shares of Rockwell Automation was higher even as Emerson having withdrawn its unsolicited bid. As an aside, according to another Bloomberg report, Japan's Softbank had offered to buy a stake of at least 14% in Uber at a valuation of $48bn - for a 30% discount on its most recent valuation - and to invest an additional $1bn at a valuation of $69bn, Bloomberg reported. |
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| | Broker Tips | | Broker tips: Mothercare, Ophir Energy, Informa Analysts at Canaccord cut their 2018 pre-tax profit forecast for Mothercare by 43% on Friday to £12.0m, reassessing their estimate for losses from its UK business from £500,000 to £7.8m. In parallel, Canaccord dropped Mothercare's target from 103p to 47p and reiterated its 'sell' rating on the retailer. To take note of, the Canadian broker's PBT estimate for the firm was also reduced, by 36%. Critically, the analysts adjusted their projections for Mothercare's like-for-like sales, anticipating a 4% drop in the second half of 2018 and flat gross margins. At the company's international unit, Canaccord reduced its full-year EBIT forecast from £36m to £33m driven by weakness in its Saudi business unit, which had accounted for "the bulk of the pressure" on sales and operating profits. "Our DCF-based price target falls from 103p to 47p. High operational gearing and balance sheet risk makes this no place to be in a difficult consumer environment. Maintain Sell," the broker said.
Credit Suisse believes the market has become too pessimistic on Ophir Energy's ability to reach a financing deal with its potential Chinese investors in order to progress on Fortuna.
With a delay in Ophir's first-investment-decision already priced-in and following 10% underperformance in the shares quarter-to-date, Credit Suisse said it now saw an "attractive" risk-reward trade-off in the shares; hence its decision to upgrade its recommendation for the same from 'neutral' to 'outperform'. According to the Swiss broker's analysts, market pricing was currently implying only a 50% chance of success. "With an offtake agreement already in place, securing project financing may help to further de-risk the project to 90% we carry in our NAV," Credit Suisse added. Furthermore, the broker hailed the company's decision to search for alternate project financing options in parallel to its talks with those Chinese investors. Ophir was set to update the market in December and was aiming to wrap-up the necessary talks on project financing by mid-month with a view to taking FID in the first quarter of 2018. Nonetheless, missing that schedule was a near-term risk which might potentially push-out FID and negatively impact management's credibility, the broker said. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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