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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: Forties failure lifts FTSE as inflation spikes London stocks extended their gains on Tuesday as supply disruptions boosted the energy sector and investors mulled higher than expected UK inflation figures. The FTSE 100 added almost 47 point or 0.6% to finish at 7,500.41, while the pound was up 0.2% against the euro to 1.1358 but down 0.1% on the dollar at 1.3326, following a brief spike higher on the back of the latest inflation figures. Data released earlier by the Office for National Statistics showed UK consumer price inflation has risen so high that Bank of England governor Mark Carney, who will gather his Monetary Policy Committee minions later in the week to discuss interest rates, will have to write a letter to the Chancellor in the New Year to explain why and what he intends to do about it. Carney previously stated that he believed that inflation had peaked back in October and November, however this figure shows an increase in prices as November's consumer price index was 3.1% higher year on year, the highest rate since March 2012 and up from the 3% at which it has been for the previous two months. The consensus forecast had been for it to remain at 3%. Annual CPI growth was lifted by a 0.3% month-on-month increase in November, which was up from the 0.1% rise in October and higher than the 0.2% consensus forecast. Core CPI, which excludes more volatile prices such as for fuel and food, stayed at 2.7%, as economists had predicted. "Importantly it is worthwhile differentiating between the headline and core measures, with the divergence between the two proving that the recent rise has more to do with energy prices than something monetary policy has an influence upon," said analyst Joshua Mahony at broker IG. "Coming amid a UK-wide freeze, the shutdown of the UK forties pipeline, along with an explosion at the main Austrian gas import hub, points towards even more energy driven inflation in December." Mahony said the initial sterling strength in the wake of the rise in inflation was been shortlived, with the pound losing ground with markets largely seeing the BoE rate hike as a 'one and done' scenario. On the corporate front, British Gas owner Centrica was the standout gainer as UK gas prices rose after an explosion at a natural gas facility near Austria's border with Slovakia and as Britain's Forties pipeline - which carries 40% of North Sea oil and gas - has been closed for repair due to a crack and is expected to remain offline for some weeks. Energy stocks BP and Shell gushed higher as oil prices rose due to the closure of the Forties pipeline, with oil services groups Petrofac, Tullow Oil and Cairn Energy also up. Petrofac also was lifted by winning a contract worth around $800m with BP for the at the Khazzan gas development in Oman. Industrial equipment rental firm Ashtead rallied after it posted a 16% rise in half-year pre-tax profits to £493.1m and announced the start of a share buyback programme, of at least £500m and up to £1bn over the next 18 months. Construction group Balfour Beatty was trading up after saying it is "increasingly confident" of improving margins this year as it continues to win new business on better terms, while Elementis was on the front foot after agreeing to sell its Netherland surfactants unit for €39m. Leading the fallers, Sainsburys and Morrisons were in the red following the release of the latest data from Kantar Worldpanel and Nielsen. Sainsburys sales were 2% higher in the past 12 weeks, but the supermarket chain saw its market share drop to 16.3% from 16.5%. Meanwhile, Morrisons till receipts were up 1.4% and its share down two points to 10.6%. Sainsburys was also likely taking a hit from its inclusion in a Goldman Sachs list of 10 Sell Ideas, with Next and William Hill - both weaker - also targeted by analysts. In broker note action, Experian was boosted by an upgrade to 'outperform' at Exane, while Homeserve gained as JPMorgan Cazenove lifted the stock to 'overweight' and Grainger was up on the back of an initiation at 'overweight' by Barclays. Mediclinic and Moneysupermarket were hit by downgrades from Cazenove, while Capital & Counties was weaker as Barclays initiated coverage of the stock at 'underweight'. Pub group Greene King was under the cosh after a downgrade to 'underweight' from JPMorgan, with Marston's following suit. |
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| | Market Movers FTSE 100 (UKX) 7,500.41 0.63%
FTSE 250 (MCX) 20,073.02 0.04%
techMARK (TASX) 3,483.51 0.54% FTSE 100 - Risers Experian (EXPN) 1,604.00p 2.49%
BP (BP.) 511.00p 2.47%
Admiral Group (ADM) 1,899.00p 2.37%
Centrica (CNA) 144.80p 2.33%
Micro Focus International (MCRO) 2,485.00p 2.10%
Ashtead Group (AHT) 2,060.00p 2.03%
Royal Dutch Shell 'A' (RDSA) 2,426.00p 1.70%
Severn Trent (SVT) 2,120.00p 1.68%
Standard Life Aberdeen (SLA) 424.30p 1.65%
Royal Dutch Shell 'B' (RDSB) 2,448.00p 1.47% FTSE 100 - Fallers Morrison (Wm) Supermarkets (MRW) 211.40p -4.52%
Sainsbury (J) (SBRY) 234.60p -4.13%
CRH (CRH) 2,596.00p -1.70%
Fresnillo (FRES) 1,287.00p -1.45%
Ferguson (FERG) 5,265.00p -1.40%
Randgold Resources Ltd. (RRS) 6,745.00p -1.24%
Persimmon (PSN) 2,649.00p -1.23%
Taylor Wimpey (TW.) 201.40p -1.18%
Glencore (GLEN) 347.45p -1.10%
Whitbread (WTB) 3,859.00p -0.75% FTSE 250 - Risers Hikma Pharmaceuticals (HIK) 1,073.00p 4.38%
Petrofac Ltd. (PFC) 451.60p 3.82%
Elementis (ELM) 285.80p 3.21%
Homeserve (HSV) 809.50p 3.12%
Wizz Air Holdings (WIZZ) 3,563.00p 2.80%
Drax Group (DRX) 275.50p 2.49%
Tullow Oil (TLW) 194.90p 2.47%
Intermediate Capital Group (ICP) 1,079.00p 2.47%
Diploma (DPLM) 1,149.00p 2.41%
Pennon Group (PNN) 777.50p 2.10% FTSE 250 - Fallers Polymetal International (POLY) 835.50p -3.69%
Acacia Mining (ACA) 171.21p -3.33%
GVC Holdings (GVC) 929.00p -2.72%
Ladbrokes Coral Group (LCL) 172.80p -2.59%
Wood Group (John) (WG.) 679.00p -2.30%
Ultra Electronics Holdings (ULE) 1,260.00p -2.25%
Saga (SAGA) 126.50p -2.24%
Marston's (MARS) 118.60p -1.98%
Dunelm Group (DNLM) 706.00p -1.94% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Technology and M&A power gains in shares Stocks on the Continent gained ground on Tuesday paced by Technology issues, even as traders waited on the US central bank's policy announcement the next day. Against that backdrop, by the closing bell the benchmark Stoxx 600 was higher by 0.66% or 2.58 points to 391.63, alongside a gain of 0.46% or 59.88 points to 13,183.53 on the German Dax and an advance of 0.75% or 40.36 points to 5,427.19 for the Cac-40. Technology was the strongest segment of the market, with the Stoxx 600 Technology gauge up by 1.61% to 444.97, bolstered by shares of Dutch cyber-security specialist Gemalto after France's Atos tabled an all-cash €4.3bn (£3.84bn) takeover offer, sending the stock's price up by over a third. Tellingly, Atos shares also ended the day sharply higher. Despite Tuesday's gains, the pan-European tech gauge was still trading roughly 5% below the roughly 17-year high it hit in early November. Oil&Gas also performed well, as traders waited on an update on how long the North Sea Forties pipeline would be closed following the discovery of a crack the day before. News regarding the Forties pipeline - which transports roughly 40% of the UK North Sea's oil and gas - sent front month Brent crude oil futures sharply higher, lifting the Stoxx 600 Oil&Gas sector gauge by 1.56% to 317.19. However, a statement late in the session from the International Energy Agency saying it was monitoring the situation sent crude prices lower. Also in the corporate headlines was France's Unibail-Rodamco after announcing it had decided to go Down Under in search of market opportunities, launching a $16bn (£11.94bn) bid for shopping mall owner Westfield. The bid price, which was accepted by the Aussie outfit, equated to a 18% premium. On the economic front, the main data release was the ZEW Institute's economic sentiment index for December, which slipped by 1.3 points to 17.4 points (consensus: 17.8). According to ZEW president Achim Wambach, uncertainty around the creation of a coalition government had had no "significant" impact on financial experts' assessment of the outlook. Nonetheless, according to Wambach, "Financial market experts, however, expect to see negative effects resulting from this with regard to the Brexit negotiations as well as EU reforms." Yet his remarks were directly at odds with the opinion voiced by Derek Halpenny, Bank of Tokyo-Mitsubishi's head of global markets research, who told Bloomberg TV that markets were not pricing in the full positive implications of the prior week's Brexit 'breakthrough'. |
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| | US Market Report | | US open: Boeing, 3M push Dow Industrials to fresh record-high Wall Street's main indices are again heading higher on Tuesday as the Federal Reserve kicks off its two-day rate-setting meeting and several positive updates from corporate heavyweights such as Boeing and 3M. At 1645 GMT, the Dow Jones Industrial Average was ahead by 0.56% or 136.15 points to 24,521.75, alongside a gain of 0.31% or 8.10 points to 2,668.10 on the S&P 500 and a rise of 8.20 points or 0.12% for the Nasdaq Composite. From a sector standpoint, the best gains were to be seen in Fixed Line Telecommunications (1.91%), Telecommunications (1.87%) and Oil Equipment services (1.60%). The KBW index of lenders shares was also continuing to push higher, gaining 0.96% to 107.19. On the economic front, US factory gate prices advanced at a 3.1% clip year-on-year in November (consensus: 3.0%), with the details of the report leading economists at Barclays and Pantheon Macroeconomics to conclude that inflationary pressures were in the pipeline. In parallel, the NFIB reported that its small business confidence gauge jumped back to a Reagan-era high of 107.5 last month, the second best reading in that gauge's 44-year history. In the background, the US dollar spot index was 0.34% higher at 94.19 points, alongside a reversal in West Texas Intermediate crude oil futures which were down by 1.38% to $57.20 a barrel on the NYMEX. Losses for oil were trigerred by a statement from the International Energy Agency saying it was monitoring events around the Forties North Sea pipeline but that there was no reason to act as the market remained well-supplied. Ahead of the FOMC announcement due on Wednesday, analysts at Rabobank said: "A raise in the target range for the federal funds rate to 1.25-1.50%, from 1.00-1.25%, is widely expected. The same is true for a raise in the reinvestment caps of the balance sheet normalisation programme to $20bn from $10bn. Since the third rate hike of the year has been well-telegraphed by the Fed, and the balance sheet is on autopilot, markets are likely to focus on the fresh set of projections, in particular the dot plot. "Do the FOMC participants still expect to hike three times in 2018? Are they still banking on the Phillips curve or are doubts about the inflation outlook setting in? And are they ready to incorporate the expected tax cuts in their projections?" On the corporate front, aerospace group Boeing was sharply higher after saying late on Monday that it was lifting its dividend and announced a new $18bn share buyback. Comcast shares were also active after the company said it no longer plans to make a bid for the entertainment assets of 21st Century Fox, leaving Walt Disney as the sole bidder. Post-it maker 3m was in focus as well after saying it expected 2017 earnings per share and sales growth at the top half of the guidance range. JetBlue Airways stock on the other hand was trading lower despite the carrier having raised its fouth quarter revenue guidance, saying the impact from the hurricanes in the Gulf of Mexico had been less than anticipated. |
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Top of the stocks Number of Deals Bought Number of Deals Sold |
| | Broker Tips | | Broker tips: Lloyds, Barclays, Entertainment One Goldman Sachs reiterated its 'sell' recommendation on shares of Lloyds and Barclays, placing both stocks on its list of 'UK Sell Ideas' for 2018. Analysts at the investment bank pointed to evidence of lower margins on mortgages and intensifying competition on deposits as reflected in the lenders' latest third quarter financials as the main cause of their 'bearishness'. Those pressures would continue in 2018, they said, as rival HSBC increased its share of the UK mortgage market via increased use of the intermediary channel and as the drawing window for the Term Funding Scheme closed shut in February. Making matters worse, the Bank of England's latest set of stress tests showed the lender now had reduced headroom than in 2016 and the 2018 edition of the stress tests would include a roughly 200 basis point D-SIB buffer. As a result, Goldman said: "Investors are therefore increasingly focused on whether the group will be permitted to continue operating in line with its current target capital level (a c.13% CET1 ratio). In our view, upward pressure on capital could in turn impact the group's potential for dividend growth." |
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