| | | | | | | Stocks for your stocking this Christmas As it’s the season for sharing Ian Forrest, investment research analyst at The Share Centre, comments on five companies that ‘yule’ likely see prosper as a result of the festive season. Capital at risk. Read more | | |
| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stocks hit fresh record high The top flight index notched up a fresh record high on Thursday as investors digested the passing of the US tax reform bill and the latest readings on UK consumer confidence and public finances, although trading volumes were much thinner than usual in the run-up to Christmas. The FTSE 100 jumped 1.05% or 78.76 points to 7,603.98. Meanwhile, the pound was flat versus the euro at 1.1263 and off 0.1% against the dollar at 1.3369 David Madden, Market Analyst at CMC Markets UK, said: "The FTSE 100 is the standout performer in Europe as it reached a fresh all-time high. The market has cleared the 7600 mark, for the first time ever. Since consumer goods like Reckitt Benckiser, Diageo and Tesco are some of the biggest risers on the day, the Santa rally is certainly underway. "The FTSE 100's relatively high proportion of commodity stocks is also giving it a boost as BP, Royal Dutch Shell, BHP Billiton and Rio Tinto are all higher on the day." Overnight, the US House of Representatives and the Senate passed a $1.5trn tax reform bill, sending it to President Trump for his signature. The bill, which Trump hailed as a "historic victory for the American people", will see corporate tax cut to 21% from 35%, while income tax rates will be reduced across all seven individual tax brackets. It will give individuals and married couples who fall into the highest income bracket of $500,000 and over the largest tax cut, to 37% from 39.6%. "I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting," Trump said. Closer to home, a survey released on UK consumer confidence fell to a four-year low in December. GfK's consumer confidence index declined to -13 this month from -12 in November, missing expectations for it to remain unchanged and surpassing the post-Brexit lows to fall to its lowest level since December 2013. Investors were also digesting news that UK public finances improved slightly in November as the government reaped the rewards of rising income tax revenue. Public sector net borrowing, excluding state-owned banks, was £8.7bn in November, a 1.9% decline from a year earlier, the Office for National Statistics said. The figure was slightly below the average economist's forecast of £8.9bn. November's result took borrowing since the start of the financial year in April to £48.1bn, down 6.1% from a year earlier and the lowest figure for this point in the year since 2007. It kept the chancellor, Philip Hammond, on track to meet a borrowing target revised down at November's Budget. Revenue from income and capital gains tax rose 6.2% in November from a year earlier and 3.4% for the year to date. Sales tax revenues were 4.1% higher so far this year, tracking a rise in inflation. Corporation tax revenues were flat. In corporate news, infrastructure group Balfour Beatty rallied as it announced the sale of a 12.5% stake in Connect Plus, the company which operates the M25 orbital motorway, for £103m, and lifted its 2017 profit expectations. Holiday Inn owner InterContinental Hotels rose after it commented on the impact of US President Donald Trump's tax reform bill. Based on initial estimates, the Republican tax reforms are expected to reduce IHG's group effective tax rate "by mid to high single digit percentage points" from 1 January 2018. For 2017, IHG's group effective tax rate is still expected to be in the low 30s. Kaz Minerals was on the front foot as it said that the expansion of its Aktogay copper mine has been approved. On the downside, housebuilders were weaker, with Berkeley, Persimmon, Barratt Developments and Taylor Wimpey all down after the Department for Communities and Local Government's proposal to set all ground rents to zero. Retirement housebuilder McCarthy & Stone was sharply lower as it protested about its being lumped in with the rest of the residential sector. Greencoat Renewables fell after agreeing to buy the Dromadda More wind farm from Impax Asset Management for €88.4m funded by a €250m credit facility, while outsourcer Capita retreated despite saying it had won an internet network contract with Transport for London. Home furnishings retailer Dunelm was in the red too after saying it has appointed Nick Wilkinson - a former chief executive of Evans Cycles - as it new CEO. |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks brush-off uncertainty around Catalan elections European stocks finished higher as voting began in regional elections in the Spanish region of Catalonia with investors also reacting to fresh gains on Wall Street after the passing of tax reforms in America. By the closing bell, the Stoxx 600 was 0.60% or 2.32 points ahead to 390.69, while the German Dax was climbing 0.31% or 40.57 points to 13,109.74 and the FTSE Mibtel added 0.59% or 130.60 points to 22,240.25. Somewhat ironically, Spain's Ibex 35 outperformed, adding 0.95% or 96.90 points to 10,304.60. In the background, euro was was relatively steady, edging down 0.1% against the dollar to 1.1862. Looking at the Catalonian regional parliament elections, while some hope these polls could mark the end of what has been a tumultuous political time in Spain, it is unlikely to be so straightforward. "The topic of independence is a very divisive issue in Catalonia and it remains quite evenly split between those wanting it and those not," said analyst Craig Erlam at Oanda. "There's a good chance that this election will produce a hung parliament which will far from resolve the crisis and even a small majority for independence parties will be unlikely to see them get their wishes." David Madden at CMC Markets noted that polls were pointing to a hung parliament, which was keeping the Spanish market in a holding pattern, "but should the pro-independence party gain a majority a sell-off is likely." Elsewhere in Europe, in Germany, Angela Merkel's CDU/CSU bloc and former coalition partners the Social Democratic Party overnight put out a joint statement noting talks about forming a government will begin on 7 January, with the aim of reaching a preliminary agreement by 12 January. It was unclear whether the talks will focus on a grand coalition or a minority led government, although party officials noted "good discussions in an atmosphere of trust." On the US tax cuts, the yield curve steepened as bond investors reacted amid concerns that the $1.5trn tax cuts will lead the Federal Reserve to raise interest rates faster, amid parallel concerns about potential mushrooming of government borrowing that will increase the supply of bonds. Meanwhile, on the economic front, France's INSEE's business climate index edged up by one point in December to reach 112.0 and beat the consensus forecast of 111.0. INSEE said the business climate increased mostly strongly in the construction sector to a level not seen since September 2008, while services reached highs not seen since mid-2011. Later in the day, Eurostat reported that its consumer confidence gauge for the euro area in December climbed by 0.5 points to 0.5 (consensus: 0.2). |
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| | US Market Report | | US open: Stocks edge higher as investors digest data slew US stocks edged tentatively higher in early trade on Thursday as investors digested the latest readings on growth, jobs and manufacturing, although volumes were thinner than usual as we head towards the Christmas break. At 1455 GMT, the Dow Jones Industrial Average was up 0.2% to 24,784.09, while the S&P 500 and the Nasdaq were 0.1% firmer at 2,683.11 and 6,966.18, respectively. On Wednesday, stocks closed little changed overall after the House and the Senate passed a $1.5trn tax reform bill, sending it to President Trump for his signature. The bill, which Trump hailed as a "historic victory for the American people", will see corporate tax cut to 21% from 35%, while income tax rates will be reduced across all seven individual tax brackets. It will give individuals and married couples who fall into the highest income bracket of $500,000 and over the largest tax cut, to 37% from 39.6%. Craig Erlam, senior market analyst at Oanda, said: "With tax reform having been priced in over the course of the year, including a late push in recent weeks as details of the bill became clear and progress through Congress was made, it's evident that it is already priced in. While we're not yet seeing signs of corrections following - in buy the rumour sell the fact fashion - markets may struggle for positive catalysts over the next week or so." Figures released earlier showed third-quarter economic growth in the US was revised down a touch amid weaker consumer spending. The final reading of gross domestic product showed a 3.2% annualised increase, down from a previous estimate of 3.3% growth. Still, it was the fastest pace since the first quarter of 2015 and up from 3.1% growth in the second quarter. Meanwhile, the number of Americans filing for unemployment benefits grew more than expected last week, according to data from the Labor Department. US initial jobless claims rose 20,000 from the previous week's unrevised level to 245,000. Economists had been expecting a smaller increase to 231,000. The four-week moving average came in at 236,000, up 1,250 from the previous week's unrevised average. Elsewhere, manufacturing conditions in the Philadelphia region unexpectedly improved in December. The Philly Fed index for current manufacturing activity in the region rose to 26.2 from 22.7 the month before, beating expectations for a drop to 21.5. Both the current new orders and shipments indexes also improved this month, increasing 8 points and 2 points, respectively. Pantheon Macroeconomics said: "The Philly data - we look more at the weighted sub-indexes rather than the headline sentiment number - undershot relative to the national ISM in November, so we're inclined to see this rebound as mean-reversion rather than a signal of incremental strength in manufacturing. Still, we're happy to see more evidence that the recovery in the sector continues after two years of weakness triggered by the collapse in oil sector capex. The three-month high in new orders is especially welcome. "Overall, we think the data are consistent with little change in the December ISM, following the trivial dip to a still-strong 58.2 in November." In corporate news, tech giant Apple nudged up despite admitting to slowing down older iPhones to prevent unexpected shutdowns. Elsewhere, biotech group Aeterna Zentaris surged after saying late on Wednesday that the US Food and Drug Administration approved one of its products for the diagnosis of adult growth hormone deficiency. Shares in Long Island Iced Tea rocketed after the company said it was rebranding and changing its name to Long Blockchain Corp. Conagra Brands was a little lower despite its quarterly profit and sales beating expectations, while Paychex fell even as its quarterly sales and profit also beat expectations. Chipotle dropped as it emerged that public health officials in Los Angeles are reportedly investigating a possible foodborne illness outbreak at one of its restaurants. |
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| | Broker Tips | | Broker tips: Shire, Tullow Oil, Easyjet Liberum has downgraded Shire to 'hold' from 'buy' and cut the price target to 4,100p from 4,200p, saying the risk/reward is more balanced. The brokerage noted that since upgrading the stock mid-November on valuation grounds, the shares are up 14% in dollar terms despite better-than-expected competitor haemophilia data and a small pipeline failure on Tuesday, when the company announced that clinical trials for a drug to treat Hunter syndrome in children, SHP609, failed to meet their primary and secondary endpoints. Liberum had pencilled in around $70m of risk adjusted peak sales for SHP609. Adjusting for the drug trial failure and FX moves - the impact of a stronger pound - Liberum cut its valuation to 4,100p a share, which now implies just 4.5% upside. "We still believe that, if handled right, the update on the neuroscience strategic review due by year end could be a catalyst for the shares, but with fundamental upside now limited the risk/reward is more balanced." Tullow Oil shares were boosted by an upgrade from Jefferies as analysts hiked their crude oil price forecasts for 2018, though Cairn Energy was downgraded due to its strong performance of late. Brent crude will average $63 a barrel in 2018, Jefferies forecast in a pair of Wednesday notes on oil companies, up from its previous $57 expectations, with the WTI forecast upped to $59 per barrel from $54. Analysts said they are "increasingly confident that the oil market will remain undersupplied through 2018" and that oil inventories will fall to five-year average levels in the third quarter of next year. "The incremental tightness in the market is more a function of robust demand that, while broad-based, is underpinned by accelerating Chinese growth," they wrote, expecting the market to remain tight. As a result of these crude price upgrades, forecasts for net asset values across its international exploration and production sector coverage increased on average 15%. Tullow Oil's successful refinancing without further equity dilution "removes a risk we were concerned about" and the new oil price forecast now suggests $741m free cash flow next year and so lifts Jefferies' target 3% to 180p. Tullow shares were therefore upgraded to 'hold' from 'underperform'. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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