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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 gains as Sterling wavers amid Brexit uncertainty Shares reversed earlier losses to finish just a touch higher on Wednesday as the pound remained under pressure on account of the breakdown in Brexit talks, with M&A news providing a welcome distraction. At the closing bell, the FTSE 100 was up 0.28% or 20.53 points to 7,348.03, while the pound was down 0.54% versus the dollar at 1.33713 and off by 0.20% weaker against the euro at 1.1344. CMC Markets analyst David Madden said the drop in stock markets could be down to profit-taking into the year end. "2017 has been a good year for global equities, and it appears that traders are winding down their positions as we approach the end of the year. The FTSE 100 is holding up better than its Continental counterparts due to the weakness in sterling." Brexit was in focus, not unsurprisingly, as David Davis told MPs that the government has not carried out an impact assessment on the UK economy of leaving the EU. "There's no sort of systematic impact assessment," Mr Davis told parliament's Brexit committee, adding that a judgement had been made "on qualitative things, but not a quantitative one". In corporate news, shopping centre owner Hammerson retreated after saying it has agreed to buy FTSE 350 rival Intu Properties in a £3.4bn all-share deal that will create a £21bn portfolio across Europe. Intu surged nearly 20%. Medical technology business Smith & Nephew recovered from early weakness after completing the acquisition of Rotation Medical, which develops novel tissue regeneration technology for shoulder rotator cuff repair, for $125m, with a further $85m due over the next five years contingent on financial performance. GlaxoSmithKline dipped after it released new data from a Phase III clinical study which it said supports the safety and efficacy of Shingrix in preventing shingles when given to adults 18 years and above shortly after undergoing autologous haematopoietic stem cell transplant. Saga shares tumbled after the over-50s specialist warned that profits in the current financial year would grow more slowly than expected and that 2018 profit would be down 5% on this year. Shaftesbury fell as it announced plans for a placing of up to 27.86m new ordinary shares at 952p each, representing around 9.98% of the company and raising gross proceeds of up to £265m to fund a number of acquisitions. Marine engineering services group James Fisher edged up after buying Lancashire-based EDS, which provides a complete range of high voltage engineering services to the renewables industry, for up to £14.6m. Stagecoach rallied after it kept its 2018 earnings forecast unchanged despite reporting a drop in bus revenue and passenger volumes for the first half. EasyJet flew higher after the budget carrier reported an 8.1% jump in passenger numbers in November and announced new domestic German routes. It was also boosted by upgrades from JPMorgan and Investec. Great Portland was up following an upgrade by Credit Suisse, along with Land Securities. Recruiters Hays and Pagegroup were hit by downgrades from Deutsche Bank. |
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| | Market Movers FTSE 100 (UKX) 7,348.03 0.28%
FTSE 250 (MCX) 19,828.94 -0.21%
techMARK (TASX) 3,410.68 -0.12% FTSE 100 - Risers Whitbread (WTB) 3,990.00p 7.55%
British American Tobacco (BATS) 5,028.00p 3.67%
Reckitt Benckiser Group (RB.) 6,551.00p 2.06%
Morrison (Wm) Supermarkets (MRW) 222.80p 1.83%
BAE Systems (BA.) 561.00p 1.81%
Imperial Brands (IMB) 3,086.00p 1.68%
Diageo (DGE) 2,642.00p 1.36%
Kingfisher (KGF) 335.30p 1.33%
NMC Health (NMC) 2,837.00p 1.32%
easyJet (EZJ) 1,444.00p 1.26% FTSE 100 - Fallers Hammerson (HMSO) 501.50p -6.17%
Micro Focus International (MCRO) 2,427.00p -1.86%
Worldpay Group (WPG) 413.60p -1.76%
DCC (DCC) 6,885.00p -1.36%
Shire Plc (SHP) 3,564.50p -1.30%
Croda International (CRDA) 4,271.00p -1.16%
HSBC Holdings (HSBA) 724.90p -0.92%
Legal & General Group (LGEN) 261.70p -0.87%
London Stock Exchange Group (LSE) 3,769.00p -0.84%
Coca-Cola HBC AG (CDI) (CCH) 2,332.00p -0.81% FTSE 250 - Risers Intu Properties (INTU) 226.10p 13.62%
Victrex plc (VCT) 2,532.00p 5.90%
WH Smith (SMWH) 2,161.00p 2.32%
SIG (SHI) 171.30p 2.15%
Greggs (GRG) 1,343.00p 2.13%
Provident Financial (PFG) 807.00p 2.09%
Sirius Minerals (SXX) 24.14p 2.07%
Equiniti Group (EQN) 296.00p 2.03%
Electra Private Equity (ELTA) 961.00p 2.02%
Dixons Carphone (DC.) 164.40p 1.86% FTSE 250 - Fallers Saga (SAGA) 142.50p -21.40%
Brown (N.) Group (BWNG) 259.00p -6.19%
Pagegroup (PAGE) 440.60p -4.80%
Hays (HAS) 175.40p -3.84%
IP Group (IPO) 144.10p -3.82%
Spire Healthcare Group (SPI) 237.00p -3.50%
Petrofac Ltd. (PFC) 422.00p -3.48%
Tullow Oil (TLW) 181.50p -3.25%
Wizz Air Holdings (WIZZ) 3,440.00p -3.23% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks end on mixed note, analysts as well European stocks ended on a mixed note but off their worst levels of the session on the back of a dip in the euro's value as recent buying in the US dollar continues, although City traders were cautious. By the closing bell, the benchmark Stoxx 600 was down by 0.19% or 0.73 points to 386.74, alongside a dip of 0.08% or 10.01 points to 13,048.54 for the German Dax. The Cac-40 also finished lower, retreating by 0.26% or 13.76 points to 5,375.53, although Milan's FTSE Mibtel gained 0.24% or 54.20 points to 22,416.31. In parallel, euro/dollar was down by 0.51% to 1.1807. "The DAX and CAC 40 are in the red as traders are still a bit nervy when it comes to the Continental markets. The German and French equity markets have been subdued for the past couple of weeks. Traders can't seem to make up their mind whether to buy back into the market, or cash in their positions before year-end," said David Madden at CMC Markets UK. On a related note, but on the subject of global markets, Michael Hartnett, head of Global Investment Strategy at Bank of America-Merrill Lynch, said: "Our overall outlook for the year ahead is macro bullish, so much so that we're ultimately market bearish. "Investors are chasing growth and high-yielding assets in a bull market that's been driven and enabled by central bank liquidity. We see an end to this Icarus trade and an aggressive downgrade of risk assets once profits peak, investor positioning becomes excessively enthusiastic and central banks start withdrawing liquidity as they scale back support." Nevertheless, BofA's 2018 target for the Stoxx 600 specifically was 430 points. Commenting on the outlook for European equities, BofA-ML added: "2017 has been unusually benign with the lowest daily price volatility, narrowest price range and sixth smallest drawdown in 30 years. We are in the fourth longest rally with no 10% correction since 1987. Volatility / corrections are more likely in 2018. Potential drivers include QE flows turning negative, higher bond yields and possibly inflation, macro data maxing out, credit market excesses unwinding or China/geopolitics tail risks." Economic data out on Tuesday revealed that the euro area's service sector continued to be in rude health, with IHS Markit's purchasing managers' index for November printing at 56.2, up from a reading of 55.0 in October, which was in-line with a preliminary estimate. However, according to Eurostat Eurozone retail sales volumes plummeted by 1.1% month-on-month in October (consensus: -0.7%). Spanish industrial production for October on the other hand surprised to the upside, with figures from the country's national statistics office, INE, showing growth of 0.6% versus September (consensus: 0.4%) and of 4.1% in comparison to the year-earlier level. Later in the day, at 1330 GMT the US Department of Commerce was set to release its foreign trade numbers for the month of October, followed by the ISM Institute's service sector purchasing managers' index for November at 1500 GMT. On the corporate front, Thyssenkrupp chairman Ulrich Lehner rejected calls from some investors for a break-up of the group, Handelsblatt reported. In France, Carrefour and FNAC Darty unveiled a purchasing alliance for white goods and consumer electronics. Elsewhere, Natixis reportedly said it was aiming to boost Asia's share of its corporate and investment banking sales to over 15% in the new few years. |
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Top of the stocks Number of Deals Bought Number of Deals Sold |
| | US Market Report | | US open: Stocks little changed amid weak data Wall Street is trading on a mixed note as traders digest weaker-than-expected readings on service sector activity and foreign trade while scanning the headlines for news regarding the US tax reform proposals which were making their way through Congress. As of 1514 GMT, the Dow Jones Industrial Average was slipping 0.07% or 9.13 points to 24,280.65, alongside a gain of 0.07% or 1.83 points to 2,641.40 for the S&P 500, while the Nasdaq Composite was higher by 0.46% or 30.96 points at 6,806.68. Meanwhile, the US dollar spot index was edging up by 0.10% to 93.28, alongside an unchanged yield on the benchmark 10-year US Treasury note of 2.38%. On Monday, the Dow notched up a record close as investors cheered the passing of the US tax reform bill, but the rest of the market closed in the red, with technology stocks under the cosh. Jasper Lawler, head of research at London Capital Group, said: "Technology has been the most consensus, as well as the one of the best-performing trades of 2017. That combination is making investors nervous going into year-end and they are taking profits. After briefly reaching a three-day high on Monday, the tech-heavy Nasdaq 100 slammed back down to finish -1.17% and near its lows. "The idea that tech could be in for a bigger correction does have more merit with year-end repositioning so in the short-term, a clear break below 6,250 in the Nasdaq 100 could see the index fall to 6,100 then 6,000." Craig Erlam, senior market analyst at Oanda, said: "The passage of tax reform through Congress will likely be the key focus for US investors between now and year-end, with a rate hike this month almost entirely priced in. While these discussions take place though there is plenty of data to keep an eye on including of course this Friday's jobs report." In economic news, the ISM's non-manufacturing purchasing managers' index for November slipped from a reading of 60.1 for October to 57.4 in November (consensus: 59.0). The latest foreign trade numbers from Commerce weren't much better, with the US's shortfall on foreign trade widening from -$44.9bn in September to -$48.7bn for October (consensus: -$47.5bn), amid broad-based weakness in exports, according to analysts. Back in the equity space and from a sector standpoint, the best performing areas of the market were: Industrial suppliers (3.61%), Railroads (3.01%), Delivery services (2.94%), Apparel retailers (2.56%) and Industrial transportation (2.54%). More specifically, shares of payments company Mastercard were higher following the approval of a new $4bn share buyback programme and a dividend hike, while car parts seller AutoZone rallied after better-than-expected earnings. Regal Entertainment racked up strong gains after agreeing to be bought by UK cinema chain Cineworld for $3.6bn. Shares in Revance Therapeutics were also rocketing after disclosing positive results for its wrinkle-relaxing injection in two late-stage clinical trials. Amazon.com was also in focus after launching its first full offering in Australia. |
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| | Broker Tips | | Broker tips: IMI, Bodycote, IQE, Easyjet Deutsche Bank upgraded its stance on IMI on Monday and downgraded Bodycote as it took a look at the European capital goods sector. The bank expects sector growth to peak around the first quarter of 2018 as Chinese economic data show signs of weakening and comps get tougher for short-cycle businesses. "Given we already need to look beyond 2018 for valuation support, we expect later cycle companies with exposure to process/hybrid industries (international O&G, petrochem, copper mining, food & beverage, etc) to perform better," it said. Deutsche Bank upgraded its stance on IMI to 'buy' from 'hold' and lifted its price target to 1,475p from 1,285. The bank said it estimates around 40% of IMI is exposed to late cycle markets, predominantly at Critical, with this division bottoming in 2017 and offering scope for recovery surprise across margin and revenue as it rebounds over the next 18-24 months. In, addition, it pointed to an undemanding valuation versus sector, with 12-month forward price-to-earnings seeing no sector relative re-rating. It also said that M&A remains firmly on the agenda, which will supplement organic growth. It downgraded Bodycote to 'hold' from 'buy' but left the price target unchanged at 990p. Trading on 24 times' their estimates for its earnings per share in 2020, stock in IQE was on a 'premium' valuation but it did not look stretched, analysts at Barclays said. In particular, the sole supplier of epitaxial wafers to Apple was set to see "substantial" near-term growth in the market for 3D sensors, the analysts said. Reflecting that, the stock had run-up by 359% year-to-date. Even so, given their estimates for a compound annual rate of growth in EPS of nearly 40%, Barclays sounded a bullish note, initiating coverage at 'overweight' and setting a target of 210p. Analysts at Morgan Stanley hiked their target on Shares of Easyjet on the back of improved estimates for the airline's revenues per seat and higher projections for the cable exchange rate together with the impact from 'rolling forward' their valuation at improved multiples. In particular, Easyjet's RPS were now seen growing by 2% in fiscal years 2018 and 2019 while the pound was seen trading at an average level of 1.33 against the US dollar, up from 1.31 previously. Hence, the broker's estimates for the company's profits before tax in fiscal years 2019-2020 received a boost of between 2% to 5%. Morgan Stanley added: "With encouraging revenue trends as a result of capacity leaving the market, and solid ancillary growth, we roll forward our valuation from FY18 to FY19 and update our EV/EBITDAR multiple from 8xto 9x, now at the mid-point of its 10 year historic trading range." | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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