| | | | | | | The Top 10 Stocks for 2018 What does the year hold for these 10 blue chips? A look at some of the key themes in the coming 12-months, the key numbers from 2017, FTSE 100 companies that reached record highs… and those that fell to all-time lows, and our Top Stock Picks for 2018. Losses can exceed deposits. Get your copy. | | |
| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Punchy pound knocks FTSE down again London stocks lost out on their earlier modest gains by the close on Thursday as the pound remained firm and UK corporate and economic news was mixed. The FTSE 100 fell 0.4% to 7,615.84, it's worst finish since before Christmas as the pound gained 0.2% versus the dollar to 1.4268 but fell 0.4% on the euro 1.1427. Sterling not only consolidating but hitting a new 19-month high saw another step lower for London's blue chip companies that have major exposure to the dollar, as on the previous session. With around two thirds of London's benchmark index making most of their earnings in dollars, they have made enjoyed the many months of the pound's post-referendum slump but have seen their shares get some payback this week. "The FTSE 100 is one of the most sensitive of all large stock markets to domestic currency effects, as was seen in the rapid recovery following the panic selling in June 2016 on the EU referendum outcome, and the rise in the Pound is becoming an ever greater headwind to further gains for stocks," said David Cheetham, analyst at XTB. Among the dollar-heavy fallers were cigarette makers British American Tobacco and Imperial Brands, Rolls-Royce and IAG. The stronger pound is good news for retailers from a buying perspective, so Primark owner AB Foods, Marks & Spencer and Kingfisher were all among the risers. UK data points on Thursday were no help to general sentiment and indicated that sterling's strength was down to dollar weakness. Mortgage approval numbers dropped off more than expected last month, with approvals by the main high street banks falling to their lowest level since January 2015, according to UK Finance. Meanwhile, a survey from the Confederation of British Industry showed UK retail sales rose in line with expectations in January. The CBI's retail sales balance fell to +12 from +20 in December. But the real focus point for the day will be the ECB's interest rate decision at 1245 GMT, followed by President Mario Draghi's press conference at 1330 GMT. No changes are expected, so investors will be paying close attention to Draghi's comments. Elsewhere on the UK corporate front, Guinness and Scotch whisky maker Diageo rallied as it served up half-year sales growth and operating profit growth both ahead of market expectations despite a number of market challenges and higher marketing investment. The FTSE 100 group toasted the gin drinkers of Europe, and Britain in particular, where Tanqueray was one of the best performing brands of the period. Smith & Nephew was riding high after an upgrade to 'overweight' at JPMorgan Cazenove on the back of better tax and forex expectations, while Next was up after RBC Capital Markets lifted the stock to 'outperform'. Elsewhere, amid an ongoing takeover bid from 21st Century Fox, Sky advanced as it posted a 5% increase in like-for-like revenue for the first half. Kier Group was the big winner on the day, jumping 15% after saying it had traded in line with expectations in the six months to the end of December, with joint-venture contracts taken on from collapsed Carillion both performing fine. Close Brothers surged 8% after it reported a rise in its loan book and said it remained well placed for the full 2018 financial year, as it announced the departure of its finance director. Dechra Pharmaceuticals gained 7% as the company announced the acquisition of Netherlands-based AST Farma and Le Vet for €340m. Garfunkel's and Frankie & Benny's owner Restaurant Group reversed earlier losses even as it reported a drop in full-year sales amid a challenging environment, while pub group Greene King frothed higher after initial losses from its report that like-for-like sales in the 37 weeks to 14 January fell 1.4%. On the downside, mining giant Anglo American slipped as it reported a 5% jump in 2017 output, while Countryside Properties ticked lower after saying it had a "strong" first quarter and is trading in line with expectations for the full year, as it reported a 47% jump in total completions. Renishaw tumbled as investors booked profits after it posted a 73% increase in first-half profits and wealth manager St James's Place turned lower even as it said full-year net inflows rose 40% to £9.5bn as funds under management increased 20% to £90.7bn. In broker note action, Grainger also rose after an upgrade to 'overweight' at JPM, while Bunzl was boosted by an upgrade to 'buy' at Goldman Sachs. Sage was down after analysts at Deutsche Bank said the software group would find it challenging to meet its full year targets. |
| | Share Tips for 2018 | | The Share Centre’s investment research analyst Ian Forrest, comments on five equities, an investment trust as well as an ETF that our expert research team think could flourish in 2018. Read more. Capital at risk. |
| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Most markets down as ECB stands pat on policy European shares finished primarily in the red on Thursday, as US president Donald Trump stormed off Air Force One and into the Davos talkfest, with the ECB making no changes to its policy after its two-day meeting. The pan-European Stoxx 600 lost 0.5% to 400.79, while Germany's DAX fell 0.87% to 13,298.36 and the CAC 40 in Paris slipped 0.25% to 5,481.21. In London, the FTSE 100 was off 0.36% at 7,615.84 and the more domestic FTSE 250 lost just 0.08% to 20,521.74, while on the upside, Spain's IBEX 35 managed to add 0.31% to settle at 10,595.30. Trump entered the Swiss ski retreat shoulder pads ablaze, as he managed to send tweets about America 'WINNING' in between arguments with journalists. His entourage brought good news for the UK, with Treasury Secretary Steve Mnuchin promising that the UK would be "at the front of the line" for a trade deal with the US after Brexit. The first sit-down between Trump and prime minister Theresa May also occurred during the day - their first since May condemned the president since he retweeted inaccurate propaganda from the racist Britain First group. Over at the European Central Bank, the Governing Council made "no meaningful changes" to its policy statement, according researchers at Daiwa Capital Markets. "So, once again, the policymakers left open the possibility of additional net asset purchases after the current phase ends in September, and also restated that they expect rates to remain at current levels well past the horizon of the net asset purchases," the said. "And to reinforce the point - although in our view it's stating the obvious - Draghi said that he saw 'very few chances at all [sic] that interest rates will be raised this year'." Draghi did acknowledge that economic growth since the middle of last year had been stronger than expected, but he also noted that domestic price pressures remained muted overall and were yet to show signs of a sustained upward trend. In corporate news, international baker Aryzta plunged 20.87% after a major cut to its 2018 core profit forecast. The baker of the Big Mac's top, bottom and bizarre middle buns said European underperformance was forecast to account for 20% of the anticipated shortfall relative to expectations and cited Brexit pressures on its UK business. It added that the weak performance in its second quarter was not expected to reverse for the remainder of 2018. London-based merchant bank Close Brothers finished ahead 8.13%, after it reported a rise in its loan book and said it remained well placed for the full 2018 financial year, as it announced the departure of its finance director. In the an update for the five months to 31 December 2017, the company said its loan book was up 2.6%, while year-on-year it gained 7.3% to £7.1bn, driven by the premium and property finance businesses. |
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| | Cryptocurrencies Report | | Top Cryptocurrencies | # | Name | Market Cap($) | Price(%) | Change | Price Graph(3m) | | 1 |  | Bitcoin (BTC) | 190,675,614,415 | 11,263 | -0.99% |  | | 2 |  | Ethereum (ETH) | 104,140,706,376 | 1,065.9 | +0.26% |  | | 3 |  | Ripple (XRP) | 51,359,193,365 | 1.31 | -3.25% |  | | 4 |  | Bitcoin Cash / BCC (BCH) | 28,022,561,828 | 1,652 | -0.29% |  | |
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| | US Market Report | | US open: Stocks rise as dollar takes a beating from the euro on Draghi comments US stocks advanced in early trade on Thursday as investors sifted through a raft of corporate earnings, with eyes on Davos and forex markets as comments by European Central Bank chief Mario Draghi boosted the euro. At 1525 GMT, the Dow Jones Industrial Average was up 0.4% at 26,367.66, while the S&P and the Nasdaq were 0.2% firmer at 2,841.87 and 7,426.83, respectively. The European Central Bank left interest rates and its forward guidance on policy unaltered earlier, pledging to keep its asset purchases running until inflationary pressures pick up. The ECB made no change in terms of language or guidance, holding back from recent indications that it was preparing to tweak up the pace of policy tightening after the euro's recent surge to a three-year high. The key refinancing rate was left unchanged at 0.00%, as economists expected, as were the deposit facility rate, marginal lending facility rate and asset purchase target at -0.4%, 0.25% and €30bn respectively. The euro continued its move higher against the greenback, pushing past $1.25 after Draghi pointed to growing confidence that inflation will reach its 2% target and as he appeared more relaxed about the currency's recent appreciation than many market participants expected. The greenback also continued to take a kicking from the pound, which rose 0.4% to 1.4303, extending gains from the previous session. With the ECB announcement out of the way, investors will be looking to the World Economic Forum in Davos. Oanda analyst Craig Erlam said: "The World Economic Forum will undoubtedly grab investors' attention, with some of the world's most important politicians and business leaders in attendance and making speeches. Naturally, it's US President Donald Trump's speech on Friday that is most hotly anticipated given growing concerns globally about protectionism, with many other leaders having warned against it already at the event." In corporate news, defence group Northrop Grumman rose after it posted better-than-expected quarterly sales and lifted its dividend while Biogen edged higher after its fourth-quarter revenues and guidance for 2018 surpassed expectations. Kroger gained following reports that it and Chinese e-commerce company Alibaba have had early talks about working together, while 3M was on the front foot as investors welcomed better-than-expected fourth-quarter numbers and an upbeat outlook for this year. On the downside, Southwest Airlines flew lower despite its fourth-quarter profit coming ahead of forecasts, while Union Pacific retreated after its fourth-quarter earnings per share came in just light of expectations. Caterpillar fell back despite the heavy duty equipment maker's quarterly profit beating forecasts again and Newell Brands tumbled as the consumer goods company said it's exploring some strategic options that could cut its customer base by half. Freeport McMoran declined despite a fourth-quarter earnings beat. Figures out earlier from the Labor Department showed the number of Americans filing for unemployment benefits rose last week. US initial jobless claims increased by 17,000 from the previous week's revised average to 233,000 versus economists' expectations for an increase to 240,000 .The previous week's average was revised down by 4,000 to 216,000. Meanwhile, the four-week moving average fell by 3,500 from the previous week's average, which was revised down by 1,000 from by 244,500. Elsewhere, figures from the Commerce Department showed that US new home sales fell in December compared to the previous month. Purchases of newly built single-family homes fell by 9.3% to a seasonally-adjusted annual rate of 625,000, below the 679,000 expected. |
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| | Broker Tips | | Broker tips: Next, Smith and Nephew, Sage Retailer Next got a boost on Thursday as RBC Capital Markets upped its stance on the stock to ’outperform’ from ‘sector perform’ and hiked the price target to 5,500p from 4,800p. The bank said its proprietary entry price point pricing survey suggests Next has become more price competitive, in particular versus the likes of competitors M&S and Debenhams. In addition, RBC reckoned that recent strength in the pound against the dollar could lift Next's gross margin earlier than peers. "Next typically hedges 9-12 months out in advance, shorter than M&S and Debenhams, who hedge 12-18 months out in advance; as such Next should realise its margin benefit a quarter earlier," said RBC, noting that Next sources around 70% of its cost of goods sold in US dollars. "All else being equal, we estimate Next could see a theoretical 130-300 basis points of gross margin tailwind from FX for FY19/20E. We believe some of this margin gain will be offset by higher cotton costs, mix dilution, as well as the need to invest in its product and online propositions, but we now believe Next can sustain its margins rather than seeing a decline." Analysts at JPMorgan Cazenove update the investment firm's forecasts on Smith and Nephew (S&N) on Thursday, upgrading the medical technology group's rating to 'overweight'. JPMorgan moved its target for S&N ahead to 1,411p from its previous 1,369p expectation after the London-based group saw significant tailwinds from currency moves and recent US tax reforms. The analysts noted that while they had expected a boost as a result of the changes to US tax laws back in December, S&N's announcement that its group tax rate would fall to 20-21% from its previous figure of 25% was better than they had initially expected. In regards to the FX upgrade, JPMorgan saw a decent dollar tailwind that led to a 4% upgrade to its revenue forecasts for S&N. As a result of the moves, JPMorgan felt S&N was ahead of its 2019 full-year revenue forecasts by around 2% and about 8% above its earnings per share targets. Sage will find it challenging to meet its full-year targets, reckon analysts at Deutsche Bank, after a weak first quarter and growing competition from the likes of Quickbooks and Xero. DB, which maintained its 'hold' rating and 740p target, said organic revenue growth of 6.3%, with 7% growth in recurring revenue, was due to "sales execution issues" and subscription growth slowed to 26% from 30% the prior year. Management, which blamed the shortfall on a training initiative across the sales force which cost around two weeks of lost productivity, reiterated full-year guidance of "around 8% organic and around 27.5% organic operating margin" but said the first half would be closer to 7%, with flat margins year-on-year, which analysts said left the second half "looking particularly challenging". Estimating the impact of the Intacct and Fairsail acquisitions, along with the US Payments divestment, the analysts add around two percentage points to the top line versus last year's reporting metric, on which Sage managed 5.9%, therefore, organic growth has actually declined by around 1.5pp on an 'apples to apples' basis. With little detail given by management around Sage One, other than to say that the focus remains more toward ARR than subscriptions, the analysts felt this suggested that recent efforts to increase pricing to more reasonable levels are constraining subscription growth/driving churn, in line with the experience in 2H17. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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