| | | | | | | 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. | | |
| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stocks rise ahead of FOMC minutes, Next jumps London stocks edged higher on Wednesday, as a disappointing reading on the UK construction sector was offset by a solid performance for retailers after Next lifted its guidance and ahead of the release of the minutes of the US central bank's last policy meeting. The FTSE 100 finished 0.30% or 23.01 points higher at 7,671.11, while the pound was off by 0.24% versus the euro at 1.1242 and 0.54% lower against the greenback at 1.3523. UK construction firms reported a worse December than the market had been expecting and expectations for the year ahead were the worst for four and a half years. Growth in the last month of the year came as housebuilders slightly slowed their pace of growth and commercial building continued to decline. The Markit/CIPS construction purchasing managers' index fell to 52.2 in December from 53.1 in November, below the consensus forecast of 53.0. A PMI reading above 50 indicates growth in output. While residential building expanded for the sixteenth consecutive month, responses to the survey indicated a slight moderation from the preceding month. Commercial construction extended the slump seen since July, while civil construction was reported to have stabilised after a most of the second half of the year negative territory. Economists at Pantheon Macroeconomics said the construction sector ended 2017 on a weak note, probably depressed by the heavy snowfall in December, with the average level of the PMI in the fourth quarter of 52.0 suggesting construction output held steady, following two consecutive quarter-on-quarter declines. With the UK construction figures out of the way, investors will turn their attention to the minutes from the Federal Open Market Committee's 12-13 December meeting as they look for clues on the central bank's interest rate path following three hikes last year. Rabobank said its Fed watcher Philip Marey continues to argue that core inflation will continue to undershoot the Fed's 2% target.# "Therefore, he expects only two hikes this year - one in June and another in December - instead of the three hikes that are implied by the dot plot." In corporate news, Next provided some cheer, with its shares racking up impressive gains as the retailer nudged up its full year profit target thanks to a better online sales performance in the run up to Christmas, and said it expects increased sales but slightly lower profits in the coming year. Fellow retailers Marks & Spencer rose along with Primark owner Associated British Foods, N Brown, Supergroup, Sports Direct and JD Sports. Electrocomponents gained after saying it expects changes to US tax law to trigger a one-off credit this year followed by a reduced overall tax rate in the longer run. Budget airline Ryanair flew higher as it reported a 3% jump in traffic for December and said it has applied for a UK air operator licence so it can continue to fly from Britain in the event of a hard Brexit. CLS Holdings was up as it unconditionally exchanged contracts to sell three properties in Peterborough in the UK and Hamburg in Germany for £12.4m. FTSE 250 residential landlord Grainger was steady after it exchanged contracts with Abode Hallam Limited and agreed to forward fund and acquire a private rented sector (PRS), build to rent development, Eccy Village, in Sheffield, for around £32m. Indivior got a fairly flat reaction after saying it is joining up with Switzerland's Addex Pharma to support the development of treatments for drug addiction that target neurotramsitter systems. Wizz Air was in the red as it posted a 20% jump in passenger numbers in December, while Babcock International slipped despite signing a five-year agreement worth about £115m to maintain frigates for the Australian navy. Carillion slumped as it emerged the outsourcer and construction group is being investigated by the Financial Conduct Authority over the "timeliness and content" of updates made by the company in the run up to its profit warning on 10 July last year. In broker note action, IG Group was up after Barclays lifted its price target on the stock and reiterated its 'overweight' stance, while Experian and Bunzl were boosted by upgrades to 'outperform' at Credit Suisse. Serco, Hays and Pagegroup were all lower following downgrades by Credit Suisse. |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: German jobless data boosts stocks European stocks held onto early gains on Wednesday, boosted by strength in the retail sector and good news regarding German unemployment, as investors looked to the latest Federal Reserve minutes for further insight into the US central bank's thinking. The benchmark Stoxx 600 index ended the session 0.48% higher to 390.22, while Germany's DAX added 0.83% to close at 12,978.21 and France's CAC 40 advanced 0.81% to 5,331.28. Meanwhile, the euro was down 0.24% versus the US dollar at 1.2028. The latest figures from Germany's Federal Labour Agency, helped to lift sentiment, showing that seasonally-adjusted joblessness fell by 29,000 to 2.442m in December, which was more than twice the 14,000 decline economists had predicted. Pantheon Macroeconomics said: "The German labour market remains red hot. The month-to-month drop in unemployment claims was the largest since 2011, and leading indicators point to further declines in coming months, which should drive headline unemployment to new record lows." Later in the day, the key release will be the minutes of the 12-13 December Federal Open Market Committee meeting at 1900 GMT. IG analyst Joshua Mahony said: 2Current market expectations point towards a 50 basis point rise for 2018, with a 75% chance of a March rate hike. Given the recent rise in commodity prices, the 2017 dollar decline, and successful passing of tax reforms, there is likely to be an increased focus on the prospect of resurgent inflation in the US. Markets will be keeping a close eye on the likely response from the FOMC should such a rise occur." In corporate news, there were reports that Deutsche Telekom's T-Mobile unit and US rival Sprint were working to salvage their merger. Retailers were doing well after luxury retailer Hugo Boss lifted its guidance for sales in 2017 on the heels of a solid third quarter performance, while London-listed Next nudged up its full year profit target thanks to a better online sales performance in the run up to Christmas, and said it expects increased sales but lower profits in the coming year. Elsewhere, Fiat Chrysler posted a 3.17% drop in auto sales in Italy for December, while Dutch telecoms company Altice NV rose after saying its Altice-SFR unit has signed a broadcast distribution deal with M6 Group. |
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| | US Market Report | | US open: Stocks in the black after strong data; Fed minutes eyed US stocks rose in early trade on Wednesday, underpinned by solid data on manufacturing and construction spending, as investors eyed the latest minutes from the Federal Reserve. At 1600 GMT, the Dow Jones Industrial Average was up 0.2% to 24,872.83, the S&P 500 was 0.4% higher at 2,706.16 and the Nasdaq was 0.6% firmer at 7,060.01, pushing further into record territory. Data released earlier by the Institute for Supply Management showed growth in the US economy's manufacturing sector unexpectedly improved in December. The ISM's headline manufacturing index rose to 59.7 from 58.2 in November, beating expectations for a drop to 58.1. Timothy R. Fiore, chair of the ISM, said: "This indicates growth in manufacturing for the 16th consecutive month, led by strong expansion in new orders and production with hiring growing at a slower rate and supplier deliveries continuing to struggle." A reading above 50 indicates expansion, while a reading below signals contraction. The new orders index increased to 69.4 in December from 64 the month before, marking the highest reading since January 2004, when the index came in at 70.6. Meanwhile, the employment index ticked down to 57 from 59.7 in November and the production index printed at 65.8 from 63.9 a month earlier. There was more good news on the data front as figures from the Commerce Department revealed that construction spending rose 0.8% to an all-time high of $1.26trn in November, beating expectations for a 0.5% increase. Spreadex analyst Connor Campbell said: "The ISM reading joins yesterday's Markit PMI in suggesting the US manufacturing sector had a very strong end to 2017. This news helped lift a previously flagging dollar, with the greenback taking 0.7% back off the pound and 0.4% off the euro, allowing the currency to ease, if in no way erase, its recent woes." Still to come, minutes from the Federal Open Market Committee's 12-13 December meeting are due at 1900 GMT. After the Fed hiked rates last month by 0.25% - the third hike of 2017 - market participants will be looking to the minutes for more clues as to what the US central bank is thinking in terms of interest rates for this year. Rabobank said its Fed watcher Philip Marey continues to argue that core inflation will continue to undershoot the Fed's 2% target. "Therefore, he expects only two hikes this year - one in June and another in December - instead of the three hikes that are implied by the dot plot." In corporate news, Scana surged as it agreed to an all-stock merger with Dominion Energy that values the group at $7.9bn. Elsewhere, MoneyGram International suffered heavy losses after it and Ant Financial Services said they have ended their merger agreement. |
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| | Broker Tips | | Broker tips: GVC Holdings, Asos, Wizz Air GVC Holdings' takeover of Ladbrokes Coral should bring greater scale and geographic diversity as well as boosting earnings and cash growth, said analysts at Barclays as they initiated coverage on the online gaming group on Tuesday. These three reasons make the deal attractive and, on a proforma post-deal basis, GVC's shares look "cheap" on a price/earnings ratio that would fall from 9-11 in 2020 to around 8-9.5 in 2021 "when all cost synergies should have been delivered". However, should the deal not complete, as it stands GVC looks "relatively expensive" and the share would likely tumble. On Barclays confidence in the deal, which was announced late last month, shares in the owner of Foxy Bingo and Partypoker were given an initial 'overweight' rating and a 1,066p target. The risks of a large merger are tempered as both sides of the management team have strong track records of integrating complicated businesses and of delivering even better cost synergies than expected. Deutsche Bank upgraded online fashion retailer ASOS to 'buy' from 'hold' and hiked the price target to 7,400p from 5,800p. The bank said ASOS is well placed to continue to benefit from the online channel shift, underpinned by a high pace of active customer number additions and expansion into the activewear and beauty categories. "In particular in 2018 we expect strong growth in Europe, as the company delivers the full service and cost benefits of its localised logistics and digital shopfronts. Meanwhile, customer economics remain very strong with payback on acquisition costs more than twice as fast as at Zalando." Deutsche Bank outlined five reasons why it is positive on ASOS. It pointed out that the channel shift online continues and said ASOS should continue to gain channel share. In addition, DB said that Face & Body and Activewear categories increase the total addressable market. It also said that international expansion, especially in Europe, has strong prospects, and the customer economics remain very strong. |
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