| | | | | | | 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: FTSE falls as US jobs report lifts dollar and bond yields London stocks finished a weak week with more Friday falls, led lower by disappointing reading on the UK construction sector and as a strong US payrolls lifted the dollar and bond yields to send stocks lower, especially miners. The FTSE 100 fell 0.6% to 7,443.43 to lose more than 222 points of 2.9% over the week, extending losses from the second half of January to around an eight-week nadir. Friday's falls came even though the pound slipped further, trading down 0.76% against the dollar to 1.4155 and 0.43% versus the euro at 1.1355. A weaker pound usually helps to prop up the top-flight index, as around 70% of its constituents derive most of their earnings from overseas, while a stronger dollar makes metals more expensive for holders of other currencies. London's metals megaliths Glencore, BP, Anglo American and Antofagasta led the fallers, while rising sovereign bond yields continued to upset demand for equities. The dollar rose after official figures showed earnings for US workers rising faster than expectations, fuelling expectations of interest rate rises to come. Average hourly earnings rose 2.9% year-on-year in January, which was faster than the 2.5% rate in December and ahead of analysts' expectations for 2.6% growth. The US added 200,000 jobs ?" higher than the 180,000 figure pencilled in by economists. "The week looks set to end on a downbeat tone, with the positive surprise in today's US jobs data doing little to help stocks amid further weakness in Treasury prices," said analyst Joshua Mahoney at IG. "With inflation representing a core driver of monetary policy, the jump in US average earnings (2.9% from 2.5%) puts more pressure on the Fed to continue tightening as they move into the Powell era. With the recent rise in Treasury yields having a grounding in the strengthening economic picture, it comes as no surprise that we have seen another leg higher upon the release of today's stronger than expected jobs numbers." Data out earlier showed the UK's construction industry was "teetering on the edge" of contraction last month amid the collapse of Carillion and as Brexit and the surrounding political uncertainty curtailed investment. The IHS Markit/CIPS UK Construction headline PMI for January was 50.2, down from 52.2 in December and marking a four-month low. It was also well below the consensus estimate of 52.0. Residential building activity slipped into decline, while overall, total industry activity barely rose. Pantheon Macroeconomics said the collapse of Carillion, which operates in the commercial and public sectors, could not explain why the PMI fell in January. "Although the PMI remained slightly above the 50-mark that in theory should separate expansion from contraction, all readings below 52 have signalled declining output in practice. Housebuilding was the weakest sub-component; the housing activity index fell below 50 for the first time since August 2016. By contrast, the commercial and civil engineering balances both edged above 50," the economists said. In corporate news, BT shares drooped back towards a five year low as it said third quarter revenues declined 3% to £5.9bn and adjusted earnings were 2% lower to £1.8bn, reflecting investment in mobile devices and customer experience, along with higher business rates and pension costs, partly offset by cost savings. Cobham slumped 6% after saying it has entered a conditional agreement to divest its AvComm and Wireless test and measurement businesses to Viavi Solutions for $455m in cash (around £325m). National Grid ticked down as it said that US tax changes were "significantly positive" for its US customers and economically neutral for the company itself. AstraZeneca climbed out of the red as investors weighed up news of a US legal dispute with Array BioPharma against its full-year results. After a good fourth quarter, total revenue was down 2% last year and core earnings per share down just 1% after the group a year ago warned of a potential fall in the mid-teens. FTSE 250 engineering group Meggitt edged up after receiving a $26m contract to provide thermal management systems to General Dynamics Land Systems for its main battle tank, the M1 Abrams. Provident Financial advanced as it made Malcolm Le May its permanent chief executive, with the banking veteran having last year been appointed executive chairman on temporary basis. Since its trading statement last month, it added that the doorstep lending business has made "further operational progress" and that discussions were continuing with regulators the Vanquis Bank and Moneybarn investigations. Oil industry engineer Wood Group edged up as it said it would book a one-off full year non-cash credit as a result of recent US tax changes, while Vedanta Resources gained a little ground after it said that earnings and revenue in the third quarter rose. Mediclinic was in the black after Barclays reinstated coverage of the stock at 'overweight', and also boosted NMC Health as it rated the stock a new 'overweight'. DS Smith was boosted by an upgrade to 'hold' at Goodbody Stockbrokers, while Mondi was up after an upgrade to 'buy' at the same outfit. This in turn helped to underpin Smurfit Kappa ahead of its results next week. Britvic was upgraded to 'overweight' at JPMorgan, while Capita was upgraded to 'equalweight' at Morgan Stanley and Auto Trader was up after an upgrade from UBS. Royal Mail was downgraded to 'hold' by HSBC. |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets close week in miserable fashion European shares ended the week in a truly miserable fashion, with markets finishing lower for the fifth day in a row as a bigger-than-expected fourth quarter loss at Deutsche Bank hit sentiment. The pan-European Stoxx 600 finished down 1.38% at 388.07, with Germany's DAX off 1.68% at 12,785.16 and the CAC 40 in Paris dropping 1.64% to 5,364.98. In Spain, the IBEX 35 lost 1.81% to 10,211.20, while London's FTSE 100 finished down 0.63% at 7,443.43 and the domestically-focussed FTSE 250 fell 1.11% to 19,962.46. Analysts at Oxford Economics were focussing on the positive data out of the eurozone earlier in the week, calling it "final confirmation" that 2017 was the best year for growth in the single currency area in a decade. "While we are starting to see signs of activity topping out, this is not a reason for concern. 2018 will be another year of strong, broad-based growth in Europe. "ECB watchers continue looking for clues into the governing council's thinking as we move closer to the end of a historic period of monetary stimulus. "January's inflation figures showing headline and core inflation moving in opposite directions means the balance between hawks and doves remains unchanged." Oxford Economics added that meanwhile, ECB communications were suggesting that the bank was becoming "increasingly uncomfortable" with the meteoric ascent of the euro. Deutsche Bank shares lost 6.21% by end-of-play as the company posted its third consecutive annual loss. The lender cited challenging markets, a drop in investment bank revenue and US tax changes. Nokian Tyres was also among the leading fallers, dropping 7.01% after reporting weak Russian sales figures. BT shares were off 3.26% in London as it said third quarter revenues declined 3% to £5.9bn and adjusted earnings were 2% lower to £1.8bn, reflecting investment in mobile devices and customer experience, along with higher business rates and pension costs, partly offset by cost savings. Cobham slumped 6.37% after saying it has entered a conditional agreement to divest its AvComm and Wireless test and measurement businesses to Viavi Solutions Inc. for $455m in cash (around £325m). National Grid slipped 0.78% as it said that US tax changes were "significantly positive" for its US customers and economically neutral for the company itself. AstraZeneca reversed earlier losses to turn into a bright spot, as investors weighed up news of a US legal dispute with Array BioPharma against its full-year results. Those results showed total revenue was down 2% last year and core earnings per share down just 1% after the group warned a year ago warned of a potential fall in the mid-teens. |
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Top of the stocks Number of Deals Bought Number of Deals Sold |
| | Share Tips for 2018 | | The Share Centre’s investment research analyst Ian Forrest, comments on five equities, an investment trust as well as an ETF that our expert research team think could flourish in 2018. Read more. Capital at risk. |
| | Cryptocurrencies Report | | Top Cryptocurrencies | # | Name | Market Cap($) | Price(%) | Change | Price Graph(3m) | | 1 |  | Plus One Coin (PLUS1) | 444,375 | 0.066427 | -16.81% |  | | 2 |  | Bitcoin (BTC) | 145,994,592,127 | 8,624 | -6.36% |  | | 3 |  | Ethereum (ETH) | 87,037,748,507 | 892.1 | -14.15% |  | | 4 |  | Ripple (XRP) | 32,869,906,440 | 0.86189 | -9.86% |  | | 5 |  | Bitcoin Cash / BCC (BCH) | 19,792,151,088 | 1,161.9 | -9.3% |  | |
| | Atlantic Advisory - Share Tips of the Year 2018 | | Download Our Latest Report Here Losses can exceed deposits |
| | US Market Report | | US open: Stocks drop as strong payrolls reinforce rate hike expectations US stocks fell in early trade on Friday as a strong non-farm payrolls report added weight to rate hike expectations. At 1445 GMT, the Dow Jones Industrial Average was down 0.9% to 25,971.13, while the S&P 500 was off 0.7% to 2,802.80 and the Nasdaq was 0.4% lower at 7,351.34. Stocks had been called to open lower already amid rising global bond yields and the downbeat tone in equity markets was only exacerbated after data revealed that US average hourly earnings surged in January as more jobs were added than expected, adding strength to the conviction that interest rates will be hiked three or even four more times this year. There were 200,000 new jobs added in the first month of 2018, the non-farm payrolls reported showed, which was better than the 180,000 forecast and the 160,000 added the month before. December payrolls were revised up to 160,000 from the initial growth indicated of 148,000, while November's growth was revised down to 216,000 from 252,000. Unemployment was left unchanged at 4.1% for January, as expected, but average earnings grew 2.9% year-on-year versus the 2.6% Wall Street estimate and up from the 2.5% a month earlier. Month-on-month earnings were up 0.3%, in line with forecasts and following an upwardly-revised 0.4% gain for the previous month. The dollar spiked against most currencies after the release and by 1445 GMT was trading up 0.7% versus sterling, 0.4% higher against the euro and 0.9% firmer versus the yen. Pantheon Macroeconomics said: "In short, the labour market is tight, getting tighter, and employees are becoming more expensive. The question for the Fed now is whether the plan for 'gradual' tightening will be enough if wage gains accelerate further. If much further/faster rates hikes are to be avoided, with unpleasant consequences for asset prices, we have to see both productivity growth and labour participation rise markedly, and soon. It isn't happening yet. We still look for four hikes this year." Minneapolis Federal Reserve President Neel Kashkari told CNBC that the January jobs report was "one of the first signs" of wage growth. "The most important thing that I saw in a quick review of the jobs data is wage growth," he said. "We've been waiting for wage growth. Everyone's been declaring we're at maximum employment. More Americans have been coming in, which is a really good thing. But there hasn't been much wage growth. This is one of the first signs that we're seeing wage growth finally starting to pick up." In corporate news, Amazon surged after it said late on Thursday that full-year revenue rose 31% to $178bn, while profit rose to $3bn from $2.4bn the year before. Technology giant Apple was on the back foot after its results for the three months to the end of December released late on Thursday fell short of analysts' expectations for iPhone sales. Google parent Alphabet was sharply lower after its quarterly earnings were hit by rising costs. Investors were also wading through numbers from Mattel, Estee Lauder, Merck, Chevron and Exxon Mobil, along with Sprint and Charter Communications. Still to come, the University of Michigan consumer sentiment index is at 1500 GMT. |
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| | Broker Tips | | Broker tips: Royal Mail, Micro Focus, Capita Morgan Stanley upgraded outsourcer Capita to ‘equalweight’ from ‘underweight’ as it slashed the price target to 180p from 460p. "The outlook for estimates remains opaque, with a strategic update expected later in the year. We continue to view Capita as a traditional business process outsourcing provider that is competitively challenged, which justifies a discount to its wider peers. But with the shares now up with events, we move to equalweight." MS noted that Capita has guided to an underlying pre-tax profit of £270-300m and the bank now forecasts £275m. This is around 30% below its and consensus numbers before the company's profit warning, while its 2018 pre-tax profit estimate is down around 40% since January 2017. "Capita is a traditional BPO provider, offering labour arbitrage or to move a customer process into an existing process. The former can be significantly challenged by automation (RPA and cognitive), while the latter should show some benefit." Stockbroker Numis highlighted a buying opportunity at Micro Focus after the shares fell 18% since its results on 8 January. Analyst David Toms at Numis said he understands why the market was disappointed with a slightly weak operating performance at the "heritage" business, "but we think the quantum of move is overdone" even allowing for roughly 4% share price impact from US dollar weakness. "Our decade-long view has been that a key attraction of MCRO is the long-term stickiness and cash generative nature of its products. This is sometimes belied by short-term licence volatility which can drive even greater volatility in the shares and thus an opportunity, such as now, for longer-term investors to make supernormal returns," he said. Unlike some in the market, the analysts said he was confident in management's guidance of revenue falling 2-4% in the twelve months to October 2018. Perceiving that achievability of guidance is a key factor in investor confidence after revenues fell 8% in the six months to last October, he believes that "as the market gains confidence in this, and thus that the model remains effective, the shares will regain their former rating". Analysts at Deutsche Bank praised Royal Mail's ability to reach an agreement with the Communications Workers Union on Thursday and but still sees the shares as overpriced. Deutsche Bank said striking a deal with the unions over pensions, a shorter working week, culture and operational changes were "positive as the RMG needs the unions to be on-side". The GLS arm has been the "bright spot" since IPO both in terms of volumes/revenues and margins, analysts acknowledged. "But overall top-line growth is hard to achieve (group revenues for 9m 2017/18 at 2%) and although we think the deal with the unions is good, the company still faces cost inflation not just in the UK, but also in Continental Europe and the US and therefore needs to find continuous efficiencies," they said. The analysts felt there was "much to do to modernise the business" as mail volumes continued to fall, but forecast a post-operating costs profit of £550m for this year, roughly 6% ahead of Factset consensus of £519m. Deutsche Bank made no change to its 'hold' rating or 359p target, which remains well below Friday's close of 506.40p. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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