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| | London close: Stocks dip as CPI comes in ahead of forecasts |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | London's top-flight index ended the session little changed, even as the pound rallied on a higher than expected reading from the Office for National Statistics on consumer prices for January, increasing expectations that the Bank of England will hike interest rates in the spring. The FTSE 100 dipped 0.13% to finish at 7,168.01, while the pound was up 0.39% against the dollar at 1.3888 and 0.2% lower versus the euro to 1.1235. According to ONS, January's consumer price index was 3.0% higher than a year ago after easing to that level at the end of last year from a peak of 3.1%. This headline rate was in line with the Bank of England’s inflation report last week, but stronger than the consensus forecast of 2.9%. Core CPI, which strips out more volatile prices such as fuel and food, rose 2.7% in January, faster than the 2.6% predicted, up from the 2.5% rise seen in the month before and at its joint-highest level since 2011. However, CPIH, ONS's preferred measure of inflation as it includes owner-occupiers' housing costs, rose by 2.7% for the second month in a row, which was shy of the 2.8% expected by economists. A large downward contribution from fuel prices, which rose by less this year than they did in January 2017, kept headline CPI from returning to 3.1%, though this was offset by a rise in the contribution from prices in the services sector, in particular for recreation and culture. Producer input and output price inflation both ticked down in January. Joshua Mahony, market analyst at IG, said: "While traders were fixated on whether the headline figure would drop back below 3%, the real head turner turned out to be the core CPI reading, which jumped back to 2.7% to negate last month’s 0.2% fall. "With core CPI now back to the joint highest level since 2011, the intense price pressures remain on the BoE to raise rates, with markets factoring in a greater than 50% chance of two or more rate rises in 2018. Unfortunately for Mark Carney, his recent reasoning that inflation could rise over the short term due to energy prices appears to be undermined, with the core reading showing that UK inflation is on the rise irrespective of energy prices." In corporate news, tour operator Tui cruised to new record highs as it got off to a strong start for its financial year with sales and underlying earnings both much improved on last year. Mining giant BHP Billiton was in the black after saying it would book a $1.8bn charge due to cuts in the US corporate tax rate, but that the tax reform will have a positive impact on the group's US attributable profits in the longer term. British Land edged higher as Japanese bank Sumitomo Mitsui signed a 20-year lease on 161,000 square ft at the 100 Liverpool Street redevelopment at Broadgate. Computacenter fell as it posted the results of its tender offer, saying that just under 44.1m ordinary shares were validly tendered, with the strike price determined to be 1,170p. On the broker note front, Smiths Group was on the up as Barclays initiated coverage of the stock at 'overweight', while Dixons Carphone was lifted by an upgrade at Cenkos. Imperial Brands was hit by a downgrade to 'neutral' at Piper Jaffray and Inmarsat took a beating after HSBC cut its price target on the stock to 530p from 570p and said the company is being hurt by recent weakness of the dollar versus the pound and that the dividend is uncertain. Market Movers - FTSE 100 (UKX) 7,168.01 -0.13%
- FTSE 250 (MCX) 19,320.08 -0.31%
- techMARK (TASX) 3,243.83 -0.36%
FTSE 100 - Risers - Just Eat (JE.) 853.20p 3.75%
- WPP (WPP) 1,335.50p 3.57%
- Glencore (GLEN) 375.80p 2.48%
- Evraz (EVR) 360.60p 2.36%
- Standard Life Aberdeen (SLA) 400.90p 2.06%
- BHP Billiton (BLT) 1,531.60p 1.77%
- Anglo American (AAL) 1,670.40p 1.70%
- Rio Tinto (RIO) 3,955.00p 1.53%
- Smurfit Kappa Group (SKG) 2,478.00p 1.47%
- CRH (CRH) 2,458.00p 1.24%
FTSE 100 - Fallers - Severn Trent (SVT) 1,725.50p -3.39%
- United Utilities Group (UU.) 663.60p -3.10%
- Hargreaves Lansdown (HL.) 1,640.50p -2.61%
- Relx plc (REL) 1,455.00p -2.32%
- Imperial Brands (IMB) 2,600.50p -2.29%
- G4S (GFS) 248.80p -2.16%
- BT Group (BT.A) 225.85p -1.97%
- British American Tobacco (BATS) 4,381.50p -1.87%
- Pearson (PSON) 653.60p -1.74%
- National Grid (NG.) 736.80p -1.62%
FTSE 250 - Risers - Polypipe Group (PLP) 402.40p 4.14%
- Fidessa Group (FDSA) 2,505.00p 3.73%
- Cineworld Group (CINE) 229.80p 3.33%
- Brown (N.) Group (BWNG) 205.20p 2.75%
- IWG (IWG) 232.80p 2.56%
- Hochschild Mining (HOC) 220.80p 2.55%
- Vedanta Resources (VED) 731.20p 2.29%
- IG Group Holdings (IGG) 785.00p 2.28%
- Purecircle Limited (DI) (PURE) 428.00p 2.27%
- NewRiver REIT (NRR) 304.00p 2.18%
FTSE 250 - Fallers - Inmarsat (ISAT) 426.10p -5.67%
- Computacenter (CCC) 1,080.00p -5.43%
- Mitie Group (MTO) 150.20p -5.30%
- Capita (CPI) 183.45p -4.03%
- Petrofac Ltd. (PFC) 403.90p -4.02%
- Vectura Group (VEC) 78.10p -4.00%
- Convatec Group (CTEC) 187.40p -3.58%
- BCA Marketplace (BCA) 161.00p -3.13%
- Greencore Group (GNC) 187.00p -2.93%
- Entertainment One Limited (ETO) 289.40p -2.89%
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| | Europe close: Stocks off as Wall Street dips, single currency gains |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | European shares struggled to make headway on Tuesday, despite positive finishes overnight on Wall Street and in Asia as still wary investors kept a wary eye on Wall Street amid moderate gains in the euro. The pan-European Stoxx 600 index retreated, slipping 0.63% to 370.58. All main bourses were also lower across the board, with the Dax down by 0.70% to 12,196.50 and the FTSE Mibtel dropping 1.35% to 22,034.42. Acting as a backdrop, IG analyst Joshua Mahony said an unexpected rise in UK inflation had put further pressure on the Bank of England over interest rates, with the rise in sterling helping to pull the FTSE lower. "European markets are back in familiar negative territory, after yesterday’s rebound in stocks failed to carry through into a second session," he said. "While today’s losses are relatively minimal, it is the precedent that is being set which carries more weight, for given the size of last week’s losses, the bulls would be hoping to see a significantly more forthright and constant upward pressure." In corporate results news, shares in Belgian telecoms operator Telenet fell 7% as the company reported a 2.3% rise in fourth quarter revenues to €644m. Adjusted EBITDA was up 6.9% to €299m. Inmarsat was brought down to earth after HSBC cut its price target on the stock to 530p from 570p and said the company is being hurt by recent weakness of the dollar versus the pound and that the dividend is uncertain. UK government outsourcing contractor Capita was again out of favour, as the shares fell. The company recently issued a profits warning and capital raising. The sector has been hit by the jitters since the spectacular collapse of Carillion. On the positive side, shares in French computer games maker Ubisoft were among the top performers as the company beat sales targets in the last three months of 2017. The company, which makes Assassins Creed, reported a 36.8% year-on-year jump in sales to €725m in its fiscal third quarter, ahead of its target of €700m. European travel group TUI shares soared as the company reported that summer bookings for Turkey were picking up, on the day that Thomas Cook resumed flights to Tunisia. Other travel shares took heart from the news with German carrier Lufthansa and UK budget airline Easyjet both up. |
| | Cryptocurrencies Report | | Top Cryptocurrencies | # | Name | Market Cap($) | Price(%) | Change | Price Graph(3m) | | 1 |  | Bitcoin (BTC) | 148,625,958,000 | 8,730.42 | +11.12% |  | | 2 |  | Ethereum (ETH) | 84,998,910,899 | 860.99 | +10.05% |  | | 3 |  | Ripple (XRP) | 42,720,942,725 | 1.05 | +16.42% |  | | 4 |  | Bitcoin Cash / BCC (BCH) | 21,990,478,770 | 1,279 | +7.27% |  | | 5 |  | Cardano (ADA) | 10,132,713,999 | 0.37586 | +7.76% |  | | 6 |  | Litecoin (LTC) | 8,889,528,292 | 160.66 | +13.28% |  | |
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Top of the stocks Number of Deals Bought Number of Deals Sold |
| | US open: Stocks dip, threatening two-day climb | Trading began on Wall Street on a bit of a down note on Tuesday following two days of gains, as investors looked ahead to key inflation data that was set for release the next day. At 1515 GMT, the Dow Jones Industrial Average and S&P 500 were lower, dropping 0.30% and 0.25% respectively, while the Nasdaq had managed to edge higher – even if it was limited to a fractional 0.01% advance, amid cautious trading ahead of Wednesday's release of January's consumer price index. Headline CPI, which came in at up +2.2% in November but slipped back to 2.1% in December, was seen slipping again by economists to 2.0% for last month, but rising by 0.4% month-on-month. In greater detail, HSBC said: "We expect that core services prices rose around 0.25% month-on-month, with the monthly increase in rents cooling off slightly compared to previous months. We expect that core goods prices were close to unchanged in m-o-m terms, with new and used vehicle prices holding relatively steady. Meanwhile, we estimate the headline CPI increased 0.4% m-o-m in January, with average gasoline prices rising by around 5%. We expect the y-o-y headline CPI inflation rate slowed to 2.0%, down from 2.1% in December." "In the current environment, we can expect US Treasury yields to soar if January's number were to come in at 2.1% or higher. This would be a problem as the key 10-year Treasury note yield is dangerously close to testing 3.0% - a four-year high, increasing fears that the 35-year bond bull market is finally over. This would signal higher borrowing costs to come which would not be good for global equities," David Morrison, senior market analyst at GKFXadded. Data released earlier in the day showed that small business optimism in the US improved more than expected in January. The index of small-business optimism from the National Federation of Independent Business printed at 106.9 last month, up from 104.9 in December beating expectations for a reading of 106.2. NFIB President and chief executive officer Juanita Duggan said: "Main Street is roaring. Small business owners are not only reporting better profits, but they’re also ready to grow and expand. The record level of enthusiasm for expansion follows a year of record-breaking optimism among small businesses." The number of respondents saying "now is a good time to expand" printed at 32%, marking the highest level in the history of the survey, which began in 1973. NFIB chief economist Bill Dunkelberg said: "The historically high index readings over the last year tell us small business owners have never been more positive about the economy. This is in large response to the new management in Washington tackling the biggest concerns of small business owners - high taxes and regulations." In corporate news, AmerisourceBergen was up 9.29% following reports that Walgreens Boots Alliance (up 1.09%) had approached the company about a takeover. Elsewhere, Amazon saw active trading – up 1.96% - following reports the retailer was planning to slash hundreds of jobs across its consumer business. General Motors dropped 0.95% after announcing its plans to close an auto plant in South Korea. PepsiCo quarterly sales were flat, hurt by falling demand in for its beverages across the US, but said it had ramped up cost-cutting efforts to protect its bottom line, and Xerox shares had dipped as much as 2.54% after Darwin Deason, the document management company's third-largest shareholder, sued the firm, its current board members, former chief executive Ursula Burns and Japan's Fujifilm Holdings in an effort to block a deal that would see Fujifilm acquire a controlling stake in Xerox Baidu and MetLife will report after the close of markets. Fedspeak was also in focus, with Cleveland Fed president Loretta Mester telling an audience at the Dayton Area Chamber of Commerce in Ohio that the big moves seen in the stock market over the past 10 days were still "far away" from being large enough to risk causing any damage to the economy. "I expect the economy will work through this episode of market turbulence and I have not changed my outlook," she said. In a more conciliatory tone, she added: "Of course, this is my current view of monetary policy," Mester said. "If upside risks to growth come to pass, we may need to steepen the path a bit: if inflation surprises to the downside, we may need to go a bit slower." Traders were also keeping a close eye on Fed chairman Jerome Powell who said in his inauguration speech that the central bank would "remain alert" to any financial stability risks. |
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| | Broker tips: BP, Smiths, Imperial Brands | Morgan Stanley downgraded its view on shares of BP by one notch from 'overweight' to 'equalweight', predicting that management would continue to prioritise debt reduction over the dividend payout. Even so, as confidence grew in its payout, Morgan Stanley expected the shares' dividend yield to fall. Worth noting, the broker also revised its target prices for multiple stocks in the energy sector lower, with BP's falling from 645p to 550p, Total's from €56.0 to €55.6 and Shell's from 3,040p to 2,830p. The target price cut on Shell was despite the broker's forecasts calling for it to be the next to raise its dividend, with its free cash flow reaching $21bn in 2018 on an oil price of $64 a barrel, rising to $24bn in 2020 at $60 oil, resulting in FCF dividend covers of about 135% and 155% in each of those years. "If history is any guide, BP's financial outlook is strong enough so that investors do not demand a yield much bigger than ~5.2% [from 6.2% at present], which is our target yield by end-2018. This still suggests a return prospect of ~23% – healthy but less strong that its two direct peers (Total and Shell)." Imperial Brands was under the cosh on Tuesday as Piper Jaffraycut the stock to 'neutral' from 'overweight' and reduced the price target to 2,800p from 3,500p, highlighting a cheap valuation but a modest earnings per share growth outlook. The US investment bank said it expects further reinvestment spending to weigh on EPS growth as the company expands in vapour and considers a heated tobacco launch. "The stock trades at just 10x our 2019E calendar EPS, but this looks less attractive relative to modest EPS growth (we estimate 1% 3-year growth), especially without a proven heated tobacco platform (which we consider a much bigger opportunity than vapour, Imperial's focus to date)." Piper Jaffray cut its FY18 EPS estimate to 260.5p from 265.7p and its FY19 forecast to 266p from 294p. It said that while Imperial hasn’t actually committed to a heated tobacco launch, there is a risk to FY19 EPS growth from likely launch investments, as rival Philip Morris's momentum with electronic tobacco device IQOS makes it too difficult to rely on vapour products alone. Barclays initiated coverage of diversified engineer Smiths Group at 'overweight', with a 1,800p price target as it highlighted material change under the current management team. "Since Andy Reynolds Smith took over as CEO in 2015 we have seen a return to active management of the portfolio, an operational improvement seen through much-improved cash dynamics and a much greater focus on organic growth," it said. Barclays noted that cash flow has seen a material, positive change as the benefits of the focus on working capital, operational improvements and a reduction in pension contributions impact the business. In addition, it said Smiths has had clear improvement in free cash flow since the FY14 trough and now has a higher free cash flow margin than its peers for the first time since FY10. "We see this as evidence that changes brought to the business post-Andy Reynolds Smith becoming CEO are having an impact and Smiths Group is changing." Barclays also argued that pension risks are diminishing, with the company reporting an accounting surplus for each of the last two fiscal years, while cash contributions are falling and the estimated buyout value for the three main schemes has fallen to around £1bn, or 2.2x FY17 free cash flow. "This is less than 20% of Smiths’ market cap and so we feel the pension is much less of an impediment to changes, and cash flow, at Smiths than in the past." |
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