Evening Euro Markets Bulletin

ADVFN III Evening Euro Markets Bulletin Daily world financial news Tuesday, 20 February 2018 19:56:00 Monitor Quote Charts News CFD's Compare Brokers Free BB   Get Your FREE Weekly Bitcoin Newsletter From Guardian Stockbrokers Click Here To Subscribe For FREE Today All trading involves risk. Losses can exceed deposits. London close: Heavyweight HSBC drags as investors prove hard to impress FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts London stocks fell less than one point on Tuesday, as solid results from HSBC and BHP Billiton failed to please demanding investors but currency traders were more taken in by Brexit reports. The FTSE 100 closed 0.89 points or just 0.012% lower at 7,246.77, while the pound recovered from earlier losses against the dollar to climb to a flat 1.4002 and gained 0.6% versus the euro to 1.1350. Sterling was tickled green by a vivid speech by Brexit secretary David Davis in Vienna, where he painted an optimistic picture to Austrian business leaders and denied that the Tories will plunge Britain into a "Mad Max-style world borrowed from dystopian fiction". More sceptical observers wondered if perhaps there were other dystopian futures being planned instead, but not according to another report that emerged suggesting the EU parliament had prepared a 60-page Brexit proposal that which would see the UK given special associate status and raised the likeliness of a bespoke deal. "While the internationally focused FTSE 100 has moved lower given the negative impact of a strong pound on internationally located firms, the positive implications of today’s Brexit breakthrough seems to have been better reflected on the domestically focused FTSE 250 index," noted IG analyst Joshua Mahony. David Cheetham at XTB added that these latest developments reveal some "possible cracks" in the EU's hardline approach and "are the clearest sign yet that the bloc may accept preferential terms as far as trade is concerned post-Brexit". UK manufacturing data out from the Confederation of British Industry in the morning showed growth slowed more than expected as the boost from a weakening pound starts to fade. The CBI's order balance dropped to +10 from +14 in January, short of the +11 expected, and marking a four-month low but still well above the long-run average of -14. Meanwhile, the balance of export orders came fell to +10 from +19 the month before and the balance of output expectations declined to +16 from +24. Volume of output in the last three months came in at +24 compared to +21. The selling prices balance fell to +25 in February from +40 the previous month, but remained well above its 30-year average of +16. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The further decline in the CBI’s total orders balance in February indicates that the support to growth in manufacturing output from sterling’s depreciation is beginning to fade." He added that the boost to growth from sterling’s depreciation will continue to fade as this year progresses. In corporate news, heavily-weighted HSBC was under the cosh as its growth in full-year profits still missed City expectations. "Markets were largely unimpressed by the latest HSBC earnings, with the bank’s 141% rise in pre-tax profits undershooting market expectations," said Mahony. "Interestingly, we are starting to see the impact of Carillion’s recent demise, with HSBC seemingly taking a $500 million hit on 'two large corporate exposures in Europe', thought to be Carillion and Steinhoff." Also, despite delivering solid results mining giant BHP Billitonwas also under pressure as its interim profit grew 25% but fell short of analysts' forecasts, with a bumper dividend still not enough to please investors. InterContinental Hotels was also in the red despite reporting a jump in full-year profit. It lost a few short-termist supporters after saying it will not be paying out any additional capital this year as it looks to reinvest savings in growth. Home furnishings retailer Dunelm tumbled as it posted an 8% drop in underlying interim pre-tax profit, said its profit margin declined by 1.8 percentage points to 48.6% and announced the departure of its chief financial officer. Going the other way, Fidessa flew 23% higher after confirming that it is in "advanced discussions" about being taken over by Swiss banking software group Temenos for £1.4bn in cash. Hikma Pharmaceuticals surged more than 5% higher after appointing Siggi Olafsson as its new chief executive officer. He brings experience from generic drugs giants Teva and Actavis. On the blue chip list, Evraz was the standout gainer after signing a new five-year contract the previous day to supply rail products to Russian Railways. Industrial turnaround specialist Melrose Industries, which is in the throes of a hostile bid for GKN, gained as it reported a narrower pre-tax loss for 2017. William Hill shrugged off the Gambling Commission's £6.2m fine for breaching anti-money-laundering and social responsibility regulations, while Sports Direct rose as it announced plans to buy back up to £100m worth of its shares as it looks to reduce the share capital of the company. New contracts boosted Bodycote and Wood Group. The former was a long-term deal with France's Afran to provide manufacturing services, while the latter won a strategic five-year engineering services contract at an Australian gas export project. On the broker note front, Reckitt Benckiser was cut to 'neutral' at Credit Suisse after its results the day before, Travis Perkinswas downgraded to 'hold' at Berenberg and Shire cut to 'neutral' by JPMorgan. Grafton and ZPG were upgraded to 'buy' and 'overweight' by Berenberg and Morgan Stanley, respectively.   Market Movers FTSE 100 (UKX) 7,247.69 0.00% FTSE 250 (MCX) 19,802.85 0.76% techMARK (TASX) 3,339.30 1.10% FTSE 100 - Risers Evraz (EVR) 434.00p 5.34% Smith (DS) (SMDS) 488.20p 2.74% Standard Life Aberdeen (SLA) 382.80p 2.65% Ashtead Group (AHT) 2,065.00p 2.33% Schroders (SDR) 3,486.00p 2.23% Hargreaves Lansdown (HL.) 1,707.93p 2.00% Mondi (MNDI) 1,917.00p 1.89% Persimmon (PSN) 2,470.00p 1.86% Sage Group (SGE) 703.80p 1.82% Rentokil Initial (RTO) 292.50p 1.81% FTSE 100 - Fallers BHP Billiton (BLT) 1,490.40p -4.58% HSBC Holdings (HSBA) 736.40p -3.17% InterContinental Hotels Group (IHG) 4,570.00p -2.70% WPP (WPP) 1,400.00p -2.47% Reckitt Benckiser Group (RB.) 5,942.00p -2.19% Rio Tinto (RIO) 3,990.50p -1.59% Fresnillo (FRES) 1,340.50p -1.51% Shire Plc (SHP) 3,080.00p -0.98% Severn Trent (SVT) 1,705.00p -0.55% Antofagasta (ANTO) 893.60p -0.47% FTSE 250 - Risers Fidessa Group (FDSA) 3,593.80p 23.29% Grafton Group Units (GFTU) 804.00p 5.51% Hikma Pharmaceuticals (HIK) 986.40p 4.89% Spire Healthcare Group (SPI) 230.40p 4.73% Sports Direct International (SPD) 373.70p 4.50% Ocado Group (OCDO) 509.60p 4.43% Euromoney Institutional Investor (ERM) 1,230.00p 3.89% Inmarsat (ISAT) 477.80p 3.44% Fenner (FENR) 468.20p 3.17% Thomas Cook Group (TCG) 125.20p 2.88% FTSE 250 - Fallers Dunelm Group (DNLM) 576.00p -10.90% McCarthy & Stone (MCS) 134.50p -4.54% Hochschild Mining (HOC) 220.20p -3.67% Capita (CPI) 180.95p -2.53% Vectura Group (VEC) 77.80p -2.32% Fisher (James) & Sons (FSJ) 1,458.00p -2.02% Lancashire Holdings Limited (LRE) 561.00p -1.84% Polymetal International (POLY) 781.40p -1.66% Kaz Minerals (KAZ) 815.40p -1.57% TalkTalk Telecom Group (TALK) 100.70p -1.56% Atlantic Advisory - Share Tips of the Year 2018 Download Our Latest Report Here Losses can exceed deposits Europe close: Stocks higher as euro dips FTSE 100 Euronext Dax perf CAC 40 European stocks held onto their early gains with following the long weekend in the States against a backdrop of rising government bond yields, a dip in the euro and ahead of a wave of debt sales scheduled for later on the other side of the Pond. By the closing bell, the benchmark Stoxx 600 was 0.60% or 2.27 points higher to 380.51, alongside an advance of 0.83% or 102.30 points to 12,487.90 on the German Dax and a gain of 0.64% or 33.68 points to 5,289.66 for the Cac-40. Meanwhile, the euro/dollar was 0.56% lower to 1.2341. Acting as a backdrop, analysts at Morgan Stanley were in the market spotlight on Tuesday after reportedly pointing out to clients how, in inflation-adjusted terms, government bond yields in the US had yet to break-out from their recent trading range. Hence, in their opinion, the early February correction in stocks had been just the "appetiser, not the main course". Their comments came ahead of the sale of $151bn of US Treasury bills scheduled for later on Tuesday, alongside an auction of $28bn in two-year debt. Back in European news, Germany's Ministry of Finance reported that the year-on-year rate of advance in consumer prices in the euro area's largest economy slipped to 2.1% for January, versus 2.3% in December (consensus: 1.8%). Also in Germany, the ZEW institute's economic confidence gauge for Germany in February slipped 2.6 points to a reading of 17.8 (consensus: 16.2). Later in the day, Eurostat reported that its gauge of euro area consumer confidence fell to a reading of 0.1 for February from an upwardly revised 1.4 in January (consensus: 1.1). Arcelor Mittal stock was unchanged despite a Bloomberg report that its bid for Essar Steel India might be disqualified because when it filed its bid it still held a 29.1% stake in Uttam Galva, a company that was classified as a delinquent borrower. Top of the stocks Number of Deals Bought Place EPIC Equity name % 1 BT.A BT Group plc 6.74 2 VOD Vodafone Group plc 6.12 3 GSK GlaxoSmithKline plc 5.84 4 SMT Scottish Mortgage Investment Trust 2.02 5 MKS Marks & Spencer Group plc 1.93 6 FRCL Foreign & Colonial Investment Trust plc 1.69 7 UU. United Utilities Group Plc 1.65 8 LLOY Lloyds Banking Group plc 1.51 9 BLND British Land Co plc 1.08 10 LGEN Legal & General Group plc 1.08 Number of Deals Sold Place EPIC Equity name % 1 RMG Royal Mail PLC 1.70 2 LLOY Lloyds Banking Group plc 1.42 3 IQE IQE plc 1.40 4 GLEN Glencore plc 1.22 5 BOO Boohoo.com 1.02 6 NG. National Grid 0.97 7 SOPH Sophos Group plc 0.95 8 SXX Sirius Minerals plc 0.91 9 WPP WPP plc 0.86 10 BARC Barclays plc 0.83 Market Analysis 20/02/2018 Today's highlights: Global markets remain higher Wall Street ends week higher: The Dow Jones and S&P 500 both showed gains on Friday, while the Nasdaq registered slight losses. However, all three indices finished overall higher for the week, including a 4% spike for the S&P 500 – its biggest weekly gain in five years. Strong numbers in Asia: Markets in the East were seen higher today, as leading indices Nikkei and China50 rose more than 1.5% and 1.2% respectively. Volatility expected for GBP today: Bank of England governor Mark Carney will be speaking and taking questions at Regent’s University, in London, at 18:45 GMT. Carney’s words could potentially generate volatility for the Pound Sterling. Read More... US open: Stocks mixed, off lows despite wave of government debt auctions Wall Street was trading on a mixed note early on Tuesday, amid some upwards pressure on bond yields as investors awaited a slate of government debt sales scheduled for later in the day and throughout the week, together with the release, on Wednesday, of the minutes of the Federal Reserve's last policy meeting. At 1759 GMT, the Dow Jones Industrial Average and S&P 500 were down 0.32% and up 0.10%, respectively, alongside an advance of 0.71% for the Nasdaq Composite. In parallel, the yield on the benchmark 10-year US Treasury note was gaining three basis points to 2.90%. Earlier, the US Treasury had auctioned $96bn-worth of very short-term debt maturing in 13 and 26 weeks, with the sale of a further $55bn in 4-week bills and $28bn in two-year notes still ahead. Following that, on Wednesday the Treasury was set to sell $64bn of notes maturing in five years' time followed by $29bn of seven-year notes on Thursday. Against that flood of Treasury issuance, and with a significant level of technical resistance close to current levels for the S&P 500, in the form of the 61.8% Fibonacci retracement at 2,743 points, investors were seemingly finding few reasons to keep pushing share prices higher. That followed a six-day long rally that ended in the biggest single week of gains for indices in years, with a further bounce in the US dollar doing little to help sentiment. Like climbing bond yields, it held the potential to make equities appear less attractive, despite strong macroeconomic conditions and corporate earnings. The US dollar spot index was up 0.63% at 89.66. David Morrison, chief market analyst at GKFX, said, "The US stock market reopens this afternoon after being closed yesterday for Presidents’ Day. A couple of hours ahead of the open the major stock indices were indicating initial weakness. The Dow futures were down over 100 points, although well above lows posted earlier in the day. Once again, investors are keeping a close eye on US Treasury bonds which have sold off recently on fears that inflation is picking up. "The yield on the US 10-year note is back above 2.90% and dangerously close to breaking through the key 3.0% level. There are concerns that investors will rush to dump equities should borrowing costs push much higher from current levels. "Traders will be keeping a close eye on technical levels this week for clues to where the market is heading next. If the S&P 500 can hold above 2,700 (previously resistance) then there’s a good chance of further gains. However, a break below the 100-day moving average around 2,670 opens up the possibility of a retest of support around 2,600. A break below here raises the probability of a retest of the correction low of 2,530." In corporate news, Walmart shares were shedding 8.96% after its quarterly earnings missed analysts' forecasts, while Gannettwas also down 5.24% after posting fourth-quarter adjusted earnings per share of 55 cents versus a consensus forecast of 46 cents. Home Depot was ticking higher by 0.64% after its fourth-quarter earnings and sales beat expectations, while Qualcomm fell 3.73% following a Wall Street Journal report that it was ready to sweeten its bid for NXP Semiconductors to around $44bn. Elsewhere, Rite Aid grew 4.46% after Albertsons Cos said it would buy the rest of the company that Walgreens Boots Alliance wasn't buying. No major economic reports were due on Tuesday, but Wednesday sees the release of the latest FOMC minutes, along with Markit's manufacturing PMI and existing home sales figures for January. Looking for early access to investment opportunities? Make your own informed investment decisions. Get the right tools and information at Master Investor Show 2018. Register for free today Cryptocurrencies Report Top Cryptocurrencies # Name Market Cap($) Price(%) Change Price Graph(3m) 1 Bitcoin (BTC) 199,077,744,338 11,673.98 +4.46% 2 Ethereum (ETH) 91,352,565,919 922.96 -1.73% 3 Ripple (XRP) 43,928,277,955 1.08 -2.59% 4 Bitcoin Cash / BCC (BCH) 25,776,302,223 1,491 -1.82% 5 Litecoin (LTC) 13,581,674,874 241.74 +8.81% 6 Cardano (ADA) 10,156,489,123 0.369001 -1.6% Following the financial crisis, high street banks have funded fewer SME housebuilders Alternative finance providers are stepping in to fill this void, offering investors high margins and attractive returns. One of these lenders, Clearwell Capital is currently fundraising with a 3-year secured bond paying 10% per annum. Click here to find out more. Capital at risk. Broker tips: Shire, Grafton, Travis Perkins, Britvic JPMorgan Cazenove downgraded specialty biopharmaceutical group Shire to 'neutral' from 'overweight' on Tuesday, slashing the price target to 3,600p from 5,000p. The bank said that while the valuation remains undemanding, there are few 2018 or 2019 catalysts beyond the potential spin-off of the Neuroscience division, which it does not see as creating fundamental value. "We believe a spin could highlight the disproportionate earnings contribution from the short-lived Neuroscience franchise," it said, as it remodelled the split company following the full-year results last week. It now reckons the Neuroscience division has a 60% EBITDA margin, which implies that the remainder Rare Disease division has a 37% EBITDA margin, with expansion potential. Shire said in its full-year results last week that it had completed the first stage of the strategic review of the Neuroscience division and concluded that the business warrants additional focus and investment. "There is a strong business rationale for creating two distinct business divisions within Shire: a Rare Disease division and a Neuroscience division," it said. The company said at the time that it expects to report the operational performance metrics of each division separately beginning with the first quarter of 2018. Meanwhile, the second stage of the review will continue to evaluate all strategic alternatives, including the merits of an independent listing for each of the two divisions. Analysts at Berenberg upgraded Grafton but downgraded Travis Perkins on Tuesday as they took a look at UK construction distributors. Grafton - which announced the acquisition of specialist decorators' merchant Leyland on Monday - was lifted to 'buy' from 'hold', with the target rice upped to 920p from 800p. The bank said that the company's 32% EBITA exposure to Ireland and the Netherlands, along with its 29% exposure to the rapidly-growing Selco business means that positive earnings momentum will continue. In addition, the upgrade to EBITA guidance in the January trading update and the strong like-for-like sales growth delivered in the UK merchanting business has made it reassess its views and it now reckons the risk/reward trade-off is more favourable. Berenberg cut its stance on Travis Perkins to 'hold' from 'buy' and reduced the target price to 1,550p from 1,800p. While it still believes the company will be a long-term winner in the UK general merchanting space with its investments in the supply chain, in the nearer term it expects limited earnings momentum and reasons for a re-rating given Perkins' 100% UK exposure. In terms of the broader repair, maintenance and improvement market, Berenberg said it expects activity to be flat, at best, this year. "We remain cautious about spending in the near term with mortgage approvals and housing transactions down slightly year-on-year. Although the UK merchant space looks cheap relative to recent history, we believe there are limited catalysts for a re-rating beyond a recovery in broader equity markets given ongoing uncertainty in the UK and a lack of positive drivers for UK RMI (repair, maintenance and improvement) activity." After having fallen 15% in the past month, Shore Capital now thinks drink maker Britvic looks like a 'buy'. Britvic’s share price declined sharply post its first-quarter statement on 31 January and in absolute terms has fallen by 15% in the past month and closer to 20% peak to trough, notes analyst Phil Carroll. After moving to a negative stance on the stock in December due to concerns over valuation especially with the uncertainty of sugar tax ahead, he now believes Britvic shares "look compelling". Carroll's forecasts are below consensus expectations and there is a prospect of a "rising attractive free cash flow yield" once the drink-maker emerges from its three-year capital investment programme and therefore, the ShoreCap man's recommendation has been upgraded from 'sell' to 'buy'. The shares are currently trading for 13.6 times the 2018 full year earnings per share of 50.8p that Carroll has forecast, which take account of a shift in some customer-related investment spend from selling and distribution costs to revenue and moves some incentives from suppliers from revenue to cost of sales. "The valuation based on Bloomberg consensus is 13.0x. We believe we have taken quite a prudent view of the year ahead given the introduction of the sugar tax," the analyst said. But he stressed that "even taking into account any downward pressure on market expectations, the valuation remains historically attractive".   To advertise in the Euro Markets Bulletin please contact advertise@advfn.com     To unsubscribe from this news bulletin or edit your mailing list settings click here. Registered Office/Accounts Dept: Suite 27, Essex Technology Centre, The Gable, Fyfield Road, Ongar, CM5 0GA. Customer Support +44 (0) 207 0700 961. Company registered in England and Wales: Number 2374988 VAT No. GB 549 2130 49