Evening Euro Markets Bulletin

ADVFN III Evening Euro Markets Bulletin Daily world financial news Thursday, 22 February 2018 20:16:14 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: FTSE flops as PLC and GDP growth disappoints FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts London stocks erased most of their earlier losses but still finished in the red on Thursday as bond yields retreated and the pound struggled for direction after disappointing UK economic growth figures. The FTSE 100 lost 29 points or 0.4% to finish the session at 7,252.39. Equities were on the back foot from the opening bell after overnight minutes from the US central bank's recent policy meeting pointed to at least three rate hikes this year. Although this more or less priced in, the potential for a fourth hike was keeping investors on edge. Yields had risen overnight but eased off as the session wore on. The yield on 10-year US Treasuries was down by four basis points to 2.91% after hitting a high of 2.96%. Sterling, which is being moved by the many Brexit stories that emerge every day as much as by immediate economic data, was lower in the morning, falling as much as 0.4% as the dollar strengthened in line with yields. Having fallen to 1.386 around midday, the pound climbed above 1.3944 as the US session began. There was disappointing data for London investors to mull too, with second reading on UK gross domestic product growth for the fourth quarter of 2017 revised down, though this had only a small effect on the pound. Figures from the Office for National Statistics showed that GDP growth rose just 0.4% in the fourth quarter compared to the third, down from an initial estimate of 0.5%, meaning year-on-year growth was cut to 1.4% from 1.5%. This put the UK back at the bottom of the G7 growth leaderboard for 2017. The 0.1 percentage point revision down from the preliminary estimate was partly due to a downward revision to the estimated output of the production and services industries, ONS said, revealing a disappointing expenditure component mix. Business investment was flat, consumer spending growth slowed to 0.3% compared to the prior quarter and net trade subtracted 0.5 percentage points as exports fell 0.2% and imports rose 1.5%. Howard Archer, chief economist advisor at the EY Item Club, said: "The downward revision to UK GDP growth may dilute expectations that the Bank of England will raise interest rates in May, but we suspect that the MPC remains more likely than not to act then. "With the Bank of England keen to gradually normalise monetary policy and the economy likely to see essentially stable growth during 2018, we expect two interest rate hikes this year in May and November. This also assumes that earnings growth will trend up gradually." Retail sales were also in focus following the release of the latest quarterly distributive trades survey from the Confederation of British Industry. Sales growth slowed for the third month in a row, with 32% of respondents reporting a rise in sales volumes from a year ago and 24% reporting a drop, giving a retail sales balance of +8. This was down from +12 in January and missed expectations for a nudge up to +13. Still, the survey also found that most retailers expect volumes to increase next month, while investment intentions also strengthened to their highest level since August 2015. In corporate news, British American Tobacco retreated even as it reported on what it claimed was a record year, with its "transformational" acquisition of Reynolds American leading to a 37.6% surge in revenue to £20.29bn. Analyst Mike Van Dulken at Accendo Markets noted that revenues missed consensus of £20.6bn, pre-tax income was either a beat on an adjusted basis or bang in-line when adjusted for constant currencies. The real problem, however, he said was volumes falling 2.6% when excluding Reynolds, together with comments about a challenging trading environment. BAE Systems was weaker after saying it expects profits for 2018 to be flat, outweighing earnings for 2017 being better than expected. Moneysupermarket.com tumbled 16% as its full-year earnings and revenue missed expectations and investors were left disappointed by the 2018 outlook, while Hays fell even as the FTSE 250 recruiter said interim profit rose 18% on the back of strong growth in its international markets and good cost control in the UK. Kaz Minerals was in the red despite reporting a rise in full-year profit as its numbers missed across the board. Safestore was on the back foot as it reported a 9.8% rise in first-quarter revenues, while gambling software development company Playtech tanked 10% after its full-year results fell short, with growth rates slowing from 2016. GlaxoSmithKline, Diageo, Carnival, HSBC and Imperial Brandswere lower as they numbered among the companies whose stock went ex-dividend. Bucking the trend were a few big names, with Barclays rallying as it declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits last year. Peer RBS was in the black ahead of its annual results on Friday. Centrica rose despite reporting a 17% drop in full-year adjusted operating profits, as investors welcomed a steady dividend, an increase to the cost efficiency programme and signs that management will be more focused on turning around the overall performance. The British Gas owner was the standout gainer on the blue chip index as this cost cutting drive saw it announce 4,000 job cuts by 2020. RSA Insurance gained as it posted a jump in full-year profit and bumped up its dividend as a strong performance in Scandinavia, Canada, the Middle East and Ireland helped to offset a poor showing the UK. Anglo American, trading around its highest level in almost five years, reversed initial losses after it reported a 45% jump in full-year EBITDA thanks to higher commodity and copper prices. Bus and rail group Go-Ahead surged as its first-half operating profit beat forecasts, but this was thanks to one-offs resulting from losing its London Midland franchise. Serco racked up good gains as the outsourcer's 2017 results beat analysts' expectations. In broker note action, Rotork and Weir were lifted to 'hold' from 'underperform' at Jefferies, while TalkTalk was cut to 'hold' from 'buy' at HSBC. Barratt Developments sank again as Shore Capitalreiterated its 'sell' recommendation.   Market Movers FTSE 100 (UKX) 7,252.39 -0.40% FTSE 250 (MCX) 19,736.06 -0.27% techMARK (TASX) 3,332.75 -0.42% FTSE 100 - Risers Centrica (CNA) 142.15p 7.53% Barclays (BARC) 211.00p 4.40% NMC Health (NMC) 3,510.00p 3.24% RSA Insurance Group (RSA) 632.60p 3.20% BHP Billiton (BLT) 1,521.20p 1.82% Royal Bank of Scotland Group (RBS) 282.00p 1.66% Shire Plc (SHP) 3,037.00p 1.50% SSE (SSE) 1,237.00p 1.44% Evraz (EVR) 433.60p 1.40% Standard Life Aberdeen (SLA) 385.70p 1.23% FTSE 100 - Fallers Barratt Developments (BDEV) 551.80p -2.75% BAE Systems (BA.) 585.00p -2.73% HSBC Holdings (HSBA) 728.10p -2.57% TUI AG Reg Shs (DI) (TUI) 1,545.00p -2.15% British American Tobacco (BATS) 4,354.50p -2.15% Imperial Brands (IMB) 2,609.50p -2.12% Kingfisher (KGF) 353.60p -1.94% Carnival (CCL) 4,839.00p -1.71% Mondi (MNDI) 1,894.50p -1.66% GlaxoSmithKline (GSK) 1,303.00p -1.63% FTSE 250 - Risers Go-Ahead Group (GOG) 1,527.00p 14.13% AA (AA.) 88.00p 5.29% Capita (CPI) 180.15p 5.20% TalkTalk Telecom Group (TALK) 98.00p 3.70% Stagecoach Group (SGC) 138.00p 3.60% Aveva Group (AVV) 2,944.00p 3.59% Mitie Group (MTO) 163.20p 3.42% Tullow Oil (TLW) 186.65p 3.12% BCA Marketplace (BCA) 167.60p 2.95% Wood Group (John) (WG.) 633.00p 2.93% FTSE 250 - Fallers Moneysupermarket.com Group (MONY) 283.60p -13.75% Acacia Mining (ACA) 141.15p -6.68% CLS Holdings (CLI) 211.00p -6.64% Hikma Pharmaceuticals (HIK) 898.00p -5.47% Hays (HAS) 195.40p -4.50% Fisher (James) & Sons (FSJ) 1,392.00p -4.00% Marshalls (MSLH) 405.20p -3.75% Lancashire Holdings Limited (LRE) 572.50p -3.46% Inmarsat (ISAT) 444.00p -3.27% Greencore Group (GNC) 176.35p -3.10% Crypto Pizza Evening with Clem Chambers, CEO of Online Blockchain In May 2010, programmer Laszlo Hanyecz bought two pizzas from Papa Johns for 10,000 bitcoins. Had he kept the coins, as of today they would be worth a cool $86,000,000. Join us on Wednesday 14 March for a crypto pizza 'Bite' on Clem Chambers, the CEO of the first London-listed British blockchain company - Click Here To Register For Free  Europe close: Stocks track gains on Wall Street FTSE 100 Euronext Dax perf CAC 40 A late buying spree lifted stocks across the Continent off their session lows, with traders seemingly breathing a sigh of relief as Wall Street began Thursday's session on the up. That followed the release of a more hawkish than expected set of policy meeting minutes in the US overnight that initially weighed on sentiment, with a weak reading on German business confidence further dampening animal spirits in the markets and offsetting upbeat corporate updates. At the closing bell, the benchmark Stoxx 600 was down by 0.20% or 0.76 points to 380.34, alongside a dip of 0.07% or 8.58 points to 12,461.91 for the German Dax, although the FTSE Mibtel still ended the day noticeably lower, shedding 189.50 points to close at 22,463.51. Euro/dollar meanwhile was 0.35% higher to 1.2325 and the yield on the benchmark 10-year Bund off by two basis points to 0.71% following an early morning dip. The minutes of US Federal Reserve policymakers' meeting on 30-31 January initially sent US government bond yields higher, which in turn weighed on Wall Street, although come Thursday afternoon they had almost completed retraced that move, touching an intra-session low of 2.90%. Thursday also saw the release of the latest European Central Bank policy minutes, which drew a slightly mixed reaction from analysts, with some believing they pointed towards Frankfurt 'tweaking' its communications as soon as the March meeting and others expecting that any modification would not come before April. "They remain uncomfortable with the uncertainty attached to movements in the euro over the outlook period and the impact on underlying domestic price dynamics. Not least as they remain unconvinced by the weak trend in wages. "The majority of the ECB council still looks in no hurry to begin tightening monetary policy. Even tweaks to the communication may have to wait until the council meeting in April instead of March to better gauge the underlying inflation dynamics," said Oliver Rakau, chief German economist at Oxford Economics. Also dampening sentiment, the IFO institute's business confidence gauge for Germany retreated from a reading of 117.6 points in January to 115.4 for February, although the think-tank pointed out that it remained at its second highest level since 1991. Company-wise, shares of Hennes & Mauritz AB were still under pressure in the wake of data showing that so-called 'short interest' in the Swedish fashion retailer had climbed to over 9% of the shares outstanding, according to data provided by IHS Markit. Shares in France's Bouygues Telecom ended the session near the unchanged mark, after early sharp gains, after delivering full-year top line growth of 4% to reach €32.9bn but a 62% jump in operating profits to €1.53bn. Pacing gains on the Stoxx 600, Dutch biotech outfit Genmab's shares were running up 15% after soothing investors' worries on the outlook for sales of its blood cancer treatment Darzalex. Dutch lender KBC's shares also gained some ground in the wake of its fourth quarter results. Further South, in Spain, Telefonica stock got a lift from news that its full-year 2017 net profits soared 32.2% to hit €3.13bn. In other news, oil major Repsol sold a 20% stake in Gas Natural to Rioja Bidco Shareholdings, controlled by private equity outfit CVC, for €3.82bn. Market Analysis 22/02/2018 Today’s highlights: Fed minutes push global markets down Wall Street closes lower: A volatile session in the US yesterday, as leading indices started the day with sharp gains, but eventually closed lower. The trend reversal occurred following the release of minutes from the latest FOMC meeting, which showed the Fed could be planning more rate hikes. Despite the negative momentum, some stocks continued to show gains, such as Domino’s Pizza, which climbed more than 4% to reach a new all-time high. Asia follows Wall Street’s lead: Top indices in Asia, such as the Nikkei and China50, were seen lower this morning. Read More... US open: Stocks bounce back after Fed minutes on better-than-expected labour data Stocks rose across the board as Wall Street trading kicked off on Thursday, as positive data on the labour market offset investors' concerns surrounding potential interest rate hikes coming from the Federal Reserve's most recent meeting. At 1515 GMT, the Dow Jones Industrial Average had moved ahead 0.69%, while the S&P 500 and Nasdaq had gained 0.56% and 0.49%, respectively, after all three indices ended Wednesday's session in the red as minutes from the US central bank's meeting at the end of last month pointed to at least three rate hikes this year. The minutes revealed that Fed officials see an increased economic growth outlook and a rise in inflation as justification to keep lifting rates gradually. "A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate," the minutes stated. Previously, the policy statement said that gradual increases in the federal funds rate were likely to be appropriate but the use of the word "further" this time around is what seemed to rattle investors. Daiwa Capital Markets said that "further" could mean more increases than currently built into the dot plot, or it could mean more than the five changes that have occurred since late 2015. "In reading the minutes we did not get the sense that the Committee was attempting to signal a likely upward shift in the dot plot. Rather, we viewed the wording change as a signal that officials were more confident that the economy would be performing well and that the Fed would remain active this year. To be sure, four tightenings are possible this year, especially with the budget agreement adding another dose of fiscal stimulus, but four shifts are not assured," they said. The broker stood by its forecast of three for now, but said this would quickly change if the economy shows signs of growing faster than 2.5%. The hawkish tone of the minutes sent stocks lower, the dollar higher and the yield on the 10-year Treasury bond to a fresh four-year high above 2.94% on Wednesday. However, by Thursday bonds were retracing that move, with yields having fallen by three basis points to 2.92%. Craig Erlam, senior market analyst at Oanda, said: "The minutes from the January meeting, like the statement that accompanied it, were quite hawkish and pointed to at least three rate hikes this year. While this is now strongly priced in - more than 50% - there is potential for a fourth and more again next year, something that appears to be worrying investors and shaking confidence in equity markets." With interest rates firmly in focus, investors will be eyeing Atlanta Fed President Raphael Bostic's speech later in the day after New York Fed President William Dudley failed to comment on interest rates in a research presentation on the effects of Hurrican Maria which struck Puerto Rico on 20 September, the worst natural disaster in 90 years and the largest government bankruptcy in US history. Dudley, who was set to stand down from his role by the middle of the year, added that the US territory's labour market appeared to have stabilised due to a return of hospitality jobs and the emergence of construction. "These job gains are expected to continue for some time to come," he told reporters at the New York Fed. However, Dudley, who's views tend to be more on the hawkish side of the policy spectrum, stayed mum regarding the outlook for monetary policy. Investors were also waiting on an afternoon Treasury auction of $29bn of seven-year debt. In corporate news, shares in streaming video company Roku fell as much as 15.45% following a disappointing outlook late on Wednesday, while Cheesecake Factory gained 4.28% despite its quarterly revenue falling short of expectations. Elsewhere, Chesapeake Energy soared ahead 18.63% after better-than-expected fourth-quarter earnings and car-rental giant Avispicked up 12.94% on its own unexpectedly positive results. Pandora Media shed 8.83% after the music streaming service posted a wider than expected adjusted net loss, despite a stronger-than-expected quarterly revenue on Wednesday, and Wayfairshares tumbled 20.56% after the Internet-based home retailer reported a wider-than-expected fourth-quarter loss. On the data front, initial US jobless claims fell by 7,000 to 222,000 in the seven days ended 17 February, beating analysts' estimates of 230,000 to come in at the second-lowest level since the end of the 2007-2009 recession. Looking for early access to investment opportunities? Make your own informed investment decisions. Get the right tools and information at Master Investor Show 2018. Register for free today Cryptocurrencies Report Top Cryptocurrencies # Name Market Cap($) Price(%) Change Price Graph(3m) 1 Bitcoin (BTC) 169,732,794,035 9,989.7 -5.41% 2 Ethereum (ETH) 79,774,289,120 807.65 -2.25% 3 Ripple (XRP) 36,298,075,337 0.88671 -6.6% 4 Bitcoin Cash / BCC (BCH) 20,496,961,016 1,197.58 -6.69% 5 Litecoin (LTC) 10,786,611,433 194.95 -6.95% 6 Cardano (ADA) 8,738,433,927 0.315 -5.35% Atlantic Advisory - Share Tips of the Year 2018 Download Our Latest Report Here Losses can exceed deposits Broker tips: Go-Ahead, Hotel Chocolat, Moneysupermarket A strong balance sheet and "solid" earnings from the bus segment will allow Go-Ahead to maintain or raise its dividends going forward, according to analysts at Cannacord Genuity. Absent new franchise wins, challenging market conditions in the UK bus markets, together with falling earnings from rail (excluding one-offs), suggested earnings growth would turn negative in coming years, analyst Gert Zonneveld said. Indeed, at the half-year stage and on a like-for-like basis, regional bus volume growth was down by 1.2%. However, Go-Ahead was exploring growth opportunities overseas and "in the meantime, a strong balance sheet and solid bus earnings, however, should allow the company to maintain or increase its dividends going forward," Zonneveld explained. Zonneveld stuck by a 'buy' recommendation and 2,080p target price on the shares. Berenberg downgraded British chocolatier Hotel Chocolat to 'hold' from 'buy' and cut the price target to 340p from 380p pointing to limited scope for substantial upgrades in the near term and a high multiple. The bank upgraded the stock back in October last year as it reckoned significant upgrades could be delivered through a faster-than-anticipated rollout, growth from the new wholesale relationships and improvements to the subscription business. It also felt that higher revenue growth could drive margin expansion despite some cost headwinds. It argued on Friday that while the company made good progress in the first half of this year, with revenue and EBITDA growth of 15%, this was in line with expectations. "While we continue to believe the company has considerable expansion potential, we see limited scope for substantial upgrades in the near term. Thus, given the stock is on a high multiple, we downgrade to hold," it said. Berenberg noted that the peer group is trading on 35x 2018 price-to-earnings versus Hotel Chocolat on 29x FY June 2019 estimate price-to-earnings. "We feel that Hotel Chocolat deserves to trade at a slight discount to account for its lower-than-average EBIT margin and average EPS growth." Credit Suisse analysts maintained their ‘hold’ recommendation on Moneysupermarket.com (MONY) as they feel the company’s new strategy will unlock new market growth but will take time. However, analysts at the investment bank noted that recent tech investment has restricted customer experience innovation and so expects MONY to underperform industry growth of 6-7% in 2018 before accelerating, thus justifying the continued ‘hold’ recommendation. In the same research note, the analysts revised the target price for MONY down to 300p from the previous 350p estimate, explaining that this revised projection reflects execution risks that could reduce as the market becomes more “comfortable and confident” with the group's strategy. Regarding the content of the strategy, the analysts said: “Overall whilst we see clear merit in the group's strategy of focusing on customer conversion, retention and rebuy we doubt the market will give the group the benefit of the doubt for the strategy, at least initially. Given tangible and financial benefits from the previous technology spend are yet to be seen we await evidence of execution.” The note also highlighted market concerns such as the slowing growth of car insurance premiums, rising interest rates and the looming energy price cap as slowing down MONY’s growth in comparison to that of recent years, projecting a 5.1% increase in revenue growth for 2018. “Overall we see FY17 as largely solid and uneventful. Whilst we see merit in the group's Reinvent strategy (and we hope to learn more at the group's presentation today) we doubt the market will give the group the future benefits for the investment given the lack of benefits seen thus far from their previous strategy/investment.”   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