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| | London close: Stocks gain, all eyes on US Federal Reserve |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | Stocks recovered from early selling during the final hour of the session as traders reacted to the release of the text of the US central bank chief's semi-annual monetary policy report to Congress, which according to market observers at first glance did not appear to point to an overly hawkish Federal Reserve. That is to say, it did not appear to shut the door to the possibility of just three more interest rate hikes over the course of 2018, instead of four as per the most recent projections from several economists. Nevertheless, caution still seemed to be the watchword amongst traders. Against that backdrop, the FTSE 100 finished the day 0.11% shedding 7.98 points to 7,244.41. For the week, it was 50.29 points lower. Meanwhile, and ahead of possible remarks from several top officials from the US Federal Reserve later in the day, the yield on the benchmark 10-year US Treasury note was five basis points lower to 2.87% (below where it had closed the previous week), while that on similarly-dated Gilts was down by three basis points at 1.52%. Commenting on Friday's market action, Chris Beauchamp at IGsaid: "While the FTSE 100 suffers, US and European markets are looking more robust. However, the hope of strong gains for US markets is dimmed by the knowledge of the late-day selloff that has hobbled Wall Street over the past two sessions. It is thus sensible to avoid counting chickens until they have been hatched," said IG's Chris Beauchamp. In a reflection of the above, perhaps, overnight strategists at Bank of America-Merrill Lynch cautioned that their proprietary Bull & Bear indicator was still in 'sell' territory, with the various financial markets indicators used to construct it pointing to uncomfortably high levels of 'bullishness' among investors. BofA-ML also pointed out to clients the recent inverse correlation between the US dollar and Treasury bond yields, a rarity which had only been observed less than 10% of the time over the past half century. And when it had occurred, they said in the same research report sent to clients, it had coincided with "bouts of inflation and/or market volatility [...] on average inflation rose 2 percentage points, equities fell 9% and volatility rose 22 percentage points; higher wages remains the obvious risk to investors; higher wages & peak profits/growth much less anticipated." In corporate space, Royal Bank of Scotland was under the cosh even as it clambered back into the black in 2017 for the first time in a decade. The taxpayer-owned bank took a hit in the fourth quarter from higher charges and warned of higher restructuring costs in 2018 and reminded of looming threat of US and UK regulatory settlements. Joshua Mahony, a market analyst at IG, said: "Coming off the back of positive earnings from Lloyds, there is a clear benefits of being free from any government stake, which will continue to loom over RBS until the stake is finally sold." International Consolidated Airlines Group also sustained big losses as its reported 19% jump in full-year operating profit fell short of analysts’ expectations. Bookmaker William Hill on the other hand managed to climb out of a crater after news it had swung to a £75m pre-tax loss in 2017 compared to a profit of £181m the year before saw the shares get bombed out in early trading. The opposite was true for educational publisher Pearson, which reversed earlier gains to trade a touch lower despite moving into a full-year pre-tax profit of £421m from a £2.5bn loss the year before. On the bright side, BT racked up strong gains as telecoms regulator Ofcom eased price controls on its network subsidiary Openreach. Analyst Michael Hewson at CMC Markets noted: "Ofcom moderated its approach on the price controls on the company’s Openreach division for access to the fibre broadband network. The original proposal mooted a charge of £11.23, but this has changed to £11.92 a potential net improvement of £80m over four years." Standard Life Aberdeen shares also fell after confirming the sale of its insurance arm to Phoenix for £3.2bn alongside its final results. Phoenix rallied on the news. Life insurer Aviva finished lower after saying it has sold two more life and pensions joint ventures in Spain for £178m in cash, while Rightmove gained as it reported a 10% jump in full-year operating profit as revenue and customer numbers grew. In broker talk, Barclays was reinstated at 'buy' at Cenkos Securities, while Lancashire was upgraded to 'neutral' at Credit Suisse. Moneysupermarket was cut to 'hold' at Canaccord, BAE Systemswas downgraded to 'underweight' at JPMorgan and Petrofac was cut to 'underweight' by Morgan Stanley. Market Movers FTSE 100 (UKX) 7,244.41 -0.11%
FTSE 250 (MCX) 19,801.05 0.33%
techMARK (TASX) 3,320.07 -0.38% FTSE 100 - Risers BT Group (BT.A) 244.05p 5.04%
United Utilities Group (UU.) 686.80p 3.43%
Severn Trent (SVT) 1,766.00p 3.27%
British American Tobacco (BATS) 4,460.00p 2.42%
British Land Company (BLND) 650.40p 1.98%
DCC (DCC) 6,765.00p 1.50%
Centrica (CNA) 144.15p 1.41%
Hammerson (HMSO) 475.77p 1.36%
SSE (SSE) 1,251.50p 1.25%
RSA Insurance Group (RSA) 639.80p 1.14% FTSE 100 - Fallers International Consolidated Airlines Group SA (CDI) (IAG) 587.20p -5.69%
Royal Bank of Scotland Group (RBS) 268.40p -4.82%
Smurfit Kappa Group (SKG) 2,502.00p -3.85%
BAE Systems (BA.) 565.00p -3.42%
easyJet (EZJ) 1,631.50p -3.15%
Standard Life Aberdeen (SLA) 376.10p -2.49%
Smith (DS) (SMDS) 479.90p -2.18%
Randgold Resources Ltd. (RRS) 6,014.00p -1.89%
St James's Place (STJ) 1,121.50p -1.84%
Micro Focus International (MCRO) 2,031.00p -1.74% FTSE 250 - Risers Phoenix Group Holdings (DI) (PHNX) 815.00p 7.31%
CLS Holdings (CLI) 224.50p 6.40%
TalkTalk Telecom Group (TALK) 102.80p 5.22%
Hunting (HTG) 644.50p 4.29%
Playtech (PTEC) 782.20p 4.04%
Rightmove (RMV) 4,482.00p 3.99%
IP Group (IPO) 114.60p 3.62%
Bodycote (BOY) 948.50p 3.60%
Clarkson (CKN) 3,295.00p 3.44%
Fenner (FENR) 479.80p 3.32% FTSE 250 - Fallers SIG (SHI) 143.10p -4.60%
Vectura Group (VEC) 72.25p -4.18%
Man Group (EMG) 179.15p -3.97%
Rathbone Brothers (RAT) 2,652.00p -3.56%
Sophos Group (SOPH) 499.60p -3.37%
Indivior (INDV) 382.70p -2.51%
Purecircle Limited (DI) (PURE) 430.00p -2.49%
Moneysupermarket.com Group (MONY) 276.80p -2.40%
AA (AA.) 86.04p -2.23%
Intermediate Capital Group (ICP) 1,048.00p -2.05% |
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| | Europe close: Stocks finish on a high note |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Stocks ended the week on a high note amid possible signs that rate-setters in the States weren't pushing for much quicker pace of rate hikes than markets had already discounted. Critically, in its semi-annual monetary policy report to Congress, released on Friday, the Federal Reserve stuck to its view that in 2018 consumer prices were likely to remain at or beneath their 2% target, indicating that labour cost growth was not excessively rapid. Nevertheless, the mood was very clearly cautious. Indeed, as strategists at Bank of America-Merrill Lynch pointed out, $13.2bn of inflows into equities over the past week, reflecting a higher growth/higher rates backdrop, had not been reflected in the direction of flows into other asset classes. "[...] inflows to deflationary winners of tech, investment grade bonds, emerging market bonds/equities continues," they said. BofA-ML also pointed out to clients the recent inverse correlation between the US dollar and Treasury bond yields, a rarity which had only been observed less than 10% of the time over the past half century. And when it had occurred, they said in the same research report sent to clients, it had coincided with "bouts of inflation and/or market volatility [...] on average inflation rose 2 percentage points, equities fell 9% and volatility rose 22 percentage points; higher wages remains the obvious risk to investors; higher wages & peak profits/growth much less anticipated." Against that backdrop, by the closing bell the benchmark Stoxx 600 was ahead by 0.22% or 0.82 points to 381.16, alongside a rise of 0.18% or 21.88 points in the Dax and an advance of 0.93% or 208.64 points to 22,672.15 for the FTSE Mibtel. Meanwhile, euro/dollar was trading lower by 0.30% at 1.2292. On the macroeconomic front, Eurostat confirmed that the rate of increase in consumer prices within the single currency bloc slipped from a 1.4% year-on-year pace to 1.3%. Shortly beforehand, Germany's Ministry of Finance reported that the expansion in the country's gross domestic product slowed from the 0.8% quarter-on-quarter pace observed in the third quarter to 0.6%, as expected. St.Gobain stock was higher as the construction products and innovative materials manufacturer posted a 16.7% jump in recurring net income to reach €1.63bn. French auto parts supplier Valeo on the other hand skidded lower after reporting a 24% drop in net income to €380m on the back of negative exchange rate effects and from the impact of higher raw materials prices. In Spain, all eyes were on Inditex, until recently that market's largest company in terms of market capitalisation, with shares moving sharply lower as analysts at Citi and JP Morgan slashed their target prices on the stock ahead of its 14 March full-year numbers, sending shares 6.36% lower to €25.19. Citi cut its target to €36.50, saying "we forecast gross margin -120bp due to the FX pressure and the launch of the Spring/Summer collection in January." To take note of, Swedish rival H&M had also come under severe pressure of late amid reports that short-sellers had amassed significant positions in its shares. |
| | Market Analysis 23/02/2018 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: Wall Street opens firmer as tech stocks pull indices higher | Wall Street trading kicked off with all major indices opening firmer on Friday following on from highs seen at the end of the previous session, with another round of Fedspeak very much in focus. At 1500 GMT, the Dow Jones Industrial Average and Nasdaq had moved up 0.65% and 0.66% respectively, while the S&P 500 grew 0.61% firmer, helped in part by a pullback in bond yields as the key US 10-year Treasury note dropped below 2.9%. David Morrison, senior market strategist at GKFX, said: "Despite these gains, the only thing which anyone can say with certainty is that the jury's still out when it comes to predicting the next big move for US stock indices." Morrison pointed out that so far this week all major indices had failed to break conclusively to the up or downside, reflecting uncertainty amongst investors. Strategists at Bank of America-Merrill Lynch were of a similar view, pointing out that the previous week's $13.2bn of inflows into equities, reflecting a higher growth/higher rates backdrop, had not been reflected in other flows. "[...] inflows to deflationary winners of tech, IG bonds, EM bonds/equities continues. "Recent 5 months of lower US dollar & higher US bond yields rare (<10% of past 50-year history, Table 1, though v common in Emerging Markets); has coincided with bouts of inflation and/or market volatility...on average inflation rose 2ppt, equities fell 9% and volatility rose 22ppt; higher wages remains the obvious risk to investors; higher wages & peak profits/growth much less anticipated," they said. Earlier this week, there was a number of occasions on which rallies were curtailed by aggressive selling. This was particularly apparent on Wednesday, after the release of minutes from the Fed’s last FOMC meeting at the end of January, when the major indices reversed initial gains for a high-to-low swing of 2% in both the Dow and the S&P. "We may get some resolution by tonight's close. However, investors may be wary of taking on too much risk ahead of new Fed Head Jerome Powell’s testimony in Washington next week on monetary policy. Once again, bond yields will be key as the 10-year still threatens a break above 3.0%," said Morrison. On a related note, in an interview with Bloomberg on Thursday, US Treasury Secretary Steven Mnuchin dismissed concerns about rising wages, saying they won’t necessarily prompt a rise in inflation. "There are a lot of ways to have the economy grow...You can have wage inflation and not necessarily have inflation concerns in general," he said. With this in mind, potentially market moving remarks were possible on Friday from New York Fed President William Dudley and Boston Fed chief Eric Rosengren at the Chicago Booth School of Business's Fed policy forum at 1515 GMT, and separately those of Cleveland Fed President Loretta Mester at 1630 GMT, as well as a speech from San Francisco Fed President John Williams at 1840 GMT. On the corporate front, US food company General Mills made a move into the pet food market as it agreed to buy Blue Buffalo for $40 per share in cash, which is around $8bn. Blue Buffalo shares surged 16.84%, while General Mills fell off 3.86%. Chemical company Albermarle moved ahead 2.45% after it hiked its quarterly dividend by 5% to 33.50 cents a share. Hewlett-Packard shares jumped 9.63% after the tech group reported a strong first quarter that beat earnings expectations and raised its full-year projections. Xcerra lost 0.21% after the semiconductors and electronics testing firm announced it would terminate its sale to a Chinese group, citing difficulties receiving federal approval was too much for the $580m deal. |
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| | Cryptocurrencies Report | | Top Cryptocurrencies | # | Name | Market Cap($) | Price(%) | Change | Price Graph(3m) | | 1 |  | Bitcoin (BTC) | 170,513,783,930 | 10,112 | +2.87% |  | | 2 |  | Ethereum (ETH) | 83,699,399,413 | 853.2 | +6.27% |  | | 3 |  | Ripple (XRP) | 38,806,634,405 | 0.95461 | +7.4% |  | | 4 |  | Bitcoin Cash / BCC (BCH) | 21,397,060,458 | 1,204.8 | +0.06% |  | | 5 |  | Litecoin (LTC) | 11,073,412,107 | 205.71 | +6.59% |  | | 6 |  | Cardano (ADA) | 8,768,664,891 | 0.317814 | +1.64% |  | |
| | Atlantic Advisory - Share Tips of the Year 2018 | | Download Our Latest Report Here Losses can exceed deposits |
| | Broker tips: Lancashire, BT Group, BAE Systems | Credit Suisse upgraded non-life insurer Lancashire Holdings to 'buy' from 'underperform', saying that despite its fourth-quarter pre-tax losses missing consensus expectations, the share price offered a better level of risk/return. Swiss bank dropped Lancashire's target price to 580p from 620p, citing potential risks to their target price coming in the form of large losses, reserving and investment risks, with Lancashire's outlook comments "less positive than expectations", which had driven the shares lower. Analysts pointed out that rate increases following Lancashire's heavy losses in 2017 were expected to be in the "mid-single digit level", and as new business opportunities had been limited as the insurer's peers had defended their long-term relationships, but said, "nevertheless, given the share price de-rating and potentially positive read-across from a pick-up in M&A activity, we think that the shares now offer a more balanced risk/return." As Lancashire has material exposure to catastrophe and tail risks, the firm's management, which had previously expected substantial price increases that could have led to improved shareholder returns to come on the back of the large losses witnessed in 2017, had scaled back their expectations for 2018, suggesting that initial indications had initially been too optimistic and that the environment became more competitive as January renewals approached. "While these developments pose questions on Lancashire's longer-term strategy, we continue to think that the company still plays an important role in the current (re)insurance market albeit one less levered on catastrophe risks," the Friday morning note read. "We trim our 2018E but raise our 2019E/20E estimates by 4%-5% on higher investment returns," it concluded. Analysts at Berenberg upgraded telecommunications giant BT Group from 'hold' to 'buy' on Friday, saying that improving clarity on key strategic issues and improving market confidence triggered the re-rating. Berenberg said its revised target price on BT, down from 320p to 310p, represented a 33% upside and even though it was "slightly below 2018/19 consensus", its analysts believe the valuation was "sufficiently attractive to turn positive now". Carl Murdock-Smith and his team of analysts said that by the time the 2019-20 fiscal year rolled around, infrastructure investment, the end of public sector headwinds, remedial action to fix its Italian operations and scope for outperformance on EE synergies would coalesce to create growth in revenue, EBITDA and normalised FCF over at BT. Berenberg also noted that in the long-term, BT was quite unlike most telecoms companies as it would actually be a beneficiary if real interest rates increase, given that its pension deficit would shrink. "BT has faced tough financial drags in recent regulatory reviews. We believe the extent to which this is due to Ofcom’s cost attribution review is underappreciated," Berenberg's analysts noted, but this was before Ofcom released its Wholesale Local Access review on Friday morning. Defence giant BAE Systems was under the cosh on Friday as JPMorgan Cazenove downgraded the stock to ‘underweight’ from ‘neutral’ and trimmed the price target to 550p from 555p following the company’s full-year results a day earlier. The bank said BAE’s lacklustre guidance for 2018 earnings before interest, tax and amortisation and free cash flow suggests that, for the foreseeable future at least, it will continue to underperform its peers in US defence and in European civil aero. JPM reckons the US portfolio can grow more than 5% a year for several years. However, UK sales look flat at best and defence export sales are unpredictable by nature. The bank argued that BAE needs a new export Eurofighter order to fill a hole in its delivery schedule from 2019-21. "Our estimates only include deliveries where a firm order is won so there would be upside to our 2019- 21E earnings per share if a large Eurofighter order was secured. Based on channel checks we worry Saudi Arabia won't order EFs in the coming year, but this is just our opinion." Shares in BAE fell on Thursday as it posted a jump in 2017 sales and earnings but said earnings for 2018 would be flat on the back of organisational changes and the adoption of a new accounting standard. Analysts had been expecting earnings to rise 2% in 2018. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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