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| | London close: Stocks track gains on Wall Street, Fed firmly in focus |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | London stocks finished near their session highs on Monday as investors began to entertain the apparently real possibility that rate-setters in the States might not be quite as hawkish as some market participants had been expecting. Critically, last Friday the head of the Federal Reserve bank of New York, William Dudley, made the case for allowing prices to rise past the monetary authority's 2% target, arguing that it followed logically from the central bank's 'symmetric' inflation target. Against that backdrop, the FTSE 100 was up 0.62% to 7,289.58, while the pound edged lower by 0.12% against the dollar to 1.3951 and by 0.13% against the European single currency to 1.1346, despite comments from Bank of England deputy governor Dave Ramsden and Labour leader Jeremy Corbyn. In an interview with the Sunday Times, BoE Deputy Governor David Ramsden said he now sees a stronger case for lifting rates sooner than previously thought. David Cheetham, chief market analyst at XTB, said: "Ramsden was one of only two members who voted against raising rates for the first time in a decade back in November, and this apparent hawkish shift in his views can be seen to suggest that there will be little opposition to further rate hikes going forward." To take note of as well, speaking from Coventry, opposition leader Jeremy Corbyn expressed his support for a customs union with the European Union after Brexit, which he said would avoid the need for a hard border with Northern Ireland and allow free-flowing trade for business. "Labour would seek a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union [...] with no new impediments to trade and no reduction in rights, standards and protections," he said. "We have long argued that a customs union is a viable option for the final deal. So Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe and to help avoid any need for a hard border in Northern Ireland." Investors were also digesting the latest figures from UK Finance, which showed mortgage approvals rose in January for the first time in four months, although lending to consumers fell. Approvals rose to 40,117 from a 56-month low of 36,085 in December, but consumer credit slipped 0.2% on an annual basis. Howard Archer, chief economic advisor at the EY Item Club, said: "January's rebound in mortgage approvals suggests that there may have been a hit to activity in December as a reaction to the Bank of England raising interest rates in November. It is also possible that cutting stamp duty for first-time buyers in the Chancellor’s Budget may have provided limited support to mortgage approvals in January. It should be noted that housing market activity can be particularly volatile around Christmas and New Year. “While January’s rebound in mortgage approvals suggests that December’s drop overstated the weakness of housing market activity, it is still subdued." In corporate news, miners were up on the back of early selling in the dollar and stronger copper and steel prices. Anglo American topped the group as it announced the completion of the sale of its interest in the Drayton thermal coal mine in Australia. Associated British Foods rose despite reporting a rare decline in like-for-like sales at its Primark retail arm in the first half of the year, as it said its full-year outlook was unaltered. Vodafone also advanced after saying it will become Samsung's exclusive strategic telecoms partner in selected European markets, to develop and launch a range of consumer ‘internet of things’ (IoT) smart home product and services. Veterinary products manufacturer Dechra Pharmaceuticalsrallied as first-half revenues cantered in ahead of expectations, while Senior was on the front foot as full-year profit came in ahead of expectations and sales exceeded £1bn for the first time. Events and business information provider Ascential gained after announcing a strong dividend hike and a review of its events business. Turnaround specialist Melrose Industries edged lower despite saying that its hostile £7.4bn for GKN has received clearance from financial authorities in the US and Canada. On the downside, Hiscox tumbled after the insurer posted a 91% drop in full-year pre-tax profit as it took a hit from natural catastrophes. "In a brutal year for insured catastrophe losses across the globe, Hiscox has delivered a fine underlying result," said broker Shore Capital. Distribution and outsourcing group Bunzl reversed earlier gains even as it posted a 13% jump in full-year pre-tax profit thanks to recent acquisitions and a weaker pound. Sub-prime lender Provident Financial was also under the cosh ahead of its preliminary full-year results on Tuesday and after reports in the Sunday newspapers that it has been sounding out investors about a "bumper cash call". The shares were coming off their lows later in the morning amid some optimistic broker comment. Hammerson turned lower as the property development and investment company - which announced a £3.4bn takeover of Intu Properties in December - reported a rise in full-year pre-tax profit as net rental income jumped 7%. "It was a strong set of results from the real estate investment trust (REIT), but the industry as a whole is suffering from the rise in online shopping, as major retail parks are starting to become less relevant," said David Madden at CMC Markets. Interserve retreated as the outsourcer was reported by the Sunday Telegraph to be "struggling" to put together a crucial debt refinancing deal after the collapse of Carillion spooked its lenders. In broker note action, BP and Centrica were lifted to 'outperform' from 'sector perform' by RBC Capital Markets, while Jupiter Fund Management was downgraded to 'sell' at UBS. Market Movers FTSE 100 (UKX) 7,289.58 0.62%
FTSE 250 (MCX) 19,828.73 0.14%
techMARK (TASX) 3,330.80 0.32% FTSE 100 - Risers Anglo American (AAL) 1,844.20p 3.09%
Associated British Foods (ABF) 2,726.00p 3.06%
International Consolidated Airlines Group SA (CDI) (IAG) 602.80p 2.66%
BAE Systems (BA.) 577.60p 2.23%
Kingfisher (KGF) 360.30p 2.07%
easyJet (EZJ) 1,664.50p 2.02%
Pearson (PSON) 714.00p 2.00%
WPP (WPP) 1,381.50p 1.92%
St James's Place (STJ) 1,144.00p 1.92%
Unilever (ULVR) 3,843.50p 1.89% FTSE 100 - Fallers Hammerson (HMSO) 465.80p -2.18%
Bunzl (BNZL) 1,982.00p -1.79%
Evraz (EVR) 425.50p -1.55%
Mediclinic International (MDC) 600.00p -1.38%
Standard Life Aberdeen (SLA) 371.00p -1.36%
TUI AG Reg Shs (DI) (TUI) 1,529.50p -1.07%
Relx plc (REL) 1,502.00p -1.05%
Shire Plc (SHP) 3,002.50p -0.71%
Barclays (BARC) 208.50p -0.62%
Rentokil Initial (RTO) 292.00p -0.54% FTSE 250 - Risers Ascential (ASCL) 400.60p 5.92%
Sirius Minerals (SXX) 26.84p 4.84%
Metro Bank (MTRO) 3,802.00p 4.02%
Vedanta Resources (VED) 770.80p 3.77%
Wizz Air Holdings (WIZZ) 3,542.00p 3.60%
Genus (GNS) 2,316.00p 3.58%
Kaz Minerals (KAZ) 861.60p 3.19%
Vectura Group (VEC) 74.80p 2.98%
Ultra Electronics Holdings (ULE) 1,481.00p 2.85%
Ferrexpo (FXPO) 313.50p 2.75% FTSE 250 - Fallers AA (AA.) 75.70p -12.23%
Provident Financial (PFG) 588.00p -10.45%
Serco Group (SRP) 89.75p -4.77%
Capita (CPI) 176.15p -3.05%
Spire Healthcare Group (SPI) 236.40p -3.04%
Cobham (COB) 116.95p -2.94%
Mitie Group (MTO) 156.80p -2.85%
Phoenix Group Holdings (DI) (PHNX) 795.00p -2.45%
Royal Mail (RMG) 556.60p -2.35%
Aggreko (AGK) 773.20p -2.32% |
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| | Europe close: Early gains stick ahead of Sunday votes in Italy, Germany |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Early gains for stocks on the Continent stuck, as investors took note of last Friday's advance on Wall Street which appeared to easily offsetting uncertainty ahead of the Italian parliamentary elections scheduled for the following Sunday. Investors also seemed care free ahead of the results of a postal vote by members of Germany's centre-left SPD, on whether to approve a coalition deal with Angela Merkel's CDU/CSU, due on 4 March. Stoking buying interest in stocks, according to some market watchers, the US Federal Reserve's semi-annual monetary policy report to Congress, published on Friday, appeared to be noticeably less hawkish than some market participants had expected, weighing on government bond yields and putting a big bid into the S&P 500 as a result. Against that backdrop, by the closing bell the benchmark Stoxx 600 was 0.50% or 1.90 points higher to 383.06, alongside an advance of 0.35% or 43.25 points to 12,527.04 for Germany's Dax and a gain of 0.51% or 26.89 points to 5,344.26 on the Cac-40. In parallel, the yield on the benchmark 10-year Bund was essentially unchanged at 0.65%, albeit after a six basis point plunge on Friday, while euro/dollar was edging 0.09% higher to 1.2306. Commenting on the outlook for the Italian political landscape following next Sunday's vote, analysts at Barclays Research told clients: "We think the spectre of political instability could cast a long shadow, as a future coalition government may group together several political parties with very different views on critical subjects such as fiscal policy, structural reform implementation and the relationship with European partners and authorities." Basic Resources was among the strongest segments in the market, with the Stoxx 600 sector gauge adding 1.34% to 485.55 on the back of an earlier dip in the US dollar and amid sharp gains in Chinese steel futures on reports that the Chinese city of Tangshan might extend output curbs from March to November. Meanwhile, at the individual level, Bank of Ireland said it was set to restart paying dividends after posting full-year underlying profits of €1.1bn, but shares fell. "Excluding [a 44% jump in non-busienss income], adj. PBT was 18% above UBSe on loan loss write-backs of €44m, partly offset by a 6% NII miss. Net write-backs reflect the improving economic conditions in Ireland, which is good, but we don’t expect this to be extrapolated with BoI guiding to a 20bps of LLPs in 2018," commented analysts at UBS. Stock in Thales was slightly lower as well, even after clinching a AUD$1.2bn contract to provide air traffic management services Down Under. Further East, shares in Germany's Daimler were lower despite news that China's Geely had built up a nearly 10% stake in the carmaker. Also in Germany, contrary to media reports, Innogy had no plans for a sale to either of its main rivals, Spain's Iberdrola or Italian outfit Enel, the company's management said on 23 February. |
| | 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 rising interest rate fears recede | Trading in US stocks started on a firmer footing on Monday as investors on Wall Street shook off worries about the recent inflation picture and rising interest rates while thumbing through a slew of data releases ahead of Jerome Powell's first testimony as Federal Reserve chairman. At 1515 GMT, the Dow Jones Industrial Average had moved up 0.83%, while the S&P 500 and Nasdaq were 0.59% and 0.68% higher, respectively. Fedspeak was in focus as St Louis Fed President James Bullard gave a speech at the National Association of Business Economics in Washington where he said it would be a smart move for the Federal Reserve to periodically review its inflation framework. However, any change would require a firm guarantee that a new set up would provide benefits over the current 2% target, he said. In order to change the framework, "you would have to get buy-in from the political side. You would have to get buy-in from the larger financial community." Several Fed chiefs had previously called for a review of how the Fed sets its inflation target and "that is a good thing to do and I am hopeful the committee will go ahead and do it," Bullard explained. Fed Vice chairman Randall Quarles was also due to speak at the same event, later in the day. In any case, the week's main attraction still lay ahead, on Tuesday, when Fed chairman Jerome Powell was set to deliver his first congressional testimony. Investors would be looking for any clues on the pace of future monetary tightening given the split in the market between those who expected the US central bank could hike rates four times over the course of 2018 and those who were still anticipating only three hikes. Rebecca O'Keeffe, head of investment at Interactive Investor, said Powell has had a baptism of fire in the three weeks since he took on his new role, with markets experiencing huge volatility on fears that inflation will see the Fed raise rates more aggressively than anticipated. "The opportunity to establish what Mr Powell thinks about the US economy, inflation, interest rates and asset values is therefore highly important for markets. "Current market valuations were one of the main talking points from Warren Buffett’s annual letter, as he gave investors his view of the world. His efforts to deplete his burgeoning war chest and pull the trigger on a major deal in 2017 were all scuppered by his inability to find anything that he believed offered a 'sensible purchase price'. For the ultimate deal maker and value investor to conclude that the market is not offering any attractive buying opportunities is a potentially worrying sign for investors." On the corporate front, Dean Foods tumbled 15% after the company fell short of earnings estimates for the fourth quarter and offered guidance below consensus Hibbett Sports dropped off 2.57% out of the gate, despite its fourth-quarter earnings per share beat analysts' expectations, and General Electric fell back 3.21% after it nominated three new candidates to its board of directors as the size of the board is cut to 12 directors from 17. UPS shares picked up 0.50% following news the parcel delivery service is suing the European Union's antitrust watchdog for €1.74bn over its decision to block a planned merger with TNT Express. On the macroeconomic side of things, new US home sales fell to an annualised rate of 593,000 for January after an upwardly-revised 643,000 for December (consensus: 647,000). Despite the big miss, Ian Shepherdson at Pantheon Macroeconomics was quick to point out how net revisions of 42,000 to the prior three months of data had largely offset Monday's 'miss'. "January sales were well below the pace implied by the lagged mortgage applications numbers, about 675,000, so we look for a hefty rebound in February sales. Any weakening on the back of the rise in mortgage rates likely won't be visible until late spring at the earliest. In the meantime, inventory remains tight - though it is rising - pushing up prices by about 5% y/y," he said. Elsewhere, the Chicago Fed's index of national economic activity showed activity relaxing to a positive 0.12 in January from a downwardly revised but positive 0.14 in December, owing mainly to a slowdown in factory activity. The index, a measure of activity levels in the US economy, had been moving in a narrow band over recent months, with October's reading of positive 0.87 being the highest for the volatile index since a positive 0.94 was recorded in December 2006. The index's less-volatile three-month moving average fell to positive 0.12 in January from positive 0.26 in December. |
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| | Cryptocurrencies Report | | Top Cryptocurrencies | # | Name | Market Cap($) | Price(%) | Change | Price Graph(3m) | | 1 |  | Bitcoin (BTC) | 174,638,673,567 | 10,402.07 | +8.72% |  | | 2 |  | Ethereum (ETH) | 84,951,897,697 | 870.41 | +3.62% |  | | 3 |  | Ripple (XRP) | 37,369,431,287 | 0.93111 | +3.41% |  | | 4 |  | Bitcoin Cash / BCC (BCH) | 21,285,920,526 | 1,255.2 | +7.32% |  | | 5 |  | Litecoin (LTC) | 12,400,588,777 | 222.74 | +2.59% |  | | 6 |  | Cardano (ADA) | 8,884,636,678 | 0.3282 | +1.3% |  | |
| | Atlantic Advisory - Share Tips of the Year 2018 | | Download Our Latest Report Here Losses can exceed deposits |
| | Broker tips: Provident Financial, Ascential, IQE, BP | Provident Financial is down at its lowest levels since the mid-1990s on the back of a weekend newspaper report that suggested the doorstep lender has been sounding out investors for a "bumper" capital raise. The Sunday Telegraph had said management was looking for up to £500m to cover the cost of fines and to shore up its balance sheet. The article said that the announcement could be made alongside results that are due on Tuesday. Broker Numis suggested the balance sheet does not need shoring up as Provident is "trading profitably and it is not paying dividends". Provident, as well as recovering from its calamitous strategic rejig last year, is under investigation by the Financial Conduct Authority over its Moneybarn car loans business and the repayment option plan (ROP) sold by its Vanquis Bank arm. At the start of February, Malcolm Le May was made permanent chief executive, with the banking veteran having last year been appointed executive chairman on a temporary basis. "While we believe it is possible that Provident could secure a contingent capital facility from shareholders, if there is a capital raise we believe a firm outcome from the FCA is required so that the quantum of any customer redress can be known," Numis said. The resolution of ROP "should see investors start to look at the value of the group as opposed to obsessing about ROP", analyst James Hamilton said. Hamilton believes Provident is worth about £3bn "on a look through basis" and consequently if ROP were to cost £0.5bn -- though he does not think it will cost anything like that -- "shareholders should double their money". The shares were seen as a 'buy', "if there is 100% upside in a worst case scenario". Analysts at Numis reiterated their 'buy' recommendation for shares of Ascential following its latest set of full-year numbers, which it described as "strong", highlighting the better-than-expected dividend payout. The company's outlook was also "encouraging", Numis said, given management's expectations for better sales and profits. In particular, they noted the company's confidence on the back of "the current level of forward booked revenue." "The achievements of 2017 have positioned them well to increase their growth rate in revenue and profit in 2018 and the Board is confident in its prospects for continued success," Numis said. Profits ahead at every level and debt as expected at 2.3 times' earnings before interest taxes and depreciation led to a payout of 5.6p per share (Numis: 5.3p). All in all, following the latest results, Numis revised its estimate for Ascential's earning per share in 2018 from 19.3p to 19.5p and, after rolling forward their target, raised the latter from 405p to 455p. Analysts at Canaccord reiterated their recommendation of 'buy' on shares of semiconductor developer IQE on Monday, dismissing claims that the company had misled investors. Commenting on the recent accusations from short-sellers Muddy Waters and ShadowFall, Cannacord analysts said they "don’t subscribe to the view that the joint ventures (JVs) were created to 'deceive investors' and that IQE's accounts are entirely consistent with those of its JVs." The Canadian broker added: "Recent weakness caused by the short sellers has created an attractive entry point which offers substantial upside to our unchanged target price of 190p." In a research note sent to clients, the broker further argued that it believes IQEs margins for the second half of 2017 will be strong after a company trading update on 20 December said that revenues would not be less than £150m. Canaccord analysts also stated that Muddy Waters and ShadowFall had failed to note IQE’s potential after focusing on its JV’s, stating that the company has seen "no change of accounting policy" and that its figures are "entirely consistent with the JV accounts." Speaking of IQE’s realistic potential, the analysts argued that "it is unrealistic to expect a JV created just two years ago to have either filed any patents or generated a profit" and that there are "many other mass-market opportunities for compound semiconductors (CS), whose superior properties make them preferable to silicon for many applications." "In short, we believe this note demonstrates that IQE did not create the JVs in order to inflate short-term revenues and cash flows, as the bear reports have suggested. More importantly, we believe that IQE is at the beginning of an exciting journey and has the potential to become a leading global player in the fast-evolving compound semiconductor industry." Analysts at RBC Capital Markets took a look at oil and gas giant BP on Monday morning, saying they believed its cash flow framework would improve in 2018 as a result of a growing upstream base and favourable dynamics in the downstream, the latter of which it felt "may be underappreciated by the market". RBC upgraded BP to 'outperform' from 'sector perform' and raised its target price to 570p from 550p, citing continued earnings momentum, both in the upstream and downstream, and more importantly improved cash conversion throughout the year as its principal reasoning. "2017 was a transition year for BP, with a number of major projects in final execution stages and still a significant Macondo burden. We look to 2018 for continued earnings momentum both in the upstream and downstream, and more importantly, we expect cash conversion to improve this year," wrote analyst Biraj Borkhataria. In terms of risks to its target price, RBC warned that BP's addition of fixed cash payments relating to the settlement on the April 2010 Deepwater Horizon oil spill would see the firm hit with a cash charge of $3.1bn in 2018, with a reduction to $2bn in 2019, with the investment bank also noting that it was expecting BP to "de-leverage more slowly than peers in a higher oil price environment". "BP trades on a ~6.1% dividend yield, which we see as well covered on an organic basis between $50-55/bbl. We expect improving earnings and cash generation to show through in early 2018 as BP captures higher commodity prices and widening crude spreads. BP trades on 6.1x EV/DACF in 2019E versus the global sector average 6.8x and the European average at 5.9x," Borkhataria concluded. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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