Evening Euro Markets Bulletin

ADVFN III Evening Euro Markets Bulletin Daily world financial news Tuesday, 06 February 2018 20:21:06 Monitor Quote Charts News CFD's Compare Brokers Free BB   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 London Market Report FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts London close: Market volatility leaves traders licking their wounds London stocks finished firmly in the red on Tuesday, taking their cue from a bloodbath on Wall Street and in Asia as investors fret that rising inflation will force the Fed to hike rates more than initially expected this year. At the close of trading, the FTSE 100 was down 2.64% or 193.58 points to 7,141.40, which was slightly above the 7,117.88 plumbed at the weakest point of the day, while the pound was flat against the dollar at 1.3967 and 0.14% weaker versus the euro at 1.1271. Stateside, Wall Street's main equity market gauge were trading on either side of the unchanged mark but only after having begun the session with another dose of heavy selling and amid wild moves in some of the most widely-followed gauges of volatility. That was on top of losses overnight that saw the S&P 500 and the Dow Industrials suffer their biggest declines since August 2011, alongside similar declines in Asia, with the Nikkei and Hang Seng closing down 4.7% and 5.1%, respectively. US stocks had enjoyed record highs recently as investors welcomed President Donald Trump’s tax overhaul, but a strong non-farm payrolls report last Friday, which showed the best US wage growth in eight-and-a-half years, prompted fears that the Fed may need to hike rates more than previously anticipated. Some market commentators also suggested that automatic trades could have been behind the sharp move lower seen on Monday. Commenting on Tuesday's price action, analysts at Oxford Economics said: "The ongoing correction in global equities was overdue. The pretext and triggers are less important. Extended valuations often find their own triggers. But worries about a 1994-style rise in interest rates derailing global risk appetite look overblown to us. "Both the macro and policy environments are vastly different. Given strong earnings (EPS) cycles and no evident liquidity stresses, we look to buy more into the correction. Japan, EM Asia and the even US are on our radar." For his part, Chris Beauchamp, chief market analyst at IG, said: "A host of indicators, including market breadth, are at the kind of levels that signal short-term bottoms, suggesting that a bounce from here is entirely within the bounds of possibility, even if it is then followed by fresh declines." Beauchamp said that for those investors with a horizon beyond the next 48 hours, the chance to pick up some stocks at cheaper prices should be too good to pass up. "The relative calm seen in gold prices also points to the idea that this isn’t some kind of major risk-on/risk-off move as we were used to years ago. The speed of the correction, not its size, is the real shock, particularly to a market inured to low volatility. A crystal ball would be handy at this point, but in the absence of such a device it is possible that equities will resume their climb higher in due course, although not perhaps in the same quiet fashion." According to Neil Wilson at ETX Capital, the FTSE 100 was trading at less than 14 times earnings on a forward 12-month p/e basis, while S&P was below 16x and the Stoxx 600 below 15x. "Versus current multiples this does not look bad at all and might help weighted buyers come in to shore things up," Wilson said. "On a forward earnings basis, equities haven’t looked this cheap in half a decade – the big guys might just be tempted but then again there could be a little further for this to go and they may decide to wait another day or two before hoovering up bargains. In many ways we’re seeing the same kind of situation as after the Brexit vote – a significant correction without any fundamental (ex-UK) reason for the selloff, presenting buyers with a boat-load of opportunities." With stocks mired in the red across the board, it didn’t seem to matter too much whether individual company news flow was good or bad. Oil giant BP was weaker even as it reported a surge in profit to $2.1bn (£1.5bn) in the fourth quarter from $400m a year earlier as the oil company increased production. Underlying replacement cost profit for the three months to the end of December jumped as BP increased production at its upstream business. For the full year profit more than doubled to $6.2bn from $2.6bn. Hargreaves Lansdown was lower even as it said interim assets under administration rose 9% to £86.1bn and pre-tax profit was up 12%, and lifted its dividend by 17% to 10.1p per share. Ocado slumped as it posted strong sales growth from a "transformational" year, but also asked investors for extra cash as profits in 2018 will be hit by investment in new facilities. EasyJet on the other hand managed to buck the wider market trend after it reported an 8.7% jump in January traffic on Tuesday as the load factor ticked up, while Babcock International fell after saying that adjusted earnings for 2018 will be in line with management expectations, but revenue will fall short due to tough trading conditions. Stagecoach shares crashed as the UK transport minister said on Monday that the government could take over the company’s running of the rail route between London and Edinburgh after it got its numbers wrong when bidding to run the franchise. Sanne Group retreated as it said it still expects to report underlying earnings per share in line with the board's expectations for the year. St Modwen Properties was on the back foot after posting a rise in full-year profit and announcing the retirement of chairman Bill Shannon. Softcat, a provider of IT infrastructure products and services, managed to eke out gains after saying results are expected to be “slightly exceed” of previous expectations for the full year. On the broker note front, LSE was upgraded to ‘overweight’ at JPMorgan, while Direct Line was lifted to ‘overweight’ at Barclays. Market Movers FTSE 100 (UKX) 7,141.40 -2.64% FTSE 250 (MCX) 19,262.56 -2.17% techMARK (TASX) 3,217.81 -2.72% FTSE 100 - Risers Tesco (TSCO) 199.90p 0.58% easyJet (EZJ) 1,643.00p 0.09% Antofagasta (ANTO) 912.60p -0.41% Berkeley Group Holdings (The) (BKG) 3,853.00p -0.44% Sky (SKY) 1,045.00p -0.48% GKN (GKN) 408.00p -0.51% Barratt Developments (BDEV) 563.00p -0.71% Anglo American (AAL) 1,647.60p -0.76% Burberry Group (BRBY) 1,541.00p -0.80% Randgold Resources Ltd. (RRS) 6,458.00p -1.01% FTSE 100 - Fallers Standard Life Aberdeen (SLA) 396.00p -5.10% Schroders (SDR) 3,451.00p -5.06% Scottish Mortgage Inv Trust (SMT) 422.20p -4.95% Mediclinic International (MDC) 556.60p -4.76% Hargreaves Lansdown (HL.) 1,751.50p -4.37% Hammerson (HMSO) 456.00p -4.30% BAE Systems (BA.) 561.20p -4.17% National Grid (NG.) 748.70p -4.16% United Utilities Group (UU.) 693.00p -4.10% Evraz (EVR) 352.30p -4.08% FTSE 250 - Risers Capita (CPI) 197.45p 13.41% Investec (INVP) 558.80p 3.79% AA (AA.) 127.05p 3.55% Hochschild Mining (HOC) 220.10p 1.85% Diploma (DPLM) 1,095.00p 1.67% Renewi (RWI) 95.20p 1.49% Superdry (SDRY) 1,708.00p 0.83% Acacia Mining (ACA) 176.40p 0.74% Brown (N.) Group (BWNG) 201.40p 0.70% Redrow (RDW) 593.50p 0.68% FTSE 250 - Fallers Petrofac Ltd. (PFC) 467.00p -7.16% Man Group (EMG) 194.40p -6.49% BGEO Group (BGEO) 3,342.00p -6.07% Stagecoach Group (SGC) 137.00p -5.71% F&C Global Smaller Companies (FCS) 1,265.00p -5.60% Go-Ahead Group (GOG) 1,440.00p -5.45% Genus (GNS) 2,222.00p -5.45% Alfa Financial Software Holdings (ALFA) 444.50p -5.43% Marshalls (MSLH) 384.80p -5.22% Fisher (James) & Sons (FSJ) 1,408.00p -4.99% Leeds City Centre Apartments Invest in the UK’s number 1 property hotspot Priced from just £124,995  Fully managed, 6.5% NET yields Only 33 Units available, Expected to sell out within weeks Find Out More Top of the stocks Number of Deals Bought Place EPIC Equity name % 1 CPI Capita plc 4.84 2 SMT Scottish Mortgage Investment Trust 2.07 3 RDSB Royal Dutch Shell Plc B Shares 1.35 4 LLOY Lloyds Banking Group plc 1.33 5 SXX Sirius Minerals plc 1.16 6 Amazon.com Inc. 1.16 7 IQE IQE plc 1.13 8 VOD Vodafone Group plc 1.11 9 BP. BP Plc 0.97 10 GSK GlaxoSmithKline plc 0.92 Number of Deals Sold Place EPIC Equity name % 1 LLOY Lloyds Banking Group plc 1.66 2 CPI Capita plc 1.48 3 IQE IQE plc 1.30 4 RMG Royal Mail PLC 1.22 5 XBT Provider AB 1.07 6 XBT Provider AB 0.97 7 GSK GlaxoSmithKline plc 0.96 8 SMT Scottish Mortgage Investment Trust 0.91 9 SXX Sirius Minerals plc 0.82 10 RDSB Royal Dutch Shell Plc B Shares 0.80 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) 126,384,099,000 7,596 +9.07% 2 Ethereum (ETH) 73,599,491,655 764.8 +9.02% 3 Ripple (XRP) 28,884,646,932 0.7519 +10.44% 4 Bitcoin Cash / BCC (BCH) 16,040,860,788 952 +7.39% 5 Cardano (ADA) 8,810,355,621 0.353999 +11.67% 6 Litecoin (LTC) 7,595,325,984 139.34 +10.77% Share Tips for 2018 The Share Centre’s investment research analyst Ian Forrest, comments on five equities, an investment trust as well as an ETF that our expert research team think could flourish in 2018.  Read more. Capital at risk. US Market Report US open: Stocks trading on either side of unchanged   Stocks on Wall Street are mixed, having recovered from another round of heavy losses at the opening bell, following a massive sell-off during the previous session, amid a spike in volatility and concern in some corners of the market regarding the likely pace of interest rate hikes by the Fed. Some analysts also suggested that automatic trading and sharp losses in products dependant on low volatility might have been the chief reason behind the selling seen on Monday. Commenting on the outsized moves in stocks and volatility, analysts at Morgan Stanley said: "While large one-day S&P drawdowns have historically been associated with higher-than-usual returns for equities and tighter spreads for credit in the subsequent 12 months, weakness tends to persist 3-6 months out. "Two key takeaways are that 1) risk assets can remain soft in the short term, and 2) realised volatility in months subsequent to sell-off episodes trends higher than usual, even as implied volatility drops off after initial spikes." Against that backdrop, as of 1644 GMT, the Dow Jones Industrial Average was trading higher by 0.01% or 16.69 points to 24,358.61, with the S&P 500 down by 0.33% or 8.62 points to 2,640.04 and the Nasdaq Composite lower by 0.04% or 3.22 points to 6,964.08. Meanwhile, the VIX was off by 1.66% at 36.70, having seen wild swings thus far throughout the day. At one point during Monday's session, the Dow Industrials suffered its largest point drop for a single day ever, alongside a record jump in the Chicago Board of Option Exchange's VIX volatility index. US stocks had enjoyed record highs recently as investors welcomed President Donald Trump’s tax overhaul, but a strong non-farm payrolls report last Friday, which showed the best US wage growth in eight-and-a-half years, led some traders to conclude that the Fed might need to hike rates more quickly than previously anticipated. Emmanuel Cau at JP Morgan chipped in: "Global equities did not experience any material weakness for nearly two years, valuations have become stretched and technical, positioning and sentiment indicators all flashed red in recent weeks. "The unwinding of this extreme bullishness could have a bit more to go in the near term, but our view is that the medium term fundamental backdrop remains supportive and that one should indeed use the recent dip as buying opportunity." With stocks roughly unchanged, Treasury prices slipped back again following Monday's rally, pushing the yield on the 10-year note up by five basis points to 2.75%. By way of a guidepost, the consensus 2018 year-end forecast for the 10-year yield was 2.9%. On the corporate front, Allergan dipped after it announced positive late-stage results for one of its migraine drugs and released its fourth-quarter earnings. Elsewhere, Dunkin Brands was also a tad lower even as its fourth-quarter profit and revenue beat analysts' expectations, while Gartner was in focus as its fourth-quarter net profit beat views but sales fell a little short. General Motors shares on the other hand were powering higher after reporting that cost-cutting and higher vehicle prices helped to offset a double-digit decline in sales volume during its fourth and final trading quarter   Atlantic Advisory - Share Tips of the Year 2018 Download Our Latest Report Here Losses can exceed deposits Broker Tips Broker tips: BT Group, Randgold, Forterra   Investors in Vodafone and Swisscom should expect to see dividend cuts, analysts at Macquarie said. In a nutshell, according to the analysts, outside of BT Group and Orange dividend growth rates in the Europeans telecom sector were "overstated". There also remained a long-term risk to consensus expectations for free cash flows, they said. The main drivers of their investment thesis for the sector were: firms' difficulty in growing revenues due to a cocktail of negative factors including price competition, regulators, politicians, consumer behaviour, the shift towards 'bundles', continued strong growth in consumer demand for speed and reliability and sustained high levels of capital expenditure. In the same note, Macquarie reiterated its 'outperform' recommendations for shares of Orange and Telecom Italia. The Australian broker also had BT Group (target price: 256p) and CityFibre at 'outperform' (target price: 49p) and Vodafone at 'underperform' (target price: 214p). Analysts at Credit Suisse stuck by their 'neutral' recommendation on shares of Randgold Resources but expressed surprise at management's decision the day before regarding the size of its dividend payout and what that said about their willingness to return any excess capital to shareholders. Indeed, its proposed $190m payout meant the outfit was in effect paying out almost all cash in excess of its target $500m cash buffer. "While reinvestment opportunities are on the horizon, namely Massawa, we take a more bullish stance on dividends in the coming years seeing the potential for yields of over 5% YE2019E, well above the majority of its gold peers," they said. Credit Suisse also noted Randgold Chief Mark Bristow's comments regarding the potentially "serious" impact that the Democratic Republic of Congo's proposed higher royalties might have on reinvestment in the region in the future. At the time, the Swiss broker's forecasts were predicated on 2018 gold price of $1,375/oz. and consensus estimates calling for a year-end 2018 yield on the benchmark 10-year US Treasury note of 2.90%. Analysts at Numis Securities took a look at the current position of the brick industry in the UK on Tuesday, concluding that while sales volumes across the nation were expected to remain "broadly flat", supply and demand dynamics remained attractive, and forecast higher prices too. "Looking to 2018, despite an expected increase in UK production, we believe that sales volumes by UK manufacturers will be flat (as 2017 was augmented by sales from inventory, which we do not think can repeat). We, therefore, expect demand growth to be met by an increase in imports, and this dynamic has historically led to higher brick prices," the report read. Indeed, Numis added it would "not be surprised" to see average 2018 brick price inflation in the mid-single digits, indicating share price upside for the likes of Ibstock and Forterra. Christen Hjorth, along with the co-authors of the industry review, said she believed that it was likely that growth for UK brick producers would be a mirror image of 2017, but noted that there were important mix dynamics to account for. In the same report, Numis indicated that Ibstock would likely outperform the industry with sales growth of 1%, projecting 5% growth at Forterra, driven by planned increases in available capacity. In parallel, the firms were expected to achieve average price increases of 4% and 4.9% over the year, respectively. "Driven by our peer group analysis, we believe that an average 2019 P/E ratio of 12.5x for the brick sub-sector is attainable on a one-year view. Based on this and an assumed 5% P/E ratio discount for Forterra (to reflect Ibstock's larger scale/liquidity), we set our target price at 288p/share for Ibstock (from 270p) and 335p/share for Forterra (unchanged). This suggests 15% and 19% upside, respectively, and we, therefore, maintain our Add recommendations for both companies."   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.   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. 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