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| | London close: Shares dip despite fresh M&A news |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | London stocks failed to build on the gains seen on Wall Street at the end of last week as investors mulled over news that London house prices have slumped over the last year, while M&A was in focus as Melrose sweetened its hostile bid for GKN. The FTSE 100 finished 0.13% lower at 7,214.76, while the pound was up by 0.4% against the dollar to 1.3902 and 0.2% firmer versus the euro at 1.1271. On Friday, the Nasdaq hit a record high as US stocks rallied on the back of solid jobs data, which revealed the perfect combination of a much stronger-than-expected non-farm payrolls number and a worse-than-expected wage growth reading. According to David Madden at CMC Markets UK: "It has been a lacklustre session today as it was a quiet day on the news front. The mood was optimistic in general, but a slide in commodity prices left the FTSE 100 disadvantaged in relation to its Continental counterparts. Only some of the bullish sentiment from the Asian session has slipped over to Europe." Investors were also digesting uninspiring news that house prices in some parts of London have fallen as much as 15% in the last year. Figures from estate agency YourMove revealed that house prices in Wandsworth dropped by more than £100,000 in the last 12 months. On the corporate front, turnaround specialist Melrose Industries was on the back foot as it upped its hostile offer for engineer GKN to 467p per share, or £8.1bn from £7.4bn. The sweetened 'final' offer comes after GKN announced on Friday that it had agreed to combine its automotive business, Driveline, with US-based Dana in a deal valued at around $6.1bn. GKN was also trading lower. Polymetal International was in the red as it said net profit declined 10% in 2017 while generic drug-maker Hikma Pharmaceuticals also retreated after saying it will carry out a clinical trial of its generic version of GlaxoSmithKline's Advair Diskus asthma drug after consultation with the US drug regulator. AstraZeneca was little changed as it said it has pushed back the expected completion of the Phase III 'Mystic' clinical trial of its Imfinzi immunotherapy treatment of non-small cell lung cancer. Petrofac gushed higher as it was awarded a lump-sum 27-month engineering, procurement and construction (EPC) contract by Bharat Petroleum Corporation (BCPL) valued at around $135m. Clarksons gained as it posted a 12% jump in full-year underlying pre-tax profit amid early signs of a recovery across shipping markets. In broker note action, Just Eat was downgraded to ‘sell’ at Deutsche Bank, while Smurfit Kappa was cut to ‘neutral’ at UBS. Aveva was downgraded to ‘neutral’ at Citi and Virgin Money was reduced to ‘hold’ at Jefferies. Cairn Energy was lifted to ‘overweight’ by Morgan Stanley, while CYBG was upped to ‘buy’ at Jefferies. |
| | Market Movers | FTSE 100 - Risers - Easyjet Plc (LSE:EZJ) - £1594, 1.98%, £31
- Marks & Spencer (LSE:MKS) - £284.9, 2.59%, £7.2
- GKN Plc (LSE:GKN) - £438.9, 0.87%, £3.8
- Centrica (LSE:CNA) - £142.55, 0.53%, £0.75
- Std Life Aber (LSE:SLA) - £375, 1.24%, £4.6
- United Utilities (LSE:UU.) - £711.4, 1.25%, £8.8
- Evraz Plc (LSE:EVR) - £444.8, 1.78%, £7.8
- Pearson Plc (LSE:PSON) - £764, 1.68%, £12.6
- St. James's Place (LSE:STJ) - £1156.5, 0.3%, £3.5
- Severn Trent (LSE:SVT) - £1831.5, 0.3%, £5.5
FTSE 100 - Fallers - Just Eat (LSE:JE.) - £754.8, -4.26%, £-33.6
- NMC Health (LSE:NMC) - £3438, -2.16%, £-76
- Randgold Resources (LSE:RRS) - £5934, -1.66%, £-100
- Antofagasta Plc (LSE:ANTO) - £886, -0.94%, £-8.4
- Fresnillo plc (LSE:FRES) - £1213.5, -2.02%, £-25
- BHP Billiton (LSE:BLT) - £1421.8, -0.98%, £-14
- Rio Tinto (LSE:RIO) - £3682.5, -1.18%, £-44
- Burberry Group (LSE:BRBY) - £1638.5, -1.74%, £-29
- Tesco (LSE:TSCO) - £212.2, -0.24%, £-0.5
- Smurfit Kappa Group (LSE:SKG) - £3182, -1.18%, £-38
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| | Europe close: Indices edge higher despite simmering trade tensions |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Stocks across the Continent managed to hold on to their early gains even after the US president said on Monday he wants the European Union to eliminate the "large" tariffs and barriers that discriminate against his country's farmers and manufacturers. That followed an inconclusive round of talks at the weekend between EU trade commissioner Cecilia Malmstrom and her American counterpart, with Brussels failing to win assurances that it will be exempted from US tariffs on steel and aluminium. Indeed, at a Saturday rally ahead of a special election in Pennsylvania to choose one of the state's representatives, Donald Trump reiterated a threat to impose tariffs on imports of luxury German cars, prompting Malmstrom to vow to "stand up to bullies". Against that backdrop, by the close of trading the benchmark Stoxx 600 was ahead by 0.25% or 0.96 points at 379.20, alongside a 0.58% or 71.71 point jump on the German Dax to 12,418.39. Out on the periphery meanwhile, Spain's Ibex 35 was rising by 0.43% or 41.40 points to 9,727.50. Commenting on Monday's market action, Michael Hewson, chief market analyst at CMC Markets UK, said: "While US markets appear to have recovered some of their 'mojo', the same cannot be said for markets in Europe which are struggling to rebound meaningfully from their recent lows. "Concerns abound with respect to the political backdrop in Europe with Italy now replacing Germany as a potential pressure point. There is also the fact that recent economic data has shown that the vibrant growth story of the past few months in Europe may well be starting to slow, at precisely the time that the European Central Bank is looking at easing off the monetary accelerator." In a similar vein, on Sunday UniCredit chief economist Erik Nielsen had expressed concern at the potential negative implications for growth of a trade war and the populist shift seen in the last Italian elections. Nevertheless, he said: "And monetary policies will not remain super-accommodative indefinitely. The Fed is now signaling that they may be eying four (rather than three) hikes this year, and on Thursday, the ECB toughened their language as part of their communication leading to an end to QE around the end of this year. In my assessment, it is not likely that a forthcoming economic slowdown will be prevented by a reversal of the presently ongoing monetary policy normalization among the major central banks." No major economic data was scheduled for release on Monday. M&A was the chief factor behind gains in Germany's top flight index as shares of E.On, RWE and Innogy leapt higher after the former two of those companies unveiled a complex cross shareholding plan that would see RWE recover some renewable energy assets, with both companies contributing the necessary financing in order to buy out Innogy's retail investors. At the pan-European level meanwhile, the Stoxx 600 utility index was climbing 1.03% to 278.69. In other company news, a consortium including Air France-KLM, Delta Air Lines and India's Jet Airways was reportedly looking into making a bid for Air India. The news came on the heels of French President Emmanuel Macron's visit to New Delhi at the weekend. Corporate activity was also in the headlines in the UK, with Melrose sweetening its bid for GKN from £7.4bn to £8.1bn. |
| | US open: Soft start for Dow and S&P but Nasdaq in the black | Wall Street trading kicked off with mixed performances on Monday, as the Dow Industrials came under selling pressure even as many investors continued to cheer encouraging jobs data at the end of the previous week. At 1520 GMT, the Dow Jones Industrials Average and S&P 500 were down 0.56% and 0.17%, respectively, while the Nasdaq had gained 0.17%. Stocks racked up healthy gains on Friday after the non-farm payrolls report revealed the right combination of better-than-expected jobs growth but weaker-than-forecast wage growth, but with some of the best known names in the Industrials down by more than 1%, the broad-market index was up against some stiff headwinds early in the day. Connor Campbell, financial analyst at SpreadEx, said that, while the slip was "not that bad", it did show a "slight unwillingness on the part of investors to let the index escape the 24250 to 25500 trading band its found itself for the past month and a half." Craig Erlam, senior market analyst at Oanda, chipped in saying: "The numbers we saw on Friday provided the perfect balance of strong job creation and softer wage growth which does not necessarily trigger faster rate hikes. The much higher participation rate was a clear reminder that, while unemployment is at a 17-year low, there is still some slack in the economy which may take longer to sort out and explain why wage growth and inflation is so muted. "This is why we didn’t see the kind of knee-jerk reaction in the markets that we saw a month ago. Policy makers will likely be looking at the data and see it as evidence that slack still remains and no additional tightening is needed as a result of the strong employment gains. Of course, this is just one jobs report and future reports could show stronger wage growth but for now, investors are comfortable with the numbers." An apparent softening in President Trump's stance on trade tariffs was also providing a boost to sentiment. "Trump is clearly using these tariffs to force the hand of those allies that he believes is taking advantage of the US. Whether this is the best way to get more cooperation is another matter but investors are becoming more encouraged by his recent acknowledgment that a reduction could be imposed for some countries," Erlam said. On the corporate front, Dow Chemical was in the black as it announced that long-time chief executive Andrew Liveris is stepping down and Biogen dropped 1.11% after it agreed to buy Pfizer's schizophrenia drug for up to $590m. Elsewhere, optical components manufacturer Oclaro surged 26.18% after it agreed to be bought by Lumentum Holdings in a deal valued at $1.8bn and Clorox dropped back 0.37% on the announcement that it had agreed to buy privately-held wealth and wellness company Nutranext for $700m. There were no major US data releases due on Monday but things will pick up over the course of the week, with inflation and retail sales figures due. | |
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| | Monday broker round-up | Just Eat: Deutsche Bank downgrades to sell with a target price of 630p. TT electronics plc: Berenberg reiterates buy with a target price of 265p. National Express: Deutsche Bank reiterates hold with a target price of 390p. Inmarsat: JP Morgan reiterates neutral with a target price of 580p. Old Mutual: Deutsche Bank reiterates buy. Smiths Group: JP Morgan reiterates overweight with a target price of 1,800p. BAE Systems: JP Morgan reiterates underweight with a target price of 550p. Spire Healthcare: JP Morgan reiterates neutral with a target price of 293p. Aveva plc: Citigroup reiterates neutral with a target price of 2,140p. GKN plc: Citigroup reiterates neutral. IMI plc: Citigroup reiterates neutral with a target price of 1,260p. SIG: Citigroup reitereates neutral with a target price of 140p. Kenmare Resources plc: Canaccord reiterates buy with a target price of 500p. 3i: Canaccord reiterates buy with a target price of 1,035p. Polar Capital Holdings: Canaccord reiterates buy with a target price of 590p. BT Group plc: Berenberg reiterates buy with a target price of 310p. eve Sleep plc: Berenberg reiterates buy with a target price of 155p. Media group plc: Berenberg reiterates buy with a target price of 230p. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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