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| | London close: Stocks shrug off Chancellor to slip on sterling spike |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | London stocks were knocked back into the middle of last week on Tuesday after a the market shrugged at the Chancellor's spring statement but was unsettled by another sacking in the White House. Having been steady up until midday, the FTSE 100 lost 75.98 points or 1.05% to finish at 7,138.78, where it was last Wednesday morning. The pound climbed back to levels last seen in mid February, rising 0.6% against the dollar to 1.3985, and flat against the euro, which was in turn up 0.6% versus the greenback. Arriving during the middle of Philip Hammond's big moment to throw London and Wall Street traders a curve ball, was Donald Trump's giving Secretary of State Rex Tillerson the axe. The ex-oilman was sent skidding out of the White House with only his $174m of tax-free Exxon Mobil shares for solace after a series of disagreements with the President. Just hours before he was given the boot, Tillerson warned that the poisoning of Russian defector Sergei Skripal and his daughter was from Russia and would "certainly trigger a response." Trump announced on Twitter that CIA Director Mike Pompeo would be the new Secretary of State. Meanwhile, in Westminster, Philip Hammond declared himself "Tigger-like" as he held out the prospect of increases to public spending and set out improved short-term figures for UK economic growth and the public finances, including lower than expected government borrowing in 2017-18. In his spring statement, the Chancellor resisted calls for short-term spending on the NHS and other services but his statement appeared to acknowledge the concerns of Conservative MPs who have called for austerity to be eased. He said the Office for Budget Responsibility had revised its predictions to reflect improved prospects for the public finances. The OBR said government borrowing would be £45.2bn in 2017-18 – down from a forecast of £49.9bn in November. But the OBR's report showed that Hammond's upbeat statement that there is "light at the end of the tunnel" for the UK economy after years of austerity is based almost entirely on an improved global economy rather than any domestic improvement. Paul Johnson, director of the Institute for Fiscal Studies, said there was little cause for celebration in the OBR’s projections. Johnson tweeted: “To be clear – against a long term trend of at least 2% a year growth, after poor growth since 2008, and compared with growth across rest of OECD, these are not encouraging forecasts.” Analyst Chris Beauchamp at IG added: "The Spring budget statement served up predictably thin gruel for markets, with the Chancellor able to offer little in the way of excitement. It would not do to attribute the bounce in the pound to the OBR’s forecasts, and the news that the UK won’t stop throwing money across the Channel until some forty years hence will not exactly excite the Leave Camp. Brexit remains the only game in town." In economic data, the US news again trumped the UK, with CPI coming in bang in line with forecasts. According to the Labor Department, the consumer price index rose 0.2% last month following a 0.5% increase the month before, in line with economists' expectations. Treasury yields pulled back, which normally might be expected to help stocks but the higher pound was the stronger influence, while lower yields also hit global financial stocks. In corporate news, Irish food company Greencore tanked 30% after it issued a profit and said chief executive Patrick Coveney will spend half his time in the US as part of a restructuring. Interdealer broker TP Icap tumbled as its full-year adjusted results fell short of consensus, while Computacenter fell sharply as it posted a 23% jump in full-year pre-tax profit but said the growth outlook for 2018 remains challenging. Retirement specialist Just Group was down as it said deputy chairman Tom Cross Brown will retire. Merchant bank Close Brothers retreated even as it posted a 6% jump in first-half adjusted operating profit thanks to a good performance across its businesses. Legal & General Group edged lower after announcing that its Legal & General Capital division has acquired the 52.1% of CALA Homes which it did not previously own. Anglo American was in the red as production at the company's massive Minas-Rio mine in Brazil was halted due to a ruptured slurry pipeline, while Cairn Energy was hit by profit taking as it reported a swing back to profits. On the upside, Antofagasta gained as it increased its dividend 177% for last year as cash flow surged, though the Chilean copper miner is facing strike action at its Los Pelambres mine. Engineer GKN was another FTSE 100 gainer after it rejected a sweetened offer from turnaround specialist Melrose Industries a day earlier. Melrose was also in the black. In broker note action, Barclays was added to Deutsche Bank's 'buy' list, while LondonMetric Property was raised to 'equalweight' at Morgan Stanley. Direct Line was cut to 'hold' from 'buy' by Deutsche Bank, industrial flow-control equipment maker Rotork was downgraded to 'sell' at Investec and Morgan Stanley cut Inmarsat's target price from 550p to 500p but stayed at an 'equalweight'. |
| | Market Movers | - FTSE 100 (FTSE:UKX) - 713,878.00, -1.05%, -75.98
- FTSE 250 (FTSE:MCX) - 1,986,323.00, -1.26%, -254.3
- FTSE Techmark All Share (FTSE:TASX) - 333,918.00, -1.51%, -51.23
FTSE 100 - Risers - Antofagasta Plc (LSE:ANTO) - 914.60, 3.02%, 26.8
- GKN Plc (LSE:GKN) - 430.00, 1.39%, 5.9
- Randgold Resources (LSE:RRS) - 6,044.00, 0.97%, 58
- Evraz Plc (LSE:EVR) - 444.20, -0.94%, -4.2
- Glencore (LSE:GLEN) - 376.70, 2.07%, 7.65
- British Petroleum (LSE:BP.) - 474.00, -0.83%, -3.95
- Barclays (LSE:BARC) - 209.70, -0.85%, -1.8
- Reckitt Benckiser (LSE:RB.) - 5,665.00, -0.56%, -32
- Royal Dutch Shell A (LSE:RDSA) - 2,232.50, -0.91%, -20.5
- Royal Dutch Shell B (LSE:RDSB) - 2,252.50, -1.12%, -25.5
FTSE 100 - Fallers - Direct Line (LSE:DLG) - 383.30, -2.52%, -9.9
- Imperial Brands (LSE:IMB) - 2,494.00, -2.31%, -59
- Mondi (LSE:MNDI) - 1,951.00, -1.66%, -33
- Anglo American (LSE:AAL) - 1,731.60, -0.41%, -7.2
- Johnson Matthey (LSE:JMAT) - 3,157.00, -2.86%, -93
- Just Eat (LSE:JE.) - 775.00, -0.84%, -6.6
- British American Tobacco (LSE:BATS) - 4,166.00, -2.09%, -89
- Hargreaves Lansdown (LSE:HL.) - 1,707.00, -1.33%, -23
- Burberry Group (LSE:BRBY) - 1,649.00, -0.66%, -11
- Barratt Developments (LSE:BDEV) - 540.00, -1.64%, -9
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| | Europe close: US dollar weakness takes its toll on shares |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Stocks finished near their session lows as news of changes at the top of the US Department of State percolated through markets, pushing the single currency higher as market participants tried to guess at the potential implications of the move. Commenting on the downbeat afternoon session for equities, David Madden at CMC Markets UK said: "Stock markets in Europe turned lower around lunchtime, and now they are set to finish firmly in the red. Whatever bullish sentiment existed in the first half of the session has disappeared, and the firmer euro and pound are playing a role too." As of the closing bell, the benchmark Stoxx 600 was 0.98% or 3.71 points lower to 375.49, alongside a 1.59% fall on Germany's Dax to 12,221.03 while Spain's Ibex 35 erased 0.37% or 35.80 points to 9,691.70. Nonetheless, Chris Beauchamp at IG was of a different opinion, linking weakness in the US dollar to the in-line US CPI print published at half past noon. "The recent outbreak of bullishness has taken something of a knock today, and it is not hard to find the culprits. US CPI came in bang in line with forecasts, but evidently there were plenty of dollar bulls who had been expecting more, especially from the core figure. "While this disappointed on the headline number, the three-month annualised change hit its highest level since early 2011. The problem for dollar bulls here however is even this measure promptly turned southwards after this seven years earlier," Beauchamp said. In any case, news of the change in one of the US administration's most senior posts sent euro/dollar 0.54% higher to 1.2396, even as the governor of the Bank of Ireland, Philip Lane, said the European Central Bank must keep its guard up against the possibility of a sudden appreciation. As an aside, two days before The Sunday Times had reported that ECB chief Mario Draghi and German central bankers were expected to back Lane's candidacy for the post of chief economist when it came up for renewal in 2019. News was light on the economic front on the Continent, with releases centred on Southern Europe. Thus, according to Spain's INE, harmonised consumer prices in the Iberian country advanced by 0.1% month-on-month and 1.2% year-on-year in February, confirming a previous estimate. In France, INSEE reported a 0.3% or 72,700 person rise in non-farm payrolls for the three months to December. On the company side of things, ahead of its industry-changing asset swap with local rival EON, RWE posted full-year 2017 after tax profits of €1.9bn, with the company's bottom line boosted by a government refund on past taxes on nuclear fuel. In parallel, overnight EON projected as many as 5,000 job cuts as part of the same asset swap, alongside between €600m to €800m of synergies y 2022. |
| | US open: Stocks waver amid news of State Department shake-up | Stocks are holding higher, but are off their best levels, following an in-line reading on US consumer prices and as traders digest the White House's decision to replace Secretary of State Rex Tillerson with CIA chief Mike Pompeo. Against that backdrop, as of 1442 GMT the Dow Jones Industrial Average was ahead by 0.42% or 103.70 points at 25,280.70, alongside a 0.21% or 5.98 point advance on the S&P 500 to 2,788.57, while the Nasdaq Composite was higher by just 0.02% or 1.97 points at 7,591.39. In parallel, the yield on the benchmark 10-year US Treasury note was off by one basis point to 2.86%, having recovered from an earlier drop to 2.83%. From a sector standpoint, the worst performing industry groups were: Coal (3.97%), Automobiles (1.99%) and Travel&Tourism (1.61%). America's consumer price index printed at 2.2% year-on-year for February, up from 2.1% in the month before, while core CPI came in at 1.8%, with both readings as expected. According to economists at Barclays Research, which had expected CPI to rise by just 0.1% month-on-month at both the headline and core levels, last month's rise was the result of lingering transitory strength in core goods prices. "That said, the report suggests a gradual firming in inflation pressures, and we view the report as consistent with our view that the Fed will raise rates in March, and three more times during the rest of the year," said Barclays Pooja Sriram in a research note sent to clients. Earlier on Tuesday, president Donald Trump had unexpectedly ousted Tillerson, with some market commentary pointing out the multiple public scraps he had with the president himself. Tillerson reportedly had also fallen afoul of lawmakers from both sides of the aisle given his public support for the cuts in the State Department's budget that the White House had pushed for. In other economic news, the National Federation of Independent Business index of activity and sentiment rose to 107.6 from 106.9, beating expectations for a reading of 107.1. "The historically high readings indicate that policy changes – lower taxes and fewer regulations - are transformative for small businesses. After years of standing on the sidelines and not benefiting from the so-called recovery, Main Street is on fire again," said NFIB president and CEO Juanita Duggan. On the corporate front, Qualcomm slumped 5% after President Trump blocked Broadcom's hostile $140bn bid for the chip company on the grounds of national security. Trump said there is "credible evidence" that the deal "threatens to impair the national security of the US" amid concerns it would have given China the upper hand in mobile communications. United Continental was in the black after the airline said it was targeting 2018 adjusted earnings per share of between $6.50 and $8.50 versus consensus expectations of $7.46. Footwear retailer DSW was on the back foot,however, after its fourth-quarter revenue missed expectations. |
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| | Tuesday broker round-up | Randgold Resources: Canaccord upgrades to buy with a target price of 7,000p Diploma plc: Berenberg reiterates buy with a target price of 1,365p. IWG plc: Berenberg reiterates hold with a target price of 240p. Galliford try: Canaccord downgrades to hold with a target price of 1,000p. Goals Soccer Centres: Canaccord reiterates buy with a target price of 130p. GVC Holdings: Canaccord reiterates buy with a target price of 1,070p. Barclays: Deutsche Bank reiterates buy with a target price of 234p. Direct Line Group: Deutsche Bank downgrades to hold with a target price of 440p. GKN: Citigroup reiterates neutral with a target price of 455p. Reckitt Benckiser: JP Morgan reiterates overweight with a target price of 7,200p. Clarkson plc: JP Morgan reiterates overweight with a target price of 3,723p. Mondi: JP Morgan reiterates overweight with a target price of 2,310p. Just Eat: JP Morgan reiterates overweight with a target price of 976p. Polymetal International: JP Morgan reiterates underweight with a target price of 915p. XLMedia plc: Berenberg reiterates buy with a target price of 290p. Antofagasta plc: Berenberg reiterates hold with a target price of 865p. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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