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| | London close: Pound strength proves too much for stocks |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | A bout of late selling clipped the wings of London's top flight index, with deal-making and broker upgrades failing to offset the drag from currency gains and still visibly weak investor sentiment in the States. The FTSE 100 lost 33.25 points or 0.48% to finish at 6,888.69, having shed 3.3% during the previous week. Another down-draft in shares of Facebook, which weighed on an initial bounce on Wall Street appeared to ripple through to European markets, accounting for the negative closes seen across the Continent and in London. A much strengthened Sterling was another factor behind the weak start to the week, which weighs against the index's predominance of overseas earnings, with the pound up 0.71% on the dollar to 1.4222 although versus the euro it drifted lower by 0.04% to 1.1434. News that the Labour party will table an amendment to the government's EU withdrawal bill to ensure parliament has a final say on the Brexit deal was key to the pound's rise on Monday, with little major macroeconomic data to move markets and a sparse corporate diary. The news "is being taken well by the market," says Jane Foley, chief currency strategist at Rabobank. "It means less chance of a hard Brexit," she said. Commenting on the market backdrop, Michael Hewson, chief market analyst at CMC Markets UK said: "A recovery in Asian markets, after South Korea became the latest country to gain an exemption from steel and aluminium tariffs, along with comments from US Treasury Secretary Steve Mnuchin that he was cautiously optimistic that some form of agreement can be reached with China, saw European markets open higher this morning, as the widespread pessimism from last week gave way to a slight recovery in optimism early on. "This initial buoyancy has been difficult to sustain with stocks pulling back from their highs on the back of a rising euro, as well as some concern that the recent declines could also be indicative of developing micro fissures in the economic arguments for higher stock prices, and a buoyant global growth story." Earlier in the day, Hewson had told clients that China's initially measured response to the White House's announcement of tariffs appeared to offer "some hope" in terms of a possible stabilisation this week, but sentiment is likely to remain volatile, particularly if Chinese authorities follow up with further large scale measures which target, larger US corporations like Boeing or Apple. In company news, Smurfit Kappa's shares were down after the Irish packaging group rejected an increased offer from US-based International Paper Company (IPC) that valued it at €37.54, saying it "fundamentally undervalues the group". IPC offered €25.25 in cash and 0.3028 new shares of IPC common stock for each Smurfit Kappa ordinary share. Smurfit said the revised offer did not offer Smurfit Kappa shareholders "much more than compensation for the fall in International Paper's share price since since IPC's first offer". BP and Shell were lifted by stronger oil prices. Brent crude hit a 52-week high on Friday and was sustaining the $70 level on Monday. "Although fear of trade wars have been lowered a notch overnight, geopolitical tensions have risen," Rabobank noted, adding that concern that oil supply in the Middle East could be disrupted is for now overshadowing an increase in supply from the US. GKN was slightly higher as the Thursday's deadline loomed for shareholders' decision over its potential hostile takeover by Melrose. Monday morning was mixed, with GKN receiving an increased cash offer for its Driveline business from US-based Dana, while also being forced to retract directors' statements on shareholder support, which had been quoted in Sunday newspapers. Melrose shares were down slightly. JD Sports Fashion succumbed to late selling after it agreed a "transformational" $558m acquisition of Nasdaq-listed retailer The Finish Line in a deal that would add a 556-store estate across 44 US states. Shire slipped on the announcement that it and biotechnology company NanoMedSyn have entered into a preclinical research collaboration to evaluate a potential enzyme replacement therapy using NanoMedSyn's proprietary synthetic derivatives named AMFA. Car seller Inchcape's shares were revved up by news it had bought Suzuki-focused Central American dealer Grupo Rudelman for $284m ( £201m), on a cash-free and debt-free basis. In small cap news, publication of a 95% success rate for a blood test for ovarian cancer made by UK medical technology company Angle sent its shares up 17% at one point in the session. In broker note action, Deutsche Bank upgraded RBS to 'buy', Goldman Sachs raised Fresnillo to 'conviction buy', Randgold Resources to 'buy' and said Centamin was one of its top picks. Elsewhere, HSBC moved Smith & Nephew to 'buy' and Credit Suisse hiked its target price for Rolls Royce to to 785p but kept its 'underperform'. |
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| | Europe close: Bounce in stocks hobbled by jump in euro |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | A small bounce in stocks, helped by more positive news on the international trade front, was snuffed out by the close, coinciding with weakness in the technology space across the Pond, even as traders kept an eye out for any further key headlines on the international trade and geopolitical fronts. Thus, another down-draft in shares of Facebook, which weighed on Wall Street's advance quickly rippled across the Atlantic, apparently accounting for the negative closes seen across the Continent. "European markets opened higher this morning, as the widespread pessimism from last week gave way to a slight recovery in optimism early on. "This initial buoyancy has been difficult to sustain with stocks pulling back from their highs on the back of a rising euro, as well as some concern that the recent declines could also be indicative of developing micro fissures in the economic arguments for higher stock prices, and a buoyant global growth story," was CMC Markets Michael Hewson's take on matters. Perhaps helping to steady investor sentiment a tad initially, in remarks to broadcaster Fox on Sunday, US Treasury Secretary Steve Mnuchin said: "We're having very productive conversations with them. I'm cautiously hopeful we reach an agreement." Against that backdrop, by the closing bell the benchmark Stoxx 600 index was down by 0.52% or 1.92 points to 363.90, alongside a 0.60% or 71.09 point drop in the German Dax to 11,815.22. The FTSE Mibtel also fell back, retreating by 1.19% or 266.02 points to 22,023.08. Sector-wise, the Stoxx 600's gauge of Automobiles&Parts surrendered early gains on the back of Mnuchin's remarks to end 0.11% lower at 604.10, alongside a much diminished advance of 0.15% for Oil&Gas stocks after Brent futures hit a fresh 52-week high on Friday. Meanwhile, euro/dollar rose 0.77% to 1.24481. Nevertheless, Monday's bounce had been hobbled from the start by strength in the euro, with confident remarks from German Bundesbank chief Jens Weidmann doing little to dissuaded buying in the currency. In the background, at the weekend Italy's centre-right coalition - at the coaxing of its senior member, the Northern League - reached a deal with the populist Five Star Movement on naming the speakers for the lower and upper houses of parliament, with Forza Italia's Elisabetta Alberti chosen as president of the Senate - despite Silvio Berlusconi's stated preference for another candidate. That stoked concerns in some corners of the market of a possible tie-up between the two populist (and less than ardent supporters of the euro) parties. Nonetheless, for the time being at least, their vastly different election campaign planks and, according to Barclays Research, the 5SM's numerical superiority (which would relegate the League to 'junior' status in any grand coalition) appeared to rule out such a scenario, analysts at said. "To sum up, Italian political risk looks to be on the rise given the weekend's events but in a qualified fashion given the still notable hurdle to M5S & LN entering a power-sharing arrangement," analysts at Rabobank chipped-in. Elsewhere on the economic front, earlier in the session INSEE marked up its preliminary reading on the rate of growth in French gross domestic product during the fourth quarter of 2017 from 0.6% to 0.7%. To take note of, as a result of that growth, France's public budget deficit fell to 2.6% of GDP last year, below the Elysee's target of 2.9%. Meanwhile, in the Netherlands, government statisticians confirmed that the country's GDP expanded at a 0.8% pace quarter-on-quarter over the final three months of 2017. |
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| | US open: Stocks bounce amid talks of back-channel talks between Washington and Beijing | | Wall Street is bouncing back on the heels of more market-friendly remarks from top US administration officials on the global trade picture at the weekend. As of 1512 BST, the Dow Jones Industrials were adding 1.79% or 426.46 points to 23,957.99, alongside a 1.64% or 42.35 point gain for the broader S&P 500 to 2,631.79, while the tech-laden Nasdaq Composite was tacking on 122.52 points to 7,115.56. Technology issues were doing best, with the biggest gains among industry groups coming from: Software (3.96%), Home Improvement Retailers (3.19%), Reinsurance (2.86%), Technology Hardware (2.63%) and Software&Computers (2.59%). In parallel, the CBOE's VIX volatility index - dubbed by some traders as Wall Street's 'fear gauge' was down by 11.5% to 22.01. During the previous week, all three of the Street's main market gauges had slumped by roughly 6% each, with the S&P 500 having clocked-in with its worst performance in more than two years. Significantly, over the weekend US Treasury Secretary Steve Mnuchin indicated that progress was being made in negotiations with China on paring its bilateral trade surplus with Washington. "We're having very productive conversations with them," Mnuchin told Fox News Sunday, when discussing the talks. "I'm cautiously hopeful we reach an agreement." Nonetheless, the risk of further reshuffles in the top ranks of the US administration were still a source of concern and the object of market speculation. Fanning those flames, reports at the weekend again indicated President Trump had until quite recently been mulling doing without a chief of staff, with ex-White House chief strategist chief strategist telling the FT much the same at the weekend. There was little on tap at the start of the week in terms of economic data. However, before the opening bell the Federal Reserve bank of Chicago reported that the three-month moving average for its national activity index jumped from +0.02 in January to +0.88 for March. For later in the day, three Fed Speakers were set to take to the podium on Monday, starting from 1730 GMT with New York Fed chief William Dudley. Among the most-heavily traded stocks on the Big Board were Lowe's, after the home-improvement retailer's chief Robert Niblock said he would be stepping down. Trading was also especially intense in shares of building materials group USG, after Berkshire Hathaway it had proposed its sale to a German outfit for $42 a share. Car parts marker Dana's shares were also on the up, even after GKN spurned its upwardly-revised buyout bid. Also making headlines was outdoor gear-maker Yeti after the company withdrew its plans to float. |
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| | Monday broker round-up | | RBS: Deutsche Bank upgrades to buy with a target price of 305p. Sabre Insurance Group: Berenberg reiterates buy with a target price of 311p. JD Sports: Shore Capital Markets reiterates buy. Inspired energy plc: Canaccord reiterates buy with a target price of 33p. Quixant plc: Canaccord reiterates buy with a target price of 530p. EnQuest plc: Canaccord reiterates hold with a target price of 30p. Next: Deutsche Bank reiterates hold with a target price of 4,850p. Aviva plc: Deutsche Bank reiterates buy. Smiths: Deutsche Bank reiterates buy. TalkTalk: Deutsche Bank reiterates buy. Connemara Mining Company: Northland Capital Markets reiterates corporate. Taptica International ltd: Berenberg reiterates buy with a target price of 620p. Restore plc: Berenberg reiterates buy with a target price of 620p. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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