Evening Euro Markets Bulletin

ADVFN III Evening Euro Markets Bulletin Daily world financial news Monday, 05 March 2018 21:44:47 Monitor Quote Charts News CFD's Compare Brokers Free BB   Get Your FREE Weekly Bitcoin Newsletter From Guardian Stockbrokers Click Here To Subscribe For FREE Today All trading involves risk. Losses can exceed deposits. London close: Turnaround on Wall Street boosts stocks, trade frictions in focus FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts London stocks jumped back in late trading, helped by a turnaround on Wall Street as investors digested better-than-expected services data on both sides of the Pond, though lingering fears of a US trade war kept a lid on gains. The FTSE 100 finished higher by 0.65% at 7,115.98 even as the pound jumped 0.45% higher versus the dollar to trade at 1.3855 after the Prime Minister told Parliament officials were closer to clinching a Brexit transition deal. Sterling was also 0.3% stronger versus the euro at 1.1238 as the single currency was hit by weaker-than-forecast services PMIs and the results Italian election. "A lack of outbursts from the US president regarding potential tariff wars has helped sentiment this afternoon, with US markets building on their late-stage recovery seen on Friday and assisting UK and European markets to move into positive territory. Of all the problems that might bring down markets, a tariff war between the major powers is the one that terrifies investors the most," said IG's Chris Beauchamp. Meanwhile, in Milan the FTSE MIB was off 0.42% at 21,819.91 as Italy looked set for a hung parliament after voters backed right-wing and populist parties. According to projections based on partial results of the election, the anti-establishment Five Star Movement won the biggest share of the vote, while ex-Prime Minister Silver Berlusconi's right-wing coalition is on course to win the most seats in the lower house of parliament. Helping to steady sentiment after a late afternoon dip, the US ISM's closely-followed services sector purchasing managers' index slipped from a reading of 59.9 for January to 59.5 in February, but still managed to edge past economists' forecasts for a reading of 59.0. A key gauge for the UK's services sector reported better also printed ahead of forecasts, though economists were not united over whether it would be enough to prop up the wider economic growth figures for the first quarter of the year. February's CIPS IHS Markit services purchasing managers' index climbed to 54.5 from 53.0 the month before, beating forecasts for a slight improvement to 53.3. Service growth thereby overtook manufacturing as the fastest growing part of the economy for only the second time since the Brexit referendum in 2016. After a slight manufacturing slowdown and a still-lacklustre construction market reported last week, Markit's all-sector PMI output index bounced back from January's 18-month low of 53.1 to 54.2 in February, which indicates UK gross domestic product growth of 0.3-0.4% for the first quarter. Pantheon Macroeconomics economist Samuel Tombs said: "The case for the MPC to hold back from raising interest rates in May remains strong, despite the rise in the business activity index in February. Both the activity and orders indices only are in line with their 2017 averages. "In addition, the decline in the input and output prices balances to their lowest levels since August 2016 and July 2017, respectively, suggests that domestically-generated inflation remains subdued and supports our view that CPI inflation will undershoot the MPC’s expectations over the coming months. The Committee might feel it has invested too much reputational capital to hold back from raising rates in May, but the data won’t support a series of hikes this year." Housebuilders were in focus as Prime Minister revealed a new planning policy framework to force councils to hit house-building targets. May said in a speech in London that developers need to do their bit, with those slow to build new homes at risk of being refused planning permission in future. She had harsh words for the bosses of some of the biggest building and property companies. "The bonuses paid to the heads of some of our biggest developers are based not on the number of homes they build but on their profits or share price. In a market where lower supply equals higher prices that creates a perverse incentive, one that does not encourage them to build the homes we need," the PM said. Barratt Developments, Berkeley Group, Persimmon and Taylor Wimpey were all on the front foot. But Shore Capital analyst Robin Hardy said: "Expect more talk than action but it is clear again that policy is shifting away from demand-feed to supply-feed and that has to be less than good news for the house builders as it means more competition and more pressure on the supply chain - once again we would conclude that the supply chain companies will be the winners. "As we continue to suggest reduced weightings in the house builders, the supply chain for materials and for home improvement spend still looks more attractive." Morrison and Tesco were boosted by upgrades to 'buy' at Jefferies, while Ryanair was also up after announcing a 5% rise in February traffic as the load factor held steady. Paddy Power Betfair edged up as it confirmed that chief financial officer Alex Gersh would leave the company once a successor was found. On the downside, Ultra Electronics fell sharply following a damp squib set of annual results and as it revealed that its agreed takeover of US-based rival Sparton has been blocked on antitrust grounds. Fenner edged down after saying it had bought the assets and business of US-based National Bearings Company, a small specialist manufacturer of custom engineered polymer and metal bearings, for an undisclosed sum. Sports betting and gaming group GVC Holdings was weaker after agreeing to initially acquire 51% of the equity capital of Crystalbet, with a commitment to acquire the remaining 49% in 2021. Wizz Air flew lower even as the FTSE 250 low-cost airline reported a 23.5% jump in passenger numbers in February, as the load factor nudged lower. 3i Infrastructure retreated as it said it was investing another £125m in electricity supplier Infinis to help fund its purchase of independent power generator Alkane Energy. In broker note action, Spectris was downgraded to 'hold' at Liberum, while Travis Perkins was upgraded to 'add' at Peel Hunt. Market Movers FTSE 100 (UKX) 7,115.98 0.65% FTSE 250 (MCX) 19,567.00 0.93% techMARK (TASX) 3,321.31 1.07% FTSE 100 - Risers Smurfit Kappa Group (SKG) 2,542.00p 4.61% Smith (DS) (SMDS) 478.80p 4.13% CRH (CRH) 2,461.00p 2.58% Antofagasta (ANTO) 862.80p 2.40% Persimmon (PSN) 2,642.00p 2.24% Smith & Nephew (SN.) 1,289.00p 1.98% 3i Group (III) 923.60p 1.94% SEGRO (SGRO) 582.80p 1.85% Micro Focus International (MCRO) 2,021.00p 1.76% United Utilities Group (UU.) 674.40p 1.75% FTSE 100 - Fallers Rentokil Initial (RTO) 261.00p -4.22% Evraz (EVR) 437.10p -1.62% Sky (SKY) 1,355.00p -1.35% Standard Life Aberdeen (SLA) 362.30p -1.06% Mediclinic International (MDC) 570.00p -0.77% TUI AG Reg Shs (DI) (TUI) 1,506.50p -0.76% Associated British Foods (ABF) 2,590.00p -0.65% Standard Chartered (STAN) 775.10p -0.63% BAE Systems (BA.) 572.40p -0.63% WPP (WPP) 1,260.00p -0.47% FTSE 250 - Risers CLS Holdings (CLI) 237.00p 7.97% FirstGroup (FGP) 83.05p 6.54% Brown (N.) Group (BWNG) 199.90p 6.22% Aveva Group (AVV) 1,925.00p 5.42% BTG (BTG) 676.50p 5.13% IWG (IWG) 240.20p 4.89% TalkTalk Telecom Group (TALK) 107.10p 4.59% Bovis Homes Group (BVS) 1,130.00p 4.52% Cairn Energy (CNE) 192.20p 4.31% Vectura Group (VEC) 76.10p 4.25% FTSE 250 - Fallers Ultra Electronics Holdings (ULE) 1,333.00p -9.87% Capita (CPI) 155.45p -7.96% AA (AA.) 71.32p -5.15% IP Group (IPO) 106.20p -3.63% Domino's Pizza Group (DOM) 306.50p -2.48% Jardine Lloyd Thompson Group (JLT) 1,262.00p -2.02% Greene King (GNK) 498.90p -1.87% Spire Healthcare Group (SPI) 219.60p -1.79% Hunting (HTG) 678.00p -1.74% Wizz Air Holdings (WIZZ) 3,472.00p -1.73% Crypto Pizza Evening with Clem Chambers, CEO of Online Blockchain In May 2010, programmer Laszlo Hanyecz bought two pizzas from Papa Johns for 10,000 bitcoins. Had he kept the coins, as of today they would be worth a cool $86,000,000. Join us on Wednesday 14 March for a crypto pizza 'Bite' on Clem Chambers, the CEO of the first London-listed British blockchain company - Click Here To Register For Free  Europe close: Stocks shrug off Italian blues FTSE 100 Euronext Dax perf CAC 40 European stocks ended the day mostly higher, save in Italy, where traders were still assessing the unexpected results from the country's parliamentart elections which appeared to indicate the country's main anti-establishment parties came away with half of the votes. "This constitutes a "mass populist rebellion", not just for Italy but also for the European Union, said Saxo Bank FX strategist John J. Hardy.  In particular, Hardy pointed out that a government in Rome led by the 5Star party would slow down progress towards banking union in the single currency bloc. With 94% of votes counted, according to Italy's Interior Ministry the 5Star party came away with 32.20% of the ballots cast - roughly five percentage points more than expected - while the Lega party garnered 17.71% of the vote, five percentage points more than Silvio Berlusconi's Forza Italia. Yet by the closing bell the benchmark Stoxx 600 was trading 1.04% or 3.83 points higher at 370.87, helped by upbeat readings on service sector activity in the States, alongside a 0.60% or 30.65 point gain on the Cac-40 to 5,167.23, while Spain's Ibex 35 was adding 0.63% or 59.70 points to 9,590.80. Meanwhile, the yield on the benchmark 10-year Italian government bond was three basis point higher to 2.0% and that on similarly-dated Spanish debt down by four basis points at 1.50%. In parallel, the FTSE Mibtel had come off its worst levels of the day but had still erased 0.42% to close at 21,819.291, led by falls in shares of Italy's main lenders, Banca Monte dei Paschi di Siena, UniCredit, UBI Banca, Intesa Sanpaolo, Mediobanca and Assicurazioni Generali. Commenting on the results of Sunday's Italian vote, economists at Berenberg said: "The outlook for further pro-growth reforms in Italy looks dim for now. Instead, Italy could be heading for partial reform reversals and an increase in public spending that may lead to some conflict with Italy's partners in the EU. "If the 5Stars focus more on their anti-corruption drive than their expensive spending promises, the outlook may be less concerning." But it wasn't all bad news at the start of the week. Also on Sunday, it was announced that 66% of the German SPD party's voters had backed forming a grand coalition with Chancellor Angela Merkel's CDU/CSU, putting an end to the longest political impasse in modern German history. Significantly, the coalition programme called for a focus on domestic issues and euro area reforms. Nonetheless, economists at Barclays Research cautioned that: "any reform requiring either implicit or explicit German fiscal backing, such as debt mutualisation or the establishment of a euro area Finance Minster with an independent budget, seems unlikely in our view. "Any such reform would also need support from all member states and, following Prime Minister Rutte's remarks on Friday, the Netherlands would likely oppose it." Against that backdrop, come Monday morning strategists at JP Morgan reiterated their 'overweight' stance on Eurozone equities, citing - among other factors - stocks' "undemanding" valuations relative to fixed income. Weak economic data On the economic front, IHS Markit's 'final' euro area service sector purchasing managers' index for January printed at 56.1, which was below a preliminary reading of 56.7 and far beneath January's print of 56.8. The chief reason for the downward revision was a lower-than-expected print on the French PMI of 57.3, versus a preliminary estimate of 57.8. Data on euro area retail sales volumes for January was also short of the mark, revealing a dip of 0.1% month-on-month (consensus: 0.3%). However, according to Eurostat, in year-on-year terms they advanced by 2.3% (consensus: 2.0%). Meanwhile, ELSTAT reported that Greece's gross domestic product edged higher by just 0.1% quarter-on-quarter over the three months ending in December (Barclays: 0.5%). Axa craters In the corporate space, France's Axa agreed to buy American property and casualty peer XL Group for about $15.3bn in cash, for a 33% premium versus XL's closing price on Friday. Elsewhere, it was reported that Airbus would move to slash its headcount by 3,600 people in the wake of lower rates of production for its A380 and A400M models. At the weekend, Siemens announced a pricing range for the upcoming initial public offering of its Healthineers unit of between €26 and €31 a share, for a total valuation ranging from €26-€30bn. US open: Services PMI's lift Wall Street out of the red Wall Street has erased early losses, helped by upbeat readings on the country's services sector albeit amid lingering concerns about the potential for increased trade frictions between the US and some of its main trading partners. At 1657 GMT, the Dow Jones Industrial Average was up by 0.30% or 74.55 points at 24,612.59, alongside a rise of 0.38% or 10.30 points for the S&P 500 to 2,701.91, while the Nasdaq Composite was adding 0.29% or 21.18 points to 7,280.18. From a sector standpoint, the biggest gains were being seen in Medical supplies (2.64%), Water (2.19%) and Full line insurance (2.05%). Last Friday, stocks had ended the session mixed, amid news that Trump will impose a 25% tariff on steel imports and a 10% tariff on aluminium. Helping to steady sentiment, the ISM's closely-followed services sector purchasing managers' index slipped from a reading of 59.9 for January to 59.5 in February (consensus: 59.0). As expected, the separate services sector PMI compiled by IHS Markit rose to 55.9 in February from 53.3 for the month before. On the trade front, on Saturday Trump tweeted: "If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars which freely pour into the US. They make it impossible for our cars (and more) to sell there. Big trade imbalance!" The US president followed up at the beginning of the week, tweeting that tariffs against Canada and Mexico would only be cancelled if a "new and fair" North American Free Trade deal was signed. Craig Erlam, senior market analyst at Oanda, said: "With the US President threatening tariffs on car imports should the EU retaliate, there is a real possibility that a trade war could unfold which doesn't work to anyone's benefit. The prospect of this rattled markets on Friday but this didn’t last long and US equities quickly bounced back, with the S&P 500 ending the day half a percentage point higher. European stocks have been playing catch up at the start of the week, although automakers continue to struggle after Trump's threats." Market participants were also keeping an eye on Italy, which looked set for a hung parliament after voters backed right-wing and populist parties. In corporate news, shares in Sparton Corp were getting pummeled after its takeover by London-listed Ultra Electronics was blocked on antitrust grounds, sending the stock to the steepest fall on the NYSE. It was a much cheerier picture for Bermuda-based insurer XL Group, however, with shares up a whopping 29% and at the top of the NYSE's most active list after it agreed to be bought by French insurer AXA for $15.3bn. Clearside Biomedical rocketed trade after announcing positive top-line results in a late-stage trial of a macular edema treatment. Looking for early access to investment opportunities? Make your own informed investment decisions. Get the right tools and information at Master Investor Show 2018. Register for free today Cryptocurrencies Report Top Cryptocurrencies # Name Market Cap($) Price(%) Change Price Graph(3m) 1 Bitcoin (BTC) 196,465,177,005 11,585.03 +1.57% 2 Ethereum (ETH) 84,007,682,209 855.9 +0.03% 3 Ripple (XRP) 38,267,350,971 0.95999 +6.67% 4 Bitcoin Cash / BCC (BCH) 21,699,498,066 1,275.76 +0.93% 5 Litecoin (LTC) 11,724,650,235 211.05 +0.5% 6 Cardano (ADA) 7,879,625,643 0.30285 +4.04% Atlantic Advisory - Share Tips of the Year 2018 Download Our Latest Report Here Losses can exceed deposits Broker tips: Tesco, Morrison, Abcam, Greencore Analysts at Jefferies upgraded their recommendation for shares of Tesco and Morrisons on Monday from 'hold' to 'buy', explaining that the pound has rallied against the dollar by well above 10% over the past year, while discount supermarkets' new store applications have fallen 25% in the past 2 years. The analysts believed that after a cautious 15 months the time had come to review their stance on the UK grocery market due to the aforementioned factors and the fact that "wage challenges, whilst ongoing, are on a different scale relative to the position the industry found itself in two years ago." The analysts added that a margin-focused Tesco, together with Asda's focus on free cash flows, made for a rational competitive backdrop, meaning that "the sector may be rediscovering its low Beta mojo at exactly the time when investors need it most." Jefferies therefore revised its target price for Tesco up to 250p, while also highlighting the strongly accretive nature of the company’s merger with Booker for its free cash flows over the medium-term. The above also assuaged the analysts' near-term concerns that investors were being overly optimistic on Tesco's stand-alone prospects. Indeed, Jefferies analysts expected Tesco’s stand-alone EBIT margin to fall short of the company's 3.5-4% ambition - instead penciling in a margin of 3.3%.   Abcam's latest set of half-year figures revealed the company was growing at twice the industry rate, but with the shares up by 26% since Berenberg started coverage of the shares in June 2017, the German broker decided to downgrade its stance on the stock from 'buy' to 'hold', citig their valuation. On the upside, Berenberg noted strong growth for the immuno-assay manufacturer in China and in Europe, Middle East&Africa.   Furthermore, the recent acquisition of Spring Bio was expecetd to add marginally to top-line growth in fiscal years 2018 and 2019, while the company's effective tax rate would decline from 21% to 19%. But foreign exchange headwinds would knock-off about 2.5 percentage points from the company's rate of growth in sales and operating expenditures might come in between 1% and 2% higher than previously estimated, Berenberg said as it trimmed its target price from 1,240p to 1,230p.   Analysts at Berenberg marked down their target price for Greencore despite the favourable growth prospects for the chilled assembled convenience foods market, especially in the UK. "In a competitive UK grocery retail market, the chilled cabinet, in general, and private label brands, in particular, are the most dynamic areas seeing the highest levels of growth, innovation and support from the retailers looking to differentiate their offerings in relatively profitable categories," they explained. The analysts also labeleld the 9.5 times 2019 earnings multiple that Greencore was trading, and sector peer Bakkavor´s 11.5 price-to-earnings multiple, "undemanding". Despite that, they marked down their target price for the former from 305p to 250p, albeit while keeping their recommendation at a 'buy'. In the same research note, they initiated coverage of Bakkavor at a 'hold' with a target price of 210p.         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. Customer Support +44 (0) 207 0700 961. Company registered in England and Wales: Number 2374988 VAT No. GB 549 2130 49