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| | London open: Stocks in the red ahead of big week; Micro Focus tumbles |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London stocks fell on Monday as investors looked ahead to a busy week that includes the latest policy announcements from the Federal Reserve and the Bank of England. At 0830 GMT, the FTSE 100 was down 0.6% to 7,118.78, while the pound was flat versus the euro at 1.1350 and 0.1% weaker against the greenback at 1.3927. Rebecca O'Keeffe, head of investment at Interactive Investor, said: "Global equity markets are slightly softer ahead of potential fireworks this week, with economic data, G-20 statements and central bank meetings all threatening to move markets. Far from withdrawing the punch bowl, global central banks’ quantitative easing and low interest rate policies continue to provide stimulus for the equity market rally, so it is crucially important for investors to know how long the music is going to keep playing or if the party is coming to an end." With the odds of a US rate rise on Wednesday close to 100%, O'Keeffe said the market will be more focused on the FOMC statement and press conference, with new Fed chief Jerome Powell firmly in the hot seat. "All eyes are on whether the Fed will confirm recent hints made by officials that four rate rises are more likely than three this year and provide clarity for investors on their view of the US economy. In the UK, interest rates are a near certainty to remain unchanged on Thursday, but a May rise is a real possibility, so the number of hawks and the tone of the language are likely to be pivotal here." The G-20 meeting kicks off later on Monday in Argentina, while the Fed rate announcement is due on Wednesday, a day before the Bank of England's rate decision, which will be accompanied by retail sales data on the same day. Investors were digesting the latest data from Rightmove, which showed average asking prices paid by first- and second-time buyers in Britain hit records levels this month of £189,840 and £272,031, respectively. Overall, house prices were up 1.5% on the month in March and 2.1% on the year. It was a different picture in London, however, where prices were up 0.6% on the month but down 0.6% on the year, with the annual rate in negative territory for the seventh consecutive month. Miles Shipside, Rightmove director and housing market analyst, said: "There is a lack of spring in the number of new sellers stepping onto the market. With an annual rate of price decrease as opposed to increase being a constant factor for the last seven months, it is bound to be a deterrent to some potential sellers. "Even though fewer properties are coming to market, the slower rate of sales means stocks of unsold property are growing, leading to subsequent downwards price pressure. This is good news for potential buyers as it strengthens their negotiating power, but means some potential sellers are putting off their marketing given the reduced chances of selling at their desired price." On the corporate front, bookmakers were in focus as the Gambling Commission recommended that the maximum stake for fixed odds betting terminals be cut to £30 or less. It said the maximum stake on slot games such a fruit machines should be £2. As it stands, people can bet up to £100 every 20 seconds on electronic casino games. William Hill, Ladbrokes Coral and Paddy Power Betfair all rallied on the news, as many had feared a bigger cut to as little as £2. Neil Wilson, senior market analyst at ETX Capital, said: "This should be a relief for the sector as the worst-case scenario looks to have been avoided. Ministers will now have to justify a cut below £30 on grounds of significant risk of harm. "With the non-slots versions of the B2 machines (roulette etc) far more popular and producing the bulk of revenues for bookies from these machines, this is undoubtedly a positive outcome for bookmakers overall. Although the market had decided a £2 flat cap was looking less likely, the fact the Gambling Commission has left ministers with an easy out for a £30 is perhaps even better than hoped for." Shares in Micro Focus nosedived as chief executive Chris Hsu resigned and the company downgraded its profits guidance less than six months after completing the huge acquisition of HP's software arm. On the upside, Hammerson surged 26% as it emerged it had rejected a bid from French shopping centre operator Klepierre earlier this month "in less than 24 hours". The 615p a share offer, which represents a premium of around 40.7% to the closing price last Friday, was made on 8 March. Elsewhere, the GKN/Melrose saga continued as Dana Inc, which has agreed to combine with GKN's Driveline business, said the new combined business will hold a standard listing on the London Stock Exchange, in addition to being listed on the New York Stock Exchange. It also said the combined group would create a US and UK-led global leader in vehicle drive systems and electric propulsion, that was well-suited to address the long-term demands of global customers, expecting to deliver $235m (£170m) in synergies. Meanwhile, Melrose said that its final offer of 466p in value today and 60% of future value creation, was “clearly superior” to the “hasty break-up” being pursued by the GKN board. GKN was in the black while Melrose retreated. Barclays was on the front foot as it emerged that activist investor Sherborne Investors has acquired 5.2% of the voting rights in the bank. In broker note action, AstraZeneca was upgraded to 'buy' at Jefferies, while Rotork was lifted to 'buy' at Peel Hunt. Close Brothers was cut to 'hold' by Berenberg. |
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| | US close: Wall Street breaks four-session losing streak, but ends lower for the week | | Wall Street broke a four-session losing streak on Friday, buoyed by some strong readings on the economy, but still closed lower for the week weighed down by multiple changes - actual and heavily speculated upon - in the top ranks of the Trump administration and amid ongoing trade frictions. On top of all of the above, overnight it emerged that the Trump organisation was hit with a subpoenae by Special Counsel Mueller as part of his investigation into alleged Russian links. By the closing bell, the Dow Jones Industrial was up 0.29% or 72.85 points higher to 24,946.51, with the S&P 500 adding 0.17% or 4.68 points to 2,752.01 and the Nasdaq Composite flat at 7,481.99. However, for the week the S&P 500 ended down by 34.56 points. From a sector standpoint, the best performing areas of the market were: Coal (3.90%), Recreational products (2.91%) and Oil equipment (1.67%). In parallel, the yield on the benchmark 10-year US Terasury note was adding two basis points to 2.86%. Overnight on Thursday, strategists at Bank of America-Merrill Lynch advised their clients that it had seen a record $43.3bn of inflows into equities over the week ending 14 March. Their take on the latest weekly flow data was that clients were increasingly positioned for higher earnings per share, short rates and bond yields, albeit alongside a lower US dollar. However, "treasuries and bunds hinting at 'growth scare' makes stocks vulnerable; LIBOR leading to tighter financial conditions, higher US dollar required to ding tech and Emerging Markets," they said. Even so, their Bull&Bear indicator slipped from a reading of 6.8 to 6.5, which meant it was no longer in 'sell' territory. In the background, markets were also expectant ahead of the US Federal Reserve's next policy meeting on 20-21 March. In economic news, homebuilding fell more than expected across America last month as a dive in the number of multi-family housing units being started offset a second consecutive monthly increase in single-family projects, according to a reading on US housing starts and permits from the Commerce Department. Housing starts declined 7% to a seasonally adjusted annual rate of 1.23m, Commerce said, and data for January was revised up to a groundbreaking increase of 1.329m instead of the previously reported 1.326m. US industrial production rose the most it had in the last four months in February thanks to strong output gains in the manufacturing and oil and gas sectors, with total industrial production, which includes that from factories, mines and utilities across the nation, expanding by 1.1% during the month, topping analysts expectations for a more reserved 0.4% gain, the Federal Reserve said on Friday. Also released on Friday, the JOLTS labour market survey for January revealed that the number of American's counted as not in the labour force dropped by 653,000 in February, while the labour force itself increased by 806,000. The unemployment rate has been at 4.1% since October, its lowest reading since December 2000. Lastly, US consumers confidence hit a 14-year high in March, as lower-income households were said to feeling more optimistic about the nation's economy, according to the University of Michigan, which said the preliminary result of its consumer-sentiment index came in at 102.0 for March, up from the 99.7 posted in February. Meanwhile, in corporate news, Johnson & Johnson was up 0.47% after it announced that Platinum Equity had offered to purchase its Life Scan unit for $2.1bn. Jewellery retailer Tiffany & Co was down 5.06% after posting a fourth quarter adjusted earnings per share of $1.67 (consensus: $1.63) on the back of a stronger-than-expected 1% rise in like-for-like sales. |
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| | Monday newspaper round-up: FOBTs, advertising, crypto, RBS | | The Gambling Commission is to recommend that the government reduce the maximum stake on fixed-odds betting terminals (FOBTs), known as the “crack cocaine of gambling”, to £30 or less. However, in a move likely to come as a relief to bookmakers, the watchdog will not explicitly back a maximum £2 stake, instead suggesting measures to combat the risk of harm. - The Times A global bidding war is set to erupt for Nex Group after a takeover approach from the owner of the Chicago Mercantile Exchange (CME). Senior City sources said all the big players were rushing to work out whether they could gatecrash the talks with a higher offer. The favourite to turn interloper is the Intercontinental Exchange, parent of the New York Stock Exchange. - Telegraph Economic growth in the UK will remain at the bottom of the G7 group of advanced countries until at least the end of the decade, the British Chambers of Commerce has warned. The business organisation sharply upgraded its GDP forecast for this year from 1.1 per cent to 1.4 per cent and raised its outlook for 2019 from 1.3 per cent to 1.5 per cent. - The Times Britons saddled with high-interest “doorstep loans” should be given the same protection as people with payday loans and be saved millions of pounds’ worth of excess charges a year, said Citizens Advice. In the UK, more than 1.6 million people use loans sold door-to-door – which are also known as home credit – and the market is one of the largest for high-cost credit, the charity warned. - Guardian Exports of British advertising services grew by 35 per cent in 2016 to hit a record high of £5.8 billion, according to new analysis which also warns that a great British success story could be undermined if Brexit leads to an exodus of talent. The sector’s growth far outstripped several other key areas of the economy, including financial services, insurance, business management and management consulting services, and legal services. - The Times The rollercoaster ride for some cryptocurrency investors could be about to take another tax-time lurch, according to experts, as the taxman looks for his share of transactions made using bitcoin and its like. Wild fluctuations in the value of digital currencies – bitcoin surged from less than one dollar in 2010 to $997 at the start of the 2017 to nearly $20,000 before settling back to around $8,500 on Friday – have exposed investors to tax bills the value of their coins may no longer meet. - Guardian Dana, the US automotive group in talks to buy GKN’s driveline division, is to seek a secondary listing in London as it bumps up its efforts to win over shareholders in the engineering group. The Ohio-based maker of axles and driveshafts could outline the move this week, as the battle for control of GKN enters the final stage. - The Times The privacy regulator should be handed stronger powers to investigate technology companies, say MPs after the personal data of millions of Facebook users was leaked. Damian Collins, chairman of the digital, culture, media and sport committee, has accused a British company of lying to parliament about whether it used information from the social network. - The Times Rolls-Royce, the engineering giant, is joining the race to build the next generation of energy storage “batteries” using the same material originally designed for hard-wearing contact lenses. The FTSE 100 group said it will work with Superdielectrics, a research company, to use the material to challenge the dominance of traditional batteries. - Telegraph The accounting and financial reporting watchdog should be put in special measures and run by commissioners until it can be abolished and replaced by a fully independent agency, an influential pensions body has said. In an excoriating assessment of the failures of the Financial Reporting Council, the Local Authority Pension Fund Forum (LAPFF) has accused the regulator of being too cosy with the CBI and the Big Four accountancy firms. - The Times On March 1, a combination of disruptions to the gas supply and high demand in freezing weather sent gas prices soaring, and the National Grid scrambling to secure enough supplies. UK coal plants earmarked for imminent closure ran almost flat out to keep the lights on; generating an average of more than 10 gigawatts for eight days straight during the cold snap, according to Wood Mackenzie, a consultancy. - The Times Britain risks being held to ransom by Russia unless the vulnerable energy system is fortified, the Government has been warned amid escalating tensions with Europe’s main gas supplier. As relations with Russia sour, energy infrastructure bosses been told by secutiry officials to bolster their defences to guard against a crippling cyber attack on power plants or the national grid. - Telegraph Vladimir Putin secured a decisive victory in the Russian presidential election last night, with his campaign claiming that turnout was bolstered by the confrontation with Britain over the poisoning of Sergei Skripal. Mr Putin, 65, took more than 76 per cent of the vote according to early results, although the polls were marred by reports of rigging. -The Times Network Rail is on the cusp of securing the future of up to 500 workers on the remaining Carillion contracts that were left up in the air after the outsourcer’s dramatic collapse earlier this year. The state-controlled track owner said it was close to confirming the future of four contracts which were valued at a combined £160m when they began. - Telegraph Snapchat is so popular in Britain that its advertising revenue will overtake Twitter’s UK revenue in 2019, and revenue from consumer magazine and cinema advertising within two years. The seven-year old phone app is hugely popular with younger users and advertisers are beginning to spend increasingly large amounts of their digital ad budgets on targeting its users. - Guardian Sir Martin Sorrell, the advertising pioneer and chief executive of WPP, recently declared that 2017 was “not a pretty year” for his company. He could soon be saying the same about his pay packet: it is expected to be slashed from £48 million in 2016 to an estimated £15 million. - The Times The East India Club is threatening to sue Royal Bank of Scotland over alleged failings that enabled a former employee to steal more than £560,000. The club is preparing legal action over what it alleges is RBS’s failure to warn it about a series of illegal transactions that were used to fund a former club treasurer’s gambling addiction. - The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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