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| | London open: Stocks slip on high street woe; UK jobs, Fed decision eyed |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | As equity markets in London edged lower at Wednesday's open, it was all about the high street following full-year numbers from B&Q owner Kingfisher, a profit warning from menswear specialist Moss Bros and updates from Carpetright, SCS and Mothercare. At 0840 GMT, the FTSE 100 was down 0.2% to 7,047.91, with investors erring on the side of caution ahead of key UK jobs data, with average earnings, the ILO unemployment rate and the claimant count rate all due at 0930 GMT. Meanwhile, the pound was flat against the euro at 1.1429 and 0.3% firmer versus the greenback at 1.4040. Market participants were also eyeing the latest policy announcement from the Fed after the close, along with a speech by chair Jerome Powell and the central bank's economic projections. With a 25 basis points rate hike priced in, the main focus will be on the dot plot projections to see how many more rate increases are on the cards this year. Spreadex analyst Connor Campbell said it was likely to be "a jittery afternoon" for investors ahead of the Fed decision. UK wage growth figure including bonuses are expected to climb from 2.5% to 2.6% in January, a move that would take it to its best level in over a year. Campbell said any disappointment could sap the energy from the pound. Economist Paul Hollingsworth at Capital Economics said with the BoE focussing more on wage growth recently, if Wednesday's figures reveal the expected pick-up it would all but seal the deal for an interest rate rise in May. In corporate news, Kingfisher slumped as it reported an 8% fall in annual profits on flat sales and issued a cautious outlook. Moss Bross tumbled, meanwhile, after warning that it now expects profits this year to be "materially lower" than current market expectations. Carpetright gained ground after saying it has secured a £12.5m emergency loan from one of its biggest shareholders, announcing a £40m to £60m cash call and saying it is looking at a company voluntary arrangement to cut rents and close stores. Mothercare was also on the front foot as it got some much needed breathing space after its lenders agreed to defer the testing of its financial covenants due on 24 March. Elsewhere, GKN slipped as it branded suitor Melrose Industries a "novice" operator with no plan in the latest round of accusations between the companies locked in a hostile bid battle. The FTSE 100 engineering company published a series of rebuttals to what it described as misleading statements made by Melrose, which is trying to buy GKN against the will of GKN's board. Inhaled products design and development business Vectura Group was also trading lower despite in-line full-year results, while Ferrexpo ticked down even as it declared a higher special dividend than most investors may have expected thanks to higher iron ore prices offsetting slightly lower production. Softcat fell sharply even as the provider of IT infrastructure products and services reported a rise in interim operating profit and revenue and lifted its dividend by 14% amid strong customer demand. Traders pointed out that the stock had rallied strongly into the results. Oilfield services provider Petrofac advanced as it was awarded a new contract in India valued at around $200m. In broker note action, 888 Holdings was cut to 'hold' from 'add' by Numis, while Ocado was downgraded to 'neutral' from 'buy' at Goldman Sachs. |
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| | US close: Stocks bounce but Facebook, Twitter hit by data concerns | | Wall Street was back in positive territory on Tuesday after the heavy losses seen during the previous session, with the tech sector still in focus following the latest revelations regarding Facebook but traders thinking ahead about interest rates. As the closing bell rang, the Dow Jones Industrial Average was up 116.36 or 0.47% higher at 24,727.27, with the S&P 500 having added 0.15% to 2,716.94 and the tech-heavy Nasdaq composite booting up 0.27% to 7,364.30. Ahead of an expected interest rate hike at the end of the Federal Reserve's two-day policy meeting, the dollar was at its best levels since the start of the month, with the dollar index up 0.5% at 90.42. New Federal Reserve Chair Jerome Powell will preside over the meeting of the Federal Open Markets Committee for the first time this week. Markets have already priced in a 25 basis points interest rate hike but are still awaiting the latest so-called 'dot plot' projections from US rate-setters for a better guide as to how many more rate increases are on the cards for this year. Economists at Credit Suisse said they now expect the Federal Open Markets Committee to raise rates four times this year, which is more than the three 'dots' currently indicated and which have been priced in by the market. Pantheon Macroeconomics disagreed: "To add another dot this year, five FOMC members would have to flip, and that seems a tall order. We would not be surprised, though, to see fewer forecasts at the low end of the range and a couple moving to the upside. In December, only three members expected four hikes this year, with one looking for five." While there is increased chatter about four potential interest-rate hikes from the Federal Reserve this year, David Madden at CMC Markets said it comes at a time when geopolitical tensions are higher than normal. "The call for four rate hikes is bullish, but it seems to ignore the possibility of protectionist policies." On the corporate front, Facebook lost further ground after losing nearly $40bn of its market cap the day before. Tuesday's news was that the social media company was being investigated by the US Federal Trade Commission about how its users' personal data was used by a political consultancy to help Donald Trump's presidential campaign. Chris Beauchamp, chief market analyst at IG, said: "The big worry will be whether the Facebook news will widen into a larger investigation and as result, the dip buyers will stay their hand for the time being." Social media rival Twitter lost 10%, though other parts of the tech space were mixed, with Amazon up almost 3% to overtake Alphabet in terms of market value, as the Google owner's stock slipped 0.4%. Elsewhere in the tech sector, Oracle tumbled 9.34% as its guidance report released late the prior day left analysts disappointed. The software giant predicted cloud-computing revenue would rise 19-23% in the fourth quarter, which fell short of Street expectations for at least 27% growth. Tech deal of the day was at MuleSoft, which jumped 27% to $33 after rumours emerged that Salesforce.com was in advanced talks to buy the software maker. The deal was later confirmed by Salesforce.com, which has agreed to pay $44.89 in cash and shares per share of the API technology specialist, of which $36 will be in cash. Hollywood's MGM Holdings picked up 0.22% after it announced that chairman and chief executive Gary Barber had been fired. |
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| | Wednesday newspaper round-up: Carillion, Cambridge Analytica, Aviva | | Partners from PricewaterhouseCoopers will be questioned by the work and pensions committee on Wednesday about the accounting firm’s role in the collapse of Carillion, with PwC accused of attempting to “milk the Carillion cow dry”. The committee said the correspondence between the Pensions Regulator and Carillion exposed the regulator’s weak position and the key role played by PwC. Most of the regulator’s negotiations were conducted via PwC, which advised Carillion’s directors on managing their pensions liabilities from 2012 to 2017. – Guardian Cities in the north and the Midlands have been transformed by a period of rapid regeneration that has seen population and jobs growth far exceed that of London since the turn of the century, according to a new report. The Centre for Cities thinktank said urban renaissance in Manchester, Leeds, Birmingham and Liverpool had been so marked that problems of urban decay had been replaced by a need to find room for further expansion. – Guardian Google has become the latest technology giant to offer an olive branch to media publishers, unveiling a $300m (£215m) three-year plan to revive an industry critics say it played a role in stifling. Under the Google News Initiative, the company said it would be rolling out new features to help boost publishers' subscription numbers and provide them with better tools to analyse and understand their readership. – The Telegraph Cambridge Analytica's boss, Alexander Nix, has been suspended with immediate effect after Channel 4 broadcast footage of the chief executive boasting of using bribes and women to swing elections, amid mounting pressure over data revelations. Cambridge Analytica said Mr Nix would be suspended pending a "full, independent investigation" into the comments and allegations. Its chief data officer, Alexander Tayler, will take on an acting chief executive role while the investigation into Mr Nix takes place. – The Telegraph Some of the City's largest investors have clashed with Aviva over its controversial plan to cancel £450 million of preference shares, many of which are owned by pensioners and charities. A group made up of M&G Prudential, Invesco, GAM, Blackrock, Legal & General and Eden Tree met Sir Adrian Montague, Aviva's chairman, yesterday to demand the insurer back down from its proposal to cancel three issues of preference shares which pay an average of 8.5 per cent annually. – The Times President Trump fired another shot in an escalating trade dispute with Britain last night as his administration imposed punitive customs duties on imports of British steel products. The US Department of Commerce said that it would impose anti-dumping duties of nearly 150 per cent on imports of carbon and alloy steel wire rod from Britain, which are worth $20.5 million a year. – The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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