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Apr 20, 2018

Evening Euro Markets Bulletin

 
ADVFN III Evening Euro Markets Bulletin
Daily world financial news Friday, 20 April 2018 23:03:55
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London close: Shares gain as pound slips on 'dovish' remarks from Carney
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London stocks held onto gains made early on Friday, as investors mulled dovish comments from Bank of England Governor Mark Carney from the night before against a more hawkish tone from fellow rate-setter Michael Saunders, amid weakness in Sterling.

By session-end, the FTSE 100 was up 0.54% or 39.25 points at 7,368.17, while the pound reversed earlier losses against the euro to trade up 0.10% at 1.1422 and trimmed losses versus the US dollar, trading down just 0.41% at 1.40284. 

Sterling had been under pressure after Carney cast doubt on another interest rate hike in May, but the currency managed to recover some of its poise following more hawkish comments from Saunders today.

Speaking to BBC News the previous evening, Carney highlighted recent mixed UK data and said he didn't want to be "too focused on the precise timing" of an interest rate hike.

"The biggest set of economic decisions over the course of the next few years are going to be taken in the Brexit negotiations and whatever deal we end up with. And then we will adjust to the impact of those decisions in order to keep the economy on a stable path," he said.

However, Michael Saunders - an external member of the Monetary Policy Committee who voted for a hike in March - pushed back against Carney's comments. In a speech in Glasgow on Friday morning, Saunders argued that interest rate hikes should be gradual, not glacial.

"'Gradual' does not imply that the MPC can only raise rates at a very low frequency, such as once per year. Nor does 'gradual' mean that the MPC cannot tighten faster than markets price in," he said in a speech at the University of Strathclyde.

Spreadex analyst Connor Campbell said: "The pound-boosting potential of these comments was tempered by the fact that a) this wasn't some dove-to-hawk switch given Saunders' stance last month, and b) he doesn't feel that 'the exact timing of rate changes must be totally predictable or signalled in advance'."

Analysts at TD Securities said what was now clear from the last 24 hours was that the distribution between a May and an August hike has shifted, "and we're likely to see a divided committee in May, regardless of which decision it takes".

In corporate news, building materials group CRH was the standout gainer after its chief executive told the Irish Times that the company was keeping the prospect of a full of partial New York listing of its key US division under review, having ruled it out in the past.

Barclays was in the black after it emerged that boss Jes Staley will be fined by UK regulators for attempting to uncover a whistleblower back in 2016, but that Staley would not be banned.

Housebuilder Taylor Wimpey edged higher after announcing that finance director Ryan Mangold was stepping down.

Hikma Pharmaceuticals surged after saying it has launched Dexrazoxane for injection, to reduce the incidence and severity of heart disease in women receiving a common chemotherapy treatment.

Meggitt ticked up as it secured a long-term agreement with Solar Turbines, while Fidessa gained as Ion Investment Group confirmed it has made a proposal to buy the financial technology for £38.703 per share in cash. Ion has until 1700 BST to make a firm bid or say it does not plan to make one.

Royal Mail finished lower after saying that chief executive officer Moya Greene will retire in September after more than eight years in the role. She will be succeeded by Rico Back.

Indivior gained after filing a new drug submission with Health Canada's Therapeutic Drug Directorate for an opium use disorder treatment.

Esure was a high riser after Peel Hunt upgraded the stock to 'buy', while Cineworld racked up healthy gains after Berenberg added the stock to its preference list, saying the market is being overly bearish on the prospects for a US rebuild after the significant Regal acquisition and associated rights issue.

On the downside, Shire retreated after Allergan has pulled out of its pursuit for the biopharmaceutical group only hours after saying it was pondering a possible takeover offer. The botox-maker confirmed in a statement on Friday morning that it "does not intend to make an offer for Shire". This came a day after Japan's Takeda said the company had rejected a £42.4bn takeover offer.

Durex and Dettol maker Reckitt Benckiser was under the cosh as like-for-like sales for the first quarter fell short of estimates, while housebuilder Countryside Properties was lower after US hedge fund Oaktree Capital sold its entire 8% stake in the company.

Pub group Greene King was under pressure as Berenberg cut its price target and estimates on the stock and reiterated its 'sell' rating.


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Market Status
 
 
change pct
+0.50%
 
cur price
7,365.91
 
change
+36.99
 
 
change pct
+0.32%
 
cur price
20,211.61
 
change
+64.45
 
 
change pct
+0.18%
 
cur price
3,417.21
 
change
+6.29

Top 10 FTSE 100 Risers

# NameChange PctChangeCur Price
1CRH Plc+3.63%+88.002,514.00
2Barratt Developments+1.99%+11.00564.00
3Standard Chartered+1.97%+14.70760.00
4Smiths Group+1.91%+30.001,602.00
5BAE Systems+1.86%+11.00603.40
6Imperial Brands+1.74%+41.002,396.00
7Vodafone Group+1.65%+3.40210.05
8GlaxoSmithKline+1.61%+22.601,430.00
9Burberry Group+1.55%+26.501,741.00
10Mediclinic International plc+1.45%+9.80684.40

Top 10 FTSE 100 Fallers

# NameChange PctChangeCur Price
1Reckitt Benckiser-5.13%-297.005,489.00
2Shire Plc-4.23%-168.003,807.00
3Rolls-Royce Holdings-1.89%-16.60860.20
4Merlin Entertainments Plc-0.77%-2.70348.00
5Next Plc-0.65%-34.005,192.00
6Associated British Foods-0.57%-15.002,629.00
7Paddy Power Betfair-0.54%-40.007,300.00
8Smurfit Kappa Group-0.44%-14.003,174.00
9London Stock Exchange-0.42%-18.004,232.00
10Intercontinental Hotels Group-0.41%-18.004,377.00

Daily cryptocurrency Tracker 18.4.18: Altcoin market seen higher

An overall positive trend was seen in crypto markets over the past 24 hours, as 6 of the top 10 cryptos registered gains over the past 24 hours. Of the top 5 cryptos, Litecoin...

Read More..


Crypto Currencies
#1 Bitcoin (BTC)
change
+0.91%
mktcap
141.26B
volume
71786.47T
price
8,348.10
#2 Ethereum (ETH)
change
+3.07%
mktcap
56.65B
volume
23717.32T
price
577.00
#3 Ripple (XRP)
change
+8.93%
mktcap
33.35B
volume
23327.84T
price
0.86
#4 Bitcoin Cash / BCC (BCH)
change
+6.06%
mktcap
16.84B
volume
7247.07T
price
1,025.84
#5 Litecoin (LTC)
change
+0.57%
mktcap
8.21B
volume
14145.57T
price
147.49

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US open: Stocks head south as Trump attacks OPEC

Wall Street opened on a somewhat sombre note on Friday, with all major indices down as corporate earnings fell short of repairing the damage done by yet another Donald Trump tweet.

At 1545 BST, Dow Jones Industrial Average and S&P 500 were down 0.39% and 0.41%, respectively, while the Nasdaq had lost 0.68%.

After hitting more than three-year highs earlier in the week, crude futures turned lower on Friday after Donald Trump suggested that OPEC was keeping oil prices artificially high - something he said: "will not be accepted".

Speaking shortly after the bell, SpreadEx's Connor Campbell said, "The Dow Jones wilted in the face of the dollar's comeback after the bell. The greenback pared its gains against sterling with a half a percent rise against the euro, a bounce that helped inform the Dow's own 70 point decline."

"That drop takes the Dow under 24600 for the first time since Monday, with its early in the week momentum petering out as the weekend approached," he noted.

On the corporate front, General Electric was up 4.40% after it topped estimates with its quarterly earnings.

Honeywell picked up 0.94% in early trade and Schlumberger lost 1.44%, despite seeing profits surge 88% across the first quarter.

Elsewhere, Pivotal Software shares spiked in its first moments of trading on the New York Stock Exchange, opening at $16.75 per share, and trading up as high as 10% before losing early gains.

Semiconductor company Qualcomm shares tanked after saying it will lay off 4% of its workforce as it looks to cut costs by around $1bn.

Meanwhile, Wells Fargo gained 2.25% following reports that US regulators are set to slap a $1bn fine on the bank for forcing customers into car insurance and charging mortgage borrowers unfair fees.

There are no major US data releases due, but Chicago Fed President Charles Evans will give a speech on current economic conditions and monetary policy to the Graaskamp Center Spring Board Conference later in the day.


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Broker tips: Weir, Rank, Esure

Following Weir's acquisition of US mining tools-maker ESCO, and the announcement of its intention to sell-off its Flow Control business, analysts at Credit Suisse approved of the course the deal had set the company on, in terms of revenue and market share expansion.

Regarding the ESCO deal, Credit Suisse expects Weir's revenues to grow 10% in 2019 and that, by 2020, the Scottish firm should have achieved two-thirds of its £21m of targeted cost synergies.

Credit Suisse highlighted a great deal of potential if Weir was able to utilise its service network to build up ESCO's position in Mexico and Africa; however, it noted this would require market share gains from its already high global level of 40%.

"Strategically, we like the deal as it increases the revenue share of Minerals, the highest multiple business, and for the opportunity to expand ESCO into regions where Weir has a strong service presence," the analysts added.

Elsewhere, Weir's message on pricing was unchanged at for "low single-digit increases for 2018".

Nevertheless, despite management highlighting that its year-to-date oil and gas mix had been weighted slightly more towards the original equipment side of things, which itself has slightly lower margins than the oil and gas aftermarket trade, Weir did reiterate guidance for mid-teens price increases on that side of the business.

Overall, Credit Suisse upped its target price on Weir to 2,300p from 2,200p while reiterating its 'neutral' stance on the shares.

It's been a tough year for Rank, said analysts at Canaccord Genuityon Friday, and with tighter regulations, some seriously strong competition for its London casinos and its chief executive jumping ship, the broker has slashed its target price on the shares.

Group revenues at Rank were flat in its first trading half, but began to head south in the three months leading to 31 March, as poor performances from its London Casinos helped drive group revenues down 2% year-on-year.

Grosvenor Casinos was down by 9% in its third quarter, impacted by lower admissions and a £1.5m hit from VIP players, something Canaccord said should even out, in the long run, but it was also clear to its analysts that Grosvenor was still under-performing in London, and pricey refurbishments at two of its major properties in the capital had yet to deliver the uplift in activity Rank had anticipated.

Rank's digital operations continued to perform well through its most recent trading quarter, revenues up by 17%, in line with Canaccord's expectations, and despite Mecca Bingo remaining soft, down by 2%, tight cost control has kept it "very much on track" in profit terms.

Overall, management expects full-year operating profits to be in the vicinity of £76m to £78m, versus Canaccord's previously forecast £82.5m figure, leading the broker to reiterate its 'hold' rating on Rank, but drop its price target on its stock from 255p to 200p.

"This is another disappointing trading update from Rank," wrote Canaccord analyst Simon Davies. "The backdrop for its land-based venues is challenging, with a weak consumer spending backdrop, tightening regulation, and in the case of London Casinos, some strong competition - Hippodrome, Aspers Stratford etc."

"And while the impact from weather/VIPs should be non-recurring, we think it is going to take time for the new management to drive an underlying recovery," Davies concluded.

Esure's low-risk footprint looks undervalued, Peel Hunt said on Friday as it bumped the stock up to 'buy' from 'add' and nudged the price target up to 300p from 295p.

"A growing footprint and surprisingly benign claims inflation should support margins," said Peel, noting that the shares already appear to be factoring in a softening of the UK motor rate cycle. In addition, it argued that the stock looks undervalued at around 9x 2019 price-to-earnings - compared to a sector average of 11x - and a 7% yield.

"While the UK Motor rate cycle is now plateauing, we believe as long as the market remains disciplined and prices track in line with claims inflation, Esure will have continued room to grow its market share and build excess capital," the brokerage said.

Peel noted that the company's outlook is driven by its footprint expansion strategy and said it assumes that the 3m policy target by 2020 can be reached. The brokerage is comfortable the expansion is not materially changing the company’s risk profile, nor does it see any need for higher IT investment to generate growth.

Motor policy numbers are now 37% above 2013 levels, which was the year Esure last paused its expansion strategy as rates declined, Peel said.

"The only thing we believe that could bring Esure’s growth strategy back to a halt is a softening cycle, albeit, Esure has proven in the past that it can protect its portfolio while sustaining a high dividend payout in lieu of earnings growth."

 

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