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| | London close: Footsie rebounds from early losses |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London's top-flight index managed to eke out a slightly higher close on Wednesday after an early dip, as the 'tit-for-tat' trade spat between the US and China intensified. The FTSE 100 edged higher by 0.05% or 3.55 points to 7,034.01, while the pound was off 0.03% versus the euro at 1.1415 but 0.15% higher against the greenback at 1.40782. Yet the second-tier FTSE 250 failed to pull-off the same trick, ending the day down by 0.69% or 133.79 points at 19,264.22. The downbeat mood came as China revealed a fresh round of tariffs on 106 US goods including soybeans, cars, aircraft and chemicals, just hours after President Trump's administration unveiled a list of around $50bn in Chinese electronics, aerospace and machinery products that it plans to target with a 25% tariff. Beijing said it "strongly condemns and firmly opposes" the proposed US tariffs, which it said were "unrealistic and protectionist". The country's commerce ministry also said it had initiated a World Trade Organization dispute procedure against the US tariffs investigation. David Cheetham, chief market analyst at XTB, said: "There has been a lot of rhetoric surrounding trade wars for some time now, but the transformation of these threats into actions in recent days is alarming and is clearly roiling markets. Not only are the markets directly impacted by the tariffs selling off, but there has also been notable weakness in stocks since the news broke with European markets falling to their lowest level of the week. The latest set of tariffs isn't set to be implemented immediately but it is hard to picture either Trump or XI Jinping backing down for fear of looking weak." Cheetham added that while the situation currently concerns only the US and China, other large trading partners such as the EU will be watching very closely. "From the UK perspective the negotiations surrounding future trade agreements with their largest partners post-Brexit now look increasingly difficult as a protectionist shift from the largest players threatens to hinder global trade." Meanwhile, a disappointing reading on the state of the UK construction sector did little to help the tone, with the IHS Markit/CIPS purchasing managers' index for March falling to 47.0 from 51.4 the month before, missing expectations for a reading of 51.0. This marked the steepest fall for the industry since July 2016, just after business confidence was rattled by the Brexit vote, as heavy snow and freezing conditions took their toll. Heavily-weighted miners suffered the worst losses as base metals prices declined on the back of escalating tensions between the US and China, with Anglo American, Rio Tinto and BHP Billiton all weaker. Advertising giant WPP was under pressure after saying it had appointed an independent counsel to investigate an allegation of personal misconduct against chief executive Martin Sorrell. The company said the allegation did not involve amounts material to WPP. Smith & Nephew fell as it appointed former Johnson & Johnson director Namal Nawana as its chief executive, replacing Olivier Bohuon after a seven-year stint at the head of the artificial shoulders and knees group. Peppa Pig rights owner Entertainment One was also weaker despite reporting a "robust" profit performance in the year ended 31 March. Wizz Air zipped higher as it said traffic jumped 25% in March, but Ryanair was a weaker even after it posted a 6% rise in March traffic. Morrisons was the standout gainer as the latest data from Kantar Worldpanel showed it continued to outperform rival 'big four' supermarkets in the 12 weeks to 25 March, with sales growth of 2.4%. FTSE 250 waste-to-product company Renewi dropped after saying that results for the year to the end of March 2018 are expected to be in line with the board's expectations in terms of underlying trading and cash. In small caps, tile specialist Topps Tiles was under the cosh after posting a drop in second-quarter like-for-like sales and highlighting a "a softening of the underlying market". In broker note action, Vodafone was lifted to 'buy' at Citi, while Goldman Sachs initiated coverage of Vesuvius and Bodycote at 'neutral', and Renishaw at 'buy'. Meanwhile, RBC Capital Markets adjusted its ratings on a slew of mining stocks. The bank upgraded BHP Billiton and Fresnillo to 'sector perform' and Glencore to 'top pick'. It also upped Polymetal to 'outperform' but downgraded Randgold Resources to 'underperform'. Market Movers FTSE 100 (UKX) 7,034.01 0.05%
FTSE 250 (MCX) 19,264.22 -0.69%
techMARK (TASX) 3,249.14 -0.04% FTSE 100 - Risers Morrison (Wm) Supermarkets (MRW) 218.40p 2.87%
Shire Plc (SHP) 3,600.00p 2.64%
Imperial Brands (IMB) 2,506.00p 2.56%
Smurfit Kappa Group (SKG) 2,990.00p 2.12%
Diageo (DGE) 2,430.00p 1.89%
Vodafone Group (VOD) 197.22p 1.71%
British American Tobacco (BATS) 4,212.50p 1.51%
Severn Trent (SVT) 1,847.00p 1.48%
Unilever (ULVR) 3,964.50p 1.38%
GlaxoSmithKline (GSK) 1,395.40p 1.26% FTSE 100 - Fallers GKN (GKN) 428.50p -3.97%
Anglo American (AAL) 1,587.80p -3.17%
Glencore (GLEN) 345.00p -3.16%
Mediclinic International (MDC) 556.00p -3.03%
Randgold Resources Ltd. (RRS) 5,714.00p -2.86%
Mondi (MNDI) 1,849.00p -2.68%
Rio Tinto (RIO) 3,538.00p -2.55%
Antofagasta (ANTO) 901.80p -2.51%
BHP Billiton (BLT) 1,373.80p -2.46%
Old Mutual (OML) 234.20p -2.34% FTSE 250 - Risers Polypipe Group (PLP) 362.80p 3.30%
Rank Group (RNK) 213.50p 3.14%
Contour Global (GLO) 238.00p 2.59%
Renishaw (RSW) 4,534.00p 2.26%
Cairn Energy (CNE) 208.60p 2.25%
SIG (SHI) 137.00p 2.01%
FirstGroup (FGP) 87.30p 1.99%
Pennon Group (PNN) 648.63p 1.95%
Jupiter Fund Management (JUP) 470.90p 1.68%
Mitchells & Butlers (MAB) 254.20p 1.68% FTSE 250 - Fallers Fisher (James) & Sons (FSJ) 1,512.00p -6.09%
Melrose Industries (MRO) 213.80p -6.06%
IP Group (IPO) 114.40p -5.45%
Renewi (RWI) 73.20p -4.94%
Ferrexpo (FXPO) 232.10p -4.49%
Ocado Group (OCDO) 508.80p -3.75%
TI Fluid Systems (TIFS) 258.00p -3.73%
Bodycote (BOY) 879.50p -3.62%
Fidessa Group (FDSA) 4,025.00p -3.48%
Kaz Minerals (KAZ) 840.40p -3.45% |
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| | Europe close: Stocks finish well-off lows despite ongoing trade tensions |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Stocks managed to come off their worst levels of the session even after China stepped-up its response to US proposals to levy up to $60bn-worth of trade duties on Chinese imports. For the most part, economists seemed sanguine that the ongoing trade tensions may only have a marginal impact on the global economy, although some market watchers pointed out that the heightened uncertainty might offset any gains resulting from China opening up its economy further in response, not to mention should the reciprocal tariffs escalate past a certain point. Commenting on the market action, Joshua Mahony at IG said: "The trade war between China and the US remain front and centre of the collective market mind-set this morning, with the tit-for-tat action ramping up in the wake of announcements from both sides." Against that backdrop, by the closing bell the benchmark Stoxx 600 was down by 0.47% or 1.74 points at 367.33, alongside a 0.37% or 44.55 point drop on the German Dax to 11,957.90, while the FTSE Mibtel was off by 0.30% or 67.55 point fall to 22,442.78. From a sector standpoint, the Stoxx 600's gauge of Basic Resources fared worst, retreating 2.34% to 440.27 points. Overnight, Beijing said it would slap 25% tariffs on 106 US products worth $50bn, including soybeans, automobiles, chemicals and airplanes. That followed the release by the US Trade Representative the day before of Washington's own list of $50bn-worth of Chinese made goods it would impose levies on, including electronics and aircraft. The reaction in financial markets was swift, with stock in US jet-maker Boeing sliding 6% and soybean futures erasing 5%. In an initial reaction to Beijing's move, economists at Capital Economics said: "It is still uncertain how this will play out. China’s response could embolden Trump to push for broader US tariffs, escalating trade tensions further. Equally likely, however, is that there will be some compromise that allows both sides to row back, or at the very least, water down the proposed tariffs." Back in Europe, Eurostat reported that 'core' euro area consumer prices were unchanged in March, with the year-on-year rate running at 1.0% (consensus: 1.1%). In a separate report, investors learned that unemployment in the single currency bloc retreated from 8.6% in January to 8.5% in February, as expected. Meanwhile, in the corporate space, Airbus was in focus after investor adviser PIRC reportedly voted against choosing ex-Deutsche Telekom chief Rene Obermann to the board of Airbus, because of his possible links to the German state. |
| | Daily cryptocurrency Tracker 27.3.18: Bitcoin dips below $8,000 The bearish trend in the cryptocurrency market continued over the past 24 hours, as 47 of the top 50 cryptos registered losses. Of the top 10 cryptos, NEO suffered the heaviest losses, declining more than 14%. Other cryptos, such as Ethereum, Litecoin and Stellar also registered double-digit losses. At the time of writing, Bitcoin was seen more than 6.5% lower, trading below the $8,000 mark. Read More... |
| | US open: Stocks fall sharply as fears of a trade war intensify | US stocks fell sharply after the opening bell on Wednesday as trade war concerns reared their head again, sending the Dow's constituent components down across the board as America and China's 'tit-for-tat' intensified. At 1500 BST, the Dow Jones Industrial Average and Nasdaq were down 1.56% and 1.25%, respectively, while the S&P 500 was 1.12% weaker. The downbeat opening call came as China revealed a fresh round of tariffs on 106 US goods including soybeans, cars, aircraft and chemicals, just hours after President Trump's administration unveiled a list of around $50bn in Chinese electronics, aerospace and machinery products that it plans to target with a 25% tariff. Beijing said it "strongly condemns and firmly opposes" the proposed US tariffs, which it said were "unrealistic and protectionist". David Madden, market analyst at CMC Markets, said: "It would appear that gloves are off in relation to the trade war between the two largest economies in the world. Dealers will be half expecting retaliation from President Trump, and the exodus from equities is likely to continue." Meanwhile, David Cheetham, chief market analyst at XTB, said: "There has been a lot of rhetoric surrounding trade wars for some time now, but the transformation of these threats into actions in recent days is alarming and is clearly roiling markets. "Not only are the markets directly impacted by the tariffs selling off, but there has also been notable weakness in stocks since the news broke with European markets falling to their lowest level of the week. The latest set of tariffs isn't set to be implemented immediately but it is hard to picture either Trump or XI Jinping backing down for fear of looking weak." Cheetham said that looking at historical precedents for tariffs, the 25% level remains relatively small compared to the 100% or higher that President Reagan and other administrations imposed on Japanese products in the 1980s and 1990s. However, he said there is every chance that today’s developments don’t represent the high-water mark. "Other goods may well be drawn into this, as well as the possibility of a higher than 25% levy being implemented going forward." Shares in Boeing, whose main end market is China, were sharply lower as well, erasing 4%. Tesla shares on the other hand were managing to almost completely trim an initial drop of as much as 5% after analysts dissected its first-quarter production and delivery numbers. Amazon stock was also trading down after the company, with the internet retailer's shares still under pressure following Donald Trump's attacks against it via Twitter. Music-streaming service Spotify remained in the spotlight during its second day of trading too after debuting with a bang on Tuesday, although its shares later ended lower. Elsewhere, home builder Lennar rose 6.93% following a better-than-expected earnings report, while used-car seller CarMax nudged forward after releasing its own results. On the data front, ahead of Friday's non-farm payrolls, ADP estimated that the American private sector added 241,000 new jobs in March, following the 246,000 in February - beating estimates for 205,000. Markit's services PMI and the ISM non-manufacturing PMI were due in at 1445 BST and 1500 BST, respectively, as the ISM non-manufacturing index was expected to have edged down to 58.6 in March from 59.5 the month before, indicating a more modest expansion in the service sector, In addition, speeches were due from St Louis Fed President Bullard and Cleveland Fed President Mester later in the day. |
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| | Broker tips: Credit Suisse, Inmarsat, Renishaw | Stay the course through light turbulence for base metals and bulk commodities, RBC Capital Markets urged as its analysts upgraded ratings on Glencore and BHP Billiton. The global economy is on a strong footing and will continue to drive demand for metals, the analysts said. Short-term volatility could provide buying opportunities for those prepared to stick the course, they added. Some warning signs have emerged for copper and iron ore with copper inventories rising but potential labour disruption could be a catalyst for a multiyear copper rally. Investors should add to copper positions at attractive valuations and gold to hedge against volatility, RBC said. RBC upgraded Glencore to 'top pick' from 'outperform' because the miner and commodities trader is a compelling exposure through a weaker overall environment. The analysts also upgraded BHP Billiton to 'sector perform' from 'underweight' and kept their 'outperform' rating on Anglo American. Rio Tinto also remained as a 'sector perform' share. The analysts shaved 10p off their Glencore price target to £4.60 but made bigger cuts to their target for Anglo American, £19.50 from £22, and Rio Tinto, £39 from £42. They trimmed the price target for BHP Billiton to £14 from £14.50. Analysts at Credit Suisse slashed their target price for shares of satellite communications provider Inmarsat to reflect a more "cautious" outlook for government spending. Although they described the company's fourth-quarter figures as "solid", highlighting the resumption of top-line growth at Maritime and "re-assuring" medium-term guidance for growth, they pointed out how consensus estimates for the firm's operating profits had been marked-down sharply. That, they believed, was the result of concerns about the medium-term outlook for growth in Inmarsat's public sector revenues and a sustained lack of visibility around its in-flight connectivity or IFC. Nonetheless, "modest revenue headwinds in Government from 2018 could be at least partly offset by future contract wins & short-term operational revenue. Over 2018 we also expect Inmarsat's IFC airtime revenue to finally begin generating material revenue as aircraft installations accelerate," they said. Furthermore, the company's competitive advantage in its core Maritime and Aviation markets remained unscathed. "Material consensus earnings downgrades over the past 2 years, in our view, have been driven more by rising success-based costs and a delay to IFC revenue than any structural deterioration in Inmarsat's competitive position-reinforced by long-term contract wins in Maritime and Aviation IFC," they explained. All-in-all, they lowered their target on the shares from 810p to 610p, but stayed at 'outperform'. Factory equipment manufacturer Renishaw is going to be the fastest growing company in European capital goods sector over the next three years and catapult itself into the FTSE 100, said Goldman Sachs as it initiated coverage on Wednesday. Renishaw, whose devices and sensors are used in factory automation for highly accurate measurements of products and the calibration of machine tools, was given a 'buy' rating by based on Goldman's target price of 5,500p. Analysts pointed out that the 50% sell-rated consensus and concerns associated with the firm's margin potential and valuation were "unwarranted". Analyst Jack O'Brien argued that Renishaw's sector premium was, in fact, justified in light of Renishaw's speed of growth and potential as a M&A target. O'Brien highlighted Renishaw's products' ability to increase factory production yields, improve time-to-market and enable the continuous manufacturing feedback loop as providing a major market opportunity in Asia, where China is actively trying to promote high value-add manufacturing. He said this was a key driver into what was seen as a £1.5bn market opportunity by 2020. The analyst expects growth of 30% per year from the sector, with Renishaw likely to add scope for new products to unlock the mass-production market. |
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