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| | London close: Stocks weighed down by trade tensions, weak US jobs |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London stocks finished a little weaker on Friday, weighed down by the ongoing global trade tensions and strength in the pound after the latest US jobs report fell well short of economists' forecasts. Overnight, US President Donald Trump instructed the country's Trade Representative to consider whether tariffs on another $100bn-worth of Chinese imports were in order following Beijing "unfair" retaliation against the White House's already firm proposal for levies on $50bn-worth of goods from the Asian nation anounced on Wednesday. In reaction, according to Bloomberg on Friday afternoon Chinese Commerce Ministry spokesman Gao Feng said Beijing would retaliate "immediately, intensively and without any hesitation" if Washington published a new list of tariffs. That was followed by fresh remarks from Trump, who reportedly told a radio programme that Americans may need to endure a "little pain" if the current dispute morphed into a trade war. Against that backdrop, the FTSE 100 was down 0.22% by the closing bell at 7,183.64, while the pound was up 0.62% against the US dollar to 1.40902. Miners and Oilfield Services stocks fared worst on the back of those trade frictions. Neil Wilson, senior market analyst at ETX Capital, said: "It all looks more like a classic Trump negotiation - float an extreme position to step back from the worst-case scenario in return for some big concessions. Both sides would prefer to negotiate a settlement. "Nevertheless, markets will be sensitive to the fact that a full-blown trade war could result if the two camps back themselves into a corner. The risk of miscalculation increases the more the two sides push this." Weighing on sentiment as well, but in a boost for Sterling, the Bureau of Labor Statistics reported that non-farm payrolls in the US grew by just 93,000 last month, well short of the 189,000 increase economists on Wall Street had penciled-in. In corporate news, shares of Drax and United Utilities both registered sharps gains, with the latter helped by supportive comments out of Deutsche Bank. The German broker pointed out how UK utilities had surrendered nearly a quarter of their value over the past year, due to a mix of regulatory, competitive and political risks, water utilities now looked "increasingly attractive". EasyJet edged higher as it said passenger numbers continued to grow in line with the board's forecasts in March, with a total of 6.56 million people choosing to fly with the airline during the month - an increase of 3.4% year-on-year. AO World shares jumped after the online electrical goods retailer said that its full-year results should fall within the range of current market forecasts. LondonMetric Property reversed early losses, having said it was selling one of its oldest regional warehouses and snapping up five 'urban' logistics warehouses for £25.6m. Big Yellow Group was in the red after confirming it has been granted planning consent for a new 72,000 square foot store in Camberwell, London. Retailers were in focus amid notes on the sector by Citi and Berenberg. Tesco and Morrison were upgraded by Berenberg, while Halfords was upgraded at Citi. On the downside, Next, Marks and Spencer and Pets at Home all had their ratings dropped by Citi. |
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| | Europe close: Stocks finish at session highs |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | Stocks finished at their best levels of the session, tracking gains on Wall Street overnight after multiple top officials from the US administration came out and toned down their rhetoric on international trade. Helped by that detente, by the closing bell the benchmark Stoxx 600 was ahead by 2.40% or 8.80 points at 376.13, alongside a rise of 2.90% or 347.29 points for the German Dax to 12,305.19 and a gain of 2.62% or 134.87 points to 5,276.67 on the Cac-40. Meanwhile, and from a sector standpoint, some of the best gains were to be seen in: Technology (3.23%), Basic Resources (3.22%), and Banks (2.48%). Speaking on Wednesday evening, the US president himself commented that America was not in a trade war, although he saw little downside from one should it occur given the country's outsized shortfall in trade with the rest of the world. "We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.," Trump said via his Twitter account. In parallel, the White House's chief economic adviser, Larry Kudlow, was reportedly stressing how no tariffs had yet been put in place by either side. Nevertheless, according to Bloomberg, Kudlow did not make any reference to whether, when or along what lines negotiations between the two sides might take place. On that note, David Madden at CMC Markets UK said: "European stocks are flying high as the fears of a trade war ease. The US has showed signs that it isn’t as aggressive as traders initially suspected. Beijing won’t be implementing its latest list of tariffs for 60 days, so there is still time for the situation to be diffused. "Market volatility is high, and the choppiness is something that traders are getting used to. For the time being, investors are happy to buy into the market, but they are very much aware the sentiment could change quickly." Be that as it may, economic data published on Thursday were a tad underwhelming, with Germany's Ministry of Finance reporting a much weaker-than-expected reading on the country's factory orders for February. Total factory orders rose by just 0.3% month-on-month (consensus: 1.5%), following a 3.5% drop in January, helped by a 1.4% jump in foreign orders, mainly from other Eurozone countries. For its part, Eurostat reported that retail sales volumes in the single currency bloc edged higher by just 0.1% month-on-month in February (consensus: 0.5%), even as it revised its estimate for the prior month's gain down by two tenths of a percentage point to -0.3%. In corporate news, German regulator Bafin's head of banking regulation, Raimund Roeseler, told Handelsblatt that Deutsche Bank and Commerzbank, the country's two largest lenders, should not merge or risk creating an institution that was 'too big to fail'. Further South, Air France's unions called strikes for 17,18,23 and 24 April after management rebuffed their requests for higher wages. Also in the spotlight, Accor announced the acquisition of a 50% stake in South Africa's Mantis Group. |
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| | US open: Stocks open lower after big miss in non-farm payrolls | | US stocks opened down on Friday after President Trump said he might slap $100bn more tariffs on China, even as investors were digesting the latest non-farm payrolls report, with a particular focus on the latest figures on average hourly earnings which it contained. At 1520 BST, the Dow Jones Industrial Average was down 0.52%, while the S&P 500 and Nasdaq were slipping 0.32% and 0.35%, respectively. After the close of US markets on Thursday, Trump said he was mulling over the possibility of imposing tariffs on another $100bn worth of Chinese goods "in light of China's unfair retaliation". Rabobank said quick maths suggest that China can't simply call Trump's new bluff. "Total US goods exports to China were only $130bn last year: they would have to put a tariff on everything and then a little more […] It still has its Treasury holdings, and it might decide to put its nuclear option on the table by threatening to sell Treasuries/buy euro bonds, let go of the soft basket peg and allow the CNY to depreciate. "This would slap the US in the face, but will also upset their own policy of CNY stability. It would also be frowned upon from a European or Japanese perspective as such a move cuts off all those shiny Goldilocks. China will ultimately shoot itself in the foot with such a move, but that's virtually always the case with nuclear options. The US-China spat is indeed very reminiscent of the US-NK spat: my red button is bigger than yours!" In economic news, US non-farm payrolls rose by 103,000 in March - the lowest reading in six months - falling far short of economists' forecasts for an increase of 193,000. Nevertheless, some economists shrugged off the weak print, arguing that a more modest pace of job growth was to be expected. Indeed, it followed an upwardly revised gain of 326,000 for February, the strongest reading in two-and-a-half years, Paul Ashworth, chief economist at Capital Economics pointed out. Average hourly earnings meanwhile were 0.3% higher on the month, pushing the year-on-year rate of increase up by one tenth of a percentage point to 2.7% (consensus: 2.8%). "The earnings side of the report was strong, with average hourly earnings recording a healthy monthly increase. In all, we choose not to read too much into the March slowdown, and instead take a positive signal from the earnings side of the report. We continue to expect the Fed to raise rates three more times this year," said Pooja Sriram at Barclays Research. A speech by Federal Reserve chairman Jerome Powell on the US economy at 1830 BST was also be in focus, with traders likely keen to get some clues on monetary policy but also to see whether he says anything about the escalating trade tensions between the US and China. On the corporate front, Goodyear Tire & Rubber shares dropped 0.54% following a report that the National Highway Traffic Safety Administration is looking into allegations that the company covered up the use of potentially faulty tyres that were linked to fatal accidents. Elsewhere, Target picked-up 1.02% after agreeing to pay more than $3.7m to settle a racial bias lawsuit. |
| | Friday broker round-up | | Tesco plc: Berenberg upgrades to buy with a target price of 255p. WM Morrison plc: Berenberg upgrades to hold with a target price of 210p. Cineworld group plc: Berenberg reiterates buy with a target price of 300p. BTG: JP Morgan reiterates neutral with a target price of 680p. ContourGlobal: JP Morgan reiterates overweight with a target price of 267p. Petrofac Limited: RBC Capital Markets reiterates sector perform with a target price of 550p. Wincanton plc: RBC Capital Markets reiterates outperform with a target price of 290p. Hays: Kepler Cheuvreux reiterates hold with a target price of 205p. BAE Systems: Goldman Sachs reiterates conviction buy with a target price of 737p. Anglo American: Goldman Sachs reiterates conviction buy with a target price of 2,300p. Glencore: Goldman Sachs reiterates conviction buy with a target price of 520p. Standard Chartered: Goldman Sachs reiterates conviction buy with a target price of 980p. Harworth Group: Canaccord reiterates buy with a target price of 130p. 3i: Canaccord reiterates buy with a target price of 1,060p. BT Group: Numis reiterates buy with a target price of 400p. | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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