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| | London open: Stocks slip as investors digest Fed statement; services data eyed |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London stocks nudged lower in early trade on Thursday as investors digested the latest policy announcement from the US Federal Reserve and looked ahead to the release of key UK services data. At 0830 BST, the FTSE 100 was down 0.1% to 7,534.00, while the pound was up 0.2% versus the dollar at 1.3598 and down 0.2% against the euro at 1.1342. The Fed stood pat on rates as expected on Wednesday but pointed to the fact that inflation is beginning to edge higher. In addition, the central bank made a number of tweaks to its accompanying statement. At the March meeting, it had said that indicators "have continued to run below 2%", but in the latest statement, the Fed said "overall inflation and inflation for items other than food and energy have moved close to 2%". The Federal Open Markets Committee also said that inflation on a 12-month basis is expected to run near its "symmetric 2% objective over the medium term", with the use of the word "symmetric" grabbing investors' attention. "Use of the word symmetric may imply the Fed being prepared to allow inflation to both over- and under-shoot the 2% target, rather than consider it a concrete target," said Accendo Markets analyst Mike van Dulken. Meanwhile, Rabobank said: "The statement incorporated only minor changes, yet the emphasis on the symmetric inflation goal signals that the FOMC won’t be too worried about a slight but temporary overshoot. This suggests that the FOMC might see the need for some wiggle room later this year." On the UK data front, Markit's services PMI for April at 0930 BST is expected to have ticked up to 53.5 from 51.7 in March. In corporate news, engine maker Rolls-Royce retreated as it said its expectations for 2018 were unchanged after reorganising spending to offset costs for extra inspections of its Trent 1000 engines. The engine maker said the year had started well and that trading was in line with its expectations. Smith & Nephew slumped as it cut its full-year revenue guidance after a weak first quarter for replacement hip joints and wound-care, especially in the US. Engineering company IMI fell despite saying current trading remains consistent with market consensus expectations for the year, while Centamin slipped even as the gold miner said first-quarter profit nearly doubled. Insurer Esure was on the front foot after it reported an 18% jump in first-quarter gross written premiums thanks to a solid performance form its motor division and said it remains on track to deliver profitable growth in 2018, although its home unit was hit by claims related to bad weather. Glencore ticked higher after saying that production in its first quarter was largely in line with expectations across all commodity groups and confirming that its full-year guidance remained unchanged from what it presented in February. Lancashire Holdings rallied as it posted a 47.7% rise in first-quarter pre-tax profit as gross written premiums and its return on equity rose. Wizz Air flew just a touch higher after saying it has obtained licences for its UK subsidiary to ensure it can keep operating in the UK after Brexit. Equiniti ticked up following a reassuring update, while InterContinental Hotels was a smidgen higher after booking an agreement with Fonciere des Regions to rebrand and operate 12 high quality open hotels and one pipeline hotel, expanding its luxury and upscale estate in the UK. Marine engineering services provider James Fisher gained ground after saying the first four months of the year have seen a "significant" number of contract wins for the marine services and offshore renewables activities in the marine support division On the broker note front, Go-Ahead was hit by a cut to 'hold' at Deutsche Bank while BT was downgraded to 'equalweight' at Barclays. Direct Line was reduced to 'neutral' at JPMorgan and AO World was cut to 'hold' by Peel Hunt. Elsewhere, AA, G4S, GoCompare, Card Factory, Derwent London, Elementis, Hastings Group, Just Group , Kingfisher, LSE, McCarthy & Stone, Mondi, Morgan Advanced Materials ,Senior, Unilever, JD Wetherspoon and Rightmove were among the companies whose stock went ex-dividend. |
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| | US close: Markets finish lower as Fed stands pat on rates | | Losses were seen across the major indices on Wall Street at the close on Wednesday, despite the tech-heavy Nasdaq being earlier underpinned by solid results from Apple, as the Fed stood pat on interest rates. The Dow Jones Industrial Average lost 0.72% to 23,924.98, the S&P 500 also fell 0.72% to 2,635.67, and the Nasdaq 100 slid 0.56% to 6,644.48. Just after 1900 BST, the Federal Reserve confirmed it was keeping its interest rate targets unchanged in its latest policy statement, at between 1.5% and 1.75%. That was a move widely expected by markets, after the Fed raised its rates in March for the sixth time since it slashed them during the global financial crisis. The announcement on Wednesday was accompanied by little fanfare, with no press conference offered by chair Jay Powell, or any updated economic forecasts published. “Information received since the Federal Open Market Committee met in March indicates that the labour market has continued to strengthen and that economic activity has been rising at a moderate rate,” said the central bank in its statement. “Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low.” Notably, however, there was a change in the Fed’s choice of words surrounding inflation, indicating it was becoming more satisfied that inflation was moving towards its target of 2%. “On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent,” the statement read. In March, it told markets that inflation, also excluding food and energy, was continuing to run below 2% on a 12-month basis. It comes after core personal consumption expenditures excluding food and energy - the Federal Reserve’s preferred inflation measure - reached 1.9% year-on-year for the month of March. “The policy statement sends a clear message that the Fed does not intend to overreact to a rise in inflation above the 'symmetric’ 2% target,” said analysts at Oxford Economics. “In turn, the Fed officials do not want the bond market to overreact to the expected rise in inflation and price in an overly hawkish tightening path. “The policy statement even played down the recent rise in market-based inflation measures, though we agree they remain low.” Earlier, better-than-expected earnings from Apple after the market close on Tuesday provided some cheer, as the tech company posted a 16% jump in second-quarter revenue to just over $61bn and said it was returning another $100bn to shareholders. “There was some relief overnight after Apple not only produced a strong set of sales and earnings but also released positive forward guidance,” said David Morrison, chief market analyst at GKFX. “There had been fears that the company would caution a slowdown in iPhone sales going into the next quarter.” Also earlier in the session, the ADP employment report showed that job gains in America's private sector slowed down last month. The payroll consultancy's closely-followed gauge of private sector hiring revealed that companies in the US took on 204,000 new workers last month. Although that was less than the 241,000 seen in the month before, it was slightly better than the 193,000 that economists had penciled-in. On the corporate front, US shares in Humana lost 2.55% despite the health insurer having posted first quarter profit and revenue beats, as did cosmetics giant Estee Lauder; whose shares finished down 8.51%. Pharmacy retailer CVS saw shares drop 3.17% after it reported a first-quarter profit beat and provided upbeat 2018 guidance, while brewer Molson Coors stumbled 12.87% on news its sales volumes were continuing to dry up. |
| | Thursday newspaper round-up: Customs deal, starter homes, Sainsbury's, Spotify | | Theresa May has only days to salvage her plan for a customs deal with the EU after a show of defiance by cabinet ministers put her authority in question. The prime minister failed to secure the backing for a “customs partnership” with the EU yesterday despite telling her most senior ministers that it was her favoured option, with new home secretary Sajid Javid coming out against the plan in a crucial intervention that tipped the balance. - The Times The government has spent £250m to boost starter home construction without a single property being built so far, it has emerged. Dominic Raab, the housing minister, made the admission in response to a question from John Healey, the shadow housing secretary, who described the situation as “a betrayal of young Brits looking for help to buy a first home”. - Guardian The supermarket watchdog has given tentative backing to the mega-merger between Sainsbury's and Asda, saying bigger retailers are often easier to regulate. Christine Tacon, the groceries code adjudicator, said she had "no concerns at all" about the size of the supermarkets as scale does not affect her ability to regulate them. - Telegraph A fortnight ago markets were pricing in a near 90 per cent certainty of a rate rise in May, that has now fallen to less than 5 per cent. A round of disappointing economic data, struggles on the High Street, falling inflation and a bit of dampening from Bank of England Governor Mark Carney has put paid to expectations of a move up to 0.75 per cent. - Mail Regulators are planning to get tough on all forms of high-cost credit to end the gouging of poor households by lenders. Andrew Bailey, chief executive of the Financial Conduct Authority, said that he would set out a series of proposals “in the next month” to stamp out the worst practices by the likes of doorstep lenders, hire purchase firms, pawnbrokers and banks, but emphasised that high-cost credit was “socially useful”. - The Times Fuel prices have reached their highest level for more than three years, hitting millions of families and businesses. The average price of petrol and diesel on British forecourts rose by almost 3p a litre last month to levels not seen since late 2014 as the rise in the oil price was passed on to drivers, according to the RAC. - Mail Mike Ashley, the billionaire founder of Sports Direct, has resurrected the controversy over working conditions at his company’s Shirebrook warehouse by filing a complaint against the former MP who led the parliamentary inquiry into the retailer. The company has complained to the Parliamentary Commissioner for Standards about the conduct of Iain Wright, the former Labour MP for Hartlepool, who chaired the business, innovation and skills select committee during the last parliament. - Guardian Global demand for gold dropped between January and March, posting its weakest first quarter since the 2008 financial crisis, as the economic outlook improved while wild swings on world stock markets drove the price higher. Demand for gold fell 7% on a year ago to 973.5 tonnes, according to the World Gold Council, which represents producers. - Guardian House of Fraser is to close stores, potentially putting hundreds of jobs at risk, in a restructuring deal that will give control of the retail chain to the Chinese owner of Hamleys. C.banner is buying a 51% stake in the parent group of the ailing department store group. The buyout will involve the acquisition of shares from Nanjing Cenbest, part of China’s Sanpower conglomerate, which will retain a minority stake. - Guardian Tesla posted a record $709.6m net loss in the first quarter and burned through $745.3m in cash while struggling to crank out large numbers of its Model 3 mass-market electric car. The loss and cash burn announced overnight raised questions about the company’s future and whether it would be able to pay all of its bills by early next year without more borrowing or another round of stock sales. - Guardian Spotify shares dropped 9pc after the streaming music leader’s subscriber outlook and quarterly revenue fell just short of analyst estimates in its first report as a public company. Shares had run up 3pc in regular trading on Wednesday, and analysts said investor expectations may have been overblown and voiced concerns that discounts were eating into the company’s average revenue per user. - Telegraph/Reuters Amazon is intent on tightening its grip on India’s booming ecommerce market after apparently making a formal offer to acquire a 60 per cent stake in its biggest local rival. The move sets up a battle for control of Flipkart, which was set up in 2007 by Sachin and Binny Bansal, two former Amazon employees. - The Times TalkTalk and Vodafone have been named as the UK’s worst broadband and mobile providers respectively for customer service. Ofcom, the media and broadcasting regulator, has listed the broadband, landline and mobile phone providers as having the worst customer service records, based on a comprehensive survey. - Guardian Hotel magnate Surinder Arora has revealed detailed designs of new terminal buildings he hopes to build and operate as part of his ongoing battle to steer Heathrow’s expansion. Mr Arora, the largest landowner at the airport, launched his rival plan for an expanded Heathrow last year with the help of former British Airways boss Sir Rod Eddington but has now unveiled full details. - Telegraph Mark Mobius is to raise $1 billion for a new asset management firm based in London, despite widespread concerns about how Brexit will affect the UK fund management industry. The veteran emerging markets investor’s new business will invest in India, China and Latin America and will focus on companies that have the potential to improve their environmental, social and governance standards. - The Times The UK’s largest funeral director is to launch a no-frills cremation service in the next few weeks, amid changing attitudes to death and a shift towards celebratory gatherings rather than traditional funerals. Co-op Funeralcare reports growing interest in direct cremations - a cheaper and more basic option than the normal service, with no mourners present, typically followed by a scattering of ashes or memorial service at a later date. - Guardian Cambridge Analytica, the British election consultancy that allegedly used data harvested from millions of Facebook users for political campaigning, is shutting down. The company and its parent group SCL entered insolvency proceedings on Wednesday evening, it confirmed, appointing Crowe Clark Whitehill as administrators. US affiliate companies are also entering bankruptcy proceedings, it confirmed. - Telegraph Proposals for a five-year limit on maintenance awards in divorce were published yesterday to end huge payouts and massive court costs. Baroness Deech, a crossbencher, called for a system more like that in Scotland, to end open-ended awards that have made London the divorce capital of the world. - The Times | | | | To advertise in the Euro Markets Bulletin please contact advertise@advfn.com |
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