| | | There were no fireworks in London equity markets on Monday, with the top-flight index nudging lower in early trade ahead of the release of the latest UK services data. At 0835 GMT, the FTSE 100 was down 0.2% to 7,080.30, faring pretty well considering the heavy losses seen in Asia following disappointing services data. Dampening sentiment was data from China that backed up last week's disappointing official figures, with the Caixin-Markit services purchasing managers' index declining to 50.8 in October from 53.1 the month before, marking the lowest reading since September 2017. Meanwhile, the composite index fell to 50.5 from 51.2, hitting a 28-month low. In currency markets, the pound was up 0.2% against the dollar at 1.2999 and 0.3% firmer versus the euro at 1.1415. Spreadex analyst Connor Campbell said the performance of sterling over the rest of the day may be dependent on Markit's services purchasing managers' index for October, which is due at 0930 GMT. "Last week saw a 27 month-low manufacturing reading followed by a better than forecast, three-month high construction PMI; the services finale might be closer to the former, with analysts expecting it to slip from 53.9 to 53.4 month-on-month," Campbell said. More broadly, investors were likely to be feeling a little cautious ahead of the US mid-terms on Tuesday and following the reinstatement of sanctions on Iran. The Trump administration has reinstated all sanctions removed under the 2015 nuclear deal. "The question is whether Washington’s sanctions hold, whether Trump doubles down and toughens up limitations, or if there is thawing in relations," said Neil Wilson, chief market analyst at Markets.com. "The last of those seems highly unlikely - the bigger risk is that Trump removes waivers depending on how he assesses the impact of the sanctions." As far as the mid-terms go, there are concerns that if the Democrats succeed in taking control of the House, things will get complicated for the Trump administration. "The question here is does a loss of Republican power tie Trump’s hands on issues like trade, or does it embolden him further to strike executive orders? Is a weakened Trump positive or negative for the US dollar?" said Wilson. On the corporate front, equipment rental firm Ashtead was the worst performer on the FTSE 100 after Barclays slashed its price target on the stock to 2,200p from 2,580p. Specialist insurer Hiscox slumped after saying that gross written premiums rose 14.3% to $3.04bn in the first nine months of the year, but that there had been more claims in the third quarter from US Hurricanes Florence and Michael and Typhoons Jebi and Trammi, which hit Japan. Hiscox also saw a number of larger individual claims in big-ticket and retail businesses, including a large marine loss of $13m, while the UK & Ireland saw an uptick in subsidence claims following a particularly dry summer, as well as a continuation of escape of water claims. Shore Capital analyst Paul De'Ath said that while the business continues to grow - excluding the impact of reinstatement premiums - and is fully prepared for a hard Brexit, the challenging claims environment in the third quarter and muted guidance on growth for the rest of the year are not positive. "With the shares up 12% year-to-date, there is still scope to take profits here," he added. Plastic packaging supplier RPC Group fell as the deadline for private equity firms Apollo Global Management and Bain Capital to make an offer for the company was extended again. ITV bucked the trend as the broadcaster lured Chris Kennedy from Micro Focus to be its new chief financial officer from 1 February. Kennedy worked with ITV boss Carolyn McCall for several year at easyJet and has a strong background in media from his 17 years at EMI. Micro Focus, meanwhile, was in the green as it appointed Brian McArthur-Muscroft from Paysafe as a replacement CFO and issued a short trading statement to the effect that full year revenue will be towards the upper end of its previously guided range. The software group also said it was restarting its share buyback programme. Elsewhere, Barclays was given a leg up as it was upgraded to 'buy' at Bankhaus Lampe, while Paddy Power was raised to 'equalweight' at Morgan Stanley. Mediclinic was cut to 'hold' at Investec and Babcock was downgraded to 'sector perform' at RBC Capital Markets. | | | | | Q4's Top 10 Stock Picks The best trading opportunities for the last 3 months of 2018 Has the FTSE bottomed out? Are you looking to revamp your financial portfolio, scouting names with upside potential? This report unveils our Top 10 Stocks for Q4 that could help make your latest investment decisions informed and deliberate. 78% of retail clients lose money, consider affordability. Download here » | | | | Top 10 FTSE 100 Risers| Sponsored by Interactive Investor | 
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| | | US close: Stocks finish off worst levels, as Trump confirms progress on trade | | | | | Wall Street's main market gauges finished the session lower, but clearly off their worst levels after the US president reiterated that Washington and Beijing were now closer to reaching a trade deal. Earlier the same day, reports had surfaced denying headlines overnight that Donald Trump had instructed key cabinet secretaries to begin drafting a potential trade treaty with China, cutting short gains in shares, although sentiment was helped considerably by a very strong US jobs report for the month of October. In any case, according to analysts at Danske Bank: "We now see a 60% probability of a ceasefire but any real deal will take time to reach and is not likely to be done until some point in 2019." Linked to the above, National Economic Council Director, Larry Kudlow, said he did not expect a detailed agreement to come out of the talks scheduled between Trump and Chinese leader Xi Jinping at the end of the month. By the end of the trading day, the Dow Jones Industrials was down by 0.43% to 25,270.83, while the S&P 500 was 0.63% weaker at 2,723.06 and the Nasdaq was 1.04% lower at 7,356.99. In a wholly unexpected development, and citing four people familiar with the matter, overnight Bloomberg had reported that Trump did in fact want to reach an agreement with China's Xi Jinping at the G-20 leaders' meeting in Buenos Aires, at the end of the month, and that he had asked "key cabinet secretaries" to start drafting potential terms. But the resulting rally in risk sentiment was cut short towards 1345 GMT by a CNBC report, citing various administration officials, according to which a deal remained far off, until Trump himself weighed-in with his own remarks in the afternoon. Helping to offset the negative impact of the contradictory reports coming from Capitol Hill, the Department of Labor reported that US non-farm payrolls jumped by 250,000 in October (consensus: 190,000), alongside an acceleration in the year-on-year pace of wage gains to 3.1% - a nine-year high - even as the labour force participation rate ticked higher. Friday's stellar jobs report pushed the yields on the benchmark two and 10-year US Treasury notes higher by six and eight basis points, respectively, to 2.90% and 3.21%. Mickey Levy at Berenberg Capital Markets said: "This encouraging rise in labor force participation for the prime working-age cohort since 2016 has been a key factor that has led us to upgrade our estimates of longer-run potential growth (“Rising U.S. prime working-age labor participation”, September 20, 2018). "The employment-population ratio for the prime working-age cohort, which moves closely with wages, rose by 0.4pp to 79.7%." On the corporate front, stock in Apple fell 6.63% as its fourth consecutive quarter of record revenue and profits posted on Thursday night, driven by higher iPhone price and solid app store sales, was sullied by a weakened outlook following its best year in history. Synchrony shares were down 10% after rumours that retail giant Walmart was suing it for breach of contract and Kraft Heinz dropped 9.73% after falling short of third-quarter profit estimates on the Street. Starbucks brewed up a 10% gain at the bell after its same-store sales of 4% came in ahead of analyst expectations and Newell Brands surged 14.74% after raising its full-year guidance. Verisign rocketed 17.20% after analysts at JP Morgan upgraded it to 'neutral' from its previous 'underweight' stance. | | | Monday newspaper round-up: Living wage, trade war, Restaurant Group, GE | | | | | More than 180,000 workers are set for an inflation-beating pay rise, as the UK living wage rises against a backdrop of increases in transport costs, private rent and council tax. The pay rate, a voluntary measure adopted by more than 4,700 employers, including Aviva, Burberry and Ikea, will increase by 2.9% to £9 an hour across the country and by 3.4% to £10.55 in London. – Guardian Xi Jinping has promised to lower import tariffs and improve access to the Chinese market in remarks meant to portray his country as a champion of globalisation as it remains locked in a trade war with the US. “Protectionism and unilateralism is rising. Multilateralism and the free trade system are under threat … China will not close its door to the world and will only become more and more open”, the Chinese president said on Monday at the beginning of a trade fair in Shanghai. - Guardian Germany's nationalised train operator is locked in crisis talks with the Government as unprecedented levels of disruption cripple the finances of one of Britain’s biggest rail franchises, the Telegraph can reveal. Northern, whose parent company Arriva is owned by state-backed transport titan Deutsche Bahn, has suffered at the hands of waves of strike action and a bungled timetable overhaul. - Telegraph The Restaurant Group’s blockbuster takeover of Wagamama’s is under threat as concerns mount over the logic of the deal. Shares in the London-listed owner of Frankie & Benny’s and Garfunkel’s plunged last week after the £560m purchase of the popular noodle chain was unveiled. Investors are being tapped for £315m of funding and the chain will take on more than £400m of debt, half of which is currently sitting on Wagamama’s balance sheet. - Telegraph The chancellor has suffered his first big setback since the budget as it emerged that confidence among businesses had slumped to its lowest level since the financial crisis. Just a week after Philip Hammond announced a budget that appeared to signal the end to austerity and attempted to provide a boost to commerce, a survey has shown that corporate sentiment fell to below its lows in the wake of the Brexit referendum. - The Times HM Revenue & Customs is pursuing General Electric for almost £800 million in tax deductions going back 14 years. The tax authority has told GE that it intended to retrospectively disallow interest deductions claimed by GE Capital, its financial services division, between 2004 and 2015. - The Times | |
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