| Calculus VCT – 0% Initial Fee – Limited Time Offer Calculus Capital is waiving initial fees on its VCT, The move makes the Calculus VCT one of the most attractive in the current marketplace – most providers are charging between 3% and 5%. Find out More | | | London close: Stocks start week on a mixed note, trade talks in focus | | | | | London stocks finished the first session of the week on a mixed note, with tobacco shares dragged lower by a broker downgrade, but retailer Dunelm sharply higher after a well-received trading update. The FTSE 100 was down 0.39% or 26.54 points at 6,810.88, while the more domestically focused FTSE 250 added 1.01% or 180.27 points to 17,976.15. Sterling was edging up 0.15% against the dollar at 1.27568 and 0.35% lower versus the euro at 1.1125. In the background, investors were eyeing the latest round of trade negotiations between the US and China, with officials from both sides due to meet for talks in Beijing later in the day in what will be the first discussions since Trump and Xi Jinping agreed a temporary truce in December. "Realistically we are unlikely to see any form of tangible breakthrough in the immediate future, with issues such as the protection of intellectual property rights providing a major stumbling block that needs to be overcome," said Joshua Mahony, senior market analyst at IG. On home turf, with the so-called "meaningful vote" on Brexit set to take place in the House of Commons on 15 January, Theresa May was still trying to extract concessions from the European Union to make her deal more palatable for Conservative MPs. Meanwhile Germany's foreign affairs minister Heiko Maas was set to hold talks in Dublin on Tuesday in an effort to find a solution to help May, who insisted over the weekend that she could get assurances from Brussels to ensure ratification of her deal. However, it was not expected that this would involve re-opening the agreement she struck last year. EU officials fear that changing the deal over the Irish issue would invite demands for concessions from other states unhappy with aspects of the text. In the US, meanwhile, the government shutdown entered its third week. As a compromise, Trump promised over the weekend to build his Mexico border wall out of steel instead of concrete and repeated the threat that he may seek the necessary funding by declaring a state of emergency. Broker notes accounted for a lot of the share price action, with Imperial Brands and British American Tobacco among the worst performers on the FTSE 100 as Cowen cut its stance on both stocks to 'market perform' from 'outperform'. Centrica was hit by a downgrade to 'hold' at Jefferies, while St James's Place, Hargreaves Lansdown and Standard Life Aberdeen were lower after downgrades at Deutsche Bank. InterContinental Hotels was weaker after a cut to 'underweight' at Morgan Stanley, HSBC was in the red after a downgrade to 'sell' at Citi and Funding Circle was knocked lower by a downgrade to 'neutral' at Bank of America Merrill Lynch. Equiniti gave up earlier gains to trade a touch lower as it won a contract to run the UK media and telecoms watchdog's scheme to compensate users of radio spectrum that is being cleared for use in 5G mobile services. On the upside, homewares group Dunelm surged as it struck a note of caution about full-year results due to "unprecedented" uncertainty caused by Brexit, but posted 9% growth in total like-for-like sales for the second quarter, with LFL stores revenue up 5.7% year-on-year and online revenue 37.9% higher. The retail sector will be firmly in focus this week as updates are due from Marks and Spencer, Wm Morrison, Sainsbury and Tesco, all of which kicked the week off in the green. CMC Markets analyst Michael Hewson said they could also surprise to the upside, given the numbers from German discount supermarket Aldi earlier on Monday, which reported record Christmas sales. "The big question here is how much did the two young upstarts of Aldi and Lidl steal the big four's Christmas lunch," he said. Sticking with retail, Ted Baker - which was recently rocked by allegations of harassment against CEO and founder Ray Kelvin - was under the cosh ahead of its trading update on Wednesday, as RBC Capital Markets slashed its price target on the outperform-rated sock to 2,000p from 2,500p. On the upside, Petrofac was boosted by an upgrade to 'buy' at Jefferies, while Mediclinic rose on the back of an upgrade to 'overweight' at JPMorgan and Hays gained as HSBC bumped it up to 'buy'. | | | | | Award winning trading platform For a limited time only we are offering a 2 week FREE Trial of our Trading Alerts. Register now | | | | Top 10 FTSE 100 Risers| Sponsored by Interactive Investor | 
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| | | | | Are you looking for a profitable trading strategy? Do you have 20 minutes a day to follow this strategy? Yes! Then you need to watch this session. In fact for the past 6 months this strategy has been averaging +1275 pips per month! Book A Free Place To Find Out More | | | Europe close: Rally pauses ahead of China-US trade talks | | | | | European stocks gave back some of Friday's gains as investors eyed the latest trade talks between the US and China. The benchmark Stoxx Europe 600 index was down 0.15% at 342.88, while Germany's DAX dipped 0.18% to 10,747.81 and th Cac-40 gave back 0.38% to 4,719.17. Periphery stocks fared better, with Spain's Ibex 35 adding 0.44% to reach 8,776.30 and the FTSE Mibtel advancing 0.65% to 18,953.27. Officials from the US and China were due to meet for talks in Beijing later in the day in what will be the first discussions since Trump and Xi Jinping agreed a temporary truce in December. James Hughes, chief market analyst at Axi Trader, said: "Although China has already telegraphed that it is happy to resolve the trade spat amicably, it's difficult not to see Beijing as pushing for the best deal here. "The White House is on the back foot, with a potentially damaging government shutdown ongoing and Donald Trump very much seen as the culprit of the recent stock market volatility. The trade deal - assuming it's reached - should be good for stocks, but this point won't have escaped Chinese negotiators." In the US, meanwhile, the government shutdown entered its third week. Trump promised over the weekend to build his Mexico border wall out of steel as a compromise and repeated his threat that he may seek the necessary funding by declaring a state of emergency. "While the direct impact of the shutdown is arguably limited, indirectly the fact that the president is considering bypassing Congress entirely by declaring an emergency highlights the elevated degree of policy paralysis in the US which is a further negative from a growth outlook perspective," Rabobank said. In corporate news, France's Alstom was down following a report in Les Echos that the Alstom-Siemens rail deal is not likely to be approved by European Authorities. Elsewhere, Heineken fizzed lower as Goldman Sachs cut the stock to 'sell' from 'buy'. On the data front, figures out earlier showed Germany retail sales rose 1.4% on month in November, beating expectations for a 0.4% increase. The headline non-working day adjusted year-over-year rate fell to 1.1% from a revised 5.2% in October. Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "German consumers' spending appeared to have picked up in Q4, a bit, though we have to be careful making too much of the retail sales data given their usual volatility. "Two points are important to make at the outset. First, Black Friday almost surely boosted today's headline - seasonals haven't yet caught up to this trend - so we have to expect a reversal in next month's report. Second, the plunge in the headline year-over-year rate is misleading. The fully adjusted rate fell only marginally, by 0.2pp to 0.7%. Factoring in a 0.8% month-to-month dip in December, we estimate that retail sales increased 0.3% quarter-on-quarter in Q4, modest, but significantly better than the 0.5% fall in Q3." Meanwhile, factory orders in the country fell 1% on the month in November, missing consensus expectations for a 0.1% dip. On the year, factory orders were down 4.3% compared to a 2.7% drop in October. Elsewhere, the headline Sentix investor sentiment index for the eurozone slipped to -1.5 in January from -0.3 in December last year, coming in ahead of consensus expectations for a reading of -2.0. The index for the current situation edged up to 18.0 from 20.0 in December, but the expectations index fell to -19.3 from 18.8 last month. "These are levels not seen since the sovereign debt crisis, highlighting just how depressed investor confidence is at the moment," said Vistesen. | | | US open: Small gains at the bell ahead of Sino-US trade talks | | | | | Wall Street trading began with some small gains on Monday as investors awaited the outcome of the latest round of trade talks between the US and China. At 1545 GMT, the Dow Jones was 0.35% higher at 23,515.16, while the S&P 500 had picked up 0.57% to 2,546.34 and the Nasdaq was trading 0.86% firmer at 6,796.62. While stocks managed to reverse losses seen immediately after the bell, investors still appeared to be somewhat wary as officials from the US and China were due to meet in Beijing later on in the day for the first discussions between the two since Donald Trump and Xi Jinping agreed a temporary truce in December. James Hughes, chief market analyst at Axi Trader, said: "Although China has already telegraphed that it is happy to resolve the trade spat amicably, it's difficult not to see Beijing as pushing for the best deal here. "The White House is on the back foot, with a potentially damaging government shutdown ongoing and Donald Trump very much seen as the culprit of the recent stock market volatility. The trade deal - assuming it's reached - should be good for stocks, but this point won't have escaped Chinese negotiators." On the macro front, activity in the US services sector deteriorated more than expected in December, according to data released on Monday. The Institute for Supply Management's services index fell to a five-month low of 57.6 from 60.7 in November, missing expectations for a reading of 59.0. The non-manufacturing business activity index slipped to 59.9 from 65.2 in November, reflecting growth for the 113th consecutive month. The new orders index printed at 62.7 in December from 62.5 the month before, while the employment index fell to 56.3 from 58.4. The prices index came 57.6 compared from 64.3 in November. Respondents indicated that there is still concern about tariffs, despite the hold on increases by the US and China. Also, comments reflected that capacity constraints have lessened but employment-resource challenges remain. Elsewhere, the government shutdown entered its third week. Trump promised over the weekend to build his Mexico border wall out of steel as a compromise and repeated his threat that he may seek the necessary funding by declaring a state of emergency. In corporate news, Eli Lilly dipped 0.47% after it said earlier that it had agreed to buy biopharmaceutical company Loxo Oncology for about $8bn in cash. The price represents a 68% premium to Loxo's closing share price on Friday. Loxo soared 66.18% at the bell. Utility operator PG&E Corp shares tumbled 20.53% at the open following reports that the company is exploring a bankruptcy filing and asset sales. Elsewhere, medical implant devices manufacturer Abiomed slipped 1.48% following the release of its third-quarter numbers and steel and metal manufacturer Commercials Metals was 4.28% weaker after its first-quarter earnings. | | | Broker tips: Petrofac, Centrica, Hargreaves Lansdown, St James's Place, Standard Life Aberdeen | | | | | Jefferies energy analyst team giveth and it taketh away on Monday, upgrading Petrofac and downgrading Centrica. The broker feels Petrofac has become an "increasingly well-run business" providing "realistic expectations" within the tough oilfield service market. Pointing to a net cash balance sheet "firmly in sight" and "realistic new awards" required for 2019, the analysts upgraded to 'buy'. While Jefferies expects to see "good results" from Petrofac on 28 February, the broker trimmed its target price on the firm to 590p from 640p. However, the same positives could not be seen over at British Gas owner Centrica, which Jefferies downgraded to 'hold' from 'buy'. Jefferies sees material downside risk to Centrica's 2019-20 earnings, "borderline" credit metrics and "limited" market-to-market benefits of higher commodity prices in the medium-term. "With this, we see a timely disposal of Centrica's 20% nuclear stake as critical to protect its balance sheet against another potential hit." With a "weak" full year trading update from Centrica is expected in February, the target price was cut to 125p from its previous 170p standing. Deutsche Bank downgraded a series of stocks on Monday as it cut its stance on European insurers to 'neutral' from 'overweight'. As far as UK stocks are concerned, it downgraded Hargreaves Lansdown to 'sell' from 'hold' and cut the price target to 1,500p from 1,900p, citing a rich valuation and arguing that retail investment sentiment in the UK will remain subdued due to ongoing political uncertainty, which in turn is likely to weigh on HL's net inflow rate. "We expect Brexit uncertainty to continue into 1Q19 as the UK prepares to leave the EU on 29th March. This is significant as the 1Q of the calendar year is usually the busiest for HL due to the UK tax year-end in April." DB noted that HL already reported a 16% drop in year-on-year net flows for the three months to September and said it expects a further deterioration to this trend. It expects net flows to decline by around 22% to £1.4bn for the three-month period to December 2018 and 21% for the four months to April to £2.6bn. The bank also downgraded St James's Place to 'hold' from 'buy' and reduced the price target to 1,090p from 1,280p, noting its exposure to both markets and UK political risk and also cut Standard Life Aberdeen to 'hold' from 'buy', with the target price trimmed to 295p from 405p. | |
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