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London close: Stocks dragged into the red by Barclays
techMARK 2,064.58 -0.51% FTSE 100 5,786.72 -0.56% FTSE 250 11,843.60 -0.38% - Osborne names Canadian as new Bank of England chief There can be little doubt that what was forefront and centre on market's minds was tonight's meeting of Eurozone finance ministers (the so-called Eurogroup), with an agreement that would allow for the disbursement of the next tranche of aid to Greece thought to be a real possibility. - Agreement on Greece a real possibility tonight - Barclays leads bank stocks lower UK equities ended the day firmly lower, with banks weighing heavily on the Footsie after Deutsche Bank AG and Goldman Sachs agreed to sell as many as 303.3m shares in the group at 244p a time - at the lower end of the range they expected to sell at. Today's big news was of course the appointment of Canada's Mark Carney as the next Governor of the Bank of England. The appointment of Carney, who is currently Governor of the Bank of Canada, shocked pundits, not least because he ruled himself out of the role in August. Mr. Carney also happens to be the current Chair of the Financial Stability Board (FSB). Chancellor George Osborne said Carney was, "the outstanding candidate to be Governor of the Bank of England and help steer Britain through these difficult economic times. He is quite simply the best, most experienced and most qualified person in the world to do the job". Acting as a backdrop, the Institute of Fiscal Studies (IFS) said the Treasury could have to raise valued added tax (VAT) to 25% as tax revenues falter and the economy continues to struggle. Osborne may also have to abandon one of his fiscal targets – that overall UK debt should be falling in 2015–16, as well as pushing austerity measures into 2018, the IFS report added. "Since the budget, the outlook for the UK economy has deteriorated and government receipts have disappointed by even more than this year's weak growth would normally suggest," said IFS deputy director Carl Emmerson. "The planned era of austerity could run for eight years - from 2010-11 to 2017-18," he added. In other news, it was reported today that the public's inflation expectations for the next 12 months fell to 2.8% in November from 3.0% in the previous month, according to a survey by polling company YouGov. Tonight's Eurogroup meeting FTSE 100: Qatar takes profits on Barclays Barclays led the fallers on the top share index. Qatar Holding plans to sell its remaining warrants in the lender, which are worth around £775m, yet it will remain its largest shareholder with a 6.7% stake. The transaction, which is expected to yield a $280m profit for Qatar, saw both Deutsche Bank AG and Goldman Sachs agree to sell as many at 303.3m shares, equal to £740m, at 244p a time. Although the conversion of the warrants would provide Barclays with £750m, it would dilute other investors' holding in the group. The news dragged Royal Bank of Scotland and Lloyds lower. Aberdeen Asset Management took a hit after Peel hunt downgraded the stock to hold, but increased its target by 15p to 365p, based on its strong share price outperformance and its sector-leading valuation. The company announced a 15% full year increase in underlying profit before tax, to £347.8m, versus £301.9m a year ago. Polymetal also fell after it was reported that the group has lost 700 tonnes of gold ore after a cargo ship carrying the metal went missing off the coast off Russia. The company released a statement saying that the responsibility for the cargo "lies with the freight carrier". Analysts at UBS today issued an upbeat note on shares of British Land so as to reflect the company's lower risk profile and growing earnings potential. IAG got a boost from Espirito Santo, which has raised its target from 100p to 140p, although the broker reiterated its sell recommendation on the stock. Typically 'safe haven' stocks, British American Tobacco and Imperial Tobacco Group, were both given a boost by the decline seen in banks and across the FTSE in general. Compass moved higher after analysts at Nomura raised their target on the company's shares to 832p (from 800p). "Compass Group's results encapsulated the key attractions of the investment case: strong turnover growth (5.4%), excellent cash flow conversion and continued margin expansion (+8bp)," these analysts wrote. FTSE 250: SDL warns Bacon and sausage supplier Cranswick served up a hefty increase in half year profit, but said higher pig prices during the period were an on-going concern. Pre-tax profit rose 21% to £22.5m for the six months ended September 30th 2012, while revenues climbed 6% to £418.6m. India-focused Essar Energy almost doubled revenues in the first half, but saw this wiped out by costs, as well as regulation and coal supply problems in India. Group revenue was up 97% to $12.8bn, driven by the acquisition of the UK Stanlow refinery as well as higher refining revenues in India. Business, translation and communications software company SDL said it expects a profits shortfall, following a review of the firm, as its struggles against poor sales and marketing execution, as well as the tough economic environment. Analysts at Citi were of the belief that the results highlighted the difficulties the company was having in transitioning to a technology company. "We would expect consensus for 2012 and 2013 to fall by approximately 7-10% today in 2012 and 2013 to reflect the revised guidance," they said. | ||||||||||||
FTSE 100 - Risers
British American Tobacco (BATS) 3,252.00p +0.87%
International Consolidated Airlines Group SA (CDI) (IAG) 170.40p +0.83%
BAE Systems (BA.) 312.00p +0.55%
Resolution Ltd. (RSL) 234.90p +0.47%
Imperial Tobacco Group (IMT) 2,495.00p +0.44%
National Grid (NG.) 714.00p +0.42%
Reckitt Benckiser Group (RB.) 3,878.00p +0.41%
Unilever (ULVR) 2,384.00p +0.38%
British Land Co (BLND) 537.00p +0.37%
Pennon Group (PNN) 607.00p +0.33%
FTSE 100 - Fallers
Barclays (BARC) 240.50p -5.39%
Royal Bank of Scotland Group (RBS) 285.10p -3.03%
Lloyds Banking Group (LLOY) 45.10p -2.81%
Polymetal International (POLY) 1,074.00p -2.27%
Petrofac Ltd. (PFC) 1,594.00p -2.21%
Kazakhmys (KAZ) 679.50p -2.02%
Aberdeen Asset Management (ADN) 336.00p -1.96%
Tullow Oil (TLW) 1,366.00p -1.94%
Randgold Resources Ltd. (RRS) 6,540.00p -1.73%
CRH (CRH) 1,111.00p -1.68%
FTSE 250 - Risers
Cranswick (CWK) 812.50p +9.95%
Essar Energy (ESSR) 127.00p +4.87%
Kenmare Resources (KMR) 31.71p +4.55%
New World Resources A Shares (NWR) 241.20p +3.52%
Brewin Dolphin Holdings (BRW) 183.80p +3.20%
Dixons Retail (DXNS) 26.84p +3.19%
NMC Health (NMC) 175.20p +3.18%
PayPoint (PAY) 880.00p +2.68%
CSR (CSR) 358.80p +2.63%
Ted Baker (TED) 1,001.00p +2.14%
FTSE 250 - Fallers
SDL (SDL) 438.50p -14.19%
Centamin (DI) (CEY) 60.60p -6.34%
Supergroup (SGP) 585.00p -4.80%
Pace (PIC) 177.30p -4.21%
Ocado Group (OCDO) 71.80p -4.01%
Micro Focus International (MCRO) 564.50p -3.91%
Diploma (DPLM) 464.30p -2.93%
Stobart Group Ltd. (STOB) 107.20p -2.90%
Sports Direct International (SPD) 380.50p -2.74%
Menzies(John) (MNZS) 575.50p -2.62%
| Europe Market Report | ||||||||
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| Europe midday: Weak economic data weighs on stocks -Olli Rehn (EU) says Spanish deficit will rise to 6.4 per cent in 2014 after 6 per cent in 2013 Retail stocks lead losses-ECB and EU Comission say Spanish banks qualify for EFSF and ESM -Banks deposit 233.6bn euros overnight at ECB FTSE-100: -0.64% Dax-30: -0.38% Cac-40: -0.87% FTSE Mibtel 30: -0.63% Ibex 35: -0.72% Stoxx 600: -0.61% The main European equity benchmarks were registering moderate losses by the midday mark. That ahead of tonight's meeting of Eurozone finance ministers, with an agreement that would allow for the disbursement of the next tranche of aid to Greece thought to be a possibility. In fact, the European Union's Economic Affairs Commissioner, Olli Rehn, has this morning indicated that an agreement on Greece is "fully possible." In what would apparently amount to a worst case scenario, Finland indicated that an agreement may not be reached until a meeting on December 3rd. Acting as a backdrop, and in the United States, retail spending in stores and online rose by 13% to $59.1bn in the four days starting November 22nd, trade group National Retail Federation announced yesterday. A year ago sales advanced by 16% over the holiday weekend. As regards regional elections in Catalonia over the weekend; these seem to have been somewhat inconclusive, with barely any change in the balance of power between pro-independence and non-independence parties. But two trends seemed clear: a shift towards left-wing and anti-austerity political formations and a greater polarisation in the distribution of votes towards each extreme. Shares of German steel maker Thyssen Krupp are now registering some of the largest falls after analysts at Credit Suisse lowered their rating on the company's stock to neutral from outperform. The world's largest cement maker, Lafarge, is retreating on the back of the recent instability in Egypt. From a sector stand-point the worst performance is now to be seen in the following sectors: Banks (-1.07%), Construction (-1.04%) and Oil&Gas (-0.82%). Weak Italian consumer confidence Italy's consumer confidence index for the month of November has come in at 84.8 (Consensus: 86.3), versus 86.2 for the previous month. The GfK consumer confidence survey for Germany has come in at 5.9 points for December, versus expectations for a rise to 6.2 after a reading of 6.1 for November. Spanish mortgages for house purchase dropped by 32% year-on-year in September, following a reading of 28.5% in the month before. Slight fall in the single currency The euro/dollar is now dropping by 0.13% to t e1.2967 dollar mark. Front month Brent crude futures are now retreating by 0.279 dollars to the 111.07 dollars level on the ICE. |
| US Market Report |
| US open: Stocks off slightly following last week's rise -Mc.Graw Hill to sell education unit for $2.5bn Economic data slips a little-Goldman Sachs adds Yahoo to Conviction Buy list -Citi starts Apple at buy Dow Jones Industrial: -0.55% Nasdaq Composite: -0.16% S&P 500: -0.51% The main US equity market averages are now registering modest falls. The above came on the heels of the large bounce-back seen in share prices last week and with investors fixated on the resumption of negotiations between Democrats and Republicans over the impending "fiscal cliff". In this regard, prominent figures from both sides of the aisle could be heard over the weekend arguing in favour and against raising taxes, despite which equity strategists continue to expect an agreement to be forthcoming before Christmas. Shares of film studio DreamWorks Animation were falling sharply after a poor performance for its "Rise of the Guardians" film over the Thanksgiving weekend. Knight Capital Group flew higher after a person with direct knowledge of the matter said the trading firm expects to receive a takeover proposal. As sometimes occurs on Mondays, 'merger and acquisition' activity picked up. Foremost amongst these deals, Mc.Graw Hill is to sell its education unit to Apollo for $2.5bn. Google unveiled the purchase of high-traffic Wi-Fi provder ICOA for $400m. Analysts at UBS upgraded their view on shares of AK Steel to neutral from sell. Goldman Sachs added shares of Yahoo to its Conviction Buy list. Citi initiated coverage of Apple with a buy recommendation. The Federal Reserve Bank of Chicago's national activity index for the month of October fell to -0.56 from -0.00 in the month before. The Federal Reserve Bank of Dallas's manufacturing activity index for the month of November has come in at -2.8 (Consensus: 2.5), versus 1.8 for the previous month. Moderate fall in crude quotes 10-year US Treasury yields were falling by four basis points, to the 1.65% mark. Front month West Texas crude futures were down by 0.80% to the $87.56 per barrel mark on the NYMEX. S&P 500 - Risers Boston Scientific Corp. (BSX) $5.80 +3.75% Exelon Corp. (EXC) $29.45 +3.08% McGraw-Hill Companies Inc. (MHP) $53.50 +3.00% Abercrombie & Fitch Co. (ANF) $45.52 +2.52% FirstEnergy Corp. (FE) $41.89 +2.00% Yahoo! Inc. (YHOO) $18.92 +1.88% eBay Inc. (EBAY) $49.92 +1.87% Broadcom Corp. (BRCM) $32.15 +1.79% Public Service Enterprise Group Inc. (PEG) $29.73 +1.68% AGL Resources Inc. (GAS) $38.17 +1.65% S&P 500 - Fallers Chesapeake Energy Corp. (CHK) $17.20 -3.51% Safeway Inc. (SWY) $16.44 -3.07% Coach Inc. (COH) $57.94 -2.88% Macy's Inc. (M) $40.54 -2.85% Range Resources Corp. (RRC) $68.01 -2.47% Whole Foods Market Inc. (WFM) $92.74 -2.45% CONSOL Energy Inc. (CNX) $31.90 -2.42% Hess Corp. (HES) $49.90 -2.39% Denbury Resources Inc. (DNR) $15.37 -2.35% Tesoro Corp. (TSO) $40.96 -2.29% Dow Jones I.A - Risers Caterpillar Inc. (CAT) $84.68 +0.62% Intel Corp. (INTC) $19.78 +0.33% Hewlett-Packard Co. (HPQ) $12.48 +0.32% Walt Disney Co. (DIS) $49.40 +0.27% United Technologies Corp. (UTX) $78.63 +0.03% Dow Jones I.A - Fallers JP Morgan Chase & Co. (JPM) $40.43 -1.61% Microsoft Corp. (MSFT) $27.30 -1.44% AT&T Inc. (T) $34.01 -1.00% Verizon Communications Inc. (VZ) $43.33 -0.98% McDonald's Corp. (MCD) $86.24 -0.93% Exxon Mobil Corp. (XOM) $88.29 -0.90% Wal-Mart Stores Inc. (WMT) $69.66 -0.77% Chevron Corp. (CVX) $104.68 -0.74% Cisco Systems Inc. (CSCO) $18.70 -0.72% Bank of America Corp. (BAC) $9.83 -0.71% Nasdaq 100 - Risers Nuance Communications Inc. (NUAN) $21.13 +2.32% Yahoo! Inc. (YHOO) $18.92 +1.88% eBay Inc. (EBAY) $49.92 +1.87% Broadcom Corp. (BRCM) $32.15 +1.79% Avago Technologies Ltd. (AVGO) $34.03 +1.43% Nvidia Corp. (NVDA) $12.06 +1.34% Apple Inc. (AAPL) $578.46 +1.22% Apollo Group Inc. (APOL) $19.06 +1.06% Marvell Technology Group Ltd. (MRVL) $8.15 +0.99% Virgin Media Inc. (VMED) $34.34 +0.97% Nasdaq 100 - Fallers Randgold Resources Ltd. Ads (GOLD) $103.87 -3.28% Whole Foods Market Inc. (WFM) $92.74 -2.45% VeriSign Inc. (VRSN) $39.96 -2.23% Life Technologies Corp. (LIFE) $49.14 -1.88% Costco Wholesale Corp. (COST) $96.47 -1.48% Microsoft Corp. (MSFT) $27.30 -1.44% Express Scripts Holding Co (ESRX) $51.49 -1.44% Gilead Sciences Inc. (GILD) $75.12 -1.31% Cerner Corp. (CERN) $77.08 -1.26% Fossil Inc. (FOSL) $85.12 -1.25% |
| Broker Tips |
| Broker tips: SAB Miller, Compass, British Land Analysts at broker Jefferies were this morning praising brewery group SAB Miller's interim results out last week. In particular, they highlighted how the company's higher innovation, better execution and increasing cost synergies gives them confidence on the company's future ability to deliver peer-beating compound annual growth rates in its earnings per share of 14%. In turn, they were of the opinion that the above underpins a premium valuation rating of 17 times the company's earnings (versus peers trading at approximately 15 times). For all of the above reasons they decided to reiterate their buy recommendation on the shares and increase their price target to 3,200p. For analysts at Nomura Compass Group's latest fiscal year results – which showed an 11% increase in earnings per share - encapsulated the key attractions of the investment case. These were strong turnover growth (5.4%), excellent cash flow conversion and continued margin expansion (+8bp). Interestingly, and as regards the company's £400m buyback, the broker remarked: "Rather than welcoming the extended buyback per se, we believe it acts as a useful reminder of the free cash-flow generation [of the company] and disciplined approach to Mergers&Acquisitions (medium-sized deals at an average enterprise value/earnings before interest and taxes ratio of 10.4). As regards the weak trading conditions expected in Europe they commented that: "This remains the greatest area of risk, but we believe the downturn is being well navigated by the newly-appointed management." Nomura raised its price target on the shares of the company to 832p from 800p before-hand, while reiterating its buy stance. Analysts at UBS today issued an upbeat note on shares of British Land so as to reflect the company's lower risk profile and growing earnings potential. Hence, they indicated that; "Historically, we have been concerned about British Land's ageing portfolio. However, although the company's lease lengths have shortened, the company has been turning these from a threat into an opportunity. We (…) note management's success in potentially timing the lease expiries in harmony with the delivery of new space." UBS also saw developments adding up to £71m of annual rent, although medium term NAV growth is forecast to be driven more by improving rental values, particularly from fiscal year 2015 onwards. There is also reversion to be captured from the existing portfolio from rent reviews, index-linked leases, and letting up vacancy, they added. Furthermore, British Land's average cost of debt is just 4.4% they pointed out, materially lower than its peers, whilst its marginal cost is approximately 1%. It also has £2.3bn of available facilities, giving it a competitive advantage in terms of speed of response to opportunities and minimising earnings dilution if those come with little rental income (e.g.: Clarges). UBS has raised its target by 3.5% to 580p and its recommendation to buy from neutral. |
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