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| London close: Stocks jump to four-week high as Syria concerns ease The FTSE 100 jumped to a four-week high on Tuesday as investors' fears of an impending US military strike on Syria eased and the economic outlook for China improved. London's benchmark index finished 53.25 points higher at 6,583.99, a gain of 0.82%; the last time it closed higher was on August 14th when it ended the day at 6,587.43. "The FTSE 100 is knocking on the door of 6,600 for the first time since mid-August, as investors look to make gains before the crucial Fed meeting next week," said Market Analyst Chris Beauchamp from IG. Friday's disappointing US non-farm payrolls figure has increased hopes that the Federal Reserve could delay a move to taper its stimulus programme until later this year. Markets started on the front foot this morning on the back of a continuing improvement in economic data from China with the third-quarter outlook for the Asian powerhouse continuing to brighten. Industrial output, fixed-asset investment and retail sales strengthened during the month of August, with all three economic indicators rising by more than expected. This followed yesterday's news that exports rose more than expected in August, while consumer price inflation eased. Stocks then extended gains in the afternoon as Wall Street indices reacted positively to developments in Syria, with the S&P 500 extending its recent winning streak into the sixth day, its longest string of positive sessions since mid-July. Positive developments in Syria Syria said today that it has accepted a Russian-backed proposal to give up chemical weapons to international control in an attempt to avoid US military action, according to Russian news agency Interfax. This follows the request by Russian Foreign Minister Sergei Lavrov yesterday to give up any chemical weapons they may. Syria's Foreign Minister Walid Muallem said that he agreed to the proposals to "remove the grounds for American aggression". IG's Beauchamp said: "If you'd been asked to suggest a possible starting point for a solution to the Syrian crisis, I suspect Russia would not have been at the top of the list. "Nevertheless, it now seems as if Moscow could find a way to take some of the heat out of the situation. As a result, markets have breathed a sigh of relief, with stock indices gaining and gold and oil giving back much of their recent gains." All eyes now turn to US President Barack Obama ahead of a speech in Washington tonight where he is expected to outline his intentions for the next course of action regarding Syria. | ||||||||||||
| FTSE 100: Airlines flying high, miners track metals lower Airline groups IAG and easyJet were flying higher with crude continuing to pull back from its recent highs as fears over turmoil in the Middle East ease. Elevated oil prices have pressured both stocks over the last few weeks on concerns over the knock-on effects to jet fuel costs. Shares in easyJet were also helped by comments from Chief Executive Carolyn McCall who said in an interview that the company will be "Europe's preferred airline in five years' time" due to its low-cost operating model. easyJet rose yesterday after Bank of America Merrill Lynch predicted that October's fourth-quarter trading update would see a continuation of its robust yield performance, and suggested a special dividend could also be on the cards. Monday also saw the company add two new routes, with seats to go on sale from next month. Financials were also performing well today with RBS, Standard Chartered, Aberdeen Asset Management, Prudential, Hargreaves Lansdown and Aviva among the highest risers. Leading the downside were the miners as metal prices fell across the board. Precious metals peers Randgold and Fresnillo were among the worst performers as gold futures dropped to a two-week low. Recently-merged Glencore Xstrata however bucked the trend after lifting its synergy target to at least $2bn next year as the miner vowed to cut costs and improve operational efficiency. Pharma giant GlaxoSmithKline fell sharply after US regulators set out requirements for generic versions of its lung drug Advair, sparking competition concerns over when patents run out in a few years' time. Costa and Premier Inn owner Whitbread was also down after seeing sales growth slow from 13.8% in the first quarter to just 10.8% in the second as the hot summer weather hit demand at its coffee shops. Broker comments were also moving a number of blue-chip stocks: Drinks giant SABMiller was on the climb this morning after HSBC upgraded the stock to 'overweight'; consumer products group Unilever was lifted by Deutsche Bank to 'buy'; and Babcock was higher after JPMorgan labelled the engineering support services company as its top pick in the sector. FTSE 250: Ashmore jumps, Oxford Instruments slumps Record subscriptions helped emerging markets asset manager Ashmore to drive strong net inflows into its funds in the year to June, giving the share price a boost this morning. Strong net inflows of $13.4bn led to a 22% increase in assets under management (AuM) to $77.4bn during the year, with average AuM rising 13%. Oxford Instruments was a heavy faller after saying that while growth in the order intake rate in Industrial Products and third party Service is encouraging, slowness in R&D markets in the Western economies means that the year is likely to be more second half-weighted. Shares in chip designer Imagination Technologies jumped today ahead of an Apple event in California where the tech giant – a key customer for Imagination – is expected to unveil its latest iPhone. FTSE 100 - Risers easyJet (EZJ) 1,358.00p +7.18% Royal Bank of Scotland Group (RBS) 356.00p +4.71% International Consolidated Airlines Group SA (CDI) (IAG) 319.80p +4.68% Carnival (CCL) 2,450.00p +4.26% Aberdeen Asset Management (ADN) 384.10p +4.04% Standard Chartered (STAN) 1,511.00p +3.81% Legal & General Group (LGEN) 199.60p +2.99% Prudential (PRU) 1,171.00p +2.99% SABMiller (SAB) 3,174.00p +2.88% Weir Group (WEIR) 2,344.00p +2.85% FTSE 100 - Fallers Randgold Resources Ltd. (RRS) 4,689.00p -4.58% Fresnillo (FRES) 1,225.00p -3.47% GlaxoSmithKline (GSK) 1,598.50p -2.53% Whitbread (WTB) 3,138.00p -2.43% Eurasian Natural Resources Corp. (ENRC) 221.00p -1.69% Vodafone Group (VOD) 207.90p -1.19% BG Group (BG.) 1,205.00p -0.99% Rolls-Royce Holdings (RR.) 1,131.00p -0.26% Tullow Oil (TLW) 1,057.00p -0.19% Vedanta Resources (VED) 1,188.00p -0.17% FTSE 250 - Risers Ashmore Group (ASHM) 382.20p +5.32% Imagination Technologies Group (IMG) 302.00p +5.19% Fenner (FENR) 389.50p +5.01% Laird (LRD) 234.70p +4.96% Ferrexpo (FXPO) 187.00p +4.64% Galliford Try (GFRD) 1,070.00p +4.59% Henderson Group (HGG) 187.10p +4.53% Synthomer (SYNT) 249.20p +4.40% Ocado Group (OCDO) 365.00p +4.29% Greggs (GRG) 438.70p +4.15% FTSE 250 - Fallers African Barrick Gold (ABG) 166.40p -9.37% Oxford Instruments (OXIG) 1,404.00p -7.02% Moneysupermarket.com Group (MONY) 168.50p -2.21% Pace (PIC) 280.50p -2.13% Centamin (DI) (CEY) 46.00p -1.96% International Personal Finance (IPF) 640.00p -1.54% Polymetal International (POLY) 756.00p -1.50% Essar Energy (ESSR) 136.70p -1.37% RPS Group (RPS) 257.00p -1.19% ITE Group (ITE) 288.50p -1.13% | ||||||||||||
| Europe Market Report | ||||||||||||
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| Europe close: Stocks advance on China data, Syria
- China data beats forecasts
- Syria agrees to relinquish chemical weapons - Italy's economy shrinks more than initial estimate FTSE 100: 0.82% DAX: 2.06% CAC 40: 1.89% FTSE MIB: 0.51% IBEX 35: 1.96% Stoxx 600: 1.29% European stocks climbed to their highest level in three and a half months as Chinese economic data beat expectations and Syria agreed to surrender its chemical weapons to avoid a US military strike. China's industrial production rose by 10.4% in August compared to a year ago, beating the forecast for a 9.9% increase. Retail sales in China increased an annual 13.4% in the month, above market expectations for a 13.2% incline. The reports signalled a recovery in the world's second largest economy after its recent slump. "Today's data releases give further evidence that China's economy is picking up speed," said Capital Economics. "But the rebound is skewed towards investment, with state-led spending on infrastructure particularly strong. The latest figures also suggest that the slowdown in credit growth has levelled out." Meanwhile, fears over an imminent US-led strike in Syria eased after the country's government said it would hand over chemical weapons to international control as proposed by Russia. US President Barack Obama said he would defer any military action if Syrian President Bashar Hafez al-Assad agreed to Russia's recommendation to relinquish the weapons. "No action from the US is clearly the preferred outcome for the markets, as seen by today's reaction with European indices all trading significantly higher following a very positive session in Asia over night," said Alpari Research analyst Craig Erlam. The US has been debating an intervention in Syria after accusing the government of using chemical weapons against civilians on August 21st - claims which Assad continues to deny. Italy's economy contracts Italy's economy shrank more than initially estimated in the second quarter, reflecting weakness in consumer demand. Gross domestic product (GDP) fell 0.3% from the previous quarter, according to national statistics institute Istat, compared to the August 6th reading of a 0.2% contraction. Consumer spending dropped 0.4%, offsetting a 1.2% rise in exports. Glencore Xstrata, Peugeot Glencore Xstrata rallied after the miner lifted its synergy target from its merger and vowed to cut costs. PSA Peugeot Citroen advanced after saying it won't reduce prices for the Peugeot brand. Ashmore Group surged after the UK fund manager reported a full-year pre-tax profit and revenue that exceeded estimates. GlaxoSmithKline slumped after drafted guidelines published by the US Food and Drug Administration called for tests and clinical trials on generic replacements to drugs such as Advair. easyJet and International Consolidated Airlines soared as airline stocks benefited from a drop in oil prices after concerns over an imminent strike in Syria eased. Brent crude futures dipped $2.506 to $110.940 per barrel on the ICE. The euro was down 0.14% against the 1.0355 US dollar. | ||||||||||||
| US Market Report | ||||||||||||
| US close: Stocks lifted by M&A, China data
- M&A activity boosts sentiment
- Chinese data gives stocks a lift - September taper looking less likely Dow Jones: 0.94% Nasdaq: 1.26% S&P 500: 1.02% US markets put in a strong performance on Monday - despite ongoing concerns over Syria weighing on indices across Europe - as heightened merger and acquisition(M&A)activity and decent data from China gave stocks a boost. Wall Street's three main benchmarks each finished the session around 1% higher with the S&P 500 in particular extending its recent winning streak into the fifth straight day, its longest string of positive sessions since July. Driving gains today in the States was M&A news as data from Bloomberg showed that the US market is poised for its busiest month of takeovers since July 2007. Some $160bn of M&A involving American companies has been announced since the end of August, according to the news agency, $15bn of which occurred on Monday alone. Asian data improves Chinese trade and inflation numbers helped to brighten the third-quarter outlook for the world's second-largest economy. Chinese exports rose by a stronger-than-expected 7.2% in August and imports jumped by 7%, while the annual rate of consumer price inflation eased from 2.7% to 2.6%. Writing in Monday's Financial Times Chinese Premier Li Keqiang said that his country will stay the course on sustainable growth, by continuing to promote reforms, with an aim of meeting its 7.5% lower bound for gross domestic product (GDP) growth this year. Second-quarter GDP estimates in Japan were revised higher from 0.6% to 0.9%, as confidence grows in Prime Minister Shinzo Abe's so-called 'Abenomics'. While this was slightly lower than predictions, this data - along with the news that Tokyo will host the 2020 Olympics - gave investors more reasons to be confident about a Japanese recovery. Fed taper, Syria outcome still uncertain Friday's disappointing jobs report was likely to be at the back of investors' minds ahead of the Federal Reserve policy meeting later this month, with a September 'taper' now looking a bit uncertain. While the jobless rate inched lower in August to 7.3%, a worse-than-expected rise in non-farm payrolls has now sparked speculation that the US central bank could hold off from scaling back quantitative easing (QE) programme until later on in the year. "The figures have thrown into doubt something the markets had pretty much priced in, tapering in September," said Market Analyst Craig Erlam from Alpari. In spite of the strong gains on Wall Street, Syria continues to be in focus this week ahead of a vote by Congress over whether or not to proceed with a military attack after last month's alleged use of chemical weapons by Bashar Al-Assad's regime. Tensions at the G20 Summit escalated last week after Vladimir Putin said Russia would "assist" Syria if it was attacked by the US, just as President Barack Obama was trying to rally for support from global leaders for an intervention. Nevertheless, Russian Foreign Minister Sergei Lavrov asked Syria on Monday to give up its chemical weapons in an attempt to avoid military strikes from the US. Apple in focus Tech giant Apple, the biggest stock on Wall Street by market capitalisation, was making decent gains on Monday ahead of a much-anticipated event on Tuesday where the company is expected to launch the new upgraded model of the iPhone. Molex, which makes components for Apple's smartphone, was also a high riser after agreeing to a sale to Koch Industries for $7.2bn. In other M&A news, Ares Management and the Canada Pension Plan Investment Board said they would jointly buy luxury department store Neiman Marcus for $6bn. Delta Airlines jumped following reports the carrier will replace BMC Software Inc. in the S&P 500 this week, roughly six years after coming out of bankruptcy. Expedia rallied as the online travel services provider was raised to 'buy' from 'neutral' by Lazard Capital Markets LLC. S&P 500 - Risers Molex Inc. (MOLX) $38.63 +31.66% Sears Holdings Corp. (SHLD) $53.07 +12.79% PulteGroup Inc. (PHM) $16.63 +7.50% D. R. Horton Inc. (DHI) $19.28 +6.52% Cliffs Natural Resources Inc. (CLF) $23.18 +6.09% Lennar Corp. Class A (LEN) $33.99 +5.40% Mosaic Company (MOS) $44.31 +5.10% AutoNation Inc. (AN) $51.45 +4.42% Masco Corp. (MAS) $20.47 +4.28% Boston Scientific Corp. (BSX) $11.99 +4.26% S&P 500 - Fallers Tenet Healthcare Corp. (THC) $38.39 -3.69% Marathon Petroleum Corporation (MPC) $69.61 -1.75% M&T Bank Corp. (MTB) $113.14 -1.60% Sprint Nextel Corporation (S) $6.37 -1.55% Tesoro Corp. (TSO) $46.16 -1.33% Express Scripts Holding Co (ESRX) $64.77 -1.14% Actavis Inc (ACT) $135.90 -1.08% Hudson City Bancorp Inc. (HCBK) $9.15 -1.08% Verizon Communications Inc. (VZ) $45.91 -0.93% WellPoint Inc. (WLP) $86.71 -0.66% Dow Jones I.A - Risers Caterpillar Inc. (CAT) $85.59 +2.64% Travelers Company Inc. (TRV) $82.19 +2.11% Alcoa Inc. (AA) $8.08 +2.02% Microsoft Corp. (MSFT) $31.66 +1.61% Cisco Systems Inc. (CSCO) $23.92 +1.57% 3M Co. (MMM) $116.74 +1.48% Procter & Gamble Co. (PG) $78.16 +1.31% Wal-Mart Stores Inc. (WMT) $73.51 +1.27% United Technologies Corp. (UTX) $104.48 +1.21% Home Depot Inc. (HD) $73.58 +1.21% Dow Jones I.A - Fallers Verizon Communications Inc. (VZ) $45.91 -0.93% Hewlett-Packard Co. (HPQ) $22.36 -0.27% Nasdaq 100 - Risers Sears Holdings Corp. (SHLD) $53.07 +12.79% Green Mountain Coffee Roasters Inc. (GMCR) $86.44 +5.23% Yahoo! Inc. (YHOO) $29.24 +3.80% Vertex Pharmaceuticals Inc. (VRTX) $81.93 +3.72% Regeneron Pharmaceuticals Inc. (REGN) $276.80 +3.45% Mylan Inc. (MYL) $36.49 +3.41% Akamai Technologies Inc. (AKAM) $48.89 +2.75% Equinix Inc. (EQIX) $177.26 +2.60% Gilead Sciences Inc. (GILD) $62.66 +2.52% Fastenal Co. (FAST) $49.07 +2.46% Nasdaq 100 - Fallers Tesla Motors Inc (TSLA) $160.70 -3.76% Randgold Resources Ltd. Ads (GOLD) $76.40 -1.96% Express Scripts Holding Co (ESRX) $64.77 -1.14% Catamaran Corp (CTRX) $55.35 -0.54% Comcast Corp. (CMCSA) $42.29 -0.44% Linear Technology Corp. (LLTC) $39.00 -0.31% eBay Inc. (EBAY) $52.67 -0.30% Liberty Global plc Series A (LBTYA) $76.78 -0.25% Sigma-Aldrich Corp. (SIAL) $82.96 -0.18% Dell Inc. (DELL) $13.84 -0.00% | ||||||||||||
| Broker Tips | ||||||||||||
| Broker tips: BG Group, Whitbread, Babcock
Barclays has downgraded its rating for natural gas giant BG Group from 'overweight' to 'equalweight' after the company on Monday scaled back its production guidance for next year.
Analysts said that "with growth pushed ever further out it is increasingly difficult to justify the premium multiple on which the stock trades". They explained that the shares trade at a 53% premium to the sector. Panmure Gordon has maintained its 'sell' recommendation for Whitbread after a "resilient" but slightly worse-than-expected second-quarter update from the cafe, restaurant and hotel group on Tuesday. The broker said that even on its below-consensus estimates, the stock trades at 18.7 times prospective earnings (for the year ending February 2014) "which is too high in our view". Panmure explained that Whitbread's lofty valuation does not reflect its expected compound annual growth rate in earnings per share of just 7.4% over the next three years. Engineering support services group Babcock was making gains on Tuesday after JPMorgan Chase said that the stock remains its top pick in the European business services sector. "Babcock's shares have been rather range-bound since peaking in July, we think due to the lack of news flow since the Q1 trading statement. However, we believe that the investor seminar on September 27th could act as a catalyst and may also be accompanied by commentary on H1 trading." | ||||||||||||
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