UK/Euro Financial Market Daily Morning Briefing 15-01-2014

London open: Burberry lifts FTSE 100 to eight-month high

- Burberry jumps after Q1 sales growth
- Anglo American lifted by UBS upgrade
- World Bank raises 2014 growth forecasts

techMARK 2,830.00 +0.41%
FTSE 100 6,792.24 +0.38%
FTSE 250 16,280.74 +0.28%

Strong gains from Burberry and Anglo American helped markets higher on Wednesday morning, sending London's benchmark index to levels not seen in eight months.

The FTSE 100 was trading 0.4% higher at around 6,790 in early trading; it has not closed above this price since May 22nd 2013.

Sentiment was also lifted today by a upwards revision to 2014 growth forecasts by the World Bank, which expects the global economy to expand by 3.2% this year. This is an acceleration from the 2.4% growth in 2013 and higher than its June forecast for 2014 growth of 3%.

However, the organisation did raise concerns regarding rising interest rates and singled out the withdrawal of stimulus by the US Federal Reserve as a specific worry.

Burberry jumps after sales update, Anglo American higher

High-end fashion brand Burberry surged early on after reporting a better-than-expected 14% rise in retail sales in the third quarter, helped by double-digit growth in its key Asia Pacific region. This was ahead of analysts' predictions.

Diversified mining firm Anglo American was also a high riser this morning after analysts at UBS upgraded the stock from 'neutral' to 'buy', saying that the risk-reward balance is more "compelling" after recent weakness. The bank said: "Anglo has underperformed the other diversified miners by 18% over the last three months, and, in our opinion, the valuation now looks attractive."

Despite the upgrade, UBS said it retained its preference for Rio Tinto and BHP Billiton both rated 'buy', giving both stocks a lift today.

In contrast, iron ore group Ferrexpo was under pressure this morning after being cut from 'buy' to 'neutral' by UBS "due to the elevated political risk in the Ukraine".

SSE and Centrica were also suffering from the effects of a broker downgrade today after Barclays Capital lowered both stocks to 'underweight'. Meanwhile, Standard Life was higher after Credit Suisse lifted the shares to 'outperform'.

Financial services company Hargreaves Lansdown was a heavy faller after saying it will need to increase its assets under management by £3.5bn over three years to cover the anticipated revenue shortfall resulting from the changes made to its pricing model under the Retail Distribution Review.

UK manufacturer Fenner also slumped after a mixed first-quarter trading update, which said that results in the Advanced Engineered Products arm will be “slightly more weighted” in the second half, reflecting the deferral of customer sales.

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FTSE 100 - Risers
Burberry Group (BRBY) 1,550.00p +5.51%
Anglo American (AAL) 1,309.50p +3.72%
Prudential (PRU) 1,377.00p +2.00%
Standard Life (SL.) 384.60p +1.99%
WPP (WPP) 1,389.00p +1.83%
Kingfisher (KGF) 393.60p +1.73%
G4S (GFS) 254.30p +1.68%
Sage Group (SGE) 400.10p +1.65%
Pearson (PSON) 1,335.00p +1.52%
ARM Holdings (ARM) 1,012.00p +1.50%

FTSE 100 - Fallers
Imperial Tobacco Group (IMT) 2,177.00p -3.37%
Hargreaves Lansdown (HL.) 1,460.00p -3.18%
Centrica (CNA) 318.20p -2.69%
SSE (SSE) 1,322.00p -2.00%
easyJet (EZJ) 1,662.00p -1.95%
Fresnillo (FRES) 699.50p -1.48%
Randgold Resources Ltd. (RRS) 3,788.00p -1.41%
United Utilities Group (UU.) 657.50p -1.13%
Morrison (Wm) Supermarkets (MRW) 247.10p -1.08%
Unilever (ULVR) 2,391.00p -0.91%

FTSE 250 - Risers
Bwin party Digital Entertainment (BPTY) 118.60p +3.49%
African Barrick Gold (ABG) 195.50p +3.11%
Imagination Technologies Group (IMG) 187.70p +2.91%
Jupiter Fund Management (JUP) 391.00p +2.79%
Enterprise Inns (ETI) 170.30p +2.47%
Merlin Entertainments (MERL) 375.00p +2.12%
Home Retail Group (HOME) 199.10p +2.05%
Spirent Communications (SPT) 92.45p +1.87%
Riverstone Energy Limited (RSE) 946.50p +1.77%
Wetherspoon (J.D.) (JDW) 834.00p +1.71%

FTSE 250 - Fallers
Ferrexpo (FXPO) 166.80p -5.60%
Fenner (FENR) 429.90p -5.56%
CSR (CSR) 674.50p -2.95%
Diploma (DPLM) 692.00p -2.54%
Ashmore Group (ASHM) 353.00p -1.40%
Computacenter (CCC) 636.50p -1.32%
888 Holdings (888) 161.40p -1.22%
Catlin Group Ltd. (CGL) 539.50p -1.19%
Greencore Group (GNC) 232.90p -1.19%
NMC Health (NMC) 450.00p -1.10%

INTERIMS
Ilika

INTERIM DIVIDEND PAYMENT DATE
Alliance Pharma, JPMorgan Euro Small Co. Trust, Juridica Investments Ltd., Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus VCT, Ventus VCT 'C' Shares

INTERIM EX-DIVIDEND DATE
ACM Shipping Group, Ashtead Group, Consort Medical

QUARTERLY EX-DIVIDEND DATE
F&C Commercial Property Trust Ltd., Middlefield Canadian Income PCC

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (10:00)
Beige Book Fed Survey (US) (19:00)
Crude Oil Inventories (US) (15:30)
Gross Domestic Product (GER) (07:00)
MBA Mortgage Applications (US) (12:00)
Producer Price Index (US) (13:30)
Speech President US Federal Reserve bank of Chicago
Speech President US Federal Reserve bank of Atlanta

GMS
Verdes Management

FINALS
Fusionex International

IMSS
Fenner, Smiths News

SPECIAL DIVIDEND PAYMENT DATE
Juridica Investments Ltd.

SPECIAL EX-DIVIDEND PAYMENT DATE
Next

AGMS
Diploma, Fenner, Majedie Investments

TRADING ANNOUNCEMENTS
Burberry Group, Jupiter Fund Management , Taylor Wimpey, Tullow Oil

FINAL DIVIDEND PAYMENT DATE
Bellway

FINAL EX-DIVIDEND DATE
Blue Capital Global Reinsurance Fund Ltd (DI), Dewhurst, Dewhurst (Non-Voting), Dunedin Smaller Companies Inv Trust, Imperial Tobacco Group, NB Global Floating Rate Income Fund Limited Red C Shs GBP, Tracsis

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Europe open: Stocks rise on improved World Bank global outlook

- Stocks lifted by improved outlook from World Bank
- German GDP misses expectations at 0.4 per cent
- Burberry rises on strong revenue growth

FTSE 100: 0.39%
DAX: 0.91%
CAC 40: 0.60%
FTSE MIB: 0.84%
IBEX 35: 0.41%
Stoxx 600: 0.50%

European stocks rallied after the World Bank raised its outlook for the global economy.

The World Bank said the economy is at a “turning point” as it forecast stronger growth for 2014.

The bank predicts global gross domestic product will grow by 3.2% this year, up from 2.4% in 2013, driven by improvement in developed economies.

The group, however, warned that growth remained vulnerable to the impact of the withdrawal of monetary stimulus measures in the US.

The Federal Reserve started unwinding monthly asset purchases by $10bn to $75bn in December and is due to announce whether it will reduce further at its next meeting at the end of this month.

The World Bank said developing countries could face crisis risks if the tapering of stimulus was coupled with market volatility.

"Growth appears to be strengthening in both high-income and developing countries, but downside risks continue to threaten the global economic recovery," said World Bank President Jim Yong Kim.

"The performance of advanced economies is gaining momentum, and this should support stronger growth in developing countries in the months ahead. Still, to accelerate poverty reduction, developing nations will need to adopt structural reforms that promote job creation, strengthen financial systems, and shore up social safety nets."

German growth misses forecast

Germany’s economy expanded less than expected last year, the Federal Statistics Office revealed today.

Europe’s biggest economy saw GDP rise 0.4% from 2012, when it increased 0.7%. Economists had forecast growth of 0.5%.

The country’s budget deficit was 0.1% of GDP, compared with a forecast for a balanced budget.

Banca Monte

Banca Monte dei Paschi di Siena SpA gained after saying Chief Executive Officer Fabrizio Viola withdrew his resignation.

Burberry advanced after reporting a 14% increase in revenue in the three months ended December 31st, beating analysts’ estimates.

Hennes & Mauritz was up after Europe’s second-biggest clothing retailer posted a 10% jump in total sales in December ahead of market forecasts.
The euro fell 0.40% to $1.3624.

Brent crude futures rose $0.047 to $106.440 per barrel on the ICE.

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US close: Markets post strong gains after retail sales data

- Retail sales rise more than forecast
- JPMorgan, Wells Fargo edge higher after results
- Time Warner rejects offer from Malone’s Liberty and Charter
- Google gains after Nest Labs acquisition

Dow Jones: 0.71%
Nasdaq: 1.69%
S&P 500: 1.09%

US markets recovered strongly on Tuesday following a sell-off the day before with stocks registering their best gains of the year so far, helped by some better-than-expected retail sales data.

Stocks fell sharply during Monday’s session as concerns about lofty equity valuations dampened risk appetite ahead of a busy week for corporate earnings.

However, decent gains from Time Warner Cable and Google were providing a lift on Tuesday, while banking groups JPMorgan Chase & Co and Wells Fargo & Co inched higher after kicking off bank earnings season.

The S&P 500 finished 1.1% higher at 1,838.88, registering its best day since December 18th, while the Dow Jones Industrial Average halted a four-day losing streak to close up 0.7% at 16,373.86. A strong performance by tech stocks pushed the Nasdaq up 1.7% to 4,183.02.

Retail sales “stronger than they look”

US retail sales rose at a month-on-month rate of 0.2% in December, ahead of the 0.1% increase expected by the consensus of analysts. However, November’s 0.7% gain was revised lower to 0.4%.

Senior US Economist Paul Dales from Capital Economics said that the sales are "stronger than they look" and paint a strong picture for real consumption at the end of last year.

He said: "Overall, this report supports our view that a 4% annualised rise in real consumption will help to generate a decent 3% gain in overall gross domestic product in the fourth quarter of last year. That would provide a good platform for this year."

In other economic data, the NFIB Small Business Optimism index increased to 93.9 in December, from a reading of 92.5 in November and ahead of the 93.1 estimate.

Banks in focus, Time Warner Cable rebuffs offer

JPMorgan Chase & Co was making small gains despite reporting earnings per share (EPS) of $1.30 in the fourth quarter, down 7.3% on the year before due to poor results from its investment-banking division. However, adjusted EPS came in at $1.40 were ahead of analysts’ estimates. Revenues, meanwhile, fell a less-than-expected 1.1% to $24.11bn.

Sector peer Wells Fargo & Co also rose after beating expectations with a 10% rise in fourth-quarter EPS to $1, compared with the 98 cents forecast. Revenues were down 5.8% at $20.67bn, coming in below estimates.

US cable television group Time Warner Cable rose after rejecting a third "lowball" takeover bid from smaller rival Charter Communications, a company backed by John Malone’s Liberty Media.

Nasdaq-listed Charter, which is the fourth biggest cable company in the US, has publicly offered $132.50 per share for Time Warner, the second biggest cable company in the country, which is only slightly above Monday’s closing share price.

Google rallied as the internet search engine revealed it was buying home-automation company Nest Labs for $3.2bn.

Workday declined following news the business-software maker plans to sell 6m shares.

Analysts at JP Morgan upgraded their view on shares of Intel to 'overweight', due to their positive view on the PC market.


S&P 500 - Risers
Regeneron Pharmaceuticals Inc. (REGN) $300.32 +11.78%
Jabil Circuit Inc. (JBL) $17.89 +7.84%
Intuitive Surgical Inc. (ISRG) $419.88 +6.82%
Allergan Inc. (AGN) $121.22 +5.94%
Alexion Pharmaceuticals Inc. (ALXN) $137.66 +5.40%
Biogen Idec Inc. (BIIB) $297.47 +4.86%
Pioneer Natural Resources Co. (PXD) $172.17 +4.48%
United States Steel Corp. (X) $29.18 +4.48%
Teradyne Inc. (TER) $18.98 +4.29%
Mosaic Company (MOS) $48.03 +4.07%

S&P 500 - Fallers
GameStop Corp. (GME) $36.31 -19.88%
Bed Bath & Beyond Inc. (BBBY) $66.69 -2.36%
PVH Corp. (PVH) $126.50 -2.35%
Newmont Mining Corp. (NEM) $23.41 -1.97%
Perrigo Company plc (PRGO) $158.01 -1.78%
Gap Inc. (GPS) $37.67 -1.52%
Health Care REIT Inc. (HCN) $55.14 -1.45%
Expeditors International Of Washington Inc. (EXPD) $43.79 -0.97%
Family Dollar Stores Inc. (FDO) $64.42 -0.89%
Coach Inc. (COH) $53.88 -0.77%

Dow Jones I.A - Risers
Intel Corp. (INTC) $26.51 +3.96%
Microsoft Corp. (MSFT) $35.78 +2.29%
3M Co. (MMM) $137.41 +2.03%
Visa Inc. (V) $222.65 +1.71%
Walt Disney Co. (DIS) $74.45 +1.61%
Pfizer Inc. (PFE) $31.00 +1.51%
E.I. du Pont de Nemours and Co. (DD) $63.55 +1.42%
Travelers Company Inc. (TRV) $87.45 +1.29%
Procter & Gamble Co. (PG) $80.87 +1.07%
Cisco Systems Inc. (CSCO) $22.41 +0.99%

Dow Jones I.A - Fallers
Boeing Co. (BA) $140.01 -0.49%
Merck & Co. Inc. (MRK) $53.00 -0.23%
United Technologies Corp. (UTX) $112.63 -0.15%
Nike Inc. (NKE) $75.17 -0.01%

Nasdaq 100 - Risers
Tesla Motors Inc (TSLA) $161.27 +15.74%
Regeneron Pharmaceuticals Inc. (REGN) $300.32 +11.78%
Intuitive Surgical Inc. (ISRG) $419.88 +6.82%
Illumina Inc. (ILMN) $121.51 +6.65%
Alexion Pharmaceuticals Inc. (ALXN) $137.66 +5.40%
Avago Technologies Ltd. (AVGO) $55.27 +5.00%
Biogen Idec Inc. (BIIB) $297.47 +4.86%
Intel Corp. (INTC) $26.51 +3.96%
Western Digital Corp. (WDC) $87.89 +3.88%
Facebook Inc. (FB) $57.74 +3.27%

Nasdaq 100 - Fallers
Bed Bath & Beyond Inc. (BBBY) $66.69 -2.36%
Activision Blizzard Inc. (ATVI) $17.49 -2.13%
Randgold Resources Ltd. Ads (GOLD) $62.84 -1.35%
Expeditors International Of Washington Inc. (EXPD) $43.79 -0.97%
Liberty Global plc Series A (LBTYA) $88.99 -0.86%
Monster Beverage Corp (MNST) $69.22 -0.72%
Mattel Inc. (MAT) $44.40 -0.58%
Catamaran Corp (CTRX) $50.03 -0.50%
TripAdvisor Inc. (TRIP) $84.31 -0.17%
Twenty-First Century Fox Inc Class A (FOXA) $32.30 -0.15%

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Emerging markets, Ford, GM

An abrupt unwinding of central bank support for advanced world economies could cause capital flows to emerging markets to contract by as much as 80 per cent, inflicting significant economic damage and throwing some countries into crises, the World Bank has warned. Capital flows into emerging markets are influenced more by global than domestic forces, leaving them vulnerable to disorderly changes in policy by the US Federal Reserve, concludes a study by World Bank economists. - Financial Times

Ford, one of the UK’s leading foreign investors, has called for the country to remain in the European Union, warning that it would reassess all its plans if Britain left. Steve Odell, Chief Executive of the car manufacturer’s operations in Europe, the Middle East and Africa, told The Telegraph the UK would be “cutting its nose off to spite its face” by exiting the EU. He claimed it would be calamitous for British jobs and business. - The Telegraph

General Motors on Tuesday set the seal on its remarkable recovery from the auto industry recession by announcing that it was resuming dividend payments for the first time since its government-managed bankruptcy in 2009. GM’s move – taken hours before Dan Akerson was due to hand over to Mary Barra as chief executive – comes only five weeks after the US Treasury sold the last of the stake in the company it took on when the carmaker emerged from its 2009 bankruptcy. - Financial Times

The cost of housebuilding and investment in big construction projects in Britain has been inflated by millions of pounds by the collusion of the three large foreign-owned cement manufacturers that dominate the industry. After a two-year investigation, the Competition Commission has ordered two of the groups, Lafarge Tarmac and Hanson, to dispose of facilities to create a new, independent rival. - The Times

Punch Taverns, Britain’s second biggest pubs group, faces a bitter backlash from its senior lenders when it launches a restructuring of its £2.3bn debt pile on Wednesday. It is understood that the pubs group, which is financed through two complex debt vehicles dubbed “Punch A” and “Punch B”, will press ahead with refinancing plans despite a warning from senior lenders last month that they would reject the company’s latest proposals if put to a vote. - The Telegraph

North Sea oil and gas workers expect to enjoy wage rises up to 10% this year as the sector continues to benefit from “unprecedented” growth. Buoyed by developments such as EnQuest’s £4bn Kraken project and Dana Petroleum’s plans to invest £1bn in its Western Isles scheme, a new study also estimates that 20,000 jobs could be created across the industry this year. The survey of more than 10,000 staff by recruitment website Oil and Gas People, published today, found wages were being pushed higher by demand for skilled staff in Africa and the Middle East, with some in the UK enjoying pay rises of up to 30% last year. - The Scotsman

Japan Airlines Co Ltd said it temporarily grounded one of its Boeing 787 Dreamliners on Tuesday after white smoke was spotted outside the plane as cockpit warning lights indicated potential problems with the main battery and charger, and a battery cell appeared to be leaking. The incident raised new concerns about the 787's safety and reliability about one year after the global 787 fleet was grounded by regulators following the overheating of two batteries. - The Guardian

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