European markets close higher; tech, banks and oil record big gains

The pan-European Euro Stoxx 600 index ended provisionally higher by 1.9 percent while the FTSE 100 was up 149 points, or 2.3 percent, at 6,733 by the close of trading. In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt both ended up by around 1.7 percent.

Tech and bank stocks led the charge. Among the former, AMS, Sitronic Nam, Infineon and Logitech were big gainers while in the banking sector Banco BPM and Metro Bank attracted buyers.

Basic Resources stocks were also among those leading the gains after a rise in Chinese stocks overnight and as fears over a US-China trade war subsided.The ongoing fight between the two largest economies in the world has rattled global stock markets for much of 2018.

Rio Tinto, Evraz, Anglo-American, Glencore, Antofagasta and Randgold Resources were all bid up following a rise in metal prices.

Other sectors enjoying substantial gains on Friday morning trade include Construction & Material, Chemicals and Oil & Gas.

Friday’s gains come after heavy selling in the region on Thursday, when the DAX had closed down 2.4 percent. The German bourse is still in bear market territory, around 20 percent off its most recent 52-week high. It’s also on track for its worst month since January 2016 and its worst year since 2008.

London close: Stocks end just higher but Santa’s nowhere to be seen

London stocks ended just in the green on Friday, recovering from earlier losses but still languishing around their lowest level in more than two years amid worries about a global growth slowdown, souring relations between the US and China and the prospect of US government shutdown.

The FTSE 100 closed up 0.1% at 6,721.17, while the pound was flat against the dollar at 1.2654 and 0.4% firmer versus the euro at 1.1102.

Sino-US relations weighed on sentiment after the US Justice Department filed charges overnight accusing two members of a Chinese cyber-espionage group of hacking into dozens of US tech and industry giants. It has been alleged that the two individuals were operating in conjunction with the Chinese government, although this has been denied by Beijing.

Meanwhile, rising odds of a US government shutdown also dented the mood, as President Trump and congressional Democrats remained at odds over $5bn funding for his border wall with Mexico.

In a series of tweets, Trump threatened a “very long” government shutdown if Democrats don’t go ahead and fund his border wall. “Shutdown today if Democrats do not vote for Border Security!” he tweeted.

David Cheetham, chief market analyst at XTB, said: “December has traditionally been a good month for the benchmark in recent years, with gains seen in eight of the past 10 years, but it would take something pretty spectacular to see a monthly rise now. The size of the selling is not as dramatic as the drop seen across the Atlantic where US markets have swooned of late, but price is still down by around 4% on the month, meaning somewhere in the region of £60bn has been wiped of the value of the UK’s leading companies.

“You have to go back to 2002 to find a worse drop for the UK index in the month of December, while there’s very few who will remember the last time the Wall Street fell this hard in the final month of the year, with the current drop the largest since 1931 – when the Great Depression was taking a major toll.”

Brexit was still very much in focus as the UK government instructed UK firms to begin planning for a no-deal scenario, as the expected rejection of Theresa May’s Brexit proposal meant a messy divorce from the EU looked increasingly likely.

On the data front, lacklustre UK economic growth was confirmed, though last year’s figure was upgraded.

UK gross domestic product growth for the third quarter of the year was confirmed at 0.6%compared to the preceding quarter and 1.5% compared to the third quarter last year. This final update from the Office for National Statistics was unchanged from the previous reading.

The ONS did revise up the real GDP growth reading for 2017 to 1.8% from 1.7%.

Meanwhile, the latest GfK survey showed that UK consumer confidence fell to a five-year low in December.

GfK’s long-running consumer confidence index slipped to -14 this month from -13 in November, in line with expectations, with three of the five measures used to calculate the overall scored down, and two up.

Client strategy director Joe Staton said: “In the face of ever-rising costs, and the threat of higher inflation combined with uncertainty around the outcome of the Brexit negotiations, it’s no surprise that consumers are in a chilly mood of despondency and putting on a glum face when they look at the prospects for 2019.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Looking ahead, consumers likely will remain despondent until a no-deal Brexit is averted, but the outlook for rising real wage growth, as inflation falls further, and further marginal declines in unemployment suggests that consumers should be more upbeat in six months’ time.”

Miners were on the front foot, with Anglo American, Antofagasta and BHP Group all up as copper prices rose.

Anglo American was also in focus after saying it has resumed operations at its Minas-Rio iron ore operation in Brazil.

Just Eat was among the risers as Dutch online food delivery company agreed to buy the German business of Delivery Hero for around €930m in cash and shares.

JD Sports rallied on positive read-across after Nike released better-than-expected second-quarter earnings overnight and upped its guidance.

Peel Hunt said: “It is very clear to us that JD is seen as a key driver of Nike profitability, but on a slightly separate note it was interesting to hear that Nike considers that apparel is an ‘extraordinary opportunity for growth’, and that merchandising ‘head to toe’ looks is key.

“We have a very strong view that JD will make a success of selling apparel in the US. So Nike goes from strength to strength, and so does JD, we think.”

On the downside, Vodafone fell after saying it was looking for new auditors to replace Price Waterhouse, who are taking the company to court as part of a legal dispute over the collapse of Phones4U a few years ago.

Plastic packaging specialist RPC Group slipped after pushing back the deadline once again for private equity firm Apollo Global Management to make a takeover offer.

London close: Stocks drop amid global growth worries, Brexit exhaustion

London stocks finished lower on Friday, albeit off their worst levels of the session, following the release of weak Chinese data and after Theresa May returned home from her EU charm offensive empty-handed.

The FTSE 100 was down by 0.47% or 32.33 points to 6,845.17, while the pound was off 0.72% against the dollar at 1.2576 and 0.16% lower versus the euro at 1.1126 after European Union leaders rejected May’s plea to put a time limit on the Irish backstop, in a blow to her hopes of reaching a deal at a Brussels summit on Thursday.

May had arrived at the European Council meeting hoping to win changes on the contentious backstop, designed to stop a hard border with Ireland in the event of no-deal with the EU, and bring back a deal she get could get through parliament.

But her attempts were opposed by Ireland, France, Sweden, Spain and Belgium, who voiced doubts that the prime minister would be able to sell the technical concession to hostile MPs in Westminster.

IG market analyst analyst Joshua Mahony said: “A failure to pass this bill will likely lead us into limbo where there is insufficient support in parliament to pass any one form of Brexit.”

Disappointing Chinese data added to the gloomy mood, with industrial production up 5.4%on the year in November, versus expectations of 5.9% growth. Meanwhile, retail sales were up 8.1%, falling short of expectations for 8.8% growth and marking the weakest pace of growth since 2003.

Russ Mould, investment director at AJ Bell, said: “There is some concern that the impact of the US/China trade war has yet to be properly felt, suggesting that China’s economic data could be in for more shocks in early 2019 unless the countries secure a permanent truce.”

Striking a similar note, IG’s Chris Beauchamp told clients: “While Europe is finishing the day off the lows, on Wall Street the outlook remains grim as equities continue to give back ground won earlier in the week. It looks like the seasonal rally has been put back again, with slowing growth figures from around the globe turning investors cautious once again.”

There was some good news to be had, however, as China confirmed that it will temporarily halt its additional 25% on US vehicles. According to a release on the Chinese finance ministry’s website, China will suspend 25% tariffs on 144 vehicles and auto parts from the US and 5% on an additional 67 auto items.

The temporary halt – which was part of an agreed truce between the US and China – will kick off on 1 January for three months.

“This is a positive development no doubt, but while the US-China trade tensions are thawing slightly, they still remain frosty and are in danger of freezing back over all together at a moment’s notice,” said XTB chief market analyst David Cheetham.

Miners – which are heavily dependent on demand from China – were under pressure after the retail sales and industrial output data, with Glencore, BHP and Antofagasta all lower.

Housebuilders also retreated amid worries about Brexit, with Persimmon, Taylor Wimpey and Bellway all under the cosh.

In individual corporate news, British American Tobacco was in the red as it announced two new management board roles, in a bid to accelerate the implementation of its strategy, with a director of new categories to report directly to the chief marketing officer.

Balfour Beatty rallied as it said its performance for the year will be above previous expectations after sales of its interests in two infrastructure projects exceed directors’ valuations. The FTSE 250 construction group said it was on track to achieve industry-standard margins in all earnings-based businesses in the second half of 2018.

GVC, Paddy Power Betfair and 888 were all on the rise ahead of next week’s parliamentary vote on legislation regarding fixed-odds betting terminals.

Europe close: Italian stocks outperform on report of US offer of ‘help’

 European stocks finished the session higher, but off their best levels, with Italy outperforming following a report that US President Trump has offered to help fund its public debt next year.

The benchmark Stoxx Europe 600 index was up by 0.05% or 0.18 points at 383.56 and Germany’s DAX by 0.23% or 28.94 points to 12,394.52, while France’s CAC was 0.24% or 13.17 points firmer at 5,432.50.

Dragging on shares was a 0.77% jump in the euro’s value versus the US dollar to 1.16276 after the head of he US central bank said he saw no clear sign that inflation was accelerating above policymakers’ 2.0% target.

Italy’s FTSE MIB was the standout gainer, however, up 0.65% to 20,741.96 after Il Corriere della Sera reported that Trump told Italian Prime Minister Giuseppe Conte that he was ready to help the country fund its public debt next year.

The paper cited three unnamed Italian senior officials as saying that Trump made the offer during a meeting in Washington last month.

Monex Europe said: “If the US would start to buy Italian debt, this would drive down lending costs for the Italians, making their elevated public debt levels less of a pressing matter. It remains unclear however how the Don would go on about doing this, given the Federal Reserve remains independent and tasked with targeting inflation.”

Meanwhile, investors were looking ahead to a speech by Federal Reserve chairman Jerome Powell at the Jackson Hole symposium at 1500 BST. “Traders are probably on the edge of their seats wondering whether Powell will respond at all to the criticism from US President Trump towards US interest rate policy earlier in the week, but the most market-friendly way to respond to such comments would be to ignore them,” said FXTM analyst Jameel Ahmad.

“The Federal Reserve does remain set on raising US interest rates again next month, and there is no reason for the Fed to deter from this path. I personally doubt that he would acknowledge the comments made by President Trump during Jackson Hole.”

US-China trade relations were also still in focus as this week’s talks between the two countries yielded no breakthroughs, with both of them imposing 25% tariffs on $16n worth of each other’s goods, although the Chinese commerce ministry did say that discussions had been “constructive” and “candid”.

Chinese finance minister Liu Kun told Reuters that while China doesn’t want to engage in a trade war, it will “resolutely respond” to the “unreasonable measures” taken by the US.

IG analyst Chris Beauchamp said the absence of any progress on the trade talks is disappointing, “but then again the bar was set so low here that no one is really surprised”.

“Both sides seem determined to fight this one out for the time being.”

Figures released by Destatis earlier showed that real GDP in Germany increased 0.5%quarter-on-quarter over the three months to June, up a touch from a 0.4% rise in the first quarter and in line with both the initial estimate and consensus.

In corporate news, Irish building materials group Kingspan surged on the back of better-than-expected first-half profits, while Shire rallied as the US Food and Drug Administration approved a first-of-its-kind drug, Takhzyro, to treat patients aged 12 plus suffering from a rare hereditary disease that causes swelling.

FTSE posts worst quarter since 2011

Melrose’s successful bid for GKN helped the UK’s top share index finish the month on a positive note on Thursday and gave a mildly upbeat end to the FTSE 100’s worst quarter since 2011.

The blue-chip FTSE 100 (FTSE) was up 0.17 percent on the day at 7,056.61 points as traders prepared for a market holiday.

GKN (L:GKN) surged about 9 percent in late trading after Melrose Industries (L:MRON) announced it had narrowly clinched an 8 billion pound ($11 billion) takeover of the British engineering firm after a three-month battle for control.

The FTSE 100 ended the first three months of 2018 with a loss of 8.2 percent, its worst quarter since 2011 and making it the weakest-performing major European market so far this year. It was closely followed by Germany’s exporter-heavy DAX (GDAXI), which lost 6.3 percent over the same period.

British stocks had a bumpy first-quarter ride, marred by a spate of profit warnings and trouble in the retail and outsourcing sectors as Brexit uncertainty hangs over equities.

“There’s been negative sentiment towards UK equities for a significant period now, stemming all the way back to the EU referendum,” Laith Khalaf, senior analyst atHargreaves Lansdown (LON:HRGV), said.

“What we’ve had in 2018 is more of a global phenomenon, so we’ve had a bit of volatility returning to markets,” said Khalaf, adding that this is a more normal state of affairs for markets.

On the domestic front, high street stalwarts such as Debenhams (L:DEB), Mothercare (L:MTC) and Moss Bros (L:MOSB) have tumbled after profit warnings, examples of retailers struggling in a digital age.

The collapse of outsourcer Carillion (L:CLLN) has further dented confidence in UK domestic stocks, while peer Capita (L:CPI) has slashed profit forecasts and made plans to raise cash to avoid a similar fate.

The outlook is uncertain not just for UK domestics, however. A resurgent pound has reduced the forex-related boost enjoyed by big, international FTSE companies that benefited from an accounting boost following sterling’s slump in the immediate aftermath of the June 2016 Brexit vote.

A spike in volatility in February rattled global stock markets, which have also been hit by concerns over the prospect of a global trade war and a tumble in the U.S. tech sector.

Two FTSE 250 growth stocks I’d buy for my ISA

The FTSE 250 index, which contains the largest 250 stocks outside the FTSE 100, is home to a number of fast-growing companies. Today, I’m profiling two such companies that I believe offer excellent investment potential right now.

When Warren Buffett looks for investment opportunities, he seeks out companies that have strong ‘economic moats’. This is a certain set of conditions that allows a company to generate consistent profits every year, with little concern that competitors will steal market share.

One FTSE 250 company that looks to me to have a strong economic moat is UK property website Rightmove (LSE: RMV). The £4bn market cap company is the dominant player in the UK property search space, last year listing 1m residential properties and enjoying 1.5bn visits across all platforms. Its market share of traffic across both desktop and mobile was 73%, with the mobile component even higher at 79%.

Rightmove’s revenues and profits have grown significantly in recent years, and full-year results for FY2017 showed that the company still has momentum, despite the lingering uncertainty over Brexit and the housing market. Last year, revenue climbed 11% to £243m, with underlying basic earnings per share rising 14% to 163.3p. Looking ahead, City analysts expect a further 9% increase in revenue for 2018, along with an 8% rise in earnings.

Rightmove shares aren’t particularly cheap, as with analysts pencilling in an earnings figure of 177.1p per share for FY2018, the forward-looking P/E ratio is 24.5. Yet I think that’s a reasonable price to pay for a slice of the business, given the company’s dominant market position and growth prospects.

OneSavings Bank
If Rightmove’s P/E ratio is too high for you, check out OneSavings Bank (LSE: OSB). The challenger bank trades on a forward-looking P/E of just 7.2 – a valuation which doesn’t do the stock’s growth prospects any justice at all, in my view.

OSB is a specialist lender and retail savings group that offers residential, buy-to-let and commercial mortgages, secured loans, development finance and savings solutions. While the bank does face some headwinds in the near term, including increased regulatory costs and regulatory and tax changes in the buy-to-let market, a strong pipeline of new business in its core markets means that it is well placed to keep growing. As such, it should be able to continue generating attractive returns for shareholders.

For FY2017, OneSavings enjoyed loan book growth of 23%, generating a 21% rise in underlying profit before tax. Underlying basic earnings per share climbed 23% to 51.1p. While earnings growth may be a little subdued this year, City analysts still expect the group to hike its dividend by 17.5%, which would take the payout to 15p per share, a yield of 4% at the current share price.

The stock’s current valuation basically assumes the business is a basket-case, yet a dividend hike of 22% last year would suggest otherwise. This is one FTSE 250 stock I’m bullish on.

GKN lifts FTSE-100 as shareholders back Melrose’s £8.1 billion bid

Shares in GKN were sent soaring on Thursday after Melrose emerged victorious in a closely fought battle to seize control of the engineering giant.

The FTSE 100 Index lifted 11.87 points to 7,056.61, with GKN climbing 9% – or 40p to 463p – after shareholders backed Melrose’s £8.1 billion bid with 52.43% share of the vote.

The outcome brings to a close a bitter battle that has raged since January, although there are likely to be renewed calls for Business Secretary Greg Clark to intervene in the deal.

He has already called for “binding” agreements over Melrose’s proposals for GKN.

Melrose has stressed its commitment to improving “not only GKN, but the UK economy”, committing to keeping the firm listed in London and headquartered in the UK as part of a five-year pledge.

Unions and MPs have warned over asset stripping and flagged national security concerns, claims which Melrose has rejected.

Across Europe, Germany’s Dax surged 1.3% and the Cac 40 in France closed 0.7% higher.

On the currency markets, sterling drifted 0.4% lower versus the US dollar at 1.40 dollars, as figures from the Office for National Statistics (ONS) confirmed economic growth slowed to 0.4% in the final three months of last year.

The ONS revised up growth for the year as a whole to 1.8% from the 1.7% previous estimate, but this was still the lowest since 2012.

The quarterly national accounts data showed Britons turned to debt to support spending in the face of last year’s surging inflation, which outstripped paltry wage growth.

The proportion of total income saved by households dropped to 4.9% in 2017, its lowest level since records began in 1963, the ONS said.

Against the euro, the pound was 0.2% lower at 1.14 euro.

The price of oil took a hefty hit as traders continued to react to Wednesday’s report from the Energy Information Administration pointing to rising stockpiles of US crude. Brent crude was off 1% at 69.11 dollars a barrel.

In UK stocks, Medclinic marched higher after investors cheered the announcement of Dr Ronnie Van der Merwe as its new chief executive.

The group closed up 29.2p to 601p, after confirming the 55-year-old will succeed Danie Meintjes on June 1.

Dr Van der Merwe was previously the FTSE 100 firm’s chief clinical officer. It came as the company also announced that non-executive directors Nandi Mandela and Dr Robert Leu will retire from the board.

Banking giant Barclays pushed ahead after reaching a two billion US dollar (£1.4 billion) settlement with the US Department of Justice (DOJ).

It follows a three-year investigation into allegations that Barclays caused billions of dollars of losses to investors by “engaging in a fraudulent scheme” to sell Residential Mortgage-Backed Securities (RMBS) between 2005 and 2007.

The bank was said to have misled investors about the quality of the mortgage loans backing those deals.

The DOJ alleged violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), based on mail fraud, wire fraud, bank fraud, and other misconduct.

Shares in the bank rose 0.5p to 206.5p.

The biggest risers on the FTSE 100 Index were GKN up 40p to 463p, Mediclinic International up 29.2p to 601p, International Consolidated Airlines Group up 17.6p to 614.6p, Fresnillo up 36p to 1,268.5p.

The biggest fallers were Prudential down 60.5p to 1,778.5p, Compass Group down 29.5p to 1,455.5p, Intercontinental Hotels Group down 76p to 4,268p, Johnson Matthey down 50p to 3,042p.


Oil and mining stocks drag FTSE 100 lower

The FTSE 100 dropped 37 points, or 0.5%, to 7,377 points by lunchtime, its lowest level since early October.

The biggest losers were mining firms including Glencore and Anglo American, along with oil giants BP and Shell.

It comes after further falls in global oil and commodity prices, with Brent crude extending its losses and falling more than 1% to $61.40 a barrel.

Oil prices also fell heavily on Tuesday after warnings from the International Energy Association of slowing demand and rising stockpiles.

Royal Dutch Shell shares were down 1.4% at £24.01, while BP was 1.2% lower at 496.95 pence.

Glencore, Rio Tinto and Anglo American were all down by more than 2% on the back of falling metal prices.

But gold miner Fresnillo was one of the biggest winners on the index – rising 1.8% – after gold prices edged 0.3% higher to $1,284.30 per ounce.

Tesco, Vodafone keep FTSE afloat

Britain’s top stock index steadied on Tuesday as Tesco (L:TSCO) rallied after it won approval for a takeover and Vodafone (L:VOD) reported strong results, outweighing weakness among mining companies.

The FTSE 100 (Push Me) ended the session flat in percentage terms at 7,414.42.6 points, following three straight days of declines. The mid-cap index (FTMC) gained 0.3 percent.

Tesco was the top riser, jumping 6.2 percent after the British competition regulator gave provisional approval for its proposed 3.7 billion-pound takeover of wholesaler Booker (L:BOK), moving Britain’s biggest retailer closer to securing a new avenue of growth. Booker rose 6.8 percent.

“This is a positive catalyst for the Tesco share price as it reduces the uncertainty over this deal,” Bernstein analyst Bruno Monteyne said.

“However, we expect some uncertainty to remain as the focus will now shift to: will investors approve the deal?”

Also in the food retail space, Sainsbury’s (L:SBRY) rose 0.7 percent after data showed that Britain’s second-biggest grocer after Tesco posted the strongest rise in grocery sales in the last 12 weeks.

Vodafone was another strong performer, rallying more than 5 percent after raising its forecast for full-year earnings growth to around 10 percent from 4 to 8 percent, based on a strong first half.

However, drops among mining stocks weighed on the broader market. Shares in Rio Tinto (L:RIO), Anglo American (L:AAL), Antofagasta (L:ANTO) and Glencore (L:GLEN) declined 2.5 percent to nearly 3 percent as the underlying price of copper fell. [MET/L]

ITV (L:ITV) was another faller, down 2.6 percent after posting a 1 percent decline in third-quarter sales.

Outside of the, mid-cap asset manager Intermediate Capital (L:ICP) soared 8.2 percent after reporting record inflows.

On the macroeconomic front, investors were also focusing on October consumer inflation data, which unexpectedly held steady.

The data sent sterling close to a three-week low against the euro as it raised new questions over the Bank of England’s interest rate action. The currency recovered, however, later in the session.

“This probably isn’t the peak in UK inflation,” Aberdeen Standard Investments’ senior economist Paul Diggle said in a note.

“Given that consumption has been the bedrock of the UK economy since the referendum, that doesn’t bode particularly well for growth,” Diggle added.

FTSE weighed down by mining and oil shares

Mining and oil stocks put downward pressure on the UK’s top share index, which remained stuck at its lowest level in more than a month on Wednesday.

Britain’s blue-chip FTSE 100 (FTSE) index was down 0.4 percent at 7,382.94 points by 0909 GMT. Mid caps (FTMC) fell 0.5 percent. That was in line with a broader decline among continental European indexes.

The Click Me had managed to close flat on Tuesday and outperform a negative Europe, but commodity-related shares remained weak.

“With the miners falling … it’s a very heavily-weighted sector on the FTSE” said Henry Croft, a research analyst at Accendo Markets. “We’ve been really in a consistent downtrend since the beginning of November.”

Shares in mining companies Glencore (L:GLEN), Anglo American (L:AAL) and Rio Tinto (L:RIO) fell 2.2 to 2.7 percent as the price of copper slid [MET/L].

The FTSE 350 Mining index (FTNMX1770) lost for a second straight session, touching its lowest level in more than a month.

Oil stocks were also under pressure, as crude prices dropped after the International Energy Agency cut its outlook for 2018 oil demand growth [O/R].

Shares in Royal Dutch Shell (L:RDSa) fell 1.4 percent and BP (L:BP) declined 0.9 percent.

However, precious metals miner Fresnillo (L:FRES) led gains, rising 2.5 percent, and Randgold (L:RRS) advanced 0.5 percent. Precious metals, such as gold, are typically viewed as safe havens in times of market stress.

Fresnillo also benefited from an upgrade by HSBC, which raised its rating on the stock to “buy” from “hold”.

Vodafone (L:VOD) was another strong performer, building on the previous session’s gains after it lifted its full-year earnings forecast for the first time in recent history, sending its shares more than 5 percent higher.

On Wednesday, Vodafone rose a further 1.2 percent after some price-target upgrades from several brokers.

Outside the blue chips, company updates were very much in focus, with some large declines among British mid caps (FTMC).

Talktalk (L:TALK) fell the most, plummeting around 10 percent after a profit warning.

Crest Nicholson (L:CRST) dropped more than 5 percent after flagging weakness in central London property prices. Average house-price growth across the property company’s UK business fell to a quarter of that in 2016, it said.