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Market Briefing - UK markets finished in positive territory yesterday, boosted by gains in banking sector stocks

Published: 18:35 11 Oct 2017 AEDT

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UK Market Snapshot

UK markets finished in positive territory yesterday, boosted by gains in banking sector stocks. Lloyds Banking Group and Royal Bank of Scotland Group advanced 0.8% and 2.0%, respectively, after a leading broker upgraded its rating on the stocks amid expectations that the UK would see a soft Brexit. Domino's Pizza Group surged 8.9%, after the company reported a significant rise in its sales for the third quarter, helped by a hike in online orders. Marston’s climbed 3.8%, after the company posted an increase in its sales and profit for the full year amid growing consumer interest in local and craft brews. Capita gained 1.3%, after the company appointed Jonathan Lewis as its new CEO, effective from 01 December. Bucking the trend, BAE Systems slid 0.3%, after the company announced that it would shed almost 2,000 jobs to reduce costs. The FTSE 100 advanced 0.4%, to close at 7,538.3, while the FTSE 250 rose 0.2%, to settle at 20,146.3.

US Market Snapshot

US markets finished higher yesterday, with the DJIA index closing at its new record high level, led by a rally in Wal-Mart Stores. The retailer’s shares climbed 4.5%, after it disclosed that it would continue its strategy of focusing on domestic existing stores and e-commerce growth to increase sales and launched a $20.0 billion share buyback plan. KalVista Pharmaceuticals skyrocketed 38.6%, as news emerged that a 9.9% ownership stake in the company has been acquired by Merck, up 0.2%, for $9.1 million. NVIDIA advanced 1.9%, after the company unveiled the world’s first artificial intelligence computer system designed for self-driving taxis. On the flipside, Express Scripts Holdings declined 1.8%, after the company agreed to acquire medical benefits firm, eviCore, for $3.6 billion. The S&P 500 gained 0.2%, to settle at 2,550.6. The DJIA rose 0.3%, to settle at 22,830.7, while the NASDAQ advanced 0.1%, to close at 6,587.3.

Europe Market Snapshot

Other European markets ended mostly lower yesterday, amid ongoing political tensions between Catalonia and Madrid. Lenders, CaixaBank and Banco Santander dropped 2.2% and 2.9%, respectively. Dassault Aviation declined 2.2%, after the company’s CEO warned that the entry of its Falcon 5X business jet would be delayed. On the brighter side, Givaudan climbed 3.1%, after the company reiterated its financial outlook for 2020 following an increase in its like-for-like sales in the third quarter. LVMH Moet Hennessy Louis Vuitton advanced 2.2%, after the company posted a rise in its revenue for the third quarter, buoyed by organic growth in all its business. The FTSEurofirst 300 index marginally gained to close at 1,533.8. Among other European markets, the German DAX Xetra 30 slid 0.2%, to close at 12,949.3, while the French CAC-40 marginally shed to settle at 5,363.7.

Asia Market Snapshot

Markets in Asia are trading higher this morning, tracking overnight gains on Wall Street. In Japan, Nisshin Seifun Group and NH Foods have advanced 1.0% and 2.0%, respectively. On the contrary, Kobe Steel has plunged 19.6%, after the steelmaker confirmed a report that there is a possibility of data fabrication in iron powder products. Sanrio has eased 9.6%, after the company cut its profit outlook due to sluggish sales in Japan and a poor outlook in the US and Europe. In Hong Kong, energy giants, PetroChina and CNOOC have gained 1.0% and 1.8%, respectively, amid higher crude oil prices. In South Korea, carmakers, Kia Motors and Hyundai Motor have climbed 1.3% and 1.7%, respectively. The Nikkei 225 index is trading 0.2% higher at 20,870.2. The Hang Seng index is trading 0.1% up at 28,521.9, while the Kospi index is trading 0.7% higher at 2,450.1.

Key Corporate Announcements Today

AGMs

Coral Products, Hargreaves Lansdown

Interim Dividend Payment Date

888 Holdings, Chesnara, Pagegroup

Special Dividend Payment Date

Pagegroup

Trading Announcements

Countryside Properties, Mondi, Quiz

Key Corporate Announcements for Tomorrow

AGMs

Sky

Final Ex-Dividend Date

AIREA, Begbies Traynor Group, City of London Investment Group, Close Brothers Group, CPL Resources, Daejan Holdings, Photo-Me International, Schroder Japan Growth Fund, Strategic Equity Capital

Final Dividend Payment Date

South32 Limited (DI), United Carpets Group

Interim Ex-Dividend Date

Braime (T.F.& J.H.) Holdings, Braime (T.F.& J.H.) Holdings (Non-Voting), Caledonia Mining Corporation (DI), Cenkos Securities, Centrica, Charles Taylor, Curtis Banks Group, Downing Four VCT DP2011 Gen A Shs, Downing Four VCT DP2011 Str, Downing Four VCT DP2011 Str A Shs, Downing Four VCT DP2011Gen, Downing Four VCT DSO 'D' Shs, F&C Private Equity Trust, Finsbury Growth & Income Trust, HSBC Holdings, Kerry Group 'A' Shares, Manx Telecom, Morgan Sindall Group, NB Global Floating Rate Income Fund Ltd GBP, NB Global Floating Rate Income Fund Ltd USD, North American Income Trust (The), OneSavings Bank, Puma Vct 8, Restore, River and Mercantile Group, Saga, Scisys, Spectris, Spirax-Sarco Engineering, Sprue Aegis, Staffline Group, Tandem Group, Tesco, TP ICAP, Trans-Siberian Gold

Interim Dividend Payment Date

Forterra, Macfarlane Group, Restaurant Group, UBM, Xaar, Zotefoams

Special Ex-Dividend Payment Date

River and Mercantile Group

Quarterly Payment Date

GlaxoSmithKline, Total SA, XP Power Ltd. (DI)

Quarterly Ex-Dividend Date

F&C Commercial Property Trust Ltd., JPMorgan Asian Investment Trust, Middlefield Canadian Income PCC, Primary Health Properties

Trading Announcements

Hays

Commodity, Currency & Bitcoin

Commodity

At 0330GMT today, Brent Crude Oil one-month futures contract is trading 0.11% or $0.06 higher at $56.67 per barrel, ahead of the American Petroleum Institute’s weekly oil inventory data, scheduled to be released later today. Yesterday, the contract climbed 1.47% or $0.82, to settle at $56.61 per barrel, amid renewed faith in the efforts made by OPEC to curb global crude oil supply after Saudi Arabia pledged to cut its monthly crude exports in November. Additionally, a slowdown in US oil production due to hurricane boosted crude oil prices.

At 0330GMT today, Gold futures contract is trading marginally or $0.30 lower at $1290.30 per ounce. Yesterday, the contract advanced 0.69% or $8.80, to settle at $1290.60 per ounce, as the US Dollar lost ground against its peers.

Currency

At 0330GMT today, the EUR is trading marginally higher against the USD at $1.1809. Yesterday, the EUR strengthened 0.58% versus the USD, to close at $1.1808, after Germany’s trade surplus expanded more than expected in August due to robust demand from the Euro-zone.

At 0330GMT today, the GBP is trading a tad lower against the USD at $1.3197. Meanwhile, investors will closely await the release of latest FOMC minutes and JOLTS job openings data for August, scheduled to be released later today. Yesterday, the GBP strengthened 0.46% versus the USD, to close at $1.3203, after UK’s industrial and manufacturing production data for August painted positive picture of the nation’s economy.

Bitcoin

At 0330GMT today, BTC is trading 0.87% lower against the USD at $4733.69. Yesterday, BTC marginally advanced against the USD to close at $4775.08. News emerged that Russia will block access to websites that belong to exchanges and trading platforms offering Bitcoin and other cryptocurrencies. Meanwhile, the first draft of a bill to legalise all cryptocurrency transactions in Ukraine was submitted to the country’s Parliament. Separately, Latin American Bitcoin exchange, SurBTC, withdrew support for SegWit2x hard fork.

 

Key Economic News

UK manufacturing production advanced more than expected in August

In August, manufacturing production recorded a rise of 2.80% in the UK on a YoY basis, compared to a revised advance of 2.70% in the prior month. Markets were expecting manufacturing production to advance 1.90%.

UK trade deficit expanded in August

The UK has reported non-EU trade deficit of £5.84 billion in August, following a revised trade deficit of £5.34 billion in the previous month. Markets were expecting the nation to record a trade deficit of £3.60 billion.

UK total trade deficit expanded in August

Total trade deficit in the UK widened to £5.63 billion in August, more than market expectations of a total trade deficit of £2.80 billion. The UK had reported a revised total trade deficit of £4.24 billion in the prior month.

UK construction output rose more than expected in August

On an annual basis, construction output rose 3.50% in the UK, in August, higher than market expectations for an advance of 0.20%. In the previous month, construction output had risen by a revised 2.70%.

UK industrial production rose more than expected in August

In August, on a YoY basis, industrial production advanced 1.60% in the UK, higher than market expectations for an advance of 0.90%. Industrial production had advanced by a revised 1.10% in the prior month.

UK visible trade deficit widened in August

Visible trade deficit in the UK widened to £14.25 billion in August, compared to a revised visible trade deficit of £12.83 billion in the previous month. Markets were expecting the country's visible trade deficit to fall to £11.15 billion.

UK manufacturing production rose more than expected in August

Manufacturing production registered a rise of 0.40% in the UK, on a monthly basis in August, more than market expectations for an advance of 0.20%. In the previous month, manufacturing production had registered a revised similar rise.

UK industrial production advanced as expected in August

In August, industrial production recorded a rise of 0.20% in the UK on a monthly basis, at par with market expectations. In the prior month, industrial production had registered a revised rise of 0.30%.

UK NIESR estimated GDP rose in the July-September 2017 period

NIESR estimated gross domestic product (GDP) recorded a rise of 0.40% on a monthly basis, in the July-September 2017 period, in the UK. NIESR estimated GDP had climbed by a revised 0.50% in the June-August 2017 period.

UK construction output surprisingly rose in August

On a MoM basis in August, construction output registered an unexpected rise of 0.60% in the UK, higher than market expectations for a steady reading. In the prior month, construction output had recorded a revised drop of 1.00%.

German current account surplus narrowed in August

Germany has registered the non-seasonally adjusted current account surplus of €17.80 billion in August, following a revised current account surplus of €19.60 billion in the previous month. Markets were expecting the nation to post a current account surplus of €17.00 billion.

German trade surplus rose in August

The seasonally adjusted trade surplus in Germany widened to €20.00 billion in August, compared to a revised trade surplus of €19.30 billion in the previous month. Markets were expecting the country's trade surplus to rise to €19.50 billion.

German exports rose more than expected in August

On a MoM basis in Germany, the seasonally adjusted exports recorded a rise of 3.10% in August, more than market expectations for an advance of 1.10%. Exports had registered a rise of 0.20% in the prior month.

German imports rose more than expected in August

In August, on a MoM basis, the seasonally adjusted imports in Germany recorded a rise of 1.20%, more than market expectations for a rise of 0.50%. In the prior month, imports had advanced by a revised 2.40%.

French manufacturing production dropped in August

Manufacturing production eased 0.40% on a MoM basis, in August, in France. In the previous month, manufacturing production had climbed by a revised 0.60%.

French industrial production surprisingly slid in August

On a MoM basis in France, industrial production unexpectedly dropped 0.30% in August, lower than market expectations for a rise of 0.40%. Industrial production had risen by a revised 0.80% in the prior month.

Italian industrial production advanced more than expected in August

On a YoY basis, the non-seasonally adjusted industrial production recorded a rise of 5.60% in August, in Italy, higher than market expectations for an advance of 2.50%. Industrial production had climbed by a revised 4.60% in the prior month.

Italian industrial production rose more than expected in August

The working day adjusted industrial production advanced 5.70% on an annual basis in Italy, in August, compared to a revised rise of 4.60% in the prior month. Markets were expecting industrial production to climb 2.90%.

Italian industrial production rose more than expected in August

On a monthly basis, in August, the seasonally adjusted industrial production rose 1.20% in Italy, higher than market expectations for a rise of 0.10%. In the previous month, industrial production had registered a rise of 0.10%.

Swiss unemployment rate surprisingly fell in September

In September, the seasonally adjusted unemployment rate recorded an unexpected drop to a level of 3.10% in Switzerland, compared to a level of 3.20% in the previous month. Market expectation was for unemployment rate to remain unchanged.

US small business optimism index declined in September

The small business optimism index recorded a drop to 103.00 in the US, in September, compared to a reading of 105.30 in the prior month. Market expectation was for the small business optimism index to ease to a level of 105.00.

US Redbook index fell in the last week

In the US, the seasonally adjusted Redbook index dropped 1.50% in the week ended 06 October 2017 on a monthly basis. In the prior week, the Redbook index had recorded an unchanged reading.

US Redbook index rose in the last week

In the week ended 06 October 2017, on a YoY basis, the Redbook index in the US climbed 3.20%. In the previous week, the Redbook index had climbed 4.10%.

Canadian housing starts declined in September

In September, the seasonally adjusted housing starts eased to 217.10 K in Canada, compared to a level of 223.20 K in the prior month. Market anticipation was for housing starts to ease to a level of 212.00 K.

Canadian building permits dropped more than expected in August

Building permits in Canada dropped 5.50% on a MoM basis in August, more than market expectations for a fall of 1.00%. In the previous month, building permits had recorded a revised drop of 2.80%.

Japanese Eco Watchers Survey for current situation climbed in September

Eco Watchers Survey for the current situation recorded a rise to 51.30 in September, in Japan, higher than market expectations of a rise to 50.20. In the previous month, Eco Watchers Survey for the current situation had registered a reading of 49.70.

Japanese machinery orders advanced more than expected in August

Machinery orders climbed 4.40% on an annual basis in Japan, in August, compared to a drop of 7.50% in the previous month. Markets were anticipating machinery orders to rise 0.70%.

Japanese Eco Watchers Survey for future outlook slid in September

Eco Watchers Survey for the future outlook fell to a level of 51.00 in Japan, in September, higher than market expectations of a drop to 50.50. Eco Watchers Survey for the future outlook had recorded a level of 51.10 in the prior month.

Japanese corporate bankruptcies rose in September

Corporate bankruptcies in Japan climbed 4.62% in September on a YoY basis. In the previous month, corporate bankruptcies had recorded a drop of 11.98%.

Japanese machinery orders rose more than expected in August

On a MoM basis in Japan, machinery orders registered a rise of 3.40% in August, higher than market expectations for a rise of 1.00%. In the previous month, machinery orders had advanced 8.00%.

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