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Market briefing: UK markets finished mixed yesterday. The FTSE 100 index closed in negative territory, led by weakness in mining sector stocks

Published: 09:52 25 Aug 2016 BST

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UK Market Snapshot
UK markets finished mixed yesterday. The FTSE 100 index closed in negative territory, led by weakness in mining sector stocks. Glencore declined 3.1%, after the miner posted a net loss for the first half of 2016. Peers, BHP Billiton, Anglo American and Antofagasta lost 2.5%, 3.1% and 3.9%, respectively. Hikma Pharmaceuticals shed 3.3%, following a drop in its half yearly operating earnings. However, the pharma company reiterated its revenue outlook for the full year. On the brighter side, housebuilders, Persimmon, Berkeley Group Holdings and Barratt Developments advanced 2.2%, 2.7% and 2.9%, respectively. WPP gained 1.9%, after it reported upbeat revenue for the first half and confirmed its financial outlook for 2016. AstraZeneca rose 0.4%, after it agreed to sell stake of its antibiotics business to the US-based, Pfizer, for about $1.6 billion along with royalties. The FTSE 100 declined 0.5%, to close at 6,835.8, while the FTSE 250 rose 0.2%, to settle at 18,014.7.
US Market Snapshot
US markets ended in the red yesterday, dragged down by a slump in healthcare stocks. Mylan dropped 5.4%, after its sUBStantial hike in pricing of its anaphylactic shock medicine, EpiPen, was criticised by the lawmakers. Other healthcare firms, Merck & Co, UnitedHealth Group and Allergan lost 1.3%, 1.5% and 3.9%, respectively. Express sank 25.5%, as it posted dismal results for the second quarter and offered disappointing outlook for the third quarter. La-Z-Boy tanked 12.7%, after its results for the first quarter fell short of market expectations. Freeport-McMoRan plunged 7.5%, tracking lower metal prices. Intuit dipped 3.5%, following a weaker than expected guidance for the first quarter. Jones Lang LaSalle eased 0.6%, after it announced that its CEO, Colin Dyer, would step down. The S&P 500 slipped 0.5%, to settle at 2,175.4. The DJIA shed 0.4%, to settle at 18,481.5, while the NASDAQ slid 0.8%, to close at 5,217.7.
Europe Market Snapshot
Other European markets closed firmer yesterday, amid a rally in regional banks. Meanwhile, data showed that Germany’s second quarter GDP grew in-line with market expectations. UniCredit jumped 8.0%, extending its gains from the previous session. Peers, Banco Santander, Commerzbank and UBS Group advanced 2.4%, 2.6% and 2.9%, respectively. Svenska Cellulosa soared 7.4%, after it announced plans to split into two listed companies, hygiene goods and forest products business. Mediaset gained 1.7%, on the back of news that its Premium pay-TV dossier is being considered by two Chinese broadcasters. On the losing side, Eni and Boliden slid 0.8% and 1.3%, respectively. The FTSEurofirst 300 index gained 0.3%, to close at 1,356.0. Among other European markets, the German DAX Xetra 30 rose 0.3%, to close at 10,623.0, while the French CAC-40 advanced 0.3%, to settle at 4,435.5.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning, tracking overnight losses on Wall Street. In Japan, Recruit Holdings has declined 5.3%, after its major shareholders stated that they would sell 61.1 million shares of the company. Pacific Metals, Sumitomo Metal Mining and Toho Zinc have dropped 2.4%, 4.1% and 4.9%, respectively. On the flipside, auto exporters, Nissan Motor and Mazda Motor have advanced 1.5% and 1.8%, respectively, amid a weaker Japanese Yen. In Hong Kong, oil giants, CNOOC and PetroChina have slipped 1.1% each, after they reported disappointing results for the first half of the year. In South Korea, index major, POSCO has risen 1.1%, while Samsung Electronics has shed 0.7%. The Nikkei 225 index is trading 0.3% lower at 16,555.1. The Hang Seng index is trading marginally down at 22,815.9, while the Kospi index is trading marginally higher at 2,044.6.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading marginally higher at $49.05 per barrel. Yesterday, the contract declined 1.82% or $0.91, to settle at $49.05 per barrel, after the Energy Information Administration reported that US crude oil inventories rose more than expected by 2.5 million barrels for the week ended 19 August 2016.
Gold
At 0330GMT today, Gold futures contract is trading 0.37% or $4.90 higher at $1329.30 per ounce. Yesterday, the contract declined 1.21% or $16.20, to settle at $1324.40 per ounce, surrendering its gains from the prior session, with investors looking forward to the US Fed Chair, Janet Yellen’s speech for further clues on timing of interest rate hike.
Currency
At 0330GMT today, the EUR is trading 0.05% higher against the USD at $1.1270, ahead of Germany’s Ifo survey data for August, set to release in a few hours. Yesterday, the EUR weakened 0.36% versus the USD, to close at $1.1264. Meanwhile, the German second quarter GDP advanced in-line with market estimates.
At 0330GMT today, the GBP is trading 0.08% lower against the USD at $1.3221. Traders will closely monitor the US durable goods orders for July along with Markit services PMI figures for August, scheduled to release later today. Additionally, the weekly US initial jobless claims will be assessed by investors. Yesterday, the GBP strengthened 0.26% versus the USD, to close at $1.3232.
Fixed Income
In the US, long term treasury prices fell and pushed yields mostly higher. Yesterday, yield on 10-year notes rose 1 basis point to 1.56%, while yield on 2-year notes gained 2 basis points to 0.76%. Meanwhile, 30-year bond yield remained flat at 2.24%.

Key Economic News
UK BBA mortgage approvals fell in July

BBA mortgage approvals fell to a level of 37.66 K in July, in the UK, compared to a revised reading of 39.76 K in the previous month. Market anticipation was for BBA mortgage approvals to ease to 38.00 K.
German GDP advanced as expected in 2Q 2016
On a YoY basis, the working day adjusted final gross domestic product (GDP) climbed 1.80% in Germany, in 2Q 2016, at par with market expectations. The preliminary figures had also indicated a rise of 1.80%. In the previous quarter, GDP had recorded a revised rise of 1.90%.
German construction investment dropped less than expected in 2Q 2016
On a QoQ basis, construction investment in Germany dropped 1.60% in 2Q 2016, lower than market expectations for a drop of 2.80%. In the previous quarter, construction investment had registered a rise of 2.30%.
German domestic demand declined more than expected in 2Q 2016
Domestic demand registered a drop of 0.20% on a quarterly basis in 2Q 2016, in Germany, compared to a revised advance of 0.50% in the previous quarter. Market expectation was for domestic demand to drop 0.10%.
German capital investment declined more than expected in 2Q 2016
Capital investment in Germany eased 1.50% in 2Q 2016 on a quarterly basis, compared to a revised advance of 1.70% in the prior quarter. Markets were expecting capital investment to ease 1.30%.
German imports declined less than expected in 2Q 2016
On a quarterly basis, imports registered a drop of 0.10% in Germany, in 2Q 2016, lower than market expectations for a fall of 0.30%. Imports had climbed by a revised 1.30% in the previous quarter.
German GDP rose as expected in 2Q 2016
In 2Q 2016, the seasonally adjusted final GDP registered a rise of 0.40% in Germany on a QoQ basis, at par with market expectations. The preliminary figures had also recorded a rise of 0.40%. GDP had climbed 0.70% in the prior quarter.
German government spending advanced more than expected in 2Q 2016
Government spending registered a rise of 0.60% on a quarterly basis in 2Q 2016, in Germany, higher than market expectations for a rise of 0.50%. In the prior quarter, government spending had risen by a revised 1.30%.
German GDP advanced as expected in 2Q 2016
On a YoY basis, the non-seasonally adjusted final GDP rose 3.10% in 2Q 2016, in Germany, compared to a revised advance of 1.50% in the prior quarter. The preliminary figures had also recorded a rise of 3.10%. Markets were anticipating GDP to climb 3.10%.
German exports advanced more than expected in 2Q 2016
Exports rose 1.20% on a QoQ basis in 2Q 2016, in Germany, compared to a revised rise of 1.60% in the prior quarter. Market anticipation was for exports to advance 0.70%.
German private consumption advanced as expected in 2Q 2016
In 2Q 2016, private consumption rose 0.20% on a QoQ basis in Germany, meeting market expectations. Private consumption had recorded a revised rise of 0.30% in the previous quarter.
US house price purchase index climbed in 2Q 2016
In 2Q 2016, on a quarterly basis, the house price purchase index in the US advanced 1.20%. The house price purchase index had climbed by a revised 1.50% in the previous quarter.
US existing home sales declined in July
Existing home sales in the US eased 3.20%, on monthly basis, to a level of 5.39 million in July, lower than market expectations of 5.51 million. Existing home sales had recorded a reading of 5.57 million in the prior month.
US housing price index advanced less than expected in June
In the US, the housing price index recorded a rise of 0.20% on a MoM basis in June, lower than market expectations for an advance of 0.30%. In the prior month, the housing price index had registered a similar rise.
US mortgage applications eased in the last week
In the US, mortgage applications dropped 2.10% in the week ended 19 August 2016 on a weekly basis. Mortgage applications had fallen 4.00% in the previous week.
Japanese investors remained net buyers of foreign stocks in the previous week
Japanese investors were net buyers of ¥142.70 billion worth of foreign stocks in the week ended 19 August 2016, from being net buyers of ¥141.40 billion worth of foreign stocks in the prior week.
Foreign investors became net buyers of Japanese bonds in the previous week
Foreign investors remained net buyers of ¥298.10 billion worth of Japanese bonds in the week ended 19 August 2016, from being net buyers of ¥474.80 billion worth of Japanese bonds in the prior week.
Foreign investors turned net sellers of Japanese stocks in the previous week
Foreign investors turned net sellers of ¥229.60 billion worth of Japanese stocks in the week ended 19 August 2016, as compared to being net buyers of a revised ¥94.50 billion worth of Japanese stocks in the previous week.
Japanese coincident index advanced in June
The final coincident index rose to a level of 111.10 in Japan, in June, compared to a level of 109.90 in the prior month. The preliminary figures had indicated a rise to 110.50.
Japanese corporate service price index rose more than expected in July
In July, the corporate service price index rose 0.40% in Japan on an annual basis, more than market expectations for an advance of 0.10%. In the previous month, the corporate service price index had risen 0.20%.
Japanese investors became net buyers of foreign bonds in the previous week
Japanese investors were net buyers of ¥433.10 billion worth of foreign bonds in the week ended 19 August 2016, as compared to being net buyers of a revised ¥1297.60 billion worth of foreign bonds in the previous week.
Japanese leading economic index dropped in June
The final leading economic index in Japan eased to 99.20 in June. In the prior month, the leading economic index had recorded a reading of 99.70. The preliminary figures had indicated a drop to 98.40.

 

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