Financial market research and analysis

Another down day in Europe, taking its cues from Asia as oil prices continue to supress any real risk appetite.

Banca Monte dei Paschi announced a 200 million euro ($218 million) loss for the fourth quarter Thursday. That was better than the 250 million-euro loss most analysts had expected but has seen trading suspended on its stock today owing to limit down rules. The FTSEMIB is now trading at levels last seen in December 2014.

Energy and financials are the underperformers today overall. Oil continues to drag on the FTSE especially in light of BP’s set of results yesterday which tends to set the scene for Shell tomorrow morning when it reports its numbers.

Banks are lower by an average of around 2-3% as the oil related credit risk looks set to continue in 2016 according to a note from UBS.

Eurozone PMI services data was a mixed bag, most missing estimates with the exception of Ireland which continues to buck the trend. It’s output rose to 64.0 in January from 61.8 in December which marks the biggest rise since June 2006.
UK Services was also better than expected coming in at 55.6 versus the 55.4 consensus – this has sent the pound on a mission to retake the $1.45 level but with the Quarterly Inflation Report tomorrow and much murmuring that Carney might actually consider a rate cut rather than a hike should put a halt to sterling’s gallop.

GlaxoSmithKline (Flat) reports Q4 results at noon. FX impact on sales expected to be -3%. Revenue of £6.33bn expected, core EPS 18.1p, core operating profit £1.47b.

Barclays (2.9%) the bank is set to restructure its Middle East corporate banking unit with a loss of around 150 staff in Dubai

Hargreaves Lansdowne (-4.33%) one of the best performers on the FTSE 100 last year, as its shares rose more than 52% versus the 7% loss for the index. Today it takes the bottom spot in early trade. Profit before tax rose 6 per cent year-on-year to £108.1m and total assets under administration were up 20% to £58.8bn. Net revenue grew 10% to £158.8m. Outlook for the second half looks fairly upbeat with majority of brokers having a hold rating on the stock.

Syngenta (+6%) Chinese chemicals group ChemChina has offered more than $43bn (£30bn) to take over Swiss agribusiness giant Syngenta. (480 Swiss francs in cash for each share in Syngenta). The deal is expected to close by the end of the year and a special dividend of 5 Swiss francs a share will be paid if the deal closes.
ChemChina plans to keep Syngenta’s management and will also evaluate a possible initial public offering for the business later down the line.

Foxtons (+3.19%) sales volumes were up 4% and turnover rose 4%to £150m. further special dividend of 6.23p per share will also be paid out.

BP (-1.95%) another sell off today as investors digest yesterday’s terrible results. The decline in oil prices and the fact that its net debt rose by almost $5bn in 2015 is keeping investors cautious despite the fact that the CEO is committed to sustaining dividends even if he has to borrow more to do so.

Prudential (+1.85%) shares fell 8% yesterday on reports that China will limit offshore insurance sales. A note from Barclays today argued that Hong Kong sales won’t be significantly hurt as 50% of its sales are to mainland residents and 96% of those are well below the $5000 limit.

Severn Trent (+0.36%) trading inline, no change to FY guidance.

ADP Non-Farm Employment Change is the major US macro datapoint today. Expectations are that 193,000 jobs were added last month, a fairly hefty decrease on December’s figure of 257,000.

We call the Dow higher by 40 points to 16194.