Shares in information services company Experian rallied for the second day in a row, after Citigroup lifted its price target on the stock by 9% to 1,340p to reflect higher earnings and the sector’s re-rating. It said the results brought important validation of its view that Experian can still grow solidly in Brazil despite contracting consumer and business credit issuance and that its management is genuinely committed to shareholder distribution. The bank rates Experian at ‘buy’. Morgan Stanley lent a helping hand, hiking its target on the shares to 1,400p from 1,350p.
SABMiller was on the front foot after it confirmed that Belgium-based rival Anheuser Busch-InBev has made a formal offer to buy the London-listed brewer for £44 a share in cash. The deal, which is expected to complete in the second half of next year and follows months of negotiations and extended deadlines from the Takeover Panel, represents a premium of around 50% to SABMiller’s closing price prior to renewed speculation of an approach.
Supermarket retailer Sainsbury was the standout loser after the company said like-for-like sales shrank 1.6% in the first half, pushing pre-tax profits down 17.9% lower to £308m. Underlying total sales in the period contracted 2% to £13.6bn, with food sales down nearly 1% but clothing was up 10%, while reported total sales were in line with forecasts at £12.4bn, down 2% as market share declined by 17 basis points to 16.5% in the face of competition from discounters. Peers Morrison and Tesco followed suit.
House builder Barratt Developments was also under the cosh despite posting a 21% increase in total forward sales, including joint ventures, to £2.5bn in the 19 weeks to 8 November. David Morrison, market analyst at SpreadCo, said: “There’s been a general sell-off in the sector since the end of October when a number of major house builders hit multi-year highs. This looks like profit-taking and it will be interesting to see if Barratt can hold above support which comes in around 560p.”
Peer Persimmon was also under pressure.
Energy supplier SSE was in the red after its first half results. Although pre-tax profit rose 48.2% to £548.8m, investors noted the company’s cautious outlook. “The generally negative trend in commodity prices and the generally challenging outlook for market conditions could continue to impact in the second half of the financial year,” SSE said.
A thinly traded Veterans Day session ended with US stock markets bowing down at the closing bell as a retreating crude price weighed on the oil majors.
Despite the major indices opening higher and enjoying a mid-session charge on the back of encouragement from Asia and Europe, by the closing bell the Dow Jones packed up its troubles 0.32% lower at 17,702.22, while the S&P 500 slid 0.32% to 2,075 and the Nasdaq 100 fell 0.1% to 4,636.94.
West Texas Intermediate slumped 2.7% to $43 a barrel, while Brent crude fell 3.25% to $45.9/bbl, sending the likes of Chevron and Exxon lower. The dollar gave up some ground in most of its major pairs.
Earlier, most Asian equity markets advanced on Wednesday, as investors took the positives from a batch of mixed data from China.
Official figures showed industrial production in the world’s second largest economy grew 5.6% year-on-year in October, compared with a 5.7% gain in the previous month and with analysts’ expectations for a 5.8% reading.
Following this, Wall Street initially appeared to have moved on from last week’s wobbles before taking a breather as the session wore on.
“Markets have finally priced in Friday’s nonfarm payrolls surprise and the potential for a more hawkish Fed,” said Colin Cieszynski, chief market strategist at CMC Markets.
In company news, drink giants Anheuser-Busch InBev and SABMiller gained 1% and 2.05%, after the latter accepted a $106bn takeover offer, as it agreed to sell its 58% stake in the MillerCoors LLC joint venture to its partner Molson Coors Brewing, whose shares gained 0.26%.
Supermarket chain Kroger gained after confirming it has agreed to takeover grocery chain Roundy in a deal worth $800m.
Elsewhere in retail giant Macy’s tumbled 11.7% after lowering its full year outlook as sales fell short of estimates.
Sector behemoth Wal-Mart also declined as its workers planned a 15-day fasting campaign to lobby for $15 an hour minimum-pay deal.
General Electric was buzzing higher after it and Alstom won two contracts worth $5.6bn to supply new locomotives to Indian Railways.
Alibaba declined 1.79% even though the Chinese e-commerce giant posted record sales for China Singles’ Day.
An initial crunch on Apple stock was a weight on the indices, falling more than 1.2% in the first hour, before tracking back higher during the session.
Oil slipped lower on Wednesday after preliminary US stockpile data pointed to an inventory uptick, while copper futures headed sideways in a session marked by lower trading volumes as North American markets took a break for the Veterans Day holiday.
Brent front-month futures contract was down 2.70% or $1.28 to $46.16 per barrel. Meanwhile, WTI was 2.6% or $1.18 lower at $43.03 per barrel, with the American Petroleum Institute noting overnight that US crude stocks jumped by 6.3m barrels in the week to 6 November to 486.1m barrels, compared with analysts’ expectations for an increase of 1m barrels.
The Energy Information Administration (EIA) will release official stockpile data on Thursday, a day later on account of Veterans Day. Analysts at Deutsche Bank expect market oversupply to last well into 2016. The bank is currently predicting an oversupply of around 1m barrels per day in the first half of next year.
Sucden Financial mirrored the sentiment. “Crude oil prices came under renewed pressure this morning, as bearish fundamentals, a strong US dollar and persistent concerns over global supply glut weigh on the market,” said senior research analyst Myrto Sokou.
After two sessions in decline, copper saw a mid-week uptick. In late afternoon trading on the London Metal Exchange, the three-month copper delivery futures contract was up 0.5% to $4,938.0 per metric tonne.
Additionally, primary aluminium (up 0.8%), nickel (up 0.3%), zinc (down 0.8%) and tin (up 0.6%) futures also traded higher, but lead (down 1.0%) stayed in negative territory.
Precious metals continued on a negative patch with spot gold down 0.23% or $2.50 at $1,087.17 extending overnight declines. Spot silver fell 0.46% or seven cents to $14.29 an ounce, while spot platinum was 1.85% or $16.67 lower at $883.73 an ounce.
Jasper Lawler, market analyst at CMC Markets, said, “Gold and silver continue to languish at multi-month lows with nothing for the moment changing the belief in the market that the US Federal Reserve is ready to raise rates in December.”