Oil prices won't top $100 in the next decade, OPEC predicts

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Crude will stay below the $100-a-barrel (bbl) level for at least the next 10 years, according to the Organization of Petroleum Exporting Countries (OPEC). Read More

Market buzz: Pound falls to five-week low, Deutsche Bank upgrades UK
Monday 23 Apr 2018

(WebFG News) - 1515: Credit Suisse has a cautionary note for iron ore pellet producer Ferrexpo after meeting with Vale's CFO and understanding that Brazil's Samarco will return to the market next year, albeit in a phased manner. This could mean growth in the niche pellet market of over 10% next year, which is likely to put pressure on the pellet premium and ultimately FTSE 250-listed Ferrexpo, which is currently trading at a 19% discount to its large cap peers. "However we recommend caution over how attractive this looks because once we look forward to 2019 earnings with a lower pellet premium assumption then this discount no longer exists, on our estimates. We remain our 'neutral' rating but lower our target price from £3.34 to £2.30 giving greater weighting to our 2019 estimates with a lower premium assumption." 1447: Tech regained its lead as the private equity sector of choice in the first quarter of 2018 after losing out financial sector in previous quarters according to S&P Global Market Intelligence, with European PE "highly concentrated" in Berlin and London. The Private Equity Market Snapshot report finds private equity fundraising in Central and Eastern Europe saw a significant growth in 2017, with buyout funds of local general partners focused on the regional investments raised €1.37bn in capital commitments, which is almost four times times larger than total capital raised in 2015 and 2016 combined (€340mn). UK real estate took the lion's share of capital from global general partners, with the largest deal of the quarter also in the sector with Blackstone Real Estate Advisors acquiring Taliesin Property Fund Ltd. 1436: Apparently the Royal Baby was born earlier - "the largest future king in over 100 years" says the Mirror. 1435: Some strategy notes. From JPMorgan Cazenove: "We expect stocks to keep rebounding, bond yields to move back higher and cyclicals to lead over defensives, helped by the likely stabilization in activity momentum." Citi says it's still overweight global financials but lower conviction: "Despite late cycle concerns and headwinds (earnings risks, inflation worries, wider credit spreads and rising volatility), plus weaker tailwinds from global growth and rates normalisation, we still see overriding positives from: unstretched valuations; solid EPS CAGRs; capital strength & capital return; peak regulation; and sector M&A." 1430: Broker N+1 Singer has a note out on River & Mercantile as the firm gives a Q3 trading update. Fee earnings AUM up 1% to £33bn with net inflows of £0.8bn offset by negative investment performance as equity markets fell, though R&M as a provider of advisory and asset management business with a broad range of services, from consulting and advisory to fully-delegated fiduciary and fund management, remained relatively insulated. Outflows surrounded the departure of fund manager Phil Rodrigs, who was fired over "conduct issues" detected by more stringent systems and controls introduced after a Financial Conduct Authority probe at the end of last year. Singer has reduced its EPS forecast by 5% given the lower AuM, a negative mix effect and some additional costs but reiterated its 'buy' rating with the stock trading for 16.2 times full year earnings with 5.4% yield, with the p/e falling to 15 for 2019. "With markets cautious at this point in the economic cycle they are seeing good interest in their structured equity and value orientated equity products." 1427: Jefferies has cut its target price on Unilver to €51.50 from €54 after the Q1 update prompted a further modest sell-off on currency downgrades and 'pricing power' worries, despite the best sustained volumes since 2012. The stock remains a 'buy' for the broker, which added: "A thorough review finds us concurring with ULVR's narrative on pricing, which we view as sensible and coherent. Our volume and margin view remains unchanged. Long EM + Short US + accelerating topline + sector average valuation still stacks up for us, with ULVR our key pick in Euro Foods & HPC." 1407: Analysts at Deutsche Bank bumping up their country allocation for UK stocks from 'benchmark' to 'overweight' as part of their defensive bias on a six-month view. British shares thus join Swiss at 'overweight', whereas the broker keeps Italy, Germany and France at 'underweight'. Spain on the other hand gets demoted from 'overweight' to 'benchmark'. "We expect the Euro area composite PMI new orders to fade to 54 by end-Q3 (down from 58 at the start of the year). Our PMI projections also lead us to downgrade Spain." 1406: US 10-year government bond yields up by one basis point at 2.97%, having hit an intraday higher earlier at 2.9957%. Yield on similarly-dated Gilts on the other hand up by four basis points at 1.52%. German bund yield also up by four basis points to 0.63%. 1313: Sky, BT and other sports broadcaster should breath easier about keeping hold of tournament rights in the short term, says rating agency S&P, but further out they are at risk from the big internet firms. 1219: The pound has fallen 0.3% to a five-month low, just below $1.4 amid a government row over Brexit. Brexit supporters in the cabinet are "pressing" Theresa May to drop her favoured option for a customs deal with the EU at a meeting this week, The Times is reporting. A Brexiter gang of David Davis, Liam Fox and Boris Johnson wants the PM to abandon this plan as they believe "the so-called customs partnership is unworkable and is encouraging Brussels to press for Britain to stay in a customs union after Brexit". They want the PM to go with the "maximum facilitation" option that aims to minimise but not eliminate checks and controls at the border, even though this is felt likely to result in a hard border with Ireland. Downing Street is currently saying that May is standing firm. But she doesn't have the best record over U-turns however. 1145: Some broker views on Clarkson and Marks & Spencer from Liberum and Credit Suisse. Shipbroker Clarkson's shares are 19% underwater after today's warning that both full-year profits are likely to be "materially below" the previous year following a number of headwinds in the first quarter. Analysts at Liberum are downgrading their stance to 'hold' from 'buy' and are cutting the price target to 3,200p from 3,600p. With the shares down 10% year-to-date and limited downside to its unchanged price target of 285p, Marks & Spencer has been upped to 'neutral' from 'underperform' by Credit Suisse. Analysts are assuming pre-tax profit will drop a further 4.5% this year, driven by another year of weak like-for-like sales and assuming price investment continues in food, but the last three months have seen signs of UK consumer environment starting to turn with real-wages beginning to recover. This fits in with what we sore last week with several analysts suggesting consumer-focused stocks to watch as the pressure on the household purse strings begins to alleviate this year. 1135: Goldman Sachs sees Capita's lack of new negative news "as a mild positive" and the five-year strategy's focus on maximising risk/returns "should be taken well", likewise the clear targets on EBIT margins and FCF for 2020. "One concern could be on government services, which has driven a few negative surprises in the past and where there are still a couple of contracts under pressure. Failure to turn these around could pose a risk medium term, in our view. On new contracts we believe a consistent focus on risk/returns should help the company avoid future issues in this space." 1131: Euro area April flash PMIs came out at 55.2, unchanged from the March reading. Both manufacturing output and services confidence were flat over the month, stopping the declining trend that started in January 2018. However, Barclays, which forecasts 0.6% quarterly GDP growth, says the forward-looking components of the PMI continued to edge down with new orders at a 15-month low, dampened by the past euro appreciation, and future output at the lowest since November 2017. "We interpret this as a signal that a significant rebound in PMI surveys in the coming months is unlikely, which is not overly worrying given PMIs are still well above their historical average (55.2 vs. 53.1)." 0908: Not too long ago Monday's London open market report showed stocks flattish in early trade as investors looked for fresh catalysts following an easing of geopolitical tensions. At 0830 BST, the FTSE 100 was steady at 7,367.00, while the pound was up 0.2% versus the euro at 1.1415 and 0.1% firmer against the dollar at 1.4008

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