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Global Equities Roundup: Market Talk

2 Mar 2018 11:06 am

The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.

1104 GMT - Mining stocks are down following President Donald Trump's announcement of tariffs of 25% for steel imports and 10% for aluminum, but analysts at Liberum say these measures are unlikely to significantly impact iron-miner stocks. The brokerage says the U.S. isn't relevant to the iron-ore trade balance as most iron miners export to Asia. UBS says continued aggressive curtailment of steel production in China, designed to improve air quality, could see reduced demand for iron ore in the country. At 1104 GMT, shares in Anglo American are down 2.8% at 1,692.60 pence, Glencore shares are down 2.1% at 367.95 pence, and Rio Tinto shares are down 2% at 3,704.50 pence. (oliver.griffin@dowjones.com; @OliGGriffin)

1101 GMT - Standard Life Aberdeen looks set to receive a bigger payout from the sale of its insurance arm to Phoenix than expected, says Deutsche Bank. The group will receive an extra GBP800 million from the deal, beyond formal proceeds from the sale itself, says the bank. In total, Deutsche Bank calculates this will translate into a GBP1.6 billion total return, which should boost Standard Life's 2020 earnings per share by 10%. Deutsche bank upgrades the stock to buy from hold and increases its target price to GBP4.40 from GBP4.10. Standard Life trades 0.7% higher at GBP3.68. (nathan.allen@dowjones.com)

1055 GMT - Bryan Garnier remains cautious on Suez, keeping estimates unchanged, excluding earnings per share, which it slightly lowers following a higher-than-expected tax rate from 2018 onward. The company is moving in the right direction with its efforts to restore market confidence, the brokerage says, but this still needs to be confirmed in the next quarters. Despite a share-upside potential of about 15%, BG maintains a neutral recommendation as it waits for management to address Suez's problems. Shares trade down 1.6% at EUR11.07. (marc.bisbalarias@dowjones.com; @bamarc)

1054 GMT - Plastic- and fiber-components supplier Essentra is now ready for a "sustained recovery", says Peel Hunt, as it raises its rating on the stock to buy. Peel Hunt says that despite a 22% fall in adjusted 2017 profit to GBP75.2 million, there is "nothing in the numbers to cause significant alarm", with the struggling health-and-personal care unit poised to bounce back in 2018. Peel Hunt raises its rating on the stock to buy from add, but lowers its target price to 550 pence from 585 pence. Shares are up 5.4% at 466 pence. (adam.clark@dowjones.com)

1045 GMT - Tariffs and the accompanying rhetoric will continue to weigh down on sentiment, says Evercore ISI, following statements by U.S. President Donald Trump that the country will place tariffs on steel and aluminium imports. Shares in most European car makers trade down during the day, but Evercore says auto investors shouldn't be overly worried. "Plugging the tariffs into our model would suggest an incremental cost of $7 to $8 per vehicle for US domestics resulting in a further $20 to $25Mn headwind," says Evercore. (Max.Bernhard@dowjones.com; @mxbernhard)

1040 GMT - Panmure Gordon sees a merger between U.S. car-part supplier Dana and GKN's Driveline business as unlikely. The broker says it doubts GKN shareholders will accept being paid in shares by a U.S. car company, given the history of bankruptcy in the industry in that region. "It is even harder to imagine how U.K. politicians who are so worried about losing 'strategic' jobs in the West Midlands will approve a sale to a foreign auto-parts manufacturer which filed for Chapter 11 in 2006, two years before the financial crisis," Panmure says, adding that the company would have to find $4 billion if it wanted to pay in cash. (carlo.martuscelli@dowjones.com)

1020 GMT - Engineering company IMI's guidance on the oil-and-gas market in its 2017 financial report will disappoint investors, says Russ Mould, A.J. Bell's investment director. The company posted an increased adjusted pretax profit of GBP224 million that met market expectations, says the broker. However, IMI said that it expects the oil-and-gas market to remain a difficult trading environment. "The oil price has enjoyed a resurgence this year and many observers may have expected the likes of IMI and other engineers and service companies to enjoy an uptick in work. It now looks like IMI may not have a sudden rush of new orders," says Mr. Mould. Shares trade down 8.5% at 1,124 pence. (carlo.martuscelli@dowjones.com)

1015 GMT - Barclays says there was little in Petrofac's results that merited the stock's underperformance, suggesting that investors--discouraged by the company's previous actions--have pounced on any sign of weakness. Barclays accepts that Petrofac, which is under investigation by the Serious Fraud Office, is risky for many investors, but says that there is also significant upside potential. With Petrofac's performance beating expectations, Barclays upgrades its Ebitda forecasts for the 2018-19 period, but says forex movements could mitigate positive earnings. Barclays keeps its rating at overweight and price target at 600 pence. Shares are up 4% at 445.90 pence. (oliver.griffin@dowjones.com; @OliGGriffin)

1010 GMT - LafargeHolcim's fourth-quarter results are satisfying, despite a heavy impairment, says Bryan Garnier. The brokerage points to steady top-line growth and a 6.1% Ebitda gain on year, supported by good demand in Europe and Latin America as a sign of underlying strength. Bryan Garnier also thinks the cement maker's new growth-focused strategy will be well received by investors and considers its targets of 5% annual Ebitda growth and sales growth between 3% and 5% as realistic. However, the market is likely to focus on the CHF3.8 billion impairment, which is "certainly not negligible," given total assets amount to around CHF49 billion. LafargeHolcim trades 4.4% lower at CHF52.52. (nathan.allen@dowjones.com)

1006 GMT - President Trump's newly announced steel import tariffs will damage countries like Canada, Mexico, Brazil and South Korea much more than China, says He Ming, senior manager at the consultancy Wood Mackenzie. In 2017, the U.S. imported 35.6 million tonnes of steel, around 36% of its consumption, equivalent to about US$ 33.6 billion, Mr. Ming writes. China accounted for only about 2.9% of U.S. total imports. Instead of solving the problem connected to high costs in the U.S. steel-making business, Mr. Ming expects President Trump's efforts "to protect employees in the steel and aluminium sectors" to "be offset by more job losses in the metal-intensive industries such as car manufacturers." (zeke.turner@wsj.com, @zekefturner)

1001 GMT - U.S. President Trump's blanket 25% tariff on steel imports was "politically unfeasible and will be viewed as a direct tax on U.S. consumers," according to Seth Rosenfeld, a senior research analyst covering European and U.S. steel at the investment bank Jefferies in London. The bank, however, remains bullish on U.S. steelmakers, with prices heading sharply higher and imports sinking. But he added: "For an equity market already obsessed with inflation risks... get ready for a doozy!" As for European steelmakers, Mr. Rosenfeld expects the European Commission to "respond aggressively and quickly" with hawkish measures of its own to protect European mills. Mr. Trump's decision to on Thursday announce the broad sweep of his tariff plans without policy details left Mr. Rosenfeld wondering if we there would be exemptions for NATO and NAFTA members. He asked, are we really at "the beginning of an extended negotiating process?" (zeke.turner@wsj.com; @zekefturner)

0958 GMT - IMI reported flat sales growth on an organic constant-currency basis, as well as flat operating margins for the full year, but these figures don't tell the full story, Jefferies says. The engineering company made good strategic progress and IMI's full-year results were in line with expectations, almost across the board, Jefferies says. IMI's outlook remains healthy and its Precision unit is in very good shape, the brokerage says. Nevertheless, forecasts for the group's earnings per share are unlikely to change much, Jefferies notes. (Max.Bernhard@dowjones.com; @mxbernhard). (Max.Bernhard@dowjones.com; @mxbernhard)

(END) Dow Jones Newswires

March 02, 2018 06:06 ET (11:06 GMT)

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