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FTSE falters as Smith & Nephew declines, but G4S jumps

Discussion in 'Market News' started by Lily, Aug 10, 2016.

  1. Lily

    Lily Forum Member

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    Investors take some profits after recent rises and Bank of England bond worries

    Leading shares are edging lower as investors decide to cash in some of their recent profits, despite the lack of much of a return elsewhere. UK gilts, for example, continue to fall in the wake of the Bank of England’s bond buying setback on Tuesday.

    Among the fallers is medical group Smith & Nephew, down 13p at £12.65 as analysts at Barclays reduced their recommendation from overweight to equalweight. Barclays, which raised its target price marginally from £12.30 to £12.40, said:

    We are constructive on S&N because we believe its transition to higher growth platforms is underappreciated by the market and that there is still upside optionality from bolt-on M&A, cost efficiency opportunities and potential industry consolidation. However, with results continuing to disappoint and an upcoming management team transition we see a lower probability of upside optionality crystallising within the next year.

    European equity markets are slightly subdued in early trading as investors bank some profits after markets hit recent highs and the German index entered a bull market yesterday, rising 22% since February. However, with volatility almost non-existent, the bond market at historic lows and investors maintaining their dovish view of the Fed, investors have struggled to find alternatives to equities and they remain the asset class of choice.

    We upgrade from underweight to equal weight due to increased confidence on cash. Shares likely to remain volatile.

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