Equity markets forecast to ‘push on to next level’

THE foundations are in place for equity markets to “push on to the next level” next year according to the New Year predictions of Hargreaves Lansdown’s head of equities Richard Hunter. He said the generally benign economic environment should enable “quality companies to continue their impressive progress” during 2015.

Whitbread is behind Costa brand. Picture: Vismedia

He also highlighted the role being played by technology companies in helping markets push towards record highs.

“The increasingly amazing and pervasive development of technology, from the ‘internet of things’ to 3D printers, let alone the downward pressure on the general costs of manufacturing, has meant that many of the previously accepted business models and costs are under question,” Hunter pointed out.

In terms of stocks to watch, WHITBREAD is highlighted given the underlying strength of the business behind the Premier Inn and Costa coffee brands. Although its shares have risen 29 per cent over the last year, as compared to a 2 per cent hike for the wider FTSE-100, Hunter said the market “remains committed to the story and the general consensus of the stock is a buy”.

“The company is one which is not immune to any downturn, but one which has shown its strength in responding to one. In the five years leading up to May 2013, in other words pre, during and post the financial crisis,” he added.

Shares in Glasgow engineering group WEIR have now lost a third of their value in just three months. After hitting a year high of 2,761p in September the shares have continued to fall over concerns about its key markets.

Last week the stock came under pressure again after Investec cut its target for the share price from 1,900p to 1,585p.

Investec said it was taking a pre-emptive move to lower its forecasts for earnings per share for 2015 and 2016 by 16 per cent and 21 per cent respectively and predicted consensus downgrades ahead of Weir’s annual results in March.

The broker said it suspected that by then, current trends in the group’s key end markets will be “impacting the trading performance and outlook”.

Monday: Jelf (F)

Tuesday: Iomart (I)

Wednesday: MicroFocus (I)

Thursday: Sports Direct (I)

Friday: Bellway (trading)

SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING

• Get the latest business headlines from a variety of news sources emailed to your inbox each morning