Footsie pulls back as Resolution tanks
Market Movers
techMARK 2,077.12 -0.35%
FTSE 100 5,696.35 -0.31%
FTSE 250 11,206.70 -0.32% Resolution drops after cancelling capital return
Footsie edges back from two-month high
Eurogroup to discuss Spanish assistance
The FTSE 100 opened firmly in the red on Friday morning, tracking US and Asian markets lower overnight; Resolution and Vodafone were among the worst performers in London early on.
Yesterday, the Footsie finished at 5,714, a closing level not surpassed since May 3rd, when it finished at 5,767.
Eyes will be on the Eurogroup today as they meet to discuss the memorandum of understanding (MoU) for financial assistance to Spain's banks.
"We expect that the Eurogroup will approve the MoU (which was approved yesterday by the German parliament) without any substantial changes to the version that has circulated last week. In our view the banking sector measures are well targeted to complete the cleanup of the banking system and, if the programme is also well implemented, is likely to be credible for the markets," said analysts at Barclays Capital.
Worrying investors yesterday were escalating borrowing costs for Spanish debt on the secondary sovereign debt market. Today, the yield on a 10-year Spanish bond was three basis points lower at 7.008%. FTSE 100: Resolution and Vodafone provide a drag Shares in UK life insurance and asset management group Resolution dropped sharply after the group cancelled the cash return of £250m set for the first half of 2012 due to "uncertainty" in the markets.
The group said that the decision was based on its estimated capital position as at the end of June after working out the expected future capital requirements of Friends Life Group "against a backdrop of heightened investment, economic and regulatory uncertainty."
Telecoms group Vodafone declined early on after reported revenues fell by 7.7% (up 1% on an organic basis) in the first quarter with unfavourable foreign exchange movements in Europe providing a drag.
Anglo American, one of the largest mining companies in the world, was a high riser after it saw volume growth across most of its portfolio in the second quarter, with the exception of platinum and diamond production. FTSE 250: C&W Comms takes a hit early on Telecoms firm Cable & Wireless Comms dropped despite saying that the overall trading performance in the first quarter was in line with its initial outlook. The group said that voice revenues continue to decline across the group as market conditions in the Caribbean and Panama remain tough.
London Stock Exchange (LSE) was on the up on the back of rumours that is in merger talks with Singapore Exchange. The Telegraph reported that the CEOs of both firms had informal discussions recently, while the Financial Times said that they were not thinking about a "full-blown merger".
Banking, securities and asset management firm Close Brothers fell after admitting that difficult trading conditions in the Winterflood division continued to affect its overall performance during the five months ended June 30th.
HomeServe, the international home emergency business, advanced after saying it continues to grow its international businesses and is making progress in the UK in simplifying and refocusing the business.
FTSE 100 - Risers
Weir Group (WEIR) 1,556.00p +2.03%
Anglo American (AAL) 2,060.50p +1.25%
Rolls-Royce Holdings (RR.) 877.50p +1.15%
IMI (IMI) 816.50p +1.11%
ARM Holdings (ARM) 497.00p +1.10%
Meggitt (MGGT) 406.10p +1.04%
Johnson Matthey (JMAT) 2,224.00p +0.91%
Amec (AMEC) 1,097.00p +0.64%
Admiral Group (ADM) 1,176.00p +0.60%
Ashmore Group (ASHM) 331.50p +0.48%
FTSE 100 - Fallers
Resolution Ltd. (RSL) 212.60p -6.71%
Vodafone Group (VOD) 177.85p -2.84%
Evraz (EVR) 247.10p -1.32%
Kingfisher (KGF) 268.20p -1.25%
Aberdeen Asset Management (ADN) 255.70p -1.24%
Hammerson (HMSO) 462.50p -1.03%
Associated British Foods (ABF) 1,275.00p -1.01%
National Grid (NG.) 660.00p -0.90%
Standard Chartered (STAN) 1,506.00p -0.86%
Aggreko (AGK) 1,992.00p -0.85%
FTSE 250 - Risers
Ruspetro (RPO) 146.00p +5.19%
Homeserve (HSV) 196.70p +4.41%
JD Sports Fashion (JD.) 725.00p +4.32%
Ted Baker (TED) 907.50p +2.60%
Yule Catto & Co (YULC) 149.40p +2.33%
Bodycote (BOY) 337.90p +1.87%
London Stock Exchange Group (LSE) 1,042.00p +1.86%
Fenner (FENR) 364.00p +1.79%
Regus (RGU) 90.25p +1.63%
Invensys (ISYS) 246.00p +1.57%
FTSE 250 - Fallers
Drax Group (DRX) 524.50p -3.76%
Brewin Dolphin Holdings (BRW) 151.10p -3.39%
Cable & Wireless Communications (CWC) 32.24p -3.12%
SEGRO (SGRO) 230.70p -2.78%
Kenmare Resources (KMR) 34.00p -2.41%
Menzies(John) (MNZS) 615.50p -2.30%
BH Global Ltd. USD Shares (BHGU) 11.23 -2.26%
Moneysupermarket.com Group (MONY) 130.90p -1.95%
TR Property Inv Trust Sigma Shares (TRYS) 64.05p -1.91%
Redrow (RDW) 129.10p -1.90%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Eurozone ministers to approve Spain bank rescue Eurozone conference call for Spain bank funds at 10:00GMT
Periphery debt stable
Heineken launches bid for Asia Pacific Breweries
Stoxx 600 on track for longest winning streak since 2006
FTSE-100: -0.31%
Dax-30: -0.11%
Cac-40: -0.23%
FTSE-Mibtel: -0.54%
Ibex 35: 0.10%
Stoxx 600: -0.24%
The main European equity benchmarks have begun the session with slight falls ahead of this morning´s conference call of Eurozone finance ministers. Policy-makers are expected to agree on a €100bn bail-out of Spain´s banks and, possibly, to announce some of the details of the same.
Acting as a backdrop, Chinese authorities yesterday indicated that they will not soften property price controls.
No less important, there has been a fair amount of market commentary this morning regarding how long Spain can hold out with currently elevated public financing costs. That following protests yesterday evening in 80 Spanish cities, including Madrid.
Worth pointing out, the Stoxx 600 is on track to close higher for a seventh consecutive week, its longest winning streak since January 2006 according to Bloomberg data.
Heineken goes after a Tiger
Dutch brewer Heineken has launched a $5.1bn take-over attempt for Asia
Pacific Breweries (APB), the distributor of well-known Tiger beer.
Various banks included in an investigation over the alleged rigging of interbank interest rates are studying the possibility of a group settlement, Reuters reports.
From a sector stand-point the worst performance is now to be seen in the following industrial groups within the DJ Stoxx 600: telecommunications (-0.9%), utilities (-0.89%) and real estate companies (-0.82%). Light data calendar German producer prices fell by 0.4% month-on-month in June (Consensus: -0.2%). Light profit taking in crude futures The euro/dollar is now rising by 0.07% to the 1.2264 dollar mark.
Front month Brent crude futures are down by 0.391 dollars to the 107.38 dollar mark. UK Event Calendar
INTERIMS
Beazley
INTERIM DIVIDEND PAYMENT DATE
RWS Holdings
QUARTERLY PAYMENT DATE
Personal Assets Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Producer Price Index (GER) (07:00)
GMS
Red Leopard Holdings
IMSS
Cable & Wireless Communications, Vodafone Group
SPECIAL DIVIDEND PAYMENT DATE
NetDimensions Holding Ltd. (DI)
AGMS
Cable & Wireless Communications, DCC, Edinburgh Inv Trust, EPE Special Opportunities, Homeserve, Mulberry Group, Origo Partners , Printing.com, Walker Crips Group
TRADING ANNOUNCEMENTS
Close Brothers Group
UK ECONOMIC ANNOUNCEMENTS
Public Sector Finances (09:30)
FINAL DIVIDEND PAYMENT DATE
3i Group, Aurora Investment Trust, Big Yellow Group, Booker Group, Electrocomponents, ICAP, Maven Income & Growth VCT, Melrose Resources, NetDimensions Holding Ltd. (DI), Northern 2 VCT, Telford Homes, Tex Holdings, Value and Income Trust, Vislink |
| US Market Report | Another Tech Rally Leads To Continued Strength On Wall Street
With technology stocks adding to the substantial gains posted in the previous session, notable strength was visible on Wall Street on Thursday. Disappointing economic data limited the upside for the markets, but stocks still extended their recent upward move.
The major averages all ended the day in positive territory, although the Nasdaq outperformed its counterparts. While the Nasdaq advanced 23.30 points or 0.8 percent to 2,965.90, the Dow rose 34.66 points or 0.3 percent to 12,943.36 and the S&P 500 climbed 3.73 points or 0.3 percent to 1,376.51.
Tech stocks helped to lead the markets higher once again, as traders reacted positively to the latest batch of earnings news out of the sector.
IBM Corp. (IBM) saw notable strength on the day, with the tech giant advancing by 3.8 percent after reporting better than expected second quarter earnings growth. While the company's revenues fell short of estimates, IBM also raised its full-year earnings guidance.
Online auctioneer eBay (EBAY) also posted a strong gain after reporting better than expected second quarter results. Shares of eBay surged up by 8.6 percent.
Nokia (NOK) and Qualcomm (QCOM) also saw significant strength on the day following the release of their quarterly results.
Nonetheless, buying interest remained somewhat subdued following the release of some disappointing economic data, including a report from the Labor Department showing a bigger than expected increase in weekly jobless claims.
The Labor Department said jobless claims jumped to 386,000 in the week ended July 14th from the previous week's revised figure of 352,000. Economists had expected jobless claims to climb to 365,000 from the 350,000 originally reported for the previous week.
A separate report from the National Association of Realtors showed an unexpected drop in existing home sales in the month of June.
NAR said existing home sales fell 5.4 percent to an annual rate of 4.37 million in June from an upwardly revised 4.62 million in May. The drop surprised economists, who had expected existing home sales to climb to 4.65 million from the 4.55 million originally reported for the previous month.
The Philadelphia Federal Reserve also released a report showing continued weakness in regional manufacturing activity, while a Conference Board report showed a bigger than expected drop by its leading economic indicators index.
Additionally, shares of Morgan Stanley (MS) came under pressure after the financial giant reported weaker than expected second quarter earnings amid a notable drop in revenues. Morgan Stanley fell by 5.3 percent on the day.
Sector News
Within the tech sector, electronic storage stocks posted particularly strong gains, driving the NYSE Arca Disk Drive Index up by 4.3 percent. The gain lifted the index further off the nine-month closing low that it set on Monday.
Quantum (QTM) helped to lead the storage sector higher, with the data management company surging up by 9.8 percent after ending the previous session at its worst closing level in over two years.
Semiconductor and networking stocks also posted notable gains, adding to the standout gains posted in the previous session. The Philadelphia Semiconductor Index and the NYSE Arca Networking Index advanced by 2 percent and 1.8 percent, respectively.
Outside of the tech sector, considerable strength was also visible among railroad stock, as reflected by the 2.4 percent gain posted by the Dow Jones Railroads Index. Union Pacific (UNP) rose by 3.5 percent after reporting better than expected second quarter earnings.
While gold stocks also saw significant strength amid an increase by the price of the precious metal, airline stocks moved sharply lower over the course of the trading day. The NYSE Arca Airline Index fell by 2 percent to a one-month closing low.
Healthcare provider, brokerage, and commercial real estate stocks also moved to the downside on the day, helping to limit the upside for the broader markets.
| Friday newspaper round-up: Food crisis, LSE, Microsoft | The world is facing a new food crisis as the worst US drought in more than 50 years pushes agricultural commodity prices to record highs. Corn and soyabean prices surged to record highs on Thursday, surpassing the peaks of the 2007-08 crisis that sparked food riots in more than 30 countries. Wheat prices are not yet at record levels but have rallied more than 50 per cent in five weeks, exceeding prices reached in the wake of Russia’s 2010 export ban, says The Financial Times. The London Stock Exchange Group is in talks with the owner of the Singapore exchange about a potential 7.2bn pound merger. The British bourse, which pulled out of a 4.2bn pound merger with the owner of the Toronto stock exchange last year, is understood to have held a series of informal conversations with Singapore Exchange, its Asian rival, about a formal tie-up. Although still in their preliminary stages, the talks are believed to have focused on the benefits of merging the two exchanges amid continued consolidation attempts in the sector. If the London-Singapore deal were to come to fruition, it is expected the combined exchange group would rank third in the world in terms of trades, behind NYSE Euronext and Nasdaq OMX, The Telegraph reports. Philippe Moryoussef, the former Barclays trader identified as being at the heart of the interest rate fixing scandal, had bets in the order of €30bn resting on the rate of Euribor (the European equivalent of the UK's Libor) and appears to have been a domineering character over dealers at other banks. The multi-millionaire was revealed yesterday as being the character named "Trader E" in the explosive Financial Services Authority report into the Libor fixing scandal, where he is repeatedly mentioned among those who fixed the price of Libor up or down in order to boost the profits on their trades. In one example from 2007, the report describes how Moryous-sef appeared to hatch a plan to fix the Euribor "cash" rate so a trade linked to its level on a set date would make a bigger profit, writes The Independent. A peer who was suspended from the House of Lords over corruption allegations has resigned as chairman of Gulf Keystone, which explores for oil and gas in the Kurdish region of Iraq. Lord Truscott unexpectedly stepped down after a shareholder campaign. A resolution to re-elect him to the board was withdrawn at the last minute at the company’s annual meeting in Paris yesterday. In May 2009 Lord Truscott became the first peer since the 17th century to be suspended from the House of Lords, in response to a corruption investigation by The Sunday Times. He was accused of seeking payment of £72,000 to help two people posing as lobbyists to amend a government Bill, and video footage of the staged meeting was published. The Lords Privileges Committee concluded that he had broken rules on using his influence in Parliament in return for money, according to The Times. Yields on Spanish five-year bonds jumped to a fresh crisis peak of 6.46% at a closely-watched auction as hopes fade for fresh stimulus from the European Central Bank and direct recapitalisation of Spanish banks by the EU bailout fund, the European Stability Mechanism (ESM). “Demand for Spanish paper is collapsing, even for shorter-dated debt which is very worrying and raises the spectre of Spain losing market access,” said Nicholas Spiro from Spiro Sovereign Strategy. Marchel Alexandrovich from Jefferies Fixed Income said the markets are already bracing for second bigger rescue of around €400bn. “A few more weeks like this and Madrid is going to decide to it has nothing more to lose and call for a full sovereign bail-out,” he said. “Then we will find out if there really is any money in the EU kitty, The Telegraph writes. Microsoft suffered one of the biggest blows to its reputation last night as the software giant reported its first loss as a public company . The company founded by Bill Gates said that it had lost $492m (£313m) in the three months to the end of June after writing off $6.2bn from acquisitions made in an attempt to keep up with Google in the search engine market. While Microsoft was eating humble pie, Google was emphasising just how badly its rival had faltered as it reported an 11% rise in second-quarter profits to $2.7bn. Revenues rose by 35% to $12.2bn compared with the same quarter last year, including a $1.2bn contribution from its acquisition of Motorola Mobility. Microsoft’s results were affected by weak sales of personal computers after consumers and companies put off purchases because of the economic uncertainty. This dented revenues for the company’s core software range and the Windows division reported sales down 13% to $4.1bn, The Times explains. More UK homeowners expect property prices to rise rather than fall in the coming year, two separate studies have found, despite house sales stuttering and the dour economic outlook. According to the latest quarterly Halifax Housing Market Confidence tracker, 34% of householders thought the average UK house price would rise over the next year, with 19% predicting a drop. In a separate property market sentiment report by property website Zoopla, 63% expected values to rise in the next six months, with 18% predicting falls in the same period, The Daily Mail reports. |
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