| ADVFN III | Morning Euro Markets Bulletin | |
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| London open: Market extends losses on euro worries Market Movers
- Footsie continues to fall as Spanish yields rise - Moody's turns 'negative' on Germany, Netherlands and Luxembourg - Miners, banks provide a drag in London - Moody´s criticizes gradualist approach to crisis resolution - Goldman Sachs AM President calls for radical ECB action -BBC UK stocks edged lower on Tuesday morning as markets extended losses from the day before on the back of concerns over the financial health of both Spain and Greece. The Footsie slumped 2.09% on Monday after 10-year Spanish bond yields surged to a euro-era record of 7.565% on rumours that Spanish regions Murcia and Catalonia are joining Valencia in asking for government aid. Markets are now concerned that this will lead to a full-scale bailout for the southern European nation. Yields hit a new record-high of 7.567% this morning. Meanwhile, it is feared that the International Monetary Fund might not provide any additional funds for Greece, prompting concerns that the country will default on its debt. Yesterday, however, the Washington based lender reiterated its support for Greece. Markets will likely be cautious today after Moody's Investors Service revised the outlooks on the triple-A ratings of Germany, the Netherlands and Luxembourg to 'negative' from 'stable' due to the rising uncertainty regarding the outcome of the Eurozone debt crisis and the increased likelihood of Greece's exit from the single-currency region. Particularly worth noting, Moody´s criticizes the gradualist approach being taken to crisis resolution in the Eurozone, from which those potentially more elevated risks arise. There's a barrage of economic data due out today across the globe, including purchasing managers' indices (PMIs) from the Eurozone. In China, the preliminary HSBC manufacturing PMI rose from 48.2 to 49.5; while the sector is still contracting, the PMI is at a five-month high. FTSE 100: Aberdeen leads the risers after broker comments Fund manager Aberdeen Asset Management was a strong performer early on following yesterday's third-quarter update in which it reported assets under management slipped 1%. This morning, Societe General upgraded the stock to 'buy', JP Morgan Cazenove raised its target, while UBS and Morgan Stanley maintained their positive ratings. | ||||||||||||||||||
| UK Event Calendar |
Tuesday July 24 INTERIMS APR Energy, Croda International, CSR, International Personal Finance, Man Group, Norsk Hydro ASA, OJSC Magnit GDR (Reg S), Provident Financial INTERNATIONAL ECONOMIC ANNOUNCEMENTS BBA Mortgage Lending Figures (09:30) House Price Index (US) (15:00) Q2 CSR, Norsk Hydro ASA, Virgin Media Inc. FINALS PZ Cussons ANNUAL REPORT Vertu Motors IMSS Carpetright, Daily Mail and General Trust A (Non.V), Great Portland Estates, Halma, Sage Group AGMS Aberdeen All Asia Inv Trust, Aqua Bounty Technologies Inc. (Reg S), Downing Planned Exit VCT 3, Downing Planned Exit VCT 3 'A' Shares, Downing Planned Exit VCT 3 'C' Shares, Downing Planned Exit VCT 3 'D' Shares , Downing Planned Exit VCT 3 'E' Shares , Downing Planned Exit VCT 3 F Shares, Fidelity China Special Situations , Halma, Helical Bar, New World Oil And Gas, Scapa Group, Tau Capital, TR Property Inv Trust, TR Property Inv Trust Sigma Shares, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus VCT, Ventus VCT 'C' Shares, Vertu Motors, Vodafone Group TRADING ANNOUNCEMENTS APR Energy, Kofax FINAL DIVIDEND PAYMENT DATE Fuller Smith & Turner |
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| Moody´s cuts outlook on German and Dutch debt -LCH raises margin requirements for trading in periphery debt -Chinese manufacturing PMI rises -Mixed results at Spanish bill auction -Spanish 5 year bond yields rise above 10 year yields FTSE-100: 0.18% Dax-30: 0.12% Cac-40: 0.13% FTSE-Mibtel: -0.57% Ibex 35: -2.05% Stoxx 600: 0.09% The main European equity benchmarks, with slight gains in most ‘core’ markets but another large drop in Madrid´s Ibex 35 and modest losses in Milan. That following yesterday´s torrent of selling and as investors digest a bevy of important news out overnight. Particularly worth noting is rating agency Moody´s decision to slash its rating on the outlook for the sovereign debt ratings of Germany, the Netherlands and Luxembourg. The outlook on Finland´s, however, was reaffirmed at “stable.” One of the main reasons for the above is the gradualist approach being taken by the Eurozone to the resolution of the Eurozone crisis. For Moody´s that entails larger potential risks for the those economies who will bear the burden of providing aid, due to both the resulting larger contingent liabilities and the potential for losses on the same which a slower approach entails. In that same vein, in an interview with the BBC the President of Goldman Sachs Asset Management, Jim O´Neill, has called for the European Central Bank (ECB) to take radical actions to stem the crisis. Peugeot wants government aidFrench car maker Peugeot wants government aid on top of wage concessions as a condition for averting a second French auto plant closure, Reuters reports. Dutch telecommunications group KPN has slashed its 2012 dividend by more than half. European chipmaker STMicroelectronics posted second-quarter revenue in line with expectations but warned that bookings softened in June. From a sector stand-point, and if one looks at the DJ Stoxx 600, the worst performance is now to be seen in shares of: insurance (-0.94%), utilities (-0.60%) and banks (-0.59%). Weak manufacturing dataThe Eurozone manufacturing sector purchasing managers´ index has come in at 44.1 for the month of July, versus 45.1 in the month before (Consensus: 45.3). Some analysts are calling attention to the drop seen in domestic orders, which for them constitutes a further step towards a further deterioration in the crisis. The Eurozone service sector purchasing managers´ index has come in at 47.6 for the month of July, versus 47.1 in the month before (Consensus: 47.3). Other asset classes little changedThe euro/dollar is now off by 0.02% to the 1.2110 dollar level. Front month Brent crude futures are rising by 0.387 dollars to the 103.66 dollar per barrel mark on the ICE. |
| US Market Report |
US close: Stocks tank over concerns for Spain and Greece
Nasdaq: 2,890 (-1.20%) S&P 500: 1,351 (-0.89%) In spite of the deal reached last Friday to shore up Spain's banks, the yield on a 10-year Spanish bond set new records today, rising to 7.565% and well beyond the 'unsustainable' level of 7%. Borrowing costs surged today on rumours that both Murcia and Catalonia, both Spanish regions, are joining Valencia in asking for government aid. Markets are now concerned that this will lead to a full-scale bailout for the southern European nation. Meanwhile, the International Monetary Fund (IMF) has told the European Union (EU) that it will not provide any additional funds for Greece, prompting concerns that the country will default on its debt. German Vice Chancellor Philipp Roesler said he is "very skeptical" that the Troika can rescue Greece. Also weighing on sentiment were comments from a Chinese policy-maker who said that economic growth will slow from 7.6% to 7.4% in the third quarter. In other news, John Williams, the President of the Federal Reserve Bank of San Francisco, said that the US will make little headway in reducing unemployment unless it takes "further action." In economic news, the Chicago Fed's national activity index improved from -0.48 to -0.15 in June. McDonald's provides a drag in New York |
| Newspaper Round Up |
| Tuesday newspaper round-up: Dividends, Northern Rock, Solar panels Investors enjoyed an 18 per cent leap in dividends paid by UK-quoted companies during the second three months of 2012. The amount paid was 22.6bn pounds - a second quarter record and taking the total for the year so far to 41.bn pounds. The figures were boosted by special dividends, including 1bn pounds from insurer Old Mutual, which sold off its Nordic business. GlaxoSmithKline and Antofagasta also made extra one-off payments. Capita Registrars estimates the full-year total will be 78.3bn pounds - an annual record - thanks to the faster growth rate of shareholder payouts: dividend payments have risen every quarter for the past 18 months. Many firms put the brakes on spending bumper cash piles on investment, be it capital expenditure or buying other firms, due to uncertainty caused by the weak global economic. Cash flow is still strong, yet corporate investment is very depressed,' said Charles Cryer, chief executive of Capita Registrars. 'Dividends are one destination for the large cash surpluses that companies have accumulated as a result,' the Daily Mail reports. British taxpayers will receive a further 538m pounds from Virgin Money after the bank that acquired Northern Rock last year agreed to increase the purchase price and bought a portfolio of government-owned mortgages. Virgin Money, the banking arm of Sir Richard Branson's company, paid the Treasury an additional 73m pounds in cash on top of the 747m pound initial sale price for Northern Rock. The payment reflects a higher than expected calculation of the net asset value of Northern Rock when it was sold at the start of this year. At the time the deal was announced, UK Financial Investments, which manages the government's stakes in banks and oversaw the sale of Northern Rock expected the additional payment to be about 50m pounds, The Financial Times says. China has made a dramatic swoop on the North Sea oil industry, buying up assets that account for more than 8 per cent of the UK's entire oil and gas production. Chinese state-controlled group CNOOC agreed a 15.1bn dollars (9.7bn pounds) offer to buy Canada's Nexen, which is the second biggest oil producer in the UK North Sea. Its net UK production of both oil and gas is 114,000 barrels of oil equivalent per day (boepd). In a separate deal, China's Sinopec splashed out 1.5bn dollars on a 49 per cent stake in the UK unit of Canada's Talisman Energy, which produced an average of 71,500 barrels of oil equivalent per day last year. Talisman said its joint venture with Sinopec would "invest more in the UK than Talisman would have on its own". Both Nexen and Talisman rank within the top 10 oil and gas producers in the UK North Sea, The Telegraph reports. Italy's financial outlook darkened on Monday amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts. The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press. "The situation is becoming worse by the day," said Graziano Del Rio, the president of a national association of municipal councils. The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default. Cities and towns in southern Italy have for years been plagued by mismanagement, corruption, the wasteful use of EU funds and infiltration by the Mafia. But the "black list" of cities at risk also includes some in the north of Italy such as Alessandria, in the Piedmont region, The Telegraph says. The number of out-of-work Britons struggling with payday loans has quadrupled over the past three years, the national debt charity said yesterday. A total of 1,243 unemployed people with an average payday loan of £918 contacted the Consumer Credit Counselling Service last year asking for help. At the height of the recession three years ago, the charity was approached by only 283 people in the same situation. Delroy Corinaldi, of the counselling service, said: "Unemployment is the biggest single driver of debt problems in the UK, and people who have lost their job after taking out extremely expensive payday loans are finding it particularly difficult to cope." He said that payday lenders must recognise the problem, adding that when the industry announces its new codes of practice this week, the CCCS expects to see clear commitments to freeze interest and charges when borrowers experience a shock to their income that leaves them unable to repay, writes The Times. Europe's solar panel manufacturers are poised to launch a trade complaint against their Chinese rivals, marking a further escalation in trade tensions between China and the west over green technology. The anti-dumping complaint, led by Germany's SolarWorld, will accuse Chinese manufacturers of selling photovoltaic cells in the EU below the cost of production, allowing them to dominate the market, according to people familiar with the matter. Under EU rules, the European Commission, the bloc's executive arm, would have 45 days from the case's filing to decide whether to open an investigation, The Financial Times reports. The UK's cost of borrowing plunged to an all-time low yesterday as panicking investors sought safe havens from the financial firestorm engulfing Spain. Investors piled into UK gilts as the embattled Eurozone member's economic woes deepened and markets panicked over the latest threat to Madrid's creaking finances from struggling regional governments. Global stock markets tumbled as Spain's cost of borrowing hit a euro-era high of 7.44% – well into the territory which forced Greece, Ireland and Portugal to seek a bailout from the European Union and International Monetary Fund. In contrast, the UK's cost of borrowing hit a record low 1.4% – well below the current 2.4% rate of inflation – as nervous dealers shunned returns on their cash and simply looked for shelter from the latest storm, writes The Independent. |
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