| ADVFN III | Evening Euro Markets Bulletin | ||
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Thursday, 30 August 2012
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| London close: Stocks slip as stimulus hopes fade Market Movers
- Speculation ramps up ahead of Jackson Hole meeting - Decent US data dampens hopes for extra stimulus - Volatility could increase in coming weeks, says UniCredit The FTSE 100 index experienced its third consecutive day in the red on Thursday as economic stimulus-related optimism began to fade ahead of the Jackson Hole symposium. The meeting of central bankers in Wyoming will undoubtedly be focused on Federal Reserve Chairman Ben Bernanke who was widely expected in the lead up to the event to hint at further quantitative easing, or QE3, at his speech tomorrow. However, market analyst Michael Hewson from CMC Markets thinks that Bernanke is unlikely to announce a new raft of easing measures, especially ahead of next week's key jobs report and manufacturing data. "The likely outcome will probably be a reiteration of the latest minutes of the FOMC [Federal Open Market Committee], just over a week ago, which states that the Fed remains prepared to act and 'that additional action would likely be warranted fairly soon', but without saying when 'soon' would be. As such any imminent action would appear to be unlikely," he said. Today's robust economic data Stateside may have also eased the Fed's concerns about the economy, weighing down hopes of near-term easing. Initial jobless claims were unchanged last week while consumer spending was in line with expectations in July. Economic data elsewhere was a touch gloomier: German unemployment increased for a fifth consecutive month in August, Japanese retail sales came in below expectations and South Korean manufacturers' confidence remained near its post-crisis low. Meanwhile, European Central Bank (ECB) President Mario Draghi is being forced to miss the Jackson Hole conference due to "a heavy workload", increasing speculation that he could be putting the finishing touches to plans for strong action ahead of an ECB meeting on September 6th. According to analysts at UniCredit this afternoon, these meetings, along with the German Constitutional Court ruling on the European Stability Mechanism on September 12th, are the important "risk" events that could potentially lead to significant volatility on markets in the next couple of weeks. "In this environment, investors are likely to adopt a cautious approach and wait for more clarity from central banks and politicians in the near term." FTSE 100: Miners unwanted as risk is scaled back Kazakhmys was the heavy faller in afternoon trade, leading the mining sector lower as investors turned cautious ahead of Jackson Hole. The stock was downgraded this morning by Jefferies from 'buy' to 'hold', who said that it now prefers copper peer Antofagasta. The broker explained that Kazakhmys's first-half results were "much less impressive" than Antofagasta and its 26% stake in ENRC is "not helpful". | ||||||||||||||||
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| European Markets Pulled Back On Weak Economic Data The European markets declined on Thursday, after several weaker than expected economic reports from around the globe. Japanese retails sales fell more than expected overnight, which was followed up by a decline in Eurozone economic sentiment. German unemployment increased and U.S. weekly jobless claims came in higher than expected. Investors continued to be cautious Thursday as they watch for any clues regarding further economic stimulus in the United States. The highly anticipated speech by Federal Reserve Chairman Ben Bernanke will take place tomorrow at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyoming. Italy had a successful auction on Thursday as it sold its five- and 10-year debt at lower yields as investors remained hopeful that the European Central Bank may resume its bond-buying to help lower the borrowing costs of troubledeuro area countries. The Italian Treasury raised a total EUR 7.29 billion from today's auction, close to the maximum target set for the sale. The latest auction follows two successful sales yesterday and the day before, which raked in proceeds totaling nearly EUR 13 billion. Today the agency sold EUR 4 billion of the new benchmark bond due November 2022, matching the top end of its target range. The yield on the 10-year debt dropped to 5.82 percent from 5.96 percent paid on July 30 for a security of similar maturity. The country also placed EUR 2.5 billion of its June 2017 bond to yield 4.73 percent, which was far less than the 5.29 percent paid in the previous sale on July 30. The euro Stoxx 50 index of eurozone bluechip stocks declined by 1.03 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.62 percent. The DAX of Germany dropped by 1.45 percent and the CAC 40 of France fell by 1.02 percent. The FTSE 100 of the U.K. decreased by 0.33 percent and the SMI of Switzerland finished down by 0.68 percent. In Frankfurt, automakers were under pressure. Daimler fell by 5.43 percent, BMW lost 4.90 percent and Volkswagendeclined by 4.04 percent. In Paris, Renault dropped by 3.68 percent and Peugeot decreased by 3.82 percent. Carrefour surged by 7.37 percent, after its loss for the first-half narrowed significantly. Vivendi climbed by 3.11 percent. The media and telecom group reported a lower profit for the second quarter, but confirmed its full year forecast. Pernod-Ricard fell by 2.01 percent. The company reported its best growth since 2007/08, and also announced some appointments, including that of Danièle Ricard as Chairman of the Board of Directors. In London, miners finished notably lower. Anglo American lost 3.44 percent and Antofagasta declined by 2.58 percent. BHP Billiton dropped by 3.26 percent and Rio Tinto finished down by 2.09 percent. Vedanta Resources fell by 2.38 percent and Eurasian Natural Resources lost 2.70 percent. Barclays decreased by 1.53 percent. The lender named Antony Jenkins as its new chief executive, effective immediately. WPP dropped by 1.56 percent, after it announced first-half results. The company also lowered its revenue forecast for 2012. Shares of Admiral Group declined by 2.38 percent, following the company's report for the first half of the year. Eurozone economic sentiment deteriorated further in August reflecting the Sharp weaknesses in confidence among consumers, retailers and construction managers due to concerns over recession and the lingering sovereign debt crisis. The economic sentiment index dropped to 86.1 from 87.9 in July, European Commission's monthly survey revealed Thursday. The reading was the lowest since late 2009 and below the expected level of 87.5. German unemployment increased for the fifth month in August as firms shed jobs fearing a recession in the 17-nation currency bloc. The Federal Labor Agency on Thursday said the number of unemployed increased by adjusted 9,000 from July to 2.9 million. It was forecast to increase by 7,000, following July's monthly rise of 9,000. However, the jobless rate remained unchanged at a seasonally adjusted 6.8 percent in August as economists expected. Spain's harmonized inflation accelerated more than expected on higher fuel costs in August, flash estimate from the statistical office Ine showed Thursday. Inflation, as measured by the harmonized index of consumer prices or HICP, rose to 2.7 percent in August from 2.2 percent a month ago. The rate was forecast to rise to 2.3 percent. Initial claims for U.S. unemployment benefits unexpectedly came in unchanged in the week ended August 25th, according to a report released by the Labor Department on Thursday. The report showed that initial jobless claims came in at 374,000, unchanged compared to the previous week's revised figure. Economists had expected jobless claims to edge down to 370,000 from the 372,000 originally reported for the previous week. Personal income and spending in the U.S. both increased in the month of July, according to a report released by the Commerce Department on Thursday, with the increases both coming in line with economist estimates. The report showed that personal income rose by 0.3 percent in July, matching the increases seen in the two previous months. The increase also came in line with estimates. The Commerce Department also said personal spending increased by 0.4 percent in July after coming in roughly flat in June. The spending growth also matched the expectations of economists.
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