| ADVFN III | Evening Euro Markets Bulletin | ||
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Monday, 13 August 2012
| London Market Report | ||||||||||||||||
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| London close: Stocks fall as post-Olympic blues set in Market Movers
- Global equities finish broadly lower - GDP growth a concern in Japan and China - Greek GDP beats expectations Mixed news from the Eurozone and concerns over growth in Asia sent most stock markets across the globe into the red on Monday. "As the post-Olympic blues set in, European markets appeared to sense the weaker sentiment, with poor volumes and a dearth of economic data resulting in a mainly sideways and lacklustre trading session," said market strategist Brenda Kelly from CMC Markets. Meanwhile, trader Simon Furlong from Spreadex, said that investors were "biding their time till tomorrow as GDP figures in Europe and retail figures in the states come out." The Japanese economy grew by just 0.3% in the second quarter on the back of weak consumer spending. Annualised gross domestic product (GDP) growth was just 1.4% in the April-June period, well below the 5.5% growth the previous quarter and under the 2.3% expansion expected. However, the poor data has increased speculation that the Bank of Japan would step up with policy easing. China was also providing some concern on markets today after Bank of America Merrill Lynch lowered its 2012 GDP growth estimate for the world's second-largest nation from 8% to 7.7%. The US investment bank is the latest in a string of brokerages to reduce its growth forecasts for China. In the Eurozone, Greek GDP fell by 6.2% year-on-year in the second quarter, better than the 7.6% contraction expected by Barclays Capital. "This looks like a better start to the year than we expected," said the investment bank's analyst Fabrice Montagne. Michael Fuchs, the deputy head of Angela Merkel's CDU party, said at the weekend that Germany will block new aid to Greece if it's not happy with the Troika's findings. "You can quote me: even if the glass is half-full, that is not enough for a new aid package...Germany cannot and will not agree to that," he said. FTSE 100: Petrofac and resource stocks provide a drag Oilfield services firm Petrofac was leading the fallers on the Footsie despite reporting a strong first half as investors turned cautious on the pace of growth going forward. | ||||||||||||||||
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Europe close: Stocks fall ahead of Eurozone GDP
FTSE MIB: 14,533 (-0.11%) IBEX 35: 7,070 (+0.31%) XETRA DAX: 6,910 (-0.50%) Annualised Japanese GDP increased by just 1.4% in the second quarter, well below the 5.5% growth the previous quarter and under the 2.3% expansion expected. Meanwhile, Bank of America Merrill Lynch has lowered its 2012 GDP growth estimate for China from 8% to 7.7% Closer to home, Spanish 10-year bond yields declined today (down 5.9 basis points at 6.848%) after a German official downplayed the possibility of the Southern European nation requiring a bailout. An Italian one-year bond sale went pretty smoothly today, as expected. The sale easily raised the €8bn targeted, with demand 1.69 times the offer, compared to 1.55 times last month. Concerns about Belgium were also in focus today as the nation's central bank governor Luc Coene admitted that the government will likely miss its deficit target set out with the European Union this year. Coene said that zero economic growth would translate to a deficit of slightly more than 3% of GDP in 2012, above the initial target of 2.8%. Meanwhile, Greek GDP fell by 6.2% year-on-year in the second quarter, better than the 7.6% contraction expected by Barclays Capital. "This looks like a better start to the year than we expected," said the investment bank's analyst Fabrice Montagne. COMPANIES Germany's largest utility company E.On saw profits more than triple in the first half of 2012, but shares fell today after it warned that weaker demand for electric power in Europe has weighed on capacity utilisation, prices, and operating margins for its fossil-fuel activity. |
| US Market Report |
US open: Profit takers emerge
S&P 500: -6 at 1,400 NASDAQ Composite: -13 at 3,007 Macro data has not been strong enough to encourage investors to continue chasing prices higher. GDP numbers disappointThe Japanese economy grew by just 0.3% in the second quarter on the back of weak consumer spending. Annualised growth was just 1.4% in the April-June period, well below the 5.5% growth the previous quarter and under the 2.3% expansion expected.Greece's economy contracted by 6.2% in the second quarter, versus expectations of a 7% fall, leading to some pundits to suggest Greece is ready to pull out of its tailspin. Market approves of Google job cutsInternet giant Google is planning on eliminating around 4,000 jobs at its Motorola Mobility Holdings unit, equivalent to 20 per cent of the company it acquired last year for about $12.5bn.Two-thirds of the cuts will take place outside of the United States, the firm explained, saying it expects severance-related costs of no more than $275m. "These changes are designed to return Motorola's mobile devices unit to profitability," Google said in a regulatory filing and added that the unit will place more emphasis on more innovative and profitable mobile devices. Oil refiner Tesoro has been shopping at BP's garage sale, paying around $2.5bn for BP's refinery and related assets in Carson, California. The shares are the best performers among S&P 500 constituents. Bank of America has hardened slightly after announcing it is selling its non-US wealth management operations to Swiss operator Julius Baer. Retailer JC Penney is off the pace after Piper Jaffray cuts its rating on the stock to "neutral" from "overweight". Other marketsCrude oil futures are on the slide, with the September contract for West Texas light sweet crude down 58 cents to $92.29 a barrel.With equities in retreat government bonds are back in favour, though not overwhelmingly so. The benchmark 10-year US Treasury has seen its yield dip to 1.63% from 1.65% at Friday's close. S&P 500 - Risers Tesoro Corp. (TSO) $37.58 +5.86% Sysco Corp. (SYY) $30.05 +4.20% Sears Holdings Corp. (SHLD) $53.47 +3.99% Campbell Soup Co. (CPB) $34.36 +3.15% CareFusion Corp. (CFN) $27.05 +2.89% Salesforce.Com Inc. (CRM) $143.50 +2.62% Sprint Nextel Corporation (S) $5.03 +2.23% International Paper Co. (IP) $33.61 +2.19% Best Buy Co. Inc. (BBY) $19.61 +2.08% J. M. Smucker Co. (SJM) $78.08 +1.80% S&P 500 - Fallers Brown Forman Corp. Class B (BF.B) $61.18 -33.62% First Solar Inc. (FSLR) $20.66 -3.61% United States Steel Corp. (X) $22.75 -2.82% Cliffs Natural Resources Inc. (CLF) $43.68 -2.74% Alpha Natural Res (ANR) $7.16 -2.52% NetApp Inc. (NTAP) $31.79 -2.42% WellPoint Inc. (WLP) $56.64 -2.19% Valero Energy Corp. (VLO) $28.49 -2.10% Western Union Co. (WU) $17.29 -2.04% Helmerich & Payne Inc. (HP) $48.97 -1.91% Dow Jones I.A - Risers Bank of America Corp. (BAC) $7.78 +0.45% Hewlett-Packard Co. (HPQ) $19.75 +0.25% Dow Jones I.A - Fallers E.I. du Pont de Nemours and Co. (DD) $50.19 -1.73% Alcoa Inc. (AA) $8.88 -1.11% Intel Corp. (INTC) $26.65 -0.86% Pfizer Inc. (PFE) $23.77 -0.69% Nasdaq 100 - Risers Sears Holdings Corp. (SHLD) $53.47 +3.99% Green Mountain Coffee Roasters Inc. (GMCR) $25.05 +2.54% Intuitive Surgical Inc. (ISRG) $504.80 +1.25% Bed Bath & Beyond Inc. (BBBY) $63.45 +1.07% Google Inc. (GOOG) $648.84 +1.07% eBay Inc. (EBAY) $44.43 +1.00% Nasdaq 100 - Fallers Nuance Communications Inc. (NUAN) $22.94 -2.51% NetApp Inc. (NTAP) $31.79 -2.42% Dollar Tree Stores Inc. (DLTR) $49.78 -1.85% F5 Networks Inc. (FFIV) $100.36 -1.83% Avago Technologies Ltd. (AVGO) $36.48 -1.80% Warner Chilcott Plc (WCRX) $17.25 -1.76% Check Point Software Technologies Ltd. (CHKP) $51.01 -1.51% Activision Blizzard Inc. (ATVI) $11.47 -1.46% Biogen Idec Inc. (BIIB) $143.77 -1.19% Altera Corp. (ALTR) $36.69 -1.16% |
| Broker Tips |
| Broker tips: Petrofac, Glaxo, ENRC Petrofac may have announced that it is on track to hit its full-year guidance but Investec has maintained its 'hold' rating and 1,500p target on the stock, saying that it is 'still worrying about the future'. "Although 1H12 contract wins have just kept the order book on track (only a 4% decline since December after recent awards), delays in some contract awards to refill the core E&C [Engineering & Construction] backlog will not now occur until 2013, making it more difficult to maintain revenue and profits in this key division and underpin growth forecasts for that year." With GlaxoSmithKline's margin expansion put on hold, Jefferies has downgraded its recommendation for the stock from 'buy' to 'hold'. "Whilst we still see double digit CORE EPS growth for GlaxoSmithKline from 2013E-17E, visibility on margin expansion has been obscured by over-exposure to price pressure and transfer pricing in Europe," the broker said. The target is reduced from 1,600p to 1,550p. UBS says to expect a weak first half from mining group Eurasian Natural Resources Corp (ENRC), predicting earnings to tumble and debt to surge. ENRC, which will report its results on August 15th, will report a 40% half-on-half fall in clean earnings per share (EPS) to 38 cents, UBS says. Meanwhile, net debt is forecasted to rise from $1bn to $3.5bn over the half due to M&A and capital expenditure. The broker has cut its target for ENRC from 615p to 585p, based on a calculation of 0.8 times net present value (reflecting political risk), using a 10% discount rate. However its 'buy' rating is maintained. |
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