| ADVFN III | Evening Euro Markets Bulletin | |
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Monday, 20 August 2012
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| London close: Bundesbank spoils the party Market Movers
- Bundesbank expresses critical opinion of ECB bond-buying - ECB considering capping bond spreads - Xstrata down on concerns over Glencore merger After a subdued start, the Footsie dropped into the red in afternoon trade as Germany's Bundesbank reiterated its critical stance of the bond-buying proposal by the European Central Bank (ECB). "All it took to reverse this morning's positive start to the trading session was for the Bundesbank to puncture this weekend's recycled story about the ECB capping peripheral bond yields. Today's market reaction really shouldn't have been a surprise given previous push back on this particular trial balloon," said senior market analyst Michael Hewson from CMC Markets. The Bundesbank restated its opposition to the ECB's intervention in the bond markets, saying: "The Bundesbank remains critical of the purchase of euro system sovereign bonds, which comes with considerable risks for stability. Decisions about a possibly even broader mutualisation of solvency risks should be anchored in financial policy, meaning with the governments and parliaments, and should not occur via central bank balances." A report over the weekend in Der Spiegel said that the ECB is considering setting caps on bond spreads in southern Europe in order to help keep a lid on periphery country borrowing costs. However, the spokesman of Germany's Finance ministry that he does not know of any ECB plan to target bond spreads. Luis de Guindos, Spain's Finance Minister, said that his country would like the ECB to commit to unlimited intervention in second sovereign debt markets before it officially requests financial aid. 10-year Spanish bond yields continued to decline today, down 16.1 basis points at 6.28%, well below the 7.62% level reached in July. In other news, Asian stocks slipped overnight as hopes for Chinese stimulus fade. Investors are concerned that policy-makers will refrain from further easing after a rebound in property prices during the month of July. FTSE 100: Xstrata down as Qatar builds its stake Mining giant Xstrata was among the worst performers on reports that Qatar Holding had raised its stake in the firm, adding to speculation that the investment fund is attempting to build its stake to block the proposed merger with Glencore International. The Qataris are demanding an offer sweeter than 2.8 Glencore shares per Xstrata share. | ||||||||||||||||
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| European Markets Mixed Before Debt Talks The European markets are mixed in afternoon trading Monday, as investors keenly look to this week's discussions for a resolution to the debt crisis in the region. Reports that the European Central Bank is close to buying bonds sent Spanish bond yields lower and served to influence sentiment early in the session. Greek Prime Minister Antonis Samaras is reportedly meeting Luxembourg Prime Minister Jean Claude Juncker, who also heads the Eurogroup, German Chancellor Angela Merkel and French President Francois Hollande this week to seek a two-year extension for the country's fiscal adjustment program. Meanwhile, the European Central Bank is considering setting limits on yields of Eurozone sovereign bonds, Germany's Spiegel magazine reported Sunday without mentioning its sources. The central bank would intervene and buy the bonds if their interest rates exceed a pre-determined threshold above German bonds, the magazine said. In economic news, Eurozone construction output declined for the third consecutive month in June, Eurostat reported. In the construction sector, seasonally adjusted production dropped 0.5 percent from a month ago, when it fell 0.2 percent. The euro Stoxx 50 index of eurozone bluechip stocks is advancing 0.18 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.11 percent. The German DAX is advancing 0.22 percent. The French CAC 40 is down 0.15 percent and Switzerland's SMI is losing 0.18 percent. The UK's FTSE 100 is losing 0.34 percent. In Frankfurt, Allianz is declining 1.8 percent and Metro is losing 1.6 percent. Business software maker SAP is also dropping 1.6 percent. Volkswagen and BMW are notably higher while Daimler is moderately up. Commerzbank is gaining 0.6 percent while Deutsche Bank is losing 0.1 percent. Reports indicated that regulators in the U.S. are investigating Deutsche Bank over money-laundering charges. Rheinmetall is climbing 3.3 percent after Berenberg upgraded the stock. In Paris, STMicroelectronics is declining 2 percent. Carmaker Renault is losing 1.1 percent and Peugeot is falling 0.5 percent. BNP Paribas and Credit Agricole are modestly lower while Societe Generale is moderately up. Alcatel Lucent is rising 1.1 percent. Insurer Axa and builder Vinci are up around 1 percent each. In London, Miners are mostly down. Eurasian Natural Resources is declining 3.4 percent and Kazakhmys is losing 2.4 percent. Rio Tinto is losing 1.7 percent. Xstrata is declining 3.6 percent after a broker downgrade. Lonmin is losing 4 percent amid problems at its Marikana platinum mine near Johannesburg. AstraZeneca is losing 0.6 percent. JPMorgan cut the stock to "Underweight" from "Neutral." ARM Holdings is gaining 1.20 percent. Lender Barclays is up 1.5 percent and Royal Bank of Scotland is advancing 1 percent. Insurer Amlin is up over 4 percent after reporting a profit for the first half of the year. Home Retail is gaining more than 4 percent, reportedly on a positive broker recommendation. Dutch brewer Heineken NV has raised its offer to acquire its joint venture partner Fraser & Neave Ltd.'s stake, which it does not already own in Singapore-based Asia Pacific Breweries Ltd., for a total consideration of S$5.4 billion. Heineken shares are rising 1.4 percent in Amsterdam. Telefonica is marginally down in Madrid, after Bernstein lowered its rating on the stock. Across Asia/Pacific, major markets ended mostly lower while in the U.S., futures point to a mixed open on Wall Street. In the previous session, the Dow gained 0.2 percent, the Nasdaq rose 0.5 percent and the S&P 500 gained 0.2 percent, as better-than-expected economic news solidified market sentiment. A closely watched survey showed earlier in the day that consumer attitudes have improved in August, rising to their highest level in three months. In the commodity space, Crude for September delivery is adding $0.07 to $96.08 per barrel while December gold is losing $2.5 to $1616.9 a troy ounce. |
| US Market Report |
| US mid-morning: Apple sets new highs, Facebook plumbs new lows -Apple and Samsung CEOs will hold last minute talks -Apple Insider Dow Jones Industrial: -0.28% Nasdaq Comp.: -0.47% S&P 500: -0.37% The main US equity indices are now trading modestly lower. That after the Bundesbank´s apparent criticism of the European Central Bank´s bond buying plans in its latest monthly bulletin. Home improvement retailer Lowe´s is down sharply after missing analysts´ profit projections and after cutting its own forecasts. The worst performer on the S&P 500, however, are now shares of Best Buy after the electronics retailer announced that negotiations with its ex-chief executive officer, Richard Schulze, have fallen through. Coventry Health Care is jumping 18% after Aetna agreed to buy the medical-care provider for about $5.6bn. The 13% rally in the S&P 500 this year has lifted the gauge to its highest level ever compared with strategists' forecasts, 2.1% above that 1,389 point mark, a sign that the best may be over for US equities in 2012, Bloomberg is reporting. Some market commentary is also highlighting how while shares of Facebook are today hitting new lows more than half way below its IPO price those of Apple are setting new highs. Of interest, some reports hold that the chief executive officers of Apple and Samsung are to hold last-minute settlement talks. This as anticipation builds ahead of the launch of its new iPhone5. Sirius XM Radio is up by 2.3% after Liberty Media said that it plans to take control of the satellite-radio broadcaster and that this is now easier as it controls over 50% of its stock. Kinder Morgan is to sell $3.3bn in energy pipeline and infrastructure assets in the Rocky Mountains to Tallgrass Energy Partners, including debt. Shares of Deere could benefit following a positive mention in the latest edition of Barron´s magazine. S&P 500 - Risers Coventry Health Care Inc. (CVH) $41.46 +18.66% First Solar Inc. (FSLR) $22.17 +4.28% Aetna Inc. (AET) $39.56 +4.00% Southwest Airlines Co. (LUV) $9.38 +2.74% Wynn Resorts Ltd. (WYNN) $106.66 +1.77% Bank of America Corp. (BAC) $8.14 +1.75% Quest Diagnostics (DGX) $61.07 +1.75% Apple Inc. (AAPL) $658.65 +1.63% Citigroup Inc. (C) $29.46 +1.48% J. M. Smucker Co. (SJM) $84.18 +1.47% S&P 500 - Fallers Best Buy Co. Inc. (BBY) $18.80 -7.25% Waste Management Inc. (WM) $34.16 -4.21% Lowe's Companies Inc. (LOW) $26.75 -4.04% LSI Corporation (LSI) $7.59 -3.31% Electronic Arts Inc. (EA) $13.36 -2.98% Cliffs Natural Resources Inc. (CLF) $41.01 -2.90% Beam Inc. Common Stock (BEAM) $58.47 -2.87% JDS Uniphase Corp. (JDSU) $11.67 -2.83% Constellation Brands Inc. Class A (STZ) $31.61 -2.74% Sears Holdings Corp. (SHLD) $57.92 -2.64% Dow Jones I.A - Risers Bank of America Corp. (BAC) $8.14 +1.75% Hewlett-Packard Co. (HPQ) $19.72 +1.00% JP Morgan Chase & Co. (JPM) $37.30 +0.87% Merck & Co. Inc. (MRK) $43.65 +0.71% McDonald's Corp. (MCD) $87.87 +0.58% Pfizer Inc. (PFE) $23.90 +0.46% Wal-Mart Stores Inc. (WMT) $72.20 +0.29% United Technologies Corp. (UTX) $80.55 +0.22% Travelers Company Inc. (TRV) $65.27 +0.21% Kraft Foods Inc. (KFT) $40.53 +0.07% Dow Jones I.A - Fallers Cisco Systems Inc. (CSCO) $18.80 -1.36% American Express Co. (AXP) $56.83 -1.33% Home Depot Inc. (HD) $56.17 -0.99% E.I. du Pont de Nemours and Co. (DD) $50.26 -0.78% Microsoft Corp. (MSFT) $30.66 -0.78% Exxon Mobil Corp. (XOM) $87.72 -0.77% 3M Co. (MMM) $93.59 -0.69% Boeing Co. (BA) $73.42 -0.66% Caterpillar Inc. (CAT) $89.42 -0.66% Coca-Cola Co. (KO) $39.28 -0.63% Nasdaq 100 - Risers Wynn Resorts Ltd. (WYNN) $106.66 +1.77% Apple Inc. (AAPL) $658.65 +1.63% Garmin Ltd. (GRMN) $41.78 +1.46% Sirius Satellite Radio Inc. (SIRI) $2.60 +1.37% Expedia Inc. (EXPE) $52.03 +0.79% Ross Stores Inc. (ROST) $70.01 +0.78% Perrigo Company (PRGO) $107.76 +0.78% Dell Inc. (DELL) $12.30 +0.65% CH Robinson Worldwide Inc (CHRW) $57.31 +0.47% Celgene Corp. (CELG) $69.33 +0.32% Nasdaq 100 - Fallers Green Mountain Coffee Roasters Inc. (GMCR) $24.20 -3.01% Electronic Arts Inc. (EA) $13.36 -2.98% Avago Technologies Ltd. (AVGO) $35.78 -2.88% Baidu Inc. (BIDU) $130.41 -2.66% Sears Holdings Corp. (SHLD) $57.92 -2.64% Autodesk Inc. (ADSK) $34.13 -2.40% Fossil Inc. (FOSL) $87.73 -2.31% Microchip Technology Inc. (MCHP) $34.98 -2.10% Activision Blizzard Inc. (ATVI) $11.85 -2.07% Monster Beverage Corp (MNST) $59.59 -2.05% |
| Broker Tips |
| Broker tips: IMI, ENRC, Bovis Jefferies has downgraded its rating for engineering giant IMI from 'buy' to 'hold' ahead of the group's first-half results on Thursday. "Ahead of these results, we lower FY12F & FY13F earnings per share (EPS) by 4% and 2% (cutting underlying assumptions and updating forcurrency) and fear that consensus is too high still. The market may be favouring the cyclicals for now, but we prefer to revisit lower down." With earnings at Eurasian Natural Resources Corp (ENRC) expected to weaken, Credit Suisse has lowered its recommendation for the stock from 'outperform' to 'neutral' and reduced its target from 500p to 450p. The broker sees two key risks: "1) earnings are likely to weaken substantially over the next 12 months (we think consensus is 50%+ too high next year); 2) an equity raise cannot be ruled out and we expect investors to remain on the side-lines pending clarity on the restructuring path." Panmure Gordon has upgraded its full-year forecasts for Bovis Homes after the house-builder's interim results came in ahead of expectations. "Whilst our recommendation remains 'hold' on valuation grounds, it is clear that the group is making strong progress against a stable market backdrop," Panmure said. |
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