| ADVFN III | Morning Euro Markets Bulletin | ||
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Monday, 20 August 2012
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| London open: Stocks flat early on despite mining weakness Market Movers
- Volumes expected to stay low - ECB considering caps on bond spreads - Hopes for Chinese stimulus fade UK stocks opened broadly flat on Monday morning on a quiet day for corporate news as markets remain fixed on developments in the Eurozone and newsflow from China. "Volume remained low last week in the markets. August is notoriously lightly traded so this is no surprise. Also, as long as the Eurozone remains the key mover in the markets, unless Spain request a bailout in the coming weeks, we're likely to see volumes remain low until September 12th, when the German Constitutional Court rules on the legality of the ESM and Fiscal Pact," said analyst Craig Erlam from Alpari. Investors were focusing on reports concerning Greece which were doing the rounds this weekend. Firstly, Eurogroup head Jean-Claude Juncker said that Greece would only leave the Eurozone if it "totally refused" to fulfil its reform targets. Meanwhile, German Finance Minister Wolfgang Schaeuble ruled out a new aid plan for Greece, saying that "there are limits". The European Central Bank (ECB) is considering setting caps on bond spreads in southern Europe in order to help keep a lid on periphery country borrowing costs, according to a report in Der Spiegel. Meanwhile, 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. 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. Banks gain while miners slip Banking peers Lloyds, Barclays and Royal Bank of Scotland were in demand early on, though under-fire lender Standard Chartered bucked the trend following last week's $340m settlement with US authorities surrounding alleged dealings with Iran. | ||||||||||||||||||
| UK Event Calendar |
| Monday August 20 INTERIMS Amlin, Bovis Homes Group INTERIM DIVIDEND PAYMENT DATE Crystal Amber Fund Ltd. QUARTERLY PAYMENT DATE Caterpillar Inc. GMS Albany Inv Trust, Indian Restaurants Group EGMS Datang International Power Generation Co Ltd. AGMS Peer TV FINAL DIVIDEND PAYMENT DATE London Stock Exchange Group, Mountview Estate |
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| The European markets are poised for a slightly higher open on Monday, after data showed on Friday an unexpected increase in U.S. consumer confidence. The DAX futures are adding 9.50 points, the CAC 40 futures are gaining 2 points and the FTSE 100 futures are advancing 3.50 points. The Swiss Market Index futures are rising 4 points. The Euro Stoxx 50 futures are up 5 points. The European markets closed higher on Friday, boosted partly by German Chancellor Angela Merkel's comments on Thursday that Germany is committed to do everything it can to maintain the euro. Merkel's comments helped keep alive hopes that the European Central Bank would take some decisive steps to reduce surging borrowing costs. The DAX rose 0.6 percent and the CAC 40 rose 0.2 percent. The FTSE 100 index and the Swiss Market index rose 0.3 percent and 0.2 percent, respectively. The Euro Stoxx 50 index of eurozone bluechip stocks gained 0.6 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, rose 0.3 percent. 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. Meanwhile, house prices in the United Kingdom fell at the fastest pace ever seen for the month of August as the number of properties coming to the market continued to outstrip demand, property website Rightmove said. Asking prices for a property in the U.K. declined 2.4 percent month-on-month in August to 236,260 pounds. This was the largest August fall Rightmove has ever recorded and followed a 1.7 percent drop in July. On the corporate front, Volkswagen's labor chief Bernd Osterloh has rejected further acquisitions by the German car maker in the near future, business daily Handelsblatt reported. Bovis Homes Group reported a surge in first-half pre-tax profit to 16.2 million pounds, from 8.12 million pounds last year. Revenue increased to 170.3 million pounds from 133.6 million pounds in the 2011 period. Amlin Plc posted first-half profit attributable to equity holders of the parent company of 168.9 million pounds or 33.7 pence per share compared to a loss of 151.7 million pounds or 30.7 pence per share last year. Net earned premium grew to 990.3 million pounds from 919.3 million pounds. |
| US Market Report |
US close: Dow gains for sixth consecutive week
Dow Jones: 13,275 (+0.19%) Nasdaq: 3,077 (+0.46%) S&P 500: 1,418 (+0.19%) The University of Michigan-Thomson Reuters consumer-sentiment index rose from 72.3 to 73.6 in August, better than forecasts of no change. Meanwhile, the Conference Board's leading economic index increased by 0.4% in July, better than the 0.3% growth estimate. Markets were also reacting to comments from German Chancellor Angela Merkel who yesterday backed proposals by European Central Bank President Mario Draghi. She said his idea of buying sovereign debt to bring down bond yields in indebted nations was "completely in line" with the view of euro-area officials. Apple hits an all-time high Shares in tech giant Apple rose to a record on Friday after a Jefferies research report said that the company has started production of a new 'iPad mini'. Meanwhile, the broker said that the upcoming launch of Apple's iPhone 5 will be the biggest handset launch ever. |
| Newspaper Round Up |
| Monday newspaper round-up: Growth, Greece, StanChart The Chancellor must consider radical action including spending on infrastructure and abolishing stamp duty to put Britain back on the path to growth, according to some of Britain's leading economists. A series of opinion pieces to feature in The Daily Telegraph this week from economists including Paul Johnson, director of the Institute for Fiscal Studies, and Andrew Sentance, former member of the Bank of England's Monetary Policy Committee, add to the growing swell of opinion formers arguing for a policy rethink. Mr Johnson said planning regimes needed to be reformed while he described stamp duty as "among the most inefficient taxes we have". Kicking off the series, Mr Sentance, senior economic adviser to PricewaterhouseCoopers, writes that a "bolder" course is needed without requiring the Chancellor to change the pace of deficit reduction. Greece must remain in the euro to survive according to its finance minister, Yannis Stournaras, as the country's leader prepares for a week of crucial meetings with Eurozone authorities which could ultimately determine its fate. Stournaras said the country must press ahead with the spending cuts demanded by its fellow Eurozone members because its membership of the single currency was essential. "We have to stay alive and remain under the umbrella of the euro, because that is the only choice that can protect us from a poverty that we have not experienced," Mr Stournaras said yesterday. "If we don't take the measures ... then our stay in the euro is threatened. We have the most expensive welfare state in the Eurozone. We can no longer maintain it with borrowed money." A government job creation fund will badly miss its target to get money to businesses in employment blackspots. Nearly two thirds of the cash promised — some of it offered 16 months ago — is still sitting in the Treasury. The £2.4bn Regional Growth Fund, which has been fronted by Nick Clegg, the Deputy Prime Minister, was due to have fully allocated £1.4bn of funding to 176 bid-winning companies and organisations by the end of next month. However, it has emerged that by last month's parliamentary recess — when officials had privately expected to get most of the initial money signed off — only £502m had been disbursed to 46 winning bids, The Times reports. Standard Chartered is thought to be just months away from recruiting at least two new independent directors as it shores up its boardroom in the wake of damaging sanctions-busting allegations involving Iran. The bank's 11-strong group of non-executive directors features seven long-standing board members. Rudy Markham, the senior independent director, has been on the board since 2001, while Ruth Markland and Paul Skinner both joined in 2003. Under the Combined Code rules governing best boardroom practice, a director who has been in place for more than nine years is no longer deemed to be independent. Mr Markham suffered a mini-protest at Standard Chartered's annual meeting in May, when shareholders speaking for almost a fifth of the shares that voted opposed his re-election. Standard Chartered signalled at the annual meeting that it was preparing to bring in fresh blood. Although the bank would not be drawn on the likely departures yesterday, or a timetable for them, Mr Markham is thought the most likely to go. The world's largest sovereign wealth fund is planning to take on more risk as it seeks to exploit its role as a strategic investor, in a move that could mark a new trend for conservative publicly-owned investment funds. The Norwegian oil fund, which has more than $600bn of assets under management, also believes it could be more opportunistic when markets dry up, as was the case during the financial crisis. "The fund can exploit [its nature as a long-term investor] by being a provider of liquidity in periods when there is a lack of liquidity," Pål Haugerud, head of asset management in Norway's finance ministry, said in an interview. The new approach will be closely watched outside Norway as the size of sovereign wealth funds in the Middle East and Asia, forcing managers to rethink their investments strategies, The Financial Times says. A disappointing second-quarter earnings season in Europe has prompted analysts to scale back markedly their expectations for earnings growth for the rest of the year. More companies missed than beat expectations in the second quarter of this year, with 48% of those listed on the Stoxx 600 reporting lower than expected consensus quarterly earnings, according to data from Thomson Reuters. A remaining 47% beat estimates while 5% reported estimates in line with consensus. "The message is still quite bearish," Karen Olney, Europe equity strategist at UBS said. This is in stark contrast to the US where nearly three-quarters of companies beat expectations in the second quarter, The Financial Times writes. |
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