| Footsie falls before GDP data
Market Movers
techMARK 2,102.92 +0.14%
FTSE 100 5,764.20 -0.21%
FTSE 250 11,441.23 -0.22% London's benchmark index slumped in early trading on Friday with mining stocks once again dominating the downward trend ahead of meetings of Eurozone leaders and the release of economic growth data in the UK.
German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras are due to meet later today in Berlin to discuss the Greek economy and the extension of meeting the bailout terms.
French President François Hollande said yesterday that Eurozone leaders want Greece to remain in the single-currency region but stressed that “it’s up to the Greeks to make responsible efforts to achieve this goal”.
According to media reports this morning, the German Finance Ministry has established a group to look at the impact of contagion from a Greek exit from the Eurozone.
"These issues have surely been studied and discussed within the government for some time now, but the official confirmation of a working group putting together a 'Plan B' is a clear signal to the Greek government and its PM Samaras, who is visiting Chancellor Merkel today, that there is very little room for renegotiating the current Greek aid programme," said analysts at Barclays in en e-mailed note.
Meanwhile, UK gross domestic product (GDP) data is due for release this morning. The first stab at estimating GDP suggested that the UK economy had shrunk by an eye-watering 0.7% during the quarter, after declining by 0.3% in the first three months of the year.
"Since then subsequent data revisions seem to suggest that there will be an upward revision to the numbers with construction numbers being revised higher along with two to three months of retail sales numbers. These revisions are expected to still show a contraction but of -0.5%, or even -0.4%. Anything less than that level of adjustment would be a disappointment. FTSE 100: Miners and financials provide a drag
Mining stocks were heavy fallers early on with Kazakhmys, Rio Tinto, ENRC, Antofagasta, Anglo American, Vedanta, BHP Billiton and Randgold falling sharply. Anglo American dropped after Jefferies downgraded the stock this morning from 'buy' to 'hold' despite yesterday's news that it had resolved a 10-month dispute with Codelco relating to assets in Chile. "While this outcome should be a modest positive for Anglo, we are increasingly concerned about the fundamental outlook for the company, " the broker said. Financials were also out favour with fund manager Ashmore among the worst performers after Citigroup lowered its rating to 'sell'. Global banking group HSBC was under the weather on rumours that it is in talks about a settlement concerning the allegations of laundering funds of sanctioned countries such as Iran and Sudan.
Work-wear and wash-room facilities provider Berendsen rose after increasing profitability in the first half of 2012, despite a small dip in revenues. Logistice firm Stobart fell after saying its short-term performance in transport is lower than market expectations as the current recessionary climate continues to hurt the sector. Platinum miner Lonmin was out of favour after appointing Simon Scott, the group's Chief Financial Officer, as Acting Chief Executive Officer (CEO) while Ian Farmer is receiving treatment for his illness. In small caps news, upmarket cooker maker AGA Rangemaster dropped over 10% after deciding not to pay an interim dividend as revenues and profits slipped in the first half.
FTSE 100 - Risers
Diageo (DGE) 1,715.00p +1.00%
Shire Plc (SHP) 1,943.00p +0.99%
Centrica (CNA) 326.30p +0.96%
SSE (SSE) 1,357.00p +0.89%
Aggreko (AGK) 2,279.00p +0.89%
GlaxoSmithKline (GSK) 1,463.50p +0.86%
Bunzl (BNZL) 1,111.00p +0.73%
Severn Trent (SVT) 1,738.00p +0.70%
Unilever (ULVR) 2,262.00p +0.67%
Compass Group (CPG) 714.00p +0.63%
FTSE 100 - Fallers
Kazakhmys (KAZ) 650.00p -4.48%
Ashmore Group (ASHM) 332.20p -4.13%
Rio Tinto (RIO) 2,855.00p -3.45%
Eurasian Natural Resources Corp. (ENRC) 339.70p -3.36%
Anglo American (AAL) 1,879.50p -3.19%
Antofagasta (ANTO) 1,117.00p -3.04%
Vedanta Resources (VED) 914.50p -2.76%
BHP Billiton (BLT) 1,911.00p -2.52%
Royal Bank of Scotland Group (RBS) 222.50p -2.37%
Randgold Resources Ltd. (RRS) 6,260.00p -2.19%
FTSE 250 - Risers
JD Sports Fashion (JD.) 685.50p +4.34%
Perform Group (PER) 380.00p +3.49%
Berendsen (BRSN) 525.00p +2.14%
St. Modwen Properties (SMP) 208.40p +2.06%
Devro (DVO) 309.80p +1.57%
Redrow (RDW) 141.90p +1.36%
COLT Group SA (COLT) 118.80p +1.28%
PZ Cussons (PZC) 307.40p +1.28%
Inmarsat (ISAT) 570.50p +1.24%
TR Property Inv Trust (TRY) 163.50p +1.24%
FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 39.11p -4.84%
Stobart Group Ltd. (STOB) 115.00p -3.44%
Lonmin (LMI) 618.50p -3.36%
Ferrexpo (FXPO) 185.90p -3.08%
Avocet Mining (AVM) 90.40p -2.80%
Soco International (SIA) 338.20p -2.62%
SIG (SHI) 100.00p -2.53%
Tullett Prebon (TLPR) 284.90p -2.33%
Shanks Group (SKS) 90.40p -2.27%
Premier Oil (PMO) 368.60p -2.20%
| FX round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | | Euro strikes seven week high
The euro rallied against the dollar on Thursday for the fourth consecutive session on reports that Spain is seeking a bailout.
The euro climbed to $1.2564 from $1.2535 the previous session, the highest closing level since the start of July.
Rumours circled throughout the session that Spain could seek a sovereign bailout. However there was no official confirmation about the reports.
Meanwhile the dollar remained under pressure on increased expectations the US Federal Reserve could opt for more stimulus measures "fairly soon" after minutes on Wednesday showed most central bank officials were concerned about the lack of progress made by the US economy. Investors are increasingly expecting a third round of quantitative easing, otherwise known as QE3.
The dollar index, which measures the US currency against a basket of six other major currencies, declined to 81.368 from 81.474 late Wednesday.
Against the yen, the dollar bought ¥78.48 hardly changed from ¥78.43 the previous session.
Sterling rose to $1.5866 from $1.5868 on Wednesday as appetite for perceived riskier currencies increased after the Fed indicated that more stimulus could be on its way soon.
UK Event Calendar
INTERIMS
Aga Rangemaster Group, Berendsen, Henry Boot
INTERIM DIVIDEND PAYMENT DATE
Edinburgh UK Tracker Trust, Microgen, Throgmorton Trust
QUARTERLY PAYMENT DATE
Picton Property Income Ltd
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Durable Goods Orders (US) (13:30)
GMS
Mouchel Group, Small Companies Dividend Trust
FINALS
Eurocommercial Properties NV
ANNUAL REPORT
Renishaw
AGMS
IRET Securities Ltd Zero Div Pref, Pathfinder Minerals , Pathfinder Minerals , Picton Property Income Ltd, Stagecoach Group
UK ECONOMIC ANNOUNCEMENTS
GDP (output, income & expenditure) (09:30)
Index of Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Aberdeen New Dawn Inv Trust, AEC Education, Heath (Samuel) & Sons, Latham (James), Puma VCT V, RIT Capital Partners, Volex |
| US Market Report | | Stocks slump after Fed official dashes stimulus hopes
Dow Jones -115.3 to 13,057.46
Nasdaq -20.27 to 3,053.40
S&P 500 -11.41 at 1,402.08 US stocks closed firmly lower on Thursday after an official from the Federal Reserve dashed hopes of further economic stimulus action. The Dow Jones ended down for a fourth consecutive session, with only two risers on the blue chip index, while Hewlett Packard led the fallers. St Louis Fed President James Bullard said the minutes from the latest Federal Open Market Committee (FOMC) meeting are now outdated because they do not pick up the stronger economic data that has been released since then. While Bullard is not a voting member on monetary policy, he has a track record for moving markets. Meanwhile, the dollar was down, with the ICE dollar index registering 82.368 comapred to 81.475 the previous evening. The situation wasn't helped by a rise in initial weekly unemployment claims, which grew by 4,000 to 372,000 last week, above the 365,000 expected by analysts. The previous week's figure was revised from 366,000 to 368,000, according to data from the Labor Department. The four-week moving average rose by 3,750 to 368,000 from the previous week's revised figure of 364,250, which was the lowest since late March. COMPANIES Hain Celestial Group rose sharply after Premier Foods announced an agreement to sell the company its sweet spreads and jellies business for $317m in cash and Hain shares. China Unicom was up after it posted a 32% leap in first half profits, ahead of expectations on the back of increased subscriber numbers. Synopsys was also higher after reporting a 45% jump in quarterly profits and an increased full year target. Meanwhile, heading lower was Hewlett-Packard following comments from the Chief Executive of the Dow Jones Industrial Average, Meg Whitman, who said the PC market "remains weak and channel inventory is high across the industry". Supermarket chain Safeway dropped after Jefferies reduced its rating on the stock from buy to hold. Autodesk was significantly lower after the firm's sales came in below forecasts and the company issued a revenue target below expectations. OTHER MARKETS The October West Texas Intermediate crude futures contract fell by 1.02% to $96.27 a barrel in NYMEX trading. 10-year US treasuries rose by 4/32 dollars, with yields at 1.68%. |
| Friday newspaper round-up | | Merkel, Breaking-point, Greece Putting aside the prospect of a clash with Athens, Angela Merkel has made a passionate appeal to the German public to back the Eurozone “dream.” The German chancellor today launched a bold marketing campaign with the slogan: “I want Europe”. “Europe is not just a matter of the intellect – Europe is and remains above all a matter of the heart,” she said in a video clip which launched a nationwide campaign. She added: “We have [European integration] to thank for our peace, our prosperity.” The campaign was backed by German companies, as well as celebrities, sports stars, former politicians and ordinary workers. Their clips ended with the phrase: “They know why Europe is good for us.” A raft of gloomy economic data showed why the rest of Germany needed the reminder. Manufacturing and services data showed that the powerhouse economy’s private sector shrank for the fourth month running in August, according to The Telegraph.
Royal Bank of Scotland faces an even bigger bill than Barclays to settle allegations that it attempted to manipulate Libor, according to a Labour member of the Treasury select committee. MP John Mann said he had been told by “City insiders” that RBS would have to pay out even more than the £290m Barclays was handed in fines after settling the US and British investigations into Libor-rigging. Mr Mann claimed that the Government was already aware of the scale of the fines likely to be imposed on RBS, which is 82% owned by the state. “There is an obvious Government advantage in allowing Barclays to take the full flak and letting RBS sneak in later,” he said, according to The Telegraph.
A £50 rise in monthly costs is all it would take to push one third of households to financial breaking point, according to a new study. With rising mortgage payments and utility bills, budgets are becoming so tight that millions of people would not be able to meet all their monthly bills were they bumped up by £50 or less. Of these, one in five is already finding it impossible to pay all their bills, with increasing numbers turning to debt to get them through the month, the survey by MoneySupermarket.com found. Although people are cutting back expenses where they can, 44% of adults said they have increased their use of credit over the last year to help them make it through each month. As many as 24% of those surveyed said they have relied more on credit cards and 17% have turned to authorised overdrafts to help them meet regular household outgoings. Thirteen per cent have relied on hand outs from friends and family. Household budgets have become increasingly tight as incomes remain stagnant while costs rise.
Sir Howard Davies was under pressure to step down as a director of the Prudential last night after being named chairman of Britain’s biggest insurance funds consolidator, Phoenix Group. Leading shareholders in both insurers expressed concerns about potential conflicts of interest for Sir Howard, the former chairman of the City regulator, the Financial Services Authority. “It’s like the chairman of Marks & Spencer joining the board at Booker [the cash and carry chain],” said one top Prudential investor. “I find it extraordinary that the new chairman of the Prudential [Paul Manduca] has signed off on that appointment. It is bizarre,” he said. Several of Phoenix’s most senior shareholders said that they raised concerns about potential conflicts when they were told in advance, writes The Times.
Greece will not be forced out of the single currency until after the US presidential elections at the earliest, according to senior British officials. Britain believes that any such preparations would prompt President Obama to force Europe to delay expulsion until after November 6. A report on the progress of the Greek economy by the IMF and EU officials is expected towards the end of September or early October. Any Greek exit is likely to happen over a weekend. “President Obama would bring a pretty large amount of pressure to bear on Germany if they tried to go before the elections,” a senior government source said. US officials are worried about the impact of a Greek exit across the Atlantic, and that they would not be able to focus on the inevitable turmoil it would trigger at the same time as the elections. Britain has told Germany that if Greece were to leave, Europe must increase the size of the firewalls to prevent contagion spreading to other Eurozone countries. There is speculation in Whitehall that the Eurozone may try to delay any Greek exit until after the German elections in September 2013, The Times reports.
Germany and France pressed Greece last night to continue reforms as the Greek Prime Minister warned of “a nightmare” if it were forced from the euro.Chancellor Merkel and President Hollande met in Berlin in an attempt to formulate a joint response to Greece’s request for two years more to implement austerity measures in exchange for billions of euros in bailout funds. The leaders of the Eurozone’s two largest economies will hold separate meetings today and tomorrow with Antonis Samaras as Greece faces what has been called its “last chance” to avert expulsion from the euro. Mrs Merkel said yesterday: “It is important for me that we all stick to our commitments ... We will, and I will, encourage Greece to continue along its path of reform, which has demanded a lot of the Greek people,” according to The Times. |
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