| ADVFN III | Morning Euro Markets Bulletin | |
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Tuesday, 28 August 2012
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| London open: Global concerns dent stocks early on Market Movers
- Japanese concerns weigh on sentiment early on - G4S slips after first-half results, job cuts - Kingfisher lower after broker downgrade. The FTSE 100 slipped on Tuesday morning following a long weekend on concerns over the Japanese economy and uncertainty in the Eurozone. "Another big factor in the fall [for the Footsie] is the increasing expectation that Ben Bernanke won't announce another round of quantitative easing at his speech at Jackson Hole on Friday and we could possibly see things pull back further over day as optimism turns quickly to doubt as we have seen all too often since 2008," said sales trader Matthew Nelson from Spreadex. The Japanese government reduced its view on personal consumption, housing construction, exports, imports and industrial output for the first 10 months of the year. "The Japanese economy is on the way to recovery at a moderate pace, partly due to reconstruction demand, while some weak movements are seen recently," the Cabinet Office said in its monthly report. JPMorgan Securities Japan and BNP Paribas are forecasting a 0.3% and 0.9% decline in third-quarter Japanese gross domestic product (GDP), respectively. Spanish GDP declined at a 1.3% annual rate in the second quarter, compared with the initial estimate of a 1% contraction. Meanwhile, European Central Bank (ECB) member Jörg Asmussen said that the EFSF bailout fund must take the lead in the purchase of any sovereign debt before the ECB steps in. "The ECB council will continue to decide in full independence whether, when and how it will purchase bonds on the secondary market," he said. G4S slips after revealing Olympics costs and job cuts Security giant G4S fell after expressing disappointment over the problems related to its Olympics contract, saying that it will incur a £50m loss on the contract in the first half. Meanwhile, the company said that a restructuring of its overhead structure will lead the loss of 1,100 jobs. Nevertheless, the firm revealed that turnover at constant exchange rates rose 7.5% while profits were flat. | ||||||||||||||||||||||
| UK Event Calendar |
Tuesday August 28 INTERIMS Bouygues SA, Bunzl, Eurasia Drilling Co Ltd GDR (Reg S), FBD Holdings, G4S, Inspired Energy, Lamprell, OJSC Magnitogorsk Iron & Steel Works GDR (Reg S), Regus, UTV Media, Yule Catto & Co INTERIM DIVIDEND PAYMENT DATE Dewhurst, Dewhurst (Non-Voting) INTERNATIONAL ECONOMIC ANNOUNCEMENTS Balance of Payments (GER) (07:00) Consumer Confidence (US) (15:00) M3 Money Supply (EU) (09:00) Q2 OJSC Magnitogorsk Iron & Steel Works GDR (Reg S) AGMS Advanced Computer Software Group, Development Securities, Livermore Investments Group Ltd., Omega Diagnostics Group, Pinewood Shepperton, Vedanta Resources |
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European stocks are seen opening lower on Tuesday amid skepticism about the long-term effectiveness of any possible Fed or ECB intervention to bolster growth and help ease the euro zone debt crisis. U.S. Federal Reserve Chairman Ben Bernanke addresses the Kansas City Federal Reserve Bank's annual symposium on Friday, while ECB President Mario Draghi is also expected to speak at the crucial meet on Saturday. With the ECB ready to resume bond buying, executive board member Jorg Asmussen said during a speech in Hamburg that the central bank would decide "in full independence" how and when it would intervene in the secondary debt markets to help struggling economies like Spain and Italy reduce their borrowing costs. In bond auctions, Italy will sell up to 3.75 billion euros of zero-coupon and inflation-linked bonds today, while the Spanish Treasury hopes to sell up to 3.5 billion euros of short-term bonds. Spanish Prime Minister Mariano Rajoy will hold talks with European Council President Herman Van Rompuy later in the day and meet with French President Francois Hollande later this week, increasing speculation about whether Spain would seek a sovereign bailout. Asian markets are turning in a mixed performance on global growth worries after the Japanese government cut its economic forecast for the first time since October, citing "some weak movements" such as stumbling export growth amid global economic uncertainties. In economic releases, unemployment in France rose at the sharpest pace in nearly three years in July to just below the 3-million mark, the latest figures from the labor ministry showed. The number of registered job seekers in the second-biggest eurozone economy increased for a fifteenth consecutive month in July to reach 2.987 million. This marked an increase of 1.4 percent or 41,300 job seekers from June. Annually, the unemployment rose 8.5 percent. In corporate news, Canadian grain handler Viterra Inc. provided an update regarding the status of regulatory approvals of the proposed acquisition of Viterra by commodity trader Glencore International Plc. Ipsen's first-half 2012 consolidated net profit attributable to the company's shareholders decreased slightly to 90.2 million euros from 91.7 million euros last year. French lender Credit Agricole SA reported a decline in second-quarter net income mainly due to losses at its Greek unit, impairment of Intesa Sanpaolo shares as well as lower revenues. Anglo-Swedish drug maker AstraZeneca Plc said it has appointed Pascal Soriot as its chief executive officer, while Simon Lowth would remain as the company's interim chief executive until Soriot joins. European stocks closed in positive territory on Monday after Charles Evans, president of the Chicago Federal Reserve, spoke of the need for another round of Fed action to bring down the jobless rate in the world's largest economy. The Euro Stoxx 50 index of Eurozone bluechip stocks gained 1.1 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, ended 0.4 percent higher. Around Europe, Switzerland's SMI, France's CAC 40 and the German DAX rose between 0.2 percent and 1.1 percent, while the U.K. market was closed for a banking holiday. |
| US Market Report |
| Market Closed |
| Newspaper Round Up |
| Tuesday newspaper round-up: Unilever, Small businesses, Lonmin Unilever, the company behind Persil, PG Tips and Flora said it will apply lessons from its Asian business as consumers change their shopping habits amid a financial crisis that has left Greece mired in recession for the past five years and Spain with the highest unemployment rate in the industrialised world. "Poverty is returning to Europe," Jan Zijderveld, the head of Unilever's European business told the Financial Times Deutschland in an interview. "If a consumer in Spain only spends 17 euros when they go shopping, then I'm not going to be able to sell them washing powder for half of their budget." Unilever has already started to change the way it sells some of its products. In Spain, the company sells Surf detergent in packages for as few as five washes, while in Greece, it now offers mashed potatoes and mayonnaise in small packages, and has created a low-cost brand for basic goods such as tea and olive oil, according to The Telegraph. Chastised for failing to spot it was coming in 2007, America's central bank quickly embarked on a series of policies designed to show it meant business in easing the crisis and preventing a repeat of the Great Depression. Unlike then, many of the severest headwinds facing the US are beyond the Fed's control. "It is the uncertainty over the fiscal cliff in the US and Europe's debt crisis that is really hurting," says Priya Misra, a strategist in New York at Bank of America. The bank predicts the Fed will introduce a third, $600bnof QE before the end of the year. Bernanke admitted in June that a third round of QE will be subject to "diminishing returns". It is a view that an increasing number of investors subscribe to. If the world's most powerful central banker can no longer deliver the 'shock and awe' that suited during a period of crisis, he must hope that governments in Europe and in the US quickly find the right mix of policies to foster growth and trim debt, The Telegraph reports. The Government was facing calls last night to increase support for cash-strapped small businesses as new figures revealed that more than a million are suffering because customers, many of them larger rivals, are delaying payments. The total amount owed to Britain's small and medium-sized enterprises has climbed to a record £36.5bn in the past six months, putting even more strain on the cash-flow of already hard-pressed companies and pushing some to the brink. Chuka Umunna, the Shadow Business Secretary, said: "These figures expose an ongoing national scandal. Small businesses are being forced, in effect, to bankroll many of their largest customers who simply refuse to pay on time. It is totally outrageous and unacceptable," says The Times. Lonmin is set to hold a "peace accord" meeting this week after the violence at a mine in South Africa that claimed 44 lives spread to bus drivers that take workers on to the site. After a week of mourning, only 13% of the 28,000 workforce returned to work yesterday, which was not enough to restart the mine. Those that showed up were prevented from entering the shafts by militant colleagues. A spokeswoman for the company said that some of its bus drivers were visited by a group of 30 people who warned of "repercussions" if they carried workers to the Marikana mine . Lonmin has taken to local radio stations to urge miners to return to work. The company would not confirm whether it would lay off staff or set an ultimatum for workers to return to the mines now that the period of mourning has ended, The Times explains. German business confidence it at is lowest level for more than two years according to figures that underscore the drag of the debt crisis on Europe's powerhouse economy. The influential Ifo Institute said business confidence in Germany fell for the fourth consecutive month in August amid fears that the country is heading for recession. The institute's business climate index, which surveys companies in manufacturing, construction, wholesaling and retailing, showed that expectations for German exports was negative for the first time in three years. Hans-Werner Sinn, president of the Ifo Institute, said: "The German economy continues to falter." Dominique Barbet of BNP Paribas said: "The declining growth rate in Germany shows that the country is not immune from the general slowdown in Europe and outside Europe." The data caused Brent crude to drop. Stockmarkets were broadly flat on low trading volumes, The Telegraph reports. Finnace Secretary John Swinney will face calls today from CBI Scotland director Iain McMillan to freeze taxes and trim Scottish Government spending to free up cash for infrastructure projects. In its submission ahead of next month's Scottish budget, the business lobbying group is demanding that Swinney adopts a "bolder approach" to slashing the cost of government by capping the public sector wage bill, outsourcing more services to the private sector and spinning off Scottish Water. The CBI also wants to see graduates contributing to the cost of their university education, adding more money to the devolved administration's £35bn budget. The organisation is challenging Swinney not to increase taxes for businesses during the current three-year spending review, following on from the £95m tax on large retailers in last year's budget and the £36m levy on empty premises, The Scotsman reports. |
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