| ADVFN III | Morning Euro Markets Bulletin | |
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Friday, 31 August 2012
| London Market Report | |||||||||||||||||
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| London open: Tentative start ahead of Bernanke speech Market Movers
- All eyes turn to Bernanke - Mining stocks wanted early on after recent losses - Redrow Chairman makes takeover approach Stock markets across Europe have been rather subdued over the past few days and the opening hour of Friday's session was no different as investors continued to show caution ahead of a speech by Federal Reserve Chairman Ben Bernanke later this evening. The big question on everyone's lips - "will Bernanke hint at another imminent round of quantitative easing (QE3)?" - will be answered tonight as the Fed frontman takes the stage in his keynote speech during the meeting of central bankers at Jackson Hole, Wyoming. During the lead up to the event, Bernanke was widely expected to announce a new raft of easing measures. However, as Michael Hewson, the senior market analyst at CMC Markets UK, explained this morning, the "buoyant nature" of recent US economic data may have eased the Fed's concerns about the economy and could limit the room for manoeuvre. "Whatever Bernanke does say it remains quite likely that once the markets have absorbed the focus will inevitably shift towards the next Fed meeting which is scheduled for September 12th and 13th," he said. Markets will also be looking ahead to a European Central Bank (ECB) meeting on September 6th and the German Constitutional Court ruling on the European Stability Mechanism on September 12th, all labelled as "risk" events by analysts at UniCredit yesterday which could lead to significant volatility on markets. In other news, following the meeting between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti in Berlin yesterday, Merkel has requested that Italy delays its request for aid, according to Spanish newspaper El Mundo. FTSE 100: Miners lead the risers early on Mining stocks were making gains this morning, rebounding after bearing the brunt of 'risk-off' trade over the past few days. Kazakhmys, Vedanta, Glencore, Rio Tinto, Randgold, Polymetal, Fresnillo, Anglo American and ENRC were among the top risers on the FTSE 100 in the opening hour. | |||||||||||||||||
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| European stocks are seen opening lower on Friday, extending the previous session's losses, as investors watered-down expectations that Fed Chairman Bernanke will signal new boost to the U.S. economy at the Jackson Hole meet later in the day. Also, sentiment soured after Moody's Investor Service said its review of Spain's government rating for a possible downgrade will continue through the end of September because of pending information. The review is dependent on the scope of the bank recapitalization, support available under the European Stability Mechanism and potential changes to the existing crisis-management framework, the rating agency said. Asian markets are trading mostly lower, with Japan's Nikkei index down 1.5 percent after official data showed Japan's industrial production contracted a seasonally adjusted 1.2 percent month-over-month in July amid slumping global demand. The Japanese yen edged higher on safe-haven buying as weak economic data at home and out of Europe curbed investor risk appetite. China's Shanghai Composite index is moving down 0.17 percent, heading for a fourth month of losses, on earnings disappointment. China is prepared to buy more EU sovereign debt, but wants debt-stricken countries such as Greece, Spain and Italy to embrace budget cuts and get their finances in order to overcome the debt crisis, media reports quoted Chinese Premier Wen Jiabao as saying at a state function in Beijing. Seoul shares are posting modest losses following disappointing economic data. South Korea's factory output fell a seasonally adjusted 1.6 percent from a month earlier in July, contracting for the second straight month, government data showed today, raising concerns the nation's economy might be faltering amid slowing global growth and renewed concerns over the eurozone debt crisis. Closer home, an index measuring consumer confidence in the United Kingdom remained unchanged in August, data from a survey by market research agency GfK showed. The consumer confidence index remained unchanged from the previous month at -29 in August. Economists had expected the index to rise to -27 compared to a reading of -31 in August 2011. In corporate news, French media group Lagardere SCA reported a higher profit for the first half of fiscal 2012, helped mainly by lower tax expenses and an equity accounted contribution from aerospace and defense firm EADS. Qatar Holding LLC, Xstrata Plc's second largest shareholder, said it plans to vote against the merger between Swiss firms Glencore International Plc and Xstrata, unless the merger offer is sweetened. Flights at German airliner Deutsche Lufthansa AG may potentially be impacted from Friday as its cabin crew members prepare for a strike that may put further pressure on its business and also throw into disarray travel plans of thousands of passengers. Steel giant ArcelorMittal SA and the United Steelworkers union have failed to reach a labor deal with just a day left for the expiry of the current four-year labor contract as they remain in "conflict", according to a release by the USW. European stocks ended lower on Thursday after official data showed confidence among euro-zone consumers and businesses fell to its lowest level in three years in August. Several weaker than expected economic reports from around the world also stoked global growth worries, dragging the major European averages down between 0.4 percent and 1.6 percent. On the economic front, jobless claims unexpectedly came in unchanged in the week ended August 25, while a separate report from the Commerce Department showed that personal income and spending rose by 0.3 percent and 0.4 percent, respectively in July, in line with economist estimates. The Dow and the S&P 500 slid about 0.8 percent each, while the tech-heavy Nasdaq dropped 1.1 percent. |
| US Market Report |
US close: Stocks firmly lower ahead of Bernanke speech
Nasdaq -32.48 at 3,048.71 S&P 500 -11.01 at 1,399.48 The Dow Jones fell to the 13,000 mark, while the S&P 500 dropped below 1,400 for the first time in a fortnight. There is a general agreement amongst analysts that Bernanke, who is giving a speech titled "Monetary Policy Since the Crisis", won't be giving the market any miracles and is unlikely to make an announcement over a third round of quantitative easing. Meanwhile, Spain's Prime Minister, Mariano Rajoy, said his government wants to see what the aid conditions are exactly before it commits itself to asking for a bailout from the EU, raising the prospect of the uncertainty over the timing of the Iberian country's request stretching on longer than anticipated and, as is well known, markets do not like uncertainty. Also weighing down the mood was speculation over what will occur at next week's European Central Bank meeting, which is set to take place on Thursday. There has been much chatter about whether or not the bank will be in a position to take any firm action over the on-going economic crisis. In economic news today, initial jobless claims were unchanged at 374,000 last week, according to the Labor Department, after claims for the week before were revised up by 2,000. Meanwhile, US consumer spending rose by 0.4% month-on-month in July, the biggest rise since February, according to the Commerce Department. COMPANY NEWS In company news, web radio group Pandora Media said higher ad sales meant that second-quarter revenues beat expectations. Ciena fell after the computer equipment manufacturer said sales would be below analyst forecasts. It posted a reduction to quarterly losses. Vera Bradley, a women's fashion accessory firm, fell after posted a decline in quarterly profits as margins declined on improved revenue. Retailing firm Sears dropped after being ousted from the S&P 500 Index as its public float is below the 50% threshold required of index constituents. LyondellBasell will replace Sears in the S&P 500. There was better news elsewhere in the retail sector, as both Gap and Macy's posted pleasing like-for-like sales figures for August. Gap's like-for-like (LFL) sales were up 9% on a year earlier, way above the 5.5% improvement the market had been expecting. Macy's also knocked the ball out of the ground, with LFL sales growth of 5.1% versus expectations of a 3.3% gain. Discount chain Target and cash-and-carry barn operator Costco also topped expectations with their LFL sales figures. OTHER MARKETS The yield on the benchmark 10-year Treasury fell to 1.62% from around 1.65% towards the close of trading on Wednesday. The October delivery contract for Crude oil settled down 0.91% at $94.62 per barrel on the New York Mercantile exchange. S&P 500 - Risers GameStop Corp. (GME) $19.16 +2.96% Gap Inc. (GPS) $36.11 +2.67% Marathon Petroleum Corporation (MPC) $50.81 +2.19% Lexmark International Inc. (LXK) $21.53 +2.18% DeVry Inc. (DV) $18.98 +2.04% Coach Inc. (COH) $57.35 +1.96% CIGNA Corp. (CI) $45.68 +1.81% Assurant Inc. (AIZ) $34.59 +1.80% Frontier Communications Co. (FTR) $4.74 +1.72% Costco Wholesale Corp. (COST) $98.59 +1.52% S&P 500 - Fallers First Solar Inc. (FSLR) $19.67 -18.71% Sears Holdings Corp. (SHLD) $52.90 -7.92% JDS Uniphase Corp. (JDSU) $11.07 -5.79% Netflix Inc. (NFLX) $60.48 -4.67% F5 Networks Inc. (FFIV) $97.39 -4.60% Seagate Technology Plc (STX) $32.21 -4.11% Juniper Networks Inc. (JNPR) $17.75 -3.95% Vulcan Materials Co. (VMC) $38.50 -3.73% Leucadia National Corp. (LUK) $21.29 -3.36% Alpha Natural Res (ANR) $5.94 -3.26% Dow Jones I.A - Risers Merck & Co. Inc. (MRK) $43.12 +0.14% Procter & Gamble Co. (PG) $66.88 +0.01% Dow Jones I.A - Fallers Caterpillar Inc. (CAT) $84.47 -1.88% Intel Corp. (INTC) $24.27 -1.61% Cisco Systems Inc. (CSCO) $18.90 -1.56% United Technologies Corp. (UTX) $79.06 -1.38% Walt Disney Co. (DIS) $49.42 -1.24% Alcoa Inc. (AA) $8.44 -1.17% Bank of America Corp. (BAC) $7.91 -1.12% Microsoft Corp. (MSFT) $30.32 -1.08% JP Morgan Chase & Co. (JPM) $36.90 -1.07% McDonald's Corp. (MCD) $88.70 -1.06% Nasdaq 100 - Risers Costco Wholesale Corp. (COST) $98.59 +1.52% Electronic Arts Inc. (EA) $13.00 +1.17% Starbucks Corp. (SBUX) $49.71 +1.10% Warner Chilcott Plc (WCRX) $13.61 +0.81% Bed Bath & Beyond Inc. (BBBY) $67.02 +0.37% Cerner Corp. (CERN) $73.49 +0.31% Virgin Media Inc. (VMED) $27.41 +0.29% Priceline.Com Inc. (PCLN) $603.60 +0.07% Whole Foods Market Inc. (WFM) $97.04 +0.04% Biogen Idec Inc. (BIIB) $145.95 +0.04% Nasdaq 100 - Fallers Sears Holdings Corp. (SHLD) $52.90 -7.92% Netflix Inc. (NFLX) $60.48 -4.67% F5 Networks Inc. (FFIV) $97.39 -4.60% Seagate Technology Plc (STX) $32.21 -4.11% Check Point Software Technologies Ltd. (CHKP) $45.93 -3.75% Green Mountain Coffee Roasters Inc. (GMCR) $24.11 -3.37% Research in Motion Ltd. (RIMM) $6.71 -2.89% Marvell Technology Group Ltd. (MRVL) $10.18 -2.86% Expedia Inc. (EXPE) $51.48 -2.61% KLA-Tencor Corp. (KLAC) $50.89 -2.57% |
| Newspaper Round Up |
| Friday newspaper round-up: Energy bills, Xstrata, China Households are running out of ways to avoid being stung by higher energy bills this winter after one of the UK's big suppliers ended its fixed deal. EDF Energy is withdrawing its dual electricity and gas tariff, which is guaranteed to be maintained until April 2014, after a last-minute stampede. A rival supplier, Scottish and Southern Energy, unexpectedly announced last week that it would raise prices by 9 per cent. Other energy companies are expected to follow soon, triggering a rush by consumers to protect themselves by signing up to cheaper fixed deals. Some 700,000 households have signed up to EDF Energy's Blue + Price Promise April 2014 tariff of 1,058 pounds a year, which compares favourably with its standard variable tariff of 1,129 pounds, The Times reports. The European Central Bank (ECB) would be given sweeping authority over all 6,000 Eurozone banks under a plan being drawn up by the European Commission, putting Brussels on a collision course with Germany and the ECB itself, which have urged a more decentralised first step towards "banking union". The plan, agreed at a meeting this week between top aides to José Manuel Barroso, commission president, and Michel Barnier, the EU's senior financial regulator, would strip existing national supervisors of almost all authority to shut down or restructure their countries' failing banks, giving those powers to Frankfurt. Under the proposal, ultimate authority would pass to a new ECB "supervisory board" separate from the ECB's existing governing council. Although its make-up is still being debated, the leading plan would create a 23-member board: a national representative from each Eurozone country plus six independent members, including its chair and vice-chair, The Financial Times explains. Qatar Holding has confirmed that it will vote against the $70bn merger of Glencore and Xstrata next week after Glencore failed to propose any improvement in terms. As the deal enters its final days before shareholders vote, Qatar, which has a 12% stake in Xstrata, said that it could not accept Glencore's offer of 2.8 of its shares for each one of Xstrata's. Bankers on both sides of the deal, who stand to lose millions in fees if it collapses, are trying to shape how its failure will be perceived by investors, according to The Times. India's biggest privately owned steelmaker has triggered a trade row after it accused South Korean rivals of dumping steel. Seshagiri Rao, the managing director and chief financial officer of JSW Steel, told The Times that Korean companies, including Hyundai and Posco, were abusing the terms of a free trade agreement and that he had appealed to Delhi to clamp down on the practice. Mr Rao said: "An FTA should be of mutual benefit, not put one side at an advantage. That needs to be examined." An agreement signed in 2009 by Japan, India and South Korea cut Delhi's import duties on steel from 7.5% to 3.15%. The duty is due to fall to zero by 2014. In the three months to July, Indian steel imports surged to 2.99m tonnes, compared with 1.92m tonnes during the same period last year. Almost all of the extra imports came from South Korea and Japan, which have about 196m tonnes of installed steelmaking capacity between them but only 120m tonnes of domestic demand, the newspaper reports. The impasse in Japan's parliament has raised fears among investors that the world's third largest economy is being driven towards a "fiscal cliff", Reuters reported. "The government running out of money is not a story made up. It's a real threat," Finance Minister Jun Azumi told a news conference, making a last-ditch appeal for cooperation by opposition parties to pass the bill. "Failing to pass the bill will give markets the impression that Japan's fiscal management rests on shaky ground," he said. Unless the bill clears the current parliamentary session that ends next week, the government will start suspending or reducing some state spending to avoid running out of money for as long as possible, the finance ministry said, The Telegraph says. Premier Wen Jiabao told German Chancellor Angela Merkel that Europe must "strike a balance" between fiscal tightening and measures to promote growth. "Europe's debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly, I am also worried," he said. His comments mark a shift in Chinese policy. Beijing has until now backed austerity across Euroland, but the severity of China's own downturn has begun to rattle policymakers. Exports of electronic goods to Italy crashed 43% in July from a year earlier, and sales to Germany fell 11%. Caixin reported that processing trade to Europe fell 21%, according to The Telegraph. An urgent government-level investigation has been launched to identify the source of an oil spill in the North Sea off Aberdeenhire. A sheen of oil, estimated to contain up to 132 tonnes of oil – equivalent to almost 800 barrels – was spotted from the air 100 miles north-east of the St Fergus terminal on the Buchan coast. The sheen is only two-and-a-half miles from a subsea pipeline, operated by Talisman Energy, where an estimated 13 tonnes of oil are believed to have leaked through a crack in the pipeline over the past week. But detailed analysis has now ruled out any link between the two spills. A spokesman for Aberdeen-based Talisman said yesterday that the "third-party" sheen had been sighted by a spotter plane following the discovery of a leak in the subsea pipeline that connects the Galley field to the company's Tartan Alpha platform, 117 miles north-east of Aberdeen, The Scotsman says. After five years of trying to force the TV world to "go Google", the search company has abandoned its scheme to trade broadcast ads in the same way as it does online banner ads.cIn a victory for the traditional media establishment against a digital insurgent, Google quietly announced in a blogpost on Thursday evening that it would close its TV Ads in Adwords product later this year. The service, which at one stage partnered with NBC Universal and the Hallmark Channel, was supposed to combine the speed, flexibility and targeting capabilities of the web with the emotional punch of the 30-second spot. But amid resistance from some parts of Madison Avenue, Google struggled to obtain enough airtime upon which to sell ads, The Financial Times explains. |
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