London open: Japanese slowdown weighs on stocks
Market Movers
- techMARK 2,108.97 -0.33%
- FTSE 100 5,828.72 -0.31%
- FTSE 250 11,432.57 -0.33%
- Petrofac leads fallers early on
- Japanese GDP growth misses forecasts
- Germany could block aid to Greece
The FTSE 100 fell slightly in early trade on Monday on concerns over the global economy after Japanese growth figures disappointed.
The Japanese economy grew by just 0.3% in the second quarter on the back of weak consumer spending. Annualised growth was just 1.4% in the April-June period, well below the 5.5% growth the previous quarter and under the 2.3% expansion expected.
"The poor Japanese growth figures do however encourage the BOJ to pump additional easing measures and this has helped Asian markets recover from lows," said Ishaq Siddiqi, a market strategist from ETX Capital.
As for London markets, Siddiqi said that activity is expected to "pick up a touch" with some traders back at their desks after holidays. "However, we are at the height of the summer season so low volumes are likely to persist in the weeks ahead," he said.
In other news, Michael Fuchs, the deputy head of Angela Merkel's CDU party, said at the weekend that Germany will block new aid to Greece if it's not happy with the Troika's findings. "You can quote me: even if the glass is half-full, that is not enough for a new aid package...Germany cannot and will not agree to that," he said.
FTSE 100: Petrofac disappoints with first-half results
Shares in oilfield services firm Petrofac dropped despite reporting a strong first half, driven by growth across all its markets. Earnings per share were up 32% to 94.8c, with pre-tax profits rising to $412.5m, from $300m the year before.
"Even though earnings per share beat, the market hasn't been told anything positive it didn't already know. Some analysts are citing the number of delayed contracts awarded in Onshore Engineering and Construction as a reason to temper FY'13 outlook," said trader David White from SpreadEX.
Oil giant BP was slightly lower after announcing the sale of its Sunray and Hemphill gas processing plants in Texas for $227.5m.
Resource peers Vedanta, Xstrata and Kazakhyms were also out of favour due to concerns over global economic growth. Meanwhile, Costa owner Whitbread snakes after Deutsche Bank downgraded its rating on the stock to 'hold'.
Heading the other way was under-fire banking group Standard Chartered as it continues to rebound from its recent falls. Shares were trading around the 1,345p mark this morning, but still well off from the 1,567p level reached on August 3rd, the day before it was revealed that the lender had engaged in illegal transactions with the Iranian government.
FTSE 250: Michael Page, MITIE and Colt provide a drag
Recruitment firm Michael Page fell after its profits took a tumble as market conditions worsened in the second quarter; things are not looking much brighter for the second half of the 2012 either.
Outsourcing and energy services group MITIE was lower despite saying it has made a 'good start' to its financial year with 87% of budgeted revenues for the year having already been secured.
Telecoms group Colt was also down after having beefed up its presence in the small to medium enterprises (SME) market with a bolt-on acquisition of a UK cloud computing specialist.
FTSE 100 - Risers
Standard Chartered (STAN) 1,344.50p +1.36%
British Sky Broadcasting Group (BSY) 754.00p +0.87%
British Land Co (BLND) 543.00p +0.74%
Polymetal International (POLY) 934.00p +0.70%
RSA Insurance Group (RSA) 114.10p +0.62%
Resolution Ltd. (RSL) 219.00p +0.60%
Land Securities Group (LAND) 802.50p +0.56%
Sage Group (SGE) 299.70p +0.47%
Prudential (PRU) 813.50p +0.43%
Standard Life (SL.) 258.50p +0.39%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,494.00p -4.66%
Vedanta Resources (VED) 975.50p -2.16%
Shire Plc (SHP) 1,954.00p -1.76%
Whitbread (WTB) 2,117.00p -1.53%
Xstrata (XTA) 913.40p -1.48%
GKN (GKN) 214.90p -1.33%
Evraz (EVR) 267.50p -1.07%
Kazakhmys (KAZ) 738.00p -1.07%
IMI (IMI) 881.00p -1.07%
Antofagasta (ANTO) 1,121.00p -1.06%
FTSE 250 - Risers
Ruspetro (RPO) 155.00p +4.03%
Dunelm Group (DNLM) 591.00p +1.90%
BH Macro Ltd. GBP Shares (BHMG) 1,939.00p +1.73%
Phoenix Group Holdings (DI) (PHNX) 494.90p +1.58%
Dexion Absolute Ltd. GBP Shares (DAB) 135.90p +1.34%
Hiscox Ltd. (HSX) 458.80p +1.28%
Stobart Group Ltd. (STOB) 120.00p +1.27%
Dechra Pharmaceuticals (DPH) 486.07p +1.27%
Rank Group (RNK) 121.40p +1.17%
Diploma (DPLM) 434.70p +1.12%
FTSE 250 - Fallers
Petropavlovsk (POG) 442.40p -2.34%
Kenmare Resources (KMR) 39.17p -2.32%
Salamander Energy (SMDR) 191.10p -2.30%
Big Yellow Group (BYG) 308.50p -2.06%
Regus (RGU) 98.95p -2.03%
Michael Page International (MPI) 371.30p -2.03%
Hunting (HTG) 790.00p -1.68%
Essar Energy (ESSR) 111.80p -1.67%
Ferrexpo (FXPO) 188.00p -1.62%
UK Event Calendar Monday August 13
INTERIMS
Michael Page International, Petrofac Ltd.
QUARTERLY EX-DIVIDEND DATE
Lilly (Eli) & Co
Q2
Telecom Egypt SAE GDS (Regs)
GMS
easyJet
ANNUAL REPORT
Provexis
IMSS
Stagecoach
AGMS
1pm, ShalkiyaZinc NV GDR (Reg S)
FINAL DIVIDEND PAYMENT DATE
Monks Inv Trust | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe open: China concerns still hitting markets
Market movements:
FTSE 100: 5,834 -0.2%
Dax 30: 6,942 - 0.04%
CAC 40: 3,432 -0.09%
IBEX 35: 7,040.10 -0.11%
FTSE MIB: 14,590.77 +0.29% - China growth worries persist
- Italy goes to market for €8bn
Catching up with the DragonEuropean equity markets are just tipping into the red this morning after Japanese gross domestic product data disappointed and Bank of America cut the growth forecast for China.
There are concerns that Chinese growth may be slowing down more than expected with the worst still ahead. On Friday Chinese export growth in July registered 1%; this compares to expectations of around 8%, a big miss.
"Not everybody is completely convinced that the Chinese government will do enough to support growth in the months ahead," says Markus Huber from ETX Capital.
Italy taps debt marketsIn Europe we are light on big data announcements today leaving equities to open relatively flat this morning.
The main focus will be on Italy auctioning off €8bn of one year bills today, but there doesn't seem to be much concern about Italy getting what it needs.
Indeed Italy's MIB Index was the only major European bourse in positive territory in early trading.
"Market sentiment, especially for short maturities, has improved over the past week, following ECB [European Central Bank] President Draghi's comments to do 'whatever it takes to preserve the Euro' and to 'undertake outright open market operations focused on the shorter part of the yield curve'," says Huw Worthington at Barclays Capital.
However, more jaded commentators are warning that thin summer markets might cause yields to move up even further.
Solarworld in the shadeGerman solar panel maker Solarworld is friendless after it lowered full-year revenue guidance. In the second quarter of 2012 the company made a loss of €161m on sales of €169.6m.
Over the border in Switzerland, money manager Julius Baer plans to raise 750m Swiss francs through a rights issue to help fund the 850m franc purchase of BofA Merrill Lynch's wealth management activities outside of the USA.
DAX - Risers
E.ON AG €17.95 +0.81%
Allianz SE €87.16 +0.70%
SAP AG €51.9 +0.66%
DAX - Fallers
Volkswagen AG €146.85 -0.68%
ThyssenKrupp AG €16.34 -0.70%
Infineon Technologies AG €5.91 -0.96%
CAC 40 - Risers
Credit Agricole (ACA) € 4.03 +1.28%
BNP Paribas (BNP) € 34.06 +1.14%
AXA (CS) € 11.35 +1.11%
Societe Generale (GLE) € 20.26 +0.97%
Veolia Environnement (VIE) € 8.26 +0.94%
Alstom (ALO) € 27.94 +0.29%
GDF Suez (GSZ) € 19.35 +0.23%
Vivendi (VIV) € 15.66 +0.22%
EDF (EDF) € 16.47 +0.18%
Unibail-Rodamco (UL) € 162.10 +0.15%
CAC 40 - Fallers
LVMH (MC) € 133.20 -1.08%
Technip (TEC) € 86.28 -0.95%
Alcatel-Lucent (ALU) € 0.98 -0.81%
Danone (BN) € 48.69 -0.72%
EADS (EAD) € 30.51 -0.60%
Lafarge (LG) € 37.76 -0.58%
Publicis Groupe Sa (PUB) € 41.65 -0.54%
ST Microelectronics (STM) € 4.90 -0.43%
Schneider Electric (SU) € 48.96 -0.40%
Saint Gobain (SGO) € 26.51 -0.39%
| US Market Report | US close: Even the bad news is good
Dow Jones: +43 at 13,208
S&P 500: +3 at 1,406
NASDAQ Composite: +2 at 3,021 US equities shrugged off worries about slowing economic growth in China to keep the bull run going.
In July the world's second largest economy saw exports rise just 1% compared to a consensus estimate of a rise of 8%. Imports, meanwhile, grew less than expected. The year-on-year rise was 4.7% versus market expectations of a 7.2% rise. The trade surplus narrowed from $31.7bn in June to $25.1bn in July.
To add to the gloom, local currency lending for last month was 540.1bn yuan, compared to 919.8bn in June.
The International Energy Agency (IEA) cut oil demand expectations for 2012 and 2013 by 300,000 to 400,000 barrels per day, according to its August Oil Market Report.
The IEA noted that the change is due to "baseline data revisions and a weaker economic prognosis".
Despite this reduction in forecasts, the IEA still expects annual growth of 800,000 to 900,000 barrels per day with demand averaging 89.6m barrels per day in 2012 and 90.5m in 2013.
Although macroeconomic news initially had investors drawing in their horns, the afternoon session saw shares take off, pushing the S&P 500 index to a five week high. Once again, the reason for the turnaround was the ability of stock market bulls to turn any negative into a positive, to wit bad news means more fiscal stimulus from global banks is on the way.
RIM and IBM in spaghetti soup rumoursEmbattled Research In Motion (RIM), maker of the fast-fading Blackberry phone, attracted speculative interest as rumours circulated that International Business Machines (IBM) is sniffing around. looking to buy RIM's enterprise-services unit.
Things were not looking quite as rosy for another tech colossus of yesteryear, Yahoo!, which fell back after management appeared to signal it would not be returning cash to shareholders despite selling half its stake in Chinese e-commerce platform Alibaba for $7bn. New Chief Executive Officer Marissa Mayer may prefer to keep the windfall to invest in the business.
US fund manager Janus Capital has its glad-face on after sealing a deal which will seek Japan's largest life assurance firm, Dai-Ichi Life, take a large stake in the US firm.
The Japanese firm is looking to buy at least 15% and up to 20% of the US fund manager, which has seen its star wane since its golden era of the nineties.
Medical devices maker CareFusion was in rude health after announcing fiscal fourth-quarter profits that were 29% higher year-on-year, as it achieved the double-bubble bonus of lifting sales while cutting operating costs.
Earnings per share of 49 cents were up from 37 cents in the corresponding quarter of last year, and more or less in line with market forecasts. Revenue of $968m was ahead of market forecasts of $957m.
No longer a bad PenneyRetailer JC Penney's second quarter profits were not much to write home about but investors chased up the shares after the group said its facelift programme for its stores began to pay off in July.
Like-for-like sales plummeted 21.7% in the second quarter, with many pundits attributing the sharp decline to an unpopular change in pricing strategy.
Loss per share in the firm's fiscal second quarter was 67 cents, versus positive earnings per share of 7 cents the year before.
In-car gizmos maker Harman International powered ahead on better than expected fiscal fourth quarter figures. Earnings per share (EPS) of 69 cents for the April - June quarter were up sharply from 26 cents a share in the corresponding quarter of 2011. Underlying EPS, which strips out once-off items, came in 2 cents above market consensus at 67 cents.
Investors chased the shares higher as the firm doubled its annual cash dividend to 60 cents a share.
Manchester United will be hoping to make a better start to the new football season than its shares managed on their début in New York. Bundled by US financial institutions into lowering its flotation price to $14, below its previously indicated range of $16 to $20, the flotation is looking about as well-timed as a Paul Scholes tackle, with the shares closing little changed before falling behind in extra-time in screen-based trading.
Other marketsWith the IEA cutting oil demand expectations (see above), there was little enthusiasm for the black stuff in New York trading, and the September futures contract for West Texas light sweet crude eased 49 cents to $92.87 a barrel.
In contrast, gold edged higher on Friday. With equity investors not sure which way to turn, gold seemed like a safe option, especially as a weakening US dollar made the yellow metal cheaper in relative terms. Gold for December delivery rose $2.60 to $1,622.80 an ounce on the Comex division of the New York Mercantile Exchange.
S&P 500 - Risers
Janus Capital Group Inc. (JNS) $8.46 +10.01%
Harman International Industries Inc. (HAR) $45.68 +7.46%
CareFusion Corp. (CFN) $26.29 +7.00%
J.C. Penney Co. Inc. (JCP) $23.40 +5.88%
GameStop Corp. (GME) $17.74 +5.41%
Netflix Inc. (NFLX) $59.90 +3.44%
Seagate Technology Plc (STX) $34.18 +3.29%
DIRECTV (DTV) $52.10 +3.17%
Broadcom Corp. (BRCM) $35.35 +2.97%
Metropcs Communications Inc. (PCS) $9.03 +2.85%
S&P 500 - Fallers
Monster Beverage Corp (MNST) $54.27 -11.32%
Big Lots Inc. (BIG) $38.44 -6.95%
Yahoo! Inc. (YHOO) $15.15 -5.37%
DeVry Inc. (DV) $19.23 -3.22%
Chesapeake Energy Corp. (CHK) $19.68 -3.10%
TripAdvisor Inc. (TRIP) $35.10 -2.99%
Expedia Inc. (EXPE) $54.44 -2.72%
Nabors Industries Ltd. (NBR) $15.23 -2.56%
Southwestern Energy Co. (SWN) $32.04 -2.38%
CF Industries Holdings Inc. (CF) $207.95 -2.31%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $19.70 +1.49%
Alcoa Inc. (AA) $8.98 +1.35%
McDonald's Corp. (MCD) $88.20 +1.20%
United Technologies Corp. (UTX) $77.89 +1.12%
E.I. du Pont de Nemours and Co. (DD) $51.08 +1.07%
Dow Jones I.A - Fallers
American Express Co. (AXP) $55.85 -1.10%
Cisco Systems Inc. (CSCO) $17.54 -0.90%
Walt Disney Co. (DIS) $49.65 -0.62%
Coca-Cola Co. (KO) $78.79 -0.57%
Nasdaq 100 - Risers
Research in Motion Ltd. (RIMM) $8.29 +6.28%
Nuance Communications Inc. (NUAN) $23.53 +3.93%
Netflix Inc. (NFLX) $59.90 +3.44%
Sirius Satellite Radio Inc. (SIRI) $2.48 +3.33%
Seagate Technology Plc (STX) $34.18 +3.29%
DIRECTV (DTV) $52.10 +3.17%
Broadcom Corp. (BRCM) $35.35 +2.97%
Check Point Software Technologies Ltd. (CHKP) $51.79 +2.25%
Nasdaq 100 - Fallers
Monster Beverage Corp (MNST) $54.27 -11.32%
Liberty Interactive Corp (LINTA) $17.52 -7.06%
Yahoo! Inc. (YHOO) $15.15 -5.37%
Expedia Inc. (EXPE) $54.44 -2.72%
Dollar Tree Stores Inc. (DLTR) $50.72 -1.82%
Fastenal Co. (FAST) $42.08 -1.71% |
| Newspaper Round Up | Monday newspaper round-up: Greece, Barclays, Anglo American...
Germany will block any new aid to ailing Greece if Athens does not fully comply with the terms of previous rescue packages, even if other countries support unlocking funds, a senior lawmaker said Sunday. The deputy head of Chancellor Angela Merkel's conservative parliamentary bloc, Michael Fuchs, told business daily Handelsblatt that Berlin was ready to use its veto if it is unhappy with findings from the Greece creditors "troika". [The Telegraph]
Barclays has issued a strong defence of its sale of financial products based on the Libor interest rate index it has admitted trying to fix,The Times has learnt. In a test case, the bank is being sued by a care homes business that claims it lost millions buying swaps pegged to rates that were being manipulated in the bank's favour. Barclays is arguing that it cannot be held responsible as a large corporate entity for matters that its local staff were unaware of when they arranged the financial deals. [The Times]
Cynthia Carroll, chief executive of Anglo American, is under attack from shareholders who have demanded an immediate change of management because they have lost confidence in her strategy and leadership. Several of the miner's biggest institutional investors have contacted Sir John Parker, the chairman of Anglo American, to ask him to start the search for a new chief executive. [The Telegraph]
Manchester United's first day on the New York Stock Exchange got off to a flat start as shares eked out a tiny gain in early trading before falling back to the slashed launch price. United's bankers had been looking to sell shares for between $16 and $20, but cut the launch price late on Thursday to $14 – shaving as much as $100m off the windfall expected for the team and its owners, the Glazer family. Shares crept up by 5¢ in early trading. But even this modest gain was wiped out by close, ending back at $14. [The Guardian]
Japan's economy grew by just 0.3 per cent in the second quarter, lower than expected, as weak exports and softer consumer spending offset continuing strong public investment in the disaster-stricken Tohoku region. Preliminary data from the Cabinet Office on Monday indicated annualised growth of 1.4 per cent between April and June, a significant fall from the revised 5.5 per cent expansion between January and March, and well short of the 2.3 per cent growth rate anticipated by economists. [Financial Times]
The Financial Services Authority's new chief policewoman has warned the City that there will be no let-up in the tough line taken in response to a string of scandals. The regulator has already smashed its 2010 record of £89.1m in fines, with the running total standing at £94.2m for the first seven months of this year. Speaking following her promotion from acting to permanent head of enforcement, Tracey McDermott said: "Effective enforcement has, and will continue to be, a key part of FSA's strategy, to improve behaviour in our markets. We will continue to take tough, targeted action against those who don't play by the rules." [The Independent]
Top accountants have hit back at plans by auditing regulators to drastically increase the fines they will face for misconduct, describing the proposals as "irrational" and "fundamentally misconceived". The Financial Reporting Council, which investigates significant audit failures, believes that the big firms have not been punished adequately for their mistakes and wants to introduce stiffer penalties based on the size of their turnover.
This could result in the largest accountants — the so-called Big Four of Deloitte, Ernst & Young, KPMG and PwC — paying tens of millions of pounds in fines if they are found to have made a mistake in their oversight of a company's accounts or, in the worst cases, helped to cover up fraud. [The Times] |
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