| ADVFN III | Evening Euro Markets Bulletin | |
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Wednesday, 05 September
| London Market Report | ||||||||||||
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| Footsie at five-week low ahead of ECB decision Market Movers techMARK 2,086.82 +0.26% FTSE 100 5,657.86 -0.25% FTSE 250 11,446.07 +0.15% Mixed remarks from Eurozone officials prompted a volatile day of trade on London’s stock market on Wednesday as eyes remain fixed on tomorrow’s policy rate decision from the European Central Bank (ECB) and subsequent press conference with bank President Mario Draghi. FTSE 100: Ex-div stocks and BP lead the fallers “Conflicting headlines from Eurozone policy-makers markets feeling rather confused at the end of Wednesday’s session,” said market strategist Ishaq Siddiqi from ETX Capital. The FTSE 100 index closed at 5,658, its lowest level since July 31st. According to Bloomberg this afternoon, unnamed central bank officials have said that Draghi will announce unlimited purchases of short-dated government debt (with maturities of up to three years) that will be sterilised, though the ECB would refrain from setting a public cap on yields. However, according to Michael Fuchs from Merkel’s Christian Democratic Union party, Germany would oppose the ECB’s bond-buying plan if it purchases “too much” sovereign debt without ensuring that these nations agree to strict conditions. “Today’s events have left investors extremely uncertain over the ECB’s action on Thursday – what we know is that the ECB does have the firepower to significantly ease tensions in the debt markets in the near term, however the central bank is extremely constrained with Germany’s opposition,” Siddiqi added this afternoon. Also pressuring stocks today were global growth concerns: Australian second-quarter economic growth figures came in below expectations; Chinese data continues to point to a deceleration in the services sector; a Bank of Japan board member said that the odds of an extended world economic slowdown have increased. More than one-tenth of the top-share index's constituents were trading in ex-dividend format today, which acted as a millstone around the benchmark's neck. These include: Aggreko, ARM Holdings, BHP Billiton, Diageo, Evraz, IMI, Kazakhmys, Resolution, Serco, Shire and Tullow Oil. FTSE 250: Britvic, AG Barr surge on merger speculationOil titan BP was falling heavily on press reports that the US Department of Justice is looking to impose the maximum possible penalty on the firm for its part in the 2010 Deepwater Horizon disaster in the Gulf of Mexico. Gas giant BG Group dropped after analysts at Jefferies lowered their price target for the stock to 1,800p from 2,000p. In contrast, telecoms group BT Group was benefitting from a broker upgrade from JPMorgan Cazenove, who lifted its rating from 'neutral' to 'overweight'. Potential merger partners Xstrata and Glencore were on the rise ahead of a crucial day on Friday, when shareholders vote on the proposed tie-up. Qatar Holdings, which owns around 12% of the miner, is among the several shareholders who have already voiced their opposition to the merger. Insurance group Prudential gained after completing the acquisition of SRLC American Holdings Corp from Swiss Re after receiving all necessary regulatory approvals. Financial services provider and asset management group Hargreaves Lansdown fell into the red after saying that its co-founder would step down later this year. Nevertheless, the company hiked its dividend by a fifth after seeing record levels of revenue, profits, assets under administration (AuA) and active client numbers in the year to June 30th. Investors of Britvic and AG Barr today celebrated the news that the companies are in discussions about an all-share merger which would create ‘one of the leading soft drinks companies in Europe’. "The combination would have compelling industrial logic and represents an opportunity for both companies to enhance their industry position, and achieve significant synergies and shareholder value," the companies said. At today's prices, the market cap of the combined group would be around £1.4bn. Heading the other way was diversified miner Bumi. Shares have lost 17% in the past week since the company announced that its 29.2% associate PT Bumi Resources did not receive a $231m payment from investment fund manager PT Recapital Asset Management. The parties were said to be discussing a new repayment schedule. Sector peer Lonmin also dropped on reports that around 1,000 miners at its Marikana site are staging a protest march as the stand-off over pay which led to the death of 34 workers continues. | ||||||||||||
FTSE 100 - Risers
ITV (ITV) 84.90p +3.54%
Lloyds Banking Group (LLOY) 33.93p +3.16%
Croda International (CRDA) 2,429.00p +2.79%
Petrofac Ltd. (PFC) 1,554.00p +2.37%
Wolseley (WOS) 2,620.00p +2.26%
Xstrata (XTA) 935.10p +1.92%
Kingfisher (KGF) 276.70p +1.84%
Smith & Nephew (SN.) 673.00p +1.82%
Prudential (PRU) 783.50p +1.75%
Shire Plc (SHP) 1,942.00p +1.73%
FTSE 100 - Fallers
Resolution Ltd. (RSL) 203.00p -5.14%
Kazakhmys (KAZ) 570.00p -4.52%
BG Group (BG.) 1,221.00p -3.93%
Evraz (EVR) 211.50p -2.98%
BP (BP.) 423.85p -2.92%
BHP Billiton (BLT) 1,778.50p -2.65%
British American Tobacco (BATS) 3,208.00p -1.91%
Imperial Tobacco Group (IMT) 2,406.00p -1.76%
Tullow Oil (TLW) 1,355.00p -1.67%
Eurasian Natural Resources Corp. (ENRC) 296.10p -1.53%
FTSE 250 - Risers
Britvic (BVIC) 369.90p +12.57%
Barr (A.G.) (BAG) 450.20p +8.33%
Moneysupermarket.com Group (MONY) 141.50p +4.81%
Dechra Pharmaceuticals (DPH) 527.50p +4.35%
Taylor Wimpey (TW.) 54.40p +4.31%
Big Yellow Group (BYG) 315.60p +3.82%
Barratt Developments (BDEV) 164.20p +3.47%
Sports Direct International (SPD) 324.00p +3.18%
Fidessa Group (FDSA) 1,459.00p +3.04%
Heritage Oil (HOIL) 199.50p +2.84%
FTSE 250 - Fallers
Bumi (BUMI) 268.70p -6.70%
Lonmin (LMI) 529.50p -6.20%
Phoenix Group Holdings (DI) (PHNX) 480.00p -5.60%
NMC Health (NMC) 186.00p -5.10%
Cape (CIU) 226.00p -4.72%
Kenmare Resources (KMR) 38.21p -4.12%
Aquarius Platinum Ltd. (AQP) 34.50p -3.39%
Avocet Mining (AVM) 86.80p -3.23%
John Laing Infrastructure Fund Ltd (JLIF) 107.80p -3.14%
Soco International (SIA) 334.00p -2.94
| Europe Market Report | ||||||||
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| European Markets Largely Finished With Gains Ahead Of ECB Announcement The majority of the European markets closed in positive territory on Wednesday. Investors appeared to be cautiously optimistic ahead of Thursday's announcement from the European Central Bank meeting. The upward revision to the second quarter U.S. productivity and costs data also provided some support in the afternoon. The FTSE 100 of the U.K. was under pressure due to the negative performance of BP along with the rest of the energy stocks, as well as the declines in shares of miners and tobacco companies. The European Central Bank on Thursday is widely expected to announce measures to battle the sovereign debt crisis that has plagued the euro area, which could include buying bonds of peripheral governments as indicated by the bank's President Mario Draghi last month. The central bank of 17 nations may also cut the refinancing rate, which is currently at 0.75 percent, while the deposit rate that is already at zero is likely to be left unchanged. The ECB is set to announce the decision at 7.45 am ET and Draghi will hold the regular press conference at 8.30 am ET. Bank of England policymakers are expected to hold steady on quantitative easing and interest rates, as officials continue to assess the impact of bond purchases and the lending facility on economic activity. Given the weak economic condition, the case for more stimulus is seen in the pipeline. Economists widely expect the Monetary Policy Committee headed by Governor Mervyn King to maintain the quantitative easing programme at the current GBP 375 billion. It is set to leave the Bank Rate unchanged at 0.50 percent. The announcement is due on Thursday at 7.00 am ET. The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.22 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, decreased by 0.14 percent. The DAX of Germany climbed by 0.46 percent and the CAC 40 of France gained 0.20 percent. The SMI of Switzerland rose by 0.98 percent, but the FTSE 100 of the U.K. fell by 0.25 percent. In Frankfurt, Fresenius increased by 1.39 percent. Commerzbank upgraded its rating on the stock to "Add" from "Hold." BMW declined by 0.61 percent, after HSBC downgraded the stock to "Neutral" from "Overweight." Daimler also lost 0.13 percent. Kloeckner gained 0.69 percent, after HSBC upgraded the stock. In Paris, STMicroelectronics dropped by 4.89 percent, after UBS downgraded the stock to "Sell" from "Neutral." LeGrand rose by 3.03 percent, after Barclays upgraded the stock to "Overweight" from "Equal weight." In London, BP fell by 2.92 percent on reports that the U.S. Department of Justice will try to prove gross negligence against the oil giant for the Gulf of Mexico oil spill in April 2010. BT Group climbed by 0.50 percent. JPMorgan upgraded the stock to "Overweight" from "Neutral." Sports Direct rose by 3.18 percent, after the sporting goods retailer reported about 25 percent growth in sales for the 13-week period ended July 29, benefited by its pricing measures and Olympics. Theo Fennell shares surged by 27.66 percent. The jewelry and silverware provider confirmed that it is in very preliminary talks with private equity firm EME Capital LLP. Britvic finished higher by 12.57 percent, on news that the company and A.G. Barr are in preliminary merger talks. Richemont gained 1.52 percent in Zurich. The luxury goods group reported a 23 percent increase in sales for the five months ended August, helped by continued positive momentum across its regions. |
| US Market Report |
| Choppy Trading Persists Ahead Of ECB Meeting After turning mixed over the course of the previous session, stocks have shown a lack of direction during trading on Wednesday. The choppy trading comes as traders look ahead to the European Central Bank's monetary policy meeting. Currently, the major averages are posting modest gains. The Dow is up 32.91 points or 0.3 percent at 13,068.85, the Nasdaq is up 0.79 points or less than a tenth of a percent at 3,075.85 and the S&P 500 is up 1.16 points or 0.1 percent at 1,406.10. Uncertainty about tomorrow's European Central Bank meeting is contributing to the lackluster performance on Wall Street, with the bank expected to announce details of a plan to purchase bonds from troubled eurozone countries such as Italy and Spain in order to reduce borrowing costs. Bloomberg News reported that ECB President Mario Draghi's bond-buying proposal involves unlimited purchases of government debt but will refrain from setting a public cap on yields. Traders are also staying on the sidelines ahead of Friday's monthly U.S. jobs report, which is expected to show an increase of about 125,000 jobs in August. Meanwhile, the markets have largely shrugged off a report showing that U.S. labor productivity increased by much more than previously estimated in the second quarter. The Labor Department said productivity increased by an upwardly revised 2.2 percent in the second quarter compared to the preliminary estimate for 1.6 percent growth. Economists had expected the rate of productivity growth to be revised to 1.9 percent. With the upward revision, the productivity growth in the second quarter reflects an even more substantial turnaround from the 0.5 percent drop seen in the first quarter. Among individual stocks, shares of FedEx are down by 1.2 percent after the delivery giant cut its first quarter earnings guidance due to weakness in the global economy. FedEx said it now expects first quarter earnings in the range of $1.37 to $1.43 per share compared to its original forecast for earnings of $1.45 to $1.60 per share. Meanwhile, auto parts retailer Pep Boys is seeing notable strength after reporting stronger second quarter earnings growth. The company also announced the appointment of David Stern as its new CFO. Shares of Pep Boys are up by 5.6 percent on the news. Shares of DeVry have also shown a strong move to the upside after the educational services provider said its board has approved a plan to buy back up to $100 million worth of its common stock. Sector News Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets. Nonetheless, airline stocks have moved sharply higher on the day, driving the NYSE Arca Airline Index up by 1.4 percent. The gain by the index comes after it ended the previous session at its lowest closing level in a month. United Continental and US Airways are turning in two of the airline sector's best performances, advancing by 4.6 percent and 4.4 percent, respectively. Meanwhile, railroad stocks have come under considerable selling pressure, dragging the Dow Jones Railroads Index down by 1.2 percent. Earlier in the session, the index hit its lowest intraday level in well over a month. Within the railroad sector, Providence and Worcester and Guangshen Railway are posting notable losses. |
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