| Dull end to sparkling quarter
Market Movers
techMARK 2,115.49 -0.01%
FTSE 100 5,742.07 -0.65%
FTSE 250 11,734.10 -0.17% Early gains dissipated in London and by the time Wall Street opened lower investors were in the mood to bank some of this quarter's handsome gains; despite today's fall, the top share index still put on close to 250 points in the third quarter.
Sentiment was boosted early on by consumer confidence data that was not as bad as feared. Consultancy GfK´s consumer confidence gauge for the month of September rose by 1 point in September, to -28. The consensus estimate was for a retreat to -30.
The increase in the index comes after it was unchanged for four consecutive months and could mark the start of an improvement in consumer confidence after an extended period of weakness, commented analysts at Barclays Research.
The UK´s index of services came in at a 1.1% month-on-month rate of change for July (Consensus: 1.5%). On a three month basis the gauge rose by 0.1%, ONS says, as expected. Admiral on the rocks
Car insurer Admiral was lower after the Office of Fair Trading (OFT) referred the private motor insurance market to the Competition Commission, as it is concerned that the market is not working well for motorists.
Bearing in mind the OFT's move it was not, perhaps, the best day for state-owned lender Royal Bank of Scotland (RBS) to release more details of its proposed flotation of its insurance arm, the Direct Line Group.
The flotation will be priced somewhere between 160p and 195p per share. The maximum number of shares to be floated will be 575m shares, but the actual number is expected to be somewhere between 375m and 500m, which represent between one-quarter and one-third of the existing share capital of Direct Line.
Final pricing is currently expected to be announced on or around October 11th, 2012, with conditional dealings in the shares on the London Stock Exchange beginning the same day.
Bourses operator London Stock Exchange (LSE) has had a bad week. On Wednesday it revealed the extent to which equity trading volumes have been hit by worries over the Eurozone crisis. Today, it was bashed after it warned that proposed European regulatory changes will cut net treasury income over next financial year.
Recommendations published by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) look set to change the rules of the game, and differ considerably from the initial proposals published in March 2012.
"If adopted in their current form, the recommendations will have some implications for LSE's existing wholly owned subsidiary CCP, CC&G," it added.
The move could significantly reduce net interest income from its Italian clearing house, which currently accounts for over 15% of total group revenue.
Nick Buckles, Group Chief Executive Officer (CEO) of security firm G4S, is to keep his job after dodging the blame in the group's internal report into the Olympics staffing fiasco.
David Taylor-Smith, Chief Operating Officer and Regional Chief Executive Officer of UK and Africa, and Ian Horseman Sewell, Managing Director, G4S Global Events, have been thrown under the bus, however, leading to a shake-up in the management structure of G4S.
Electronics components distributor Electrocomponents blew a fuse after it issued a profit warning. First half performance is now expected to be lower than anticipated, although the group expect profits in the second half to benefit from a combination of a return to sales growth and actions to improve operating margins.
Pubs owner Mitchells and Butlers said like-for-like (LFL) sales increased 3% in the nine weeks to September 15th as the Olympic and Paralympic Games had little impact on overall sales. Total LFL sales for the 51 weeks to September rose 2.1% with food sales up 2.9% and drink sales up 1.4%.
Multi-national design and engineering consultancy Hyder said it now expects first half pre-tax profit to be well ahead of previous forecasts, buoyed by the timing of performance bonuses earned in Australia.
Package tour operator Thomas Cook issued the comforting news that it continues to expect full year results will be in line with market expectations, which were set by the group's interim management statement in August. The group has enjoyed a late surge in bookings from Brits anxious to escape the soggy summer.
Vodafone has seen its price target slashed at Goldman Sachs, to 227p from 233p. Analysts at HSBC have upgraded their view on shares of Tesco to "overweight" but Seymour Pierce has gone the other way, downgrading their recommendation to "reduce" from "hold". Plumbers' merchant Wolseley was upgraded by Deutsche Bank to "buy" from "hold".
| AIM/Small Cap Report | | FTSE 100 - Risers
Fresnillo (FRES) 1,853.00p +4.22%
Polymetal International (POLY) 1,085.00p +2.36%
Randgold Resources Ltd. (RRS) 7,615.00p +1.87%
Antofagasta (ANTO) 1,262.00p +1.28%
Vedanta Resources (VED) 1,029.00p +0.98%
Babcock International Group (BAB) 927.00p +0.98%
Evraz (EVR) 246.60p +0.86%
Aberdeen Asset Management (ADN) 311.10p +0.84%
Croda International (CRDA) 2,425.00p +0.83%
G4S (GFS) 265.70p +0.76%
FTSE 100 - Fallers
Compass Group (CPG) 683.50p -2.98%
Admiral Group (ADM) 1,053.00p -2.95%
International Consolidated Airlines Group SA (CDI) (IAG) 149.00p -1.65%
Anglo American (AAL) 1,817.00p -1.65%
Standard Chartered (STAN) 1,400.00p -1.48%
National Grid (NG.) 683.00p -1.44%
Melrose (MRO) 242.20p -1.42%
WPP (WPP) 841.50p -1.35%
RSA Insurance Group (RSA) 110.50p -1.34%
Johnson Matthey (JMAT) 2,413.00p -1.31%
FTSE 250 - Risers
Stobart Group Ltd. (STOB) 117.70p +4.53%
Centamin (DI) (CEY) 92.50p +3.18%
Kentz Corporation Ltd. (KENZ) 430.90p +3.06%
Oxford Instruments (OXIG) 1,375.00p +3.00%
Ophir Energy (OPHR) 608.00p +2.96%
Afren (AFR) 140.10p +2.79%
Unite Group (UTG) 263.60p +2.69%
Mondi (MNDI) 630.00p +2.61%
Genus (GNS) 1,512.00p +2.44%
Telecity Group (TCY) 895.50p +2.28%
FTSE 250 - Fallers
Electrocomponents (ECM) 200.30p -8.83%
London Stock Exchange Group (LSE) 943.00p -8.00%
FirstGroup (FGP) 240.00p -4.46%
NMC Health (NMC) 181.00p -3.72%
Homeserve (HSV) 210.00p -3.63%
National Express Group (NEX) 209.70p -3.36%
New World Resources A Shares (NWR) 265.00p -2.79%
Go-Ahead Group (GOG) 1,312.00p -2.74%
ICAP (IAP) 321.10p -2.70%
Imagination Technologies Group (IMG) 475.00p -2.64%
FTSE TechMARK - Risers
Sepura (SEPU) 86.75p +3.89%
Ark Therapeutics Group (AKT) 3.48p +3.73%
Innovation Group (TIG) 22.00p +3.53%
Psion (PON) 88.00p +2.92%
RM (RM.) 82.62p +2.64%
Kofax (KFX) 306.25p +2.42%
Vectura Group (VEC) 86.50p +2.37%
FTSE TechMARK - Fallers
AEA Technology Group (AAT) 0.055p -8.33%
Skyepharma (SKP) 92.00p -1.60%
Phoenix IT Group (PNX) 152.50p -1.29% |
| Sector movers |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | | Mixed fortunes in Travel & Leisure Goals Soccer Centres, the 5-a-side football centre operator, has expanded its issued share capital by around one-twentieth through a discounted placing of shares.
The group raised around £2.8m through the placing of 2.43m shares at 115p per share, some 7.5p below last night's closing price. As is usual when a new pile of shares comes on to the market at a price below the prevailing level, the shares headed lower in a generally dull Travel & Leisure sector.
Elsewhere in the sector, however, shares in Thomas Cook, the package tour operator, were wanted after the group reiterated full-year profits guidance on the back of late surge in summer bookings.
With the summer season now almost over, cumulative bookings are tracking ahead of planned capacity in most markets, the travel group said, while the late rush to escape Britain's soggy summer means price trends have been better than those reported on back in August; aeroplane load factors also remain high.
Watermark Global, the AIM-quoted company with investments in acid mine drainage and coal briquetting in South Africa, was the best performer in the vaolatile Industrial Metals & Mining sector which, on Friday, was having one of its up days.
Watermark was wanted after interim results revealed it has moved into the black, with profit before tax of £2.72m versus an interim loss last year of £0.63m.
Possibly of more interest to shareholders was the assertion of Peter Marks, the Chairman of Watermark, the company’s assets are worth 0.33p per share, whereas the shares trade at only 0.15p, even after Friday's 0.45p rise.
Top performing sectors so far today
Forestry & Paper 6,775.18 +2.44%
Industrial Metals & Mining 2,694.24 +0.90%
Real Estate Investment & Services 1,767.45 +0.87%
Software & Computer Services 903.84 +0.75%
Electronic & Electrical Equipment 3,373.50 +0.43%
Bottom performing sectors so far today
Financial Services 5,114.42 -1.12%
Travel & Leisure 4,924.55 -1.11%
Automobiles & Parts 5,036.19 -0.83%
Gas, Water & Multiutilities 5,243.49 -0.79%
Mobile Telecommunications 4,091.53 -0.78% |
| US Market Report | | Europe Worries, Disappointing Data Weighing On Stocks
Stocks have moved mostly lower over the course of the trading day on Friday, partly offsetting the strong gains posted in the previous session. Lingering concerns about the financial situation in Europe are weighing on the markets along with disappointing U.S. economic data.
The major averages have been rangebound in recent trading, stuck firmly in negative territory. The Dow is down 77.83 points or 0.6 percent at 13,408.14, the Nasdaq is down 20.71 points or 0.7 percent at 3,115.89 and the S&P 500 is down 8.74 points or 0.6 percent at 1,43.41.
The weakness on Wall Street comes as traders are keeping a close eye on developments in Europe, waiting on the release of the results of stress tests of Spanish banks.
While the unveiling of Spain's budget for 2013 contributed to the rally that was seen on Thursday, analysts have noted that the country still faces difficult times ahead.
Peter Boockvar, managing director at Miller Tabak, said, "The initial reaction yesterday was that maybe the Spanish news was enough to satisfy any potential conditions brought upon them with an eventual bailout request. Either way, Spain will be asking for help."
"Noon time we'll see how much money the Spanish banking system will be thought to need for recaps, with 60 billion euros expected," he added. "The ESM though won't give Spain the money until banking oversight in the Euro zone is up and running and that may not be until 2013."
Further selling pressure was generated by a report from the Institute for Supply Management - Chicago showing an unexpected contraction in Chicago-area business activity in the month of September.
The ISM Chicago said its business barometer dropped to 49.7 in September from 53.0 in August, with a reading below 50 indicating a contraction in business activity. With the drop, the barometer fell to its lowest level in three years.
A separate report from Reuters and the University of Michigan showed that consumer sentiment improved by less than previously estimated in September, although the consumer sentiment index was still at a four-month high.
Before the start of trading, the Commerce Department released a report showing that personal income edged up by just 0.1 percent in August, matching the downwardly revised increase reported for July.
The report also showed that personal spending rose by 0.5 percent in August, although the increase was largely due to higher gas prices. When adjusted to remove price changes, spending edged up by just 0.1 percent.
Among individual stocks, Nike (NKE) has come under pressure after the athletic apparel giant reported stronger than expected first quarter results but also reported future orders that trailed estimates on weak demand from China. Shares of Nike are down by 1.5 percent.
Sector News
Reflecting concerns about the outlook for global demand, steel stocks have come under considerable selling pressure on the day. The NYSE Arca Steel Index has fallen by 1.8 percent, extending the sharp downward move seen throughout the past two weeks.
ArcelorMittal (MT) and Cliffs Natural Resources (CLF) are turning in two of the steel sector's worst performances, falling by 3.7 percent and 2.8 percent, respectively.
Networking stocks are also seeing significant weakness in mid-day trading, dragging the NYSE Arca Networking Index down by 1.7 percent. Adtran (ADTN) is leading the sector lower after cutting its third quarter guidance.
Brokerage, trucking, and oil stocks are also posting notable losses, moving to the downside along with most of the major sectors.
| Week Ahead | | Sainsbury and Tesco go head-to-head There is a retail theme to next week's results, with supermarket giants Tesco and Sainsbury set to report, along with car products provider Halfords, homewares retailer Dunelm and fashion chain Ted Baker.
On the economic front, central banks will be in focus with the European Central Bank making its interest rate announcement on Thursday, a few hours of the Fed's statement in the US.
On Friday, the big announcement is the US non-farm payrolls figure for September, with the market expecting an increase of 116,000.
Panmure Gordon's view on the trading updates of supermarket rivals Tesco and Sainsbury is that, taking the long term view, neither is very important.
"Sainsbury’s Q2 [second quarter] trading statement is not important in the context of what we expect will be significant changes to the food retailers’ strategic priorities over the next 12 months. We expect space growth to slow, investment to shift online and ultimately significant and recurring returns of capital to shareholders," the retail team at Panmure Gordon opined.
"We look for similar like-for-like sales growth in Q2 to that seen in Q1, which delivered 1.4% (ex-fuel). We expect to see continued growth online at around double that recorded by Ocado," the broker added.
Looking at the supermarket sector as a whole, Panmure Gordon thinks the ending of the "space race" and the re-focus of investment online is "but the first step to making the sector investable again and the path that we have outlined should lead to a significant revaluation."
Seymoure Pierce wants to see how the aggressive money-off coupon campaign has affected sales and profitability at Tesco. “Attention will also be focused on whether the international business has slowed much from its Q1 [first quarter] update, particularly South Korea where new opening hour legislation was introduced at the end of Q1, as well as an update on the US where losses are still unacceptably high,” the broker suggests.
The broker is forecasting a 6% fall in first half profit before tax to £1,603m and a flat dividend per share of 4.6p. "A fall in profits from the UK is expected to be partially offset by improvements in Asia, US and the bank and flat Europe," they predict.
The first quarter interim management statement from Dunelm sees the group going up easier comparatives figures, as a year ago like-for-like (LFL) sales were down 2.0% year-on-year (yoy).
"However, given the deterioration in market data, we expect a sharp slowdown in LFL sales and pencil in a flat quarter for Dunelm. Gross margin likely to show modest progress yoy," Peel Hunt suggests. Friday broker round-up
African Minerals: Investec cuts target to 482p from 507p, retains buy
Cairn Energy: Jefferies raises target to 385p from 305p, maintains buy
Schroders: Jefferies upgrades to buy
Tesco: HSBC lifts target to 390p from 360p, upgrades to overweight
Tesco: Seymour Pierce downgrades to reduce from hold, keeps target at 310p
Vodafone: Goldman Sachs trims price target to 227p from 233p, retains buy
Wolseley: Deutsche Bank raises target to 3092p from 2470p, upgrades to buy |
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