Stocks finish flat
Market Movers
techMARK 2,138.87 +0.48%
FTSE 100 5,858.84 +0.07%
FTSE 250 11,949.80 +0.17% Footsie's movements were being directed by the Grand Old Duke of York today and, as in the old nursery rhyme, ended the day more or less neither up nor down. Extra time often leads to penalties What was set up to be the big item of the day, the decision from the independent directors of mining group Xstata on whether to accept the merger proposals from commodities broker Glencore also turned out to be a damp squib, with the company pleading for more time to canvas key shareholders.
The Takeover Panel duly granted a one week extension which means this time next week we could be sitting here experiencing a spot of deja vu.
Elsewhere in the mining sector, Lonmin reported that more than 80% of miners turned up for work at its Marikana operations after workers called off their strike late on Tuesday following a settlement.
The accord, however, will be quite costly for the company. Following the Marikana agreement Credit Suisse has this downgraded its 2012/13 earnings before interest, taxes, depreciation and amortisation (EBITDA) forecasts from $218m to $95m in 2012 and from $195m to $29m in 2013.
“A positive equity case on Lonmin in our view could be made if the company can grow to 950koz per year. which would require capex of $450m at a minimum.” That, however, would require an equity raise of at least $500m, together with some debt, or $1bn should all its debt be eliminated, the Credit Suisse scribblers suggest.
Credit Suisse reiterated its "underperform" stance and 525p price target on the miner´s shares. M&A news The Sage Group has acquired EBS Empresa Brasileira de Sistemas, a provider of accounting, business management and tax software in Brazil. The acquisition will cost the group up to £10.6m, including a performance related sum of £1.8m.
Guinness brewer Diageo was wanted on rumours that it is preparing to have another crack at Indian outfit United Spirits. The drinks brands colossus made an offer back in 2009 but was sent off with a flea in its ear. This time round it is said to be negotiating to buy a stake in the company, with United Spirits stakeholder Vijay Mallya apparently keen to sell to plug a financing gap in another one of his holdings, the Kingfisher airline.
Lift platform firm going down Tanfield, a global manufacturer of powered access equipment and an investor in Smith Electric Vehicles, slumped after plans to float Smith were binned.
"We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders," said Bryan Hansel, Smith's Chief Executive Officer.
Things just keep getting worse for HMV, the retailer which left it too late to move away from its dependency on selling CDs, DVDs and books in their physical forms. The group saw like-for-like sales decline 11.6% year-on-year in the 20 weeks to September 15th. Including the impact of previously announced store closures, total group sales declined by 14.8%.
"The like-for-like decline was less marked towards the end of the period and we should be helped in the remainder of the year by a strong pipeline of new releases in the music, DVD and games markets ahead of Christmas," said Trevor Moore, the group's newish Chief Executive. Slick numbers from oil companies Nighthawk, a US-focused shale oil development and production company, has said a continuous 24-hour flow test on the John Craig 6-2 well at its 75% owned and operated project at Jolly Ranch in the Denver-Julesburg Basin, Colorado, produced over 600 barrels of oil. The well tested commercial oil flow rates from the Cherokee shale formation, while three further potential oil-bearing zones have been clearly identified in addition to further Cherokee targets, which have not yet been tested.
Shares in Texan oil firm Empyrean Energy moved to a 52-week high on the back of a production update for new wells completed recently on the group's Sugarloaf project. The group has nine wells on the go at the project and has a 3.0% working interest in each of them. The two biggest producers - Davila 1H and Davila 2H - produced an average of 1,123 barrels of equivalent per day over a 30-day period, the group revealed. Other markets The price of oil is back on the rise. The most widely traded futures contract for Brent crude rose $1.31 to $111.34 a barrel on the InterContinental Exchange.
Gilts were friendless on a day when Bank of England Chief Economist Spencer Dale predicted the UK economy is set to show more signs of late later this year or the early part of next year. The yield on the benchmark 10-year gilt is up to 1.83% from 1.80% overnight. Yields move inversely to prices.
FTSE 100 - Risers
Evraz (EVR) 270.00p +3.53%
Pearson (PSON) 1,220.00p +3.21%
Vedanta Resources (VED) 1,084.00p +2.85%
Royal Bank of Scotland Group (RBS) 275.30p +2.53%
Amec (AMEC) 1,171.00p +2.45%
Lloyds Banking Group (LLOY) 40.21p +2.26%
Standard Chartered (STAN) 1,490.00p +2.02%
Vodafone Group (VOD) 178.20p +1.83%
Sage Group (SGE) 325.20p +1.82%
BT Group (BT.A) 232.40p +1.75%
FTSE 100 - Fallers
Xstrata (XTA) 1,018.50p -2.91%
Reckitt Benckiser Group (RB.) 3,610.00p -1.61%
Glencore International (GLEN) 363.00p -1.40%
ITV (ITV) 89.90p -1.37%
National Grid (NG.) 685.00p -1.30%
Imperial Tobacco Group (IMT) 2,372.00p -1.13%
BG Group (BG.) 1,247.50p -0.99%
Weir Group (WEIR) 1,773.00p -0.95%
Rio Tinto (RIO) 3,048.50p -0.93%
Hammerson (HMSO) 449.60p -0.93%
FTSE 250 - Risers
Home Retail Group (HOME) 94.00p +4.85%
Dixons Retail (DXNS) 19.59p +4.76%
Imagination Technologies Group (IMG) 532.50p +4.11%
Halfords Group (HFD) 268.20p +3.35%
Homeserve (HSV) 224.20p +3.32%
JPMorgan Indian Inv Trust (JII) 360.50p +3.30%
Petra Diamonds Ltd.(DI) (PDL) 110.30p +2.99%
Grainger (GRI) 109.30p +2.82%
Ferrexpo (FXPO) 215.70p +2.81%
Essar Energy (ESSR) 121.40p +2.71%
FTSE 250 - Fallers
Bumi (BUMI) 201.00p -19.63%
Euromoney Institutional Investor (ERM) 752.00p -6.58%
Gem Diamonds Ltd. (DI) (GEMD) 178.80p -5.40%
Avocet Mining (AVM) 88.25p -4.08%
Bwin.party Digital Entertainment (BPTY) 106.60p -3.62%
Aquarius Platinum Ltd. (AQP) 43.53p -3.27%
SIG (SHI) 102.50p -3.21%
Lonmin (LMI) 593.00p -2.87%
Talvivaara Mining Company (TALV) 164.40p -2.78%
African Barrick Gold (ABG) 467.90p -2.56%
FTSE TechMARK - Risers
AEA Technology Group (AAT) 0.060p +9.09%
Emblaze Ltd. (BLZ) 49.50p +5.32%
Optos (OPTS) 176.50p +3.82%
E2V Technologies (E2V) 135.00p +3.65%
BATM Advanced Communications Ltd. (BVC) 16.75p +3.08%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.55p -5.84%
Filtronic (FTC) 42.50p -5.29%
Phytopharm (PYM) 12.25p -3.92%
| European Market |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Markets Finished Mostly Higher On Reports Of Spanish Bailout Talks
The majority of the European markets ended Friday's session in positive territory, after reports that the government of Spain is engaged in discussions over a potential bailout. Meanwhile, the discussions in Greece continue and while the situation is not yet resolved, some progress has been made.
The Spanish government and the European Commission are in talks over measures that would be demanded by creditors if the country places an official bailout request, Financial Times reported Thursday citing unnamed officials involved in discussions.
According to the newspaper, the plan will be unveiled next Thursday and will focus on structural reforms rather than new taxes and spending cuts. Discussions between the Greece government and international creditors to fix a deal on EUR 11.5 billion spending reduction reached no clear conclusion late Thursday.
But some progress has been made on lifting the retirement age and pension cuts, which would together contribute a saving of EUR 9.5 billion. A final deal is crucial for Greece to receive a EUR 31.5 billion in aid.
Officials from the European Commission, the International Monetary Fund and the European Central Bank, collectively known as the troika, will leave Athens this weekend. The troika mission is set to come back next week again to finalize the terms if it is not resolved soon.
The Italian government on Thursday slashed the economy's growth forecasts, while sharply hiking its budget deficit targets.
The government led by Prime Minister Mario Monti now forecasts the economy to contract 2.4 percent this year, double the April projection of 1.2 percent contraction.
The recession is forecast to continue in 2013 with the gross domestic product shrinking 0.2 percent, in contrast to the previous projection of 0.5 percent growth.
Rome, meanwhile, hiked its prediction for budget deficit this year to 2.6 percent of GDP from 1.7 percent projected in April. The deficit target for 2013 was lifted to 1.8 percent of GDP from 0.5 percent.
In an interview to Channel 4 television on Thursday, Bank of England Governor Mervyn King said the U.K. is likely to experience a slow recovery. He also said that it is "acceptable" for the UK to miss debt target given the weak growth.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.85 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.42 percent.
The DAX of Germany climbed by 0.84 percent and the CAC 40 of France gained 0.59 percent. The SMI of Switzerland rose by 0.75 percent, but the FTSE 100 of the U.K. declined by 0.03 percent.
In Frankfurt, MAN gained 0.63 percent after JPMorgan raised its price target on the stock.
Adidas dropped by 0.40 percent, after the company slashed its 2015 sales target for the Reebok brand.
Duerr finished lower by 2.78 percent. Berenberg downgraded the stock to "Hold" from "Buy."
In Paris, Technip climbed by 2.01 percent. The company was awarded a contract by Statoil for the fabrication, installation and tie-ins of flowlines for the Gullfaks South field development.
In London, BP lost 0.74 percent. Ireland-headquartered DCC has signed a conditional agreement with BP to buy its liquefied petroleum gas distribution business in the Netherlands and Belgium.
National Grid fell by 1.08 percent, after JP Morgan downgraded the stock to "Underweight" from "Neutral."
Hansard Global sank by 14.41 percent, after the specialist long-term savings provider reported a decline in fiscal 2012 profit.
Essenden surged by 33.33 percent, after the company posted a significantly higher pre-tax profit for its first half, helped by lower costs.
Kuoni rose by 1.15 percent in Zurich. The leisure travel company plans to explore exit options for its small loss-making tour operating businesses that are not of strategic relevance to the company. |
| US Market Report | Stocks Holding On To Gains After Initial Upward Move
After moving higher at the start of trading, U.S. stocks have continued to perform well over the course of the trading day on Friday. While buying interest has remained relatively subdued, the markets continue to benefit from news out of Europe.
The major averages have moved roughly sideways in recent trading, holding on to moderate gains. The Dow is up 35.69 points or 0.3 percent at 13,632.62, the Nasdaq is up 14.76 points or 0.5 percent at 3,190.72 and the S&P 500 is up 4.35 points or 0.3 percent at 1,464.61.
The strength on Wall Street comes on the heels of a report from the Financial Times indicating that European Union officials are working behind the scenes to pave the way for a new Spanish rescue program and unlimited bond buying by the European Central Bank. Citing officials involved in the discussions, FT said the talks are focused on ensuring that the measures that will be required by international lenders as part of a new rescue program are in place before a bailout is formally requested.
Peter Boockvar, managing director at Miller Tabak, said, "While discussions are ongoing, it doesn't mean Spain will be so quick to ask for the help as right now seems to be a fact finding mission for Spanish officials on what the conditions they will be subject to if need be."
Nonetheless, trading activity has remained relatively subdued amid a lack of major U.S. economic data as well as continued uncertainty about the near-term outlook for the markets.
Among individual stocks, Apple (AAPL) is moving moderately higher as the company's highly anticipated iPhone 5 hits stores around the globe. Shares of Apple are up by 0.9 percent.
Earlier this week, Apple announced that pre-orders of the iPhone 5 topped two million in just 24 hours, more than double the previous record of one million held by the iPhone 4S.
Business software giant Oracle (ORCL) is also moving higher after releasing its fiscal first quarter results after the close of trading on Thursday.
Oracle reported first quarter adjusted earnings of $0.53 per share, in line with analyst estimates. However, the company said its revenues dipped 2 percent to $8.18 billion, coming in below expectations.
Meanwhile, shares of MicroVision (MVIS) have come under pressure after the developer of miniature laser display and imaging engines announced that Jeff Wilson has resigned his position as Chief Financial Officer. MicroVision is currently down by 8.2 percent.
Sector News
While most of the major sectors are showing only modest moves, considerable strength is visible among housing stocks. The Philadelphia Housing Sector Index has advanced by 1.9 percent, reaching its best intraday level in almost five years.
KB Home (KBH) has helped to lead the housing sector higher, with the homebuilder surging up by 8.5 percent after unexpectedly reporting a third quarter profit compared to a year-ago loss.
Telecom stocks have also shown a notable move to the upside on the day, driving the NYSE Arca North American Telecom Index up by 1.7 percent. MetroPCS Communications (PCS) and Motorola Solutions (MSI) are turning in two of the sector's best performances.
Health insurance, biotechnology, and electronic storage stocks are also seeing strength in mid-day trading, although buying interest remains subdued. |
| Broker tips | Burberry, JD Wetherspoon, Asian Citrus Analysts at Credit Suisse were left scratching their heads after a meeting with Burberry management and a visit to the Spring '13 showroom on Thursday night. What has gone wrong in the two weeks through September 8th, they ask themselves.
“Our recent conversations with peers and initial checks with luxury operators makes us guess that Burberry's warning possibly reflects a combination of sector-wide factors (e.g. slowing economy and pull-back in gift giving in China, slowing US) and company-specific issues,” they write.
Even so, they came away with the knowledge that Burberry's merchandising teams are analysing the potential factors above and accelerating initiatives to add more appealing items and greater wow factor to stores in coming months.
Thus, for now, Credit Suisse opts to maintain its investment outlook (outperform) while it looks for more clarity after extra channel checks, particularly given that the stock has de-rated (to 14.4x the company´s estimated 2013 calendar year price-to-earnings multiple versus the luxury sector´s average multiple of 15x). Nevertheless, its analysts have cut their target to 1400p from 1600p previously.
JD Wetherspoon has won the praise of analysts at Nomura for its “swift” reaction to the stagnant sales and margin pressures seen in the 2012 fiscal year.
During that period the pub owner saw like-for-like (LFL) sales growth of just 3.2%, which was insufficient to fully offset pressure on gross margins, utility cost inflation and higher expenditure on repairs. As a result, margins fell by 50 basis points to 9%. There are 100 basis points to a full percentage point.
However, in its fourth quarter LFL sales grew 6.1% and the company only saw 30 basis points of margin pressure.
Furthermore, momentum continued into the start of fiscal year 2013 (six weeks to 9th September) with LFL sales up by 8.4%. That was materially better than the industry data (Peach Tracker +2.1% in August) and suggests that JD Wetherspoon is taking market share, the broker explains.
For all of the above reasons Nomura has decided to raise its target to 465p and its recommendation to Neutral (from Sell), adding that it believes that there is risk to the upside if the current sales momentum can be maintained.
Analysts at Seymour Pierce have issued a bullish note on Asian Citrus, highlighting both the “very encouraging” 8.7% rise seen in net profits, to RMB629.1m, as well as the “pleasing” 30% increase in its final dividend payment, for a yield of 5.2%.
So, while the company´s outlook notes the slowing Chinese economy, which may result in a modest, if any, rise in orange prices, the poor winter harvest expected should see some rise by the end of 2012, the company's house broker notes.
Furthermore, the broker has a positive view of the firm´s pursuit of synergistic benefits from the vertical integration into the fruit processing business.
These analysts believe that investors will be encouraged by the results. So, given that the company is trading on a historic price-to-earnings (PE) multiple of just 6.6x (earnings per share (EPS) of RMB0.52/5.07p) and a prospective PE of 5.9x, Seymour Pierce has decided to maintain its BUY recommendation and 50p target. | |
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