London open: Footsie lower as Burberry plummets
Market Movers
- techMARK 2,112.49 -0.08%
- FTSE 100 5,780.11 -0.23%
- FTSE 250 11,785.32 -0.47%
- Markets await German ruling on ESM, FOMC meeting
- Burberry sinks after full-year guidance
- Miners provide a drag
The FTSE 100 opened slightly lower on Tuesday morning as markets gear up for some big 'risk events' later this week; falls in the heavyweight mining sector and a sharp drop from Burberry were weighing on the blue-chip index early on.
A last minute interjection by Peter Gauweiler, a member of Angela Merkel's own coalition, threatened to derail what seemed to be the likely approval by Germany's Constitutional Court of the European Stability Mechanism (the new Eurozone rescue fund) tomorrow. Gauweiler called on the court this past weekend to first assess the impact of the European Central Bank's 'outright monetary transactions', which it announced last week. Half an hour before today´s open however the Constitutional Court has confirmed that it will go-ahead with its sentence, tomorrow, as scheduled.
Meanwhile, the Federal Reserve is starting its two-day monetary policy meeting tomorrow. "Despite the much improved data in many areas, there remains a strong belief that the Fed will announce some form of monetary easing on Thursday, although those expecting QE3 are likely to be disappointed," said analyst Craig Erlam from Alpari.
In other news, Spanish Prime Minister Mariano Rajoy has yet to decide if he will request assistance from the European Central Bank (ECB) in what would effectively be considered a 'bailout' of the southern European country. "I haven't decided yet if I'm going to request the ECB's help. I have to think about it," he said.
Worth noting as well, the mixed macroeconomic data out last night in China: the latest bank lending figures -the most important of the two- have beat expectations (700bn Yuan in August versus expectations for 600bn), although the latest auto sales data have come in slightly lower than forecast. FTSE 100: Burberry sinks 18% after warning about full-year profits British fashion house Burberry plummeted in the opening hour after warning that trading conditions were becoming more challenging with like-for-like sales flat in the second quarter. The firm said that ahead of the key retail trading period in the second half, it expected pre-tax profits for the year to March 31st 2013 to be at the lower end of market expectations.
Nomura and Seymour Pierce both downgraded their ratings on the stock this morning. "This news will obviously hit sentiment towards Burberry and the luxury sector and the shares are likely to underperform until there is better news on demand," said Seymour analyst Kate Calvert.
Mining stocks were firmly out of favour with Vedanta, Anglo American, Kazakhmys and Antofagasta among the worst performers. Xstrata and Glencore were slightly lower after Qatar Holding (which owns 12% of the former) said it hasn't yet made up its mind on whether or not to vote in favour of amended new terms of Glencore's offer.
Fund manager Ashmore fell after full-year pre-tax profits and assets under management took a small dip in the year to June 30th.
FTSE 250: IG Group gains after first-quarter update
Spread betting firm IG Group rose strongly after first-quarter revenues came in line with expectations, though they were still 18% down year-on-year due to a tough comparative.
Internet gambling group Betfair was in the red in spite of revenues gaining 13% in the three months to the end of July, helped by betting on Euro 2012 and Wimbledon.
FTSE 100 - Risers
British American Tobacco (BATS) 3,159.50p +1.12%
ARM Holdings (ARM) 554.50p +1.00%
Imperial Tobacco Group (IMT) 2,272.00p +0.98%
United Utilities Group (UU.) 692.00p +0.73%
GlaxoSmithKline (GSK) 1,425.50p +0.71%
Hargreaves Lansdown (HL.) 657.00p +0.54%
Severn Trent (SVT) 1,699.00p +0.53%
AstraZeneca (AZN) 2,923.00p +0.50%
Unilever (ULVR) 2,256.00p +0.49%
Vodafone Group (VOD) 177.45p +0.48%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,132.00p -17.67%
Vedanta Resources (VED) 951.50p -5.13%
Anglo American (AAL) 1,942.50p -2.95%
Antofagasta (ANTO) 1,217.00p -2.56%
Kazakhmys (KAZ) 669.00p -2.55%
Evraz (EVR) 255.00p -2.00%
Eurasian Natural Resources Corp. (ENRC) 335.80p -1.93%
Rio Tinto (RIO) 3,012.50p -1.84%
Fresnillo (FRES) 1,726.00p -1.71%
Randgold Resources Ltd. (RRS) 6,910.00p -1.64%
FTSE 250 - Risers
IG Group Holdings (IGG) 455.90p +5.19%
Ruspetro (RPO) 119.70p +4.36%
Ocado Group (OCDO) 71.45p +2.14%
Stobart Group Ltd. (STOB) 116.70p +1.48%
Diploma (DPLM) 454.90p +1.45%
Bumi (BUMI) 285.70p +1.35%
Go-Ahead Group (GOG) 1,338.00p +1.13%
Dairy Crest Group (DCG) 347.60p +1.05%
Grainger (GRI) 101.00p +1.00%
TR Property Inv Trust (TRY) 160.80p +1.00%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,285.00p -5.86%
Lonmin (LMI) 599.50p -3.15%
Computacenter (CCC) 382.00p -3.12%
COLT Group SA (COLT) 118.80p -2.94%
St James's Place (STJ) 354.90p -2.77%
Bwin.party Digital Entertainment (BPTY) 101.00p -2.60%
Petropavlovsk (POG) 383.80p -2.59%
Betfair Group (BET) 730.00p -2.41%
Shanks Group (SKS) 90.60p -2.37%
UK Event Calendar
| US Market Report | US close: Stocks in late swoon
Market movers
Dow Jones: -53 at 13,254
S&P 500: -9 at 1,429
NASDAQ Composite: -32 at 3,104 After markets trod water in the morning session, as hopes for central bank stimulus cancelled out continuing concerns over Europe, the bears took control in the afternoon session.
The fate of Greece is still hanging in the balance after the country's Prime Minister Antonis Samaras failed to convince his coalition partners to sign up to the latest round of cuts demanded by lenders.
In Germany, the entire future of the Eurozone's bailout mechanism is in the balance as the nation's Constitutional Court decides on the legality of Germany contributing to the European Stability Mechanism. A decision is expected this month.
Stateside, markets are eagerly awaiting an announcement on possible stimulus action by the Fed. If the US central bank decides to go down that road it will make the announcement on September 13th.
Increasing the uncertainty have been disappointing numbers out of China where both the industrial production figure for August (+8.9%) and imports (-2.6%) came in below expectations.
Intel threatened by mobile revolution
Intel fell after analysts at Morgan Stanley cut their earnings forecast for the stock. Many believe Intel has been caught unawares by the emergence of mobile computing, which relies on lower power computer chips, an area in which Intel is not seen as a market leader.
The world's biggest maker of paper and pulp, International Paper, also got hit by broker commentary, as Deutsche Bank analysts said it would struggle to push price increases on to customers.
In contrast, bubble-wrap envelope maker Sealed Air got a lift from JPMorgan Chase, which initiated coverage with an "overweight" rating and a $19 price target. The company's shares have taken a dive since it acquired Diversey last June, raising the prospect that it could become a takeover victim itself. "While we understand the reasons, and the stock has bounced a bit, we still think shares are oversold," JPMorgan Chase said.
Mobile phone network Sprint Nextel put on a bit of a spurt, after Nomura upgraded the stock to "buy" from "neutral" on the back of projected cost savings expected from the company's network improvement plan.
One of the main victims of the financial crisis in 2008, American International Group dropped on news the US Treasury is planning to sell up to $18bn of shares in the nationalised financial services company.
The technology, financial and industrial sectors were the hardest hit.
Other markets
As equities retreated, so US Treasuries headed higher. The yields on 10-year notes dipped 2/100 of a percentage point to 1.66%, having risen to 1.69% at one point.
The front month futures contract for West Texas intermediate crude eased 29 cents to $96.25 a barrel on NYMEX.
S&P 500 - Risers
Sealed Air Corp. (SEE) $15.65 +3.92%
R.R. Donnelley & Sons Co. (RRD) $11.99 +3.18%
Vulcan Materials Co. (VMC) $41.44 +2.70%
Sprint Nextel Corporation (S) $5.15 +2.39%
PPG Industries Inc. (PPG) $115.79 +2.34%
O'Reilly Automotive Inc. (ORLY) $85.06 +2.17%
Fluor Corp. (FLR) $55.86 +2.03%
Chipotle Mexican Grill Inc. (CMG) $332.81 +1.98%
Urban Outfitters Inc. (URBN) $39.48 +1.94%
Janus Capital Group Inc. (JNS) $9.04 +1.92%
S&P 500 - Fallers
Apollo Group Inc. (APOL) $28.04 -7.43%
Teradata Corp. (TDC) $74.63 -6.95%
International Paper Co. (IP) $34.79 -4.16%
Intel Corp. (INTC) $23.26 -3.84%
Chesapeake Energy Corp. (CHK) $19.57 -3.79%
F5 Networks Inc. (FFIV) $96.63 -3.63%
Federated Investors Inc. (FII) $20.92 -3.42%
DeVry Inc. (DV) $20.59 -3.38%
E*TRADE Financial Corp. (ETFC) $8.75 -3.37%
Staples Inc. (SPLS) $11.25 -3.35%
Dow Jones I.A - Risers
Verizon Communications Inc. (VZ) $44.06 +0.78%
International Business Machines Corp. (IBM) $200.95 +0.73%
Merck & Co. Inc. (MRK) $44.26 +0.48%
Johnson & Johnson (JNJ) $68.18 +0.44%
Dow Jones I.A - Fallers
Intel Corp. (INTC) $23.26 -3.84%
Bank of America Corp. (BAC) $8.58 -2.50%
Boeing Co. (BA) $71.08 -2.48%
3M Co. (MMM) $90.67 -2.32%
Cisco Systems Inc. (CSCO) $19.15 -2.10%
JP Morgan Chase & Co. (JPM) $38.76 -1.37%
Caterpillar Inc. (CAT) $87.10 -1.14%
United Technologies Corp. (UTX) $78.61 -1.01%
Nasdaq 100 - Risers
Green Mountain Coffee Roasters Inc. (GMCR) $30.36 +9.09%
O'Reilly Automotive Inc. (ORLY) $85.06 +2.17%
Expeditors International Of Washington Inc. (EXPD) $38.35 +1.51%
Costco Wholesale Corp. (COST) $100.45 +0.73%
Gilead Sciences Inc. (GILD) $59.66 +0.67%
KLA-Tencor Corp. (KLAC) $52.17 +0.62%
Warner Chilcott Plc (WCRX) $12.93 +0.54%
Nasdaq 100 - Fallers
Apollo Group Inc. (APOL) $28.04 -7.43%
Intel Corp. (INTC) $23.26 -3.84%
F5 Networks Inc. (FFIV) $96.63 -3.63%
Staples Inc. (SPLS) $11.25 -3.35%
Avago Technologies Ltd. (AVGO) $34.99 -3.34%
Garmin Ltd. (GRMN) $40.35 -2.82%
Flextronics International Ltd. (FLEX) $6.55 -2.67%
Marvell Technology Group Ltd. (MRVL) $10.20 -2.62%
Apple Inc. (AAPL) $662.74 -2.60%
Expedia Inc. (EXPE) $52.75 -2.51% |
| FX and Commodities round-up | FX round-up: Dollar pulls off four-month low
The dollar recovered from a four-month low on Monday while the euro nursed losses for the first time in four days.
Focus remained firmly on the US Federal Reserve which is expected to announce new stimulus measures to stimulate the economy this week.
The euro had rallied almost to a four-month high against the dollar on Friday following disappointing US jobs figures. The widely anticipated report further fuelled speculation that the Fed would outline a third round of quantitative easing.
Sentiment towards the euro was also lifted after the European Central Bank unveiled a bond-buying plan to reduce borrowing costs in indebted countries.
However by Monday, the euro's rally had run out of steam. The single currency fell to an intra-day low of $1.2756 and later traded at around $1.2763 as investors took profit on the euro's recent gains and as markets gear up for the Fed policy meeting this week.
The dollar index, which measures the US currency against a basket of six major currencies, climbed to 80.407 from 80.183 in late US trading on Friday.
Against the Japanese yen, the dollar traded at ¥78.31 versus ¥78.25 the previous session while the euro fell 0.2% to buy ¥99.83 as investors mulled a sharp downward revision to Japanese GDP for the second quarter.
Sterling's recent also rally ran out steam on Monday, taking the UK currency off a four-month high against the dollar.
Last week the pound rallied against the dollar on fresh hopes about the Eurozone debt crisis after the ECB unveiled its plan to lower borrowing costs.
The Australian dollar traded at $1.0336 compared to $1.0397 the previous session. Commodities: Crude taps into last minute gains
Crude oil futures shrugged off earlier losses on Monday to eke out a small gain as focus remains firmly pinned on expectations of a third round on monetary stimulus from the Federal Reserve.
Crude for October delivery settled up 12 cents at $96.54 a barrel on the New York Mercantile Exchange.
Demand had initially been weighed down by concern about slowing demand from China, the world's second largest crude consumer after figures showed oil imports fell to a 22-month low in August. Crude traded at an intra-day low of $95.34 a barrel on Monday.
Weak US employment figures out Friday also kept crude gains slim. There is concern about slowing demand for oil the US, the world's number one consumer. Last week the Energy Information Administration said weekly petroleum demand declined 0.9% amid higher unemployment.
Otherwise investors digested comments from Saudi Arabia's oil minister Ali al-Naimi who said Saudi, the world's top exporter of crude, is worried that the current high price of oil does not reflect market fundamentals.
On the ICE futures exchange Brent crude climbed 56 cents to settle at $114.81 a barrel.
Elsewhere gold lost its allure on Monday, as profit takers moved in on the previous session's rally.
Gold futures for December delivery fell $8.70 to settle at $1,731.80 an ounce on the Comex division of the New York Mercantile Exchange.
Bullion surged over 2% on Friday on bets that the Fed will announce another round of monetary stimulus. Gold, like all precious metals, is often used as a hedge against inflation.
Silver for December fell 6 cents to $33.63 an ounce while palladium for the same month added $18 to $672.75 an ounce.
US policy makers will meet on Wednesday and Thursday this week. |
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