London close: Growth concerns sink stocks for second straight day
Market Movers
- techMARK 2,128.68 -0.81%
- FTSE 100 5,810.25 -0.54%
- FTSE 250 11,911.76 -0.53%
- Miners gain, but Footsie finishes firmly lower
- IMF cuts forecasts; investors nervous ahead of Alcoa
- UK economic data paints gloomy picture
With the International Monetary Fund (IMF) cutting its growth forecasts and Wall Street starting on the back foot ahead of third-quarter earnings season, the Footsie slid to an intraday low by the close in London on Tuesday.
"European financial markets dropped today, as global growth concerns prompted caution ahead of the upcoming US 3Q earnings season. Traders demonstrated nerves over faltering global economic contraction feeding through into the corporate sector before Alcoa kicked off the season later this evening," said market strategist Ishaq Siddiqi from ETX Capital.
However despite the slump, the heavyweight mining sector held up relatively well today, as hopes for economic stimulus in China lifted shares in afternoon trade.
China's central bank injected 265bn yuan (£26bn) into the world's second-largest economy in reverse repurchase agreements overnight. Meanwhile, Zhou Xiaochuan, the governor of the People's Bank of China, said that while the external environment for China's economic growth is "very grim", the central bank will keep the continuity and stability in monetary policy and will "make policy more pre-emptive, targeted and effective".
The IMF has cut global economic growth forecasts for this year and next because "prospects have deteriorated further and risks increased". According to its "World Economic Outlook", the IMF now expects the world economy to grow 3.3% in 2012 compared to the prior 3.5% July estimate and just 3.6% in 2013, down from the previous 3.9% forecast. Forecasts for the Eurozone, UK and emerging markets were all cut.
Economic figures from the UK also added to the gloom today. The British deficit in visible goods widened from £7.3bn to £9.8bn in August, according to the Office for National Statistics (ONS). The consensus estimate had been for a smaller increase to £8.5bn.
The ONS also said that domestic industrial output fell 0.5% in the same month, in line with forecasts. However, analysts at Barclays Research said the data is consistent with its view that industrial and manufacturing output is likely to rebound during this period after the Jubilee holiday-related weakness observed during the second quarter."
German Chancellor Angela Merkel flew to Greece today - her first trip to the country in five years – to keep the pressure on Athens to stick with its harsh austerity measures. Merkel expressed her support for Greece, signalling that the country has gone a long way. Her arrival was met with protests by an estimated 25,000 people today.
IMF Managing Director Christine Lagarde said today that Greece must do more "on all fronts" before the IMF could consider paying out the next tranch of aid worth €31bn. FTSE 100: Miners hold up well; Capita & Aggreko hit by downgrades
Mining stocks were being lifted by stimulus hopes in China today. Vedanta was near the top of the risers list despite reporting sluggish production figures in the second quarter. The miner said that output and sales of iron ore from Goa dropped in the period as the government's ban on mining activities took its toll.
Rio Tinto was making gains after UBS raised its target on the stock and reiterated its 'buy' recommendation, saying that the company "offers the greatest leverage [within the UK diversified mining sector] to a recovery in commodity demand in China, which we expect to occur from Q4 12 as large infrastructure projects approved earlier in 2012 take hold."
Sector peer BHP Billiton was also in demand after pricing a five-year one billion Australian dollar note, its first return to the Australian bond market in 11 years. The issue was heavily oversubscribed, according to Reuters.
Heading the other way was outsourcing company Capita after Seymour Pierce downgraded its recommendation on the stock to 'hold'. Meanwhile, temporary power solutions provider Aggreko was also hit by a ratings cut from HSBC to 'neutral'. In contrast, asset manager Schroders was given a lift by Morgan Stanley which upgraded the shares to 'equal weight' and lifted its target from 1,535p to 1,665p.
Banking group Barclays finished in the red after announcing to say that it is to acquire the deposits, mortgages and business assets of ING Direct UK from Dutch finance house ING.
Defence group BAE Systems continues to trade lower as opposition to its proposed merger with European aerospace giant EADS mounts. According to the Financial Times this morning, more than 30% of shareholders in BAE have expressed "significant concerns" with the deal.
FTSE 250: Hays jumps 6% after beating forecasts
Recruitment firm Hays saw shares rise strongly today after saying that group net fee income fall by 1% year-on-year in the first quarter, better than the 4% decline expected by the consensus. Seymour Pierce upgraded its rating from 'hold' to 'buy' today, saying it is better placed than its peers to weather the current challenging market conditions".
Pubs group Greene King was the heaviest faller on the FTSE 350 after Deutsche Bank cut its recommendation for the shares to 'equal weight'.
FTSE 100 - Risers
Marks & Spencer Group (MKS) 381.30p +3.19%
Vedanta Resources (VED) 1,090.00p +2.06%
Rio Tinto (RIO) 3,030.00p +1.52%
Aberdeen Asset Management (ADN) 325.50p +1.43%
Evraz (EVR) 247.40p +1.10%
Xstrata (XTA) 958.40p +0.86%
Next (NXT) 3,571.00p +0.85%
Fresnillo (FRES) 1,973.00p +0.77%
BHP Billiton (BLT) 1,935.50p +0.65%
Anglo American (AAL) 1,813.50p +0.61%
FTSE 100 - Fallers
Capita (CPI) 740.00p -3.71%
Aggreko (AGK) 2,240.00p -3.41%
CRH (CRH) 1,143.00p -3.38%
BT Group (BT.A) 221.70p -2.29%
Sage Group (SGE) 306.00p -2.17%
British American Tobacco (BATS) 3,218.00p -2.11%
Resolution Ltd. (RSL) 214.30p -2.01%
SABMiller (SAB) 2,679.00p -1.98%
G4S (GFS) 263.80p -1.90%
Morrison (Wm) Supermarkets (MRW) 278.90p -1.76%
FTSE 250 - Risers
Hays (HAS) 79.50p +5.72%
Home Retail Group (HOME) 97.30p +3.18%
Homeserve (HSV) 225.90p +3.06%
IP Group (IPO) 122.50p +2.60%
Sports Direct International (SPD) 398.50p +2.47%
Debenhams (DEB) 107.20p +2.10%
Man Group (EMG) 89.95p +2.04%
Essar Energy (ESSR) 125.50p +2.03%
Mitchells & Butlers (MAB) 308.70p +1.71%
JD Sports Fashion (JD.) 773.50p +1.38%
FTSE 250 - Fallers
Greene King (GNK) 599.00p -4.08%
Petra Diamonds Ltd.(DI) (PDL) 106.20p -3.98%
Diploma (DPLM) 479.30p -3.74%
Fidessa Group (FDSA) 1,350.00p -3.36%
Berkeley Group Holdings (The) (BKG) 1,387.00p -3.07%
Stobart Group Ltd. (STOB) 113.10p -2.84%
Ted Baker (TED) 910.00p -2.67%
Ophir Energy (OPHR) 597.00p -2.61%
Telecity Group (TCY) 933.00p -2.51%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe midday: Stocks recover partially
-IMF cuts global growth forecasts
-Portugal receives one year extension on adjustments
-Greek Finance Minister says lenders may give country more time
-Germany and France pushing for financial transactions tax
-Spanish 10 year benchmark bond changes today
-Italian 10 year bond yields flat at 5.09%
-China CB injects 42.2bn dollars in reverse repos
FTSE-100:-0.22%
Dax-30: -0.40%
Cac-40: 0.19%
FTSE-Mibtel 30: 0.44%
Ibex 35: -0.83%
Stoxx 600: -0.07%
European equity markets have recovered partially, after having teetered lower at mid-morning.
That after yesterday´s meeting of Eurozone finance ministers, which saw them grant Portugal an extra year to carry out its adjustment, although economic authorities –Greece´s lenders- are being described as still at loggerheads over how to tackle the country´s crisis.
As if to underline the risks which the world economy is currently facing, the International Monetary Fund (IMF) yesterday forecast that global growth will only rise by 3.3% this year and 3.6% next year. The Washington based lender´s 2012 forecast is the lowest since 2009. Furthermore, the IMF is now said to see "alarmingly high risks" of a steeper slowdown, with a one-in-six chance of the rate of expansion dropping south of 2% (commonly accepted to be the threshhold for recessions at the global level).
Particularly worth highlighting, at first glance, are the Fund´s new estimates of the peak levels which Greece and Spain´s public debt piles are now expected to hit. Many observers see them as proof that excessive austerity may backfire.
Acting as a backdrop, China´s central bank last night injected $42.2bn into the country´s money markets via so-called reverse repos, in what some consider a bid to stimulate growth. Fiat to cut outlook for European car market
Peugeot´s Chief Executive has rebuffed French industry minister Arnaud Montebourg´s remarks to the effect that he will wring concessions from the carmaker in talks on its restructuring - Peugeot plans to cut 8,000 jobs and close an assembly plant, Reuters reports.
Luxury goods company Hermes's Chief Executive, Patrick Thomas, told the Wall Street Journal (WSJ) that it remains optimistic about the Chinese market.
Fiat will cut its outlook for the European auto market when the company updates its five-year plan that runs through 2014, Chief Executive Officer Sergio Marchionne told Bloomberg.
From a sector stand-point the best performance is now being seen in the following sectors: Basic resources (1.7%), Oil (0.64%) and Construction (0.14%).
French trade deficit narrows
The French trade deficit improved to €5.3bn in August, after -€4.2bn in the month before (Consensus: -€5bn).
Dutch industrial production fell by 0.1% month-on-month in August. Slight drop in the single currency
The euro/dollar is now falling by 0.12% to the 1.2951 dollar mark.
Front month Brent crude futures are rising by 0.895 dollars to the 112.83 dollar mark on the ICE.
| US Market Report | US open: Investors step back ahead of results season
Market movers
Dow Jones: -55 at 13,528
S&P 500: -3 at 1,453
NASDAQ Composite: -43 at 3,089 US investors have reduced positions ahead of the onset of the third quarter earnings season, with a downgrade of global growth forecasts by the International Monetary Fund (IMF) weighing on traders' minds.
According to its "World Economic Outlook", the IMF now expects the world economy to grow 3.3% in 2012 compared to the prior 3.5% July estimate and just 3.6% in 2013, down from the previous 3.9% forecast. Forecasts for the Eurozone, UK and emerging markets were all cut.
Stateside, confidence among small businesses eased off in September, according to the results of a survey by the National Federation of Business.
The Federation's optimism index retreated to 92.8 from 92.9 in August, the fourth time in the last five months that the index has moved lower. Brokers weigh in
After trading ends today, aluminium firm Alcoa will kick off the third quarter results season when it releases its results. Analysts are expecting earnings per share on or around zero on sales of $5.6bn.
KFC and Pizza Hut owner Yum! Brands is also set to serve up figures after the close of trading. The market is expecting earnings per share of $0.97 on sales of $3.7bn.
Until then, corporate news is a bit thin, leaving the field open for brokers to move share prices with research notes.
Computer chip colossus Intel is marked down after Sanford C. Bernstein downgraded the shares.
In contrast, RadioShack is buzzing after BofA Merrill Lynch upgraded the consumer electronics retailer after the shares had taken a tumble recently.
The same broker reacted to Netflix's sharp rise on Monday by downgrading the media streaming firm to "under-perform" from "buy", because the stock had passed the broker's target.
Edwards Lifesciences is the worst performing blue-chip after it warned third quarter sales are set to be below market expectatoons. The heart valve maker lowered third quarter sales guidance after the bell on Monday to $448m, having previously indicated the figure would be somewhere between $465m and $485m.
| Broker Tips | Broker tips: Rio Tinto, Barclays, Hays
UBS has raised its target for resources giant Rio Tinto from 4,600p to 4,700p and kept its 'buy' rating, saying that the stock is its preferred pick of the UK diversified miners.
The broker said that Rio "offers the greatest leverage [within the UK diversified mining sector] to a recovery in commodity demand in China, which we expect to occur from Q4 12 as large infrastructure projects approved earlier in 2012 take hold."
Investec has reiterated its 'buy' rating and 250p target for UK banking group Barclays after the firm's purchase of the ING Direct UK business, saying that its reflects the process of 'evolution, not revolution'.
"While other issues may make the headlines, one hallmark of Chris Lucas's tenure as CFO has been a string of small, value-accretive, bolt-on retail acquisitions. Today's announcement of the purchase of the ING Direct UK business (at a discount) is a continuation of this trend – adding £10.9bn deposits, £5.6bn mortgages, 750 staff and 1.5m customers," said analyst Ian Gordon.
"While the selective acquisition of distressed Lehman assets in 2008 may go down in history as the most daring, opportune and immediately value accretive transaction of all, Barclays's disciplined but committed approach to opportunities in the retail space is acting as a particularly useful source of sustainable value accretion."
Seymour Pierce has upgraded its rating for recruitment firm Hays from 'hold' to 'buy', after the group's first-quarter results came in ahead of expectations.
"Hays is clearly outperforming Michael Page which reported a 6.5% decline in NFI over the same period," said analyst Caroline de La Soujeole.
De La Soujeole said: "We believe Hays has a more resilient business model compared to Michael Page given its more balanced temp/perm exposure." |
Other markets
As tensions rise between Syrian and Turkey, the price of oil is heading higher. The November contract for West Texas intermediate is up $1.16 to $90.49 a barrel.
Gold for December delivery is down again today, however, at $1,773.30 an ounce, $2.40 lower on the day.
US Treasuries are firmer, with 10-year Treasuries up 3/16 of a dollar, pushing 10-year yields down to 1.70% from 1.74% overnight.
S&P 500 - Risers
Alpha Natural Res (ANR) $7.14 +5.31%
Newfield Exploration Co (NFX) $32.10 +4.42%
Cliffs Natural Resources Inc. (CLF) $42.34 +4.34%
Eli Lilly and Company (LLY) $52.72 +3.82%
CONSOL Energy Inc. (CNX) $32.82 +3.44%
United States Steel Corp. (X) $21.06 +3.36%
Peabody Energy Corp. (BTU) $23.31 +2.96%
First Solar Inc. (FSLR) $20.72 +2.27%
Noble Corp (NE) $35.81 +2.02%
Tyson Foods Inc. (TSN) $16.60 +1.97%
S&P 500 - Fallers
Edwards Lifesciences Corp. (EW) $88.17 -17.91%
Netflix Inc. (NFLX) $67.43 -8.28%
Masco Corp. (MAS) $15.02 -3.53%
LSI Corporation (LSI) $6.61 -3.22%
Intuitive Surgical Inc. (ISRG) $494.01 -3.01%
Stryker Corp. (SYK) $52.90 -2.67%
Seagate Technology Plc (STX) $28.75 -2.65%
Covidien Plc (COV) $58.26 -2.56%
Akamai Technologies Inc. (AKAM) $38.61 -2.50%
Zimmer Holdings Inc. (ZMH) $65.17 -2.47%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $9.19 +0.82%
Exxon Mobil Corp. (XOM) $93.19 +0.55%
Chevron Corp. (CVX) $118.16 +0.46%
Coca-Cola Co. (KO) $38.75 +0.44%
Boeing Co. (BA) $70.87 +0.43%
Dow Jones I.A - Fallers
Intel Corp. (INTC) $21.98 -2.35%
Johnson & Johnson (JNJ) $68.54 -1.30%
Microsoft Corp. (MSFT) $29.43 -1.16%
Walt Disney Co. (DIS) $51.85 -0.91%
Home Depot Inc. (HD) $61.47 -0.66%
3M Co. (MMM) $94.80 -0.60%
Nasdaq 100 - Risers
Randgold Resources Ltd. Ads (GOLD) $125.50 +0.90%
Warner Chilcott Plc (WCRX) $13.34 +0.76%
Sirius Satellite Radio Inc. (SIRI) $2.68 +0.56%
Staples Inc. (SPLS) $11.74 +0.34%
Lam Research Corp. (LRCX) $32.22 +0.31%
O'Reilly Automotive Inc. (ORLY) $85.87 +0.27%
Nasdaq 100 - Fallers
Netflix Inc. (NFLX) $67.43 -8.28%
Baidu Inc. (BIDU) $108.81 -4.79%
Research in Motion Ltd. (RIMM) $7.92 -3.88%
Intuitive Surgical Inc. (ISRG) $494.01 -3.01%
Seagate Technology Plc (STX) $28.75 -2.65%
Akamai Technologies Inc. (AKAM) $38.61 -2.50%
Expedia Inc. (EXPE) $55.41 -2.45%
Altera Corp. (ALTR) $32.55 -2.43%
Intel Corp. (INTC) $21.98 -2.35%
Broadcom Corp. (BRCM) $33.26 -2.20% |
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