Stocks flat ahead of EU summit
Market Movers
techMARK 2,109.15 +0.03%
FTSE 100 5,914.83 +0.07%
FTSE 250 12,036.79 -0.08% London's FTSE 100 index opened broadly flat on Thursday morning as investors showed caution ahead of the EU summit in Brussels.
Markus Huber from ETX Capital said this morning: "EU leaders are kicking off their two day summit in Brussels today, although expectations in general are very low and nobody expects that any kind of final deal will be struck neither what Spain nor a European banking union is concerned, however markets seem to have priced in at least some progress on both issues."
Last night saw the release of some solid economic figures from China, giving mining stocks a lift in London early on. The data show a moderate acceleration in activity and came alongside better-than-expected prints for retail sales, industrial production and fixed asset investments.
China’s gross domestic product (GDP) grew at a 7.4% year-on-year rate in the third quarter of the year as expected, down from the 7.6% in quarter two. While this was the slowest rate of expansion in 12 years - except for that seen in the first quarter of 2009 - economists reckons that they can see hopeful signs which point to a stabilisation, such as a better tone to exports and a progressive improvement in residential investment.
Financial trader David White from Spreadex said: "European benchmarks will be watched closely this morning to determine whether sentiment holds ahead of significant news flows due out later today. The EU economic summit joins UK retail sales, Spanish 10-year auction, US unemployment claims and manufacturing data. Traders are potentially buyers of volatility given the data-heavy session and will look to position in line with any significant prevailing bias." FTSE 100: Mining stocks celebrate Chinese data
Robust Chinese data saw mining stocks gain in early trading with Vedanta, Kazakhmys and EVRAZ leading the risers on the Footsie. ENRC, Anglo American, BHP Billiton, Rio Tinto and Antofagasta were also making decent gains.
EVRAZ, the steel, mining and vanadium group, was in demand even though it saw production decrease in the third quarter while prices were hit by tough conditions in global steel markets.
Drinks giant SABMiller was among the fallers this morning despite seeing good growth in lager volumes shipped across most regions in the first half of its financial year. Weighing on the shares was a ratings downgrade by Shore Capital to 'hold'.
Also hit by a broker downgrade this morning was Royal Dutch Shell after Goldman Sachs lowered its recommendation for the oil titan to 'sell' and cut its target price for the shares from 2,840p to 2,260p. FTSE 250: Booker, Go-Ahead and Jupiter impress with updates
There was a flurry of interim management statement (IMSs) on the second-tier index this morning, providing some movement in share prices early on.
Cash and carry chain Booker gained after saying that like-for-like sales rose 3.1% for the 24 weeks to September 14th.
Transport group Go-Ahead said that trading in the first quarter has been strong as it announced a new ambitious target for profit growth in its bus division. The company said bus operating profit should be £100m by 2015/16, compared with the £64-70m range over the past five years.
Fund manager Jupiter rose after saying that assets under management increased from £23.37bn to £25.0bn in the three months to the end of September.
Business published and events organiser UBM was out of favour after missing forecasts in the third quarter. Revenue in the first nine months of 2012 gained 4.0% to £734.6m; Investec had expected £746m. | AIM/Small Cap Report | FTSE 100 - Risers
Evraz (EVR) 259.40p +2.69% Kazakhmys (KAZ) 777.00p +2.24% Vedanta Resources (VED) 1,166.00p +1.66% Antofagasta (ANTO) 1,324.00p +1.46% Smiths Group (SMIN) 1,082.00p +1.41% Anglo American (AAL) 1,930.50p +1.31% Eurasian Natural Resources Corp. (ENRC) 356.60p +1.25% BHP Billiton (BLT) 2,038.50p +1.22% Rio Tinto (RIO) 3,222.50p +1.21% Tullow Oil (TLW) 1,485.00p +1.16% FTSE 100 - Fallers
Capital Shopping Centres Group (CSCG) 332.20p -2.15% Unilever (ULVR) 2,309.00p -1.58% Royal Bank of Scotland Group (RBS) 282.60p -1.22% Standard Chartered (STAN) 1,469.50p -1.18% Diageo (DGE) 1,749.00p -1.10% Smith & Nephew (SN.) 658.00p -1.05% SSE (SSE) 1,443.00p -1.03% Lloyds Banking Group (LLOY) 41.72p -1.01% ITV (ITV) 91.55p -0.87% Tate & Lyle (TATE) 701.00p -0.85% FTSE 250 - Risers
Go-Ahead Group (GOG) 1,331.00p +3.18% Jupiter Fund Management (JUP) 270.90p +2.69% COLT Group SA (COLT) 121.50p +2.36% Henderson Group (HGG) 121.50p +2.36% Booker Group (BOK) 96.35p +2.12% Talvivaara Mining Company (TALV) 142.60p +1.93% Cookson Group (CKSN) 553.50p +1.75% Michael Page International (MPI) 373.40p +1.74% Premier Oil (PMO) 386.70p +1.71% Fenner (FENR) 366.20p +1.55% FTSE 250 - Fallers
UBM (UBM) 690.00p -4.50% Jardine Lloyd Thompson Group (JLT) 739.00p -4.40% Man Group (EMG) 88.50p -4.38% Petra Diamonds Ltd.(DI) (PDL) 100.60p -3.36% Diploma (DPLM) 436.20p -2.42% Cranswick (CWK) 756.50p -2.26% NMC Health (NMC) 181.10p -2.11% PZ Cussons (PZC) 322.00p -1.68% Telecom Plus (TEP) 867.50p -1.64% Elementis (ELM) 226.30p -1.61% |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Currency traders say "show me the money" FTSE-100: 0.18% Dax-30: 0.17% Cac-40: 0.00% FTSE-Mibtel 30: 0.05% Ibex 35: 0.28% Stoxx 600: 0.05% European equities have begun the day slightly higher, similar to what was seen in Wall Street overnight and despite better than expected data overnight out of China. That ahead of today’s EU summit –where no major decisions are expected to be taken. Perhaps best expressing market sentiment, some traders comment that they are somewhat loathe -but not pessimistic- to push stocks much higher until clearer signs emerge of progress in handling the Eurozone crisis. Not to be missed, the main equity benchmarks on both sides of the Atlantic are fast approaching important –and likely very hard to breach- levels of technical resistance. Sentiment in the currency markets is quite similar, with analysts at Unicredit this morning commenting that: “Investors do not seem eager to ride an EUR-USD rally above 1.3169 peak, as there is no full solution in the current Spanish and Greek debate. A good result of today’s auctions in Spain could offer support.”
Also on tap, Spain’s Treasury will today auction up to €4.5bn in medium and long-term debt. A positive result could help reassure the market. However, at 09:00 the Bank of Spain will publish its latest monthly loan delinquency data (July: €169.3bn), which could dampen any positive effect from the above.
To be had in account, yesterday the troika stated that it agreed with the Greek authorities on the core measures of the austerity package and expects a full agreement in the coming days. Financing issues will then be discussed between the official lenders and Greece. No more drinks for Remy Cointreau Nestle is retreating after the company reported nine-month sales growth that missed analysts’ estimates.
Likewise, Remy Cointreau -France’s second-biggest distiller- posted an improvement in first-half sales that fell short of forecasts.
From a sector stand-point the best performance is now to be seen in the following industrial groups: Basic resources (0.99%), Construction&Materials (0.66%) and Industrial Goods and Services (0.36%). Food&Beverage stocks are leading losses, down by 1.89%. Weak Dutch data Dutch consumer confidence index worsened to -32 points in September, after -29 in the month before (Consensus: -27). The Swiss trade balance improved to €2.01bn in September, after €1.73bn in the previous month. Single currency shy this morning The euro/dollar is now off by 0.22% to the 1.3087 dollar mark. Front month Brent crude futures are declining by 0.283 dollars to the 112.90 dollar level on the ICE. UK Event Calendar INTERIMS
Booker Group
INTERIM DIVIDEND PAYMENT DATE
888 Holdings, Netplay TV, RPS Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Initial Jobless Claims (US) (13:30)
Leading Indicators (US) (15:00)
Philadelphia Fed Index (US) (15:00)
IMSS
Evraz, Ladbrokes, Man Group, Petropavlovsk, Renishaw
AGMS
IG Group Holdings, Mattioli Woods, Renishaw
TRADING ANNOUNCEMENTS
Britvic, Mothercare, SABMiller
UK ECONOMIC ANNOUNCEMENTS
Internet Retail Sales (09:30)
Retail Sales (09:30)
Trends in Lending (09:30)
FINAL DIVIDEND PAYMENT DATE
Standard Life UK Smaller Companies Trust, Trifast |
| US Market Report | Stocks Close Mostly Higher But Buying Interest Subdued
While buying interest was relatively subdued, stocks moved mostly higher over the course of the trading day on Wednesday. Upbeat housing data helped to push the markets higher despite the release of some mixed earnings news.
The major averages all ended the day in positive territory, although the Dow inched up only 5.22 points or less than a tenth of a percent to 13,557.00. The Nasdaq edged up 2.95 points or 0.1 percent to 3,104.12, while the S&P 500 rose 5.99 points or 0.4 percent to 1,460.91.
The modest strength on Wall Street was largely due to a positive reaction to a report from the Commerce Department showing a substantial increase in housing starts in the month of September.
The report said housing starts jumped 15 percent to an annual rate of 872,000 in September from the revised August estimate of 758,000. Economists had expected starts to climb to 765,000 from the 750,000 originally reported for the previous month.
With the much stronger than expected monthly growth, the annual rate of housing starts reached its highest level since July of 2008.
Building permits, an indicator of future housing demand, also surged up by 11.6 percent to an annual rate of 894,000 in September from the revised August rate of 801,000. The increase in building permits also exceeded expectations.
In a research note, Capital Economics said, "The U.S. economy appears to be developing a split personality. Households, seemingly oblivious to the scheduled jump in marginal tax rates that will reduce their after-tax income next year, are apparently growing in confidence and boosting expenditure."
"At the same time, alarmed by the looming fiscal cliff and the global slowdown, businesses appear to be slashing investment," the firm added.
Meanwhile, a mixed batch of earnings news helped to limit the upside for the markets, with tech giants Intel (INTC) and IBM (IBM) under pressure after reporting their quarterly results.
While Intel reported better than expected third quarter results, the semiconductor giant warned of a difficult environment ahead. Shares of Intel fell by 2.5 percent on the news.
IBM ended the day down by 4.9 percent after reporting third quarter earnings that came in just above analyst estimates on revenues that fell by more than expected.
Bank of America (BAC) posted a more modest loss after the financial giant reported third quarter earnings that showed a notable decrease year-over-year but exceeded analyst estimates for a loss. At the same time, the company reported revenues that fell by more than expected.
Housing stocks saw considerable strength on the heels of the housing starts data, with the Philadelphia Housing Sector Index surging up by 2.9 percent. During the session, the index reached its best intraday level in five years.
Hovnanian (HOV) and KB Home (KBH) turned in two of the housing sector's best performances, jumping by 9.3 percent and 8.7 percent, respectively.
Significant strength also emerged among brokerage stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Broker/Dealer Index. Morgan Stanley (MS) posted a notable gain ahead of the release of its quarterly results on Thursday.
Biotechnology stocks also showed a strong move to the upside, driving the NYSE Arca Biotechnology Index up by 2.1 percent. InterMune (ITMN) helped to lead the sector higher, surging up by 16.3 percent.
Steel, oil service, and banking stocks also saw notable strength on the day, while weakness was visible among electronic storage and software stocks.
Looking Ahead
Trading on Thursday could be impacted by the release of some key economic data, including reports on weekly jobless claims, leading economic indicators, and Philadelphia-area manufacturing activity.
On the earnings front, American Express (AXP) and eBay (EBAY) are releasing their quarterly results after the close of today's trading, while Morgan Stanley, Travelers (TRV), and Verizon (VZ) are among the companies due to release their results before the start of trading on Thursday. | Thursday newspaper round-up | Eurozone, BP, Bumi Friction between France and Germany set the scene for a bumpy summit today in which European Union leaders are to lay the groundwork for bolstering the fragile Eurozone and open the way to a two-tier Europe with Britain on the outside. President Hollande fired an undiplomatic broadside at Germany, urging France’s traditional co-pillar of the EU to show more solidarity with the weaker members, desist from red herrings over political union and live up to pledges made at the last summit in June. “We are all taking part in this solidarity, not just the Germans,” the Socialist President told Le Monde and other newspapers. “Let’s stop thinking that there is only one country that is going to pay for all the others. That is false.” Chancellor Merkel should subordinate her domestic concerns, he said. “Our common responsibility is to put Europe’s interests first,” The Times writes.
Chinese growth has slowed for a seventh consecutive quarter, leading to fears that the world's second largest economy is nearing the end of an unsustainable age of rapid expansion. China's GDP grew 7.4% in the third quarter of the year according to data from The National Bureau of Statistics (NBS). Last year the country saw growth of 9.2% and over the last three decades the average has been nearer to 10%. The figure for the last quarter was the weakest since the first three months of 2009, when the global financial crisis weighed on China and led to relatively subdued growth of 6.6%. The deepening crisis has been causing slowing growth in China's economy every quarter since early last year. But government officials said that there were signs that the country was stabilising, The Telegraph says.
BP is on the verge of clinching an historic deal with Rosneft that would see the Russian state-controlled group take control of TNK-BP and hand the UK company a major stake in what would be the world’s largest listed oil producer. Rosneft chief executive Igor Sechin flew to London on Wednesday to discuss acquiring BP’s 50% stake in Russian joint-venture TNK-BP and on Thursday morning is expected to make a cash and shares offer worth up to $28bn (£17.3bn). The development came after Rosneft on Tuesday night signed a preliminary deal with AAR, the oligarchs who own the other half of TNK-BP, to buy their 50% stake in the venture for $28bn. The oligarchs had planned to table a bid for BP's stake but had been unable to raise financing, according to The Telegraph.
The chairman of crisis-hit Bumi faces questions over whether he was working on a controversial “divorce” deal with the mining group’s Indonesian backers months before it was announced. Emails seen by The Daily Telegraph appear to show that as early as July, chairman Samin Tan was in talks with the Bakries, the powerful Indonesian family, over a £750m proposal announced last week to buy back Bumi’s coal assets. Financier Nat Rothschild, another major investor in the FTSE 250’s Bumi, is fighting the deal, on Monday announcing his surprise resignation from the board and accusing Mr Tan of being “complicit” in the “oppression” of shareholders.
A leading Standard Chartered banker involved in making a $1bn (£620m) loan to the Indonesian chairman of the London-listed miner Bumi has quit after the bank struggled to get other lenders on board. Samin Tan used the funds to buy a stake in the coal-miner only to see the investment plunge in value from $1bn to $230m as the board was rattled by rifts between key shareholders, including the financier Nat Rothschild and Indonesia's influential Bakrie group. More recently, Bumi launched an investigation into alleged financial irregularities at its Indonesian units. The loan is secured, reducing the British bank's risk, but so far it has sold down just $230m of the loan, leaving $770m on its books. Sources told Reuters Peter Kay, the global head of leveraged finance syndication at Standard Chartered, was pushed out of the bank, The Independent reports.
Retail chains shut an average of 20 stores a day in the first six months of this year as the pace of high street closures accelerated. A net total of 953 stores (openings minus closures) closed in the first half of the year, compared with 174 in the whole of 2011, according to new figures from consultants PwC and the Local Data Company, a retail information provider. This equated to 20 stores operated by the retail chains on average closing every day, compared with 14 a day in 2011. “All retailers in distress have too many locations,” said Mike Jervis, PwC insolvency partner and retail specialist. “Relatively long leases, with inflexible terms, have been entered into in a growth phase of the economy which is no longer appropriate,” The Financial Times writes.
Energy companies will be forced to place customers on the cheapest suitable tariff in an attempt to curb soaring household bills, the Prime Minister announced yesterday. In a move hailed as a “big moment” by one consumer group, David Cameron said that the forthcoming Energy Bill would compel companies by law to guarantee consumers the best deal. The move, which surprised the Department of Energy and Climate Change, comes amid growing concern in government at the impact on voters of rising gas and electricity prices. It is the first new policy since Mr Cameron used his Conservative conference speech to promise to deliver for “strivers” and marks what will be a sharply-contested battle with Labour for the votes of squeezed households, The Times says.
Bumi investors could be forced to decide whether to sever ties with the Bakrie family without knowing the full extent of the alleged financial irregularities at their Indonesian subsidiaries, the City grandee trying to restore order there has admitted.Sir Julian Horn-Smith, deputy chairman and senior non-executive director, told The Times that Bumi may be unable to publish the full details of its investigation for legal reasons. He said that any Indonesian authority also carrying out investigations into the companies could order Bumi to keep them secret so any potential trial was not prejudiced. “I would personally like to see as much made public as possible, ideally 100%. But our legal advice may say we are not allowed to do so if an agency is already investigating .” He insisted that the board of Bumi would recommend to shareholders whether to accept the Bakrie divorce proposal after having examining the full details of the investigation. |
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