| Stocks finish flat despite decent data
Market Movers
techMARK 2,096.03 +0.20%
FTSE 100 5,805.05 0.00%
FTSE 250 11,972.15 +0.92% Stocks pared gains to finish flat by the close on Thursday despite a barrage of better-than-expected data the world over – including UK gross domestic product (GDP) figures – and upbeat speculation about Asia’s largest economies, China and Japan.
Markets were initially given a lift this morning after it was announced that the UK economy expanded by 1.0% in the third quarter, compared with the 0.4% decline seen in the second quarter and well ahead of the 0.6% increase expected. That was the strongest reading since late 2007 and means that the economy exited from its double-dip recession.
Analysts at Barclays Research and Investec now expect quantitative easing (QE) to be off the table at the next Monetary Policy Committee (MPC) meeting. Having said that, a poll by Reuters out over the weekend placed the probability for further QE in November at 60%.
Barclays said: "We have changed our policy call and now expect the current round of asset purchases, due to be completed at the end of this month, to be the last (we had previously expected an additional £50bn of QE in November).”
China’s Ministry of Industry and Information Technology said today that the Chinese industry sector performance has shown “signs of stabilisation”. The Ministry said that fourth-quarter industrial output growth may be faster than that seen in the third “which will help the country to achieve its annual economic growth target of 7.5%”.
Meanwhile, reports from a Japanese newspaper that the Bank of Japan would boost stimulus were also helped to lift markets higher today. According to the Nikkei newspaper, Japan will up its asset purchase programme by 10trn yen to 90trn yen at its policy meeting on October 30th.
US jobless claims and durable goods orders came in better than forecasts today, a good sign ahead of the big one, the US gross domestic product report, due out tomorrow afternoon. Consensus forecasts are for an annualised expansion of 1.9% in the third quarter, an acceleration from the 1.3% growth in the preceding three months. FTSE 100: Carnival and Unilever gain but resources provide a drag
Cruise operator Carnival jumped in afternoon trade, buoyed by news that its US rival Royal Caribbean has raised its full-year forecast.
Consumer products giant Unilever was in demand after underlying sales growth beat expectations in the third quarter, helped by a strong performance in the emerging markets.
However, mining stocks were heavily out of favour this afternoon, with Evraz, ENRC and Kazakhmys registering steep falls. However, precious metals producer Fresnillo bucked the trend after approving the feasibility study for the development of the $500m San Julian silver project in Mexico.
Oil giant Royal Dutch Shell was down after announcing that it is looking to buy Hess Corporation's stakes in the Beryl area fields and the Scottish Area Gas Evacuation Systems (SAGE) in the North Sea for $525m.
Also lower was media giant WPP after it admitted its third-quarter growth was slower than that seen in the second quarter, which also came in short of expectations, while the fourth quarter is set to slow further.
ARM Holdings was in the red as investors took profits following the previous two day's surge; the stock is now up around 12% on the week after after the chip designer beat forecasts in the third quarter and gave a confident outlook for the rest of the year.
Speciality chemicals group Johnson Matthey was given a boost after sector peers BASF and AZ Electronic Materials reiterated their full-year targets. FTSE 250: Debenhams leads after full-year results
Department store group Debenhams surged after the company reported resilient full-year results and said it would be continuing its share buy-back programme for the next 12 months amidst 'challenging' conditions for the British consumer.
Speciality chemicals producer AZ Electronic Materials also jumped after maintaining full-year guidance, saying that it made "solid progress" in the third quarter despite an uncertain macro-economic environment.
Oil and gas group Salamander Energy gained after saying the Bravo jacket is now en route to the Bualuang oil field, where the company's operated block B8/38 is located, in the Gulf of Thailand.
Bwin.party rose after saying that it has formed an exclusive partnership with social gaming provider Zynga to develop and operate real money online and mobile poker and casino services in the UK.
Essar Energy and New World Resources were both in decline following reports that an investigation into diesel pricing in underway.
| AIM/Small Cap Report | | FTSE 100 - Risers
Carnival (CCL) 2,505.00p +3.04%
Fresnillo (FRES) 1,930.00p +2.17%
Aggreko (AGK) 2,089.00p +2.10%
Unilever (ULVR) 2,310.00p +1.99%
International Consolidated Airlines Group SA (CDI) (IAG) 160.00p +1.78%
Wood Group (John) (WG.) 848.50p +1.74%
Johnson Matthey (JMAT) 2,253.00p +1.67%
Next (NXT) 3,618.00p +1.54%
Imperial Tobacco Group (IMT) 2,330.00p +1.48%
Babcock International Group (BAB) 953.50p +1.44%
FTSE 100 - Fallers
Evraz (EVR) 235.40p -5.95%
Eurasian Natural Resources Corp. (ENRC) 333.40p -2.40%
WPP (WPP) 789.50p -2.29%
Kazakhmys (KAZ) 736.00p -1.87%
ARM Holdings (ARM) 665.00p -1.55%
Royal Dutch Shell 'A' (RDSA) 2,088.50p -1.49%
Amec (AMEC) 1,034.00p -1.43%
Resolution Ltd. (RSL) 210.60p -1.13%
Royal Dutch Shell 'B' (RDSB) 2,165.00p -1.12%
Anglo American (AAL) 1,857.50p -1.04%
FTSE 250 - Risers
Debenhams (DEB) 119.00p +9.17%
F&C Asset Management (FCAM) 101.00p +6.88%
Bwin.party Digital Entertainment (BPTY) 125.50p +6.72%
Anite (AIE) 143.60p +6.37%
AZ Electronic Materials SA (DI) (AZEM) 336.00p +6.33%
Drax Group (DRX) 548.00p +5.38%
Salamander Energy (SMDR) 192.30p +5.37%
Pace (PIC) 170.00p +4.87%
Home Retail Group (HOME) 110.60p +4.64%
Oxford Instruments (OXIG) 1,337.00p +4.13%
FTSE 250 - Fallers
Kentz Corporation Ltd. (KENZ) 398.90p -3.37%
Bumi (BUMI) 249.00p -3.34%
Ruspetro (RPO) 102.70p -2.19%
Essar Energy (ESSR) 132.30p -2.00%
Petropavlovsk (POG) 416.70p -1.91%
Supergroup (SGP) 660.00p -1.64%
Cranswick (CWK) 760.50p -1.62%
Regus (RGU) 101.60p -1.45%
Hochschild Mining (HOC) 496.70p -1.45%
Hansteen Holdings (HSTN) 75.05p -1.25% |
| European broker round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | | European Markets Finished Mixed Thursday, Earnings In Focus
The European markets have ended Thursday's session with mixed results. Corporate earnings results from a number of major companies are continuing to roll in, as the busiest week of the reporting season nears its end. The better than expected U.K. GDP report provided a boost, as the country exited a double-dip recession. Economic news from the U.S. was also better than expected, with a sharp rebound in durable goods orders and a decline in weekly jobless claims.
Finance Minister Yiannis Stournaras said Wednesday that its international lenders have agreed to give Athens extended time and other concessions for meeting the terms of the country's bailout program.
Stournaras said a new package of austerity measures would be put to vote in the parliament next week. The finance minister, however, did not specify how much extra time Athens had been granted by its creditors. Nevertheless, media reports citing a leaked copy of the draft loan agreement suggested that Greece had been given until the end of 2016 to meet the bailout targets.
In March, Greece pledged a series of economic reforms and spending cuts worth 13.5 billion euros for 2013 and 2014 in exchange for a joint 130 billion euros bailout from the troika of lenders, consisting of the European Union, the European Central Bank and the International Monetary Fund.
Athens has long been seeking an extension of up to two years to implement the economic reforms and spending cuts agreed under the bailout deal. The Greek government had been negotiating with representatives of the troika for months for release of the next tranche of bailout loan, as well as more time and concessions for implementing the bailout conditions.
The Federal Reserve concluded its 2-day meeting on Wednesday and, as expected, made no change to its highly accommodative monetary policy. The Federal Reserve will continue to purchase $40 billion of mortgage-backed securities per month, and gave no indication they will expand their quantitative easing program before year's end.
"Unemployment rate remains elevated," the Fed said in a statement accompanying its decision. More encouraging, "Household spending has advanced a bit more quickly," and housing has "improved from a depressed level."
The Euro Stoxx 50 index of Eurozone bluechip stocks lost 0.30 percent, but the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.14 percent.
The DAX of Germany climbed by 0.10 percent and the FTSE 100 of the U.K. gained 0.00 percent. The CAC 40 of France declined by 0.44 percent and the SMI of Switzerland fell by 0.31 percent.
In Frankfurt, BASF rose by 1.05 percent. The chemical giant reported a decline in profit for the third quarter, hurt by increased taxes, while sales advanced 8 percent, beating estimates. The company also confirmed its forecast for record sales and operating profit this year.
Adidas gained 0.62 percent, after winning a legal battle with bitter athletic-shoe rival Nike over patent infringement.
Bayer increased by 0.79 percent, after announcing a collaboration agreement on cancer therapies with Qiagen.
Daimler declined by 2.99 percent, after the auto company warned that it will miss its full year operating profit target.
In Paris, France Telecom dropped by 5.16 percent. The company reported third-quarter revenues of 10.76 billion euros, lower than 11.15 billion euros in the corresponding period last year on a comparable basis.
AXA rose by 1.04 percent, after the insurer reported a 1.3 percent increase in 9-month revenues.
Dassault Systèmes advanced by 2.28 percent. The company posted higher IFRS net earnings attributable to equity holders of the parent of 82.6 million euros versus 76.4 million euros a year ago.
In London, Unilever climbed by 1.99 percent. The consumer goods maker posted a 5.9 per cent increase in underlying sales in the third quarter, beating analyst forecasts.
Royal Dutch Shell decreased by 1.49 percent. The company announced an agreement with Hess Corp to acquire its interests in the Beryl area fields and the Scottish Area Gas Evacuation System for $525 million.
AstraZeneca finished higher by 0.42 percent. Third quarter sales fell by 19 percent, after the loss of exclusivity on antipsychotic drug Seroquel. Earnings for the quarter also declined by 12 percent.
WPP lost 2.29 percent, after the company reduced its full year revenue guidance. Revenues are now expected to grow between 2.5 and 3.0 percent, down from prior expectations of 3.5 percent growth.
Credit Suisse advanced by 0.09 percent in Zurich. The Swiss banking giant unveiled plans to cut costs further after posting a 63 percent fall in third-quarter profit.
Shares of Novartis dipped by 0.70 percent, after posting worse-than-expected third quarter sales.
Underpinned by a surge in services output, the U.K. economy expanded at the fastest pace in five years during the three months to September, ending three straight quarters of contraction, preliminary data from the Office for National Statistics showed Thursday.
Officially exiting from a double-dip recession, the economy grew by a bigger-than expected 1 percent sequentially in the third quarter. It followed a 0.4 percent fall in the second quarter and 0.3 percent drop in the first three months of the year. Gross domestic product was forecast to rise 0.6 percent in the third quarter.
U.K. services output expanded 1.7 percent in August from a year ago, following a 1.1 percent rise in July, the Office for National Statistics said Thursday. |
| US Market Report | | Stocks Pull Back Amid Fitch Downgrade Rumors
Mirroring the trend seen in the previous session, stocks have moved back to the downside over the course of the trading day on Thursday after failing to sustain a strong move to the upside at the open. Rumors of a possible downgrade of the U.S. credit rating contributed to the pullback by the markets.
The major averages are currently posting modest losses, extending a recent downward trend. The Dow is down 22.88 points or 0.2 percent at 13,054.46, the Nasdaq is down 1.16 points or less than a tenth of a percent at 2,980.54 and the S&P 500 is down 1.20 points or 0.1 percent at 1,407.55.
The initial strength on Wall Street was partly due to a positive reaction to a batch of largely upbeat economic data, including a report showing that the U.K. emerged from recession in the third quarter.
The report from the U.K. Office for National Statistics said the U.K. economy grew by 1 percent in the third quarter after contracting in each of the three previous quarters.
The U.S. Labor Department also released a report showing a bigger than expected drop by initial jobless claims in the week ended October 20th, while a report from the Commerce Department showed that durable goods orders rebounded by more than expected in September.
However, stocks gave back some ground following the release of a separate report from the National Association of Realtors showing a much smaller than expected increase in pending home sales.
NAR said its pending home sales index edged up by 0.3 percent to 99.5 in September after falling by 2.6 percent to 99.2 in August. Economists had been expecting a more substantial rebound by the index of about 2.5 percent.
Adding to the selling pressure were rumors that Fitch Ratings intended to release a statement regarding a downgrade of its AAA credit rating for the U.S.
While a Fitch spokesman later referred to the ratings agency's July statement indicating that its negative outlook on the AAA rating is unlikely to be resolved until late 2013, the downgrade worries continue to weigh on the markets.
Sector News
Housing stocks have shown a notable move to the downside on the heels of the disappointing pending home sales data. Reflecting the weakness in the housing sector, the Philadelphia Housing Sector Index has tumbled by 2.4 percent.
Meritage Homes (MTH) has helped to lead the housing sector lower, with the homebuilder down by 9.8 percent after releasing its third quarter results.
Commercial real estate, airline, and electronic storage stocks have also come under pressure over the course of the trading day.
Meanwhile, considerable strength remains visible among gold stocks, as reflected by the 2.5 percent gain being posted by the NYSE Arca Gold Bugs Index. The index is regaining some ground after ending the previous session at a one-month closing low.
The strength in the gold sector comes amid an increase by the price of the precious metal as well as upbeat earnings news from Agnico-Eagle Mines (AEM) and Goldcorp (GG).
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.
In the bond market, treasuries continue to see modest weakness but have climbed well off their early lows. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.4 basis points at 1.799 percent after reaching a high of 1.852 percent. |
| Broker tips | | WPP, Reckitt, ASOS Investec has maintained its 'buy' rating for media and advertising giant WPP but has put its 950p target price under review after a disappointing third-quarter trading update on Thursday.
"3Q IMS is disappointing with slower US/Europe but also Emerging markets. The latter is expected to bounce back but other areas may stay tough, so numbers reduce slightly," said analyst Steve Liechti.
Nevertheless, Liechti said: "Shares likely to be weaker today but international marketing growth story remains, so a buying opportunity could emerge."
Panmure Gordon has raised its target price for consumer products group Reckitt Benckiser after strong growth in Europe and North America (ENA) helped like-for-like (LFL) sales beat forecasts in the third quarter.
"Reckitt only reiterated its full-year outlook, and as such we believe the initial 6% jump in the share price was a slight over-reaction. Nevertheless, we nudge our price target up by 3% from 3540p to 3650p and reiterate our 'hold' recommendation."
Seymour Pierce has raised its target price for online retailer ASOS from 1,900p to 2,350p to reflect the recent share price momentum, but the broker has maintained its 'hold' rating.
Seymour analyst Freddie George said: "The founder of BestSeller, however, who holds 27% of the equity (recently increased by one percentage point), is getting closer to the 30% bidding threshold while we believe the Chinese development plans will be pushed further into the future." |
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