Miners surge after US jobs figures beat forecasts
Market Movers
techMARK 2,161.02 +0.47%
FTSE 100 5,871.02 +0.74%
FTSE 250 12,061.35 +0.89% The FTSE 100 index finished the day with decent gains on Friday as some better-than-expected employment figures from the US lifted sentiment late on.
“A firmer but fairly lacklustre morning in Europe was given fresh impetus this afternoon after the US September employment report, saw the unemployment rate slide under eight per cent for the first time since Obama became President,” said market analyst Michael Hewson from CMC Markets.
US non-farm payrolls increased by 114,000 in September, ahead of the previous gain of 96,000 and the 111,000 rise expected by analysts. The unemployment dropped to 7.8% from 8.1% due to a rise of 873,000 in the number of employed.
Analyst Michael Gapen from Barclays Research said that the better-than-expected report is unlikely to alter the Federal Reserve’s plans for more quantitative easing (QE): “We think the unemployment rate would need to decline further from here in the October and November reports before the Fed would think about not fully converting its Treasury purchases under Operation Twist to open-ended purchases,” he said.
According to German paper Handelsblatt, the International Monetary Fund (IMF) will reduce its global gross domestic product (GPD) growth forecast to 3.3% this year, down from the prior 3.4% estimate. In 2013, growth will accelerate to 3.6%, though still below the prior expectation of a 3.9% rise.
Meanwhile, Greek Prime Minister Antonis Samaras has signalled that his country could not survive beyond November if it isn’t granted the next tranche of bailout aid.
Spanish Minister of Economy Luis de Guindos has insisted that his country doesn’t need to be bailed out at all as he defended Spain’s progress on deficit reduction. FTSE 100: Risk appetite benefits the miners
Mining stocks were among the highest risers after the US employment report from the States improved the demand outlook for commodities. ENRC, Kazakhmys, Evraz and Vedanta were the top three performers by the close. Vedanta was making gains even though its confirmed this afternoon that the mining ban in Goa was still ongoing.
In contrast, Anglo American sank into the red this afternoon after its 80%-owned platinum operation, Amplats, was forced to sack around 12,000 striking employees from its Rustenberg project in South Africa. Amplats has lost platinum production of 39,000 ounces since the industrial action began three weeks ago, which will result in around 700m South African rand (nearly £50m) of lost revenue.
Luxury brand Burberry rose after Morgan Stanley upgraded the stock to 'overweight' this morning. Engineering group IMI was a high riser after Morgan Stanley and JPMorgan Cazenove both reiterated their 'overweight' ratings on the shares.
Oilfield services firm Wood Group was in demand after saying that it is still confident in hitting full-year profit targets, with conditions in energy markets remaining favourable. "We anticipate strong operating cash flow in the second half, and our strong balance sheet provides a robust platform for growth," the group's interim management statement said.
Technology firm Smiths Group was higher after saying that it will launch a $400m bond offering, saying that the funds will be used for general corporate funding purposes and to repay certain existing debt.
Supermarket group Tesco continued to fall, extending losses after its profits disappointed the markets on Wednesday. Shares are now down over 5% on the week. Both Seymour Pierce and Espirito Santo reduced their target for the stock this morning. FTSE 250: KCOM drops 6.6% after downbeat trading update
Broadband and communications provider KCOM has fallen following a downbeat trading statement prior to its interims. It announced that it is trading “in line with expectations”, but orders in its enterprise division have been below expectations.
Hunting was on the rise after Deutsche Bank initiated its coverage with a ‘buy’ rating, while Man Group was on the up following a ‘buy’ reiteration from Singer Capital Markets.
Utilities services provider Telecom Plus also gained after dangling the prospect of a sharply increased interim dividend in front of shareholders' eyes after a first-half surge in profits. With the group's business proving to be less seasonal these days the group is moving towards a more even split between its interim and final dividend payments each year. FTSE 100 - Risers
Eurasian Natural Resources Corp. (ENRC) 333.30p +5.91%
Kazakhmys (KAZ) 738.00p +4.46%
Evraz (EVR) 254.10p +3.67%
Rexam (REX) 456.50p +3.63%
Vedanta Resources (VED) 1,101.00p +3.38%
CRH (CRH) 1,210.00p +2.98%
Weir Group (WEIR) 1,852.00p +2.89%
Burberry Group (BRBY) 1,028.00p +2.80%
Wood Group (John) (WG.) 833.50p +2.77%
Hargreaves Lansdown (HL.) 666.00p +2.54%
FTSE 100 - Fallers
Old Mutual (OML) 172.40p -2.65%
BAE Systems (BA.) 328.10p -1.59%
Johnson Matthey (JMAT) 2,339.00p -1.27%
BG Group (BG.) 1,300.50p -1.10%
United Utilities Group (UU.) 728.50p -1.02%
Tesco (TSCO) 315.35p -0.88%
Morrison (Wm) Supermarkets (MRW) 278.20p -0.78%
Next (NXT) 3,564.00p -0.78%
Wolseley (WOS) 2,702.00p -0.77%
Smith & Nephew (SN.) 680.00p -0.73%
FTSE 250 - Risers
Homeserve (HSV) 229.40p +6.45%
Bumi (BUMI) 170.80p +6.09%
Perform Group (PER) 428.60p +5.85%
IP Group (IPO) 124.80p +5.32%
Man Group (EMG) 90.00p +5.26%
Essar Energy (ESSR) 124.00p +5.08%
Ferrexpo (FXPO) 207.10p +4.54%
Ocado Group (OCDO) 68.70p +4.49%
JD Sports Fashion (JD.) 760.00p +4.32%
Talvivaara Mining Company (TALV) 160.80p +4.15%
FTSE 250 - Fallers
KCOM Group (KCOM) 78.75p -6.64%
Atkins (WS) (ATK) 695.00p -4.66%
FirstGroup (FGP) 196.10p -2.24%
Investec (INVP) 383.70p -1.31%
Rank Group (RNK) 149.50p -1.25%
New World Resources A Shares (NWR) 272.60p -1.23%
Pace (PIC) 169.70p -1.22%
Telecity Group (TCY) 939.00p -1.16%
Berendsen (BRSN) 571.00p -1.04%
BTG (BTG) 369.20p -0.99% | European broker round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Markets Finished Solidly Higher After U.S. Jobs Report
The European markets rallied higher on Friday, after a strong U.S. jobs report for September. The U.S. jobs data overshadowed investor concerns over the situation in Spain and in Greece. The Bank of Japan also abstained from announcing further stimulus Friday, just as the European Central Bank and Bank of England did on Thursday.
With employment in the U.S. rising for the twenty-fourth consecutive month in September, the Labor Department released a report on Friday showing that the unemployment rate for the month fell to its lowest level in well over three years.
The report showed that employment increased by 114,000 jobs in September following an upwardly revised increase of 142,000 jobs in August. Economists had expected employment to increase by 113,000 jobs compared to the addition of 96,000 jobs originally reported for the previous month.
The continued job growth pushed the unemployment rate down to 7.8 percent in September from 8.1 percent in August. The drop surprised economists, who had expected the unemployment rate to come in unchanged.
The French economy will stagnate in the second half of this year, extending the period of stagnation to five consecutive quarters, reports said citing the latest forecasts from statistical office Insee, published Thursday.
The statistical office also forecasts the Eurozone economy to have entered recession in the third quarter with the gross domestic product falling 0.2 percent quarter-on-quarter following a 0.2 percent contraction in the second quarter. Recession is expected to continue in the fourth quarter with GDP falling 0.1 percent.
Insee predicts the French economy to grow just 0.2 percent in 2012, below the government's forecast for a 0.3 percent expansion.
Spanish Economy Minister Luis de Guindos on Thursday insisted that his country does not need a bailout, despite rumors that the troubled euro member may request European aid as soon as this weekend.
The minister's remarks came a couple of days after Prime Minister Mariyano Rajoy denied reports that Spain is planning to seek a bailout at the upcoming meeting of Eurozone finance ministers on October 8.
Greece will run out of cash in November without the next tranche of bailout fund, Prime Minister Antonis Samaras said in an interview with German business daily Handelsblatt.
According to an interview published by the business daily on Friday, Samaras said the European Central Bank should consider accepting lower interest rates on Greek debt holdings or rolling over its debt holdings to give more time.
The International Monetary Fund has no fixed timeline for the troika report on Greece, IMF External Relations Department Director Gerry Rice said Thursday.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.78 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.94 percent.
The DAX of Germany rose by 1.27 percent and the CAC 40 of France advanced by 1.64 percent. The FTSE 100 of the U.K. climbed by 0.74 percent and the SMI of Switzerland gained 0.66 percent.
In Frankfurt, Air Berlin gained 0.58 percent. Germany's second-largest airline, reported a decline in passenger numbers and capacity for the month of September, following its earlier decision to reduce capacity and fleet with a view to bringing the company back to profitability.
Volkswagen climbed by 2.44 percent, BMW rose by 2.02 percent and Daimler gained 2.16 percent. Gerresheimer declined by 4.57 percent, after Cheuvreux reduced its rating on the stock.
In Paris, Sanofi rose by 1.87 percent. The company reported clinical trial results which showed that its diabetes drug, Lantus, is three times more likely to maintain targeted blood sugar levels than standard care.
Societe Generale finished higher by 3.73 percent. BNP Paribas increased by 3.54 percent and Credit Agricole added 1.85 percent.
Bouygues lost 1.41 percent, after a broker downgrade. UBS added Air Liquide to its 'Least Preferred List." The stock finished higher by 0.80 percent.
In London, mining stocks turned in a strong performance. Eurasian Natural Resources climbed by 5.91 percent and Kazakhmys gained 4.46 percent. Vedanta Resources rose by 3.47 percent and Rio Tinto added 2.19 percent.
Barclays increased by 2.38 percent, Royal Bank of Scotland added 1.42 percent and HSBC rose by 1.18 percent.
Burberry finished higher by 2.80 percent, after Morgan Stanley upgraded it to "Overweigh" from "Equal weight."Experian climbed by 1.52 percent, after Credit Suisse upgraded its rating on the stock to "Outperform" from "Neutral."
Energy services company John Wood Group said it continues to deliver good growth and is still confident of achieving full-year performance in line with expectations. The stock closed up by 2.77 percent.
Telecom Plus gained 2.29 percent. The company expects first-half pre-tax profits and earnings per share firmly ahead of last year.
KCOM Group sank by 6.64 percent, after warning of macro-economic uncertainty in the second half. Givaudan rose by 1.76 percent in Zurich. UBS added the stock to "Most Preferred List'' in European chemicals.
Germany's factory orders declined more than expected in August on weak domestic orders, suggesting that the economy gained only limited support from private consumption. Orders fell 1.3 percent from a month ago, when it rose 0.3 percent, the Federal Ministry of Economics and Technology reported Friday. Bookings were forecast to decline by 0.5 percent. |
| US Market Report | Stocks Give Back Ground But Remain Mostly Positive
Stocks remain mostly higher in mid-day trading on Friday, although buying interest has waned from earlier in the session. While a positive reaction to the monthly jobs report helped to drive stocks higher, lingering economic uncertainty has limited the upside for the markets.
After moving notably higher earlier in the session, the major averages have given back ground but remain in positive territory. The Dow is up 53.07 points or 0.4 percent at 13,628.43, the Nasdaq is up 2.72 points or 0.1 percent at 3,152.18 and the S&P 500 is up 4.41 points or 0.3 percent at 1,465.81.
The early strength on Wall Street came on the heels of the release of the Labor Department's monthly employment which, which showed that continued job growth pushed the unemployment rate down to its lowest level in well over three years.
The report showed that employment increased by 114,000 jobs in September, roughly in line with the increase expected by economists.
Job growth in the previous month was much strong than previously estimated, with employment rising by 142,000 jobs in August compared to the addition of 96,000 jobs originally reported.
The continued job growth pushed the unemployment rate down to 7.8 percent in September from 8.1 percent in August. With the drop, the unemployment fell to its lowest level since January of 2009.
The notable drop by the unemployment rate came as the volatile household survey said total employment rose by 873,000 jobs in September compared to the addition of 418,000 people to the workforce.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, the largest increase in the household survey since 2003 is the main focus of the markets due to the drop in the unemployment rate that it caused, thus putting aside the lackluster gain in private sector payrolls for the 2nd straight month."
Despite the strength in the broader markets, shares of Zynga (ZNGA) have come under pressure after the online video game company cut its full-year guidance. Zynga is currently posting an 18.4 percent loss.
Sector News
Housing stocks are turning in some of the market's best performances in mid-day trading, with the Philadelphia Housing Sector Index up by 1.7 percent. With the gain, the index is poised to end the session at its best closing level in almost five years.
Standard Pacific (SPF) and PulteGroup (PHM) are leading the housing sector, advancing by 3.3 percent and 2.3 percent, respectively.
Considerable strength has also emerged among trucking stocks, as reflected by the 1.6 percent gain being posted by the Dow Jones Trucking Index. The gain has lifted the index to its best intraday level in well over two months.
Defense, chemical, and railroad stocks are also posting notable gains on the day, while most of the other major sectors are showing more modest moves to the upside. |
| Broker tips | Tesco, IMI, WS Atkins The strategic problems at Tesco are getting worse, according to Investec, which still recommends to sell shares in the supermarket giant.
Investec said that Tesco's strategy needs a "major overhaul". The broker has kept its 295p target on the shares, saying that the risk remains on the downside.
Jefferies has reiterated its 'hold' rating and 930p target for engineering group IMI, saying that while it is a good business, there's still work to be done to satisfy 'near-term concerns'.
The broker explained: "Management are targeting 75% of sales in their sweetspot (currently 55%) by 2017, and £20m of incremental year-on-year investment maybe required over that period.
"Whether or not the group will be spending £100m on this investment by 2017 clearly depends on the progress they are making with the top line. We believe they will have to manage this carefully in the near-term, especially given the possibility of markets remaining challenging in the near-term."
Shares in engineering and design consultancy WS Atkins were hit on Friday on concerns about the company's involvement in the high-profile West Coast franchising fiasco.
"Rail has accounted for c10% of group revenue and headcount in recent years. It has been involved in a number of high-profile schemes so we do not believe that this particular project will have a significant negative financial impact," Brown said.
"The bigger hit is likely to be on share price sentiment. This follows the uncertainty created by Peter Brown and the cautious Q1 update." |
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