London close: Markets rebound on low volumes
Market Movers
- techMARK 2,102.68 +0.54%
- FTSE 100 5,849.90 +0.95%
- FTSE 250 11,954.25 +0.28%
With US stock markets remaining closed for a second straight day as Hurricane Sandy continues to batter the shores of America's East Coast, equities across the Pond rebounded as investors celebrated decent results from a number of heavy hitters across Europe.
"Trading remained thin today as the NYSE's decision to keep shut, the first time weather has halted trading for two straight days since 1888, put off many investors from engaging in risk-on assets and instead many investors opted to await news regarding the impact of Hurricane Sandy," said financial trader Shavaz Dhalla from Spreadex.
"However, the few investors still willing to trade the markets were clearly bullish as the remaining open markets traded positively. Thus, it seems these scarce investors have preferred to build on positive news from European stocks, including BP which has today announced a big dividend increase, instead of focusing on the potential financial consequences of Hurricane Sandy," Dhalla said. Heavyweights including ENI, Deutsche Bank, Bayer and Imperial Tobacco also lifted sentiment today.
Markets were also focusing on some key macroeconomic indicators in the Eurozone today: Spanish gross domestic product (GDP) figures showed that the country remained in recession in the third quarter, contracting by 0.3% quarter-on-quarter but better than the 0.4% decline expected; meanwhile German unemployment gained for a seventh consecutive month in September despite the jobless rate remaining stable at 6.9% - unemployment increased by 20,000, double the 10,000 gain expected.
In other news, Greek Prime Minister Antonis Samaras has announced that a deal has been reached for a €13.5bn austerity package and negotiations with the 'Troika' have concluded. The austerity deal was a necessary step so that Greece can receive its next tranche from its bailout programme with international creditors.
The Bank of Japan has expanded its asset-purchase programme for the second consecutive month. Markus Huber, the head of German HNW trading at ETX Capital, said this morning that the news was "less well-received as many had hoped for much more aggressive easing to counteract renewed weakness seen in the Japanese economy." FTSE 100: BP jumps after Q3 beat and raised dividend
Oil giant BP gained nearly 5% today after profits came in well ahead of forecasts in the third quarter and the company moved early on a dividend increase to nine cents per share (up 12.5%). In its first quarterly announcement since the recent deal with Rosneft, BP reported a clean net income of $5,170m on an underlying replacement cost (RC) basis, well ahead of Investec's $4,020m estimate.
Imperial Tobacco rose after profits came in broadly in line with expectations in the year to the end of September, helping the firm to raise its payout ratio and increase its full-year dividend by over a tenth.
Insurance stocks were surprisingly making gains today in spite of the dreadful weather Stateside as markets get ready for the UK insurance and life assurance nine-month results season, which kicks off tomorrow with statements due out from Standard Life, St James's Place and Phoenix. UBS lifted targets across the sector today but said that its preferred life stocks remain Aviva and Prudential.
Resolution was also rated as a 'buy' by the Swiss broker "based on valuation, and given improving governance, its own restructuring momentum, and underperformance year to date."
Banking stocks were mixed with Barclays and Lloyds making gains whilst Standard Chartered disappointed with its third-quarter results. Nomura said that StanChart's results were broadly in line but a "touch below if we are nit picking". StanChart said that third-quarter ALM income was slightly down on the first half run rate due to lower reinvestment yields; Nomura highlighted this this would be a "negative read-across for BSM at HSBC" whose shares finished flat.
Airline group IAG was being dampened after having to cancel flights as a result of Hurricane Sandy. Meanwhile, it was being reported that the firm could add more wide-body planes at Gatwick in a review of capacity at a base dominated by ageing single-aisle jets that generate lower profit margins than operations at its main Heathrow hub, one of the company's Managing Directors has told Bloomberg.
FTSE 250: Centamin plummets on Sukari concerns
Centamin tanked shortly before trading in the shares was suspended on concerns that it could lose its flagship Sukari gold mine in Egypt. According to media reports, an Egyptian court has said that the gold miner's contract to mine Sukari has been withdrawn, after a decision in 2005 to award the company the contact was over-ruled. However, the company responded today that mining operations are still ongoing and no official written judgement on the concession has been given.
Lonmin shareholders saw their shares jump after the platinum producer announced a chunky $800m rights issue to improve its chances of passing banking covenant tests. On top of that work at Lonmin's Saffy mine in South Africa was back up and running after striking workers bowed to a deadline to go bad to work.
Regus also had a good day after it announced plans to open more offices this year than originally expected in order to meet growing demand for flexible and mobile working.
FTSE 100 - Risers
BP (BP.) 442.85p +4.20%
Barclays (BARC) 238.80p +3.35%
Resolution Ltd. (RSL) 213.70p +3.14%
GKN (GKN) 210.10p +2.74%
Weir Group (WEIR) 1,764.00p +2.56%
CRH (CRH) 1,147.00p +2.41%
Kazakhmys (KAZ) 729.50p +2.39%
Amec (AMEC) 1,058.00p +2.32%
Wood Group (John) (WG.) 848.00p +2.05%
Rio Tinto (RIO) 3,142.50p +2.03%
FTSE 100 - Fallers
United Utilities Group (UU.) 695.00p -2.66%
Randgold Resources Ltd. (RRS) 7,250.00p -1.16%
Standard Chartered (STAN) 1,483.50p -0.93%
National Grid (NG.) 702.50p -0.78%
British Sky Broadcasting Group (BSY) 712.50p -0.49%
Schroders (SDR) 1,520.00p -0.46%
British American Tobacco (BATS) 3,112.50p -0.43%
Pennon Group (PNN) 724.50p -0.41%
Polymetal International (POLY) 1,116.00p -0.27%
Tullow Oil (TLW) 1,382.00p -0.22%
FTSE 250 - Risers
Lonmin (LMI) 513.50p +6.98%
Man Group (EMG) 82.15p +4.72%
Regus (RGU) 102.70p +4.26%
Kenmare Resources (KMR) 39.00p +3.53%
Playtech Ltd. (PTEC) 415.90p +2.69%
Morgan Crucible Co (MGCR) 251.90p +2.57%
Ferrexpo (FXPO) 200.00p +2.51%
FirstGroup (FGP) 191.70p +2.19%
Filtrona PLC (FLTR) 580.50p +2.02%
Premier Oil (PMO) 357.40p +2.00%
FTSE 250 - Fallers
Centamin (DI) (CEY) 63.83p -35.40%
IP Group (IPO) 115.00p -3.36%
COLT Group SA (COLT) 114.30p -3.30%
New World Resources A Shares (NWR) 271.40p -2.93%
Anite (AIE) 142.00p -2.41%
African Barrick Gold (ABG) 431.40p -2.40%
Rathbone Brothers (RAT) 1,271.00p -2.38%
Computacenter (CCC) 364.50p -2.33%
Restaurant Group (RTN) 373.50p -2.23%
Stobart Group Ltd. (STOB) 110.10p -2.13%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe midday: Germany and Greece working on Greek solution
-Moscovici: Greece to be discussed tomorrow
-Italian DMO head says current bond yield levels manageable
-PIMCO (Balls) says Spain will ask for aid relatively shortly -Bbg
-PIMCO (Balls) says no longer underweight Spanish debt
FTSE-100: 0.86%
Dax-30: 1.06%
Cac-40: 1.40%
FTSE Mibtel 30: 0.98%
Ibex 35: 1.31%
Stoxx 600: 0.81%
The main European equity benchmarks are now registering a strong bounce-back, more than reversing yesterday´s price action. That as New York equity futures resumed trading overnight, and actually turned positive.
More important, of course, millions have been left without power in the Mid-Atlantic and North-Eastern United States, but the floodwaters have receded from the streets of New York City. Nevertheless, the New York City Metropolitan Transit System may take weeks to return to normalcy and remains flooded, according to some reports. Even so, insurers are now amongst the best performers on the Continent, in apparent relief. As an aside, but worth monitoring, some of the first estimates available are putting the cost of the storm at approximately $20bn.
Acting as a back-drop, overnight the Bank of Japan approved a ninth consecutive increase in the size of its asset repurchase program. That following the release of very weak data on industrial production, consumer spending and the labour market.
Markets, however, had apparently been expecting firmer actions analysts say. Hence today´s fall in the benchmark Nikkei-225 and rise in the Yen.
According to the French Finance Minister, Pierre Moscovici, his country and Germany are working towards a complete solution of the Greek situation with November´s Eurogroup meeting in mind as the target date, although Greece´s plight will also be discussed at tomorrow´s summit. Strong results out of Deutsche Bank
Shares of Deutsche Bank are now rising after reporting third quarter net profits of €747m, which came in well ahead of the €564m consensus forecast.
Shares of UBS are this morning tacking on another 5% after confirming plans to pursue cost cutting measures with an aim to lifting its return on equity –or on the funds its shareholders have invested- to at least 15% by 2015.
Allianz has raised its full-year operating profit target.
Denmark´s largest lender, Danske Bank, has announced its intention to sell $1.2bn (£745bn) in new shares.
From a sector stand-point the best performance can now be seen in the following industrial groups: Oil (1.95%), Automobiles (1.48%) and Insurance (1.45%).
German unemployment rises for first time in 3 years
German unemployment increased by 20,000 in October, ahead of consensus forecasts for a rise of 10,000. The unemployment rate came in at 6.9%, as expected, but the previous month´s level was revised up by a tenth of a percentage point. Last month´s increase was the first in three years.
Spanish gross domestic product contracted at a 0.3% quarter-on-quarter rate in the third quarter, less than the 0.4% contraction that had been foreseen.
The European Commission´s economic sentiment indicator for the Eurozone in the month of October fell to a three year low, at 84.5 points, after 85.2 for September (Consensus: 84.4). Single currency holding above 1.29
The euro/dollar is now is now rising by 0.40% to the 1.2960 dollar mark.
Front month Brent crude futures are down by 0.45 dollars to the 108.95 dollar level.| US Market Report | NYSE Euronext has announced that it will close all its trading venues on Tuesday, in coordination with all US equities, bonds, options and derivatives markets.
The above comes as 85 mile-per-hour winds from Hurricane Sandy hone in on New York city, thus paralysing capital markets, with flooding expected in lower Manhattan, precisely where the financial district is concentrated.
Nevertheless, NYSE has indicated that it intends to reopen on Wednesday, October 31st, conditions permitting.
| Broker Tips | Broker tips: BP, StanChart, Premier Foods
Investec has reiterated its bullish stance on oil giant BP, saying that the company's third-quarter results were 'much strong than we and the market anticipated'.
The broker said: "Overall, we have seen a much better result than the poor Q2 and the company has moved early on a dividend increase to 9c/share (+12.5%)."
A 'buy' rating and 460p target for the stock has been retained.
Emerging markets lender Standard Chartered's third-quarter results were broadly in line with expectations, according to Nomura, but 'a touch below if we are nit picking'.
Nevertheless, the broker has maintained its 'buy' rating and 1,600p target for the shares, saying that the business is "motoring away as expected".
Panmure Gordon says that the recent disposals at Premier Foods do not rule out further divestments in the future.
Panmure maintained its 'hold' rating and 90p target for the stock, saying even after these disposals, the business will remain highly geared with a very large pension deficit "which has to be serviced from a smaller cash generative base". |
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