Soft start but banks shine
Market Movers
techMARK 2,096.57 -0.61%
FTSE 100 5,818.86 -0.19%
FTSE 250 11,864.01 -0.29% London has taken its cue from Wall Street, which experienced a late swoon yesterday, and opened lower. Stocks on the other side of the Atlantic were initially boosted by jobless data, which showed a fall to levels not seen in over four years, but the good mood did not last, as some pundits claimed the figures were distorted by seasonal factors and one of the larger states delaying its re-certification process.
The ONS will publish construction output data for August at 9:30; the data will be the last published official input into the preliminary estimate of third quarter gross domestic product (GDP) growth. GDP figures are due out on October 25th. Building materials sector fatigued In company news, financial services provider Hargreaves Lansdown said revenue, assets under administration (AuA) and client numbers all hit record levels in the July-September quarter, the firm's quietest period of the financial year. AuA increased by £2.2bn in the three months to the end of September to £28.5bn, while revenue in the period rose 20% year-on-year to £58.7m. The group said it has made an excellent start to October.
Building materials supplier Travis Perkins saw like-for-like sales fall back in the group's second quarter (to end-September), as the group struggled with the poor weather and the competing attraction of the Olympics. Total sales in the quarter were down 2.4% year-on-year, although the group noted that the quarter this year had one less trading day. Like-for-like sales per trading day were down 3.5% on the corresponding period of last year.
Industrial materials provider Morgan Crucible has delivered a profits warning as trading conditions have deteriorated across most geographies, particularly in Europe and China. Sector peer Bodycote falls in sympathy.
Information technology services provider Computacenter is having to spend time and money getting service levels up to the required standard on some new German contracts, but things are going well in the home market. Other markets The price of Brent crude is drifting lower, with the most actively traded futures contract down 35 cents to $115.36 a barrel.
Gilts are in retreat. The yield on the benchmark 10-year gilt is up to 1.69% from 1.67% overnight. Yields move inversely to prices.
| AIM/Small Cap Report | FTSE 100 - Risers
Barclays (BARC) 237.35p +2.02%
Standard Chartered (STAN) 1,421.50p +1.86%
Lloyds Banking Group (LLOY) 39.83p +1.48%
Royal Bank of Scotland Group (RBS) 277.00p +1.17%
Aviva (AV.) 329.80p +0.83%
Admiral Group (ADM) 1,091.00p +0.55%
Hargreaves Lansdown (HL.) 691.50p +0.51%
SABMiller (SAB) 2,671.50p +0.43%
International Consolidated Airlines Group SA (CDI) (IAG) 163.00p +0.37%
Capital Shopping Centres Group (CSCG) 334.00p +0.36%
FTSE 100 - Fallers
IMI (IMI) 901.50p -2.59%
GKN (GKN) 213.10p -1.80%
Antofagasta (ANTO) 1,291.00p -1.75%
Kazakhmys (KAZ) 734.00p -1.61%
WPP (WPP) 856.00p -1.33%
Smiths Group (SMIN) 1,061.00p -1.21%
Serco Group (SRP) 576.00p -1.20%
Vodafone Group (VOD) 176.25p -1.18%
Melrose (MRO) 233.30p -1.10%
InterContinental Hotels Group (IHG) 1,618.00p -1.10%
FTSE 250 - Risers
Bumi (BUMI) 299.90p +15.79%
Ocado Group (OCDO) 68.40p +3.48%
New World Resources A Shares (NWR) 281.10p +2.93%
Interserve (IRV) 378.20p +2.11%
Ruspetro (RPO) 108.40p +2.07%
Centamin (DI) (CEY) 102.60p +1.99%
St James's Place (STJ) 387.60p +1.97%
Menzies(John) (MNZS) 641.58p +1.84%
St. Modwen Properties (SMP) 198.50p +1.69%
African Barrick Gold (ABG) 483.00p +1.68%
FTSE 250 - Fallers
Morgan Crucible Co (MGCR) 223.00p -12.82%
Bodycote (BOY) 355.60p -4.97%
Spectris (SXS) 1,595.00p -3.97%
Spirax-Sarco Engineering (SPX) 1,955.00p -2.83%
Yule Catto & Co (YULC) 156.40p -2.62%
Senior (SNR) 190.10p -2.51%
Travis Perkins (TPK) 1,108.00p -2.38%
Fenner (FENR) 361.90p -2.19%
Computacenter (CCC) 373.20p -1.79%
Spirent Communications (SPT) 145.90p -1.42% |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | INTERIM DIVIDEND PAYMENT DATE
Admiral Group, Chime Communications, Clarke (T.), Drax Group, H&T Group, IMI, Restaurant Group, Stadium Group, Tikit Group
QUARTERLY PAYMENT DATE
Land Securities Group, Schlumberger Ltd., Yamana Gold Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Industrial Production (EU) (10:00)
Producer Price Index (US) (13:30)
U. of Michigan Confidence (US) (15:00)
ANNUAL REPORT
Smiths Group
IMSS
Computacenter, Hargreaves Lansdown, Travis Perkins
SPECIAL DIVIDEND PAYMENT DATE
Admiral Group
EGMS
Aqua Resources Fund Ltd, Zhejiang Expressway Co 'H' Shares
AGMS
Bailey (C.H.), Crystal Amber Fund Ltd.
FINAL DIVIDEND PAYMENT DATE
Catalyst Media Group, Henderson Smaller Companies Inv Trust, Mid Wynd International Inv Trust, Stewart & Wight, Sweett Group FX round-up
US Jobless claims claims drop to lowest levels in 4 years
The US dollar dropped on Thursday, as risk assets bounced back after the losses seen in the last few trading sessions.
Partially explaining the above perhaps, initial weekly US jobless claims fell to their lowest level in over four years, making the dollar even les necessary as a refuge. Claims were lower by 30,000 last week at 339,000.
No less relevant were reports that Greece might just receive another two years´ time to carry out its adjustment and that the European Union may postpone the introduction of the Basel III capital rules for banks.
As such, the dollar index, which measures the greenback´s performance against a basket of six other major currencies, declined from 80.058 late Wednesday to 79.778 on Thursday evening.
The WSJ index, a wider measure, fell from 69.99 to 69.80.
Despite Standard & Poor's decision to downgrade Spain's long-term credit rating by two notches from ‘BBB+’ to ‘BBB-’, with a negative outlook, the euro climbed from $1.2869 on Wednesday to $1.2932 last night.
Meanwhile, the pound was marginally higher at $1.6032, compared to $1.6003 on the previous evening.
The British currency also traded at 1.2411 euros Thursday evening, compared to 1.2418 the prior day.
The Japanese yen traded at ¥78.49 last night, up from ¥78.19 on Wednesday, mainly as a result of a weak Japanese economy. |
| US Market Report | Stocks Close Nearly Flat Despite Upbeat Jobs Report
After failing to sustain an early upward move, stocks gave back ground over the course of the trading day on Thursday before ending the session nearly flat. The pullback by the markets came as traders shrugged off an upbeat jobs report.
The major averages eventually ended the session mixed. While the S&P 500 inched up 0.28 points or less than a tenth of a percent to 1,432.84, the Dow edged down 18.58 points or 0.1 percent to 13,326.39 and the Nasdaq dipped 2.40 points or 0.1 percent to 3,049.38.
The early strength on Wall Street was partly due to bargain hunting, with traders picked up stocks at reduced levels following recent weakness.
Adding to the buying interest was the release of a report from the Labor Department showing that initial jobless claims unexpectedly dropped to a four-year low last week.
The report said initial jobless claims tumbled to 339,000 in the week ended October 6th from the previous week's revised figure of 369,000. The drop surprised economists, who had expected jobless claims to edge up to 370,000 from the 367,000 originally reported for the previous month.
With the unexpected decrease, jobless claims fell to the lowest level since a matching number in the week ended February 16th, 2008.
The report initially helped to drive stocks higher, although buying interest waned over the course of the morning due in part to indications that the data was distorted by an irregular filing by a large state.
Peter Boockvar, managing director at Miller Tabak, said, "After talking to a contact listed on the Labor Department press release in this morning's jobless claims data, I was told the state not revealed subtracted 30,000 from the weekly initial jobless claims figure."
"This would take the 'adjusted' number to 369,000, about in line with the original expectations of 370,000," he added.
Lingering concerns about the global economic outlook also contributed to the pullback by the markets, with a report from the Commerce Department showing a notable drop in U.S. exports in August.
Among individual stocks, Sprint Nextel (S) held on to a standout gain after the Wall Street Journal reported that Japanese mobile carrier Softbank is in advanced talks to buy the company in a deal expected to exceed $12.8 billion. Shares of Sprint Nextel jumped 14.3 percent.
Sector News
Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close for the broader markets.
Nonetheless, considerable strength remained visible among steel stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Steel Index. AK Steel (AKS) and Mechel (MTL) turned in two of the sector's best performances.
Oil service stocks also held on to strong gains, benefiting from an increase by the price of crude oil, which rose $0.82 to $92.07 a barrel.
Natural gas, brokerage, and health insurance stocks also posted notable gains, while weakness was visible among housing and electronic storage stocks.
Looking Ahead
Trading on Friday could be impacted by reaction to quarterly results from financial giants JP Morgan Chase (JPM) and Wells Fargo (WFC), which are both due to release their third quarter results before the start of trading.
Investors are also likely to keep an eye on U.S. reports on producer price inflation and consumer sentiment as well as remarks by Richmond Federal Reserve President Jeffrey Lacker, who voted against the Fed's recent decision to authorize a new round of quantitative easing. |
| Broker tips | BAE, BoE, BP BAE Systems is examining a series of potential acquisitions to bolster its position in the United States in the wake of its failed merger with EADS. While British investors are demanding to see BAE’s top brass on strategy, following the aborted 28bn pound merger, The Times has been told the defence group is considering “doubling down” on its American growth strategy. According to BAE advisers, it will look at buying suppliers in the electronic warfare, services and cyber security sectors to increase its exposure to the growing areas of US defence. Speculation that BAE will become a target for one of the big American defence contractors is doubted by industry experts in Washington because the US Defence Department has an informal ban on consolidation between its prime contractors or main suppliers.
Britain's £375bn money printing programme has run out of steam and new ways must be found to stimulate the economy, according to Lord Turner, one of the leading candidates for the Bank of England governorship. In comments that will be seen as a strong criticism of the Bank of England’s quantitative easing policy by one of the leading candidates to replace Sir Mervyn King, Lord Turner said printing more money would have a “declining marginal impact” and threatened the stability of the economy. Lord Turner warned that quantitative easing had left Britain facing a “liquidity trap in which replacing private sector holdings of bonds with private sector holdings of money has little impact on behaviour and thus on demand,” The Telegraph reports.
Like a jilted lover, BAE Systems now has to look ahead to life on its own. Among those most keenly affected by the repercussions of the failure of the EADS deal are BAE’s 35,000 UK employees – many of whom face an uncertain future. The main reason for this is the planned rundown in big UK defence programmes, together with a more difficult environment for export orders as military spending worldwide comes under pressure. Many of those in the UK who backed a BAE-EADS marriage did so because they believed an expanded business – with a stronger position in civil aerospace – would have put the British company in a better position to maintain its home workforce at something approaching the current level, The Financial Times explains.
BP faces a major new threat after the president of Azerbaijan accused it of making “false promises” about production volumes and warned it to expect “serious measures”. The oil major made “grave mistakes” that had resulted in an $8.1bn (£5bn) shortfall in the government’s revenues, President Ilham Aliyev said in a dramatic televised attack. The embattled company was accused of failing to meet its output targets at a giant field in the country, which accounts for 4% of its global oil production. The threat to BP’s future in Azerbaijan comes as the company is still struggling to recover from the Gulf of Mexico disaster in the US and facing major uncertainty over the future of its Russian business. Azerbaijan is of key strategic importance to the British company, which is also part of the giant Shah Deniz gas project in the country. The criticism in Azerbaijan relates to the massive Azeri-Chirag-Gunashli (ACG) fields, which BP operates, The Telegraph writes.
International lenders will this weekend discuss an emergency lifeboat worth up to €15bn, aimed at preventing the Greek crisis from pushing vulnerable European countries to the east into deeper recession, The Times has learnt. Heads of institutions including the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development and the European Investment Bank are due to meet on Sunday in Tokyo amid fears about the impact of the euro crisis on countries such as Romania, Albania, Slovenia, Serbia and Macedonia. Erik Berglof, chief economist of the EBRD, told The Times: “The south east Europe recovery plan will be a major co-ordinated effort to help the countries that are most acutely exposed to the spillovers from Greece and the eurozone. Many are in dire straits.”
Greece’s biggest publicly listed company dealt the country’s already battered economy a fresh blow yesterday after announcing plans to move its main listing from Athens to London. Coca-Cola Hellenic, the world’s second biggest bottler of Coca-Cola Company beverages, cited the sharp fall in liquidity on the Athens Exchange since 2007 and rising borrowing costs, after the recent downgrading of its bonds by the credit ratings agencies as factors in its decision. Dimitris Lois, the chief executive, said that the move was also recognition that only 6% of the company’s volumes are from Greece — Russia provides the biggest at 16% — while 95% of its shares are held by international investors, The Times reports.
Some of the world’s biggest oil companies and traders are poised to export substantial amounts of crude from the US for the first time in decades, as booming output there promises to reshape global energy markets. Royal Dutch Shell, BP and Vitol, the world’s largest independent oil trading house, are among the six companies known to have applied to the US government for export licences, the Financial Times has learnt. A surge of exports from the US would affect oil trading patterns between Europe, west Africa and North America. Greater supplies in the Atlantic basin are likely to put pressure on physical prices of other crudes in the region, particularly Brent, the North Sea benchmark.
Norway is to double carbon tax on its North Sea oil industry and set up a £1bn fund to help combat the damaging impacts of climate change in the developing world. In one of the most radical climate programmes yet by an oil-producing nation, the Norwegian government has proposed increasing its carbon tax on offshore oil companies by £21 to £45 (Nkr410) per tonne of CO2 and a £5.50 (Nkr50) per tonne CO2 tax on its fishing industry. Norway will also plough an extra £1bn (Nkr10bn) into its funds for climate change mitigation, renewable energy, food security in developing countries and conversion to low-carbon energy sources, Environmental Finance reported, according to The Guardian.
British Gas is set to increase its gas and electricity tariffs to record levels, adding up to £100 a year to household bills. The country's biggest power supplier is preparing to reveal as early as today that it is putting up its energy prices in "high single digits" – close to the nine per cent increase from its rival, Scottish & Southern Energy, that comes into force on Monday. The average British Gas dual fuel bill for gas and electricity now stands at £1,260. A five per cent rise would add £63, while an eight per cent increase would be £100. The new higher prices are expected to kick in next month, The Independent says. |
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