FTSE gets off to wobbly start ahead of MPC minutes
Market Movers
techMARK 2,105.25 -0.38%
FTSE 100 5,870.23 -0.01%
FTSE 250 11,974.46 -0.09% After initially edging higher following a strong performance in the US last night, the FTSE 100 has dropped marginally lower as investors await the release of minutes from the October meeting of the Bank of England's Monetary Policy Committee (MPC) and the unemployment figures, due out at 09:30 this morning.
The Bank's current round of quantitative easing (QE) ends next month and economists will be scouring the minutes to see whether there are any clues as to whether the QE tap will be turned on again.
Sentiment has been given a boost this morning following an announcement overnight from ratings agency Moody's that it is maintaining Spain's sovereign debt rating unchanged at Baa3, although with a negative outlook.
This morning Market News International (MNI) reported that negotiations between the troika and Greek authorities on the austerity package are closer to a conclusion than yesterday’s news on divisions within the government coalition suggested, analysts at Unicredit are commenting. Elsewhere in the market, however, other reports suggest the opposite is true.
As an aside, Japanese authorities will hold a special cabinet meeting this morning. Speculation is rife that the government may tap budget reserves to stimulate a slowing economy.
Of interest, following yesterday's televised Presidential debate Stateside, Intrade is giving a 61.5% probability of an Obama victory.
FTSE 100: RBS leads the risers
The Royal Bank of Scotland is set to leave the government insurance scheme that was set up at the height of the financial crisis to protect the company from collapse. Analysts said this could pave the way for RBS to be sold back into the private sector. It is currently 82%-owned by the UK taxpayer after receiving a £45bn bailout in 2008.
Anglo-Australian mining giant BHP Billiton saw iron ore output rise year-on-year in the third quarter, but fall from the previous quarter's production levels as a result of the planned shut-down associated with the Inner Harbour expansion project in Western Australia. Iron ore production was up 1% year-on-year but down 3% quarter-on-quarter to 39.8m tonnes.
Xstrata, the Switzerland-based miner which looks set to merge with commodities trader Glencore, said volumes of thermal coal, zinc and lead in concentrate and zinc metal in the third quarter increased year-on-year. Volumes of copper and nickel declined, however.
Diageo is in talks to buy a stake of about 20% in Vijay Mallya’s in a deal that would give it management control of the Indian distiller, said two people with knowledge of the matter, Bloomberg News reports. Diageo would buy new shares in United Spirits and also purchase part of Mallya’s 28% stake, said the people, who asked not to be identified as the process is private. Diageo would get the right to appoint United Spirits’s Chief Executive Officer and other key managers, while Mallya is expected to remain Chairman, they said.
FTSE 250: C&W Comms in talks over another potential sale
Cable & Wireless Communications, already in talks with the Bahrain Telecommunications Company (Batelco) about a possible sale of its Monaco & Islands business unit, has confirmed that it is also in talks regarding a potential sale of its business in Macau. Responding to recent press speculation, the international mobile communications networks operator confirmed it is in discussions with CITIC Telecom International Holdings Limited regarding a potential sale of its 51% shareholding in Companhia de Telecomunicações de Macau (CTM). CITIC is a 20% shareholder in CTM.
Financier Nat Rothschild is 'completely, 100 per cent wrong' about the controversial deal that could end the feud at Indonesian mining firm Bumi, according to the firm's Deputy Chairman. Rothschild resigned from the board of Bumi on Monday, saying he had lost confidence in the management's ability to stand up for investors.
| AIM/Small Cap Report | FTSE 100 - Risers
Tesco (TSCO) 314.20p +2.05%
Royal Bank of Scotland Group (RBS) 285.40p +1.93%
Evraz (EVR) 248.30p +1.89%
Eurasian Natural Resources Corp. (ENRC) 334.20p +1.77%
Burberry Group (BRBY) 1,184.00p +1.72%
Rio Tinto (RIO) 3,109.00p +1.57%
Kazakhmys (KAZ) 718.00p +1.27%
Anglo American (AAL) 1,826.50p +0.97%
Shire Plc (SHP) 1,874.00p +0.97%
Vedanta Resources (VED) 1,109.00p +0.91%
FTSE 100 - Fallers
BAE Systems (BA.) 320.50p -2.61%
Barclays (BARC) 242.55p -1.44%
Prudential (PRU) 859.00p -1.26%
Capital Shopping Centres Group (CSCG) 336.20p -1.09%
Compass Group (CPG) 687.00p -1.08%
Bunzl (BNZL) 1,105.00p -1.07%
Wolseley (WOS) 2,652.00p -1.04%
Smith & Nephew (SN.) 663.00p -0.97%
Admiral Group (ADM) 1,165.00p -0.85%
Experian (EXPN) 1,072.00p -0.83%
FTSE 250 - Risers
Cable & Wireless Communications (CWC) 37.51p +3.65%
New World Resources A Shares (NWR) 268.00p +3.63%
Ashtead Group (AHT) 358.00p +3.62%
Ferrexpo (FXPO) 198.40p +2.01%
St. Modwen Properties (SMP) 201.80p +1.92%
Petropavlovsk (POG) 448.20p +1.86%
Henderson Group (HGG) 118.10p +1.81%
Bumi (BUMI) 253.10p +1.52%
Ruspetro (RPO) 107.60p +1.51%
Raven Russia Ltd (RUS) 68.50p +1.48%
FTSE 250 - Fallers
Close Brothers Group (CBG) 833.00p -3.42%
Carpetright (CPR) 675.00p -2.60%
Fidessa Group (FDSA) 1,310.80p -1.52%
Ted Baker (TED) 945.00p -1.46%
Rightmove (RMV) 1,611.00p -1.41%
Brown (N.) Group (BWNG) 302.60p -1.40%
Supergroup (SGP) 672.50p -1.39%
Pace (PIC) 169.10p -1.34%
Big Yellow Group (BYG) 338.60p -1.28%
Euromoney Institutional Investor (ERM) 763.00p -1.23%
FTSE TechMARK - Risers
Torotrak (TRK) 34.50p +2.99%
BATM Advanced Communications Ltd. (BVC) 16.25p +2.36%
Gresham Computing (GHT) 68.00p +1.49%
Vectura Group (VEC) 91.92p +0.46%
Corin Group (CRG) 57.50p +0.44%
Optos (OPTS) 209.00p +0.36%
Kofax (KFX) 300.00p 0.00%
Triad Group (TRD) 6.25p 0.00%
Parity Group (PTY) 19.25p 0.00%
Promethean World (PRW) 17.00p 0.00%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.53p -4.08%
Wolfson Microelectronics (WLF) 205.00p -3.76%
Ricardo (RCDO) 373.00p -1.84%
NCC Group (NCC) 977.00p -1.31%
Vislink (VLK) 28.25p -1.31%
Innovation Group (TIG) 22.25p -0.56%
Consort Medical (CSRT) 748.64p -0.05%
Kofax (KFX) 300.00p 0.00%
Triad Group (TRD) 6.25p 0.00%
Parity Group (PTY) 19.25p 0.00% |
| FX round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Euro rallies on Spain bailout reports The euro rose to a one week high against the dollar on Tuesday following speculation that Spain is moving closer to asking for a bailout.
The euro rose to $1.3060, its highest in a week before later trading at $1.3047. The single currency also rose to a high of ¥103.07 as investors steered clear of the Japanese currency on speculation of more monetary easing from the Bank of Japan and after the recent Softbank deal.
Spain rumours fuelled most of the euro's gains on Tuesday. A formal Spanish aid request would initiate the European Central Bank Spanish bond buying which would lower the nation's borrowing costs. However while reports circulate that Spain is moving closer to a bailout, much uncertainty remains.
The ICE dollar index, which measures the US currency against a basket of six other currencies, fell to 79.370 from 79.710 the previous session as safe haven flows dried up.
The broadly stronger euro bought 81.02p against the pound while sterling rose against the weaker dollar as risk appetite improved. Concern about the weak UK economic outlook and more easing measures from the Bank of England kept gains against the dollar in check.
Against the yen the dollar changed hands at ¥78.91 from ¥78.72 on Monday as speculation mounts that the BoJ will announce further stimulus measures.
The Australian bought $1.0268 from $1.0257 previously. UK Event Calendar INTERIMS
Datatec Ltd. (DI), Vertu Motors
INTERIM DIVIDEND PAYMENT DATE
Dunedin Income Growth Inv Trust, Neptune-Calculus Income & Growth VCT, Premier Farnell
INTERIM EX-DIVIDEND DATE
BAE Systems, British Polythene Industries, Capital Shopping Centres Group, Foresight Solar VCT, JZ Capital Partners Ltd, Kerry Group 'A' Shares, Mears Group, Octopus Apollo VCT, S & U, Scisys, Smart Metering Systems, Spectris, Ted Baker, TT Electronics
QUARTERLY EX-DIVIDEND DATE
F&C Commercial Property Trust Ltd., Middlefield Canadian Income PCC
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Building Permits (US) (13:30)
Crude Oil Inventories (US) (15:30)
Housing Starts (US) (13:30)
MBA Mortgage Applications (US) (12:00)
Wholesale Price Index (GER) (07:00)
Q3
MCB Bank Ltd GDR (Reg S)
GMS
Persimmon, Vipera
IMSS
Diageo
SPECIAL EX-DIVIDEND PAYMENT DATE
Aberdeen Asian Smaller Companies Inv Trust
AGMS
Diageo, Diverse Income Trust (The), Vipera, Wasabi Energy
TRADING ANNOUNCEMENTS
Speedy Hire
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Minutes (09:30)
Claimant Count Rate (09:30)
Unemployment Rate (09:30)
FINAL DIVIDEND PAYMENT DATE
News Corp. 'A' Shares
FINAL EX-DIVIDEND DATE
Aberdeen Asian Smaller Companies Inv Trust, Animalcare Group, Avingtrans, Close Brothers Group, Henderson EuroTrust, Quayle Munro Holdings, Ricardo, Stavert Zigomala, Strategic Equity Capital, Wilmington Group
| US Market Report | Positive Reaction To Earnings News Drive Stocks Higher
With traders reacting positively to the latest batch of earnings news, stocks saw considerable strength during trading on Tuesday. The markets extended the upward move seen in the previous session, continuing to recover from the weakness seen last week.
The major averages ended the day firmly in positive territory, near their highs for the session. The Dow jumped 127.55 points or 1 percent to 13,551.78, the Nasdaq surged up 36.99 points or 1.2 percent to 3,101.17 and the S&P 500 advanced 14.79 points or 1 percent to 1,454.92.
The rally on Wall Street came on the heels of the release of quarterly results from some big-name companies, including financial giant Goldman Sachs (GS), which reported better than expected third quarter earnings.
Goldman Sachs reported adjusted third quarter earnings of $2.85 per share compared to a year-ago loss of $0.84 per share, while analysts had expected earnings of $2.12 per share.
Beverage giant Coca-Cola (KO) also reported third quarter earnings that came in slightly above analyst estimates but on weaker than expected revenues.
Johnson & Johnson (JNJ) reported third quarter earnings and sales that exceeded analyst estimates and also raised its full-year guidance.
Traders also reacted to news that health insurer UnitedHealth (UNH) raised its full-year guidance and that online retailer Amazon (AMZN) is hiring for more than 50,000 seasonal positions this holiday season.
Shares of Citigroup (C) were also in focus after the financial giant announced that Vikram Pandit has stepped down as the company's Chief Executive Officer and as a member of the Board.
Citigroup also said its board has unanimously elected Michael Corbat as CEO and a director of the Board. Corbat previously served as Citigroup's CEO of Europe, Middle East and Africa.
Separate reports showing a rebound by industrial production and a continued increase in homebuilder confidence also helped to push stocks higher.
The Labor Department also released a report showing that consumer prices rose by slightly more than expected in the month of September due to another jump in energy prices.
Sector News
While most of the major sectors moved to the upside, steel stocks posted particularly strong gains on the day. The NYSE Arca Steel Index surged up by 2.6 percent, ending the session at its best closing level in almost a month.
Cliffs Natural Resources (CLF) and Olympic Steel (ZEUS) turned in two of the steel sector's best performances, advancing by 7.1 percent and 6.1 percent, respectively.
Significant strength was also visible among chemical stocks, as reflected by the 2.5 percent gain posted by the Dow Jones Chemicals Index. Dow Chemical (DOW) helped to lead the sector higher, jumping by 5.6 percent.
Electronic storage, semiconductor, and networking stocks also posted notable gains, reflecting strength in the tech sector. Energy, railroad, and gold stocks also saw considerable strength.
Looking Ahead
Trading on Wednesday is likely to be impacted by reaction to quarterly results from tech giants Intel (INTC) and IBM (IBM), which are releasing their quarterly results after the close of today's trading.
Additionally, Bank of America (BAC), PepsiCo (PEP), and Halliburton (HAL) are among the companies due to release their quarterly results before the start of trading on Wednesday.
On the economic front, the Commerce Department is scheduled to release its report on new residential construction in the month of September. |
| Wednesday newspaper round-up | Recession, Bumi, Greece Indonesia’s market regulator is investigating the use of funds raised in an initial public offering of one of London-listed Bumi Plc ’s key assets. Bapepam, the financial watchdog, has requested data and information over several months from Bumi Resources Minerals, which in late 2010 raised about $230m through a flotation in Jakarta. BRM is a subsidiary of Bumi Resources , the Indonesian coal miner controlled by the influential Bakrie family in which the London group has a 29 per cent stake. Allegations over the BRM funds also form part of the Bumi Plc board’s probe into what it says are potential financial irregularities at its Indonesian businesses. According to one person familiar with the matter, the board was examining an allegation that $110m in IPO funds was used to back a bank loan to a special purpose vehicle, known as Blue Quartz, The Financial Times reports.
George Osborne’s austerity drive could be partly to blame for the recession, the Government’s own economic forecaster said yesterday. The independent Office for Budget Responsibility (OBR) said that “unexpectedly stubborn” inflation and deteriorating export markets are the main causes but austerity may have also played a part. “We clearly cannot rule out the possibility that the unexpected weakness of economic growth over the past two years can be explained in part by the fiscal consolidation acting as a greater drag than we had assumed,” it said in its latest forecast evaluation report, The Times says.
Germany has stated its exorbitant price for keeping Greece in the euro and agreeing to mass bond purchases by the European Central Bank. There must be an EU “currency commissioner” with sweeping powers to strike down national budgets; a “large step towards fiscal union”; and yet another EU treaty. Finance minister Wolfgang Schaeuble dropped his bombshell in talks with German journalists on a flight from Asia, and apparently had the blessing of Angela Merkel, the chancellor. “When I put forward such proposals, you can take it as a given that the chancellor agrees,” he said. Officials in Brussels reacted with horror. “If that is the demand, they are not going to get it. Nobody in the Council wants a new treaty right now,” said one EU diplomat, The Telegraph holds.
Oil giant BP has set a deadline of Thursday for all bids for its stake in TNK-BP, in a move expected to elicit offers both from its oligarch partners, AAR, and from Kremlin-controlled Rosneft. The AAR consortium has said it plans to submit a “competitive” cash bid on Wednesday, the final day in a 90-day period of “good faith” negotiations under which BP was precluded by the TNK-BP shareholder agreement from signing a deal with any other parties. But the Daily Telegraph understands that BP, which has also been in talks with Rosneft since late July, has asked for all bids from interested parties to be submitted by Thursday morning at 9am.
Nat Rothschild is “completely, 100% wrong” about the controversial “divorce” deal facing Bumi, according to the man trying to steady the troubled London coal group in the wake of the financier’s shock resignation. The former Vodafone executive spoke out after Mr Rothschild outlined his lack of confidence in the board’s ability to “do the right thing”, flagging his opposition to a £750m deal from key Indonesian shareholders, the Bakries, to sever ties with Bumi. Sir Julian said the financier was wrong to argue that agreeing to part of the deal risked creating a backdoor way for the Bakries to get all the FTSE 250 company’s assets on the cheap, The Telegraph says.
Royal Bank of Scotland is today expected to announce its exit from the £282bn state-backed insurance scheme set up when the bank was bailed out four years ago. RBS is set to make its final £1.4m payment to the Asset Protection Scheme (APS) this week, which will see it reach the £2.5bn minimum threshold to leave the emergency insurance programme. The APS was set up by the authorities in January 2009 to provide insurance cover to RBS and Lloyds Banking Group after their taxpayer-funded rescues. The scheme originally provided RBS with cover against losses on toxic assets worth £282bn, but this has shrunk over the past four years to a figure of about £100bn as the bank has sold off businesses and loan portfolios no longer considered core to its operations, The Telegraph reports.
EU regulators have demanded that Google substantially change its controversial privacy policies or risk fines, a move that threatens to slow the US search giant’s introduction of new products and advertising schemes in Europe. European privacy watchdogs said a probe led by the French regulator CNIL showed that Google failed to provide users with adequate information about how their personal data were being used across the US group’s different platforms. Isabelle Falque-Pierrotin, CNIL’s chairwoman, said that unless Google implemented the recommended changes within three to four months, the dispute would “move on to another phase, which is a sanctions phase”. Google this year introduced sweeping changes to the terms and conditions governing how it can use data about its hundreds of millions of customers – enhancing its ability to profile consumers and deliver targeted advertising, The Financial Times explains. |
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