| Stocks flat with US earnings and EU summit in focus
Market Movers
techMARK 2,114.94 +0.11%
FTSE 100 5,915.30 -0.03%
FTSE 250 12,069.96 -0.01% Worse-than-expected results from some US blue chips and the EU summit were in the spotlight on Friday morning, keeping UK stocks flat early on.
"European equities are trading lower this morning pressured by weak US tech earnings where Microsoft and also internet search engine powerhouse Google both missed expectations by a wide margin," said Markus Huber, the head of German HNW Trading at ETX Capital.
He also said that '"there haven’t been many new revelations coming out of Brussels so far where currently a two-day EU summit is being held."
European leaders announced that they would set up a Eurozone bank supervisor run by the European Central Bank (ECB) by the end of the year. “We have a date in place now for the legislative framework, which we didn’t have before – and that in itself is an important step forward," said European Council President Herman Van Rompuy. FTSE 100: Aggreko sinks after giving mixed guidance
Temporary power and temperature control group Aggreko got an Olympics revenue boost in the third quarter, but guidance for the full year was mixed, with some parts of the business performing better and worse than expectations and currency movements likely to have a negative impact on the bottom line. Shares sunk nearly 7% in the opening hour.
Distribution and outsourcing group Bunzl was a heavy faller after the third quarter saw a moderation in the underlying revenue growth rate, particularly in North America, where the company is going up against tough comparatives.
Barclays continues to trade lower after announcing last night that it has set aside a further £700m in provisions against the possible costs associated with compensating customers for mis-sold payment protection insurance (PPI), taking it total provisions to £2bn.
Financial peers Standard Life and Lloyds were also out of favour in early trading: the former was hit by a downgrade from Berenberg to 'sell'; with the latter was weighed down by a ratings cut from JPMorgan Cazenove to 'underweight'.
Oilfield support services Petrofac gained after saying that it is experiencing high levels of bidding activity, which should see its backlog pile up over the coming months. FTSE 250: Spectris jumps after 'resilient' performance
Specris saw a robust performance in the final quarter of its financial year and while like-for-like (LFL) sales growth had slowed from the first half, analysts said that this was as expected. The instrumentation and controls company said that reported sales during the last quarter were up 12%.
High flying small loans specialist Provident Financial was in the red despite saying its Vanquis Bank credit card division continued to trade ahead of expectations in the third quarter.
| AIM/Small Cap Report | | FTSE 100 - Risers
Burberry Group (BRBY) 1,192.00p +1.02%
Johnson Matthey (JMAT) 2,309.00p +0.96%
Royal Dutch Shell 'B' (RDSB) 2,219.00p +0.77%
Wood Group (John) (WG.) 871.00p +0.69%
Land Securities Group (LAND) 812.00p +0.56%
Unilever (ULVR) 2,333.00p +0.56%
Prudential (PRU) 867.50p +0.52%
Royal Dutch Shell 'A' (RDSA) 2,166.00p +0.51%
Diageo (DGE) 1,764.50p +0.46%
Compass Group (CPG) 689.00p +0.44%
FTSE 100 - Fallers
Aggreko (AGK) 2,150.00p -6.60%
Bunzl (BNZL) 1,047.00p -3.23%
ITV (ITV) 90.10p -1.74%
Lloyds Banking Group (LLOY) 41.31p -1.34%
Barclays (BARC) 238.65p -0.85%
Morrison (Wm) Supermarkets (MRW) 269.20p -0.81%
BT Group (BT.A) 221.60p -0.81%
Capita (CPI) 730.00p -0.61%
GKN (GKN) 212.70p -0.61%
Randgold Resources Ltd. (RRS) 7,525.00p -0.59%
FTSE 250 - Risers
Spectris (SXS) 1,763.00p +10.60%
Bumi (BUMI) 256.40p +4.61%
New World Resources A Shares (NWR) 277.80p +2.89%
Grainger (GRI) 110.10p +2.42%
Stobart Group Ltd. (STOB) 116.00p +2.29%
Savills (SVS) 410.50p +1.99%
Essar Energy (ESSR) 133.60p +1.91%
PayPoint (PAY) 763.00p +1.73%
Devro (DVO) 341.70p +1.70%
TalkTalk Telecom Group (TALK) 181.70p +1.68%
FTSE 250 - Fallers
Redrow (RDW) 152.00p -6.46%
Daejan Holdings (DJAN) 2,860.00p -2.72%
Drax Group (DRX) 536.00p -2.55%
Phoenix Group Holdings (DI) (PHNX) 498.20p -2.03%
Dechra Pharmaceuticals (DPH) 607.00p -1.78%
Micro Focus International (MCRO) 556.50p -1.77%
Greggs (GRG) 478.10p -1.54%
Brewin Dolphin Holdings (BRW) 175.10p -1.52%
Fidessa Group (FDSA) 1,340.00p -1.47%
Chemring Group (CHG) 348.60p -1.33% |
| European broker round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Antena 3: Barclays rates UNDERWEIGHT and lowers target price to €3.50 from €3.75. Bankinter: Nomura rates UNDERWEIGHT and lowers price target to €2.40 from €2.80. ING: AlphaValue downgrades to ADD from buy with a price target of €8.30. Mediaset: Barclays rates UNDERWEIGHT and lowers price target to €4.20 from €4.40. Renault: AlphaValue downgrades to REDUCE from add and raises price target to €37.70 from €37.20. UK event Calendar INTERIM DIVIDEND PAYMENT DATE
AZ Electronic Materials SA (DI), Barr (A.G.), Bilfinger Berger Global Infrastructure Sicav S.A.(DI), Christie Group, Computacenter, CRH, G4S, Glanbia, International Public Partnerships Ltd., John Laing Infrastructure Fund Ltd, Melrose, Networkers International, Petrofac Ltd., Playtech Ltd., Robert Walters, Serco Group, Total Produce, Treatt, Tribal Group, Witan Pacific Inv Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Payments (EU) (09:00)
Balance of Trade (EU) (10:00)
Current Account (EU) (09:00)
Existing Home Sales (US) (15:00)
Producer Price Index (GER) (07:00)
Q3
Schlumberger Ltd.
IMSS
Aggreko, Petrofac Ltd., Provident Financial
SPECIAL DIVIDEND PAYMENT DATE
Highland Gold Mining Ltd.
AGMS
Argos Resources Ltd. (DI), Brooks Macdonald Group, Dechra Pharmaceuticals, PME African Infrastructure Opportunities
UK ECONOMIC ANNOUNCEMENTS
Public Sector Finances (09:30)
FINAL DIVIDEND PAYMENT DATE
City of London Investment Group, Dart Group, TP70 2008 (I) VCT, TP70 2008 (II) VCT, Tricorn Group, Utilico Investments Ltd (DI)
| US Market Report | | Stocks Close In The Red As Google Weighs On The Tech Sector
With disappointing earnings news from Google (GOOG) weighing on the technology sector, stocks ended Thursday's trading mostly lower. The major averages all closed in the red, although the tech-heavy Nasdaq underperformed its counter parts by a wide margin.
The Nasdaq regained some ground going into the close but still ended the session down 31.25 points or 1 percent at 3,073.87. The Dow edged down by a more modest 8.06 points or 0.1 percent to 13,548.94, while the S&P 500 slipped 3.57 points or 0.2 percent to 1,457.34.
Tech stocks showed a notable move to the downside in afternoon trading after internet search giant Google released its third quarter results ahead of schedule.
Google reported adjusted third quarter earnings of $9.03 per share, well below analyst estimates for $10.65 per share. The company also reported revenues that came in below analyst estimates.
The markets experienced choppy trading earlier in the session following the release of a mixed batch of economic data.
Early selling pressure was generated by the release of a report from the Labor Department showing a bigger than expected rebound by initial jobless claims.
The report showed that jobless claims jumped to 388,000 in the week ended October 13th after falling to a four-year low of 342,000 in the previous week. Economists had been expecting jobless claims to rise to 365,000 from the 339,000 originally reported for the previous week.
However, a positive reaction to a batch of largely upbeat Chinese economic data helped to limit the downside for the markets.
Stocks subsequently regained some ground following the release of a pair of upbeat reports on Philadelphia manufacturing activity and leading U.S. economic indicators.
The Philly Fed said its diffusion index of current activity jumped to a positive 5.7 in October from a negative 1.9 in September, with a positive reading indicating an increase in regional manufacturing activity. With the increase, the index returned to positive territory for the first time since April.
Separately, the Conference Board said its leading economic index rose by 0.6 percent in September following a revised 0.4 percent drop in August. Economists had expected the index to edge up by 0.2 percent compared to the 0.1 percent dip originally reported for the previous month.
Traders also reacted to the latest batch of earnings news, including results from big-name companies such as Morgan Stanley (MS), Verizon (VZ), and Travelers (TRV).
Sector News
While many of the major sectors ended the day showing only modest moves, significant weakness was visible among gold stocks. The NYSE Arca Gold Bugs Index fell by 3 percent to its lowest closing level in over a month.
The weakness among gold stocks came amid a decrease by the price of the precious metal, with gold for December delivery sliding $8.30 to $1,744.70 an ounce.
Considerable weakness also emerged in the electronic storage sector, as reflected by the 2.2 percent loss posted by the NYSE Arca Disk Drive Index. With the loss, the index ended the session at a three-month closing low.
Internet stocks also came under pressure, with Google helping to lead the way lower. Reflecting the weakness in the internet sector, the NYSE Arca Internet Index fell by 1.2 percent.
Tobacco, biotechnology, and brokerage stocks also saw notable weakness, while strength was visible among oil service and commercial real estate stocks.
Looking Ahead
With Google releasing its results ahead of schedule, the earnings spotlight shifts to Microsoft (MSFT) after the close of today's trading.
Advanced Micro Devices (AMD), Capital One (COF), and ETrade (ETFC) are also releasing their quarterly results after the close, while General Electric (GE), McDonald's (MCD), and Honeywell (HON) are among the companies due to report their results before the start of trading on Friday.
Housing data may also attract some attention on Friday, with the National Association of Realtors scheduled to release its report on existing home sales in the month of September. Other Markets
In overseas trading, stock markets across the Asia-Pacific region saw considerable strength on the heels of the upbeat Chinese economic data. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index advanced by 0.5 percent. |
| Friday newspaper round-up | | Tesco, Vodafone, Redrow Tesco Bank has sparked a possible mortgage price war by taking advantage of cheap government money to launch cut-price deals. Chief executive Benny Higgins unveiled what he called “market-leading rates” after announcing that Tesco was accessing the Bank of England’s Funding For Lending Scheme. Edinburgh-based Tesco Bank is now offering two-year fixed mortgages with rates starting at 1.99 per cent. Higgins said: “We welcome the Funding for Lending Scheme, and are delighted to be able to pass on the benefit to our customers. “We are committed to responsible lending and hope to enable our customers to borrow a further 1bn pounds, over the next year, at affordable rates.” Rates on other products are also lower, he said, adding that the bank will be launching a cash ISA before the end of the year, The Scotsman reports.
India’s government has confirmed plans to make mobile operators including Bharti Airtel and Vodafone pay a one-time “spectrum charge” that could amount to as much as $4.24bn, dealing a further blow to the debt-strapped industry. A ministerial group meeting in New Delhi confirmed moves to charge for so-called “excess spectrum” owned by operators in certain areas. Government estimates have previously suggested this charge could raise as much as Rs226bn ($4.24bn). The move is the latest blow to an industry which was once viewed as an emblem of the economic dynamism of Asia’s third-largest economy, but has since become increasingly known for incompetent regulation, fierce price competition, stagnant revenues and ballooning debts, The Financial Times writes.
Redrow chairman Steve Morgan last night ditched his plan to buy the housebuilder he founded in 1974 – bringing seven weeks of takeover talks to an end. The 59-year-old entrepreneur, who left the Flintshire-based company in 2000 but returned as executive chairman in a boardroom coup nine years later, proposed a 152p-a-share-offer at the end of August worth £560million. But in a statement to the stock exchange at 16:50 yesterday, after shares closed up 2.8p to 162.5p, he revealed that talks ‘have now been terminated’. The approach – first revealed in the Daily Mail – was made through Morgan’s investment vehicle Bridgemere Securities which holds a 40% stake in Redrow.
When the University of Oxford’s investment chief was invited to address private equity titans at one of the industry’s biggest annual events, she was asked to give an investor’s perspective. Her explosive remarks were perhaps not quite what the industry had in mind. Sandra Robertson startled the audience at the British Private Equity and Venture Capital Association’s annual summit on Thursday, accusing managers of failing their clients by charging excessive fees and delivering lacklustre returns. “Why on earth as a rational investor would I allocate blindly to private equity?” she asked, in a speech calculated to provoke debate among quiescent private equity investors as much as those handling their money. “We need proof that the time and resources required to invest in private equity is worthwhile. You need to earn your place in our portfolios,” she told the audience at London’s Landmark hotel, The Financial Times says.
The new financial regulator should be given explicit powers to block big bank mergers to avoid a repeat of Royal Bank of Scotland ’s near collapse after its purchase of the Dutch lender ABN Amro, say MPs. “We need a regulator with the self-confidence to intervene, even if it might cause some destabilisation in the short term,” the Treasury select committee says in a report published on Friday.
The ill-fated 2007 ABN deal, which came shortly before a global meltdown in financial markets, left RBS requiring a £45bn government bail-out. Responding to a Financial Services Authority analysis of the failure of RBS, the committee said the regulator “should and could have intervened” in the bank’s acquisition of ABN, The Financial Times reports.
Web search giant Google’s stock crashed by as much as 11% and wiped more than $22bn (£13.7bn) off the value of the company after the inadvertently published figures revealed a 20% fall in profits. The announcement was scheduled for publication after markets closed in New York, but they were accidentally published four hours early. The release even contained a space for a quote from Google’s chief executive, Larry Page. The mistake sent Google’s share price plummeting – before their trading was suspended, more than 9% down at $687.30 – amid fears that the stock would crash, The Telegraph writes.
The board of BP is expected to accept a landmark cash and shares offer from Rosneft for its stake in the Russian joint venture TNK-BP when it meets today. A speedy sale is on the cards after the Kremlin-backed giant was the sole bidder for BP’s 50% share by yesterday morning’s deadline. The deal means that BP will finally cut its ties with the four Russian oligarchs behind AAR, who co-own TNK-BP, and secure its place as a junior partner in Rosneft. Rosneft yesterday offered BP between $25 billion and $28 billion, with the share element expected to give the British company a stake of between 10% and 20% of the enlarged business, The Times says. |
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