London open: Spanish bailout rumours weigh on stocks
Market Movers
- techMARK 2,130.62 -0.24%
- FTSE 100 5,805.35 -0.26%
- FTSE 250 11,849.92 -0.15%
Following a strong surge the day before, London's FTSE 100 slipped in early trading on Tuesday with concerns about a Spanish bailout weighing on sentiment early on.
According to reports, Spain has finally decided to move ahead with its bailout request to the Eurozone, but Germany now wants Madrid to hold off due internal political pressure.
On Friday, the southern European country received a long-awaited report noting that its financial sector needs €59.3bn in additional capital. The receipt of the auditory information paves the way for Spain to move ahead with the bailout request for its banks, as well as a larger package for its public finances.
In domestic news, house prices are set to remain flat or see a modest decline over the next year, according to the Nationwide building society. Its House Price Index showed the price of a 'typical' UK house rose by 0.4% in September. This was worse than expected, with economists forecasting prices to remain flat compared to August. Evraz drops early on
Steel giant Evraz was a heavy faller after Nomura said that the near-term outlook for the steel sector remains weak. "We believe falling steel prices and muted demand will keep 3Q earnings weak, with only limited improvement in 4Q as lower raw material costs start to have an impact," said analyst Neil Sampat.
Engineering support firm Babcock rose after saying it was enjoying buoyant markets as customers turned to it to make cost savings.
Rumours of a special dividend from Wolseley have proved to be on the money, with the plumbers' merchant paying 40p on top of the full-year divi of 60p. Nevertheless, shares fell early on after reported pre-tax profits fell from £391m to £198m.
BP was lower despite news that it won't face claims for damages over the 2010 Gulf of Mexico oil spill brought by recreational users, company-branded gas station owners and businesses alleging loss of reputation, as ruled by a US judge. A US District Judge removed these categories of claims from more than 500 lawsuits.
FirstGroup sees strong growth in UK Rail; Andor jumps
FTSE 250 transport firm FirstGroup was in demand after saying that trading in the first half has been in line with its expectations with strong growth being seen in the company's UK Rail division. UK Rail like-for-like (LFL) passenger revenues are expected to rise by 8.1% in the six months to September 30th.
Elsewhere, AIM-listed scientific digital cameras maker Andor Technology jumped after announcing its maiden dividend of 2p per share. The group also alleviated concerns about an order from a US customer.
FTSE 100 - Risers
Babcock International Group (BAB) 946.50p +2.60%
Randgold Resources Ltd. (RRS) 7,860.00p +2.54%
ITV (ITV) 91.60p +1.83%
United Utilities Group (UU.) 733.00p +1.10%
Rio Tinto (RIO) 2,970.00p +1.09%
Weir Group (WEIR) 1,820.00p +0.94%
Fresnillo (FRES) 1,897.00p +0.85%
BAE Systems (BA.) 329.50p +0.70%
Tesco (TSCO) 333.00p +0.60%
International Consolidated Airlines Group SA (CDI) (IAG) 155.20p +0.58%
FTSE 100 - Fallers
ARM Holdings (ARM) 575.50p -1.79%
Schroders (SDR) 1,549.00p -1.46%
Amec (AMEC) 1,139.00p -1.39%
Royal Bank of Scotland Group (RBS) 262.80p -1.35%
Diageo (DGE) 1,750.50p -1.21%
Aberdeen Asset Management (ADN) 315.70p -1.03%
Admiral Group (ADM) 1,055.00p -1.03%
CRH (CRH) 1,176.00p -0.93%
Evraz (EVR) 251.60p -0.83%
Aggreko (AGK) 2,307.00p -0.82%
FTSE 250 - Risers
Telecom Plus (TEP) 851.50p +3.71%
Ruspetro (RPO) 108.00p +2.66%
Premier Farnell (PFL) 180.70p +2.15%
COLT Group SA (COLT) 121.20p +1.93%
FirstGroup (FGP) 245.00p +1.87%
PayPoint (PAY) 745.00p +1.78%
Dixons Retail (DXNS) 20.20p +1.41%
BH Global Ltd. GBP Shares (BHGG) 1,151.00p +1.32%
Hochschild Mining (HOC) 511.50p +1.29%
Savills (SVS) 406.10p +1.27%
FTSE 250 - Fallers
Inmarsat (ISAT) 579.00p -2.53%
Bank of Georgia Holdings (BGEO) 1,250.00p -2.19%
IP Group (IPO) 120.00p -2.12%
Diploma (DPLM) 474.90p -1.74%
Dialight (DIA) 1,180.00p -1.67%
Soco International (SIA) 329.90p -1.64%
Jupiter Fund Management (JUP) 250.30p -1.53%
Hunting (HTG) 838.00p -1.47%
Hiscox Ltd. (HSX) 480.00p -1.40%
UK Event Calendar Tuesday October 02
INTERIMS
Walker Greenbank
INTERIM DIVIDEND PAYMENT DATE
FBD Holdings, Holders Technology
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Auto Sales (US) (15:00)
Producer Price Index (EU) (10:00)
FINALS
Antisoma, St Ives, Ultimate Finance Group, Wolseley
TRADING ANNOUNCEMENTS
Babcock International Group
FINAL DIVIDEND PAYMENT DATE
City of London Group, Micro Focus International, Vianet Group
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe open: Stocks cut initial losses despite Moody's report
-Moody's sees Spanish banks' capital needs at between 70bn and 105bn euros
-10 year Spanish bond yields down by 6bp to 5.83%
-294bn euros deposited overnight at ECB
FTSE-100: -0.20%
Dax-30: -0.07%
Cac-40: -0.53%
FTSE-Mibtel: -0.08%
Ibex 35: -0.13%
European equities are now cutting their losses after an initial start lower. That following a mixed close –overnight- on Wall Street and after reports that Spanish authorities have now shifted their position and are keen on asking for a bail-out. Unfortunately, some sources, cited by Reuters, indicate that Germany is pressuring the Iberian nation to hold off on making any such petition.
Possibly further weighing on sentiment, the release of a rather negative report from ratings agency Moody's on Spain's financial system.
According to the same Spanish banks may need between €70bn and €105bn to plug their capital gaps, well above the €59.3bn announced by private consultancy Oliver Wyman last Friday.
The main discrepancy between the findings of both reports resides in the level of so-called 'core capital' which lenders are expected to maintain under both adverse and highly-adverse scenarios. Whereas Spanish authorities argue that the minimum level of 6% would suffice –and be more logical so as to avoid reinforcing the negative cycle- Moody's assumed that levels of between 8% and 10% would be advisable.
Nevertheless, Moody's added that a recapitalization would still be "intrinsically credit positive [since it would involve more capital and more banks than earlier efforts]."
From a sector stand-point, and on the corporate front, the worst performance is now to be seen in the following industrial groups within the DJ Stoxx 600: Technology (-0.28%), Healthcare (-0.39%) and Oil (-0.43%). Spanish unemployed rise above forecasts
Spanish unemployment rose by 79,600 in September (Consensus: 57,000).
Eurozone producer price data for the month of August will be released at 10:00.
Other asset classes steady
The euro/dollar is now 0.12% higher at 1.2902.
Front month Brent crude futures are now falling by 0.062 dollars to the 112.12 dollar per barrel mark on the ICE. |
| US Market Report | US close: Stocks finish mixed after Bernanke comments
Market Movers
Dow Jones: 13,515 (+0.58%)
Nasdaq: 3,114 (-0.07%)
S&P 500: 1,444 (+0.23%) Following a strong start on the back of some upbeat manufacturing data, US benchmarks were mixed by the close after comments by Federal Reserve Chairman Ben Bernanke.
In defending the Fed's latest decision to launch a third round of quantitative easing, Bernanke said that the US economy "simply has not been growing fast enough recently to make significant progress in bringing down unemployment."
Speaking at the Economic Club of Indiana, he said: "We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Fed's commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend." ISM beats expectations
Stocks gained strongly after the ISM's manufacturing gauge rose from 49.6 to 51.5 in September, its best level since May and above the 49.7 consensus estimate. "The number, at 51.5, shows significant growth compared to forecasts, potentially illustrating a forthcoming uptick in the broader US economy," said financial trade David White from Spreadex.
Meanwhile, construction spending declined by 0.6% in August, compared with a 0.5% rise expected by analysts.
In other news, Friday's release by Oliver Wyman on the Spanish financial sector was among the factors lifting sentiment early on today. The independent auditor estimated that banks would need €59.3bn in funds in order to stay afloat, well within the €100bn limit given by the European Union.
Company movements
Technology group Oracle was higher after inaugurating its annual Open World conference over the weekend.
Ceramic products firm Ceradyne surged after 3M launched a $860m offer for the group, equal to $35 a share.
Goldman Sachs advanced after Barron's reported that the stock will rise as much as 25% within a year as capital markets improve.
| FX and Commodities round-up | FX round-up: Dollar slips as safe haven demand dries up
The dollar and the yen fell on Monday as better than expected US factory data wiped out demand for safe haven currencies.
The Institute for Supply Management's manufacturing purchasing index rose to 51.5 in September from 49.6 a month earlier. Crucially, the gauge of manufacturing activity did not contract again and came in better than forecasts of around 49.7 for September. Any reading above 50 signals expansion.
The ICE dollar index, which measures the US currency against a basket of six other currencies, fell to 79.795 from 79.896 on Friday.
Markets also digested comments from US Federal Reserve Chairman Ben Bernanke about the latest round of monetary policy. Recently other Fed members have criticised the last round of quantitative easing saying it was the wrong medicine and many are concerned that too many people remain out of work.
Bernanke defended the latest bond-buying programme, saying it was necessary to support the weak economic recovery.
The euro rose to $1.2883, pulling off a three week low against the dollar, after encouraging German data.
Against the yen, the dollar bought ¥78.01 from ¥77.92 the previous session while the Australian dollar was hardly changed at $1.0371. The euro rose to ¥100.55.
Sterling declined to a one-week low against the euro on Monday after data showed UK manufacturing activity weakened more than expected last month. Commodities: Mild gains after factory data
Crude oil futures registered slim gains on Monday as investors cheered better than expected US manufacturing data.
The Institute for Supply Management's manufacturing purchasing index increased to 51.5 in September from 49.6 the month before. Not only did the gauge of manufacturing activity not contract again, the reading came in above 50, which signals expansion. Economists had expected the index to rise to 49.7 in September.
The ISM report helped crude for November delivery gain 29 cents or 0.3% at $92.48 a barrel on the New York Mercantile Exchange.
Oil prices were also supported by gains on Wall Street despite a weak performance in Asia and Europe. Weak manufacturing data from Japan and China hurt confidence about the global outlook.
Also of note was Federal Reserve Chairman Ben Bernanke's defence of the latest round of monetary easing after recent criticism. Other Fed members have said the wrong medicine is being applied to America's economy while far too many people remain out of work.
On the ICE futures exchange Brent crude fell 20 cents to $112.19 a barrel.
Among precious metals gold regained its allure on Monday, climbing its highest close since late February, after the encouraging factory data.
Gold futures for December delivery advanced $9.40 to settle at $1,783.30 an ounce on the Comex division of the New York Mercantile Exchange.
Silver for December delivery rose 38 cents to $34.95 an ounce. Platinum for January climbed $16.50 to $1,685.80 an ounce and palladium for December delivery gained $4.80 to $645.60 an ounce. |
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