Corporate results impress as markets await GDP data
Market Movers
techMARK 2,092.22 +0.02%
FTSE 100 5,819.86 +0.26%
FTSE 250 11,892.44 +0.25% UK stocks edged higher on Thursday morning after a flurry of corporate updates were well received; however gains will likely will be modest this morning ahead of the UK growth figures due out in the coming hours.
Senior market analyst Michael Hewson from CMC Markets said: "Over the past three months the recovery in a lot of UK economic data has pointed to a recovery in GDP data for the third quarter, more than offsetting the disappointing contraction in Q2.
"Whether or not you believe the Q2 figure was negatively skewed by the bad weather and the Jubilee bank holiday, which I don’t, the likelihood is that due to the Olympic Games, hopes are high that the preliminary Q3 GDP number will come in around 0.6%," he said.
Speculation for decent growth has grown over the last few days after Prime Minister David Cameron told MPs that there would be "good news" coming soon about the economy.
Meanwhile, Mervyn King, the governor of the Bank of England, suggested that the Monetary Policy Committee (MPC) is ready to act if the recovery in the UK falters. In a speech in Cardiff yesterday, he said: “At this stage, it is difficult to know whether some of the recent more positive signs will persist. Should those signs fade, the MPC does stand ready to inject more money into the economy.” FTSE 100: Unilever, Astra and miners impress
Consumer products giant Unilever was in demand after underlying sales growth beat expectations in the third quarter, helped by a strong performance in the emerging markets.
Pharmaceuticals giant AstraZeneca was higher after beating earnings expectations in third quarter and maintained its full-year targets.
Mining peers Anglo American and Kazakhmys gained after their well-received third-quarter production reports, while Fresnillo rose after approving the feasibility study for the development of the $500m San Julian silver project in Mexico.
Heading the other way was media giant WPP after it admitted its third-quarter growth was slower than that seen in the second quarter, which also came in short of expectations, while the fourth quarter is set to slow further.
Costa and Premier Inn owner Whitbread also fell after Citigroup downgraded its rating on the stock to 'neutral'. | AIM/Small Cap Report | FTSE 100 - Risers
Unilever (ULVR) 2,335.00p +3.09%
Anglo American (AAL) 1,916.00p +2.08%
Fresnillo (FRES) 1,924.00p +1.85%
Vedanta Resources (VED) 1,153.00p +1.68%
Lloyds Banking Group (LLOY) 41.05p +1.48%
Rio Tinto (RIO) 3,166.50p +1.34%
Kazakhmys (KAZ) 760.00p +1.33%
Antofagasta (ANTO) 1,296.00p +1.25%
Xstrata (XTA) 986.60p +1.20%
BHP Billiton (BLT) 2,015.00p +1.10%
FTSE 100 - Fallers
WPP (WPP) 782.00p -3.22%
Whitbread (WTB) 2,258.00p -1.83%
Aggreko (AGK) 2,024.00p -1.08%
Polymetal International (POLY) 1,088.00p -0.91%
ITV (ITV) 85.65p -0.87%
ARM Holdings (ARM) 670.00p -0.81%
Evraz (EVR) 249.00p -0.52%
Royal Dutch Shell 'B' (RDSB) 2,178.50p -0.50%
GKN (GKN) 203.90p -0.49%
Royal Dutch Shell 'A' (RDSA) 2,111.00p -0.42%
FTSE 250 - Risers
Debenhams (DEB) 115.70p +6.15%
Bwin.party Digital Entertainment (BPTY) 122.80p +4.42%
JD Sports Fashion (JD.) 770.00p +4.05%
Salamander Energy (SMDR) 189.60p +3.89%
AZ Electronic Materials SA (DI) (AZEM) 327.90p +3.77%
Heritage Oil (HOIL) 198.10p +2.70%
Drax Group (DRX) 530.50p +2.02%
Man Group (EMG) 78.60p +2.01%
Perpetual Income & Growth Inv Trust (PLI) 283.30p +1.69%
Centamin (DI) (CEY) 99.00p +1.64%
FTSE 250 - Fallers
Menzies(John) (MNZS) 593.00p -2.06%
Telecom Plus (TEP) 845.50p -1.91%
Euromoney Institutional Investor (ERM) 780.00p -1.58%
Rathbone Brothers (RAT) 1,300.00p -1.44%
Supergroup (SGP) 662.00p -1.34%
Home Retail Group (HOME) 104.50p -1.14%
Big Yellow Group (BYG) 331.40p -1.07%
Fidessa Group (FDSA) 1,310.00p -1.06%
UK Commercial Property Trust (UKCM) 65.25p -0.99%
Regus (RGU) 102.10p -0.97% |
| European broker round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Air France-KLM: AlphaValue upgrades to REDUCE from sell and raises its price target to €6.10 from €5.00. Safran: AlphaValue downgrades to REDUCE from add and raises its price target to €30.90 from €30.70. Sanofi: Nomura reiterates NEUTRAL rating with a price target of €47. SEB: UBS reiterates BUY rating and lowers price target to €61 from €66. STMicroelectronics: Société Générale reiterates BUY rating with a price target of €7.90. UK Event Calendar INTERIMS
ASOS, Stobart Group Ltd.
INTERIM DIVIDEND PAYMENT DATE
BrainJuicer Group, Inmarsat, Ladbrokes, Lupus Capital, Martin Currie Global Portfolio Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Durable Goods Orders (US) (13:30)
Initial Jobless Claims (US) (13:30)
M3 Money Supply (EU) (09:00)
Pending Homes Sales (US) (15:00)
Q3
AstraZeneca, Petroleum Geo Services ASA, Shire Plc, Unilever
GMS
Premier Foods
FINALS
Debenhams
IMSS
AZ Electronic Materials SA (DI), Inchcape, Kazakhmys, National Express Group
EGMS
Acer Incorporated GDR (Reg S), Datang International Power Generation Co Ltd.
AGMS
Antisoma, BHP Billiton, Go-Ahead Group, Hermes Pacific Investments, Leeds Group, Lochard Energy Group
TRADING ANNOUNCEMENTS
Mail.ru Group Ltd GDR (Reg S), Stobart Group Ltd., WPP
UK ECONOMIC ANNOUNCEMENTS
GDP (Preliminary) (09:30)
Index of Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Oxford Instruments |
| US Market Report | Stocks Close Moderately Lower After Fed Statement
Stocks moved moderately lower over the course of the trading day on Wednesday after failing to sustain an initial upward move. Lingering concerns about the outlook for the global economy weighed on the markets, leading to an extension of the sharp drop seen in the previous session.
The major averages moved to the downside going into the close, ending the session near their worst levels of the day. The Dow edged down 25.19 points or 0.2 percent to 13,077.34, the Nasdaq slipped 8.76 points or 0.3 percent to 2,981.70 and the S&P 500 dipped 4.36 points or 0.3 percent to 1,408.75.
While bargain hunting helped push stocks higher at the start of trading, buying interest waned not long after the open amid concerns about the outlook for the markets against the backdrop of a generally disappointing earnings season.
Even though several well-known companies reported better than expected quarterly results, troubling forecasts from other big-name companies have led to worries about the economic outlook.
Traders also reacted negatively to the Federal Reserve's monetary policy statement, with the central bank making no change to its highly accommodative policy.
The Fed said it will continue to purchase $40 billion worth of mortgage-backed securities per month and gave no indication it will expand the quantitative easing program before year's end.
The central bank said economic activity has continued to expand at a moderate pace but reiterated that conditions are likely to warrant exceptionally low interest rates at least through mid-2015.
Although the Fed was not expected to make any major announcements, the statement still generated some selling pressure on Wall Street.
Meanwhile, traders largely shrugged off a report from the Commerce Department showing a bigger than expected increase in new home sales, which rose to a two-year high.
The report said new home sales rose 5.7 percent to an annual rate of 389,000 in September from the revised August rate of 368,000. Economists had expected new home sales to increase by about 3.2 percent to an annual rate of 385,000 from the 373,000 originally reported for the previous month.
With the bigger than expected monthly increase, new home sales reached their highest annual rate since April of 2010.
Sector News
Electronic storage stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Disk Drive Index down by 3.2 percent. With the loss, the index ended the session at its lowest closing level in a year.
Imation (IMN) helped to lead the storage sector lower, tumbling by 11.1 percent after reporting a drop in third quarter revenues and announcing a plan to cut its global workforce by about 20 percent.
Significant weakness also emerged among internet stocks, as reflected by the 2.2 percent loss posted by the NYSE Arca Internet Index. Netflix (NFLX) posted a particularly steep loss after cutting its forecast for full-year subscriber additions.
Transportation stocks also came under considerable pressure over the course of the trading day, dragging the Dow Jones Transportation Average down by 2 percent. Overseas Shipholding (OSG) and Norfolk Southern (NSC) turned in two of the sector's worst performances.
Gold, networking, and semiconductor also moved to the downside on the day, while some strength was visible among chemical, housing, and telecom stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday. While Japan's Nikkei 225 Index ended the day down by 0.7 percent, Hong Kong's Hang Seng Index rose by 0.3 percent.
In the bond market, treasuries closed modestly lower but well off their worst levels of the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.1 basis points to 1.775 percent.
Looking Ahead
Trading on Thursday could be impacted by the release of some key U.S. economic data, with traders likely to keep an eye on reports on durable goods orders, pending home sales, and weekly jobless claims.
On the earnings front, Procter & Gamble (PG), Sprint Nextel (S), Altria (MO), United Continental (UAL), and Aetna (AET) are among the companies due to release their quarterly results before the start of trading on Thursday. |
| Thursday newspaper round-up | GDP, Barclays, BP David Cameron on Wednesday promised “the good news will keep coming” as his error-prone government prepared to seize on new data that is expected to show Britain’s double-dip recession is over. Mr Cameron hopes Thursday’s release of GDP statistics for the third quarter – including the period of the London Olympics – will be a political tipping point, even though he will also warn that the economy still faces tough times ahead. Private sector economists expect third-quarter growth to be about 0.6 per cent following nine months of contraction. It comes after other positive recent data showing rising employment and falling inflation. Economists say the British economy will remain weak at that rate of growth. Labour will also argue that even growth of 1 per cent would only bring the economy back to where it was a year ago and that a “one-off Olympic boost” is no substitute for a long-term economic strategy. The Office for National Statistics has valued Olympics ticket sales at 0.3 per cent of national income, according to The Financial Times.
Sir David Walker is planning a clean sweep of Barclays’ board after he formally becomes chairman of the scandal-tainted bank next week and will also oversee the replacement of some key executive positions. The City grandee has spent recent weeks sounding out a selection of top figures over their suitability to join the bank in a variety of roles, according to people close to the process. Last week, Tim Breedon, the former Legal & General chief executive, signed up to join the board from November 1. Barclays is trying to revive its image and overhaul its way of doing business, following a succession of scandals. A week ago the bank revealed a surprise £700m of additional charges relating to the misselling of personal protection insurance (PPI), The Financial Times reports.
BP and Royal Dutch Shell have been accused of colluding with four other oil companies to fix diesel prices for more than 15 years. Subsidiaries of the two oil giants were yesterday named, along with divisions of America’s Chevron, France’s Total, and domestic companies Sasol and Engen, in a referral to South Africa’s Competition Tribunal by the country’s Competition Commission. Farmers, fishing and mining industries and the transport industry were all likely to have suffered as a result of the alleged “price fixing and market division”, the Commission said. An investigation begun in 2009 had “revealed collusive conduct through extensive exchanges of commercially sensitive information” by the companies, The Telegraph reports.
Ford’s vehicle manufacturing in Britain is at risk of coming to an end after more than a century following the US car maker’s decision to shrink its European production operations. Ford’s vehicle manufacturing in Britain is at risk of coming to an end after more than a century following the US car maker’s decision to shrink its European production operations. It is understood that Ford’s Southampton plant has been earmarked for closure risking 500 jobs as part of a broader consolidation process prompted by the negative impact of the Eurozone debt crisis on the industry. In a statement Stephen Odell, chairman and chief executive of Ford’s business in Europe said the region-wide review was necessary for the company’s future, The Telegraph says.
New rules to curb the number of homeowners with risky interest-only mortgages have been watered down by regulators, as it emerged that the Government has been asking banks to consider reviving mortgages for people with a deposit of just 5 per cent. The Times has learnt that the Treasury has approached at least two high street banks to ask whether the Government could offer guarantees or other assistance to revive the market in mortgages that cover 95 per cent of the value of a property. Last year the Government launched its “NewBuy” scheme, which offered a Treasury guarantee for 95 per cent mortgages sold to buyers of newly built homes. Banks said that they welcomed any form of subsidy. “If they are willing to take the risk on their books, of course we’d be willing to offer the product,” one banking source said.
Britons are more than £1,800 a year worse off than they would be had the country avoided a double-dip recession, according to a study by leading business analysts. With official growth figures due this morning expected to show the economy growing for the first time this year, a study by PwC for The Times shows the long shadow cast by the banking collapse of 2008-09. Annual incomes, including taxes and benefits, would have been 9% higher if they had carried on growing along their pre-crisis path, John Hawksworth, PwC’s chief economist, found. The overall annual output of the economy would have been £200bn (12.8%) higher if it had followed its normal trajectory, he said. Hundreds of thousands more people would be in work. |
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