Stocks gain ahead of central bank announcements
Market Movers
techMARK 2,150.97 +0.40%
FTSE 100 5,841.46 +0.27%
FTSE 250 11,922.60 +0.42% European stock markets have opened with moderate gains ahead of what is likely to be a busy day on the economic front, with rate decisions due out from the Bank of England (BoE) and European Central Bank (ECB) later today, as well as the minutes of the latest Federal Reserve meeting.
The BoE's Monetary Policy Committee (MPC) is set to reveal whether it has made any alterations to its key interest rate and asset purchase programme (also known as quantitative easing, or QE) at noon.
The smart money is on there being no change, with the interest rate staying at 0.5% and the asset purchase (quantitative easing, or QE) pot staying at £375bn. However, some are expecting an increase in QE and a 25 basis point rate cut in November.
The ECB is also expected to remain in 'wait-and-see' mode when it reveals its policy decision after midday. Analysts believe that the ECB will wait for Spain to make the next move considering that it already announced its bond purchase plan for ailing countries that request aid. The key interest rate currently stands at 0.75% after it was cut by 25 basis points early in the year. The deposit rate is at 0%.
Analyst Craig Erlam from Alpari said: "There's been a lack of volatility in the markets in recent weeks as investors look beyond central banks to the governments for reassurance on the next step in the debt crisis. The uncertainty surrounding Spain has left investors unsure on how to position themselves as we approach near end. Given a lack of details out of the eurozone, there is a hope that the ECB will give us some valuable insight into this."
Meanwhile, the Federal Open Market Committee (FOMC) minutes are also on the agenda for later. Analyst Moyeen Islam from Barclays Research said this morning that the minutes should provide more "granularity regarding what the Fed may judge to be a 'sustainable improvement' in the labour market that would underpin any decision to end the current open-ended commitment to asset purchases. FTSE 100: Tate & Lyle gains after broker upgrade Sweeteners and food products group Tate & Lyle was the high riser in early trading after Credit Suisse raised its recommendation for the stock from 'neutral' to 'outperform'.
The broker said: "There is no easy way to value Tate & Lyle, but it does seem to us to be a better business for all the changes we have seen and that this is not reflected in the share price (which is down 8% year to date versus a staples sector up 18%)."
Evraz fell after acquiring an indirect controlling interest in OJSC Raspadskaya, one of Russia's largest producers of coking coal and a supplier to the Russian steel firm.
Pharmaceuticals behemoth GlaxoSmithKline gained after saying its joint venture company, Shionogi-ViiV Healthcare, has completed an initial clinical registration package for dolutegravir, its treatment for HIV patients.
Supermarket peers Tesco and Sainsbury were among the stocks in the red following their results and trading update yesterday, respectively. Exane BNP Paribas reduced its target for Tesco this morning from 325p to 300p and reiterated its 'underperform' rating on the shares. FTSE 250: Halfords surges after impressive Q2, new CEO appointment Car and bike parts retailer Halfords jumped after appointing a new Chief Executive Officer following the abrupt departure of David Wild in the summer, as it revealed that full-year profits would be at the top end of guidance after a strong second quarter.
The company expects pre-tax profit to be in the region of £40-42m in the first half on the back of its second quarter performance and an acceleration of operating cost investment. The consensus estimate currently stands at just £35.8m.
Fashion chain Ted Baker was in demand after saying that the reaction to its autumn/winter collections has been positive as it unveiled a solid first-half trading performance.
FTSE 100 - Risers
Tate & Lyle (TATE) 691.50p +2.52%
Standard Chartered (STAN) 1,421.00p +1.21%
Prudential (PRU) 833.00p +1.09%
Carnival (CCL) 2,336.00p +0.99%
InterContinental Hotels Group (IHG) 1,655.00p +0.98%
Barclays (BARC) 222.30p +0.93%
International Consolidated Airlines Group SA (CDI) (IAG) 165.20p +0.92%
Royal Bank of Scotland Group (RBS) 260.40p +0.89%
Diageo (DGE) 1,795.00p +0.84%
ITV (ITV) 91.95p +0.82%
FTSE 100 - Fallers
Evraz (EVR) 239.60p -3.11%
BHP Billiton (BLT) 1,929.00p -0.72%
Tesco (TSCO) 325.75p -0.67%
G4S (GFS) 266.50p -0.56%
BG Group (BG.) 1,302.00p -0.53%
BP (BP.) 436.85p -0.50%
CRH (CRH) 1,183.00p -0.50%
Johnson Matthey (JMAT) 2,406.00p -0.46%
Amec (AMEC) 1,145.00p -0.43%
British Land Co (BLND) 521.00p -0.29%
FTSE 250 - Risers
Halfords Group (HFD) 302.00p +13.53%
Ted Baker (TED) 945.00p +3.45%
Victrex (VCT) 1,372.00p +3.08%
Stobart Group Ltd. (STOB) 115.40p +2.58%
Ocado Group (OCDO) 67.70p +2.27%
Rentokil Initial (RTO) 84.85p +2.23%
Computacenter (CCC) 385.00p +2.18%
Paragon Group Of Companies (PAG) 212.30p +2.07%
Lonmin (LMI) 548.00p +2.05%
FirstGroup (FGP) 197.30p +2.02%
FTSE 250 - Fallers
Rank Group (RNK) 146.90p -2.39%
Hansteen Holdings (HSTN) 76.30p -2.18%
Carpetright (CPR) 630.00p -2.10%
IP Group (IPO) 118.60p -1.58%
JD Sports Fashion (JD.) 709.00p -1.53%
Dechra Pharmaceuticals (DPH) 583.00p -1.10%
Bovis Homes Group (BVS) 495.20p -1.06%
Kenmare Resources (KMR) 39.75p -1.00%
Petra Diamonds Ltd.(DI) (PDL) 115.20p -0.95%
Utilico Emerging Markets Ltd (DI) (UEM) 160.12p -0.86%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | ECB in focus, but wary eye also on Spain FTSE 100: 0.27%
Dax-30: 0.39%
Cac-40: 0.17%
FTSE-Mibtel 30: 0.27%
Ibex 35: 0.62%
Stoxx 600: 0.23%
European equities are heading slightly higher this morning following yesterday’s rise in global composite purchasing managers’ data, in no mean measures due to positive macro-surprises Stateside. That with central banks expected to be firmly in focus today ahead of the release, tomorrow, of the all-important monthly employment report on the other side of the Atlantic, in the United States.
“Market focus today will be on the European Central Bank’s policy meeting in Frankfurt. After yesterday’s “ECB sources” story suggesting that the ECB was still open to further Greek debt restructuring, President Draghi will like be questioned on the ‘outright monetary transactions (OMT)’ as well as the ECB’s position on ‘official sector involvement (OSI)’, wrote Barclays Research this morning.
Investors will also be keeping tabs on a short-term debt auction by Spain’s treasury this morning. That as The Telegraph reports this morning that senior officials from Germany and other parts of the Eurozone's AAA core have warned Spain privately that angry parliaments are likely to impose stringent conditions on any further rescue loans. Fear of escalating demands by Germany, Finland and Holland is a key reason why Spanish premier Mariano Rajoy continues to drag his feet on a full sovereign bail-out.
Worth watching out for, the US Federal Reserve will release the minutes of its last rate setting meeting this evening, at 19:00. EdF to go on a hiring spree Nobel Biocare is sinking by 7% after saying a drop in the Japanese market in the third quarter is “materially impacting” full-year sales and profit.
Telefonica plans to reduce its fleet of private jets as part of an effort to lower costs.
EdF has said it will hire 6,000 workers in France this year. Central banks in focus The European Central Bank’s rate announcement will come at 12:45, followed by governing council President Mario Draghi’s press conference at 13:30. Small rise in single currency The euro/dollar is now up by 0.31% to the 1.2950 level.
Front month Brent crude futures are rising by 0.679 dollars to the 108.9 dollar mark on the ICE. UK Event Calendar INTERIMS
Ted Baker
INTERIM DIVIDEND PAYMENT DATE
Amlin, Antofagasta, ARM Holdings, Churchill China, Croda International, Eurasian Natural Resources Corp., Phoenix Group Holdings (DI), Shire Plc, Tullow Oil
QUARTERLY PAYMENT DATE
GlaxoSmithKline
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)
Factory Orders (US) (15:00)
FOMC Interest Rate Minutes (US) (19:00)
Goods Orders (US) (15:00)
Initial Jobless Claims (US) (13:30)
PMI Construction (GER) (08:55)
Q3
Sandvine Corp.
FINALS
Animalcare Group, Matchtech Group
IMSS
Carillion
EGMS
Public Power GDR SA (Reg S)
AGMS
F&C US Smaller Companies, Oil & Gas Development Company Ltd GDR (Reg S), VietNam Holding Ltd
TRADING ANNOUNCEMENTS
Halfords Group, Victrex
FINAL DIVIDEND PAYMENT DATE
Medusa Mining Ltd. (DI) |
| US Market Report | Upbeat Economic Data Leads To Strength On Wall Street
With traders reacting positively to a pair of upbeat U.S. economic reports, stocks moved mostly higher during trading on Wednesday. Buying interest remained relatively subdued, however, limiting the upside for the markets.
The major averages all ended the day in positive territory, although they Dow posted only a modest gain. While the Dow inched up 12.25 points or 0.1 percent to 13,494.61, the Nasdaq rose 15.19 points or 0.5 percent to 3,135.23 and the S&P 500 climbed 5.24 points or 0.4 percent to 1,450.99.
The strength on Wall Street was partly due to the release of a report from payroll processor Automatic Data Processing showing stronger than expected private sector job growth in the month of September.
ADP said private sector employment increased by 162,000 jobs in September compared to economist estimates for an increase of about 140,000.
At the same time, job growth in previous months was revised lower, with July growth reduced by 17,000 to an increase of 156,000 jobs and August growth lowered by 12,000 to an increase of 189,000 jobs.
A separate report from the Institute for Supply Management also helped push stocks higher, as it showed an unexpected acceleration in the pace of service sector growth in the month of September.
The ISM said its non-manufacturing index climbed to 55.1 in September from 53.7 in August, with a reading above 50 indicating an increase in activity in the service sector. The increase surprised economists, who had expected the index to edge down to 53.5.
With the unexpected increase, the non-manufacturing index rose to its highest level since coming in at 56.0 in March.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, the U.S. economy is hanging in there, especially compared to its other developed world brethren in Europe."
Nonetheless, buying interest remained relatively subdued, as traders expressed caution ahead of Friday's monthly jobs report from the Labor Department, which includes both public and private sector jobs.
Disappointing guidance from Hewlett-Packard also helped to limit the upside for the markets, with the PC giant tumbling by 13 percent after forecasting earnings for fiscal 2013 well below analyst estimates. The loss pulled shares of HP down to a nearly ten-year closing low. |
| Thursday newspaper round-up | FirstGroup, Spain, RBS FirstGroup is considering legal action against the Department for Transport after it pulled the controversial West Coast rail bid in a humiliating about-turn, plunging the entire industry into chaos. The bus and rail operator, which had been awarded the contract after bidding £13.3bn to run the London-to-Scotland services until 2028, saw its shares dive by more than a fifth, falling 50.6 to 193.4p. Analysts said the potential loss of £40m cash flow this year and £50m of operating profits next could lead to fresh fears over FirstGroup's balance sheet and signalled a near-certain dividend cut. Karl Burns, at Shore Capital, said: "This could lead to fears over the loss of the franchise and subsequent balance sheet concerns." Gert Zonneveld at Panmure Gordon said: "I don't think the dividend looks sustainable." The decision by new Transport Secretary Patrick McLoughlin to pull the contract came after the "discovery of significant technical flaws in the way the franchise process was conducted". Three DfT officials have been suspended, The Telegraph says.
Senior officials from Germany and other parts of the Eurozone's AAA core have warned Spain privately that angry parliaments are likely to impose stringent conditions on any further rescue loans. Fear of escalating demands by Germany, Finland and Holland is a key reason why Spanish premier Mariano Rajoy continues to drag his feet on a full sovereign bail-out. Spain's refusal to act has frozen the Eurozone rescue machinery and begun to rattle markets. The European Central Bank will not buy Spanish bonds until the country requests aid from the European Stability Mechanism (ESM) and signs a "Memorandum" giving up fiscal sovereignty. Finance minister Luis de Guindos told Spain's parliament Wednesday that there will be no bail-out until the terms are clear. "The government will take the best decision for Spain and its European allies when it knows all the details," he said, The Telegraph writes.
Royal Bank of Scotland has been left facing an €212m (£170m) loss after the collapse of one of Spain’s largest housebuilders. Rivero y Soler, which is controlled by the Rivero family and Bautista Soler, yesterday filed one for one of the largest bankruptcies in Spanish history with debts totalling €1.6bn. RBS is among the largest creditors to the struggling Spanish builder, along with several domestic lenders. The bankruptcy follows the failure by two of the company’s subsidiaries, Alteco and MAG Import, to refinance an outstanding loan. Together the two companies own a 31% stake in Gecina, France’s largest property company, raising questions about the future of the holding. RBS is unlikely to have to write-off the entire loan and the state-backed lender has already made substantial provisions for new losses, according to The Telegraph.
Capita has lost a flagship contract to manage the Criminal Records Bureau — and some analysts believe the reason is that the company has had it too good for too long. Kevin Lapwood, at the brokers Seymour Pierce, said: “There’s a suspicion that Capita has been earning too high a margin on certain central government contracts.” The Home Office will drop Capita, which has provided IT support to the CRB for more than a decade, in favour of a rival bidder, named by unions as the Indian-owned Tata Consultancy Services, when its £400m deal expires in March. Capita said it was “disappointed” to lose the contract, which involves vetting the background of anybody who gets a job working with children or vulnerable adults. Among those who are routinely screened are teachers, social workers and clergy, The Times reports.
Royal Bank of Scotland is said to have found buyers for the full 33 per cent stake of Direct Line it is selling to stock market investors, just three days into a nine-day marketing drive. The bank is selling Direct Line, Britain’s biggest motor insurer, to win European Union regulatory approval for a government bailout it received during the 2008 financial crisis that left it 82% state-owned. A source close to the flotation said: “The book is now fully covered within the range, and to get that done three days in is pretty encouraging.” Direct Line, which also includes the Churchill and Green Flag brands, would be worth £2.66bn at the mid-point of the 160p to 195p a share price range, at the lower end of market forecasts. Another source said banks handling the sale had so far focused on attracting British investors, and would now turn to marketing the shares in North America and continental Europe. If priced at 195p, the insurer could raise as much as £975m, making the sale London’s biggest IPO in over a year. Order books, which opened on 28 September, are due to close on 10 October, The Scotsman explains.
Spread-betters readied sell orders before a trading update from Michael Page International next week. The recruitment giant may have the global footprint to cope with economic lethargy in the West, but with Australia feeling the pinch and China slowing, punters suspect that it, too, may struggle. GFT Markets offered 357.3p-358.7p on Michael Page, The Times says.
Canny punters were keeping a close eye on Premier Gold, 2.7% easier at 0.36p. The word is that results from soil samples in Kyrgyzstan are back from the lab and geologists think that it should look at multiple targets over 5 sq km, similar to bigger gold mines in that area. Premier plans to dig deeper next year to determine the amount of gold, writes The Times. |
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