Footsie closes at worst levels since July
Market Movers
techMARK 2,021.39 -0.99%
FTSE 100 5,605.59 -1.27%
FTSE 250 11,576.98 -0.91% The FTSE 100 sunk to its lowest level since July on Friday as rising tensions in the Middle East, Eurozone debt concerns and the worries about the impending ‘fiscal cliff’ in the US combined to dampen risk appetite.
The Footsie finished just above 5,600, its lowest closing price since July 26th when it finished at 5,573.
According to Sky News, two rockets have been fired at an uninhabited area near Jerusalem, with Israel Defence Forces confirming that the attack came from Gaza. No injuries have been reported.
Also causing some concern this afternoon was the news of a fire on an oil platform in the Gulf of Mexico. While rumours suggest that it is not a deep-sea drilling operation and is located in shallow water, the USA Today reported that the fire has resulted in the deaths of two workers and several injuries.
The news comes at an unfortunate time for sentiment in the oil industry after BP reached a $4.5bn settlement with US authorities about their part in the Macondo oil spill in 2010, which cost 11 lives and resulted in the world’s largest-ever offshore oil spill for its environmental implications.
Stateside today, US President Barack Obama met with Democratic and Republican congressional leaders to discuss a deal that would negotiate a reduction to the deficit in a bid to avoid the so-called US 'fiscal cliff'. Stocks began to pick up on Wall Street this afternoon after lawmakers emerged from the White House, labelled the discussions as “constructive”.
Acting as a backdrop for markets were ongoing fears about the Greek debt crisis, as investors speculate that the country could need another ‘haircut’ on its debt. Bundesbank President Jens Weidmann said today the country's debt level is not sustainable.
Market analyst Craig Erlam from Alpari said: “This notion of a ‘haircut’ is nothing new and for many in the markets, it has been clear all along that Greece were not necessarily going to be capable of paying all their debts.”
Italy's Finance Minister has told Bloomberg he is optimistic that Europe can reach an agreement on Greece next week. The International Monetary Fund's Managing Director, Christine Lagarde, on the other hand, has been cited in a slightly more sceptical vein. FTSE 100: Melrose plummets; IMI climbs after ‘in-line’ trading
Industrial turnaround specialist Melrose tanked today after saying some of its businesses have seen a slow-down in business in recent weeks. The overall weekly rate of order intake in the second half of the year has been 8% lower than the first half, but Melrose said it is too early to tell how this will affect 2013, and in any case the order intake rate is varying on a business by business basis.
Engineering giant IMI gained after saying that second-half trading has been in line with expectations so far in spite of some expected weakness in the Fluid Power division.
Serco rose strongly after it delivered the anticipated pick-up in performance in the second half and said it is on track to meet full-year expectations.
Pennon Group saw its shares take a hit after several brokers, including Nomura, UBS and Morgan Cazenove, lowered their target for the stock. The company warned yesterday that full-year profits at its recycling unit Viridor would be "somewhat below the bottom of the current range of market expectations".
Cruise operator Carnival was flat despite announcing a special payout of $0.50 per share to be paid next month, in addition to its previously announced quarterly dividend.
Banking peers RBS and Lloyds were registering losses. A Public Accounts Committee report said today that while the government would look to make a profit for taxpayers on the sale of its stake in the two banks, this may not happen "for many years". It also said that there is a risk that the £66bn invested in RBS and Lloyds "may never be recovered" | AIM/Small Cap Report | FTSE 250: Bodycote gains after solid revenue growthBodycote, the world’s largest thermal processing services provider, has reported revenue growth of 2.9% in the four months to the end of October compared to the same period the previous year. At constant currency rates, revenue rose to 7.6%.
Defence contractor Ultra Electronics fell after saying that uncertainty and cutbacks in the defence sector will hit it profits for the year. In addition, the Finance Director has decided to move on.
Property consultancy Savills adds to yesterday's gains which it racked up after announcing that its overall underlying result for the full year will be slightly ahead of its original expectations. In the UK, investment activity has continued to be strong in the Central London market, but for the most part has remained subdued elsewhere.
FTSE 100 - Risers
IMI (IMI) 958.00p +1.70%
Serco Group (SRP) 550.00p +1.01%
Compass Group (CPG) 692.00p +0.65%
Polymetal International (POLY) 1,111.00p +0.63%
Croda International (CRDA) 2,292.00p +0.61%
Associated British Foods (ABF) 1,394.00p +0.58%
Severn Trent (SVT) 1,524.00p +0.33%
Babcock International Group (BAB) 960.00p +0.31%
Intertek Group (ITRK) 2,836.00p +0.28%
Aggreko (AGK) 2,095.00p -0.05%
FTSE 100 - Fallers
Melrose (MRO) 208.90p -11.48%
Eurasian Natural Resources Corp. (ENRC) 259.60p -5.39%
Pennon Group (PNN) 599.50p -4.61%
Lloyds Banking Group (LLOY) 43.98p -3.77%
Fresnillo (FRES) 1,877.00p -3.64%
Evraz (EVR) 218.60p -3.06%
BT Group (BT.A) 219.00p -2.75%
Wood Group (John) (WG.) 770.00p -2.59%
Aviva (AV.) 320.00p -2.59%
Amec (AMEC) 994.50p -2.50%
FTSE 250 - Risers
Bodycote (BOY) 376.40p +3.78%
Oxford Instruments (OXIG) 1,318.00p +2.97%
Computacenter (CCC) 373.90p +2.52%
Barr (A.G.) (BAG) 467.00p +2.52%
Centamin (DI) (CEY) 69.30p +2.29%
Bank of Georgia Holdings (BGEO) 1,092.00p +2.06%
Ashtead Group (AHT) 378.30p +1.37%
Telecom Plus (TEP) 855.00p +1.24%
Genesis Emerging Markets Fund Ltd. (GSS) 520.00p +0.97%
Dairy Crest Group (DCG) 352.10p +0.92%
FTSE 250 - Fallers
Ruspetro (RPO) 88.00p -7.56%
Supergroup (SGP) 638.50p -7.46%
Essar Energy (ESSR) 119.00p -6.67%
Shanks Group (SKS) 79.80p -5.56%
COLT Group SA (COLT) 100.00p -4.76%
Brewin Dolphin Holdings (BRW) 169.80p -4.61%
Lonmin (LMI) 471.30p -3.89%
KCOM Group (KCOM) 69.00p -3.83%
Bumi (BUMI) 264.20p -3.72%
Cable & Wireless Communications (CWC) 34.91p -3.64% |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Markets Weakened Further On U.S. Fiscal Cliff Concerns
The European markets declined again on Friday, extending their losses from the previous two trading sessions. Bank stocks were among the weakest performers at the end of the week, but technology stocks performed well. The escalation of the conflict between Israel and Hamas in the Gaza strip has raised concerns that the situation could develop into all out war in the region.
International Monetary Fund Managing Director Christine Lagarde said the lender is committed to ensure that Greece economy return to a sustainable path. She will meet Eurozone leaders in Brussels on November 20 to forge a deal that would help Greece to get back on its feet.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.25 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.94 percent.
The DAX of Germany dropped by 1.32 percent and the CAC 40 of France fell by 1.21 percent. The FTSE 100 of the U.K. decreased by 1.27 percent and the SMI of Switzerland finished lower by 1.00 percent.
In Frankfurt, Henkel declined by 4.65 percent. The detergent maker reported higher quarterly profit, but said it expects the volatility and uncertainties in its markets to persist.
Commerzbank and Deutsche Bank fell by 4.97 percent and 3.76 percent, respectively. JPMorgan upgraded Bayer to "Overweight" from "Neutral.'' The stock closed down by 0.17 percent.
In Paris, Credit Agricole decreased by 2.86 percent, while Societe Generale lost 2.80 percent and BNP Paribas fell by 2.59 percent.
In London, Melrose sank by 11.48 percent. The manufacturing buy-out specialist said revenue trends have slowed and sales outlook for 2013 has become more uncertain.
Evraz fell by 3.06 percent. Eurasian Natural Resources and Rio Tinto dropped 5.25 percent and 2.18 percent, respectively.
BP finished down by 2.07 percent. The oil giant agreed to pay about $4.5 billion to the U.S. government to settle criminal and securities claims over the 2010 Deepwater Horizon accident in the Gulf of Mexico that claimed 11 lives and led to a massive oil spill.
Serco Group climbed by 1.01 percent, after reporting results for the first half of the year.
Lloyds Banking Group declined by 3.77 percent and HSBC fell by 0.88 percent. Barclays decreased by 2.11 percent and Royal Bank of Scotland lost 1.70 percent.
Zurich Insurance fell by 1.03 percent in Zurich, following a broker downgrade.
The euro area current account surplus declined to EUR 0.8 billion in September from EUR 10.9 billion in August, the European Central Bank said Friday.
Eurozone trade surplus increased in September as the decline in imports exceeded the fall in exports, indicating that weak domestic demand was one of the factors behind the recent recession.
The trade surplus increased to EUR 9.8 billion in September from EUR 5.2 billion in August, data from Eurostat revealed Friday. The surplus was also bigger than a EUR 1.7 billion excess in September 2011. Economists had forecast a surplus of EUR 10 billion. | US newspaper round-up: | 'Fiscal cliff', Hostess Brands, FHA... President Obama opened negotiations with congressional leaders Friday on ways to avert a looming 'fiscal cliff' of huge spending cuts and tax hikes, saying that Americans want 'action' from government leaders instead of political bickering. 'I think we’re all aware that we have some urgent business to do,' Obama said before beginning the talks. 'We’ve got to make sure that taxes don’t go up on middle-class families, that our economy remains strong, that we’re creating jobs. And that’s an agenda that Democrats and Republicans and independents, people all across the country share.' [The Washington Post]
News that Hostess Brands is closing shop is creating a host of business questions, including the fate of iconic brands such as Twinkies and Wonder Bread. The company, which had been in and out of bankruptcy restructuring, was already struggling from a high cost structure and sluggish consumer demand for its products. Its fate was sealed by a confluence of negative events including rising commodity costs and competitive pressures, says Erin Lash, analyst at Morningstar. [USA Today]
The Federal Housing Administration, which has played a crucial role in stabilizing the housing market, said it ended September with $16.3 billion in projected losses -- a possible prelude to a taxpayer bailout. The precarious financial situation could force the FHA, which has been self-funded through mortgage insurance premiums since it was created during the Great Depression, to tap the U.S. Treasury to stay afloat. The agency said a determination on whether it needs a bailout won't come until next year. [Los Angeles Times]
The head-to-head battle between Apple Inc. and Google Inc. in mobile maps is drawing nearer.Google has distributed a test version of its new mapping app that will work on Apple's iPhones to some individuals outside the company, said a person with direct knowledge of the matter. Google has been putting the finishing touches on the app before submitting it for approval to the Apple iTunes store, this person said, though it's unclear exactly when that will happen. If Google's new mapping app is accepted into the iTunes store, it will directly compete against Apple's new mapping software that is preinstalled on its mobile devices. [The Wall Street Journal]
As its policy on highly caffeinated energy drinks is scrutinized, the Food and Drug Administration publicly released records on Thursday about fatality and injury filings that mentioned the possible involvement of three top-selling products. The Web posting of the records by the agency included 13 previously undisclosed injury filings that mentioned Rockstar Energy. The F.D.A. also released filings related to 5-Hour Energy, a popular energy shot, and Monster Energy, another popular brand. [The New York Times]
The U.S. is targeting America's two biggest shipping companies, FedEx Inc. and United Parcel Service Inc., as part of an expanding crackdown against illegal sales of prescription painkillers. The Drug Enforcement Administration has been probing whether the companies aided and abetted illegal drug sales from online pharmacies for several years, according to company filings, although the investigation has gone largely unnoticed. Both companies were served with subpoenas starting more than four years ago, according to their disclosures. [The Wall Street Journal]
Regulators failed to adequately protect customers of the failed brokerage MF Global because they did not communicate with each other leading up to the firm’s collapse, a report released Thursday by Republicans on a House panel concluded. The 100-page report hammers Jon S. Corzine, the former head of Goldman Sachs and a Democrat who served as a U.S. senator and governor of New Jersey before taking the helm at MF Global. It blames Corzine’s risky investment strategies and “authoritarian” management style for the firm’s demise, assertions Corzine has denied. [The Washington Post] |
| Broker tips | BP, Melrose, Morrison
Nomura has maintained its 'neutral' rating and 455p target for oil giant BP following Thursday's 4.5bn-pound settlement with US regulators.
The broker said that in order to become more positive on BP, it would need to see a greater evidence of an "operational and financial turnaround".
"An upstream day in December will provide a framework, but we maintain a turning point for E&P is unlikely till 2014."
Investec has pared its target for industrial group Melrose from 270p to 260p after Friday's disappointment, but has reiterated its 'buy' rating for the stock, saying that the long-term outlook for the business is positive.
"Longer term, we still expect Melrose to offer above average revenue growth with the prospect of margin upside (predominantly from [recent acquisition] Elster)."
UBS has cut its recommendation for supermarket giant Morrison from 'buy' to 'neutral', saying that the stock's sector premium is perhaps not appropriate right now.
The broker highlighted that the trading momentum has fallen "alarmingly adrift of the competition" in recent months. UBS is concerned that Morrison could struggle to diagnose and effectively sort out the underlying issues. |
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