London close: Footsie struggles to hold on to gains after jobs data
Market Movers
- techMARK 2,104.52 -0.28%
- FTSE 100 5,868.55 +0.11%
- FTSE 250 12,120.83 +0.24%
- US jobs provide temporary boost, but gains trimmed
- Data unlikely to change Fed's stance, says analyst
- Financials Admiral and RBS disappoint
While the closely-watched US jobs report provided a bit of a bounce in early afternoon trade, the Footsie had pared gains to finish flat by the close as the initial euphoria surrounding the figures died away.
US non-farm payrolls rose by 171,000 last month, well above the 125,000 expected by the market consensus. The unemployment rate did increase, by 10 basis points to 7.9%, but this was expected.
What's more, upwards revisions were made to previous months' figures which added "more lustre to an already-solid report", said analyst Michael Gapen from Barclays Research.
The Footsie jumped to an intraday high of 5,888 shortly after the data was released, but quickly came pulling back to its starting point after US stock markets opened. "Despite the better numbers the initial gains proved to be somewhat short-lived as markets fizzled out like a damp firework ahead of the weekend and the outcome of next week's US elections," said market analyst Michael Hewson from CMC Markets.
Barclays Research's Gapen said that the labour market is exhibiting good momentum heading into Q4, "although we would not be surprised to see some volatility in upcoming jobless claims and payrolls as a result of Hurricane Sandy. We do not see the momentum in hiring and decline in the unemployment rate in recent months as changing the calculus for the Fed at this stage."
In domestic, the UK economy is not expected to contract this year, but ill-timed fiscal consolidation in Europe and other external risks continue to pose risks, the National Institute of Economic and Social Research (NIESR) said in its latest quarterly forecasts.
The British economy is now expected to grow by 0.1% in 2012, which marks a slight upwards revision on its previous forecasts. Next year however the external environment is no longer being forecast to make a contribution to aggregate demand, leading the NIESR to reduce its forecast for gross domestic product (GDP) downwards, to 1.1%, as net trade will not make any positive contribution. FTSE 100: Financials provide a drag
Car insurance firm Admiral dropped after seeing a 2% decrease in third-quarter turnover. "Little has changed since the half year. The UK car insurance market is cyclical and we are in the softer part of the cycle with premium rates coming down," said Chief Executive Henry Engelhardt.
Banking giant RBS fell after reporting a statutory loss before tax of £1.26bn for the three months to September 30th after taking a £1.46bn charge in own-credit adjustments and a £400m bill for PPI redress. Investec maintained its 'sell' rating for the stock this morning, saying that it had expected a loss of £1.0bn.
Lloyds fell lower following its sharp rise on Thursday on the back of its third-quarter update, which showed figures were in line with expectations. Meanwhile, sector peer HSBC was also under the weather after the Financial Stability Board said that it (along with Citigroup, Deutsche Bank and JPMorgan Chase) must hold additional capital in order to be able absorb possible losses.
Airlines group IAG was the top performer this afternoon, up three per cent over 168p. Technical analysts at Charles Stanley said today: "A close above 168p would suggest that this line is giving way and would amount to a 'trading buy' signal."
Oil giant Tullow was also a high riser after JPMorgan Cazenove upgraded its stance on the shares to 'overweight'. In contrast, engineering giant Weir was under the weather after Jefferies cut its rating to 'hold' and supermarket group Morrisons fell after Morgan Stanley downgraded the stock to 'underweight'.
Shares in luxury brand Burberry were making gains ahead of its first-half results on November 7th. Seymour Pierce has raised its target and maintained its 'buy' rating this morning, saying that risks to forecasts are now 'on the upside'.
FTSE 250 movers: Shares in Bumi rocket on proposal news
Mining group Bumi advanced after saying it has appointed Rothschild Goup as its financial adviser with immediate effect to evaluate the proposal received from Long Haul Holdings.
Shares in Dixons rose once again, boosted by the news that its main High Street rival, Comet, is likely to go into administration. Also Seymour Pierce has said that John Lewis's strong start to their new Windows 8 range is a positive sign for Dixons.
Meanwhile, hotels group Millennium & Copthorne fell despite seeing RevPAR rise 2.6% in the third quarter, with London enjoying an Olympic boost.
Hikma Pharmaceuticals also fell after saying it is considering the future of its Generics business as its Eatontown facility in New Jersey continues to be dogged by compliance issues.
Gold miner Centamin has once again taken a hit, one day after shares rebounded after returning to the market following a suspension from trade. Earlier this week the firm's shares plummeted after media reports claimed that an Egyptian court had labelled its Sukari mining concession, its primary source of revenue, as void.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 169.10p +3.55%
Burberry Group (BRBY) 1,253.00p +3.13%
Tullow Oil (TLW) 1,445.00p +2.70%
Whitbread (WTB) 2,456.00p +2.68%
GKN (GKN) 216.70p +2.22%
Capita (CPI) 737.50p +2.08%
Hargreaves Lansdown (HL.) 762.00p +2.08%
Evraz (EVR) 243.30p +2.06%
Imperial Tobacco Group (IMT) 2,392.00p +1.79%
Carnival (CCL) 2,539.00p +1.72%
FTSE 100 - Fallers
Admiral Group (ADM) 1,081.00p -5.34%
Severn Trent (SVT) 1,557.00p -2.44%
Weir Group (WEIR) 1,751.00p -2.40%
Pennon Group (PNN) 701.00p -2.30%
Royal Bank of Scotland Group (RBS) 281.30p -2.05%
GlaxoSmithKline (GSK) 1,361.50p -1.87%
Associated British Foods (ABF) 1,370.00p -1.72%
Smith & Nephew (SN.) 638.00p -1.62%
Petrofac Ltd. (PFC) 1,599.00p -1.48%
Randgold Resources Ltd. (RRS) 7,325.00p -1.48%
FTSE 250 - Risers
Bumi (BUMI) 283.00p +13.97%
Dixons Retail (DXNS) 25.84p +10.52%
Chemring Group (CHG) 277.30p +6.41%
Homeserve (HSV) 235.20p +5.38%
Brown (N.) Group (BWNG) 354.90p +4.47%
RPS Group (RPS) 237.40p +4.12%
FirstGroup (FGP) 208.40p +3.99%
PayPoint (PAY) 826.50p +3.38%
Talvivaara Mining Company (TALV) 135.40p +3.36%
Spectris (SXS) 1,818.00p +3.30%
FTSE 250 - Fallers
Centamin (DI) (CEY) 60.50p -9.84%
Millennium & Copthorne Hotels (MLC) 480.00p -6.16%
Lancashire Holdings (LRE) 848.00p -3.03%
Debenhams (DEB) 120.00p -2.99%
Balfour Beatty (BBY) 311.40p -2.93%
Ocado Group (OCDO) 62.60p -2.49%
Hikma Pharmaceuticals (HIK) 738.50p -2.06%
Savills (SVS) 414.90p -1.98%
Hunting (HTG) 779.00p -1.95%
Cable & Wireless Communications (CWC) 37.31p -1.82%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe midday: Europe stands pat while waiting for US Employment Report
-Investors waiting on US employment report
-Eurozone manufacturing sectors slightly above consensus, but in contration
-Alcatel plunges after reporting Q3 losses
-Beiersdorf lifts revenue outlook
-Rumors that Deutsche Telekom to cut dividend
FTSE-100: -0.09%
Dax-30: -0.14%
Cac-40: -0.02%
FTSE Mibtel 30: -0.60%
Ibex 35: +0.50%
Stoxx 600: +0.16%
After yesterday's 1 per cent rise, European equities on the average decide to take a breather and trade flat with a mixed balance while waiting for the latest monthly employment report Stateside to come out at 12:30 London time.
Yesterday's better-than-expected US labor market data (weekly initial claims and the ADP employment change) already gave the European benchmarks a leg up, but it seems even the bulls prefer to wait for a confirmation from the "official" data before making another move.
Also of interest, in today's Financial Times James Mackintosh tells readers that recent market moves –gains led by cyclicals- show that there is quite a bit of optimism regarding economic growth. In his opinion, however, that is only justified if one believes that central banks have more ammunition left in their armouries –or not- as Governor King has recently suggested.
Other considerations to be taken into account by the shortest-term investors and traders are that the last two months of the year are usually amongst the best for equities and the still relatively "bearish" sentiment (as a contrarian indicator) of small investors, according to the latest weekly survey data out from AAII.
Alcatel burns a hole in investors´ pockets
Company earnings continue to cause scares on the Old Continent. Today, Alcatel Lucent plunges almost 7% on the Cac 40 after reporting that it swung to losses in the third quarter. According to Bloomberg data, out of the 164 Eurostoxx 600 companies that have reported earnings, only 54% have managed to beat consensus. Yet there are those positive reports at least and today we see the maker of Nivea Beiersdorf jump 6% after increasing annual revenue forecast.
Unfortunately for the bulls, its fellow Dax 30 member Deutsche Telekom plummets almost 3% after the German business daily Handelsblatt reported that the company is considering slashing its dividend by up to a third from 2013 onwards.
By sectors, the best performance in the DJ Stoxx 600 is now to be seen by companies in the following industrial groups: Basic Resources (+1.31%), Automobiles & Parts (+1.14%) and Industrial Goods & Services (+1.06%). Meanwhile, Telecommunications (-0.88%), Utilities (-0.76%) and Health Care (-0.60%) lead the decliners.
Eurozone PMI slightly ahead of forecasts
While waiting for the US macro data (apart from the Employment Report, we'll also see the New York ISM and factory orders), we've had a barrage of manufacturing sector come out from the Eurozone. In general terms, both the individual countries and the sector as a whole narrowly beat forecasts. However, it should be noted that all of the readings remained below 50, implying a contraction in the sector.
The Markit Eurozone purchasing managers index for the month of October
has come in 45.4, versus last month´s reading of 46.1 (Consensus: 45.3).
The Markit German purchasing managers index for the month of October
has come in 46, versus last month´s reading of 47.4 (Consensus: 45.7).
The Markit French purchasing managers index for the month of October
has come in 43.7, versus last month´s reading of 42.7 (Consensus: 43.5). Single currency dropping towards technical support ahead of data
The euro/dollar is now down by 0.48% to 1.2885.
Brent crude futures are off by 0.14% to $109.40
| US Market Report | US open: Traders bank profits ahead of election
Market movers
Dow Jones: -40 at 13,193
S&P 500: -3 at 1,425
NASDAQ Composite: -9 at 3,011 After initially opening firmer after better than expected non -farm payrolls data for October, stocks have turned back, with some traders closing positions ahead of next Tuesday's presidential election.
October data showed 171,000 jobs were added in the month, ahead of the 120,000 additions expected by the market.
The unemployment rate, however, edged up to 7.9% in October from 7.8% in September.
The main benchmark indices are all lower, despite some well received trading updates from TripAdvisor, Priceline.com and Starbucks.
Results from online travel agent TripAdvisor last night after the bell came in ahead of expectations on the back of a strong increase in web traffic.
Post-tax profit of $59.4m in the third quarter was equivalent to 41 cents a share, up 4 cents a share on last year's third quarter result.
Sector peer Priceline.com is also soaring after its results yesterday revealed things are not so bad in Europe as had been feared.
Post-tax earnings were up 27% from a year earlier on the back of a 25% increase in gross bookings.
Overpriced coffee peddler Starbucks saw like-for-like sales growth of 6% in the third quarter. Shares frothed higher despite revenue of $3.36bn being short of the $3.39bn analysts had been expecting.
S&P 500 - Risers
TripAdvisor Inc. (TRIP) $35.38 +20.30%
Priceline.Com Inc. (PCLN) $649.09 +10.75%
Starbucks Corp. (SBUX) $51.30 +10.05%
Alpha Natural Res (ANR) $9.44 +6.54%
Washington Post Co. (WPO) $353.92 +4.26%
Whole Foods Market Inc. (WFM) $98.45 +4.22%
Beam Inc. Common Stock (BEAM) $57.64 +3.71%
Rowan Companies plc (RDC) $32.86 +2.46%
Harman International Industries Inc. (HAR) $44.50 +2.44%
Simon Property Group Inc. (SPG) $155.83 +2.15%
S&P 500 - Fallers
Pitney Bowes Inc. (PBI) $12.60 -13.94%
First Solar Inc. (FSLR) $22.80 -7.87%
Fluor Corp. (FLR) $53.31 -7.54%
Chesapeake Energy Corp. (CHK) $18.82 -6.25%
American International Group Inc. (AIG) $33.13 -5.88%
Newmont Mining Corp. (NEM) $50.17 -5.73%
Republic Services Inc. (RSG) $26.81 -5.30%
Hartford Financial Services Group Inc. (HIG) $21.03 -4.06%
Genworth Financial Inc. (GNW) $5.99 -3.70%
CF Industries Holdings Inc. (CF) $203.59 -3.46%
Dow Jones I.A - Risers
Bank of America Corp. (BAC) $9.85 +1.13%
Walt Disney Co. (DIS) $50.33 +1.10%
McDonald's Corp. (MCD) $87.59 +0.91%
Home Depot Inc. (HD) $62.66 +0.64%
Merck & Co. Inc. (MRK) $46.20 +0.57%
Procter & Gamble Co. (PG) $69.57 +0.46%
Intel Corp. (INTC) $22.36 +0.45%
General Electric Co. (GE) $21.42 +0.37%
Pfizer Inc. (PFE) $24.64 +0.35%
United Technologies Corp. (UTX) $79.22 +0.20%
Dow Jones I.A - Fallers
Chevron Corp. (CVX) $109.36 -1.88%
Travelers Company Inc. (TRV) $69.01 -1.73%
Caterpillar Inc. (CAT) $86.52 -1.29%
Mondelez International Inc. (MDLZ) $26.48 -1.21%
International Business Machines Corp. (IBM) $195.29 -0.94%
Alcoa Inc. (AA) $8.67 -0.91%
Exxon Mobil Corp. (XOM) $90.78 -0.90%
JP Morgan Chase & Co. (JPM) $42.58 -0.62%
Wal-Mart Stores Inc. (WMT) $73.05 -0.54%
Boeing Co. (BA) $70.46 -0.47%
Nasdaq 100 - Risers
Priceline.Com Inc. (PCLN) $649.09 +10.75%
Starbucks Corp. (SBUX) $51.30 +10.05%
Whole Foods Market Inc. (WFM) $98.45 +4.22%
Sirius Satellite Radio Inc. (SIRI) $2.88 +2.67%
Liberty Interactive Corp (LINTA) $20.93 +1.85%
Amazon.Com Inc. (AMZN) $235.56 +1.47%
Research in Motion Ltd. (RIMM) $8.79 +1.03%
Netflix Inc. (NFLX) $78.34 +0.84%
Yahoo! Inc. (YHOO) $17.08 +0.77%
Virgin Media Inc. (VMED) $32.73 +0.73%
Nasdaq 100 - Fallers
Vertex Pharmaceuticals Inc. (VRTX) $43.87 -13.09%
Monster Beverage Corp (MNST) $43.74 -2.78%
VeriSign Inc. (VRSN) $40.03 -2.73%
Alexion Pharmaceuticals Inc. (ALXN) $89.99 -2.61%
Green Mountain Coffee Roasters Inc. (GMCR) $25.76 -2.22%
F5 Networks Inc. (FFIV) $84.35 -2.03%
KLA-Tencor Corp. (KLAC) $47.76 -1.97%
Altera Corp. (ALTR) $31.02 -1.87%
Randgold Resources Ltd. Ads (GOLD) $117.29 -1.87%
Life Technologies Corp. (LIFE) $49.46 -1.61% |
| Broker Tips | Broker tips: Admiral, Weir, Burberry
Investec has retained a 'sell' recommendation and 570p target for car insurance firm Admiral after the group revealed that revenue growth had slowed in the third quarter.
"We believe that, while the forecast 7% yield will support the stock, paying 12x earnings for what is essentially a UK motor insurer is too much," said analyst Kevin Ryan.
Jefferies has downgraded its rating for engineering giant Weir from 'buy' to 'hold' ahead of its third-quarter results next week, saying that its short-term stance is one of 'rising caution' over risks to 2012 and 2013 consensus forecasts.
"We have not turned hugely bearish on Weir (more that we are cautious over the near-term) and we continue to like the business over the long-term," the broker said. "There is, however, insufficient upside to our target (1900p) to warrant a more positive recommendation." The previous target was 2,185p.
Seymour Pierce has raised its target and maintained its 'buy' rating for luxury brand Burberry ahead of the group's first-half results on November 7th.
The broker estimates a first-half profit before tax (PBT) of £165m, earnings per share of 27.4p and a dividend per share of 7.8p. Full-year PBT forecasts are £390, slightly below the consensus estimate of £400m. |
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