London close: Stocks rebound as 'Glenstrata' deal pushed through
Market Movers
- techMARK 2,056.18 +0.29%
- FTSE 100 5,748.10 +0.18%
- FTSE 250 11,820.83 +0.65%
- Xstrata shareholders approve merger with Glencore
- Hamas official says ceasefire has been agreed
- Eurogroup meeting on Greece kicks off in Brussels
After a poor start on Tuesday, UK stocks rallied in afternoon trade to finish broadly flat after shareholders approved the merger between FTSE 100 constituents Xstrata and Glencore; meanwhile, reports of easing tensions in the Middle East could have helped to lift sentiment late on.
Hamas official Ayman Taha said this afternoon that Israel and Gaza militants have agreed on a ceasefire. He said: "An agreement for calm has been reached. It will be declared at nine o'clock (19:00 GMT) and go into effect at midnight (22:00 GMT)." However, Israeli government spokesman Mark Regev told CNN this afternoon that the "ball is still in play" and a deal has not been finalised.
The FTSE 100 closed only slightly higher this afternoon though, following an impressive 2.36% surge the day before on the back of increased hopes that US politicians will be able to deal with the 'fiscal cliff' before automatic spending cuts and tax increases come into effect at the start of 2103.
Markets started on the back foot this morning as investors reacted to the news that Moody's last night stripped France of its prized 'AAA' rating. The US rating agency said that the move was due to "the risk to economic growth, and therefore to the government's finances, posed by the country's persistent structural economic challenges."
Analyst Michael Hewson from CMC Markets said this afternoon: "Markets have pretty much taken this in their stride given that Moody's isn't telling the markets anything they don't already know, however markets have drifted off their highs, as yesterday's blind optimism gives way to some more pragmatic caution, ahead of this evening's Eurogroup meeting on Greece."
Eurozone finance ministers are meeting in Brussels to discuss whether or not to release the next tranche of aid for Greece. However, minutes before the start of the meeting, Eurogroup President Jean-Claude Juncker claimed not to be entirely sure that a deal would take place tonight.
"We must still reach an understanding on several details and I would expect that the chances are good that we will come to a final and joint solution this evening. But I'm not entirely certain about the matter," he said. FTSE 100: Xstrata gains after shareholder vote
Mining group Xstrata finished the day as one of the best performers on the Footsie after shareholders approved a multibillion-pound merger with commodities trader Glencore. However, its Chairman Sir John Bond announced that he would retire after the completion of the merger after shareholders did not give the green light to the proposed retention arrangements for management. Glencore finished with mild gains today.
Chip designer ARM Holdings was a heavy faller after Raymond James downgraded the stock from 'strong buy' to 'outperform'. In contrast, analysts at Barclays raised their view of hotels giant Intercontinental Hotels to 'overweight', prompting shares to rise throughout the day.
Shares in luxury brand Burberry got a boost after it was reported on Bloomberg TV that the company is likely to be able withstand the slowdown in China.
Banking peers Barclays and HSBC were lower after Andrew Bailey, the head of banking supervision at the FSA, said that banks should face the threat of being broken up if they do not comply with proposals to ring-fence retail and riskier operations.
Imperial Tobacco and British American Tobacco both fell after the Australian government blocked a request for the World Trade Organisation to investigate the companies' claims that it, the Australian government, unlawfully seized their (and a number of other companies') intellectual property. Australia banned the sale of cigarettes sold in packaging containing trademarks. The country will not be able to block a second request.
FTSE 250: Lonmin and Homeserve surge
Platinum miner Lonmin was a high riser after shareholders yesterday voted in favour of a 817m dollar rights issue to repair its balance sheet.
Strong growth internationally saw home emergency repairs group HomeServe achieve a decent increase in revenue and profit in the first half despite a slight fall in customer numbers over the period, pushing shares higher today.
easyJet was flying high after delivering forecast-beating record profits boosted by higher margins and increased passenger numbers.
LED manufacturer Dialight surged after saying that it has received a major order from an unnamed US power plant operator for over 1,000 LED lighting fixtures.
Meanwhile, Paragon Group shares took a hit despite the fact the company produced record profits for the full year, enabling a 50% hike in its dividend and the promise of a progressive payout policy.
FTSE 100 - Risers
Xstrata (XTA) 986.60p +3.11%
Burberry Group (BRBY) 1,247.00p +2.72%
InterContinental Hotels Group (IHG) 1,633.00p +2.70%
International Consolidated Airlines Group SA (CDI) (IAG) 167.60p +2.57%
Antofagasta (ANTO) 1,254.00p +2.28%
Prudential (PRU) 889.00p +2.13%
Aggreko (AGK) 2,160.00p +1.89%
Shire Plc (SHP) 1,759.00p +1.85%
Fresnillo (FRES) 1,980.00p +1.75%
Johnson Matthey (JMAT) 2,325.00p +1.62%
FTSE 100 - Fallers
ARM Holdings (ARM) 726.50p -2.74%
Meggitt (MGGT) 375.60p -1.37%
Imperial Tobacco Group (IMT) 2,428.00p -1.30%
Barclays (BARC) 246.50p -1.30%
Anglo American (AAL) 1,694.00p -0.96%
RSA Insurance Group (RSA) 111.20p -0.89%
Sainsbury (J) (SBRY) 332.70p -0.86%
HSBC Holdings (HSBA) 614.50p -0.61%
Old Mutual (OML) 170.10p -0.53%
British Sky Broadcasting Group (BSY) 749.50p -0.53%
FTSE 250 - Risers
Lonmin (LMI) 310.70p +13.42%
Homeserve (HSV) 247.90p +11.17%
Dialight (DIA) 1,136.00p +6.67%
easyJet (EZJ) 692.00p +6.05%
Diploma (DPLM) 468.80p +4.60%
COLT Group SA (COLT) 107.00p +4.39%
IP Group (IPO) 112.80p +3.96%
Menzies(John) (MNZS) 602.50p +3.88%
Anite (AIE) 135.00p +3.85%
Atkins (WS) (ATK) 762.00p +3.67%
FTSE 250 - Fallers
Talvivaara Mining Company (TALV) 105.70p -5.79%
Paragon Group Of Companies (PAG) 240.70p -3.72%
Daejan Holdings (DJAN) 2,760.00p -3.60%
Dunelm Group (DNLM) 622.50p -2.96%
Mitie Group (MTO) 271.80p -2.93%
Pace (PIC) 177.80p -2.68%
Big Yellow Group (BYG) 323.60p -2.24%
TalkTalk Telecom Group (TALK) 216.20p -2.22%
Bumi (BUMI) 267.80p -2.19%
Workspace Group (WKP) 298.70p -1.97%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Europe midday: Eurogroup still undecided on Greece
-Moody's downgrades France's debt rating
-French 10 year bond yields rise by 5 basis points
-EFSF could delay 3 year bond issue after Moody's action
FTSE 100: -0.20%
Dax-30: 0.19%
Cac-40: -0.27%
FTSE-Mibtel 30: -0.71%
Ibex 35: -0.59%
Stoxx 600: -0.13%
For the most part European equities are now giving back a little bit of yesterday's enormous gains, as might have been expected.
That ahead of this evening's meeting of Eurozone Finance Ministers and after rating agency Moody's decision to downgrade France's debt to AA1 from AAA. Of particular importance, the rating agency's decision may have negative implications for the EFSF rescue fund, although not for the European Stability Mechanism (ESM) it is thought.
Regarding the former, so-called Eurogroup finance ministers are thought to be near a political agreement to disburse the next loan tranche to Greece early in December, although divisions remain over how exactly to place the country's debt stock on a sustainable downwards trajectory.
Greece's European partners are willing to give the country more time to meet its obligations -but not more money- whereas the International Monetary Fund believes that Greece's debt load should not increase any further.
The Eurogroup gathers today at 16:00 London time.
According to Greek daily Ekathimerini, sources close to Greece's Prime Minister, Antonis Samaras, expect a tranche of €31.5bn in aid by December 5th and another €13bn in January. Finland's Finance Minister, Jutta Urpilainen, however, has stated today that his country is ready to give Greece more time to achieve its financing programme targets, but not to give it more money.
As for France, Moody's last night said that: "France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short - term due to subdued domestic and external demand" and "structural rigidities" in the longer term.
Somewhat ironically, the above comes soon after the country unveiled a set of structural reform measures.
The initial reaction in French debt markets was quite muted, with yields on French long-term debt little changed. They are now up by 5 basis points to 2.12%.
Spain's Treasury has placed €4.9bn in 12 and 18 month bills, well ahead of the €4.5bn expected, even if the bid-to-cover ratio for the 1 year debt on offer fell to 2.1 from 2.71. Travel stocks lead gains
EasyJet is trading at five year highs today following its latest yearly results and after announcing its decision to more than double its dividend payout.
Credit Suisse is down after announcing the reorganization of its investment bank, which it will merge with its asset management unit.
Fiat is down 3% following a UBS downgrade.
From a sector stand-point the best performers now on the DJ Stoxx 600 now are: Travel (1.35%), Chemicals (0.46%) and Industrial goods and services (0.39%). Sharp drop in Dutch consumer confidence
French car orders rose by 6% in May.
German producer prices were flat versus the previous month in October (Consensus: 0.1%).
Dutch consumer confidence dropped to -37 points in November, after -32 in the previous month (Consensus: -35).
Switzerland's trade surplus rose to 2.8bn Swiss francs in October, versus 1.9bn francs in September.
Crude futures back off a little
The euro/dollar is now at 1.2812, up by 0.25% on the day.
Front month Brent crude futures are now down by 0.125 dollars to the 111.56 dollar mark on the ICE. |
| US Market Report | Stocks Nearly Flat On The Heels Of Mixed Catalysts
Stocks have turned in a lackluster performance over the course of the trading day on Tuesday after ending the previous session substantially higher. A mixed batch of news has contributed to the choppy trading on Wall Street.
After seeing initial weakness, the major averages have climbed back near the unchanged line. While the Dow remains down 5.18 points or less than a tenth of a percent at 12,790.78, the Nasdaq is up 2.61 points or 0.1 percent at 2,918.68 and the S&P 500 is up 1.87 points or 0.1 percent at 1,388.76.
The early weakness on Wall Street was partly due to news that Moody's Investors Service downgraded France's government bond rating by one notch to Aa1 from Aaa. The ratings agency added that the outlook remains negative.
Moody's said France's long-term economic growth outlook is negatively affected by multiple structural challenges and said the fiscal outlook is uncertain as a result of the deteriorating economic prospects.
Nonetheless, selling pressure remained subdued following the release of a report from the Commerce Department showing an unexpected increase in U.S. housing starts.
The report said housing starts climbed 3.6 percent to a seasonally adjusted annual rate of 894,000 in October, reaching their highest level in over four years.
While the markets have subsequently recovered from the initial downward move, lingering uncertainty about the looming fiscal cliff has limited the upside for the markets.
Among individual stocks, shares of Hewlett-Packard have moved sharply lower on the day, with the PC giant currently down by 10.4 percent after hitting a ten-year low.
The loss by HP comes after the company reported better than expected adjusted fourth quarter earnings but revealed an $8.8 billion charge related to serious accounting improprieties at newly acquired Autonomy Corp.
Consumer electronic retailer Best Buy is also posting a notable loss after reporting third quarter earnings that came in well below analyst estimates. After also hitting a ten-year low, shares of Best Buy are down by 10.8 percent.
Meanwhile, shares of Krispy Kreme Doughnuts have surged up by 21 percent after the doughnut maker reported better than expected third quarter results and provided upbeat guidance. Krispy Kreme reached its highest intraday level in over a year earlier in the session. |
| Broker Tips | Broker tips: London Stock Exchange, easyJet, Debenhams
UBS has said that it still sees 'attractive diversification' and upside potential in the long term at market operator London Stock Exchange (LSE), but has maintained its 'neutral' rating on the shares for now.
The broker said: "We view LSE's diversification away from volume related revenue streams and the addition of index, technology and post trade services as starting to show encouraging signs of success (contract wins at FTSE, technology sales and small development in new asset classes). We also see some upside from cost control in the longer run. However we believe that this upside is fully reflected in the shares, we reiterate our 'neutral' rating."
Nomura has reiterated its 'buy' rating and 650p target for budget airline easyJet after the firm met expectations with its full-year figures on Tuesday.
"We recognise potential upside could come from allocated seating, yield management improvements and ongoing network developments," the broker said.
Seymour Pierce has lowered its recommendation for High Street department store Debenhams from 'hold' to 'reduce', saying that the stock's massive surge over the past year has been unwarranted.
"We do not believe that Debenhams' recent results and outlook supports the 111% share price rally since September 2011," the broker said. |
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