Footsie rallies in afternoon trade
Market Movers
techMARK 2,054.64 -0.07%
FTSE 100 5,752.03 +0.07%
FTSE 250 11,783.32 -0.32% The FTSE 100 opened on the back foot on Wednesday morning after the initial disappointment regarding a delay in funds to Greece; however comments by Eurozone officials throughout the day lifted the mood in the afternoon, pushing the index back into positive territory by the close.
Equity markets Stateside started the session with moderate gains ahead of the Thanksgiving holiday on Thursday. Volumes on European markets are expected to be very light in the absence of US trading tomorrow.
The Eurogroup on Tuesday night was unable to thrash out an agreement on how to finance a two-year extension in Greece’s commitments. "I don’t know when [the aid disbursements] will happen," said Eurogroup head Jean-Claude Juncker after the meeting in Brussels. "Greece has delivered, now it is up to us."
Market analyst Michael Hewson from CMC Markets said: “Disappointment appears to have been tempered somewhat by expectations that EU leaders will, in the final analysis, agree something next week on November 26th, and ultimately unlock the extra money that Greece needs to keep funding itself.”
German Chancellor Angela Merkel has said she is confident the issue will be closed at Monday's Eurogroup meeting. Meanwhile, German Finance Minister Wolfgang Schauble said that Eurozone governments and the International Monetary Fund (IMF) have agreed on a Greek debt buy-back programme in order to fill a financing gap, according to Reuters. MPC voted 8-to-1 in favour of keeping QE unchanged
The minutes of the latest Monetary Policy Committee (MPC) meeting came out this morning, showing that eight of the nine members voted to maintain the size of its asset purchases at £375bn.
Barclays Research analyst Chris Crowe said that the minutes were supportive of the current stance: "standing back from further stimulus for the time being, but ready to do more if the economy continues to disappoint."
In other domestic news, UK public sector net borrowing came in at £8.6bn last month, up from £5.9bn in October 2011, according to the Office for National Statistics. The consensus estimate was for net borrowing to the tune of £6bn. FTSE 100: Johnson Matthey sinks after first-half results
Shares in platinum refiner Johnson Matthey tumbled after it reported a 6% drop in profits in the first half, while warning that it doesn't expect things to pick up in the latter part of the fiscal year. Chief Executive Neil Carson said that “the outlook in some of our other markets has weakened and visibility remains limited. We therefore expect that the group's performance in the second half will be similar to the first half of the year." The group’s interim dividend also failed to live up to some expectations.
Contract caterer Compass was also down following the announcement of its full-year results. The company saw profits break through the billion-pound barrier in the 12 months to the end of September though it did caution about the challenging economic environment in Europe.
Natural gas giant BG Group was leading the risers on the Footsie with market chatter pointing to renewed takeover rumours.
Utilities stocks were performing well after an Ofwat statement eased concerns in the sector about water price controls. Ofwat sought to clarify some licence modification proposals following requests for more information from shareholders, but analysts said that the regulator had “softened” its stance, suggesting that there is room for negotiation. United Utilities and Severn Trent were making gains.
Telecoms giant Vodafone was among the heaviest fallers of the day after going ex-dividend today, along with mining group Vedanta and supermarket chain Sainsbury.
Real estate peers Land Securities and British Land were high risers this morning after Morgan Stanley upgraded its ratings on the stocks to 'overweight'.
Xstrata and Glencore continued to rise after shareholders yesterday voted in favour of their propped merger. The Financial Times reported this morning that the tie-up is expected to win the approval from the European Commission this week, citing people involved in the process. FTSE 250: JD Sports rises on sales growth
Sports apparel group JD Sports Fashion was higher after seeing like-for-like sales growth pick up slightly in the third quarter despite seeing what it labelled as a "tough" environment.
Lonmin shares took a hit as disturbing video footage of August's tragedies at the Marikana mines was reviewed by the Farlam commission, which is examining the conduct of Lonmin and other organisations. The footage appears to throw up more questions than it answers, reports suggest.
Car and bike parts retailer Halfords dropped after saying that full-year profits will be slightly below consensus estimates.
Shares in BTG were retreating one day after the company announced the approval of its ZYTIGA product, the prostate cancer treatment drug developed by thespecialist healthcare firm, was approved by the European Medicines Agency (EMA), the firm announced on Tuesday morning.
| AIM/Small Cap Report | FTSE 100 - Risers
BG Group (BG.) 1,060.00p +2.81%
United Utilities Group (UU.) 671.50p +1.90%
Imperial Tobacco Group (IMT) 2,472.00p +1.81%
British Land Co (BLND) 524.00p +1.75%
Aviva (AV.) 340.70p +1.64%
Shire Plc (SHP) 1,787.00p +1.59%
ARM Holdings (ARM) 737.00p +1.45%
Severn Trent (SVT) 1,569.00p +1.42%
WPP (WPP) 825.00p +1.35%
SSE (SSE) 1,396.00p +1.16%
FTSE 100 - Fallers
Johnson Matthey (JMAT) 2,190.00p -5.81%
Vedanta Resources (VED) 1,057.00p -2.40%
Eurasian Natural Resources Corp. (ENRC) 269.00p -2.18%
Kingfisher (KGF) 272.00p -2.12%
Vodafone Group (VOD) 159.15p -1.94%
Evraz (EVR) 226.30p -1.65%
International Consolidated Airlines Group SA (CDI) (IAG) 165.00p -1.55%
Randgold Resources Ltd. (RRS) 6,570.00p -1.50%
Aberdeen Asset Management (ADN) 333.60p -1.39%
Compass Group (CPG) 699.50p -1.34%
FTSE 250 - Risers
Pace (PIC) 184.70p +3.88%
PayPoint (PAY) 876.50p +3.73%
Telecom Plus (TEP) 889.00p +3.01%
Daejan Holdings (DJAN) 2,839.00p +2.86%
Fidessa Group (FDSA) 1,394.00p +2.58%
St. Modwen Properties (SMP) 210.00p +1.84%
Rathbone Brothers (RAT) 1,284.00p +1.82%
Sports Direct International (SPD) 399.80p +1.73%
Galliford Try (GFRD) 701.00p +1.59%
Capital & Counties Properties (CAPC) 234.80p +1.56%
FTSE 250 - Fallers
Lonmin (LMI) 292.10p -5.99%
Supergroup (SGP) 604.00p -3.90%
Imagination Technologies Group (IMG) 423.80p -3.86%
BTG (BTG) 341.20p -3.40%
New World Resources A Shares (NWR) 227.30p -3.28%
IP Group (IPO) 109.20p -3.19%
Micro Focus International (MCRO) 568.50p -2.99%
Kenmare Resources (KMR) 33.00p -2.80%
HICL Infrastructure Company Ltd (HICL) 121.60p -2.80%
London & Stamford Property (LSP) 107.90p -2.79% |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Markets Finished Up Despite Greece Concerns
The European markets recovered from early weakness on Wednesday and ended the session with modest gains. The early losses were caused by the failure of the Eurozone finance ministers to come to an agreement on Greece at their meeting in Brussels on Tuesday. The meeting was expected to produce a final decision on the next Greek aid tranche.
Eurozone finance ministers on Tuesday failed to strike a deal on Greece, delaying further the approval of the much-awaited EUR 31.5 billion-loan installment despite fears that the country will run out of cash this month.
The Eurogroup will meet again on November 26 to complete "further technical work on some elements of this package," Eurogroup President Jean-Claude Juncker said in a statement issued after the ministers' meeting in Brussels on Tuesday.
However, Juncker said the Eurogroup has made progress in identifying "a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt."
Bank of England policymakers decided to retain quantitative easing at GBP 375 billion through a split vote early November, as David Miles sought an increase of GBP 25 billion citing the slackness in the economy, while all other eight members assessed the current size as appropriate.
Though members differed over the exact impact of the asset purchases, they said that demand and output would have been significantly weaker in their absence, minutes of November 7 and 8 meeting showed Wednesday. They also discussed the likely effectiveness of additional stimulus.
Regarding interest rates, the nine-member Monetary Policy Committee voted unanimously to maintain it at a record low 0.50 percent. Nonetheless, the Committee discussed the likely effectiveness of reducing the bank rate to below 0.5 percent. Members judged that it was unlikely to wish to reduce bank rate in the foreseeable future.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.43 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.23 percent.
The DAX of Germany climbed by 0.16 percent and the CAC 40 of France gained 0.44 percent. The FTSE 100 of the U.K. advanced by 0.05 percent and the SMI of Switzerland rose by 0.37 percent.
In Frankfurt, K+S declined by 3.23 percent. JPMorgan downgraded its rating on the stock to "Underweight" from "Neutral." Deutsche Bank downgraded Siemens to "Sell" from "Hold." The stock dropped by 1.44 percent.
BASF shares finished up by 0.09 percent, after the company announced an offer to acquire Norway's Pronova. BMW rose by 0.82 percent and Daimler finished up by 0.88 percent, while Volkswagen added 1.03 percent. GSW Immobilien gained 1.26 percent. JPMorgan initiated the real estate developer with an "Overweight" rating.
In Paris, Veolia Environnement gained 1.28 percent. The company closed the sale of its U.S. solid-waste operations.
In London, Johnson Matthey declined by 5.81 percent. The chemicals firm reported a decline in profit for the first half of the year, as revenues were hurt amid decreased prices on precious metals.
Food and support services company Compass Group reported a lower profit for the year, but lifted its final dividend and announced a new share repurchase program. The stock fell by 1.34 percent.
Lloyds Banking Group climbed by 1.02 percent, after Morgan Stanley upgraded the stock to "Equal weight" from "Underweight."
Morgan Stanley upgraded its ratings on both British Land and on Land Securities Group to "Overweight" from "Equal weight." British Land rose by 1.75 percent and Land Securities Group added 0.84 percent.
Randgold Resources dropped by 1.50 percent, Eurasian Natural Resources decreased by 2.29 percent and Rio Tinto lost 1.02 percent.
A leading indicator for Germany's economic activity increased 0.1 percent month-on-month to 102.6 in September, marking its first gain since February this year, the Conference Board said in a report on Wednesday.
The U.K.'s public sector net borrowing (PSNB), excluding the temporary effects of financial interventions, rose to GBP 8.6 billion in October from GBP 5.9 billion a year ago, reports said citing data published by the Office for National Statistics on Wednesday.
Economists had forecast the budget deficit to widen to GBP 6 billion. Public sector net cash requirement (PSNCR) showed a shortfall of GBP 14.7 billion during the month. |
| US Market Report | Stocks Experiencing Choppy Trading Ahead Of Holiday
With traders getting a head start on tomorrow's holiday, stocks are turning in a lackluster performance during trading on Wednesday. A mixed batch of U.S. economic data may also be contributing to the choppy trading on Wall Street.
The major averages are currently posting modest gains but are off their early highs. The Dow is up 31.13 points or 0.2 percent at 12,819.64, the Nasdaq is up 3.23 points or 0.1 percent at 2,919.91 and the S&P 500 is up 0.22 points or less than a tenth of a percent at 1,388.03.
The lack of direction being shown by stocks comes as trading activity remains light ahead of the Thanksgiving Day holiday on Thursday.
Traders are also digesting a mixed batch of economic data, including reports showing a drop in jobless claims and a substantial downward revision to consumer sentiment.
Before the start of trading, the Labor Department released a report showing a notable decrease in initial jobless claims in the week ended November 17th, although the data continued to reflect distortions due to Hurricane Sandy.
The report showed that jobless claims fell to 410,000 from the previous week's revised figure of 451,000, with claims coming in line with analyst estimates.
Meanwhile, a separate report from Thomson Reuters and the University of Michigan showed that consumer sentiment improved by substantially less than initially estimated in the month of November.
The report said the consumer sentiment index for November came in at 82.7, down sharply from the preliminary reading of 84.9. With the downward revision, the index is now only just above the final October reading of 82.6.
The latest news out of Europe has also helped to keep buying interest subdued, as finance ministers failed to strike a deal on Greece, further delaying the approval of another round of financing for the debt-plagued nation.
The Eurogroup will meet again on November 26th to complete "further technical work on some elements of this package," Eurogroup President Jean-Claude Juncker said in a statement issued after the ministers' meeting in Brussels.
Traders are also keeping an eye on developments in the Middle East, with Secretary of State Hillary Clinton in the region to try to help broker a cease fire between Israel and Palestinian militants in Gaza.
Sector News
Reflecting the lack of direction being shown by the broader markets, most of the major sectors are showing only modest moves in mid-day trading.
Nonetheless, significant strength has emerged among electronic storage stocks, as reflected by the 1.7 percent gain being posted by the NYSE Arca Disk Drive Index. Imation (IMN) and STEC (STEC) are posting notable gains.
Software and gold stocks are also seeing moderate strength on the day, while some weakness is visible among airline stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance on Wednesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Australia's All Ordinaries Index fell by 0.4 percent.
Meanwhile, the major European markets all saw modest strength on the day. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index and the U.K.'s FTSE 100 Index edged up by 0.2 percent and 0.1 percent, respectively.
In the bond market, treasuries are moving moderately lower, pulling back further off last week's highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.1 basis points at 1.687 percent. |
| Broker tips | Compass, Capco, Halfords In spite of the negative market reaction to Compass Group's full-year results on Wednesday morning, Nomura has maintained its 'buy' rating and 800p target for the stock, saying that the figures were in line with its forecasts.
Nomura said: "Our FY 13 forecasts assume a slowdown in organic revenue growth to 4.7% [from 5.4% in the year just gone] and 10 basis points of margin upside. The implied slowdown in organic growth and new buy-back suggest that forecast risk is on the upside."
The broker added: "We retain a 'buy' recommendation based on the attractive structural growth in outsourcing, strong FCF [free cash flow] generation and restructuring potential."
Seymour Pierce has said that the news that Capital & Counties (Capco or CAPC) has received consent from another council for the Earls Court developments represents "significant process" for the business; however, the broker has maintained its 'hold rating and 233p target for the stock.
Analyst Sue Munden said: "the current share price is now 20.9% above the forecast NAV and equal to our FY14 estimate. The shares may well react positively to this news this morning but we feel the current price reflects much of the future value."
Halfords Group's first-half results on Wednesday may have been met with profit-taking by investors, but Panmure Gordon reiterated its 'buy' rating and 400p target for the stock, saying that there's still '"ots of opportunity" for the business.
"We think that there are a few easy wins and that investment in a service-based culture can unlock a substantial sales and profit opportunity. Therefore, we view the opportunity to 'buy' into Halfords at just 11x trough earnings as a good entry point, as its valuation moves into line with other fast-growing, cash generative retailers." |
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