Stocks fall on global economic concerns
Market Movers
techMARK 2,056.22 -0.30%
FTSE 100 5,756.52 -0.51%
FTSE 250 11,794.64 -0.02% Concerns about the global economy took centre stage again on Wednesday morning, causing the Footsie to sink early on as general strikes take place in Spain, Portugal, Greece and Italy.
Stocks rallied in afternoon trade yesterday on rumours that Spain could be close to officially requesting a bailout. Market analyst Craig Erlam from Alpari said: "If true, this would be very well received in the markets as the long running saga surrounding Spain has dragged equity markets lower on numerous occasions this year. A bailout request would indicate that Spain is committed to reducing its deficit and regaining competitiveness."
Nevertheless, the UK equity markets started on the back foot this morning, "tracking losses in the US overnight as concerns over the much feared fiscal cliff ate away at sentiment on the other side of the Atlantic," said financial sales trader Matthew Nelson from Spreadex.
Yesterday, a fund manager survey from Bank of America Merrill Lynch showed that some 54% of those polled see the US fiscal cliff as the biggest tail risk for the global economy, up from 42% in October.
"It’s a busy day of announcements today with the Claimant Count Rate and Unemployment Rate out at 09:30 and the Bank of England Inflation Report out at 10:30. Gilt prices have fallen slightly this morning in anticipation of Governor King speaking with questions on the fragile economy, the central bank’s independence and prospects of more QE all likely to be high on the agenda," he said.
Meanwhile, industrial production data in Europe, inflation numbers in the US and a host of other economic figures are also scheduled for release today.
In other news, the London Bullion Market Association has predicted that the price of gold would rise around 7% from today's prices to $1,849 per troy ounce by September 2013. FTSE 100: Resources and financials provide a drag Mining and oil stocks were among the worst performers on macroeconomic concerns , with ENRC, EVRAZ and Shell registering losses. Even Tullow Oil, which said this morning it is on track to hit its full-year production targets, was lower.
Banking peers Royal Bank of Scotland (RBS) and Barclays were in the red after Liberum Capital downgraded its ratings for the stocks to 'hold', citing the impact of a weak Eurozone economy.
Engineering consultancy AMEC gained after saying it was trading in line with expectations despite ongoing economic uncertainty. The firm said mining activity was slowing, but conventional oil and gas activity remained strong, particularly in the North Sea and Gulf of Mexico.
Supermarket group Sainsbury was falling early on despite reporting a better-than-expected underlying half-year profit before tax as it continued to outperform in a challenging market.
Defence group BAE Systems was down after saying that it has reached a settlement with the government of Trinidad and Tobago after a contract to provide offshore patrol vessels was cancelled two years ago.
Telecoms group BT fell after saying that it has made an agreed offer to acquire Tikit Group, the information technology services provider to the legal and accountancy profession, for £64.2m.
Energy supplier SSE was in demand after posting a 38% jump in profits in the first half as it immediately moved to offset a media storm over its hike in household bills last month. The firm pushed up its dividend 5% to 25.2p as earnings per share leapt 40.6% to 35.3p. FTSE 250: Talvivaara rebounds after leak stopped Nickel miner Talvivaara surged, recovering after recent falls, after saying that the leakage of the gypsum pond at the Sotkamo mine, which started two week ago, has now been stopped. However, the company said that it was re-assessing its fourth-quarter production target after a temporary plant shutdown. Inter-dealer broker ICAP dropped after headline pre-tax profit dropped 26% in the first half and revenue fell 14%. Bank recapitalisation and deleveraging, uncertainty over regulatory reform and even the London Olympics were cited by boss Michael Spencer as reasons for the decreases. Soft drink peers Britvic and AG Barr were higher after agreeing on a merger. Assuming the tie-up goes through, Britvic shareholders will end up controlling 63% of the combined company and AG Barr shareholders 37%. The new entity will be called Barr Britvic Soft Drinks. Shares in Egypt-focused gold miner Centamin got a boost after it reported a 43% quarter-on-quarter leap in basic earnings per share (EPS) in the three months ended September 30th. Online gaming firm bwin.party digital entertainment was higher after reiterating its view that it is "acting and has always acted in compliance with applicable laws" after its co-CEO was questioned by Belgian authorities on concerns that it was breaching the country's gambling legislation.
| AIM/Small Cap Report | FTSE 100 - Risers
Weir Group (WEIR) 1,784.00p +2.65%
Amec (AMEC) 1,054.00p +2.03%
Centrica (CNA) 313.10p +0.74%
ITV (ITV) 95.30p +0.74%
IMI (IMI) 938.50p +0.43%
Unilever (ULVR) 2,349.00p +0.34%
Reed Elsevier (REL) 620.00p +0.32%
Tesco (TSCO) 321.95p +0.30%
Carnival (CCL) 2,508.00p +0.24%
Fresnillo (FRES) 1,939.00p +0.15%
FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 284.00p -1.93%
Royal Dutch Shell 'B' (RDSB) 2,186.00p -1.82%
Marks & Spencer Group (MKS) 378.60p -1.71%
Royal Dutch Shell 'A' (RDSA) 2,123.50p -1.69%
Evraz (EVR) 230.00p -1.63%
Kingfisher (KGF) 284.40p -1.56%
Burberry Group (BRBY) 1,212.00p -1.54%
Sainsbury (J) (SBRY) 342.00p -1.50%
GlaxoSmithKline (GSK) 1,340.50p -1.18%
GKN (GKN) 205.50p -1.06%
FTSE 250 - Risers
Talvivaara Mining Company (TALV) 94.15p +12.89%
Ocado Group (OCDO) 62.10p +4.72%
SIG (SHI) 106.00p +3.31%
Bwin.party Digital Entertainment (BPTY) 117.00p +3.27%
Fidessa Group (FDSA) 1,312.00p +2.90%
JD Sports Fashion (JD.) 717.45p +2.35%
Britvic (BVIC) 376.80p +2.31%
Barr (A.G.) (BAG) 442.00p +2.27%
Grainger (GRI) 116.90p +1.65%
Centamin (DI) (CEY) 72.00p +1.55%
FTSE 250 - Fallers
ICAP (IAP) 286.30p -7.62%
Menzies(John) (MNZS) 572.00p -3.05%
TalkTalk Telecom Group (TALK) 215.00p -2.71%
Cable & Wireless Communications (CWC) 36.62p -2.01%
Go-Ahead Group (GOG) 1,214.00p -1.70%
UK Commercial Property Trust (UKCM) 65.75p -1.42%
JPMorgan American Inv Trust (JAM) 900.51p -1.42%
St James's Place (STJ) 388.10p -1.15%
BBA Aviation (BBA) 203.60p -1.07%
African Barrick Gold (ABG) 402.20p -1.01% |
| European broker round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Abertis: AlphaValue upgrades to BUY from add and raises its price target to €13.20 from €12.90.
Air France-KLM: Natixis reiterates BUY rating with a price target of €9.
Banco Popular: AlphaValue downgrades to SELL from buy and lowers price target to €0.80 from €1.40.
Deutsche Telekom: AlphaValue downgrades to ADD from buy and lowers its price target to €9.70 from €11.
UK Event Calendar INTERIMS
Blinkx, Great Portland Estates, ICAP, Sainsbury (J), Speedy Hire, SSE
INTERIM DIVIDEND PAYMENT DATE
Centrica, Scisys, Standard Life
INTERIM EX-DIVIDEND DATE
Braemar Shipping Services, Cable & Wireless Communications, Charles Stanley Group, DCC, First Derivatives, Home Retail Group, Marks & Spencer Group, Panther Securities, Wynnstay Properties
QUARTERLY EX-DIVIDEND DATE
F&C Commercial Property Trust Ltd., GlaxoSmithKline, Henderson International Income Trust, M Winkworth, MedicX Fund Ltd., Royal Dutch Shell 'A', Royal Dutch Shell 'B'
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Inventories (US) (13:30)
FOMC Interest Rate Minutes (US) (19:00)
Industrial Production (EU) (10:00)
Manufacturing Inventories (US) (15:00)
MBA Mortgage Applications (US) (12:00)
Producer Price Index (US) (13:30)
Retail Sales (US) (13:45)
Retail Sales Inventories (US) (15:15)
Q3
Elringklinger AG, New Europe Property Investments, New World Resources A Shares
IMSS
Cape, Kier Group, Serco Group, SIG, Tullow Oil
SPECIAL EX-DIVIDEND PAYMENT DATE
Ryanair Holdings
EGMS
Dragon-Ukrainian Properties & Development, VietNam Holding Ltd
AGMS
Alternative Asset Opportunities PCC Ltd Red Ptg Prf Shs, Barratt Developments, Centaur Media, Henderson EuroTrust, IRP Property Investments Ltd., Oilex Ltd., Qatar Investment Fund
TRADING ANNOUNCEMENTS
Safestore Holdings
UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
BoE Inflation Report (09:30)
Claimant Count Rate (09:30)
Unemployment Rate (09:30)
FINAL EX-DIVIDEND DATE
Air Partner, Downing Absolute Income VCT 1, Downing Absolute Income VCT 1 'C' Shares , Edinburgh Dragon Trust, Fidelity Special Values, Henderson Fledgling Trust , Inland Homes, JPMorgan Smaller Companies Inv Trust, Lok'n Store Group, Petmin Ltd. (DI), Tristel, World Careers Network |
| US Market Report | Stocks fall as 'fiscal cliff' draws closer
Market movers
Dow Jones: 12,756 (-0.46%)
Nasdaq: 2,884 (-0.70%)
S&P 500: 1,375 (-0.36%) After a strong start on the back of strong earnings from Home Depot, US stock markets sunk into the red by the close as concerns about the dreaded 'fiscal cliff' dampened the mood.
The ‘cliff’ refers to a number of laws that, if unchanged, would result in over $600bn of automatic tax increases and spending cuts starting in January. President Barack Obama is set to meet with Congress this week to discuss plans to avert the automatic change in laws.
According to November’s fund manager survey by Bank of America Merrill Lynch released today, while there is growing optimism for the global outlook, some 54% of those polled see the US fiscal cliff as the biggest tail risk for the global economy, up from 42% in October.
Markets were also caution as the Greek debt crisis continues to drag on. After a Eurogroup meeting yesterday, Chairman Jean-Claude Juncker stated that Greece’s deadline to bring debt down to 120% of gross domestic product by 2020 would be extended to 2022. However, the decision to give the go-ahead on the next €31.5bn of aid was postponed until another meeting next week, just as a €5bn bond repayment is due this Friday.
Meanwhile, the Germany ZEW economic sentiment index worsened to -15.7 in November, from -11.5 the month before. Analysts were expected a slight improvement to -10.0. Home Depot builds on profits Home improvement retailer Home Depot jumped after topping analysts' estimates in the third quarter and saying that it hopes this signals the start of a comeback in the housing market.
The company reported quarterly earnings per share (EPS) of 74 cents after excluding a charge for closing stores in China, beating the market consensus estimate of 70 cents. Revenue rose by 4.6% to $18.13bn, also topping a consensus estimate of $17.92bn.
Retail peer TJX Companies also gained after beating forecasts in the third quarter with a 14% increase in profits.
Tech giant Microsoft dropped after announcing the surprise departure of its President Steven Sinofsky, the man who was expected to be the company's next Chief Executive Officer. Sector peers Intel and Hewlett-Packard were also out of favour today. AK Steel slid after the company forecast a wider-than-anticipated fourth-quarter loss due to an expected decline in prices. S&P 500 - Risers
Advanced Micro Devices Inc. (AMD) $2.09 +5.03% Home Depot Inc. (HD) $63.38 +3.63% Southwestern Energy Co. (SWN) $35.10 +3.36% Micron Technology Inc. (MU) $5.74 +3.14% Mead Johnson Nutrition Co. (MJN) $67.70 +2.81% Monster Beverage Corp (MNST) $46.39 +2.72% TJX Companies Inc. (TJX) $42.06 +2.66% Sealed Air Corp. (SEE) $17.20 +2.56% Ross Stores Inc. (ROST) $56.58 +2.52% Masco Corp. (MAS) $15.47 +2.38% S&P 500 - Fallers
Big Lots Inc. (BIG) $27.48 -4.95% Allegheny Technologies Inc. (ATI) $27.07 -4.31% First Solar Inc. (FSLR) $24.38 -4.13% Microsoft Corp. (MSFT) $27.09 -4.01% Alpha Natural Res (ANR) $7.58 -3.68% Janus acCapital Group Inc. (JNS) $7.97 -3.28% KLA-Tencor Corp. (KLAC) $46.07 -3.21% J.C. Penney Co. Inc. (JCP) $17.40 -3.17% Goodyear Tire & Rubber Co. (GT) $11.29 -2.76% Exelon Corp. (EXC) $29.94 -2.70% Dow Jones I.A - Risers
Home Depot Inc. (HD) $63.38 +3.63% Walt Disney Co. (DIS) $47.96 +1.07% AT&T Inc. (T) $33.95 +0.24% Coca-Cola Co. (KO) $36.16 +0.22% United Technologies Corp. (UTX) $77.00 +0.06% Dow Jones I.A - Fallers
Microsoft Corp. (MSFT) $27.09 -4.01% Intel Corp. (INTC) $20.28 -2.34% Caterpillar Inc. (CAT) $83.26 -2.25% Hewlett-Packard Co. (HPQ) $13.14 -2.01% Alcoa Inc. (AA) $8.31 -1.42% American Express Co. (AXP) $54.74 -1.40% JP Morgan Chase & Co. (JPM) $40.04 -1.33% General Electric Co. (GE) $20.68 -1.01% Exxon Mobil Corp. (XOM) $86.47 -0.97% Wal-Mart Stores Inc. (WMT) $71.81 -0.92% |
| Wednesday newspaper round-up | BRICS, Anglo American, British American The catch-up boom in China, India, Brazil is largely over and will be followed by a drastic slowdown over the next decade, according to a grim report by America’s top forecasting body. Europe's prognosis is even worse, with France trapped in depression with near zero growth as far as 2025 and Britain struggling to raise its speed limit to 1 per cent over the next three Parliaments. The US Conference Board’s global economic outlook calls into question the "BRICs" miracle (Brazil, Russia, India, China), arguing that the low-hanging fruit from cheap labour and imported technology has already been picked. China’s double-digit expansion rates will soon be a romantic memory. Growth will fall to 6.9 per cent next year, then to 5.5 per cent from 2014-2018, and 3.7 per cent from 2019-2025 as the aging crisis hits and investment returns go into "rapid decline," The Telegraph reports.
The UK Government may have to hand back as much as £5bn to £7bn in taxes to major UK-based companies after a European court found HM Revenue & Customs had breached EU rules. The judgment, handed down on Tuesday, threatens to open the floodgates for businesses to claim refunds that go back as far as 1973 and comes despite mounting public furore over tax avoidance by multinational companies. However, rather than seeing money returned, the ruling by the European Court of Justice means that HMRC now faces paying out billions of pounds to companies. British American Tobacco, along with other litigants thought to include BA’s pension fund scheme, have been fighting a class action lawsuit against HMRC both in the UK and in Europe since 2006. The claimants – which are headquartered in the UK – say they have been taxed unfairly by HMRC for decades, The Telegraph says.
Anglo American, the mining company hit by the resignation of its chief executive and continuing wildcat strikes at its South African operations, said costs at a large iron ore project in Brazil would be $2bn higher than expected. Shares in the company fell by 3.15 per cent to close at £17.70 on Tuesday, after Anglo American confirmed it now expected capital expenditure at its Minas-Rio development to exceed $8bn. The company’s shares have lost over a quarter of their value since the start of the year. The company said its board had commissioned an external report into the causes of the cost overrun and delays at the project. Poor progress there has long been seen as a blot on Anglo’s plans to lower its cost of production, The Financial Times explains.
Workers angry over austerity cuts and tax rises have launched a Europe-wide string of rallies and strikes on Wednesday, shutting transport, grounding flights and closing schools. General strikes in Spain and Portugal will spearhead a "European Day of Action and Solidarity" called by unions in the region. Unions in Greece and Italy also planned work stoppages and demonstrations against austerity policies, which labour leaders blame for prolonging and worsening the continent's economic crisis. For Spain, the Eurozone's fourth-largest economy where one in four workers is unemployed in a deep recession, it is the second general strike in eight months in protest against draconian budget cuts. Spain's main CCOO and UGT unions have urged people to rally under slogans such as "They are taking away our future!", deploying pickets during the night at airports, bus and railway stations, according to The Telegraph.
Millions of people fleeing violence in Syria will be left to face winter alone after aid agencies admitted that it was becoming too dangerous to provide relief across many parts of the country. The UN’s refugee agency (UNHCR) now expects that more than four million Syrians will be in need of emergency aid by next year. But the worsening crisis is forcing international non-governmental organisations (NGOs) to abandon thousands of desperate families, as more and more of the war-torn country becomes a no-go zone for aid-workers, The Times says.
The troublesome Russian oligarch partners of BP have bent, finally, to the will of the Kremlin and made peace with the British oil group. The four billionaires who make up the AAR consortium have called off their long-running $10bn legal action against BP over their TNK-BP joint venture. It is understood that BP paid $325m to the oligarchs in return for settling all outstanding disputes. AAR launched the action last year, claiming that BP had broken their shareholder agreement by excluding the joint venture from the British company’s proposed alliance with the Kremlin-controlled group Rosneft. AAR secured an injunction in the High Court blocking the alliance but claimed that TNK-BP had lost billions of dollars of future revenue by being denied the opportunity, The Times reports. |
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