London open: Stocks flat ahead of US budget talks
Market Movers
- techMARK 2,044.20 +0.12%
- FTSE 100 5,681.81 +0.07%
- FTSE 250 11,681.73 -0.02%
The UK benchmark index opened flat on Friday morning as investors turn to the US where President Barack Obama is to hold budget talks in Congress to discuss the impending 'fiscal cliff'.
The Footsie finished yesterday's session at 5,678, its lowest closing value since September 5th when it finished at 5,658.
Obama is meeting with Democratic and Republican congressional leaders today to initiate discussions over a deal that would negotiate a reduction to the deficit in a bid to avoid the so-called US 'fiscal cliff'. Lawmakes must come to an agreement in order to avoid $607bn in spending cuts and tax increases that, if not changed, will take effect on January 1st.
Acting as a backdrop, 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.
"European equities are trading little changed this morning being supported by a late rally in the US yesterday evening and firmer markets across Asia on hopes that a likely change in government in Japan will herald more economic and aggressive stimulus in 2013," said Markus Huber, the head of German HNW trading at ETX Capital. FTSE 100: Melrose sinks; Reckitt announces Schiff offer
A red flag has been raised at industrial turnaround specialist Melrose, with the group 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. Shares dropped nearly 14% early on.
Consumer goods giant Reckitt Benckiser fell after it launched a $1.4bn (£882m) counterbid for US nutrition specialist Schiff Nutrition International, with the tender offer beginning today.
Banking peers RBS and Lloyds were making slight gains this morning. 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".
Oil titan BP was subdued as investors digested yesterday's late announcement that it has resolved all criminal claims with the Department of Justice in relation to the Gulf of Mexico oil spill disaster in 2010 and will pay the US government $4bn in installments over the next five years. It is also paying the Securities and Exchange Commission $525m over a three-year period.
Rolls-Royce, the global power systems company, was in demand after winning an order to design and equip two platform supply vessels being built by Jiangsu Eastern Heavy Industries in China.
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.
Mining giant Anglo American rose after announcing that its heavy building materials producing unit Tarmac and French cement group Lafarge are to sell a portfolio of UK construction material operations to steel tycoon Lakshmi Mittal for £272m.
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Stocks Seen Largely Unchanged
European stocks may open narrowly mixed on Friday as investors adopt a cautious approach on the eve of U.S. budget talks beginning today. The Middle-East geo-political tensions and renewed sovereign concerns about Greece and Spain may also keep investor sentiment subdued ahead of the weekend, while rising expectations of additional monetary easing by the Bank of Japan could help limit the downside to some extent.
Technology stocks could be in focus after computer maker Dell posted a 47 percent fall in its third-quarter profit and forecast a fourth straight quarter of declining sales, hurt by deteriorating performance in the personal computer industry and the challenging global macro-economic environment.
Asian markets are turning in a mixed performance reflecting lingering concerns about the looming fiscal cliff as well as worries about the flare-up of violence in the Gaza Strip. However, Japan's Nikkei index is climbing 2.2 percent, extending the previous session's 2 percent rally on expectations of further BOJ easing as Prime Minister Yoshihiko Noda decided to officially dissolve the House of Representatives at the plenary session during the routine Cabinet meeting. Noda will hold a press conference in the evening to explain the dissolution, the Xinhua news agency reported.
Meanwhile, the Japanese government today downgraded its economic assessment for the fourth straight month after official figures showed the gross domestic product contracted in the September quarter. Elsewhere, Singapore cut its growth forecast this year to around 1.5 percent, the lower end of the target range, reflecting weak external demand.
In economic releases, Eurostat is slated to release foreign trade data for September later in the session, with economists expecting Eurozone trade surplus to rise to EUR 10 billion from EUR 6.6 billion in August.
Across the Atlantic, the Federal Reserve is due to release its report on industrial production for October before the start of trading, although the data may be viewed as old news in light of Hurricane Sandy. President Barack Obama and Congressional leaders will begin budget negotiations today amid growing fears the United States may fall back into recession if a deal is not reached to avoid the fiscal cliff.
In corporate news, U.K. consumer and healthcare company Reckitt Benckiser Group Plc announced that it would commence a tender offer to acquire all of the outstanding shares of Schiff Nutrition International Inc., a provider of branded vitamins, nutrition supplements and nutrition bars in the United States and elsewhere, for $42.00 per share in cash valuing Schiff at about $1.4 billion.
Global miner BP Plc said it would 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.
Drug maker GlaxoSmithKline Plc has agreed to pay several states in the U.S. a total of $90 million to settle claims it used illegal means to promote its erstwhile block buster diabetes drug Avandia.
European stocks finished to the downside on Thursday, taking cues from Wall Street and weak economic data showing the euro-zone economy slipped into recession despite modest growth reported in both Germany and France. The Euro Stoxx 50 index of eurozone bluechip stocks fell half a percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.9 percent, while around Europe, key benchmark indexes in France, the U.K., Germany and Switzerland fell between half a percent and 1.5 percent.
U.S. stocks extended their recent declines overnight, as Wal-Mart posted disappointing quarterly sales and traders digested a batch of weak economic data on jobless claims and regional manufacturing activity, with readings obscured by major disruptions caused by Hurricane Sandy. The Dow and the tech-heavy Nasdaq slid 0.2 percent and 0.4 percent, respectively, to close at their lowest levels since June, while the S&P 500 edged down 0.2 percent to hit a three-month low. | | US Market Report | US close: Stocks drop despite gains in last hour of trading
Dow 12,542 -29
Nasdaq 2,837 -10
S&P 500 1,353 -2 US markets ended the day lower on Thursday, as investors digested the economic impact of Hurricane Sandy, although did regain some of the day's earlier losses in the final hour.
Investors are also feeling the pressure of the looming so-called 'fiscal cliff', a series of tax increases and cuts to spending that are currently due to take effect on January 1st in the US, unless the White House and Congress can come to an agreement to avoid them.
The President is meeting with Democratic and Republican congressional leaders to initiate discussions over a deal that would negotiate a reduction to the deficit.
Acting as a backdrop to Thursday's trading, "market chatter" seemed to be calling attention to President Obama's stance, Wednesday, as regards to the need for the highest income earners to pay more taxes and that simply removing tax loop-holes – as Republicans proposed - will not suffice. Also worth mentioning, some observers believe that a rift may be developing between Republicans in the House and those in the Senate.
On the corporate front, and within the retail sector, the globe's largest retailer by sales, Wal-Mart, has dampened profit expectations for the fourth quarter in anticipation of a Christmas pricing war.
The retailer guided to fourth quarter earnings of 153 to 158 cents a share, just below the median consensus forecasts of 159 cents.
Dollar Tree, which sells a rag-bag collection of goods for a dollar or less, looks to be doing better than Wal-Mart, as its third quarter earnings per share of $2.70 beat market expectations of $2.48.
Shares of Target gained after the second largest US discount retailer said third quarter profit rose by 15%.
Data storage specialist NetApp was riding the wave of the surge in popularity of cloud computing. It topped analyst expectations of earnings per share (EPS) of 48 cents with underlying EPS of 51 cents.
Integrated oil giant BP was in focus after it confirmed it is close to a deal with the US Department of Justice and the Securities & Exchange Commission regarding proposed resolutions of all US federal government criminal and SEC claims against BP in connection with the Deepwater Horizon incident.
Reuters news agency suggested that BP's fine could prove the largest in US corporate history; the unwanted record for the largest fine is held by drugs firm Pfizer, which paid a $1.3bn fine in 2009 in relation to marketing fraud charges. Sandy leaves its mark
First-time jobless claims last week jumped 78,000 to 439,000, which was the largest weekly gain since April 2011. "The positive effect may persist for a couple of weeks further, given prolonged power outages and closures in some areas, but ultimately will prove temporary, and we would expect claims to fall back in time and resume the broadly sideways trend evident prior to the hurricane," Barclays said.
Meanwhile, consumer prices rose 0.1% month-on-month in October after advancing 0.6% in September. The rise was in line with market expectations.
The core measure, which strips out items such as food and energy, where prices are more volatile, rose by 0.2%, more than expected, as rents and clothing costs picked up faster than expected.
The Federal Reserve Bank of Philadelphia's manufacturing sector survey for the month of November has come in at -10.7 points, after a reading of 5.7 for the previous month, following "the disruptive effects of Hurricane Sandy." That as the gauge for inventories dropped sharply but the prices paid sub-index increased significantly. The consensus estimate had been for a reading of 3.
Another large drop in crude futures
The December contract for crude oil dropped 87 cents to settle at $85.45 per barrel on the New York Mercantile Exchange.
S&P 500 - Risers
NetApp Inc. (NTAP) $30.18 +11.27%
Helmerich & Payne Inc. (HP) $48.85 +6.06%
Lexmark International Inc. (LXK) $23.32 +5.42%
R.R. Donnelley & Sons Co. (RRD) $9.46 +5.35%
Dollar Tree Stores Inc. (DLTR) $39.70 +5.14%
GameStop Corp. (GME) $24.50 +4.34%
Cameron International Corp. (CAM) $52.63 +3.58%
Staples Inc. (SPLS) $11.92 +3.25%
Metropcs Communications Inc. (PCS) $10.45 +2.75%
TripAdvisor Inc. (TRIP) $36.60 +2.69%
S&P 500 - Fallers
Dun & Bradstreet Corp. (DNB) $73.20 -9.42%
Discover Financial Services (DFS) $38.32 -4.15%
Urban Outfitters Inc. (URBN) $34.82 -3.84%
CONSOL Energy Inc. (CNX) $31.14 -3.77%
Juniper Networks Inc. (JNPR) $16.90 -3.70%
Wal-Mart Stores Inc. (WMT) $68.72 -3.63%
Masco Corp. (MAS) $14.41 -3.22%
Advanced Micro Devices Inc. (AMD) $1.87 -3.11%
Chesapeake Energy Corp. (CHK) $16.39 -2.73%
KLA-Tencor Corp. (KLAC) $43.97 -2.57%
Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $17.94 +1.59%
Coca-Cola Co. (KO) $36.43 +1.17%
Bank of America Corp. (BAC) $9.09 +1.11%
3M Co. (MMM) $88.02 +0.81%
Walt Disney Co. (DIS) $47.47 +0.64%
Travelers Company Inc. (TRV) $68.32 +0.37%
Intel Corp. (INTC) $20.03 +0.35%
United Technologies Corp. (UTX) $74.84 +0.25%
JP Morgan Chase & Co. (JPM) $39.39 +0.25%
General Electric Co. (GE) $20.06 +0.25%
Dow Jones I.A - Fallers
Wal-Mart Stores Inc. (WMT) $68.72 -3.63%
Verizon Communications Inc. (VZ) $41.70 -1.28%
AT&T Inc. (T) $33.42 -1.07%
Chevron Corp. (CVX) $101.52 -0.96%
Alcoa Inc. (AA) $8.06 -0.86%
McDonald's Corp. (MCD) $84.06 -0.66%
Pfizer Inc. (PFE) $23.66 -0.63%
Merck & Co. Inc. (MRK) $42.80 -0.58%
Microsoft Corp. (MSFT) $26.70 -0.52%
Hewlett-Packard Co. (HPQ) $13.08 -0.42%
Nasdaq 100 - Risers
NetApp Inc. (NTAP) $30.18 +11.27%
Dollar Tree Stores Inc. (DLTR) $39.70 +5.14%
Research in Motion Ltd. (RIMM) $8.79 +3.53%
Staples Inc. (SPLS) $11.92 +3.25%
Garmin Ltd. (GRMN) $37.16 +2.88%
Viacom Inc. Class B (VIAB) $49.23 +2.58%
Apollo Group Inc. (APOL) $19.64 +2.45%
Akamai Technologies Inc. (AKAM) $36.24 +2.43%
Fossil Inc. (FOSL) $81.91 +2.43%
Electronic Arts Inc. (EA) $13.05 +2.35%
Nasdaq 100 - Fallers
Vertex Pharmaceuticals Inc. (VRTX) $40.64 -3.61%
KLA-Tencor Corp. (KLAC) $43.97 -2.57%
Xilinx Inc. (XLNX) $32.89 -2.34%
Avago Technologies Ltd. (AVGO) $32.26 -2.33%
Lam Research Corp. (LRCX) $34.62 -2.23%
Apple Inc. (AAPL) $525.62 -2.10%
Green Mountain Coffee Roasters Inc. (GMCR) $23.45 -2.05%
Sirius Satellite Radio Inc. (SIRI) $2.65 -1.85%
Altera Corp. (ALTR) $30.22 -1.79% |
| FX and Commodities round-up | FX round-up: Euro gains despite GDP reading
The Euro rose against the dollar on Thursday, despite the news the Eurozone's gross domestic product contracted at a 0.1 per cent quarter-on-quarter pace in the third quarter, in line with expectations.
However, the data masked large divergences between the Eurozone periphery and core countries, with the former registering much weaker than expected growth while the rates of expansion in the main countries surprised to the upside.
The single currency traded hands at $1.2793 last night, against $1.2739 the previous day.
The ICE dollar index, which measures the greenback against a basket of six other currencies, fell from 81.111 on Wednesday to 81.074 yesterday.
Meanwhile, the pound strengthed to buy $1.5855, compared to $1.5846 the prior day.
Also of note, the Japanese yen fell on reports that traders believe the currency is likely to remain under pressure ahead of the governmental elections due to take place in December. Commodities: Oil and gold futures both slump
Crude oil futures took a hit on Thursday fears surrounding the Eurozone continued to grow, and worries over the looming 'fiscal cliff' take center stage.
The December contract for crude oil dropped 87 cents to settle at $85.45 per barrel on the New York Mercantile Exchange.
The 'fiscal cliff' is a series of tax increases and cuts to spending that are currently due to take effect on January 1st in the US, unless the White House and Congress can come to an agreement to avoid them.
Also of concern is the news that the Eurozone's gross domestic product contracted at a 0.1% quarter-on-quarter pace in the third quarter, in line with what was expected. However, the data masked large divergences between the Eurozone periphery and core countries, with the former registering much weaker than expected growth while the rates of expansion in the main countries surprised to the upside.
Other energy commodities also dropped, with heating oil down 0.49% at $2.97 per gallon, natural gas 1.52% lower at $3.70, while unleaded gas bucked the trend to rise 0.64% to $2.70 per gallon.
In metals, gold futures declined after a report showed quarterly demand for the commodity has fallen. The December contract lost 0.94%, equal to $16.30, to settle at $1,713.80.
Silver also fell, down 0.63% to $32.67, as did platinum, which dropped 1.15% to end the day at $1,573.30.
Going against the tide, copper climbed 0.26% to finish at $3.46. |
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