London open: Stocks slip as France downgraded
Market Movers
- techMARK 2,046.66 -0.17%
- FTSE 100 5,720.05 -0.31%
- FTSE 250 11,756.51 +0.10%
With another European nation losing its prized 'AAA' rating last night, UK stocks edged into negative territory on Tuesday morning as Eurozone concerns came back into focus ahead of an extraordinary Eurogroup meeting on Greece.
Investors are losing options to safeguard their funds in the highest investment-grade assets after Moody's decided to strip France of its triple-A rating. The US rating agency has downgraded France by one notch to 'Aa1' while keeping a negative outlook, which signals that the country is susceptible to future downgrades.
"The first driver underlying Moody's one-notch downgrade of France's sovereign rating is the risk to economic growth, and therefore to the government's finances, posed by the country's persistent structural economic challenges," Moody's said.
Markus Huber, the head of German HNW trading at ETX Capital said this morning: "While the move by Moody's doesn't necessarily comes as a surprise considered that not only has the European financial crisis still not been fully contained and French growth and finances have been weakening over the last few quarters, it certainly sends an important reminder that not only Greece and Spain are struggling with high debt levels and excessive budget deficits but also that France has much work left to do to balance their books.
"Furthermore this also means that the honeymoon period for French President Hollande has certainly come to an end," he said.
Meanwhile, Eurozone finance ministers are meeting today in Brussels to discuss whether of not to release the next tranche of aid for Greece. However, Marianne Kothe, spokesperson for Germany's Finance Ministry, told the German press yesterday that a decision on the next part of the bailout should not be expected today.
The FTSE 100 surged 2.36% yesterday on the back of optimism that US politicians can agree on ways to avert the 'fiscal cliff'. President Barack Obama said at the weekend that he is confident that the US "can get our fiscal situation dealt with." Banks fall on FSA worries
Banking stocks including Barclays, HSBC and Lloyds were out of favour this morning 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.
Real estate investment trust British Land gained after seeing a solid increase in underlying profits in the first half, as it continued to outperform its benchmark of property returns, the IPD. Meanwhile, the firm announced that its Chairman of six years, Chris Gibson-Smith, would be stepping down at the end of 2012.
easyJet was flying high after delivering forecast-beating record profits boosted by higher margins and increased passenger numbers.
LED manufacturer Dialight rose after saying that it has received a major order from an unnamed US power plant operator for over 1,000 LED lighting fixtures.
ZYTIGA, the prostate cancer treatment drug developed by specialist healthcare company BTG, has been approved by the European Medicines Agency (EMA), the firm announced, prompting shares to rise.
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, with shares up early on.
Safety, health and environmental technology group Halma fell despite increasing its interim dividend payment from 3.79p to 4.06p per share. The company delivered a 6% rise in both revenue and profit.
| UK Event Calendar | Tuesday November 20
INTERIMS
Accumuli , Big Yellow Group, British Land Co, CML Microsystems, Eckoh, Energy Assets Group, Halma, Heath (Samuel) & Sons, Homeserve, Mckay Securities, Renold, Schroder Real Estate Investment Trust Ltd, Telecom Plus, Vectura Group
INTERIM DIVIDEND PAYMENT DATE
Capital Shopping Centres Group
QUARTERLY PAYMENT DATE
Caterpillar Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ABC Consumer Confidence (US) (22:00)
Building Permits (US) (13:30)
Housing Starts (US) (13:30)
Producer Price Index (GER) (07:00)
Q2
Big Yellow Group, British Land Co, Optos
FINALS
easyJet, Enterprise Inns, Paragon Group Of Companies
ANNUAL REPORT
World Careers Network
EGMS
Experian, Plaza Centers NV
AGMS
Advance Frontier Markets Fund Ltd, Black Mountain Resources Ltd, Smiths Group
FINAL DIVIDEND PAYMENT DATE
Henderson EuroTrust, Ricardo |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European stocks are seen opening marginally lower on Tuesday following the previous session's rally. Asian markets are trading mostly higher, supported by better-than-expected economic reports on the U.S. housing market and optimism over the resolution of the U.S. fiscal crisis, while commodities are edging lower on a weaker euro after Moody's Investors Service downgraded France's top-notch credit rating, rekindling worries about Europe's debt crisis.
Moody's stripped France of its coveted triple A rating with a one notch downgrade, citing the nation's uncertain fiscal outlook because of deteriorating economic prospects and its high exposure to peripheral euro zone economies. The government bond rating on the Eurozone's second largest economy was cut to 'Aa1' from 'Aaa', while the rating outlook was maintained at 'negative.'
Meanwhile, investors await a final verdict on the issuance of the next tranche of aid to Greece as Eurozone finance ministers conduct another round of talks in Brussels today, seeking a plan to bridge a financing gap created by a two-year extension of Greece's bailout program. The finance ministers of the 17 euro area nations will also discuss how to restore Greek debt sustainability by 2020, as this is crucial in restoring investor's faith in the single currency.
Key data to watch out in the U.S. later today includes a report on housing starts for October, while Federal Reserve Chairman Ben Bernanke is due to speak to the Economic Club of New York on economic recovery and the monetary policy.
Elsewhere in Asia, Japan's Nikkei index is weakening slightly on profit taking following recent sharp gains after the Bank of Japan kept its monetary policy steady, as widely expected by analysts. China's Shanghai Composite index is losing 0.4 percent after data showed foreign direct investment into the country fell for the 11th time in 12 months in October. FDI inflows fell 0.2 percent in October from a year earlier to $8.31 billion after plunging 6.8 percent in September, according to figures released by the Ministry of Commerce.
Key benchmark indexes in Australia, Hong Kong, New Zealand, Singapore and South Korea are up between 0.4 percent and 0.8 percent.
In domestic corporate news, Fiat Industrial SpA said it has offered an additional cash dividend to sweeten its offer for CNH Global N.V. shares not held by it.
German optics firm Fielmann AG said its founder, principal shareholder and Chief Executive Officer Guenther Fielmann would transfer 24.52 percent of the shares in the company to the Fielmann Family Foundation, as part of his succession plans.
ING Groep NV has agreed to sell its investment management business in Thailand to UOB Asset Management for 10 million euros.
Credit Suisse announced changes in its organizational structure and to its executive board, effective November 30.
European stocks rebounded from a three-session losing streak on Monday, as investors welcomed signs of progress in resolving the U.S. fiscal cliff and reports of agreement on a delayed bailout payment for Greece. The Euro Stoxx 50 index of Eurozone bluechip stocks jumped 2.8 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, added 2.3 percent, while key benchmark indexes in Switzerland, the U.K., Germany and France rose between 1 percent and 1.7 percent.
U.S. stocks rose sharply overnight, as investors cheered news of a constructing meeting on the looming fiscal cliff, stronger-than-expected earnings from Lowe's and a pair of upbeat reports on the housing market. The Dow rallied 1.7 percent, the tech-heavy Nasdaq soared 2.2 percent and the S&P 500 jumped 2 percent. |
| US Market Report | US close: World Bank makes plea for action against climate change
-World Bank makes plea for action against devastating climate change risks
-Ex-Mossad head asks for Israeli flexibility on Gaza -FT
-US should engage China in the Middle East -FT
-US home inventories at February 2006 lows
-NAHB housing index rises far above forecasts
-Wal Mart brings forward dividend payments
Dow Jones Industrials: 1.65%
Nasdaq Comp.: 2.21%
S&P 500: 1.99%
The main US equity market averages finished the first session of the holiday shortened (and trading volume light) week with their largest gain in two months. That on the back of remarks by President Obama, last night, regarding his optimism over on-going debt talks with Republicans in both the House and the Senate.
Speaking at a press conference in Bangkok Obama said, "I am confident we can get our fiscal situation dealt with."
Also helping gains in stocks along were the better than expected housing figures released this afternoon showing home inventories at half-decade lows, along with double digit price increases versus a year ago.
"Rising home prices have already resulted in a $760bn growth in home equity during the past year," the National Association of Realtors' (NARs) chief economist, Lawrence Yun, said today following the release of better than expected data. "Given that each percentage point of price appreciation translates into an additional $190bn in home equity, we could see close to a $1trn gain next year," he added.
Similarly, the news-flow coming out of the Eurozone took a turn for the better over the weekend.
Of interest, the combination of falling stocks and rising profits as the economy recovers has left the S&P 500's price-earnings ratio below the ending level of eight of the nine bull markets since 1962 and beneath the average of any since Ronald Reagan was in power, Bloomberg is reporting.
Acting as a backdrop, but potentially of far more importance than all of the above, observers are carefully watching events in the Middle East. Some reports seemed to indicate that a break-through could be close at hand.
Turkey's Prime Minister, on the other hand, labeled Israel a "terrorist state."
The European Union meanwhile upheld Israel's right to self defence, while at the same time calling for an immediate cease-fire in the Gaza violence and calling on Israel to react "proportionately." Wal Mart brings forward dividend payments
Meantime, and in stock specific news, Intel Chief Executive Officer Paul Otellini announced his departure.
Of interest as well, Wal Mart brought forward the date of its next regular dividend to the next 27th of December, instead of January 2nd, so as to avoid the new legislation governing the taxation of company pay-outs of their profits.
Shares of meat processor Tyson Foods rose sharply after the company announced a special dividend and posted fiscal fourth-quarter earnings which beat analysts' estimates.
Cisco Systems will acquire Meraki for $1.2bn.
The latest quarterly results out from home improvement retailer Lowe's also came in ahead of analysts' consensus forecasts, on the back of strong demand for its wares in the aftermath of hurricane Sandy.
Analysts at Bank of America Merrill Lynch lowered their price target on shares of Apple to $780 from $840 before, albeit while maintaining their view on the company's shares at buy.
From a sector stand-point the best performance was to be seen in the following sectors: Computer hardware (6.41%), Footwear (4.08%) and Technology (4%).
Better than expected economic figures
Existing home sales increased by 2.1% month-on-month in October, to an annualized rate of 4.79m (Consensus: 4.75m). The previous month's reading was revised down to 4.69m from a preliminary reading go 4.75m. Worth noting, inventories of homes for sale fell to February 2006 lows.
The NAHB's housing market index for the month of November improved to the 46 point level, from 41 in the month before (Consensus: 41). Economists at Barclays Research were of the following opinion: "Home builder sentiment has been moving higher throughout the recent housing recovery and we expect this trend to continue." Large rise in energy quotes
Front month West Texas crude futures are rising by 2.55% to the $89.14 barrel mark on the NYMEX.
10 year US Treasury yields are now 3 basis points higher, at 1.61%.
S&P 500 - Risers
Tyson Foods Inc. (TSN) $18.72 +10.90%
Apple Inc. (AAPL) $565.73 +7.21%
Abercrombie & Fitch Co. (ANF) $43.80 +7.17%
Alpha Natural Res (ANR) $7.57 +6.62%
Lowe's Companies Inc. (LOW) $33.96 +6.19%
Urban Outfitters Inc. (URBN) $37.07 +5.76%
United States Steel Corp. (X) $21.15 +5.43%
Phillips 66 Common Stock (PSX) $48.12 +5.13%
Chesapeake Energy Corp. (CHK) $17.47 +5.11%
Electronic Arts Inc. (EA) $13.71 +5.06%
S&P 500 - Fallers
Progressive Corp. (PGR) $21.47 -4.79%
Assurant Inc. (AIZ) $34.61 -2.67%
SCANA Corp. (SCG) $45.60 -1.08%
Centerpoint Energy Inc. (CNP) $19.38 -1.02%
Ameren Corp. (AEE) $29.08 -0.95%
Cablevision Systems Corp. (CVC) $13.90 -0.86%
Edwards Lifesciences Corp. (EW) $85.03 -0.83%
VeriSign Inc. (VRSN) $40.61 -0.76%
Teradata Corp. (TDC) $61.97 -0.75%
Edison International (EIX) $44.13 -0.74%
Dow Jones I.A - Risers
Bank of America Corp. (BAC) $9.49 +4.06%
Hewlett-Packard Co. (HPQ) $13.30 +3.50%
Verizon Communications Inc. (VZ) $42.81 +3.41%
JP Morgan Chase & Co. (JPM) $40.59 +2.68%
General Electric Co. (GE) $20.66 +2.53%
E.I. du Pont de Nemours and Co. (DD) $42.93 +2.34%
Caterpillar Inc. (CAT) $83.62 +2.06%
AT&T Inc. (T) $33.82 +2.05%
Alcoa Inc. (AA) $8.34 +1.96%
Home Depot Inc. (HD) $63.33 +1.95%
Dow Jones I.A - Fallers
Nasdaq 100 - Risers
Green Mountain Coffee Roasters Inc. (GMCR) $27.33 +11.32%
Apple Inc. (AAPL) $565.73 +7.21%
Nuance Communications Inc. (NUAN) $21.57 +6.00%
Electronic Arts Inc. (EA) $13.71 +5.06%
Randgold Resources Ltd. Ads (GOLD) $106.73 +4.87%
Flextronics International Ltd. (FLEX) $5.80 +4.69%
Research in Motion Ltd. (RIMM) $9.59 +4.24%
Dollar Tree Stores Inc. (DLTR) $40.45 +4.20%
Staples Inc. (SPLS) $12.20 +4.05%
Marvell Technology Group Ltd. (MRVL) $7.70 +3.99%
Nasdaq 100 - Fallers
VeriSign Inc. (VRSN) $40.61 -0.76%
Akamai Technologies Inc. (AKAM) $35.87 -0.64%
Intuit Inc. (INTU) $58.95 -0.56%
Monster Beverage Corp (MNST) $45.23 -0.53%
Autodesk Inc. (ADSK) $31.32 -0.51%
Sandisk Corp. (SNDK) $39.30 -0.41%
Baidu Inc. (BIDU) $92.42 -0.28%
Stericycle Inc. (SRCL) $89.90 -0.19%
KLA-Tencor Corp. (KLAC) $44.25 -0.18%
Seagate Technology Plc (STX) $27.09 -0.07% |
| FX and Commodities round-up | FX round-up: Safe haven flows dwindle on cliff hopes
The dollar fell against major currencies on Monday on hopes that the so-called US fiscal cliff will be averted.
US lawmakers indicated that they were optimistic about negotiations to avert $600bn in tax increases and spending cuts due to kick in at the start of 2013.
Meanwhile president Barack Obama said he was, "confident we can get our fiscal situation dealt with."
The dollar index, which measures the US currency against a basket of six major currencies, fell to 80.853 from 81.287 on Friday.
The euro bounced to its highest level against the dollar in almost two weeks on fresh optimism that Greece would receive its bailout package.
The single currency hit a high of $1.2819 before later changing hands at around $1.2805.
Risk appetite and equities on Wall Street were boosted by better than expected US housing data. Sales of previously owned homes rose in October to an annual rate of 4.79m, according to the National Association of Realtors.
Against the yen, the greenback climbed to ¥81.38 from ¥81.18 on Friday as safe haven demand faded.
Sterling bought $1.5913 compared to $1.5883 the previous session. Commodities: Mideast tensions lift oil prices
Crude oil prices rose to a one-month high on Monday as violence between Israel and Palestinian militants enter its seventh day.
Israeli prime minister Benjamin Netanyahu said his army is prepared to significantly expand its offensive into Gaza. On Monday Israeli air strikes hit populated areas of the Gaza Strip killing a leading figure in the militant group Islamic Jihad. The Palestinian death toll is though to be over 100. Meanwhile Hamas fighters fired almost 70 rockets at Israel.
Israeli leaders met late Monday to discuss Egyptian proposals to settle the conflict and further talks are expected to be held in Cairo on Tuesday. While Israel and Palestinian are not oil rich nations, there is concern that the conflict could spread into neighbouring countries such as Iran.
Analysts said there is concern about the potential closure of the Strait of Hormuz of which a fifth of the world's oil flows through.
Crude for January delivery rose $2.36 to $89.28 a barrel on the New York Mercantile Exchange, the best closing price since October 19th.
Meanwhile on the ICE futures exchange Brent crude advanced $2.38 at $111.33 a barrel.
Among precious metals gold futures beefed up almost $20 an ounce on Monday as focus remained on the US 'fiscal cliff' and conflict in the Middle East.
Gold for December delivery added $19.70 to settle at $1,734.40 an ounce on the Comex division of the New York Mercantile Exchange.
December silver climbed 82 cents to close at $33.19 an ounce. December palladium rose $18.85 to $645.30 an ounce while January platinum tacked on $22 to $1,583.80 an ounce. |
|
No comments:
Post a Comment