Markets look to the ECB for a boost
Market Movers
techMARK 2,088.54 -0.30%
FTSE 100 5,723.51 +0.19%
FTSE 250 11,170.73 -0.14% Fed holds fire on further stimulus BoE and ECB decisions expected later today ECB expected to do 'whatever it takes' The Footsie rose moderately on Thursday morning in spite of the Federal Reserve disappointing US markets last night, as investors looked ahead to key policy decisions in the UK and Europe later on today. The Federal Reserve Open Market Committee yesterday decided to leave all its main policy settings unchanged, including most of the language employed in its post-meeting statement. While Fed Chairman Ben Bernanke noted that the recovery had lost momentum - leading to suggestions that more QE may be on the way - analyst Craig Erlam from Alpari said this morning: "Bernanke's comments appeared very similar to those of the previous meetings and with the Fed reaffirming their commitment to Operation Twist until the end of the year, I'd be surprised to see QE3 announced next month." Meanwhile, the Monetary Policy Committee (MPC) from the Bank of England (BoE) is due to make an announcement at midday and while the BoE hinted about a potential rate cut at the last meeting, it is widely expected to maintain the Bank Rate at 0.5% and its asset purchase programme at £375bn. "Although we expect the MPC to loosen policy further the current asset purchase plan is due to run until November, and we believe the MPC will wait until then before making any further changes," said analysts at Barclays Capital. However, the big event of the day will most likely be the European Central Bank's (ECB's) decision at lunchtime. Last week, ECB President Mario Draghi said that he was prepared to do do "whatever it takes to preserve the euro…and believe me, it will be big enough". "Today, ECB President Draghi will restate his commitment to intervening in the sovereign-debt market if needed. For the time being, however, the ECB will probably prefer other measures (involving EFSF money) being adopted," said analysts at UniCredit this morning in an e-mailed report. FTSE 100: Smith & Nephew on the up after ramping divi Medical devices specialist Smith & Nephew rose despite reporting a slight decline in second-quarter trading profit and revenue, as it whacked up its dividend, embarking on a progressive dividend policy on the back of the success of its recent restructuring.
Asset manager Schroders also gained after reporting an increase in assets under management over the first half; however, profits slipped year-on-year.
Heading the other way was temporary power and temperature control group Aggreko which said that underlying first-half revenues were affected by weakness in Europe, where growth is "patchy".
Also lower was defence contractor BAE Systems which is suffering from reduced military spending in both the US and UK, while a crucial fighter jet deal with Saudi Arabia has been hit by delays. First-half sales were down 11%.
RSA Insurance Group advanced after claiming a solid performance in a challenging environment in the first half of 2012, even though profits fell by more than a third. FTSE 250: SEGRO gains after first-half results, disposal Industrial property group SEGRO rose strongly after saying that pre-tax profits gained 5.3% in the first half despite net rental income falling by 3.4%. The firm also reported today that it has completed the sale of a portfolio of 10 non-core UK industrial estates for £110m.
Natural resources, land and property consultancy group RPS was in demand after revealing a slight increase in pre-tax profit during the second half and saying it remains on course to meet full year forecasts.
Communications technology firm Spirent Communications tanked after it cautioned that overall growth in the second half may reduce to mid- to low-single digit increase amid ongoing macro-economic uncertainty.
High-flying Ophir Energy disappointed the market, dropping 9%, as it revealed its gas discovery at the Papa-1 well off the coast of Tanzania is likely to contain lower recoverable resources than it had hoped for.
FTSE 100 - Risers
Smith & Nephew (SN.) 673.00p +2.05%
Schroders (SDR) 1,311.00p +1.47%
BP (BP.) 432.85p +1.12%
Randgold Resources Ltd. (RRS) 5,740.00p +1.06%
International Consolidated Airlines Group SA (CDI) (IAG) 164.10p +1.05%
British American Tobacco (BATS) 3,468.50p +0.83%
InterContinental Hotels Group (IHG) 1,595.00p +0.82%
Diageo (DGE) 1,751.50p +0.81%
Carnival (CCL) 2,194.00p +0.78%
Standard Chartered (STAN) 1,529.00p +0.76%
FTSE 100 - Fallers
Aggreko (AGK) 2,061.00p -2.78%
GKN (GKN) 206.80p -2.22%
BAE Systems (BA.) 307.00p -1.73%
Evraz (EVR) 234.70p -1.39%
Vedanta Resources (VED) 958.50p -1.24%
Anglo American (AAL) 1,897.50p -1.17%
Eurasian Natural Resources Corp. (ENRC) 384.60p -1.08%
IMI (IMI) 824.00p -1.08%
Ashmore Group (ASHM) 327.40p -1.00%
Lloyds Banking Group (LLOY) 30.40p -0.98%
FTSE 250 - Risers
SEGRO (SGRO) 237.50p +4.72%
Ruspetro (RPO) 152.20p +3.26%
RPS Group (RPS) 240.00p +1.95%
NMC Health (NMC) 199.80p +1.94%
FirstGroup (FGP) 234.50p +1.87%
Interserve (IRV) 326.70p +1.87%
TUI Travel (TT.) 186.50p +1.80%
Stagecoach Group (SGC) 291.70p +1.78%
Redrow (RDW) 128.20p +1.75%
Phoenix Group Holdings (DI) (PHNX) 488.00p +1.60%
FTSE 250 - Fallers
Spirent Communications (SPT) 140.10p -16.85%
Ophir Energy (OPHR) 529.00p -9.18%
Aquarius Platinum Ltd. (AQP) 35.12p -5.84%
JD Sports Fashion (JD.) 670.00p -2.19%
Man Group (EMG) 80.25p -2.13%
Hunting (HTG) 773.00p -1.78%
Fenner (FENR) 355.50p -1.66%
Chemring Group (CHG) 288.60p -1.64%
Petropavlovsk (POG) 414.20p -1.59%
Beazley (BEZ) 154.80p -1.53%
| FX round-up |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Dollar perks up after Fed
The dollar advanced against major currencies on Wednesday as the Federal Reserve held back from announcing new stimulus measures to stimulate the US economy.
At the conclusion of its two-day meeting the Fed said it remained disappointed with the slow progress of bringing down the nation's jobless rate, which currently stands at 8.2 per cent.
While the central bank indicated that it would take necessary action, if needed, hopes that new measures would be announced on Wednesday were dashed. The Fed also downgraded its US economic outlook.
The dollar index, which measures the greenback against a basket of six other currencies, climbed to 83.070 from 82.619 on Tuesday.
The dollar index had risen sharply after figures from ADP showed private-sector payrolls rose 163,000 in July, ahead of the 120,000 increase pencilled in by economists. However momentum for the dollar index later faded.
The dollar rose 0.4% against the Japanese yen to buy ¥78.42 following the conclusion of the Fed meeting.
One day ahead of the European Central Bank's monthly policy, the euro lost ground against the dollar. The ECB is widely expected to keep its main lending rate unchanged at 0.75%.
Last week ECB President Mario Draghi increased hopes that the central bank could resume its bond purchase programme, to help lower borrowing rates in Spain and Italy, after his comments that he would do everything necessary to preserve the euro.
The British pound eased to $1.5552 from $1.5682 in the previous session after a disappointing economic data and ahead of the Bank of England's monthly rate decision meeting.
The latest data showed UK manufacturing production fell at its fastest rate in over two years in July, after heavy declines in output and new orders.
Separately figures from Nationwide showed British house prices fell at their fastest annual rate in nearly three years last month. UK Event Calendar INTERIMS
4Imprint Group, Aggreko, Alliance Trust, BAE Systems, Ladbrokes, Millennium & Copthorne Hotels, Robert Walters, RPS Group, RSA Insurance Group, Schroders, Schroders (Non-Voting), SEGRO, Smith & Nephew, Spirent Communications, Trinity Mirror
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)
Factory Orders (US) (15:00)
Goods Orders (US) (15:00)
Initial Jobless Claims (US) (13:30)
Q2
Millennium & Copthorne Hotels, Smith & Nephew
TRADING ANNOUNCEMENTS
Hyder Consulting
GMS
Forte Energy NL
IMSS
Thomas Cook Group
AGMS
AFI Development, African Minerals Ltd., Federal Bank Ltd (The) GDR (REGS), Hyder Consulting, Investec
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
Burberry Group, Dairy Crest Group, De La Rue, Dee Valley Group, Dee Valley Group (Non-Voting), Mckay Securities, UBC Media Group
| US Market Report | Stocks down as Fed says no to further stimulus
Dow Jones -32.55 to 12,976.13
Nasdaq -19.31 to 2,920.21
S&P 500 -4.00 to 1,375.32 US stocks finished the day lower across the board on Wednesday after the Federal Reserve refused to budge on monetary policy. While the Fed opted to stay away from any further quantatitive easing, it did acknowledge that economic activity has decelerated somewhat over the first half of this year. In other news, the ISM's manufacturing sector gauage for July came in below expectations, while private sector payrolls beat forecasts. Companies Pioneer Natural Resources climbed higher after second quarter revenue came in significantly higher and its net resource potential rose from five billion barrels oil equivalent to seven billion. Botox maker Allergan was another strong riser after a positive second quarter income which reported an improved full year financial outlook. Injectable drugs manufacturer Hospira also rose after beating analyst expectations in its second quarter results. Meanwhile, heading the other way was DreamWorks Animation which suffered a heavy decrease in its second quarter income. Knight Capital experienced a 20% decline in its shareprice, hitting a 12 month low, after it reported software problems which had caused subsequent routing issues. ISM below expectations as export orders fall The ISM´s manufacturing sector gauge for the month of July has come in at 49.8, above last month´s reading of 49.7 but below the 50.2 expected by the consensus. This is Barclay´s opinion on the data: “Despite the modest rise in headline new orders, there was a continued decline in new export orders to 46.5. This index stood at 59.0 as recently as April, but continued concerns about weakness in Europe have clearly been weighing on manufacturing sentiment. Despite this, we expect that domestic demand, aided by softer energy prices resulting from a continued global slowdown, will help keep the overall economy growing.” Private sector payrolls grew by 163,000 in July according to ADP, ahead of the 120,000 expected by the consensus. Construction spending rose by 0.4% month-on-month in June, as expected. Snippets from the Federal Reserve Statement "Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year... "The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate... "To support a stronger economic recovery and to help ensure that inflation, over time the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014." Crude futures rising on inventory drop Front month West Texas crude futures are rising by 0.97% to the $88.91 per barrel level on NYMEX. 10 year US Treasuries are down by 16/32 dollars with yields at 1.52%. S&P 500 - Risers CBRE Group Inc (CBG) $16.68 +7.06% Allstate Corp. (ALL) $36.40 +6.12% Electronic Arts Inc. (EA) $11.68 +5.99% Pioneer Natural Resources Co. (PXD) $93.86 +5.90% Hospira Inc. (HSP) $36.39 +4.72% United States Steel Corp. (X) $21.61 +4.65% Laboratory Corporation of America Holdings (LH) $87.90 +4.53% Allergan Inc. (AGN) $85.62 +4.33% Humana Inc. (HUM) $63.91 +3.75% MEMC Electronic Materials (WFR) $1.99 +3.65% S&P 500 - Fallers Genworth Financial Inc. (GNW) $4.48 -11.11% Dun & Bradstreet Corp. (DNB) $74.50 -7.10% J.C. Penney Co. Inc. (JCP) $21.02 -6.62% BMC Software Inc. (BMC) $37.51 -5.28% First Solar Inc. (FSLR) $14.80 -4.76% Citrix Systems Inc. (CTXS) $69.33 -4.61% QEP Resources Inc (QEP) $28.67 -4.53% Netflix Inc. (NFLX) $54.50 -4.13% Chipotle Mexican Grill Inc. (CMG) $280.67 -3.99% Harley-Davidson Inc. (HOG) $41.67 -3.61%
| Thursday newspaper round-up: RBS, Spain, NYSE... | Senior government figures are discussing the possibility of buying out private investors in Royal Bank of Scotland and fully nationalising it amid mounting frustration at banks’ failure to lend to British businesses. Cabinet ministers are having conversations about whether to spend around £5bn buying up the 18 per cent of the bank the government does not own, although George Osborne, the chancellor, is opposed. [The Financial Times]
Italy’s leader Mario Monti is to make a last-ditch effort tomorrow to persuade Spain to swallow its pride and accept a formal rescue, hoping to clear the way for double-barrelled action by bail-out funds and the European Central Bank. The frantic diplomacy comes as investors wait nervously to see if German-led officials on the ECB’s governing council will stand behind the bank’s chief, Mario Draghi, who triggered a euphoric stockmarket rally last week with hints of intervention in the Spanish and Italian bond markets. [The Telegraph]
The New York Stock Exchange was forced to cancel hundreds of share trades yesterday after a technical glitch deluged traders with orders. Unusually high volume in the first 45 minutes of trading caused wild price swings in nearly 150 stocks, prompting exchange officials and federal regulators to open an investigation. Traders said that the sudden spike in volumes had sparked fears that the exchange was suffering a “flash crash” similar to the one experienced in 2010. [The Times]
British manufacturing shrank at its fastest rate for three years in July, highlighting the perilous state of the economy as the Chancellor, George Osborne, launched his Funding for Lending programme to encourage banks to lend more to businesses and households. The Markit/Cips PMI manufacturing index dropped unexpectedly sharply from 48.4 in June to 45.5 in July – any measure below 50 indicates the sector is shrinking. This is the first major economic indicator suggesting the third quarter in Britain has got off to an even worse start than the second. [The Independent]
Fashion chain Next said the Olympics has hit trading in its London stores, as tourists and locals stay away, leaving the capital a ghost town. Next is the first of the retailers to give a sense of current trading and will compound fears that the Games will fail to drag the UK out of recession. Next's chief executive, Lord Wolfson, said its 23 shops in London had been "adversely affected" and he does not expect any kind of retail boost from the Olympics. "The two weeks of the Games for retail won't be good. As with any sporting event, people tend to stay in and watch them on television rather than go out shopping." [The Guardian
Shareholders wiped out by the nationalisation of Northern Rock had their hopes of compensation dashed yesterday when the European Court of Human Rights dismissed their case. The Northern Rock Shareholders Action Group said it was shocked and saddened after it heard that the court had ruled its case was inadmissible. About 150,000 Rock shareholders, including the hedge funds RAB Capital and SRM as well as Rock employees, lost everything when the bank was nationalised after suffering a depositor run in 2007 |
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