Footsie in late slide
Market Movers
techMARK 2,093.00 -0.78%
FTSE 100 5,799.61 -0.52%
FTSE 250 11,839.36 -0.50% Footsie ended the week on a dull note, with most of the losses coming at the death. Evraz suspends Czech steel production Russian steel-maker Evraz led the market lower as it said it had suspended steel production in the Czech Republic because of low demand.
Credit Suisse stuck the boot into the stock, downgrading it to "under-perform" on the grounds that the pick-up in demand from China is likely to take longer than expected.
Credit Suisse also issued a short-term trading sell on miner Antofagasta, on which they are broadly neutral, with a target of 1,250p.
The Swiss bank sees three short-term drivers of under-performance. Firstly, consensus production estimates look too high by up to 10% over the period 2013-16. Secondly, the shares have outperformed peers and the copper price and valuation is at the top end of its ten year range. Third, copper price may under-perform other commodities in the near term (given the resilient performance year-to-date and improving mine supply in the second half of 2012).
Banks and insurers were buoyed by Deutsche Bank upgrading the sectors to "overweight". However, it was financial services provider Hargreaves Lansdown which topped the leader board in the morning session, after it said it had got off to a "pleasing" start to its new financial year.
Hargreaves Lansdown's revenue, assets under administration (AuA) and client numbers all hit record levels in the July-September quarter, traditionally the firm's quietest period.
Talking of insurers, Direct Line was lower after making an impressive market début on Thursday which saw the shares climb from the flotation price of 175p to 188p in conditional trading.
Building materials supplier Travis Perkins saw like-for-like sales fall back in the group's second quarter (to end-September), as the group struggled with the poor weather and the competing attraction of the Olympics. Margins are also under pressure, the firm said, prompting management to tighten up even more on cost management.
Industrial materials provider Morgan Crucible has delivered a profits warning as trading conditions have deteriorated across most geographies, particularly in Europe and China. Sector peers Bodycote and IMI fall in sympathy, as analysts look around to see where the next profits warning will come from; Cookson got its warning out of the way on Monday of this week.
Information technology services provider Computacenter is having to spend time and money getting service levels up to the required standard on some new German contracts, but things are going well in the home market. Other markets The price of Brent crude drifted lower, with the most actively traded futures contract down $1.17 cents to $114.54 a barrel.
Gilts are on the rise. The yield on the benchmark 10-year gilt is down to 1.72% from 1.78% overnight. Yields move inversely to prices.
| AIM/Small Cap Report | FTSE 100 - Risers
Hargreaves Lansdown (HL.) 712.50p +3.56%
Standard Chartered (STAN) 1,429.00p +2.40%
Lloyds Banking Group (LLOY) 39.78p +1.35%
Intertek Group (ITRK) 2,776.00p +1.24%
Resolution Ltd. (RSL) 216.50p +0.70%
Marks & Spencer Group (MKS) 380.00p +0.56%
Pennon Group (PNN) 721.50p +0.49%
Smith & Nephew (SN.) 654.50p +0.46%
National Grid (NG.) 692.00p +0.44%
Prudential (PRU) 848.00p +0.41%
FTSE 100 - Fallers
Evraz (EVR) 234.70p -5.21%
Kazakhmys (KAZ) 716.50p -3.95%
Antofagasta (ANTO) 1,268.00p -3.50%
GKN (GKN) 209.90p -3.27%
Croda International (CRDA) 2,264.00p -2.50%
Melrose (MRO) 230.00p -2.50%
Meggitt (MGGT) 402.70p -2.38%
IMI (IMI) 903.50p -2.38%
Vodafone Group (VOD) 174.55p -2.13%
Smiths Group (SMIN) 1,052.00p -2.05%
FTSE 250 - Risers
Bumi (BUMI) 273.00p +5.41%
Smith (DS) (SMDS) 204.90p +3.85%
Stobart Group Ltd. (STOB) 117.20p +3.72%
NMC Health (NMC) 190.00p +3.26%
Carpetright (CPR) 695.00p +2.96%
Dixons Retail (DXNS) 21.75p +2.79%
JD Sports Fashion (JD.) 749.50p +2.53%
Lonmin (LMI) 508.50p +2.44%
Paragon Group Of Companies (PAG) 220.00p +2.33%
COLT Group SA (COLT) 119.80p +2.31%
FTSE 250 - Fallers
Morgan Crucible Co (MGCR) 226.80p -11.34%
Spectris (SXS) 1,548.00p -6.80%
Bodycote (BOY) 351.00p -6.20%
Yule Catto & Co (YULC) 152.70p -4.92%
Renishaw (RSW) 1,658.00p -4.66%
Senior (SNR) 187.10p -4.05%
Ferrexpo (FXPO) 190.80p -3.64%
Travis Perkins (TPK) 1,095.00p -3.52%
Premier Oil (PMO) 362.00p -3.39%
Fenner (FENR) 357.80p -3.30%
FTSE TechMARK - Risers
Phoenix IT Group (PNX) 165.50p +5.25%
Kofax (KFX) 305.00p +4.45%
Skyepharma (SKP) 89.75p +3.31%
XP Power Ltd. (DI) (XPP) 931.00p +2.42%
Emblaze Ltd. (BLZ) 48.50p +2.37%
Innovation Group (TIG) 22.25p +2.30%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.55p -7.46%
Hiwave Technologies (HIW) 1.07p -6.52%
Oxford Biomedica (OXB) 2.50p -3.85%
RM (RM.) 81.25p -3.56%
Sepura (SEPU) 87.00p -2.52%
CML Microsystems (CML) 393.50p -1.62%
BATM Advanced Communications Ltd. (BVC) 16.25p -1.52% |
| AIM/Small Cap Report | FTSE 100 - Risers
Hargreaves Lansdown (HL.) 712.50p +3.56%
Standard Chartered (STAN) 1,429.00p +2.40%
Lloyds Banking Group (LLOY) 39.78p +1.35%
Intertek Group (ITRK) 2,776.00p +1.24%
Resolution Ltd. (RSL) 216.50p +0.70%
Marks & Spencer Group (MKS) 380.00p +0.56%
Pennon Group (PNN) 721.50p +0.49%
Smith & Nephew (SN.) 654.50p +0.46%
National Grid (NG.) 692.00p +0.44%
Prudential (PRU) 848.00p +0.41%
FTSE 100 - Fallers
Evraz (EVR) 234.70p -5.21%
Kazakhmys (KAZ) 716.50p -3.95%
Antofagasta (ANTO) 1,268.00p -3.50%
GKN (GKN) 209.90p -3.27%
Croda International (CRDA) 2,264.00p -2.50%
Melrose (MRO) 230.00p -2.50%
Meggitt (MGGT) 402.70p -2.38%
IMI (IMI) 903.50p -2.38%
Vodafone Group (VOD) 174.55p -2.13%
Smiths Group (SMIN) 1,052.00p -2.05%
FTSE 250 - Risers
Bumi (BUMI) 273.00p +5.41%
Smith (DS) (SMDS) 204.90p +3.85%
Stobart Group Ltd. (STOB) 117.20p +3.72%
NMC Health (NMC) 190.00p +3.26%
Carpetright (CPR) 695.00p +2.96%
Dixons Retail (DXNS) 21.75p +2.79%
JD Sports Fashion (JD.) 749.50p +2.53%
Lonmin (LMI) 508.50p +2.44%
Paragon Group Of Companies (PAG) 220.00p +2.33%
COLT Group SA (COLT) 119.80p +2.31%
FTSE 250 - Fallers
Morgan Crucible Co (MGCR) 226.80p -11.34%
Spectris (SXS) 1,548.00p -6.80%
Bodycote (BOY) 351.00p -6.20%
Yule Catto & Co (YULC) 152.70p -4.92%
Renishaw (RSW) 1,658.00p -4.66%
Senior (SNR) 187.10p -4.05%
Ferrexpo (FXPO) 190.80p -3.64%
Travis Perkins (TPK) 1,095.00p -3.52%
Premier Oil (PMO) 362.00p -3.39%
Fenner (FENR) 357.80p -3.30%
FTSE TechMARK - Risers
Phoenix IT Group (PNX) 165.50p +5.25%
Kofax (KFX) 305.00p +4.45%
Skyepharma (SKP) 89.75p +3.31%
XP Power Ltd. (DI) (XPP) 931.00p +2.42%
Emblaze Ltd. (BLZ) 48.50p +2.37%
Innovation Group (TIG) 22.25p +2.30%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.55p -7.46%
Hiwave Technologies (HIW) 1.07p -6.52%
Oxford Biomedica (OXB) 2.50p -3.85%
RM (RM.) 81.25p -3.56%
Sepura (SEPU) 87.00p -2.52%
CML Microsystems (CML) 393.50p -1.62%
BATM Advanced Communications Ltd. (BVC) 16.25p -1.52% |
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | European Markets Largely Finished Lower Friday As Debt Worries Persist
The majority of the European markets finished in negative territory Friday, as investor concerns over debt in the Eurozone lingered. Bank stocks were positive in early trade after Deutsche Bank upgraded the sector to "Overweight" from "Neutral." As the session progressed, those early gains began to erode. The markets trimmed their losses in the afternoon, following the better than expected U.S. consumer sentiment report. However, the recovery proved short lived, as the markets declined further going into the close.
The finance ministers from across the globe meeting in Tokyo have recognized that the Eurozone has made "significant progress" in addressing the debt crisis, German Finance Minister Wolfgang Schauble reportedly said Friday.
The Greek authorities should demonstrate that they can continue to stick to their commitments, the policymaker said during a speech at the 2012 Annual Meetings of the IMF and World Bank Group in Tokyo.
The German government is expected to cut its growth forecast for 2013, while slightly lifting its predictions for this year, Germany's Handelsblatt reported Friday.
The government is due to publish the latest economic growth forecasts on Wednesday. According to the daily, the government will predict 1 percent growth forecast for 2012, up from its May forecast of 0.7 percent expansion.
Meanwhile, the outlook for 2013 is likely to be downgraded to 1 percent from the earlier forecast of 1.6 percent.
The 2012 Nobel Peace Prize was awarded to the European Union "for over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe." Announcing the coveted award at the Norwegian Nobel Institute in Oslo, Thorbjørn Jagland, chairman of the Norwegian Nobel Committee, said the decision was unanimous.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.55 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.31 percent.
The DAX of Germany fell by 0.68 percent and the CAC 40 of France decreased by 0.72 percent. The FTSE 100 of the U.K. dropped by 0.62 percent, but the SMI of Switzerland gained 0.02 percent.
In Frankfurt, Lanxess declined by 4.22 percent. Barclays and Credit Suisse both downgraded the stock. Beiersdorf finished higher by 0.61 percent, after UBS upgraded the stock.
In Paris, STMicroelectronics surged by 7.04 percent, on reports that the company is planning to separate businesses.
Telecom equipment maker Alcatel Lucent rose by 7.07 percent, after Deutsche Bank raised European telecoms to "Overweight."
In London, Anglo American fell by 1.67 percent. HSBC downgraded its rating on the stock to "Neutral" from "Overweight." Antofagasta lost 3.50 percent after HSBC downgraded the stock to "Underweight" from "Neutral." Kazakhmys declined by 4.09 percent and Rio Tinto fell by 1.61 percent.
Evraz dropped by 5.37 percent, after Credit Suisse downgraded the stock to "Underperform" from "Neutral." Lloyds Banking Group rose by 1.15 percent and Standard Chartered added 2.40 percent.
Morgan Crucible plunged by 11.34 percent. The advanced materials company said its revenue in the third quarter weakened and that full-year performance would be materially below the Board's previous expectations. Hargreaves Lansdown increased by 3.59 percent, after an interim management statement.
Eurozone industrial production grew unexpectedly in August suggesting that the region has avoided a deep contraction, which many economists have feared for the third quarter.
Industrial production rose 0.6 percent month-on-month in August, the same rate of expansion as seen in July, estimates released by Eurostat showed Friday. This was the second consecutive monthly growth. Production was forecast to fall by 0.4 percent.
French current account deficit increased in August, data published by the Bank of France showed Friday. The current account deficit narrowed to EUR 4 billion in August from a EUR 2.6 billion shortfall recorded in July.
U.K. construction output declined sharply by 11.6 percent in August from a year ago, the Office for National Statistics showed Friday.
A leading indicator of the British economy increased for the second consecutive month in August, adding to hopes that the contraction in economic output is set to stabilize in the near term, data from a survey by the Conference Board showed Friday.
The leading economic index increased 0.2 percent month-on-month to 102.6 in August, after rising 0.1 percent in July that followed a 0.3 percent decline in June.
With energy prices continuing to show significant growth, U.S. producer prices rose by more than expected in the month of September, according to a report released by the Labor Department on Friday. The Labor Department said its producer price index rose by 1.1 percent in September after jumping 1.7 percent in August. Economists had expected the index to increase by about 0.8 percent. |
| US Market Report | Stocks Turn Mostly Lower After Seeing Early Strength
After failing to sustain an early upward move, stocks have moved mostly lower over the course of the trading day on Friday. Selling pressure has remained subdued, however, contributing to choppy trading on Wall Street.
The major averages have climbed off their worst levels in recent trading but remain in the red. The Dow is down 11.38 points or 0.1 percent at 13,315.01, the Nasdaq is down 4.08 points or 0.1 percent at 3,045.33 and the S&P 500 is down 5.61 points or 0.4 percent at 1,427.23.
The downturn by stocks came despite the release of an upbeat report on U.S. consumer sentiment in the month of October.
The report from Thomson Reuters and the University of Michigan showed that the preliminary reading on their consumer sentiment index for October came in at 83.1 compared to the final September reading of 78.3. Economists had expected the index to come in unchanged compared to the previous month.
With the significant monthly increase, the consumer sentiment index rose to its highest level since September of 2007.
Peter Boockvar, managing director at Miller Tabak, acknowledged that the data is encouraging but noted that "confidence is only a coincident indicator and says nothing about how the economy will unfold looking forward."
Traders are also reacting to quarterly results from financial giants JP Morgan (JPM) and Wells Fargo (WFC), which have both moved to the downside on the day.
Before the start of trading, JP Morgan reported third quarter net income of $5.7 billion or $1.40 per share compared to $4.3 billion or $1.02 per share in the same quarter last year. Analysts had expected the company to earn $1.21 per share.
The company also said revenues for the quarter rose to $25.2 billion from $23.8 billion a year ago, exceeding analyst estimates for $24.5 billion.
Shares of JP Morgan have fallen by 1.3 percent following the release of the results, although the drop comes after the stock reached a five-month high on Thursday.
Mortgage giant Wells Fargo also released its third quarter results before the start of trading, reporting earnings that came in slightly above analyst estimates but on weaker than expected revenues. Shares of Wells Fargo have dropped 3.4 percent on the news.
Sector News
Banking stocks have shown a notable move to the downside over the course of the trading day, dragging the KBW Bank Index down by 2.7 percent. Despite the steep loss on the day, the index remains stuck in a recent trading range.
Regions Financial (RF), SunTrust Banks (STI), and KeyCorp (KEY) are turning in some of the banking sector's worst performances.
Considerable weakness has also emerged among brokerage stocks, as reflected by the 1.7 percent loss being posted by the NYSE Arca Broker/Dealer Index. ETrade (ETFC) has helped to lead the sector lower, tumbling by 3.6 percent.
Steel stocks are also seeing significant weakness on the day, resulting in a 1.4 percent drop by the NYSE Arca Steel Index. Networking, electronic storage and oil service stocks are also under pressure.
On the other hand, trucking stocks are seeing continued strength, with the Dow Jones Trucking Index up by 3 percent after reaching a nearly three-year month. J.B. Hunt (JBHT) is posting a standout gain after reporting its third quarter results. |
| Broker tips | BHP, Antofagasta, Range Resources Analysts at Credit Suisse have today slashed their price targets for many companies in the Metals&Mining sector. In particular, their global commodities team has adjusted its commodity price forecasts, with the largest cuts having been made to iron ore and coking coal, along with minor changes elsewhere.
Following on from the above, they have lowered their 2013 earnings per share estimates (EPS) for the most majors by 15-40%: BHP (-14%), Rio Tinto (-39%), ENRC (-27%), Anglo American (-26%), Antofagasta (-1%), Kazahkmys (+12%), African Minerals (-80%), London Mining (-82%), Ferrexpo (-50%), Amplats (+2%), Impala (+1%), Aquarius Platinum (+143%) and Lonmin (-83%).
More specifically, they comment that: “the sector faces major headwinds through structurally slowing demand growth, falling margins and returns and weak cash flows. We continue to prefer companies that offer defensive margins and valuations, volume growth and lower execution risks. Our focus on valuations, FCF and dividendyields continues to favour the higher quality majors, RIO and BHP and, for a beta rally, we like AMI and LOND. Least preferred stocks: AAL, LMI, Amplats, KAZ.”
Analysts at Credit Suisse have issued a short term trading sell on miner Antofagasta, on which they are broadly neutral, with a target of 1,250p (up from 1,150p in fact).
The Swiss bank sees three short term drivers of underperformance. Firstly, consensus production estimates look too high by up to 10% over the period 2013-16. Secondly, the shares have outperformed peers and the copper price and valuation is at the top end of its ten year range. Third, copper price may underperform other commodities in the near term (given the resilient performance year-to-date and improving mine supply in the second half of 2012).
Credit Suisse stresses that this is a trading call and that it continues to favour the the longer term outlook for copper and that Antofagasta has the qualities it looks for in a mining company longer term; “best in class balance sheet and operating cash flow margins, good disclosure and strong management and longer term growth optionality.”
Leila Reddy, analyst at Panmure Gordon, has reiterated her “Buy” recommendation on Range Resources with a target of 10p.
She comments that this price target is “on the back of rising production in Trinidad, supported by a funded drilling programme and, importantly, well results.”
Thus and regarding the company's reserves upgrade, the broker points out that: "Following last year’s operations, especially its drilling programme, Forest A. Garb and Associates, the independent petroleum consultants, have upgraded the Company’s reserves estimates for its Trinidad assets.
The P50 unrisked prospective resources have been increased by 30.5 mmbbls to 40.5 mmbbls, led by the identified Herrera prospects that have been mapped on the Company's 3D seismic database, which are scheduled to be drilled after the completion of the MD248 well." |
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