London close: Footsie drops 1.5 per cent as nerves take over
Market Movers
- techMARK 2,081.36 -1.23%
- FTSE 100 5,672.01 -1.50%
- FTSE 250 11,428.84 -0.65%
- US manufacturing data disappoints
- Markets nervous ahead of ECB meeting
- Broker downgrades take down ARM, Vodafone, Land Secs...
Disappointing manufacturing data from the US and skittishness ahead of a European Central Bank (ECB) monetary policy decision on Thursday sparked a sell-off on global stock markets on Tuesday.
"Today's market price action in Europe highlights perfectly the uncertainty gripping investors ahead of this week's key ECB rate meeting and press conference. Having seen fairly good gains yesterday in fairly light volume, these have been pretty much wiped out today as nervousness returns in the wake of continued bickering amongst policymakers in Europe," said market analyst Michael Hewson from CMC Markets this afternoon.
ECB President Mario Draghi is widely expected to unveil plans on Thursday for buying sovereign debt in order to bring down bond yields in peripheral nations.
Stocks fell early on as investors reacted to the news that credit ratings agency Moody's last night lowered its outlook for the European Union from 'stable' to 'negative' to reflect "the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget."
Losses were extended after the ISM's US manufacturing purchasing managers' index (PMI) came in at 49.6 points in August, down from a reading of 49.8 in July. Consensus expectations were for a 50.0 level, indicating neither contraction or expansion.
Meanwhile, domestic economic data came in mixed: the UK's services PMI rose from 51 to 53.7, above the 51.1 expected by analysts; however the construction PMI fell from 50.9 to 49 in the same month, below the 50 forecast.
FTSE 100: Petrofac bucks the trend; ARM leads the decline
Just a handful of stocks on the Footsie finished the day in the blue, one being oilfield service firm Petrofac after Credit Suisse upgraded its rating on the shares from 'neutral' to 'outperform'. "We believe the stock has performed poorly on a lack of project awards over the summer period and elevated expectations for the IES business. We believe the next few months will be better," the broker said.
Chip designer ARM Holdings was the heaviest faller of the day after Deutsche Bank downgraded the stock from 'hold' to 'sell', saying "Despite secular EPS growth drivers, we believe ARM's high valuation will come under pressure as falling smartphone chip prices impact royalty growth, Intel's odds to gradually gain market share in mobile are improving and the Windows-on-ARM ramp could be below expectations."
Steel giant Evraz was among the worst performers of the day after Credit Suisse said that downward trend in iron ore and coal prices last week "goes in line with our view that risk for profitability of integrated producers and bulk miners [including Evraz] is on the downside." The broker maintained a 'neutral' stance on the stock today.
Telecoms group Vodafone declined after being downgraded by Bernstein from 'outperform' to 'market perform' on the back of "an increasing number of negative risks".
Real estate investment trust (REIT) Land Securities was a heavy faller after both JP Morgan Cazenove and UBS downgraded their ratings on the stock to 'neutral' this morning. UBS also cut its recommendation for REIT peers British Land and SEGRO today.
Banking group Royal Bank of Scotland (RBS) was lower as the threat of a bruising legal battle with angry shareholders continues to hang over the company. Investec this morning lowered its recommendation on the shares from 'buy' to 'hold', saying that "after another modest rally, we throw in the towel".
FTSE 250: Ashtead leads risers after upping guidance
High-flying plant hire firm Ashtead jumped after raising profits guidance again as its new financial year got off to a strong start. "Given this early stage of the recovery, we see further outperformance from re-rating as well as scope for further positive earnings surprises," said analyst Andrew Nussey from Peel Hunt.
Recycled packing company DS Smith was in demand after saying it was trading in line with market expectations and expected substantial year-on-year growth in earnings per share.
FTSE 100 - Risers
Morrison (Wm) Supermarkets (MRW) 279.10p +0.32%
Diageo (DGE) 1,754.00p +0.17%
Petrofac Ltd. (PFC) 1,518.00p +0.13%
FTSE 100 - Fallers
ARM Holdings (ARM) 528.00p -5.63%
Evraz (EVR) 218.00p -3.92%
Weir Group (WEIR) 1,580.00p -3.60%
Admiral Group (ADM) 1,110.00p -3.48%
Xstrata (XTA) 917.50p -3.14%
Burberry Group (BRBY) 1,315.00p -2.95%
Antofagasta (ANTO) 1,097.00p -2.75%
British Land Co (BLND) 527.00p -2.68%
Rio Tinto (RIO) 2,722.00p -2.63%
Vodafone Group (VOD) 178.45p -2.59%
FTSE 250 - Risers
Ashtead Group (AHT) 315.90p +11.82%
Dixons Retail (DXNS) 18.83p +4.03%
Smith (DS) (SMDS) 167.60p +3.46%
Ophir Energy (OPHR) 601.50p +2.65%
Brown (N.) Group (BWNG) 278.80p +2.46%
SDL (SDL) 652.50p +2.19%
Heritage Oil (HOIL) 194.00p +2.05%
Britvic (BVIC) 328.60p +1.95%
Menzies(John) (MNZS) 625.00p +1.87%
Homeserve (HSV) 229.50p +1.86%
FTSE 250 - Fallers
Talvivaara Mining Company (TALV) 130.70p -6.64%
Ferrexpo (FXPO) 151.00p -5.45%
Bumi (BUMI) 288.00p -5.01%
Centamin (DI) (CEY) 79.25p -4.80%
Gem Diamonds Ltd. (DI) (GEMD) 158.00p -4.30%
Premier Farnell (PFL) 186.30p -3.47%
New World Resources A Shares (NWR) 270.00p -3.23%
Essar Energy (ESSR) 100.20p -3.19%
Ruspetro (RPO) 122.00p -3.17%
Hikma Pharmaceuticals (HIK) 712.00p -3.13%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | | The Swiss Stock Market Pulled Back Ahead Of ECB Meeting
The Swiss stock market finished Tuesday's session with a pretty significant loss. The losses piled up gradually over the course of the trading day, after a slightly positive open. Uncertainty was running high among investors, ahead of the upcoming meeting of the European Central Bank. The negativity was further compounded by the weak economic data from the U.S. in the afternoon.
Investors seem to be positioning themselves for a possible disappointment from the upcoming ECB meeting, in case no concrete steps toward buying bonds are announced. However, according to reports, during a closed-door meeting of the lawmakers, Mario Draghi defended a number of measures introduced by the ECB, including the controversial bond-purchase plan, and indicated that the central bank is not averse to buying government bonds of up to 3-year maturities on the secondary market.
The Swiss Market Index fell by 1.16 percent Tuesday and closed at 6,362.82. The Swiss Leader Index declined by 1.14 percent and the Swiss Performance Index lost 1.09 percent.
The defensive heavyweights all finished in negative territory on Tuesday. Shares of Nestle dropped by 1.3 percent, while Roche and Novartis both lost 1.0 percent each.
The financial stocks were also under pressure Tuesday. Credit Suisse declined by 1.8 percent, while UBS lost 1.6 percent. Julius Baer also decreased by 1.1 percent. Zurich Insurance fell by 0.6 percent, Swiss Re dipped by 0.3 percent and Baloise lost 0.4 percent.
| US Market Report | US open: ISM input prices shoot higher on drought
-Moody's says outlook for US banking system remains negative
-Ford says Q3 production slightly below guidance
-GM US vehicle sales rose 10.1% in August; Forecast: 3%
Dow Jones: -0.76%
Nasdaq Comp.: -0.60%
S&P 500: -0.56%
The main New York equity benchmarks are now registering moderate falls following the release of a slightly weaker than expected ISM manufacturing survey.
Meantime, and on the corporate front, Campbell Soup is moving higher following the release of better than expected quarterly results.
Smithfields, on the other hand, has come in with worse than expected quarterly profit and revenue figures. The packaged meats business failed to bring home the bacon with earnings per share of 40 cents, down from 49 cents last year and below the 44 cents expected by the market.
Wal Mart is moving lower after a positive mention in the latest edition of Barron's.
On the M&A front, Valeant Pharmaceuticals has acquired Medicis for approximately $2.6bn.
IBM has failed to get a lift from Barclays's decision to upgrade its stock to outperform.
Morgan Stanley has also drawn positive comment, but from analysts at JP Morgan.
Drought conditions push prices higher
The ISM's manufacturing sector purchasing managers' index for the month of August has come in at 49.6 points, versus last month's reading of 49.8 (Consensus: 50). The prices paid sub-index has shot up to 54 from 39.5, with the drought conditions said to be severely impacting raw materials' prices in the food, beverage and tobacco sector.
US construction spending has fallen 0.9% month-on-month in July (Consensus: -0.9%).
Crude falls back
Front month West Texas crude futures are now falling by 1.87 dollars, to the 95.36 dollar level on the NYMEX.
10 year Treasury bonds are up by 2/32 dollars, with yields at 1.56%.
S&P 500 - Risers
GameStop Corp. (GME) $20.00 +4.84%
AutoNation Inc. (AN) $41.34 +2.84%
Dean Foods Co. (DF) $16.74 +1.95%
ConAgra Foods Inc. (CAG) $25.58 +1.89%
Juniper Networks Inc. (JNPR) $17.75 +1.78%
Morgan Stanley (MS) $15.22 +1.47%
American International Group Inc. (AIG) $34.79 +1.35%
Varian Medical Systems Inc. (VAR) $59.55 +1.29%
Zimmer Holdings Inc. (ZMH) $62.50 +1.16%
Tenet Healthcare Corp. (THC) $5.25 +1.16%
S&P 500 - Fallers
Netflix Inc. (NFLX) $54.79 -8.26%
First Solar Inc. (FSLR) $18.34 -8.25%
Alpha Natural Res (ANR) $5.51 -7.26%
CONSOL Energy Inc. (CNX) $28.69 -5.00%
Nvidia Corp. (NVDA) $13.36 -4.78%
Cliffs Natural Resources Inc. (CLF) $34.22 -4.52%
Peabody Energy Corp. (BTU) $20.75 -4.07%
Electronic Arts Inc. (EA) $12.79 -4.04%
Eaton Corp. (ETN) $43.09 -3.65%
United States Steel Corp. (X) $18.76 -3.52%
Dow Jones I.A - Risers
Wal-Mart Stores Inc. (WMT) $72.98 +0.52%
Hewlett-Packard Co. (HPQ) $16.95 +0.41%
Verizon Communications Inc. (VZ) $43.06 +0.28%
Bank of America Corp. (BAC) $8.01 +0.19%
Dow Jones I.A - Fallers
Caterpillar Inc. (CAT) $82.80 -2.96%
Intel Corp. (INTC) $24.36 -1.87%
United Technologies Corp. (UTX) $78.36 -1.87%
Microsoft Corp. (MSFT) $30.26 -1.82%
E.I. du Pont de Nemours and Co. (DD) $48.91 -1.69%
3M Co. (MMM) $91.22 -1.49%
Alcoa Inc. (AA) $8.44 -1.46%
Cisco Systems Inc. (CSCO) $18.89 -1.02%
General Electric Co. (GE) $20.50 -1.01%
Boeing Co. (BA) $70.73 -0.94%
Nasdaq 100 - Risers
Baidu Inc. (BIDU) $113.32 +1.69%
Warner Chilcott Plc (WCRX) $13.75 +0.95%
Liberty Interactive Corp (LINTA) $18.37 +0.71%
Autodesk Inc. (ADSK) $31.26 +0.68%
VeriSign Inc. (VRSN) $47.99 +0.65%
Apollo Group Inc. (APOL) $26.95 +0.37%
Virgin Media Inc. (VMED) $27.64 +0.25%
DIRECTV (DTV) $52.22 +0.25%
Apple Inc. (AAPL) $666.70 +0.22%
Ross Stores Inc. (ROST) $69.26 +0.10%
Nasdaq 100 - Fallers
Netflix Inc. (NFLX) $54.79 -8.26%
Nvidia Corp. (NVDA) $13.36 -4.78%
Electronic Arts Inc. (EA) $12.79 -4.04%
F5 Networks Inc. (FFIV) $94.61 -2.95%
Avago Technologies Ltd. (AVGO) $35.54 -2.82%
Linear Technology Corp. (LLTC) $32.23 -2.41%
Lam Research Corp. (LRCX) $33.31 -2.40%
Flextronics International Ltd. (FLEX) $6.57 -2.30%
Altera Corp. (ALTR) $36.48 -2.28%
Wynn Resorts Ltd. (WYNN) $100.94 -2.16% |
| Broker Tips | Broker tips: Petrofac, REITs, Ashtead
Following a period of weakness, Credit Suisse has upgraded its rating on the shares of oilfield services group Petrofac from 'neutral' to 'outperform' and raised its target from 1,750p to 1,800p.
"We believe the stock has performed poorly on a lack of project awards over the summer period and elevated expectations for the IES business. We believe the next few months will be better: awards should step up, thanks to less instability in the Middle East, and the payoff of extensive marketing efforts in southeast Asia and amongst oil majors," the broker said on Tuesday morning.
UBS says that investors should hold an 'equal-weight' position in the European real estate market, but has recommended to 'underweight the UK'.
The broker has upgraded both Hammerson and Capital Shopping Centres to 'buy', saying that both stocks are "pricing in lower returns, but missing the lower risk profile."
"We downgrade Land Securities and British Land to 'neutral' (valuation appropriate for their risk-return profiles). We downgrade SEGRO to 'neutral' (we like the dividend yield, but are cautious on net asset value)."
Shares in plant hire firm Ashtead surged on Tuesday morning after the firm raised its full-year guidance, leading broker Peel Hunt to upgrade its forecasts for the group.
On Peel Hunt's revised estimates, Ashtead trades at 12.1 times prospective earnings per share, equal to 4.8 times earnings before interest, tax, depreciation and amortisation (EBITDA), compared with a historical mid-cycle range of 5-6x.
"Given this early stage of the recovery, we see further outperformance from re-rating as well as scope for further positive earnings surprises," Nussey said. |
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