| Gains erased as poor data dents stocks
Market Movers
techMARK 2,099.97 +0.12%
FTSE 100 5,776.60 +0.04%
FTSE 250 11,466.54 -0.24% Stimulus hopes for the US pushed the Footsie higher early on, but disappointing economic data across the globe meant that the bullish mood was short-lived, with gains erased by the close.
Meanwhile, according to an exclusive in Reuters this afternoon, while the Spanish government has not officially requested a bailout, it is in talks with Eurozone officials over conditions for aid to reduce its bond yields. Citing three sources close to the matter, the news agency said that the favoured option being talked about its using the EFSF to buy Spanish debt at primary auctions, while the European Central Bank would purchase bonds on the secondary markets to cut borrowing costs.
The minutes of the Federal Open Market Committee (FOMC) meeting said that "many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery".
However, St Louis Fed President James Bullard poured cold water on stimulus hopes today after saying that the minutes are now outdated because they do not pick up the stronger economic data that has been released since then.
Turning back to the Eurozone, Eurogroup President Jean-Claude Juncker made clear that “the ball is in Greece’s court” following his meeting with the country's Prime Minister Antonis Samaras yesterday. While the Greek PM requested a two-year extension on the deadline to implement austerity measures, the head of the Eurozone's finance ministers said that the Troika’s visit to Athens in September will give the Hellenic Republic “one last chance” to meet its commitments.
The Markit preliminary composite purchasing managers' index (PMI) for the Eurozone rose from 46.5 to 46.6 in August but stayed well below 50, showing that activity in the single-currency region had contracted for a seventh straight month. Meanwhile, the HSBC China manufacturing PMI fell from 49.3 to 47.8 in August, a nine-month low.
Data from the US was mixed today also. Initial weekly jobless claims rose by 4,000 last week to a seasonally adjusted 372,000, from an upwardly revised 368,000 the week before. Economists were expecting a reading closer of 369,000. Meanwhile, the Markit US flash manufacturing PMI rose from 51.4 to 51.9 in August, above the 51.5 forecast. Nevertheless, as analyst Cooper Howes from Barclays points out, the flash PMI “remains well below levels seen in Q1.” FTSE 100: Randgold and Anglo lead miners higher after Fed minutes
Last night’s release of the minutes of the FOMC meeting drove mining stocks higher on hopes that the Fed will inject stimulus to give the world’s largest economy a kick start, lifting the outlook for demand. Randgold was a high riser today after releasing a statement to welcome the appointment of a new interim government in Mali which "represents a further step towards the full normalisation of the country following the coup attempt earlier this year." Anglo American rose after signing a deal with Chilean miner Codelco to end their 10-month dispute over the Sur unit. Anglo will see a 29.5% in the division for around $2.8bn. Sector peers Fresnillo, Antofagasta, Glencore and Polymetal were also putting in a decent performance. One stock limiting gains in the mining sector today was Kazakhmys, the Kazakhstan-focused copper miner. Shares dropped after the company more than halved its dividend as surging costs and falling commodity prices dented its bottom line in the first half. FTSE 250: WH Smith rises after results upgrade, share buy-back; Petropavlovsk sinksNewsagent chain WH Smith jumped after saying it expects results for the year to the end of August will be at the top end of market expectations as the group's Travel business improves margins. The group also revealed a £50m share purchase programme for 2013.
Heading the other way was gold producer Petropavlovsk whose bottom line lost its lustre in the first half of the year as interest payments bit and the group took a bath on its gold option contracts.
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 6,400.00p +4.15%
Fresnillo (FRES) 1,586.00p +3.93%
Antofagasta (ANTO) 1,152.00p +2.86%
Glencore International (GLEN) 366.00p +2.64%
Polymetal International (POLY) 976.50p +1.88%
Anglo American (AAL) 1,941.50p +1.65%
British American Tobacco (BATS) 3,312.00p +1.46%
Wolseley (WOS) 2,541.00p +1.40%
Smith & Nephew (SN.) 658.00p +1.31%
Tullow Oil (TLW) 1,396.00p +1.23%
FTSE 100 - Fallers
Kazakhmys (KAZ) 680.50p -3.41%
Royal Bank of Scotland Group (RBS) 227.90p -3.27%
International Consolidated Airlines Group SA (CDI) (IAG) 142.90p -2.72%
IMI (IMI) 861.00p -2.55%
Land Securities Group (LAND) 788.00p -2.11%
Barclays (BARC) 191.00p -1.62%
Lloyds Banking Group (LLOY) 34.05p -1.58%
Serco Group (SRP) 563.00p -1.57%
Capita (CPI) 720.50p -1.37%
Eurasian Natural Resources Corp. (ENRC) 351.50p -1.26%
FTSE 250 - Risers
SIG (SHI) 102.60p +8.97%
Aquarius Platinum Ltd. (AQP) 41.10p +5.38%
Rank Group (RNK) 137.00p +5.38%
Shanks Group (SKS) 92.50p +5.11%
Lonmin (LMI) 640.00p +4.40%
Soco International (SIA) 347.30p +3.36%
Kentz Corporation Ltd. (KENZ) 371.00p +3.06%
Man Group (EMG) 79.05p +2.93%
WH Smith (SMWH) 597.50p +2.66%
Oxford Instruments (OXIG) 1,326.00p +2.55%
FTSE 250 - Fallers
Petropavlovsk (POG) 394.00p -15.97%
Ruspetro (RPO) 145.00p -3.33%
COLT Group SA (COLT) 117.30p -3.06%
Home Retail Group (HOME) 92.20p -3.05%
Homeserve (HSV) 211.50p -2.98%
Ocado Group (OCDO) 65.10p -2.91%
Chemring Group (CHG) 367.00p -2.81%
Kenmare Resources (KMR) 38.34p -2.69%
Regus (RGU) 98.80p -2.66%
Brown (N.) Group (BWNG) 267.60p -2.66%
| Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | | European Markets Slipped Into The Red In Late Trading The majority of the European markets were unable to hold on to early gains Thursday and finished in negative territory. Investor optimism regarding potential stimulus actions from both the U.S. and China fueled today's early gains. The initial optimism fizzled out as the session wore. Bank stocks, which had been strong in early trade, sharply reversed direction in late trade.
The Federal Reserve is losing patience with the pace of the fragile U.S. economic recovery, according to the minutes of their most recent policy meeting, which were released Wednesday. Many members of the Federal Reserve say additional monetary policy accommodation is likely warranted unless the economy improves substantial. This may open the door for another round of quantitative easing measures at their next meeting in September.
China's manufacturing sector contracted in August at the fastest pace in nine months suggesting that producers are struggling with strong global headwinds, a closely watched survey showed Thursday. Largely due to a fall in factory orders, the flash HSBC manufacturing Purchasing Managers' Index dropped to 47.8 from 49.3 in July, Markit Economics said.
Most people in the U.K. would have been worse off without quantitative easing and interest rate reduction to record low, the Bank of England said in a paper published on Thursday. The asset purchases added over GBP 600 billion wealth to households, equivalent to around GBP 10,000 per person if assets were evenly distributed across the population, it said.
Germany's Finance Minister Wolfgang Schaeuble said on Thursday that allowing more time to Greece to implement economic reforms is unlikely to solve the country's problems.
In an interview to SWR Radio, Schaeuble said, "More time is no solution to the problems." More time could also mean 'more money', he said, adding that euro area had reached its limits of what is economically feasible in providing funding to Greece.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.88 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.45 percent.
The DAX of Germany fell by 0.97 percent and the CAC 40 of France finished down by 0.84 percent. The SMI of Switzerland dropped by 0.33 percent, but the FTSE 100 of the U.K. increased by 0.04 percent.
In Frankfurt, Commerzbank dipped by 0.08 percent, while Deutsche Bank gained 0.09 percent. GSW declined by 2.42 percent, after Morgan Stanley downgraded its rating on the stock.
In Paris, Societe Generale decreased by 2.38 percent. BNP Paribas dropped by 0.69 percent and Credit Agricole lost 1.31 percent.
EADS dropped by 2.35 percent. Australia's Qantas Airways said it would restructure its Boeing 787 delivery schedule, with potential commitments for the Boeing 787-9 being reduced to 50 from 85.
In London, Kazakhmys reported a plunge in profit for the first half of the year. The finished down by 3.41 percent.
Diageo rose by 1.04 percent. The beverages firm posted a higher profit for the fiscal year ended June 30, as net sales grew 8 percent driven mainly by emerging markets growth and higher spirits demand.
Barclays declined by 1.62 percent and Lloyds Banking Group fell by 1.58 percent. Royal Bank of Scotland sank by 3.27 percent and Standard Chartered lost 0.61 percent.
Shares of Evraz decreased by 0.35 percent. HSBC upgraded its rating on the stock to "Overweight" from "Neutral."
SABMiller fell by 0.86 percent, after Nomura downgraded it to "Reduce" from "Neutral." IMI declined by 2.55 percent, following the release of its results for the first half of the year.
Petropavlovskis sank by 15.97 percent, after its first-half profit plummeted. Credit Suisse was upgraded to "Buy" from "Hold" by Deutsche Bank. The stock climbed by 0.60 percent in Zurich. |
| US Market Report | | Stocks Mostly Lower On Jobs Data, Europe Worries
Stocks have moved mostly lower during trading on Thursday after turning in a mixed performance in the previous session. Disappointing jobs data is contributing to the weakness in the markets along with continued worries about Europe.
The major averages have climbed off their worst levels of the day but remain stuck in the red. The Dow is down 92.53 points or 0.7 percent at 13,080.23, the Nasdaq is down 16.16 points or 0.5 percent at 3,057.51 and the S&P 500 is down 8.39 points or 0.6 percent at 1,405.10.
The weakness on Wall Street is partly due to the release of a report from the Labor Department showing an unexpected increase in initial jobless claims in the week ended August 18th.
The report showed that initial jobless claims edged up to 372,000 from the previous week's revised figure of 368,000. The modest increase came as a surprise to economists, who had expected jobless claims to slip to 365,000 from the 366,000 originally reported for the previous week.
Disappointing earnings news from Hewlett-Packard (HPQ) is also weighing on the markets, with the PC giant down by 6.6 percent.
While HP reported fiscal third quarter adjusted earnings that exceeded estimates, the company reported a steep net loss for the quarter due to a hefty goodwill impairment charge as well as restructuring and other costs. The company also forecast full-year earnings at the low end of its previously provided outlook.
The release of results from HP came on the heels of a negative reaction to quarterly results from rival Dell (DELL), which fell by 5.4 percent on Wednesday and is currently down by another 2.8 percent.
Worries about the financial situation in Europe have also helped to drag stocks lower, with traders keeping a close eye on a meeting between German Chancellor Angela Merkel and French President Francois Hollande.
Meanwhile, traders have largely shrugged off a report from the Commerce Department showing a bigger than expected rebound in new home sales in the month of July.
The Commerce Department said new home sales rose 3.6 percent to an annual rate of 372,000 in July, while economists had expected sales to reach an annual rate of 362,000.
Among individual stocks, shares of Big Lots (BIG) have fallen sharply after the broadline closeout retailer reported weaker than expected second quarter earnings and cut its full-year guidance. Big Lots is currently down by 22.5 percent are hitting its worst intraday level in a year.
Apparel retailer Guess (GES) is also posting a steep loss after reporting second quarter earnings that missed estimates and warning of weaker than expected full-year results. Shares of Guess have tumbled by 21.1 percent.
Meanwhile, shares of Hain Celestial (HAIN) have surged up by 19.2 percent after the natural and organic food company reported better than expected fourth quarter earnings and announced an agreement to acquire Premier Foods plc's portfolio of packaged grocery brands.
Sector News
Airline stocks are turning in some of the market's worst performances on the day, resulting in a 1.9 percent drop by the NYSE Arca Airline Index. With the loss, the index is pulling back further off the one-month closing high it set on Tuesday.
Within the airline sector, US Airways (LCC) and Delta (DAL) are posting significant losses, sliding by 4.7 percent and 3.9 percent, respectively.
Considerable weakness is also visible among steel stocks on the heels of disappointing manufacturing data out of China. Reflecting the weakness in the steel sector, the NYSE Arca Steel Index has fallen by 2 percent.
Natural gas, railroad, and computer hardware stocks are also posting notable losses, moving to the downside along with most of the other major sectors.
On the other hand, gold stocks are bucking the downtrend by the broader markets, benefiting from a sharp increase by the price of the precious metal. With gold for December delivery jumping $34.80 to $1,675.30 an ounce, the NYSE Arca Gold Bugs Index is up by 1 percent. |
| Broker tips | | IHG, SABMiller, WH Smith Jefferies has raised its target for Holiday Inn and Crowne Plaza owner InterContinental Hotels from 1,350p to 1,500p, but has retained its 'hold' recommendation for the shares due to the lack of perceived potential upside to the stock.
The shares are now trading close to an all-time high, the broker said, having jumped 75% from the lows of last summer. The stock is trading at 17.6 times next year's earnings, above its long-term average.
"Given the relatively rich valuation, we are struggling to see any further medium-term catalysts that could justify us being more positive on the shares," Jefferies said on Thursday.
Nomura has downgraded its rating for drinks giant SABMiller from 'neutral' to 'reduce' with the shares now trading at a nine per cent premium to the 'beer average'.
"The H1 reporting from Heineken yesterday supports our cautious view, with higher input costs, exacerbated by FX movements, especially in C& E Europe and Africa. In addition, price/mix appears to have been weak in C & E Europe, exacerbated by growth in discount channels," the broker said.
Investec has put its target under review for newsagents chain WH Smith following the group's pre-closing trading update on Thursday, saying that the shares merit a higher rating.
The broker has reiterated its 'buy' rating on the stock, saying its investment case is based on "the combination of profit growth, cash generation (= good yield and further buy-backs) and the growth opportunities in Travel." |
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