Footsie edges higher, but Kingfisher falls
Market Movers
techMARK 2,076.47 +0.47%
FTSE 100 5,695.22 +0.17%
FTSE 250 11,180.83 +0.86%
Kingfisher leads fallers on the Footsie
Upbeat European earnings lift sentiment
Fed says US expanding at 'modest to moderate' rate
UK stocks edged higher in early trading on Thursday on the back of some
upbeat earnings reports from heavyweight European stocks AkzoNobel,
Sandvik and Novartis.
Investors will be digesting last night's release of the Federal Reserve's Beige Book
which said that the US economic grew at a "modest to moderate" pace
over the last month. Stocks closed higher yesterday after Fed Chairman
Ben Bernanke said that he does not expect the US economy to slip back
into recession.
Analyst Cooper Howes from Barclays Capital
said:"The Fed will not feel compelled to act (or not act) on this report
alone, and the decision of whether or not to pursue further monetary
stimulus will depend on developments in the economic data and financial
markets between now and the meeting."
FTSE 100: Rainfall dampens growth at Kingfisher
Kingfisher,
Europe's largest home improvement retailer, was among the worst
performers after sales were hit by the extraordinary bad weather in the
second quarter, though trading in the UK and Ireland was resilient.
Engineering groups IMI, GKN and Weir was high risers after Swedish peer Sandvik released better-than-expected second-quarter results. Meanwhile, Croda International gained on the back of positive read-across from AkzoNobel.
Gas group BG
was under the weather after Credit Suisse downgraded the stock to
'neutral' and cut its target from 1,660p to 1,500p. Mining firm Vedanta dropped after HSBC slashed its target from 1,320p to 1,000p, though it maintained its 'overweight' rating.
Banking group Lloyds
fell after it agreed with the Co-op to sell hundreds of its branches
for an initial consideration of £350m, and up to an additional £400m in
present value.
FTSE 250: Stocks jump after board changes
Halfords
advanced after saying that Chief Executive David Wild is on his bike
leaving the non-executive Chairman Dennis Millard in charge of the shop
while the struggling seller of bikes and car parts looks for a
replacement. The group also reported that LFL sales gained 0.9% in the
five weeks to June 29th.
Oilfield services firm Wood Group
rose after saying that Chairman Sir Ian Wood is to retire in November
and will be succeeded by the group's CEO, Allister Langlands.
West Africa-focused gold miner Avocet Mining
was also in demand after it revealed that CEO Brett Richards is to
resign and will be replaced by the group's Chief Operating Officer
(COO).
Digging deeper at the Simrit-2 exploration well in the Kurdistan region of Iraq has paid off for oil exploration firm Afren as the well's total net oil pay has increased to 460 metres. Shares jumped 7%.
Elsewhere, AIM-listed sports retailer JJB
dropped after saying that it is having to slow down its refurbishment
programme as poor sales mean the group will need an injection of cash
from its backers earlier than planned.
FTSE 100 - Risers
IMI (IMI) 813.50p +2.84%
Smiths Group (SMIN) 1,103.00p +2.70%
Burberry Group (BRBY) 1,265.00p +2.68%
Petrofac Ltd. (PFC) 1,502.00p +2.53%
Weir Group (WEIR) 1,526.00p +2.35%
ARM Holdings (ARM) 487.90p +2.05%
GKN (GKN) 217.20p +1.97%
Antofagasta (ANTO) 1,093.00p +1.96%
Johnson Matthey (JMAT) 2,203.00p +1.61%
International Consolidated Airlines Group SA (CDI) (IAG) 158.70p +1.54%
FTSE 100 - Fallers
Kingfisher (KGF) 269.00p -2.25%
Vedanta Resources (VED) 893.00p -1.81%
BG Group (BG.) 1,294.00p -1.78%
Smith & Nephew (SN.) 650.00p -1.29%
G4S (GFS) 242.60p -0.94%
National Grid (NG.) 664.50p -0.89%
United Utilities Group (UU.) 691.00p -0.72%
Tesco (TSCO) 320.40p -0.56%
Aberdeen Asset Management (ADN) 259.20p -0.50%
Hammerson (HMSO) 461.90p -0.45%
FTSE 250 - Risers
Halfords Group (HFD) 213.50p +8.16%
Afren (AFR) 127.70p +7.40%
Fenner (FENR) 352.60p +4.47%
Cookson Group (CKSN) 633.50p +4.28%
Ruspetro (RPO) 144.30p +3.81%
Elementis (ELM) 193.70p +3.25%
Imagination Technologies Group (IMG) 483.90p +3.24%
Paragon Group Of Companies (PAG) 179.60p +3.22%
Spectris (SXS) 1,532.00p +2.89%
Avocet Mining (AVM) 71.20p +2.89%
FTSE 250 - Fallers
TalkTalk Telecom Group (TALK) 184.40p -2.85%
Ultra Electronics Holdings (ULE) 1,574.00p -1.44%
Barr (A.G.) (BAG) 424.20p -1.30%
Aberforth Smaller Companies Trust (ASL) 585.00p -1.18%
SEGRO (SGRO) 235.00p -1.09%
Gem Diamonds Ltd. (DI) (GEMD) 210.80p -1.08%
Euromoney Institutional Investor (ERM) 783.00p -0.89%
Rathbone Brothers (RAT) 1,329.00p -0.82%
British Assets Trust (BSET) 118.00p -0.76%
NMC Health (NMC) 198.50p -0.75%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Spain fights to maintain access to debt markets
Germany and Italy to vote on ESM today
Spain to auction up to €3bn in medium term debt
Beige book describes growth as modest to moderate overall
Positive reaction to results from IBM and E-Bay
No default risk in Sicily, government says –ANSA/Bbg
Spanish rescue funds can be used by State as credit-line-El Mundo
FTSE 100: 0.11%
Dax-30: 0.30%
Cac-40: 0.36%
FTSE-Mibtel: 0.20
Ibex 35: 0.32%
Stoxx 600: 0.34%
European equities have started the day in positive territory but only slightly so, buoyed by gains in Wall Street and Asia overnight, as Spain fights to maintain access to debt markets and, by some accounts, Italy ponders whether to intervene Sicily.
That ahead of this morning´s auction of up to €3bn in Spanish medium term debt and quarterly results out of Nokia. Critically, Spanish short-term financing costs have also been on the rise this year.
Worth noting as well, Spain´s two main unions have called for protests
today as the Parliament in Madrid gets set to ratify the €65bn in
austerity cuts agreed to with its European Union partners. This after
the latest round of measures, particularly a new reduction in public
sector workers´ wages, appeared to provoke some of the first real public anger
(many Spaniards seem to prefer reducing duplicities with regional
governments instead, a potentially very politically charged issue). So
mucho so in fact that both the King and Crown-prince recently announced a
voluntary reduction in their own annual stipends.
In that
same vein, one of the government´s main allies in the Madrid parliament,
Catalan nationalist group CiU, recently withdrew its support of the
governing Partido Popular following the latter´s decision not to give
the regional authorities another year to meet their deficit targets.
Having said that, even two regions governed by the PP´s own voted
against a recent decision on public deficit targets for regional
governments.
On the other hand, reports on the situation in
Italy are somewhat contradictory. Thus, state news agency ANSA cites
government officials as saying that Sicily only faces a liquidity short-fall of €400m.
Also of possible interest, the Spanish press
is today reporting that the country will also be allowed to deploy its
€100bn rescue fund for buying back its own bonds as well as a credit
line.
Nokia in the firing line
Embattled Finnish mobile-phone maker Nokia
will release its latest quarterly results this morning. Investors will
try to gauge the company´s prospects after its share price cratered this
year.
Highstar Capital is to buy Veolia’s solid waste unit in the US for $1.9bn.
Akzo Nobel,
the world’s largest paintmaker, has released better than forecast
second quarter earnings before interest, taxes, depreciation and
amortization of €593m, an 8% gain.
Swiss pharmaceutical giant Novartis has revealed that pro-forma earnings fell to $3.36bn in quarter two, also better than expected.
From a sector stand-point the best performance on the DJ Stoxx can now
be seen in the following industrial groups: chemicals (1.02%),
industrial goods and services (0.80) and personal goods (0.80%).
Light data calendar
Italian industrial orders for the month of May will be released at 09:00.
Crude on the rise again
The euro/dollar is now 0.26% higher at 1.2320.
Front month Brent crude futures are rising again, by 1.063 dollars, to the 106.25 dollar per barrel mark on the ICE.
UK Event Calendar
INTERIMS
Howden Joinery Group
INTERIM DIVIDEND PAYMENT DATE
Edinburgh Worldwide Inv Trust, Euromoney Institutional Investor
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Payments (EU) (09:00)
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Existing Home Sales (US) (15:00)
Initial Jobless Claims (US) (13:30)
Leading Indicators (US) (15:00)
Philadelphia Fed Index (US) (15:00)
GMS
Straight
FINALS
Sports Direct International
IMSS
Britvic, Halfords Group, Imperial Tobacco Group
SPECIAL DIVIDEND PAYMENT DATE
Capital Gearing Trust
AGMS
Acal, API Group, Energy Technique, Gulf Keystone Petroleum Ltd. (DI),
JJB Sports, KCOM Group, Land Securities Group, Mckay Securities,
Mothercare, Shanks Group, Shires Income
TRADING ANNOUNCEMENTS
Kingfisher, Mothercare
UK ECONOMIC ANNOUNCEMENTS
Internet Retail Sales (09:30)
Retail Sales (09:30)
Trends in Lending (09:30)
FINAL DIVIDEND PAYMENT DATE
British Polythene Industries, Capital Gearing Trust, Hargreave Hale AIM
VCT 2, Octopus VCT , Restaurant Group, Tongaat-Hulett Ltd.
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| US Market Report |
Tech Stock Rally Leads To Strength On Wall Street
Stocks moved
notably higher over the course of the trading day on Wednesday, adding
to the gains posted in the previous session. The markets benefited from
considerable strength that emerged among technology stocks.
The major averages hovered firmly in positive territory in afternoon trading, holding on to strong gains. The Dow rose 103.16 points or 0.8 percent to 12,908.70, the Nasdaq jumped 32.56 points or 1.1 percent to 2,942.60 and the S&P 500 climbed 9.11 points or 0.7 percent to 1,372.78.
The
strength on Wall Street was largely due to the rally by tech stocks,
which moved sharply higher despite disappointing guidance from
semiconductor giant Intel (INTC).
While Intel reported
better than expected second quarter earnings after the close of trading
on Tuesday, the company also reported weaker than expected revenues and
lowered its full year revenue growth outlook. Nonetheless, shares of
Intel rose by 3.3 percent.
Tech stocks also benefited from
bargain hunting following recent weakness in the sector, with the gain
by Intel extending a recovery from the six-month closing low it set last
Thursday.
Buying interest was also generated by a report
released by the Commerce Department before the start of trading showing a
bigger than expected rebound in housing starts in the month of June.
The
report showed that housing starts jumped 6.9 percent to an annual rate
of 760,000 in June from the revised May estimate of 711,000. Economists
had expected housing starts to climb to 745,000 from the 708,000
originally reported for the previous month.
On the other hand, building permits, an indicator of future housing demand, fell by 3.7 percent to an annual rate of 755,000 in June from the revised May rate of 784,000.
In other economic news, the Fed's Beige Book report said overall economic activity continued to expand at a modest to moderate pace in June and early July.
The
report also said employment levels grew at a tepid pace since the last
report and noted that price inflation was modest across most areas of
the country. Looking ahead, the Fed said contacts remained cautiously
optimistic about future business conditions.
Traders also kept an eye on Federal Reserve Chairman Ben Bernanke's second day of testimony on Capitol Hill, with the Fed Chief facing questions from the House Financial Services Committee.
Bernanke's
prepared remarks were unchanged from those he delivered to the Senate
Banking Committee on Tuesday. He reiterated that the Fed is prepared to
take further action if necessary and continued to urge Congress to
address the upcoming fiscal cliff.
Sector News
Semiconductor stocks
turned in some of the tech sector's best performances, resulting in a
3.6 percent gain by the Philadelphia Semiconductor Index. With the gain,
the index bounced well off the seven-month closing low it set in the
previous session.
NXP Semiconductors (NXPI) and Mellanox
Technologies (MLNX) posted standout gains within the semiconductor
sector, jumping by 9.1 percent and 6.7 percent, respectively.
Networking and computer hardware stocks also saw considerable strength on the day. The NYSE Arca Networking Index advanced by 2.9 percent, while the NYSE Arca Computer Hardware Index surged up by 2.7 percent.
While buying interest outside of the tech sector was more subdued, significant strength was visible among defense, oil service, and health insurance stocks.
On the other hand, airline, brokerage, and gold stocks showed notable moves to the downside over the course of the trading day.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While Japan's Nikkei 225 Index edged down by 0.3 percent, China's Shanghai Composite Index advanced by 0.4 percent.
In the bond market, treasuries showed
a modest move back to the upside after giving back some ground in the
previous session. Subsequently, the yield on the benchmark ten-year
note, which moves opposite of its price, slipped 2.2 basis points to
1.479 percent.
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| Thursday newspaper round-up: Britain, Sicily, BP |
In
an interview with The Daily Telegraph, Mr Cameron says that he now
expects the crisis in the eurozone to drag on for years, blighting the British economy.
He indicates that the programme of spending cuts, initially planned to
take five years, is now likely to last for the entire decade. Mr Cameron
insists that he still wants to cut tax but that any reductions would
have to be funded by even greater public spending reductions. Asked
whether the austerity programme would now last a decade until 2020, the
Prime Minister replies: “I think it’s going to be...this is a period for
all countries, not just in Europe but I think you will see it in
America too, where we have to deal with our deficits and we have to have
sustainable debts. I can’t see any time soon when…the pressure will be
off.
Italian premier Mario Monti is mulling emergency action to take direct control of Sicily’s regional government
before the island spirals into a full-blown financial crisis, fearing
contagion to the rest of Italy. Mr Monti held an “urgent” meeting with
the country’s president Giorgio Napolitano on Wednesday to grapple with
the constitutional issue after it emerged that the region faces a
deficit of up to €7bn (£5.49bn) this year and is in danger of default
without sweeping cuts. Sicily’s regional councillor Andrea Vecchio
warned that the island has run out of money. “I’m afraid we will soon no
longer be able to pay civil servants’ salaries,” he said. “The
developments in Sicily are very serious,” said Prof Giuseppe Ragusa from
Luiss University in Rome. “It is just the sort of negative shock we
don’t want right now. Everything has to go perfectly for Italy to pull
through,” The Telegraph writes.
BP was facing a
tactical headache last night after four Russian billionaires in the oil
group’s TNK-BP joint venture crashed in on its plan to sell its stake.
Alfa Access Renova (AAR) said yesterday that it had formally notified BP
that it was interested in increasing its 50% ownership in TNK-BP. The
move means that BP must spend the next 90 days in “good faith”
negotiations with AAR about offloading a stake that the Russians value
at between $16bn and $20bn. BP is understood to value the stake
considerably higher and has attracted interest from two other buyers — a
Russian government entity and a possible Chinese bidder. However, it
cannot seal a deal until it has concluded talks with its Russian
partners, The Times reports.
Regulators are focusing on at
least four of Europe’s biggest banks as they investigate the attempted
manipulation of the region’s benchmark interest rate, suspecting that Barclays’s
traders were the ringleaders of a circle that included Crédit Agricole,
HSBC, Deutsche Bank and Société Générale. Evidence of links between
traders at all four banks and Barclays’ former euroswaps trader Philippe
Moryoussef is under scrutiny, people involved in the process have told
the Financial Times.
Sir Mervyn King has invited the
heads of the world’s leading central banks to make proposals to reform
Libor, the flawed series of interest rates at the heart of the financial
system. The Governor of the Bank of England has written to members of
the Economic Consultative Committee, which he heads, suggesting a dinner
on September 9 in Basel, Switzerland, as a forum for exchanging ideas
on addressing Libor’s shortcomings. His proposal came after the US
Government declared that it wanted to take reform of the bank
interest-rate setting process out of the hands of Threadneedle Street
after British officials appeared to ignore warnings about the scale of
the rate-rigging scandal, according to The Times.
Chinese President Hu Jintao has pledged African governments $20bn in credit over the next three years and called for more China-Africa coordination
in international affairs to defend against the "bullying" of richer
powers. China has emerged as Africa's main trading partner and a major
source of investment for infrastructure. But its presence has also
sparked concerns about labour abuses and corruption. Hu made the lending
pledge on Thursday during the opening ceremony of the Forum on
China-Africa Cooperation in Beijing. Hu also said China and African
countries, as developing nations, should better coordinate their
response to international affairs to counter the practices of "the big
bullying the small, the strong domineering over the weak and the rich
oppressing the poor," The Telegraph writes.
The trade minister, Lord Green, has been drawn in to the HSBC
money laundering scandal after Labour warned he had "serious questions"
to answer about the way the bank laundered money for drug cartels,
terrorists and pariah states while he was at the helm. Green was chief
executive of Britain's biggest bank between 2003 and 2006 and was its
chairman until 2010 when he resigned to take up a position of trade
minister in the coalition government. A damning Senate report - which
concluded the bank had a "pervasively polluted" culture - covers the
period 2004 to 2010 and shows that HSBC subsidiaries moved billions of
dollars around the financial system from countries such as Iran and
Syria as well moving cash for Mexican drug cartels, The Guardian says.
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