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Stocks sink ahead of Fed minutes
Market Movers
techMARK 2,097.49 -1.44%
FTSE 100 5,774.20 -1.42%
FTSE 250 11,494.35 -1.25%
Concerns about Japan and Greece pressure stocks
FOMC minutes eyed
CBO warns about ‘fiscal cliff’
Following
steep falls from the off, losses on the Footsie were cemented today
after a poor start on Wall Street as global equity markets reacted
poorly to economic data from Japan and ongoing issues in Greece, while
awaiting for the minutes of the latest Federal Open Market Committee
(FOMC) meeting in the US.
“The attention now turns to the Fed’s
meeting minutes, due after the European close – the minutes will be
under scrutiny given that US economic data over the past few weeks has
improved, leading to a scale back in expectations of QE. Markets are
looking for some insight over the Fed’s stance for upcoming policy
meetings,” said market strategist Ishaq Siddiqi from ETX Capital.
Meanwhile, the Congressional Budget Office (CBO)
warned today that the US economy could shrink in 2013 if the Bush-era
tax cuts expire and automatic spending cuts take effect in January.
Back in London, mining stocks were
among the worst performers as they were weighed down by the news that
Japan swung to a trade deficit of 517.4bn yen (£4.14bn) in July, from a
surplus of 60.3bn yen in July, on the back of slowing demand in Asia and
the Eurozone crisis. Analysts were expecting a deficit of 270bn yen.
Markets were
concerned today about the upcoming meetings between Greek Prime
Minister Antonis Samaras and Eurozone leaders this week as he attempts
to renegotiate the terms of the country’s bailout. He is widely expected
to outline a plan aimed at cutting €13.5bn in expenditures over the
next two years after coming to the conclusion that the original €11.5bn
demanded by the Troika would lead to a €2bn shortfall. However, it is
predicted that he will ask for a two-year extension to comply with the
deficit target.
“All we want is a bit of 'air to breathe' to get
the economy running and to increase state income. More time does not
automatically mean more money," Samaras has said.
FTSE 100: BHP leads miners lower
Metals
and mining stocks dropped today after Japanese trade data disappointed,
weighed on the outlook for demand. BHP Billiton fell after saying that
weakness in commodity markets and industry-wide cost pressures resulted
in earnings declining in the first half. The group also decided against
spending up to $30bn on a uranium and copper mine extension in South
Australia.
Evraz, Fresnillo, Kazakhmys and Rio Tinto were also heavy fallers, while ENRC was lower after being downgraded by both UBS and Citigroup to 'neutral'. However, it should be noted that ENRC, along with FTSE 100 counterparts CRH, InterContinental Hotels, Prudential and Standard Life, all went ex-dividend today.
B&Q owner Kingfisher was
a heavy faller after Deutsche Bank lowered its recommendation for the
stock to 'hold' and cut its target price from 340p to 315p.
Drinks giant Diageo
finished the day flat ahead of its full-year results on Thursday.
Charles Stanley is expecting the firm to deliver a good set of full year
results. "Asia, Africa and Latin America are expected to have been the
drivers of growth, with more subdued performances in North America and
Europe," notes Charles Stanley analyst Sam Hart.
Meanwhile, engineering group IMI sank before its interim results announcement tomorrow.
FTSE 250: Spirax-Sarco falls as first-half profits decline
Steam
trap and pump maker company Spirax-Sarco was out of favour after
reporting a decline in first-half pre-tax profits following higher
material costs, the impact of lower volumes in its main European
factories and the economic downturn in Latin America. Jefferies said
this morning to expect consensus downgrades after a "somewhat
disappointing" set of results.
Bus and rail group Stagecoach
fell after revealing a decline in like-for-like revenue at its UK bus
operations as all of its other divisions grew in the twelve weeks ended
July 22nd.
Heading the other way was waste management firm
Shanks after saying that the Silverburn Shopping Centre in Glasgow is
no longer sending any of its waste to landfill since appointing Shanks
to handle its recycling. Shanks won the recycling contract just six
weeks ago, and has been instrumental in ramping up the shopping centre's
recycling rate from 9% to 97%.
FTSE 100 - Risers
SSE (SSE) 1,354.00p +1.20%
Gemfields (GEM) 37.00p +0.68%
Tullow Oil (TLW) 1,379.00p +0.29%
FTSE 100 - Fallers
Kazakhmys (KAZ) 704.50p -4.15%
Evraz (EVR) 255.50p -3.88%
Eurasian Natural Resources Corp. (ENRC) 356.00p -3.84%
Anglo American (AAL) 1,910.00p -3.68%
Vedanta Resources (VED) 931.50p -3.62%
Fresnillo (FRES) 1,526.00p -3.48%
IMI (IMI) 883.50p -3.12%
Kingfisher (KGF) 285.10p -3.03%
CRH (CRH) 1,129.00p -3.01%
Prudential (PRU) 790.50p -2.83%
FTSE 250 - Risers
Shanks Group (SKS) 88.00p +3.47%
NMC Health (NMC) 196.40p +3.37%
Kentz Corporation Ltd. (KENZ) 360.00p +2.86%
Heritage Oil (HOIL) 208.00p +1.46%
Savills (SVS) 399.20p +1.45%
PayPoint (PAY) 712.00p +1.28%
Petra Diamonds Ltd.(DI) (PDL) 107.30p +1.23%
Afren (AFR) 131.00p +1.08%
Redrow (RDW) 143.20p +0.99%
Dixons Retail (DXNS) 17.56p +0.92%
FTSE 250 - Fallers
Yule Catto & Co (YULC) 149.70p -7.19%
Homeserve (HSV) 218.00p -5.75%
Soco International (SIA) 336.00p -5.27%
Brewin Dolphin Holdings (BRW) 147.90p -4.58%
Man Group (EMG) 76.80p -4.42%
Bodycote (BOY) 352.40p -4.21%
Spirax-Sarco Engineering (SPX) 1,977.00p -4.03%
Ocado Group (OCDO) 67.05p -3.59%
Premier Oil (PMO) 376.00p -3.04%
Mondi (MNDI) 552.50p -2.99%
| FX round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Japan and Greece batter European markets
Japanese trade figures disappoint markets Negotiations ongoing over revised Greek bailout Heineken struggling with rising costs FTSE 100: -1.42% Dax 30: -1.01% Stoxx 600: -1.16% Cac 40: -1.47 Ibex 35: -2.7% FTSE MIB: -1.1%
A widening Japanese trade deficit and concerns over the viability of
Greece’s bailout saw most major European markets retreat on Wednesday.
Figures released by the Japanese Finance Ministry showed the country’s
trade deficit running at 517.4bn yen in July (£4.14bn), market
expectations had been for around 270bn yen (£2.16bn). For a country
which has historically relied on exports for economic growth the figures are startling and give a sense of the scale of the global economic slowdown. In Europe the focus
has been on Greece, where Prime Minister Antonis Samaras is meeting the
head of the “Eurogroup” of finance ministers, Jean-Claude Juncker of
Luxembourg. Samaras is asking for a two-year extension to implement the
reforms that Greece’s lenders have demanded. It’s thought the Eurozone may be willing to make concessions if Samaras commits to the main points of the reform-for-aid plan. COMPANIES The world’s third largest brewer, Heineken,
dropped 1.1% after saying production costs will rise 8% over 2012,
against an initial prediction of 6%. The firm also just missed analysts’
predictions for half-year earnings, which came in at €1.27bn against a
consensus forecast of €1.31bn. Danish wind-turbine maker Vestas Wind Systems fell back 6.4% after announcing plans to cut 1,400 jobs. OTHER MARKETS
The euro had dropped 0.09% against the dollar by 16:48 to stand at
$1.2462. Front month futures contracts on a barrel of Brent crude had
gained 0.17% by 16:35 to stand at $114.84. |
| US Market Report |
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Stocks Mostly Lower But Selling Pressure Relatively Subdued
Stocks have
moved mostly lower over the course of the trading day on Wednesday,
extending the downward move seen over the course of the previous
session. Selling pressure has remained relatively subdued, however,
limiting the downside for the markets.
The major averages have regained some ground in recent trading but currently remain in the red. The Dow is down 55.60 points or 0.4 percent at 13,147.98, the Nasdaq is down 3.50 points or 0.1 percent at 3,063.76 and the S&P 500 is down 3.56 points or 0.3 percent at 1,409.61.
Troubling
economic news from overseas has contributed to the weakness on Wall
Street, with a report from Japan showing that the country swung to a
trade deficit in July.
The report from the Japanese Finance
Ministry showed a trade deficit of 517.4 billion yen in July compared to
a trade surplus of 60.3 billion yen in June. Japanese exports fell 8.1
percent year-over-year, while imports rose 2.1 percent.
A negative reaction to quarterly results from Dell has also weighed on the markets, with the PC giant falling by 6.4 percent.
After the close of trading on Tuesday, Dell reported second quarter adjusted earnings that exceeded analyst estimates but on weaker than expected sales.
The company also lowered its full year earnings outlook and forecast a 2 to 5 percent sequential drop in third quarter revenues.
Nonetheless,
selling pressure has remained subdued, with traders reluctant to make
any significant moves ahead of the release of the minutes of the Federal
Reserve's latest monetary policy meeting later in the afternoon.
Traders
are likely to closely scrutinize the minutes, looking for indications
regarding to the outlook for further monetary stimulus from the central
bank.
Meanwhile, shares of Sunrise Senior Living have
moved sharply higher after the senior living services provider agreed to
be acquired by Health Care REIT for about $845 million in cash.
The
deal values Sunrise Senior Living at $14.50 per share, representing a
62.4 percent premium to its closing price on Tuesday. Shares of Sunrise have jumped nearly 60 percent on the news.
Sector News
With
Dell leading the way lower, computer hardware stocks have come under
considerable pressure on the day. Reflecting the weakness in the
hardware sector, the NYSE Arca Computer Hardware Index is down by 1.1 percent, pulling back further off Monday's nearly three-month closing high.
Lexmark and Hewlett-Packard are posting notable losses along with Dell, falling by 2.9 percent and 2.7 percent, respectively. HP is due to release its quarterly results after the close of trading.
Semiconductor stocks
have also shown a notable move to the downside on the day, dragging the
Philadelphia Semiconductor Index down by 1 percent. NXP Semiconductors
(NXPI:Quote) and Veeco Instruments are turning in two of the sector's
worst performances.
Tobacco, steel, airline, and telecom stocks are also seeing significant weakness, moving lower along with most of the major sectors.
On the other hand, housing stocks have moved sharply higher, driving the Philadelphia Housing Sector Index up by 2.3 percent. Toll Brothers is posting a strong gain after reporting fiscal third quarter earnings and revenues that exceeded analyst estimates.
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| US Market Report |
|
Stocks Mostly Lower But Selling Pressure Relatively Subdued
Stocks have
moved mostly lower over the course of the trading day on Wednesday,
extending the downward move seen over the course of the previous
session. Selling pressure has remained relatively subdued, however,
limiting the downside for the markets.
The major averages have regained some ground in recent trading but currently remain in the red. The Dow is down 55.60 points or 0.4 percent at 13,147.98, the Nasdaq is down 3.50 points or 0.1 percent at 3,063.76 and the S&P 500 is down 3.56 points or 0.3 percent at 1,409.61.
Troubling
economic news from overseas has contributed to the weakness on Wall
Street, with a report from Japan showing that the country swung to a
trade deficit in July.
The report from the Japanese Finance
Ministry showed a trade deficit of 517.4 billion yen in July compared to
a trade surplus of 60.3 billion yen in June. Japanese exports fell 8.1
percent year-over-year, while imports rose 2.1 percent.
A negative reaction to quarterly results from Dell has also weighed on the markets, with the PC giant falling by 6.4 percent.
After the close of trading on Tuesday, Dell reported second quarter adjusted earnings that exceeded analyst estimates but on weaker than expected sales.
The company also lowered its full year earnings outlook and forecast a 2 to 5 percent sequential drop in third quarter revenues.
Nonetheless,
selling pressure has remained subdued, with traders reluctant to make
any significant moves ahead of the release of the minutes of the Federal
Reserve's latest monetary policy meeting later in the afternoon.
Traders
are likely to closely scrutinize the minutes, looking for indications
regarding to the outlook for further monetary stimulus from the central
bank.
Meanwhile, shares of Sunrise Senior Living have
moved sharply higher after the senior living services provider agreed to
be acquired by Health Care REIT for about $845 million in cash.
The
deal values Sunrise Senior Living at $14.50 per share, representing a
62.4 percent premium to its closing price on Tuesday. Shares of Sunrise have jumped nearly 60 percent on the news.
Sector News
With
Dell leading the way lower, computer hardware stocks have come under
considerable pressure on the day. Reflecting the weakness in the
hardware sector, the NYSE Arca Computer Hardware Index is down by 1.1 percent, pulling back further off Monday's nearly three-month closing high.
Lexmark and Hewlett-Packard are posting notable losses along with Dell, falling by 2.9 percent and 2.7 percent, respectively. HP is due to release its quarterly results after the close of trading.
Semiconductor stocks
have also shown a notable move to the downside on the day, dragging the
Philadelphia Semiconductor Index down by 1 percent. NXP Semiconductors
(NXPI:Quote) and Veeco Instruments are turning in two of the sector's
worst performances.
Tobacco, steel, airline, and telecom stocks are also seeing significant weakness, moving lower along with most of the major sectors.
On the other hand, housing stocks have moved sharply higher, driving the Philadelphia Housing Sector Index up by 2.3 percent. Toll Brothers is posting a strong gain after reporting fiscal third quarter earnings and revenues that exceeded analyst estimates.
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| Wednesday newspaper round-up |
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Fresnillo, Lonmin, Spirax-Sarco
Gold and silver miner
Fresnillo is 'well-placed for recovery', that's according to Galvan
Research and Trading, which has labelled the stock as a 'buy'.
"Fresnillo's
bumper production levels look to have been sufficient to ride out the
post September decline in precious metals prices, placing the miner a
strong position to take advantage of any central bank stimulus-based
rebound," said Andrew Gibson, Galvan's head of research.
Credit Suisse has trimmed its target for troubled platinum miner Lonmin and
reiterated its 'underperform' rating on the stock, following the recent
violent protests at its Marikana project in South Africa which left
more than 30 of its workers dead.
"The company needs to raise cash given the likely trajectory of earnings over the next six months," the broker said.
"Under
our normalised framework, a $1bn rights issue is valuation neutral at
current levels for Lonmin shareholders. A smaller $500m rights issue
would be value positive at current levels. However given uncertainty
over achieving the ‘normal’ 950koz target and valuation uncertainty
(high cost) we believe investors should seek theoretical 10-15%+ upside.
For this to happen the price of Lonmin shares would need to fall
another c10%-20% at least depending on size of issue."
Jefferies has
reiterated its 'hold' rating and 2,090p target for steam trap and pump
maker Spirax-Sarco after its interim results were 'somewhat
disappointing'.
The broker said in a research report on Wednesday
morning: "We typically take a more pragmatic view than most on
'misses'; however Spirax's interim results are sharply lower than we had
expected. As expected, Europe, LatAm and currency headwinds impacted
the 1H12 results; however profitability was impacted by a number of
additional 'issues'."
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