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Footsie down on mining weakness
Market Movers
techMARK 2,124.20 +0.03%
FTSE 100 5,833.04 -0.54%
FTSE 250 11,498.12 -0.05%
MPC hints at further QE
UK jobless rate improves in July
ENRC leads miners lower
Stocks held on to early losses on Wednesday afternoon, meaning that the
FTSE 100 was trading within a narrow range for most of today's session
with heavy falls in the mining sector keeping the index firmly in the
red.
Market analyst Michael Hewson from CMC Markets said this
afternoon: "Markets have had a particularly negative bias today, not
surprising given that they are close to four-month highs and economic
data continues to point to a fairly uncertain outlook."
The Monetary Policy Committee
(MPC) voted unanimously this month in favour of keeping the central
bank's key interest rate at 0.5% and maintaining the asset purchase
programme at £375bn. The central bank said it was waiting to see what
impact its Funding for Lending Scheme (FLS) - aimed at boosting bank
credit - would have on the economy.
"For most members, the
decision this month was relatively straightforward," the minutes said.
However, for others, "the decision was nevertheless more finely
balanced, since a good case could be made at this meeting for more asset
purchases."
"Our central view is that the MPC will give the
green light for another £50bn of QE, most likely when the current
programme expires in November," said analysts at Investec.
Meanwhile, the UK unemployment
rate fell to 8.0% in July from 8.1% in June, versus economists'
expectations of no change. The number of people claiming Job-seeker's
Allowance eased by by 5,900 to 1.59m in July, while the number of people
out of work dropped 46,000 to 2.56m in the three months to June.
Across the pond, markets opened tentatively as investors had to sift through a barrage of mixed US economic data.
The Empire State manufacturing index and consumer price index both came
in below expectations, while industrial output figures grew more than
forecast.
FTSE 100: ENRC and the miners provide a drag
Diversified mining giant Eurasian Natural Resources Corp
(ENRC) dropped after being hit by a fall in commodity prices and
challenging economic conditions in the first half: both revenues and
profits were significantly lower than the same period in 2011 while the
group slashed its interim dividend by 59.4%. Sector peers Anglo American, Fresnillo, Rio Tinto and Vedanta
were also heavy fallers, though they all went ex-dividend today,
meaning that investors will no longer have the right to their respective
dividends. Cigarette giants Imperial Tobacco and British American Tobacco
(BATS) were being weighed down, along with the global tobacco sector,
after a legal challenge to Australia's decision to insist cigarettes are
sold in plain packing was thrown out. BATS also went ex-dividend today. Standard Chartered
jumped after having reached a $340m settlement with the New York
Department of Financial Services (DFS) over claims its US subsidiary
illegally processed payments for Iran. Investec said that while
uncertainty still remains, the settlement reduces the risk of the group
loosing its banking licence. Bank of America and Oriel Securities both
upgraded their ratings on the stock to 'buy' today. Insurance group Resolution was also a high riser after abandoning plans to split itself up and saying it would overhaul its board structure.
FTSE 250: FirstGroup dives after West Coast win
Transport firm FirstGroup
was a heavy faller in spite of winning the West Coast franchise,
awarded by the Department for Transport. The contract runs from December
2012 to 2026 and has annual revenues of around £900m for FirstGroup.
Panmure Gordon said this morning that while this is a
"significant franchise win", it was probably already priced into the
stock with shares having risen strongly in recent weeks.
International infrastructure specialist Balfour Beatty headed the other way after underlying profits came in higher than expected.
FTSE 100 - Risers
Standard Chartered (STAN) 1,426.50p +4.12%
Resolution Ltd. (RSL) 226.30p +2.86%
ARM Holdings (ARM) 584.00p +1.74%
Rexam (REX) 441.00p +1.50%
Experian (EXPN) 1,002.00p +1.01%
Shire Plc (SHP) 2,018.00p +0.95%
Burberry Group (BRBY) 1,374.00p +0.88%
Centrica (CNA) 325.70p +0.87%
Capita (CPI) 738.50p +0.82%
United Utilities Group (UU.) 728.00p +0.76%
FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 379.60p -8.46%
Rio Tinto (RIO) 3,038.00p -4.76%
Vedanta Resources (VED) 919.50p -4.22%
Evraz (EVR) 262.40p -3.95%
Anglo American (AAL) 1,939.50p -3.87%
CRH (CRH) 1,117.00p -3.71%
Fresnillo (FRES) 1,489.00p -3.62%
Kazakhmys (KAZ) 715.00p -2.46%
BHP Billiton (BLT) 1,936.50p -2.27%
Polymetal International (POLY) 906.00p -2.16%
FTSE 250 - Risers
Salamander Energy (SMDR) 212.90p +5.61%
Home Retail Group (HOME) 89.35p +5.49%
Interserve (IRV) 335.20p +3.46%
EnQuest (ENQ) 118.10p +2.79%
Barratt Developments (BDEV) 146.60p +2.73%
Informa (INF) 406.00p +2.68%
BH Global Ltd. USD Shares (BHGU) 11.59 +2.57%
Petra Diamonds Ltd.(DI) (PDL) 102.00p +2.51%
Euromoney Institutional Investor (ERM) 764.50p +2.21%
Persimmon (PSN) 682.50p +2.17%
FTSE 250 - Fallers
Man Group (EMG) 79.40p -7.73%
FirstGroup (FGP) 243.20p -6.10%
Ruspetro (RPO) 142.90p -5.11%
New World Resources A Shares (NWR) 288.10p -4.41%
Daejan Holdings (DJAN) 3,059.00p -3.50%
Phoenix Group Holdings (DI) (PHNX) 476.80p -3.13%
NMC Health (NMC) 192.80p -3.12%
Petropavlovsk (POG) 432.80p -2.89%
Travis Perkins (TPK) 1,065.00p -2.65%
SDL (SDL) 650.00p -2.55%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Miners weighed by China slowdown fears
Market movers
CAC 40: -1 at 3,449
DAX: -28 at 6,947
IBEX 35: +4 at 7,129
MIB: Closed
It was a largely inconclusive day for European stocks, with mixed data from the US leaving investors confused. In the US, the Empire State manufacturing index fell to -5.9 this month, well down from 7.4 in July. Consensus forecasts were for a more modest fall to 7.0.
If that outcome was disappointing, there was better news from the US
factory floor, with industrial output increasing by 0.6% in July,
slightly ahead of the 0.5% growth expected.
Mining stocks had a bad day. An official at Brazilian iron ore miner Vale put mining bulls in a bad mood when he suggested that China's "golden years" as the engine of global growth are behind it.
That pronouncement also seemed to hit demand for steel makers such as ArecelorMittal and ThyssenKrupp.
Results from Kazakhstan-focused miner ENRC
did not help sentiment towards the mining sector. Eurasian Natural
Resources Corp (to give it its full name) was hit by a fall in commodity
prices and challenging economic conditions in the first half, meaning
that both revenues and profits were significantly lower than the same
period in 2011.
Meanwhile, comments from European Economic and
Monetary Affairs Commissioner Olli Rehn have put the issue of a Spanish
bailout back in the spotlight.
Speaking on Bloomberg
Television yesterday Rehn signalled that Spain's government is
considering a request for a sovereign bailout although no decision has
been made.
"The Spanish government has an open mind on this
issue, but no decision has been made," Rehn said. "We stand ready to act
if there is a request."
On the companies front, Dutch phone company Royal KPN has yanked the proposed sale of its Belgian mobile-phone unit, Base, as it has not attracted the level of bids it hoped for.
Nokia,
which was one of the big fallers in Europe yesterday as new market
research data suggested it continues to bleed market share in the mobile
phone market, has bounced back today after its Chief Executive Officer,
former Microsoft man Stephen Elop, told the Reuters news agency that
the Finnish handset maker will stick to using Microsoft operating system
for phones. The Microsoft platform is an also-ran in the world of
mobile phones.
US rating agency S&P tried to spoil the
party, downgrading its credit rating for Nokia to BB- from BB+ and
reiterating a negative outlook for further downgrades. The move places
the Finnish company's rating further into junk status.
S&P
explained that Nokia's second quarter's results and third quarter
outlook were below initial expectations. The rating agency expects
Nokia's net cash position to fall below 3 billion euros before the end
of the year. It now considers the group's business risk profile to be "weak" and the financial risk to be "significant" as opposed to intermediate.
Danish brewer Carlsberg has released what are probably
not the best results in the world, covering the second quarter.
Earnings before interest and tax declined to DKr.3.47bn, versus
expectations in the market of DKr.3.9bn. Revenue was up 4.5% to
DKr.19.6bn, however. With currency effects stripped out, the top line
rose 2%.
Carlsberg stuck by its full year earnings guidance,
banking on a better rouble exchange rate - Russia is a key market for
the brewer - offsetting the effects of a soggy summer.
Swiss cement maker Holcim
proved that its management structure is not set in concrete as it
announced an overhaul that will see three managers exit the firm's
executive committee.
The firm returned to the black with a
quarterly profit of CHF.379m, versus market expectations of CHF.353m.
Sales edged up 2% to CHF.5.6bn, slightly less the CHF.5.7bn the market
had been expecting.
DAX risers
K+S € 40.17 +0.99%
E.ON € 17.95 +0.73%
Merck KGaA € 86.58 +0.51%
DAX Fallers
ThyssenKrupp € 15.77 -2.32%
Metro € 23.51 -1.47%
Volkswagen € 144.95 -1.16%
CAC 40 - Risers
Technip (TEC) € 87.40 +1.46%
Sanofi (SAN) € 68.76 +1.31%
Credit Agricole (ACA) € 3.99 +1.17%
Unibail-Rodamco (UL) € 163.70 +0.99%
Veolia Environnement (VIE) € 8.33 +0.96%
Danone (BN) € 49.29 +0.79%
Legrand SA (LR) € 26.98 +0.67%
GDF Suez (GSZ) € 19.73 +0.66%
Societe Generale (GLE) € 20.35 +0.47%
EADS (EAD) € 30.41 +0.45%
CAC 40 - Fallers
ArcelorMittal SA (MT) € 12.42 -2.82%
Alstom (ALO) € 27.75 -1.37%
Vinci (DG) € 34.75 -1.18%
Bouygues (EN) € 21.84 -1.15%
Lafarge (LG) € 37.01 -1.10%
Carrefour (CA) € 15.77 -0.91%
Vallourec (VK) € 36.42 -0.86%
LVMH (MC) € 133.30 -0.71%
Pernod Ricard (RI) € 87.91 -0.62%
PPR (PP) € 127.15 -0.55%
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| US Market Report |
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Stocks Continue To Show A Lack Of Direction
Stocks
continue to show a lack of direction in mid-day trading on Wednesday,
extending the sideways move seen over the past week. A mixed batch of
U.S. economic data is contributing to the lackluster performance on Wall
Street.
The major averages are currently turning in a mixed performance, with the Dow down 1.74 points or less than a tenth of a percent at 13,170.40, while the Nasdaq is up 12.24 points or 0.4 percent at 3,029.22 and the S&P 500 is up 1.49 points or 0.1 percent at 1,405.42.
The
choppy trading comes as traders continue to express uncertainty about
the near-term outlook for the markets following the release of several
key U.S. economic reports.
While the New York Federal Reserve
released a report showing an unexpected contraction in regional
manufacturing activity, separate reports showed a bigger than expected
increase in industrial production and an unexpected improvement in
homebuilder confidence.
The New York Fed said its general
business conditions index dropped to a negative 5.9 in August from a
positive 7.4 in July, with a negative reading indicating a contraction
in regional manufacturing activity. Economists had expected the index to
show a much more modest decrease to 7.0.
Meanwhile, the Federal Reserve
said industrial production increased by 0.6 percent in July compared to
economist estimates for an increase of about 0.5 percent. The growth
reflected increased output in each of the manufacturing, mining, and
utilities sectors.
A separate report released by the National Association of Home Builders
showed that its index of homebuilder confidence climbed to 37 in August
from 35 in July. The increase came as a surprise to economists, who had
expected the index to come in unchanged compared to the previous month.
With the unexpected increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.
The
Labor Department also released a report showing that consumer prices
unexpectedly came in unchanged for the second consecutive month in July.
Among individual stocks, shares of Target (TGT)
have moved to the upside after the discount retailer reported better
than expected second quarter earnings and raised its full-year guidance.
Target is currently posting a 2.4 percent gain.
Apparel retailer Abercrombie & Fitch
is also turning in a strong performance after reporting second quarter
earnings that fell year-over-year but came in above analyst estimates.
Shares of Abercrombie & Fitch have surged up by 8.8 percent.
Meanwhile, shares of Deere (DE)
have tumbled by 6.9 percent after the agricultural equipment giant
reported third quarter earnings that increased by less than analysts had
expected. The company also lowered its full-year revenue guidance.
Sector News
While
most of the major sectors are showing only modest moves, networking
stocks have shown a strong move back to the upside on the day. The NYSE Arca Networking Index has risen by 1.3 percent, partly offsetting the 2.3 percent loss it posted in the previous session.
Polycom (PLCM) and Adtran (ADTN) are turning in two of the networking sector's best performances, advancing by 4.1 percent and 2.8 percent, respectively.
Considerable strength has also emerged among health insurance stocks, as reflected by the 1.3 percent gain being posted by the Morgan Stanley Healthcare Payor Index. Centene (CNC), WellCare (WCG) and Health Net (HNT) are posting notable gains.
Trucking, semiconductor, and railroad stocks are also seeing moderate strength, while steel stocks have come under pressure on the day. The NYSE Arca Steel Index is down by 1.3 percent, moving lower for the third straight day.
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| Broker tips |
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HSBC, StanChart, FirstGroup
Investec has moved its recommendation on banking giant HSBC from 'buy' to 'hold', saying that there is limited upside left in the stock. The shares are trading just 2% below 12-month highs in spite of a "wide assortment of gathering headwinds." Investec said that the first-half results showed a "creditable" cost
performance and improving impairments. However, one central issue
hasn't changed: "Customer loan growth is anaemic as HSBC struggles to
identify sufficient
opportunities within risk appetite in its core growth markets of Hong
Kong, Rest of Asia-Pacific and the United Kingdom to offset the
continuing (accelerated) run-off of legacy or non-strategic assets in
North America and elsewhere." Standard Chartered's
settlement with New York regulators has reduced the tail risk
surrounding the bank and while threats still remain, Nomura has pushed
its rating on the stock back up to 'buy'. "As investigations
are ongoing, there is still uncertainty around the ultimate size of the
penalty, but the key threat to STAN was the loss of its banking licence,
and we see this risk to be materially lower now." Panmure Gordon has upped its target price for FirstGroup after the West Coast win for the transport group but has maintained its 'hold' recommendation for the stock.
The broker has raised its target for the shares from 230p to 280p to
reflect the "significant franchise win", however as the shares have
risen strongly in recent weeks, the broker thinks that the win has been
largely priced in and maintains its neutral stance on the stock. |
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