London close: Footsie finishes flat after long weekend
Market Movers
- techMARK 2,097.89 -0.29%
- FTSE 100 5,775.71 -0.02%
- FTSE 250 11,375.24 -0.64%
- Markets await Jackson Hole symposium
- Miners lower on concerns over Japan
- Chemring drops after profit warning.
Concerns about global economic growth were weighing on sentiment on
Tuesday, meaning that the FTSE 100 was little changed by the close
despite some volatile swings between gains and losses throughout the
session.
Meanwhile, speculation about quantitative easing (QE) measures from the US Federal Reserve
was continuing to do the rounds. Market strategist Brenda Kelly from
CMC Markets said: "The almost absolute certainty displayed in recent
price action that the Fed would ease at Jackson Hole this weekend seems
to have petered out, with the major European indices pulling back
further from their recent highs and entering a consolidative mode."
The Japanese
government reduced its assessment of the economy today, warning that a
slowdown in economic growth overseas and the ongoing Eurozone debt
crisis are key risks to the world's third-largest economy. JPMorgan
Securities Japan and BNP Paribas are forecasting a 0.3% and 0.9% decline
in third-quarter Japanese gross domestic product (GDP), respectively.
Japan's concerns about economic growth overseas will likely have been
exacerbated after the release of some gloomy figures from China and
Spain. It was a revealed yesterday that combined profits in the
industrial sector in China, a major trade partner to Japan,
dropped by a year-on-year rate of 5.4% in July, worse than the 1.7%
decline seen the month before.
Meanwhile, Spanish GDP
declined at a 1.3% annual rate in the second quarter, compared with the
initial estimate of a 1% contraction, the country's national statistics
office said. News that the Generalitat of Catalonia will request
€5.023bn from the Spanish government's liquidity fund spooked markets
today, dampening earlier optimism after a successful short-term bond
auction which saw borrowing costs drop and demand improve.
FTSE 100: Miners drop on Japanese concerns; G4S falls after first-half results
Miners were firmly out of favour today on concerns over the Japanese economy. BHP Billiton fell after announcing the sale of its Yeelirrie uranium deposit in Western Australia to Cameco for $430m. BHP and sector peers ENRC, Kazakhmys and Vedanta were also lower after Morgan Stanley reduced its target for all four stocks.
Security giant G4S
fell after expressing disappointment over the problems related to its
Olympics contract, saying that it will incur a £50m loss on the contract
in the first half. Meanwhile, the company said that a review of its
overhead structure will lead the loss of 1,100 jobs. Nevertheless, the
firm revealed that turnover at constant exchange rates rose 7.5% while
profits were flat.
Retail peers M&S and Kingfisher
were both lower this afternoon. M&S was pulling back after a sharp
rise on Friday after rumours that private equity titan CVC Capital
Partners is considering a takeover offer. Meanwhile, B&Q owner
Kingfisher was lower after Bank of America Merrill Lynch lowered its
rating to 'underperform'.
Drugs giant AstraZeneca was
lower after saying that it has appointed Roche's Chief Operating Officer
as its new Chief Executive Officer. Meanwhile, the firm also announced
that the European Commission has granted marketing authorisation to its
ZINFORO treatment. Sector peer GlaxoSmithKline was suffering from a downgrade by UBS.
Bunzl,
the international distribution and outsourcing group, fell despite
saying that pre-tax profits and revenues in the first half rose 9% and
7%, respectively.
Telecoms group BT rose after Credit Suisse reiterated its 'outperform' rating and saying that it expects BT, along with BSkyB to take broadband market share.
FTSE 250: Chemring drops after profit warning
Defence contractor Chemring
dropped after it issued a profits warning, saying a computer glitch and
production delays are likely to wipe £15m off full-year earnings as it
considers a takeover offer from private equity giant Carlyle.
Heading the other way was chemicals group Yule Catto
after reporting a pre-tax profit of £56m in the first half, up from
£52.4m the year before. Sales, however, fell to £603.3m from £664.3m.
FTSE 100 - Risers
Glencore International (GLEN) 384.00p +4.67%
Carnival (CCL) 2,170.00p +3.73%
International Consolidated Airlines Group SA (CDI) (IAG) 144.90p +2.48%
BT Group (BT.A) 219.50p +2.00%
Capital Shopping Centres Group (CSCG) 334.60p +1.73%
Xstrata (XTA) 939.20p +1.24%
ITV (ITV) 84.40p +1.02%
Barclays (BARC) 188.95p +0.93%
Ashmore Group (ASHM) 334.20p +0.81%
CRH (CRH) 1,140.00p +0.80%
FTSE 100 - Fallers
Eurasian Natural Resources Corp. (ENRC) 318.60p -5.99%
Evraz (EVR) 233.90p -5.23%
Kazakhmys (KAZ) 634.00p -4.01%
Kingfisher (KGF) 276.00p -3.40%
Marks & Spencer Group (MKS) 362.80p -2.39%
Vedanta Resources (VED) 904.00p -2.22%
G4S (GFS) 261.00p -1.95%
Rio Tinto (RIO) 2,862.00p -1.65%
Intertek Group (ITRK) 2,715.00p -1.52%
IMI (IMI) 844.50p -1.46%
FTSE 250 - Risers
Yule Catto & Co (YULC) 158.00p +11.42%
Moneysupermarket.com Group (MONY) 139.20p +6.26%
Ted Baker (TED) 1,017.00p +5.17%
Imagination Technologies Group (IMG) 595.00p +5.03%
Centamin (DI) (CEY) 79.10p +3.87%
Renishaw (RSW) 1,573.00p +2.88%
Menzies(John) (MNZS) 620.00p +2.73%
Carpetright (CPR) 640.00p +2.32%
Dialight (DIA) 1,097.00p +2.14%
Britvic (BVIC) 315.00p +1.65%
FTSE 250 - Fallers
Chemring Group (CHG) 324.00p -12.55%
BTG (BTG) 300.30p -5.77%
Cairn Energy (CNE) 283.70p -4.25%
Bumi (BUMI) 340.00p -4.23%
Afren (AFR) 124.70p -4.00%
EnQuest (ENQ) 111.90p -2.86%
Ophir Energy (OPHR) 531.00p -2.84%
Man Group (EMG) 73.60p -2.84%
Cape (CIU) 187.70p -2.80%
Hunting (HTG) 771.50p -2.77%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe close: Catalonia asks for help, Vestas surges
- Catalonia puts out begging bowl to Spanish government
- Huge gains for wind turbine giant Vestas on takeover rumours
- Japanese government pessimistic on growth
FTSE 100: -0.71%
Dax 30:-0.6%
Stoxx 600: -0.19%
Cac 40: -0.83%
Ibex 35: -0.97%
FTSE MIB: -0.13%
European stocks were mostly down on Tuesday as bad news from Japan and a
request for aid from the Spanish region of Catalonia to the federal
government unsettled markets.
The Japanese government reduced
its outlook across a range of important measures, including industrial
output and personal consumption, as the world's third largest economy
reeled from global weakness in the second quarter.
Officials
highlighted the risk to Japan's economy from a further weakening in
world trade, a particular concern for a historically export-led economy.
In Spain, the government of Catalonia announced it would ask
the already cash-strapped central government for a €5bn loan. The debt
should be manageable following the creation of a fund specifically
designed to help the regions back in July, nevertheless Tuesday's
announcement was a reminder of the perilous state of the Spanish
finances.
COMPANIES
Spanish macro fragility was reflected in significant losses for the country's banks, with Santander, Bankia and Banco de Sabadell all down over 1%.
In Denmark, the world's leading manufacturer of wind turbines, Vestas Wind Systems, gained a huge 18.5% after it announced it was in talks with Japanese rival Mitsubishi Heavy Industries over "strategic cooperation". Vestas has still fallen 89% since August 2007.
The strongest sector on the Stoxx Europe 600 was food and beverage,
which fell 0.15%, compared to the weakest, technology, which dropped
2.09%.
OTHER MARKETS
The euro had gained 0.5% against the dollar by 16:43 to sit at $1.2564.
| US Market Report |
US pre-open: Stocks to start lower
The
main US equity benchmarks are being called to open lower by 0.2% on
average today. That ahead of this next Friday's speech by US Federal
Reserve President, Ben S.Bernanke. It is thought likely that he may give
further hints on how he may proceed with a further round of
quantitative easing.
Nevertheless, it may be worth pointing
out that some market commentary now seems to be questioning just how
effective another round of stimulus will, or will not, be.
Also weighing on market sentiment perhaps, Japan's Cabinet Office has
today downgraded its assessment for the country's economy.
Back on the company front, Lexmark has announced 1.700 lay-offs, equivalent to 13% of its work force.
PVH is rising after raising its earnings guidance for the year.
AOL has announced a $600m share buy-back program.
Small rise in house prices
The Conference Board will release its August consumer confidence survey data at 15:00.
The S&P Case-Shiller 20 city house price index for the month of
June has shown an 0.5% year-on-year rise (Consensus: -0.05%).
Slight gains in bonds
Front month West Texas crude futures are now rising by 0.42% to the 95.87 dollar per barrel level on the NYMEX.
10 year US Treasuries are now rising by 5/32 dollars, with yields at 1.63%. |
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| Broker Tips |
Broker tips: Glaxo, Bunzl, Ophir Energy
UBS has lowered its recommendation for pharmaceuticals giant GlaxoSmithKline from 'buy' to 'neutral', saying that there's limited potential for further upside.
"Given GSK's valuation, and somewhat reduced earnings visibility for
the stock, we see less scope for performance versus peers, and thereby
downgrade GSK to 'neutral'."
The target for the stock has been reduced from 1,625p to 1,525p.
While Investec has maintained its 'hold' rating for distribution and outsourcing group Bunzl, the broker says that company has once again delivered a strong trading performance.
"Whilst we regard Bunzl as a strongly managed business that will
continue to deliver solid growth over the medium term, we believe that
this is largely reflected in the current rating and therefore do not
change our 'hold' recommendation," Morton said.
Credit Suisse has highlighted Ophir Energy as its focus list stock in its sector review of oil and gas explorers and producers (E and Ps).
"We continue to favour select E&P names in Europe. The emphasis is
on the 'E' that provides for uncorrelated returns via the drillbit, as
activity looks set to accelerate," the broker said.
The broker
has maintained its 'outperform' rating for Ophir, highlighting material
near-term exploration programmes in Tanzania, Kenya and Gabon pre-salt
as well as a strong balance sheet. It also reckons that Ophir remains a
potential M&A candidate given the "strategic nature of its asset
portfolio".
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