Markets look to the ECB for a boost
Market Movers
techMARK 2,088.54 -0.30%
FTSE 100 5,723.51 +0.19%
FTSE 250 11,170.73 -0.14%
Fed holds fire on further stimulus
BoE and ECB decisions expected later today
ECB expected to do 'whatever it takes'
The Footsie rose moderately on Thursday morning in spite of the Federal
Reserve disappointing US markets last night, as investors looked ahead
to key policy decisions in the UK and Europe later on today.
The Federal Reserve Open Market Committee
yesterday decided to leave all its main policy settings unchanged,
including most of the language employed in its post-meeting statement.
While Fed Chairman Ben Bernanke noted that the recovery had lost
momentum
- leading to suggestions that more QE may be on the way - analyst Craig
Erlam from Alpari said this morning: "Bernanke's comments appeared very
similar to those of the previous meetings and with the Fed reaffirming
their commitment to Operation Twist until the end of the year, I'd be surprised to see QE3 announced next month."
Meanwhile, the Monetary Policy Committee (MPC) from the Bank of England
(BoE) is due to make an announcement at midday and while the BoE hinted
about a potential rate cut at the last meeting, it is widely expected
to maintain the Bank Rate at 0.5% and its asset purchase programme at
£375bn. "Although we expect the MPC to loosen policy further the current
asset purchase plan is due to run until November, and we believe the
MPC will wait until then before making any further changes," said
analysts
at Barclays Capital.
However, the big event of the day will most likely be the European Central Bank's
(ECB's) decision at lunchtime. Last week, ECB President Mario Draghi
said that he was prepared to do do "whatever it takes to preserve the
euro…and believe me, it will be big enough".
"Today, ECB
President Draghi will restate his commitment to intervening in the
sovereign-debt market if needed. For the time being, however, the ECB
will probably prefer other measures (involving EFSF money) being
adopted," said analysts at UniCredit this morning in an e-mailed report.
FTSE 100: Smith & Nephew on the up after ramping divi
Medical devices specialist Smith & Nephew
rose despite reporting a slight decline in second-quarter trading
profit and revenue, as it whacked up its dividend, embarking on a
progressive dividend policy on the back of the success of its recent
restructuring.
Asset manager Schroders also gained after reporting an increase in assets under management over the first half; however, profits slipped year-on-year.
Heading the other way was temporary power and temperature control group Aggreko which said that underlying first-half revenues were affected by weakness in Europe, where growth is "patchy".
Also lower was defence contractor BAE Systems
which is suffering from reduced military spending in both the US and
UK, while a crucial fighter jet deal with Saudi Arabia has been hit by
delays. First-half sales were down 11%.
RSA Insurance Group
advanced after claiming a solid performance in a challenging
environment in the first half of 2012, even though profits fell by more
than a third.
FTSE 250: SEGRO gains after first-half results, disposal
Industrial property group SEGRO
rose strongly after saying that pre-tax profits gained 5.3% in the
first half despite net rental income falling by 3.4%. The firm also
reported today that it has completed the sale of a portfolio of 10
non-core UK industrial estates for £110m.
Natural resources, land and property consultancy group RPS
was in demand after revealing a slight increase in pre-tax profit
during the second half and saying it remains on course to meet full year
forecasts.
Communications technology firm Spirent Communications
tanked after it cautioned that overall growth in the second half may
reduce to mid- to low-single digit increase amid ongoing macro-economic
uncertainty.
High-flying Ophir Energy disappointed the
market, dropping 9%, as it revealed its gas discovery at the Papa-1 well
off the coast of Tanzania is likely to contain lower recoverable
resources than it had hoped for.
FTSE 100 - Risers
Smith & Nephew (SN.) 673.00p +2.05%
Schroders (SDR) 1,311.00p +1.47%
BP (BP.) 432.85p +1.12%
Randgold Resources Ltd. (RRS) 5,740.00p +1.06%
International Consolidated Airlines Group SA (CDI) (IAG) 164.10p +1.05%
British American Tobacco (BATS) 3,468.50p +0.83%
InterContinental Hotels Group (IHG) 1,595.00p +0.82%
Diageo (DGE) 1,751.50p +0.81%
Carnival (CCL) 2,194.00p +0.78%
Standard Chartered (STAN) 1,529.00p +0.76%
FTSE 100 - Fallers
Aggreko (AGK) 2,061.00p -2.78%
GKN (GKN) 206.80p -2.22%
BAE Systems (BA.) 307.00p -1.73%
Evraz (EVR) 234.70p -1.39%
Vedanta Resources (VED) 958.50p -1.24%
Anglo American (AAL) 1,897.50p -1.17%
Eurasian Natural Resources Corp. (ENRC) 384.60p -1.08%
IMI (IMI) 824.00p -1.08%
Ashmore Group (ASHM) 327.40p -1.00%
Lloyds Banking Group (LLOY) 30.40p -0.98%
FTSE 250 - Risers
SEGRO (SGRO) 237.50p +4.72%
Ruspetro (RPO) 152.20p +3.26%
RPS Group (RPS) 240.00p +1.95%
NMC Health (NMC) 199.80p +1.94%
FirstGroup (FGP) 234.50p +1.87%
Interserve (IRV) 326.70p +1.87%
TUI Travel (TT.) 186.50p +1.80%
Stagecoach Group (SGC) 291.70p +1.78%
Redrow (RDW) 128.20p +1.75%
Phoenix Group Holdings (DI) (PHNX) 488.00p +1.60%
FTSE 250 - Fallers
Spirent Communications (SPT) 140.10p -16.85%
Ophir Energy (OPHR) 529.00p -9.18%
Aquarius Platinum Ltd. (AQP) 35.12p -5.84%
JD Sports Fashion (JD.) 670.00p -2.19%
Man Group (EMG) 80.25p -2.13%
Hunting (HTG) 773.00p -1.78%
Fenner (FENR) 355.50p -1.66%
Chemring Group (CHG) 288.60p -1.64%
Petropavlovsk (POG) 414.20p -1.59%
Beazley (BEZ) 154.80p -1.53%
| FX round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Dollar perks up after Fed
The dollar advanced
against major currencies on Wednesday as the Federal Reserve held back
from announcing new stimulus measures to stimulate the US economy.
At
the conclusion of its two-day meeting the Fed said it remained
disappointed with the slow progress of bringing down the nation's
jobless rate, which currently stands at 8.2 per cent.
While the central bank
indicated that it would take necessary action, if needed, hopes that
new measures would be announced on Wednesday were dashed. The Fed also
downgraded its US economic outlook.
The dollar index, which
measures the greenback against a basket of six other currencies, climbed
to 83.070 from 82.619 on Tuesday.
The dollar index had risen
sharply after figures from ADP showed private-sector payrolls rose
163,000 in July, ahead of the 120,000 increase pencilled in by
economists. However momentum for the dollar index later faded.
The dollar rose 0.4% against the Japanese yen to buy ¥78.42 following the conclusion of the Fed meeting.
One day ahead of the European Central Bank's
monthly policy, the euro lost ground against the dollar. The ECB is
widely expected to keep its main lending rate unchanged at 0.75%.
Last
week ECB President Mario Draghi increased hopes that the central bank
could resume its bond purchase programme, to help lower borrowing rates
in Spain and Italy, after his comments that he would do everything
necessary to preserve the euro.
The British pound eased to
$1.5552 from $1.5682 in the previous session after a disappointing
economic data and ahead of the Bank of England's monthly rate decision
meeting.
The latest data showed UK manufacturing production fell at its fastest rate in over two years in July, after heavy declines in output and new orders.
Separately
figures from Nationwide showed British house prices fell at their
fastest annual rate in nearly three years last month.
UK Event Calendar
INTERIMS
4Imprint Group, Aggreko, Alliance Trust, BAE Systems, Ladbrokes,
Millennium & Copthorne Hotels, Robert Walters, RPS Group, RSA
Insurance Group, Schroders, Schroders (Non-Voting), SEGRO, Smith &
Nephew, Spirent Communications, Trinity Mirror
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)
Factory Orders (US) (15:00)
Goods Orders (US) (15:00)
Initial Jobless Claims (US) (13:30)
Q2
Millennium & Copthorne Hotels, Smith & Nephew
TRADING ANNOUNCEMENTS
Hyder Consulting
GMS
Forte Energy NL
IMSS
Thomas Cook Group
AGMS
AFI Development, African Minerals Ltd., Federal Bank Ltd (The) GDR (REGS), Hyder Consulting, Investec
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
Burberry Group, Dairy Crest Group, De La Rue, Dee Valley Group, Dee
Valley Group (Non-Voting), Mckay Securities, UBC Media Group
| US Market Report |
Stocks down as Fed says no to further stimulus
Dow Jones -32.55 to 12,976.13
Nasdaq -19.31 to 2,920.21
S&P 500 -4.00 to 1,375.32
US stocks finished the day lower across the board on Wednesday after the Federal Reserve refused to budge on monetary policy.
While the Fed opted to stay away from any further quantatitive easing,
it did acknowledge that economic activity has decelerated somewhat over
the first half of this year.
In other news, the ISM's
manufacturing sector gauage for July came in below expectations, while
private sector payrolls beat forecasts.
Companies
Pioneer Natural Resources
climbed higher after second quarter revenue came in significantly
higher and its net resource potential rose from five billion barrels oil
equivalent to seven billion.
Botox maker Allergan was another strong riser after a positive second quarter income which reported an improved full year financial outlook.
Injectable drugs manufacturer Hospira also rose after beating analyst expectations in its second quarter results.
Meanwhile, heading the other way was DreamWorks Animation which suffered a heavy decrease in its second quarter income.
Knight Capital
experienced a 20% decline in its shareprice, hitting a 12 month low,
after it reported software problems which had caused subsequent routing
issues.
ISM below expectations as export orders fall
The ISM´s manufacturing sector gauge for the month of July has come in
at 49.8, above last month´s reading of 49.7 but below the 50.2 expected
by the consensus.
This is Barclay´s opinion on the data:
“Despite the modest rise in headline new orders, there was a continued
decline in new export orders to 46.5. This index stood at 59.0 as
recently as April, but continued concerns about weakness in Europe have
clearly been weighing on manufacturing sentiment. Despite this, we
expect that domestic demand, aided by softer energy prices resulting
from a continued global slowdown, will help keep the overall economy
growing.”
Private sector payrolls grew by 163,000 in July according to ADP, ahead of the 120,000 expected by the consensus.
Construction spending rose by 0.4% month-on-month in June, as expected.
Snippets from the Federal Reserve Statement
"Information received since the Federal Open Market Committee met in
June suggests that economic activity decelerated somewhat over the first
half of this year. Growth in employment has been slow in recent months,
and the unemployment rate remains elevated. Business
fixed investment has continued to advance. Household spending has been
rising at a somewhat slower pace than earlier in the year...
"The Committee expects economic growth to remain moderate over coming
quarters and then to pick up very gradually anticipates that inflation
over the medium term will run at or below the rate that it judges most
consistent with its dual mandate...
"To support a stronger
economic recovery and to help ensure that inflation, over time the
Committee decided today to keep the target range for the federal funds
rate at 0 to 1/4 percent and currently anticipates that economic
conditions - including low rates of resource utilization and a subdued
outlook for inflation over the medium run - are likely to warrant
exceptionally low levels for the federal funds rate at least through
late 2014."
Crude futures rising on inventory drop
Front month West Texas crude futures are rising by 0.97% to the $88.91
per barrel level on NYMEX. 10 year US Treasuries are down by 16/32
dollars with yields at 1.52%.
S&P 500 - Risers
CBRE Group Inc (CBG) $16.68 +7.06%
Allstate Corp. (ALL) $36.40 +6.12%
Electronic Arts Inc. (EA) $11.68 +5.99%
Pioneer Natural Resources Co. (PXD) $93.86 +5.90%
Hospira Inc. (HSP) $36.39 +4.72%
United States Steel Corp. (X) $21.61 +4.65%
Laboratory Corporation of America Holdings (LH) $87.90 +4.53%
Allergan Inc. (AGN) $85.62 +4.33%
Humana Inc. (HUM) $63.91 +3.75%
MEMC Electronic Materials (WFR) $1.99 +3.65%
S&P 500 - Fallers
Genworth Financial Inc. (GNW) $4.48 -11.11%
Dun & Bradstreet Corp. (DNB) $74.50 -7.10%
J.C. Penney Co. Inc. (JCP) $21.02 -6.62%
BMC Software Inc. (BMC) $37.51 -5.28%
First Solar Inc. (FSLR) $14.80 -4.76%
Citrix Systems Inc. (CTXS) $69.33 -4.61%
QEP Resources Inc (QEP) $28.67 -4.53%
Netflix Inc. (NFLX) $54.50 -4.13%
Chipotle Mexican Grill Inc. (CMG) $280.67 -3.99%
Harley-Davidson Inc. (HOG) $41.67 -3.61%
| Thursday newspaper round-up: RBS, Spain, NYSE... |
Senior government figures are discussing the possibility of buying out private investors in Royal Bank of Scotland
and fully nationalising it amid mounting frustration at banks’ failure
to lend to British businesses. Cabinet ministers are having
conversations about whether to spend around £5bn buying up the 18 per
cent of the bank the government does not own, although George Osborne,
the chancellor, is opposed. [The Financial Times]
Italy’s leader Mario Monti is to make a last-ditch effort tomorrow to persuade Spain
to swallow its pride and accept a formal rescue, hoping to clear the
way for double-barrelled action by bail-out funds and the European
Central Bank. The frantic diplomacy comes as investors wait nervously to
see if German-led officials on the ECB’s governing council will stand
behind the bank’s chief, Mario Draghi, who triggered a euphoric
stockmarket rally last week with hints of intervention in the Spanish
and Italian bond markets. [The Telegraph]
The New York Stock Exchange
was forced to cancel hundreds of share trades yesterday after a
technical glitch deluged traders with orders. Unusually high volume in
the first 45 minutes of trading caused wild price swings in nearly 150
stocks, prompting exchange officials and federal regulators to open an
investigation. Traders said that the sudden spike in volumes had sparked
fears that the exchange was suffering a “flash crash” similar to the
one experienced in 2010. [The Times]
British manufacturing
shrank at its fastest rate for three years in July, highlighting the
perilous state of the economy as the Chancellor, George Osborne,
launched his Funding for Lending programme to encourage banks to lend
more to businesses and households. The Markit/Cips PMI manufacturing
index dropped unexpectedly sharply from 48.4 in June to 45.5 in July –
any measure below 50 indicates the sector is shrinking. This is the
first major economic indicator suggesting the third quarter in Britain
has got off to an even worse start than the second. [The Independent]
Fashion chain Next
said the Olympics has hit trading in its London stores, as tourists and
locals stay away, leaving the capital a ghost town. Next is the first
of the retailers to give a sense of current trading and will compound
fears that the Games will fail to drag the UK out of recession. Next's
chief executive, Lord Wolfson, said its 23 shops in London had been
"adversely affected" and he does not expect any kind of retail boost
from the Olympics. "The two weeks of the Games for retail won't be good.
As with any sporting event, people tend to stay in and watch them on
television rather than go out shopping." [The Guardian
Shareholders wiped out by the nationalisation of Northern Rock
had their hopes of compensation dashed yesterday when the European
Court of Human Rights dismissed their case. The Northern Rock
Shareholders Action Group said it was shocked and saddened after it
heard that the court had ruled its case was inadmissible. About 150,000
Rock shareholders, including the hedge funds RAB Capital and SRM as well
as Rock employees, lost everything when the bank was nationalised after
suffering a depositor run in 2007
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