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Stocks rise as Merkel backs bond-buying
Market Movers
techMARK 2,123.26 +0.16%
FTSE 100 5,847.03 +0.21%
FTSE 250 11,535.58 +0.29%
Merkel backs Draghi's pledge to do 'whatever it takes'
Lonmin drops as violence at South African mine escalates
European banks make gains
Banking stocks were pulling the Footsie higher on Friday morning as
optimism regarding the Eurozone increased with Angela Merkel backing
Mario Draghi's bond-buying proposal.
Merkel, the German Chancellor, has thrown her weight behind the European Central Bank
(ECB) President's idea of buying sovereign debt in order to bring down
bond yields in peripheral Eurozone nations. She said that Draghi's
pledge to do "whatever it takes to preserve the euro" was "completely in
line" with the euro-area officials.
However, analyst Craig
Erlam from Alpari said that it is worth showing some caution: "She may
back the ECB's position, but then want to impose strict austerity
measures on any country that requests it. This would make it a very
unattractive option to the Spanish and Italian governments. The markets
are always very quick to react to comments made by Merkel and it's
regularly followed quickly by a reversal once the details of her
comments emerge."
Nevertheless, the Eurozone is set to
enter a recession in the third quarter and not return to growth until
next year, according to a monthly poll conducted by Reuters.
The survey results come just after recent data showing that the region
registered a 0.2% contraction in the second quarter. A recession is
defined as two consecutive quarters of negative growth.
Lonmin tanks after police kill dozens of miners
Riot police have shot dead dozens of miners at Lonmin's
Marikana platinum project in South Africa, as a week of protests over
pay have turned the FTSE 250 group's mine into a warzone. In what The
Guardian is calling "one of the deadliest days of protest in South
Africa since the end of apartheid", more than 30 workers who were on
strike at Marikana were gunned down by authorities, according to the
South African police ministry.
Barclays, Royal Bank of Scotland and Lloyds were in demand early on as banking stocks across Europe made gains on improving developments in the Eurozone.
Water group Pennon
was sinking after saying that trading at its waste management unit
Viridor has been significantly below the high level of the first half of
the previous fiscal year with recyclate prices remaining under
pressure.
Casino and online gaming group Rank advanced after saying that revenues in the 12 months to June 30th rose 3.4%, while pre-tax profits jumped 9.0%.
Premier Oil
fell after reporting that it has plugged and abandoned the Chim Sao
North West appraisal well in Vietnam after failing to find indications
of hydrocarbons.
FTSE 100 - Risers
Weir Group (WEIR) 1,784.00p +2.65%
Barclays (BARC) 190.45p +2.28%
Lloyds Banking Group (LLOY) 33.64p +1.99%
ARM Holdings (ARM) 586.50p +1.91%
GKN (GKN) 224.40p +1.68%
Johnson Matthey (JMAT) 2,354.00p +1.51%
Aberdeen Asset Management (ADN) 280.70p +1.41%
Royal Bank of Scotland Group (RBS) 230.30p +1.32%
Admiral Group (ADM) 1,176.00p +1.20%
Standard Life (SL.) 277.00p +1.13%
FTSE 100 - Fallers
Anglo American (AAL) 1,943.50p -1.57%
Pennon Group (PNN) 738.00p -1.53%
Eurasian Natural Resources Corp. (ENRC) 368.30p -1.10%
Diageo (DGE) 1,688.00p -0.71%
AstraZeneca (AZN) 3,005.00p -0.68%
Croda International (CRDA) 2,419.00p -0.62%
BHP Billiton (BLT) 1,953.00p -0.61%
Smith & Nephew (SN.) 667.00p -0.60%
Rio Tinto (RIO) 3,033.50p -0.57%
GlaxoSmithKline (GSK) 1,476.00p -0.57%
FTSE 250 - Risers
Ophir Energy (OPHR) 535.50p +4.79%
Ruspetro (RPO) 150.00p +4.38%
Bumi (BUMI) 367.80p +4.19%
Centamin (DI) (CEY) 72.60p +3.71%
Laird (LRD) 221.00p +2.65%
International Personal Finance (IPF) 307.30p +2.54%
Rank Group (RNK) 128.60p +2.31%
Yule Catto & Co (YULC) 157.10p +2.08%
Ted Baker (TED) 989.50p +2.01%
Brewin Dolphin Holdings (BRW) 153.90p +1.65%
FTSE 250 - Fallers
Lonmin (LMI) 605.00p -6.64%
IP Group (IPO) 126.30p -2.85%
Travis Perkins (TPK) 1,044.00p -1.51%
Millennium & Copthorne Hotels (MLC) 479.90p -1.19%
Hochschild Mining (HOC) 422.40p -1.01%
COLT Group SA (COLT) 122.80p -0.97%
easyJet (EZJ) 541.50p -0.91%
Anite (AIE) 124.00p -0.80%
Premier Oil (PMO) 387.40p -0.79%
SVG Capital (SVI) 269.10p -0.74%
| FX round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Retail sales boost for sterling
Mixed economic data had the US dollar in
retreat against most major currencies on Thursday, while the euro made
headway after German Chancellor Angela Merkel said officials in Europe
need to get a move on to tackle the region's debt crisis.
While housing starts
fell 1.1% to an annualised rate of 746,000 in July, pulling back from
the figure of 754,000 in June – the highest level since October 2008 -
building permits increased by 6.8% in July to a seasonally-adjusted
annual rate of 812,000, the highest reading since August 2008. The
government says that building permits usually turn into new housing
starts within a month.
That sent mixed signals to dollar holders. Meanwhile, the Philadelphia Federal Reserve manufacturing index improved to -7.1 from -12.9 in August but fell short of forecasts of -5.0.
That
was not good enough to support the dollar, and the greenback fell back,
albeit in light trade. The ICE dollar index, which measures the US
currency's value against a trade weighted basket of currencies, eased to
82.392 from 82.649 the day before.
The euro, meanwhile,
was buying $1.2356 in New York at the end of the afternoon trading
session, up from $1.2289 the day before, as the market drew
encouragement from comments from German leader Angela Merkel, who was in
Ottawa to meet Canadian Prime Minister Stephen Harper.
Merkel
stressed that "time is off the essence" in making progress on sorting
out the Eurozone mess, and added that the move towards closer union in
Europe is a good thing. She also suggested that the European Commission
should have "stronger powers" to influence national budgets of countries
in the Eurozone.
In London, sterling received a shot in
the arm from retail sales data and the feedback from retailers -
admittedly based on only two days of experience - that the Olympics had
not had any effect on trade.
Sales volumes rose by 0.3% from June
and by 2.8% on an annual basis, according to the latest data from the
Office for National Statistics (ONS). The market consensus was looking
for a change of -0.1% and 1.4%, respectively.
The previous
month's reading was revised higher to a monthly increase of 0.8% and
yearly rise of 2.6%, from +0.1% and +1.6%, respectively.
Retail sales
excluding petrol were unchanged from June and remained up 3.3% on the
year compared to a consensus estimate of -0.2% and +2.0%, respectively.
Sterling climbed
to its highest level in more than two weeks against the dollar,
advancing to $1.5739, having been trading below $1.57 before the retail
sales data was published.
UK Event Calendar
INTERIM DIVIDEND PAYMENT DATE
Domino Printing Sciences, Imperial Tobacco Group, Sanderson Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Leading Indicators (US) (15:00)
Producer Price Index (GER) (07:00)
U. of Michigan Confidence (Prelim) (US) (15:00)
AGMS
Chagala Group Ltd. GDR (Reg S), Heath (Samuel) & Sons, Triple Plate Junction
UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (EU) (10:00)
Current Account (EU) (09:00)
FINAL DIVIDEND PAYMENT DATE
British Smaller Companies VCT, Castings, Elektron Technology,
FirstGroup, Henderson Private Equity Inv Trust, Johnson Matthey,
Majestic Wine, SABMiller
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| US Market Report |
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Building permits lift for US equities
Market movers
Dow Jones: +85 at 13,250
S&P 500: +10 at 1,416
NASDAQ Composite: +31 at 3,062
Although
it was a bit slow to join the party, Wall Street followed global stock
markets higher on Thursday, boosted by some strong corporate earnings
and better than expected building permits data.
Taking it to the house
While
housing starts fell 1.1% to an annualised rate of 746,000 in July,
pulling back from the figure of 754,000 in June – the highest level
since October 2008 - building permits increased by 6.8% in July to a
seasonally-adjusted annual rate of 812,000, the highest reading since
August 2008. The government says that building permits usually turn into
new housing starts within a month.
House builder Pulte and DIY retailer Home Depot moved higher on the housing data.
Initial jobless claims rose by 2,000 to 366,000 last week, slightly
ahead of consensus expectations of 365,000. However, the four-week
moving average fell by 5,000 and “now stands only 1,000 above the
post-crisis low recording during the week of March 31st,” said analyst
Michael Gapen from Barclays.
The Philadelphia Federal Reserve manufacturing index improved to -7.1 from -12.9 in August but fell short of forecasts of -5.0.
Cisco inferno
Network equipment maker Cisco Systems
was the top performing blue-chip after reporting better-than-expected
quarterly earnings and hiking its dividend payout by 75% after
yesterday’s closing bell. "It was an unusually strong quarter,
especially in Asia-Pacific," said Chief Executive John Chambers. "The US
saw some positive trends. Europe was a bit challenged.”
Sector peers F5 Networks and Broadcom rose in sympathy with Cisco.
Social media giant Facebook
fell to new lows after the ‘lock-up’ of 271m shares expired following
its May initial public offering. Early investors in Facebook are now
free to cash in on their shares, though they will receive considerably
less than they would have got had they been able to sell them on the day
they were publicly floated.
Computer games maker Electronic Arts
is contemplating putting up the "For sale" sign, with private equity
groups such as KKR and Providence Equity Partners said to be sniffing
around, according to the New York Post.
Scientific testing equipment maker Agilent Technologies
was friendless after cutting full-year earnings guidance, blaming
slackening economic growth and delays in orders from customers.
Wal-Mart seared
Retailing giant Wal-Mart may have hit earnings forecasts in its second quarter but shares sank after the company marginally
missed revenue estimates. The group also raised and narrowed its target
range for full-year earnings but this also came up short of the
consensus forecast.
Asda, the UK arm of Wal-Mart, the world's
biggest supermarket chain, saw its sales growth slow in the second
quarter. Like-for-like (LFL) sales were up 0.7% in the 13 weeks to June
30th, versus LFL sales growth of 2.2% in the previous quarter.
Rival retailer Sears
received a better reception for its second quarter figures, which
revealed that losses were narrower than in the corresponding quarter of
last year as the company's controversial price-cutting campaign looks to
be paying off. Second quarter losses of $132m, or $1.25 a share, were
an improvement on the loss of $146m ($1.37 a share) in the same quarter
of 2011. Like-for-like sales were down 2.9% year-on-year.
Other markets
The
ICE dollar index, which measures the US currency's value against a
trade weighted basket of currencies, eased to 82.392 from 82.649 the day
before, as the euro and sterling both had good days. A weaker
dollar makes oil cheaper, however, and that was a factor in the rise in
the price West Texas sweet light crude. West Texas intermediate for
September delivery rose $1.27 to $95.60 a barrel on the New York Mercantile Exchange. S&P 500 - Risers Cisco Systems Inc. (CSCO) $19.02 +9.63% Sears Holdings Corp. (SHLD) $60.29 +6.52% PulteGroup Inc. (PHM) $13.60 +6.42% Coventry Health Care Inc. (CVH) $34.71 +6.08% Electronic Arts Inc. (EA) $13.81 +5.50% GameStop Corp. (GME) $17.98 +5.45% Best Buy Co. Inc. (BBY) $20.41 +5.42% F5 Networks Inc. (FFIV) $104.05 +4.79% Red Hat Inc. (RHT) $58.24 +4.52% Masco Corp. (MAS) $13.78 +4.47% S&P 500 - Fallers Agilent Technologies Inc. (A) $37.15 -8.23% Perrigo Company (PRGO) $108.93 -6.58% Sprint Nextel Corporation (S) $5.15 -4.45% St Jude Medical Inc. (STJ) $36.87 -4.38% Wal-Mart Stores Inc. (WMT) $72.15 -3.09% Waters Corp. (WAT) $76.17 -2.76% Tyson Foods Inc. (TSN) $15.26 -2.62% Metropcs Communications Inc. (PCS) $9.54 -2.55% Dow Jones I.A - Risers Cisco Systems Inc. (CSCO) $19.02 +9.63% Home Depot Inc. (HD) $56.31 +2.38% Microsoft Corp. (MSFT) $30.78 +1.92% Dow Jones I.A - Fallers Wal-Mart Stores Inc. (WMT) $72.15 -3.09% McDonald's Corp. (MCD) $87.46 -0.40% Merck & Co. Inc. (MRK) $43.94 -0.27%
| Friday newspaper round-up |
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Eurozone, Gold, Asda...
Finland is preparing for the break-up of the eurozone,
the country’s foreign minister warned today. The Nordic state is
battening down the hatches for a full-blown currency crisis as tensions
in the eurozone mount and has said it will not tolerate further bail-out
creep or fiscal union by stealth. “We have to face openly the
possibility of a euro-break up,” said Erkki Tuomioja, the country’s
veteran foreign minister and a member of the Social Democratic Party,
one of six that make up the country’s coalition government. “It is not
something that anybody — even the True Finns [eurosceptic party] — are
advocating in Finland, let alone the government. But we have to be
prepared,” he told The Daily Telegraph. [ The Telegraph] Global demand for gold is seeing a significant slowdown as top consumers in India and China
pare purchases amid weak economic growth, abruptly halting a
consumption boom that started five years ago with the onset of the
financial crisis. The consumption slowdown is driving prices downward,
denting the profitability of gold miners such as Barrick Gold of Canada
and New York-listed Newmont, and hurting top hedge funds managers such
as John Paulson and George Soros. The World Gold Council, a lobby group
for the gold miners, on Thursday said demand for the yellow metal fell
to 990 tonnes during the second quarter, the lowest since the first
quarter of 2010 and down 7 per cent from last year. [ The Financial Times]
Britain’s second-biggest supermarket group has launched a withering
attack on rivals for propping up sales with “unsustainable” voucher
promotions. Asda said that supermarkets were resorting to
“gimmicks” in an attempt to confuse shoppers and were chasing short-term
sales. The retailer, owned by Wal-Mart, reported a slowdown in
underlying sales growth in the second quarter but posted improved
first-half profits. Rob McWilliam, the finance director, said
that its rivals were using “gimmicks to disguise a weak price position”.
Last month Tesco offered discounts of up to 50p a litre on petrol to
shoppers who bought certain items — a practice that Mr McWilliam
referred to as “basket bingo”. He said: “That’s not in customers’
long-term interests and it’s certainly not sustainable. Where’s it going
to end?” [ The Times] Facebook shares plumbed
new depths last night, as some of the investors who had backed the
social network in its early days cashed out more of their holdings.
Almost three months after the company's
disastrous debut on the public markets, 271 million additional shares
became eligible for sale yesterday, and a wave of selling pushed the
stock down to almost half the float price. The early investors who sold
some of their stake in May had been prevented from selling any more for
90 days, but the huge volume of trading after the Nasdaq market opened
yesterday suggested that at least some were taking the first available
opportunity to get out. [ The Independent] British car production
is still revving ahead of the rest of the economy after official
figures showed an increase in output for the 13th month in a row. Almost
120,000 cars were built in the UK in July, which is up 22% on the same
period last year, according to the Society for Motor Manufacturers and
Traders (SMMT). The figures came in the same week that one of the
industry's great export successes, Jaguar Land Rover, moved to a 24-hour
operation in order to keep up with soaring demand from Asia. The latest
SMMT total means that year-to-date production is running at 875,998, an
increase of 15%. [ The Guardian] The family that owns Lego has spent millions of pounds on a stake in ISS,
the Danish cleaning company that G4S tried and failed to buy for £5.2
billion last year. Kirkbi, the investment vehicle of the billionaire
Kirk Kristiansen family, and the Ontario Teachers’ Pension Plan will pay
3.72 billion Danish kroner (£392 million) to acquire 26 per cent of the
business. [ The Times]
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