London open: Japanese slowdown weighs on stocks
Market Movers
- techMARK 2,108.97 -0.33%
- FTSE 100 5,828.72 -0.31%
- FTSE 250 11,432.57 -0.33%
- Petrofac leads fallers early on
- Japanese GDP growth misses forecasts
- Germany could block aid to Greece
The FTSE 100 fell slightly in early trade on Monday on concerns over
the global economy after Japanese growth figures disappointed.
The Japanese economy
grew by just 0.3% in the second quarter on the back of weak consumer
spending. Annualised growth was just 1.4% in the April-June period, well
below the 5.5% growth the previous quarter and under the 2.3% expansion
expected.
"The poor Japanese growth figures do however
encourage the BOJ to pump additional easing measures and this has helped
Asian markets recover from lows," said Ishaq Siddiqi, a market
strategist from ETX Capital.
As for London markets, Siddiqi
said that activity is expected to "pick up a touch" with some traders
back at their desks after holidays. "However, we are at the height of
the summer season so low volumes are likely to persist in the weeks
ahead," he said.
In other news, Michael Fuchs, the deputy head
of Angela Merkel's CDU party, said at the weekend that Germany will
block new aid to Greece if it's not happy with the Troika's
findings. "You can quote me: even if the glass is half-full, that is not
enough for a new aid package...Germany cannot and will not agree to
that," he said.
FTSE 100: Petrofac disappoints with first-half results
Shares in oilfield services firm Petrofac
dropped despite reporting a strong first half, driven by growth across
all its markets. Earnings per share were up 32% to 94.8c, with pre-tax
profits rising to $412.5m, from $300m the year before.
"Even
though earnings per share beat, the market hasn't been told anything
positive it didn't already know. Some analysts are citing the number of
delayed contracts awarded in Onshore Engineering and Construction as a
reason to temper FY'13 outlook," said trader David White from SpreadEX.
Oil giant BP was slightly lower after announcing the sale of its Sunray and Hemphill gas processing plants in Texas for $227.5m.
Resource peers Vedanta, Xstrata and Kazakhyms were also out of favour due to concerns over global economic growth. Meanwhile, Costa owner Whitbread snakes after Deutsche Bank downgraded its rating on the stock to 'hold'.
Heading the other way was under-fire banking group Standard Chartered
as it continues to rebound from its recent falls. Shares were trading
around the 1,345p mark this morning, but still well off from the 1,567p
level reached on August 3rd, the day before it was revealed that the
lender had engaged in illegal transactions with the Iranian government.
FTSE 250: Michael Page, MITIE and Colt provide a drag
Recruitment firm Michael Page
fell after its profits took a tumble as market conditions worsened in
the second quarter; things are not looking much brighter for the second
half of the 2012 either.
Outsourcing and energy services group MITIE
was lower despite saying it has made a 'good start' to its financial
year with 87% of budgeted revenues for the year having already been
secured.
Telecoms group Colt was also down after having
beefed up its presence in the small to medium enterprises (SME) market
with a bolt-on acquisition of a UK cloud computing specialist.
FTSE 100 - Risers
Standard Chartered (STAN) 1,344.50p +1.36%
British Sky Broadcasting Group (BSY) 754.00p +0.87%
British Land Co (BLND) 543.00p +0.74%
Polymetal International (POLY) 934.00p +0.70%
RSA Insurance Group (RSA) 114.10p +0.62%
Resolution Ltd. (RSL) 219.00p +0.60%
Land Securities Group (LAND) 802.50p +0.56%
Sage Group (SGE) 299.70p +0.47%
Prudential (PRU) 813.50p +0.43%
Standard Life (SL.) 258.50p +0.39%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,494.00p -4.66%
Vedanta Resources (VED) 975.50p -2.16%
Shire Plc (SHP) 1,954.00p -1.76%
Whitbread (WTB) 2,117.00p -1.53%
Xstrata (XTA) 913.40p -1.48%
GKN (GKN) 214.90p -1.33%
Evraz (EVR) 267.50p -1.07%
Kazakhmys (KAZ) 738.00p -1.07%
IMI (IMI) 881.00p -1.07%
Antofagasta (ANTO) 1,121.00p -1.06%
FTSE 250 - Risers
Ruspetro (RPO) 155.00p +4.03%
Dunelm Group (DNLM) 591.00p +1.90%
BH Macro Ltd. GBP Shares (BHMG) 1,939.00p +1.73%
Phoenix Group Holdings (DI) (PHNX) 494.90p +1.58%
Dexion Absolute Ltd. GBP Shares (DAB) 135.90p +1.34%
Hiscox Ltd. (HSX) 458.80p +1.28%
Stobart Group Ltd. (STOB) 120.00p +1.27%
Dechra Pharmaceuticals (DPH) 486.07p +1.27%
Rank Group (RNK) 121.40p +1.17%
Diploma (DPLM) 434.70p +1.12%
FTSE 250 - Fallers
Petropavlovsk (POG) 442.40p -2.34%
Kenmare Resources (KMR) 39.17p -2.32%
Salamander Energy (SMDR) 191.10p -2.30%
Big Yellow Group (BYG) 308.50p -2.06%
Regus (RGU) 98.95p -2.03%
Michael Page International (MPI) 371.30p -2.03%
Hunting (HTG) 790.00p -1.68%
Essar Energy (ESSR) 111.80p -1.67%
Ferrexpo (FXPO) 188.00p -1.62%
UK Event Calendar
Monday August 13
INTERIMS
Michael Page International, Petrofac Ltd.
QUARTERLY EX-DIVIDEND DATE
Lilly (Eli) & Co
Q2
Telecom Egypt SAE GDS (Regs)
GMS
easyJet
ANNUAL REPORT
Provexis
IMSS
Stagecoach
AGMS
1pm, ShalkiyaZinc NV GDR (Reg S)
FINAL DIVIDEND PAYMENT DATE
Monks Inv Trust
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe open: China concerns still hitting markets
Market movements:
FTSE 100: 5,834 -0.2%
Dax 30: 6,942 - 0.04%
CAC 40: 3,432 -0.09%
IBEX 35: 7,040.10 -0.11%
FTSE MIB: 14,590.77 +0.29%
- China growth worries persist
- Italy goes to market for €8bn
Catching up with the Dragon
European
equity markets are just tipping into the red this morning after
Japanese gross domestic product data disappointed and Bank of America
cut the growth forecast for China.
There are concerns that
Chinese growth may be slowing down more than expected with the worst
still ahead. On Friday Chinese export growth in July registered 1%; this
compares to expectations of around 8%, a big miss.
"Not
everybody is completely convinced that the Chinese government will do
enough to support growth in the months ahead," says Markus Huber from
ETX Capital.
Italy taps debt markets
In Europe we are light on big data announcements today leaving equities to open relatively flat this morning.
The main focus will be on Italy auctioning off €8bn of one year bills
today, but there doesn't seem to be much concern about Italy getting
what it needs.
Indeed Italy's MIB Index was the only major European bourse in positive territory in early trading.
"Market sentiment, especially for short maturities, has improved over
the past week, following ECB [European Central Bank] President Draghi's
comments to do 'whatever it takes to preserve the Euro' and to
'undertake outright open market operations focused on the shorter part
of the yield curve'," says Huw Worthington at Barclays Capital.
However, more jaded commentators are warning that thin summer markets might cause yields to move up even further.
Solarworld in the shade
German solar panel maker Solarworld
is friendless after it lowered full-year revenue guidance. In the
second quarter of 2012 the company made a loss of €161m on sales of
€169.6m.
Over the border in Switzerland, money manager Julius Baer
plans to raise 750m Swiss francs through a rights issue to help fund
the 850m franc purchase of BofA Merrill Lynch's wealth management
activities outside of the USA.
DAX - Risers
E.ON AG €17.95 +0.81%
Allianz SE €87.16 +0.70%
SAP AG €51.9 +0.66%
DAX - Fallers
Volkswagen AG €146.85 -0.68%
ThyssenKrupp AG €16.34 -0.70%
Infineon Technologies AG €5.91 -0.96%
CAC 40 - Risers
Credit Agricole (ACA) € 4.03 +1.28%
BNP Paribas (BNP) € 34.06 +1.14%
AXA (CS) € 11.35 +1.11%
Societe Generale (GLE) € 20.26 +0.97%
Veolia Environnement (VIE) € 8.26 +0.94%
Alstom (ALO) € 27.94 +0.29%
GDF Suez (GSZ) € 19.35 +0.23%
Vivendi (VIV) € 15.66 +0.22%
EDF (EDF) € 16.47 +0.18%
Unibail-Rodamco (UL) € 162.10 +0.15%
CAC 40 - Fallers
LVMH (MC) € 133.20 -1.08%
Technip (TEC) € 86.28 -0.95%
Alcatel-Lucent (ALU) € 0.98 -0.81%
Danone (BN) € 48.69 -0.72%
EADS (EAD) € 30.51 -0.60%
Lafarge (LG) € 37.76 -0.58%
Publicis Groupe Sa (PUB) € 41.65 -0.54%
ST Microelectronics (STM) € 4.90 -0.43%
Schneider Electric (SU) € 48.96 -0.40%
Saint Gobain (SGO) € 26.51 -0.39%
| US Market Report |
US close: Even the bad news is good
Dow Jones: +43 at 13,208
S&P 500: +3 at 1,406
NASDAQ Composite: +2 at 3,021
US equities shrugged off worries about slowing economic growth in China to keep the bull run going.
In July the world's second largest economy saw exports rise just 1%
compared to a consensus estimate of a rise of 8%. Imports, meanwhile,
grew less than expected. The year-on-year rise was 4.7% versus market
expectations of a 7.2% rise. The trade surplus narrowed from $31.7bn in
June to $25.1bn in July.
To add to the gloom, local currency lending for last month was 540.1bn yuan, compared to 919.8bn in June.
The International Energy Agency (IEA) cut oil demand expectations for
2012 and 2013 by 300,000 to 400,000 barrels per day, according to its
August Oil Market Report.
The IEA noted that the change is due to "baseline data revisions and a weaker economic prognosis".
Despite this reduction in forecasts, the IEA still expects annual
growth of 800,000 to 900,000 barrels per day with demand averaging 89.6m
barrels per day in 2012 and 90.5m in 2013.
Although
macroeconomic news initially had investors drawing in their horns, the
afternoon session saw shares take off, pushing the S&P 500 index to a
five week high. Once again, the reason for the turnaround was the
ability of stock market bulls to turn any negative into a positive, to
wit bad news means more fiscal stimulus from global banks is on the way.
RIM and IBM in spaghetti soup rumours
Embattled Research In Motion (RIM), maker of the fast-fading Blackberry phone, attracted speculative interest as rumours circulated that International Business Machines (IBM) is sniffing around. looking to buy RIM's enterprise-services unit.
Things were not looking quite as rosy for another tech colossus of yesteryear, Yahoo!,
which fell back after management appeared to signal it would not be
returning cash to shareholders despite selling half its stake in Chinese
e-commerce platform Alibaba for $7bn. New Chief Executive Officer
Marissa Mayer may prefer to keep the windfall to invest in the business.
US fund manager Janus Capital has its glad-face on
after sealing a deal which will seek Japan's largest life assurance
firm, Dai-Ichi Life, take a large stake in the US firm.
The
Japanese firm is looking to buy at least 15% and up to 20% of the US
fund manager, which has seen its star wane since its golden era of the
nineties.
Medical devices maker CareFusion was in rude
health after announcing fiscal fourth-quarter profits that were 29%
higher year-on-year, as it achieved the double-bubble bonus of lifting
sales while cutting operating costs.
Earnings per share of 49
cents were up from 37 cents in the corresponding quarter of last year,
and more or less in line with market forecasts. Revenue of $968m was
ahead of market forecasts of $957m.
No longer a bad Penney
Retailer JC Penney's
second quarter profits were not much to write home about but investors
chased up the shares after the group said its facelift programme for its
stores began to pay off in July.
Like-for-like sales
plummeted 21.7% in the second quarter, with many pundits attributing the
sharp decline to an unpopular change in pricing strategy.
Loss per share in the firm's fiscal second quarter was 67 cents, versus
positive earnings per share of 7 cents the year before.
In-car gizmos maker Harman International
powered ahead on better than expected fiscal fourth quarter figures.
Earnings per share (EPS) of 69 cents for the April - June quarter were
up sharply from 26 cents a share in the corresponding quarter of 2011.
Underlying EPS, which strips out once-off items, came in 2 cents above
market consensus at 67 cents.
Investors chased the shares higher as the firm doubled its annual cash dividend to 60 cents a share.
Manchester United
will be hoping to make a better start to the new football season than
its shares managed on their début in New York. Bundled by US financial
institutions into lowering its flotation price to $14, below its
previously indicated range of $16 to $20, the flotation is looking about
as well-timed as a Paul Scholes tackle, with the shares closing little
changed before falling behind in extra-time in screen-based trading.
Other markets
With
the IEA cutting oil demand expectations (see above), there was little
enthusiasm for the black stuff in New York trading, and the September
futures contract for West Texas light sweet crude eased 49 cents to
$92.87 a barrel.
In contrast, gold edged higher on Friday.
With equity investors not sure which way to turn, gold seemed like a
safe option, especially as a weakening US dollar made the yellow metal
cheaper in relative terms. Gold for December delivery rose $2.60 to
$1,622.80 an ounce on the Comex division of the New York Mercantile
Exchange.
S&P 500 - Risers
Janus Capital Group Inc. (JNS) $8.46 +10.01%
Harman International Industries Inc. (HAR) $45.68 +7.46%
CareFusion Corp. (CFN) $26.29 +7.00%
J.C. Penney Co. Inc. (JCP) $23.40 +5.88%
GameStop Corp. (GME) $17.74 +5.41%
Netflix Inc. (NFLX) $59.90 +3.44%
Seagate Technology Plc (STX) $34.18 +3.29%
DIRECTV (DTV) $52.10 +3.17%
Broadcom Corp. (BRCM) $35.35 +2.97%
Metropcs Communications Inc. (PCS) $9.03 +2.85%
S&P 500 - Fallers
Monster Beverage Corp (MNST) $54.27 -11.32%
Big Lots Inc. (BIG) $38.44 -6.95%
Yahoo! Inc. (YHOO) $15.15 -5.37%
DeVry Inc. (DV) $19.23 -3.22%
Chesapeake Energy Corp. (CHK) $19.68 -3.10%
TripAdvisor Inc. (TRIP) $35.10 -2.99%
Expedia Inc. (EXPE) $54.44 -2.72%
Nabors Industries Ltd. (NBR) $15.23 -2.56%
Southwestern Energy Co. (SWN) $32.04 -2.38%
CF Industries Holdings Inc. (CF) $207.95 -2.31%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $19.70 +1.49%
Alcoa Inc. (AA) $8.98 +1.35%
McDonald's Corp. (MCD) $88.20 +1.20%
United Technologies Corp. (UTX) $77.89 +1.12%
E.I. du Pont de Nemours and Co. (DD) $51.08 +1.07%
Dow Jones I.A - Fallers
American Express Co. (AXP) $55.85 -1.10%
Cisco Systems Inc. (CSCO) $17.54 -0.90%
Walt Disney Co. (DIS) $49.65 -0.62%
Coca-Cola Co. (KO) $78.79 -0.57%
Nasdaq 100 - Risers
Research in Motion Ltd. (RIMM) $8.29 +6.28%
Nuance Communications Inc. (NUAN) $23.53 +3.93%
Netflix Inc. (NFLX) $59.90 +3.44%
Sirius Satellite Radio Inc. (SIRI) $2.48 +3.33%
Seagate Technology Plc (STX) $34.18 +3.29%
DIRECTV (DTV) $52.10 +3.17%
Broadcom Corp. (BRCM) $35.35 +2.97%
Check Point Software Technologies Ltd. (CHKP) $51.79 +2.25%
Nasdaq 100 - Fallers
Monster Beverage Corp (MNST) $54.27 -11.32%
Liberty Interactive Corp (LINTA) $17.52 -7.06%
Yahoo! Inc. (YHOO) $15.15 -5.37%
Expedia Inc. (EXPE) $54.44 -2.72%
Dollar Tree Stores Inc. (DLTR) $50.72 -1.82%
Fastenal Co. (FAST) $42.08 -1.71% |
| Newspaper Round Up |
Monday newspaper round-up: Greece, Barclays, Anglo American...
Germany will block any new aid to ailing Greece
if Athens does not fully comply with the terms of previous rescue
packages, even if other countries support unlocking funds, a senior
lawmaker said Sunday. The deputy head of Chancellor Angela Merkel's
conservative parliamentary bloc, Michael Fuchs, told business daily
Handelsblatt that Berlin was ready to use its veto if it is unhappy with
findings from the Greece creditors "troika". [The Telegraph]
Barclays
has issued a strong defence of its sale of financial products based on
the Libor interest rate index it has admitted trying to fix,The Times
has learnt. In a test case, the bank is being sued by a care homes
business that claims it lost millions buying swaps pegged to rates that
were being manipulated in the bank's favour. Barclays is arguing that it
cannot be held responsible as a large corporate entity for matters that
its local staff were unaware of when they arranged the financial deals.
[The Times]
Cynthia Carroll, chief executive of Anglo American,
is under attack from shareholders who have demanded an immediate change
of management because they have lost confidence in her strategy and
leadership. Several of the miner's biggest institutional investors have
contacted Sir John Parker, the chairman of Anglo American, to ask him to
start the search for a new chief executive. [The Telegraph]
Manchester United's
first day on the New York Stock Exchange got off to a flat start as
shares eked out a tiny gain in early trading before falling back to the
slashed launch price. United's bankers had been looking to sell shares
for between $16 and $20, but cut the launch price late on Thursday to
$14 – shaving as much as $100m off the windfall expected for the team
and its owners, the Glazer family. Shares crept up by 5¢ in early
trading. But even this modest gain was wiped out by close, ending back
at $14. [The Guardian]
Japan's economy grew by
just 0.3 per cent in the second quarter, lower than expected, as weak
exports and softer consumer spending offset continuing strong public
investment in the disaster-stricken Tohoku region. Preliminary data from
the Cabinet Office on Monday indicated annualised growth of 1.4 per
cent between April and June, a significant fall from the revised 5.5 per
cent expansion between January and March, and well short of the 2.3 per
cent growth rate anticipated by economists. [Financial Times]
The Financial Services Authority's
new chief policewoman has warned the City that there will be no let-up
in the tough line taken in response to a string of scandals. The
regulator has already smashed its 2010 record of £89.1m in fines, with
the running total standing at £94.2m for the first seven months of this
year. Speaking following her promotion from acting to permanent head of
enforcement, Tracey McDermott said: "Effective enforcement has, and will
continue to be, a key part of FSA's strategy, to improve behaviour in
our markets. We will continue to take tough, targeted action against
those who don't play by the rules." [The Independent]
Top accountants
have hit back at plans by auditing regulators to drastically increase
the fines they will face for misconduct, describing the proposals as
"irrational" and "fundamentally misconceived". The Financial Reporting
Council, which investigates significant audit failures, believes that
the big firms have not been punished adequately for their mistakes and
wants to introduce stiffer penalties based on the size of their
turnover.
This could result in the largest accountants — the
so-called Big Four of Deloitte, Ernst & Young, KPMG and PwC — paying
tens of millions of pounds in fines if they are found to have made a
mistake in their oversight of a company's accounts or, in the worst
cases, helped to cover up fraud. [The Times]
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