London close: Stocks flat, markets in 'wait and see' mode
Market Movers
- techMARK 2,114.20 -0.12%
- FTSE 100 5,793.20 -0.03%
- FTSE 250 11,841.50 +0.28%
- Investors cautious ahead of pivotal week
- Ruling on ESM and FOMC meeting in focus
- Miners lead risers on hopes of QE3
London's FTSE 100 index finished just two points lower on Monday
afternoon as investors refrained from building positions ahead of a busy
week for the markets.
The Footsie stayed within a narrow range for most of the day with just 20 points between the intraday high and low.
"Markets have reverted to 'wait and see' mode
today ahead of this week's key events out of Europe and the US as
investors start to book some profits after the gains of the last few
days," said market analyst Michael Hewson from CMC Markets.
Investors are awaiting the German Constitutional Court ruling on the European Stability Mechanism on Wednesday, while Thursday's focus will be on the Federal Open Market Committee meeting in the US, "both of which are major event risks", according to Ishaq Siddiqi from ETX Capital.
"Germany's opposition of the ECB's bond buying plan and the mixed data
picture of the US economy prompt a huge degree of uncertainty over both
events," he said.
Stocks were given a boost towards the end of last week after European Central Bank
(ECB) President Mario Draghi unveiled details of the bank's bond-buying
programme, which included unlimited and sterilised purchases of
sovereign debt with maturities over between one and three years.
In other news, China
reported significantly worse-than-expected import figures for August,
falling for the first time in a non-holiday period since 2009. The trade
surplus widened to $26.7bn last month, well above expectations of
$19.5bn.
Meanwhile, Japan's Cabinet Office slashed its
estimate of gross domestic product growth for the second quarter to an
annualised rate of 0.7% (consensus: 1.0%), versus the preliminary
estimate of 1.4%.
FTSE 100: Miners gain on hopes for further QE
Mining
stocks were performing well on Monday with expectations for further
quantitative easing (QE) measures from the Federal Reserve driving
gains. UBS said this morning that the outlook for the UK mining sector
is improving: "QE triggers a return of capital flows to emerging
markets, incentivising companies to stop running for cash and embark on a
commodity bullish restocking phase. As in the past, QE is likely to
drive up commodity prices and in turn mining equities."
Kazakhmys,
which was upgraded by the Swiss broker today from 'sell' to 'buy', was
the best performing FTSE 100 constituent this afternoon. Sector peers Vedanta, Rio Tinto and Fresnillo were also wanted.
Xstrata edged higher, extending gains made Friday when Glencore
released its eleventh-hour adjustment to its offer for the miner.
Glencore gave details of its proposal to Xstrata this morning, saying
that "it is content with Xstrata's request for Xstrata management and
senior employees to receive appropriate retention and incentive
packages."
Shares in retailer Marks & Spencer were
up on reports that a buy-out of the firm is in the works. Banks are said
to be exploring different possible means to structure a leveraged
buy-out of the company, according to a report published by Reuters last
Friday after the close of markets.
Government-owned lender Royal Bank of Scotland
(RBS) was pushed higher by reports that it could start the process of
spinning off its Direct Line Insurance Group by the end of the week.
Sector peer Barclays was making gains after UBS raised its target
for the stock from 205p to 235p and reiterated its 'buy'
recommendation. The broker said that there is "potentially significant
upside if new CEO changes strategy".
B&Q owner Kingfisher
was making gains today after Credit Suisse initiated coverage on the
stock with an 'outperform' rating. The broker said that given its
historical and prospective growth, and improving returns, the stock
should trade at a premium to its UK retail peers.
Meanwhile, Primark and sugar group AB Foods
was out of favour despite saying that adjusted operating profits in the
second half will be well ahead of last year and in line with
expectations. Investec said this morning it expects to lower its
full-year EPS estimate due to the weaker-than-expected profits in the
Ingredients division.
FTSE 250: Spirax-Sarco rises after broker upgrade
Spirax-Sarco was performing well after Goldman Sachs upgraded the stock to 'buy' and raised its target from 2,100p to 2,510p. Meanwhile, Laird headed the other way after the same US broker cut its recommendation to 'sell'.
Electronics retailer Dixons
was up after revealing that it is seeking to retire some of its
existing debt prior to issuing some new loan notes. The group has
offered to buy back up to £130m pounds in outstanding debt. Of the
total, £80m would come from the company's outstanding £300m 2012 bond
issue which currently yields 6.125%. A further £50m would go on the
8.75% bonds due 2015.
The Paragon Group of Companies
was down after purchasing further unsecured loans through its Idem
Capital Securities subsidiary from The Royal Bank of Scotland under the
terms of a forward flow agreement.
FTSE 100 - Risers
Kazakhmys (KAZ) 686.50p +4.41%
Royal Bank of Scotland Group (RBS) 253.00p +3.48%
Vedanta Resources (VED) 1,003.00p +2.82%
Marks & Spencer Group (MKS) 371.10p +2.74%
CRH (CRH) 1,206.00p +2.38%
International Consolidated Airlines Group SA (CDI) (IAG) 149.90p +2.18%
Antofagasta (ANTO) 1,249.00p +1.88%
Fresnillo (FRES) 1,756.00p +1.86%
Resolution Ltd. (RSL) 214.30p +1.76%
Rio Tinto (RIO) 3,069.00p +1.59%
FTSE 100 - Fallers
SABMiller (SAB) 2,700.00p -2.26%
Glencore International (GLEN) 370.00p -2.13%
United Utilities Group (UU.) 687.00p -2.00%
Associated British Foods (ABF) 1,280.00p -1.99%
National Grid (NG.) 681.00p -1.66%
British American Tobacco (BATS) 3,124.50p -1.54%
Severn Trent (SVT) 1,690.00p -1.52%
BAE Systems (BA.) 327.70p -1.44%
Unilever (ULVR) 2,245.00p -1.32%
Tullow Oil (TLW) 1,386.00p -1.28%
FTSE 250 - Risers
JD Sports Fashion (JD.) 723.50p +9.37%
Bwin.party Digital Entertainment (BPTY) 103.70p +7.80%
Ferrexpo (FXPO) 196.50p +7.49%
Bank of Georgia Holdings (BGEO) 1,320.00p +5.85%
Hays (HAS) 81.25p +5.79%
Dixons Retail (DXNS) 20.25p +5.03%
Spirax-Sarco Engineering (SPX) 2,126.00p +4.47%
Petropavlovsk (POG) 394.00p +4.23%
Man Group (EMG) 83.90p +4.03%
Lonmin (LMI) 619.00p +3.86%
FTSE 250 - Fallers
Laird (LRD) 230.50p -4.20%
Ruspetro (RPO) 114.70p -4.02%
Dairy Crest Group (DCG) 344.00p -3.70%
Premier Farnell (PFL) 185.40p -2.78%
Premier Oil (PMO) 376.90p -2.71%
Paragon Group Of Companies (PAG) 199.20p -2.64%
Yule Catto & Co (YULC) 166.40p -2.06%
Barr (A.G.) (BAG) 458.40p -2.05%
Cranswick (CWK) 813.50p -1.99%
AZ Electronic Materials SA (DI) (AZEM) 323.00p -1.82%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe close: Markets slip on China fears
Greek PM meeting Eurozone officials on rescue programme
- China numbers worry markets
- Philips down after Goldman hit
FTSE 100: -0.03%
Dax 30: -0.01%
Stoxx 600: -0.22%
Cac 40: -0.37%
Ibex 35: -0.32%
FTSE MIB: -0.11%
European stocks retreated on Monday as investors cashed in on the big gains of the previous week.
Last Thursday equities got a big boost when the European Central Bank
revealed plans to buy the debt of distressed euro area nations but
investor attention has now turned to the strings the ECB will attach to
any intervention in the bond market. Most observers would agree that the
conditions imposed on Greece have been disastrous and no one wants a
repeat if Spain and Italy ask for help.
Today the Greek Prime
Minister Antonis Samaras has been meeting EU officials after he failed
to win agreement from his coalition partners for the latest round of
cuts demanded by the country's lenders.
Further darkening the
mood have been disappointing numbers out of China where both the
industrial production figure for August (+8.9%) and imports (-2.6%) came
in below expectations.
COMPANIES
On the
Stoxx 600 index, the weakest sector was 'food and beverage' which fell
1.22%. The strongest sector was 'basic resources' which added 0.81%.
The Belgo-Brasilian brewing giant InBev,
the makers of Budweiser, Stellar Artois and Becks fell 2.8% amidst a
general slump in the sector. Nestle (-0.6%) also had a bad day.
The world's biggest maker of light bulbs, Philips Electronics, dropped 2.4% after Goldman Sachs reduced its rating from buy to neutral.
Goldman also did a job on Telefonica, saying the Spanish firm didn't warrant a premium over other telecoms stocks. The stock fell back 1%.
| US Market Report |
US open: Stocks start the week slightly lower
-S&P 500 trading near 5 year average PE multiple
-Apple may unveil iPhone 5 this week
Dow Jones Industrial: -0.14%
Nasdaq Comp.: -0.25%
S&P 500: -0.08%
The main US equity benchmarks are now trading slightly lower. That
ahead of a weekly calendar brimming with potentially market-moving
events and following weak data out in China and Japan overnight.
For now however investors seem to be pausing ahead of this next
Thursday's rate setting meeting of the US Federal Reserve. Traders are
also closely watching events in Greece and Spain.
Back on the corporate front, AIG is down after the US Treasury announced its intention to lower its stake in the former insurance giant to below 50%.
Plains Exploration&Production will purchase $5.5bn in Gulf of Mexico assets from BP.
Of interest, the S&P 500 is now changing hands at 13.9 times the
expected earnings of its members, according to data compiled by
Bloomberg. That's the highest since February 2011 and almost matches the
average ratio since 2007 of 14.
Goldman Sachs has cut its recommendation on shares of Wells Fargo to buy from Conviction buy.
10 year US Treasuries are now flat, with yields at 1.67%.
Front month West Texas crude futures are declining by 0.85% to the 95,60 dollar per barrel mark on the NYMEX.
S&P 500 - Risers
Cliffs Natural Resources Inc. (CLF) $41.17 +3.16%
Advanced Micro Devices Inc. (AMD) $3.54 +2.61%
Sprint Nextel Corporation (S) $5.16 +2.58%
First Solar Inc. (FSLR) $20.93 +2.40%
Alpha Natural Res (ANR) $7.06 +2.32%
Vulcan Materials Co. (VMC) $41.25 +2.23%
Cabot Oil & Gas Corp. (COG) $42.98 +1.92%
PPG Industries Inc. (PPG) $115.27 +1.88%
Tesoro Corp. (TSO) $40.84 +1.74%
Regions Financial Corp. (RF) $7.49 +1.70%
S&P 500 - Fallers
International Paper Co. (IP) $34.74 -4.28%
Chesapeake Energy Corp. (CHK) $19.67 -3.32%
American International Group Inc. (AIG) $32.94 -3.09%
Boeing Co. (BA) $71.03 -2.55%
Mosaic Company (MOS) $59.57 -2.36%
Intel Corp. (INTC) $23.67 -2.15%
Colgate-Palmolive Co. (CL) $104.05 -2.12%
Express Scripts Holding Co (ESRX) $61.99 -2.07%
Constellation Brands Inc. Class A (STZ) $32.96 -2.05%
Celgene Corp. (CELG) $73.98 -1.94%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $9.25 +1.65%
Home Depot Inc. (HD) $57.60 +0.59%
Verizon Communications Inc. (VZ) $43.89 +0.39%
Caterpillar Inc. (CAT) $88.42 +0.36%
Bank of America Corp. (BAC) $8.82 +0.23%
Merck & Co. Inc. (MRK) $44.14 +0.20%
Chevron Corp. (CVX) $114.23 +0.20%
American Express Co. (AXP) $57.83 +0.17%
AT&T Inc. (T) $37.34 +0.11%
Travelers Company Inc. (TRV) $65.25 +0.06%
Dow Jones I.A - Fallers
Boeing Co. (BA) $71.03 -2.55%
Intel Corp. (INTC) $23.67 -2.15%
3M Co. (MMM) $91.26 -1.68%
Cisco Systems Inc. (CSCO) $19.28 -1.43%
Microsoft Corp. (MSFT) $30.52 -1.39%
Coca-Cola Co. (KO) $37.62 -0.74%
General Electric Co. (GE) $21.44 -0.69%
United Technologies Corp. (UTX) $79.03 -0.48%
Wal-Mart Stores Inc. (WMT) $73.57 -0.34%
Walt Disney Co. (DIS) $51.60 -0.27%
Nasdaq 100 - Risers
Expeditors International Of Washington Inc. (EXPD) $38.40 +1.64%
Green Mountain Coffee Roasters Inc. (GMCR) $28.22 +1.40%
Warner Chilcott Plc (WCRX) $13.04 +1.40%
QUALCOMM Inc. (QCOM) $62.49 +0.90%
Amgen Inc. (AMGN) $84.55 +0.70%
Randgold Resources Ltd. Ads (GOLD) $112.08 +0.55%
KLA-Tencor Corp. (KLAC) $52.11 +0.50%
Sandisk Corp. (SNDK) $44.48 +0.50%
Vertex Pharmaceuticals Inc. (VRTX) $57.37 +0.47%
Wynn Resorts Ltd. (WYNN) $103.20 +0.45%
Nasdaq 100 - Fallers
Intel Corp. (INTC) $23.67 -2.15%
Express Scripts Holding Co (ESRX) $61.99 -2.07%
Baidu Inc. (BIDU) $107.44 -1.96%
Celgene Corp. (CELG) $73.98 -1.94%
Electronic Arts Inc. (EA) $13.77 -1.92%
Apollo Group Inc. (APOL) $29.77 -1.72%
Avago Technologies Ltd. (AVGO) $35.58 -1.71%
BMC Software Inc. (BMC) $42.70 -1.45%
Cisco Systems Inc. (CSCO) $19.28 -1.43%
Monster Beverage Corp (MNST) $57.39 -1.43%
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| Broker Tips |
Broker tips: Miners, AB Foods, Chariot
The
outlook for the UK mining sector is now improving as expectations for
quantitative easing (QE) increase, according to UBS on Monday morning.
The broker said: "QE triggers a return of capital flows to emerging
markets, incentivising companies to stop running for cash and embark on a
commodity bullish restocking phase. As in the past, QE is likely to
drive up commodity prices and in turn mining equities."
UBS has upgraded its rating for Kazakhmys from 'sell' to 'buy' and reiterated its 'buy' calls on ENRC and Ferrexpo.
Investec has reiterated its 'hold' rating and 1,300p target for Primark owner and sugar group Associated British Foods as the firm's pre-close trading update guided to full-year results slightly below forecasts.
"We read the FY as a little below our expectations at Group level, with
the usual swings and roundabouts underneath," said analyst Martin
Deboo. The slightly miss is due to weaker-than-expected profits in
Ingredients.
"The two principal Divisions of Sugars and
Primark (75% of profits) appear to be more or less in line with our
FY12E numbers. However we expect a £100m impairment charge in Australia
and weak Ingredients to embarrass ABF a little this morning," Deboo
said.
Seymour Pierce has retained its 'sell' recommendation for AIM-listed oil and gas group Chariot Oil and Gas,
which plummeted on Monday morning after revealing that it has plugged
and abandoned its Kabeljour exploration well, offshore Namibia.
"We have been long-term 'sellers' of Chariot since our February
initiation, highlighting the under explored nature of their acreage. We
also pointed to the optimistic chance of success estimate prior to
drilling," said Seymour's Sam Wahab.
Wahab said that the
Kabeljou result, as well as the setback at Tapir South, "concludes a
disappointing year for Chariot following heavy initial fundraising."
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