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Dull end to sparkling quarter
Market Movers
techMARK 2,115.49 -0.01%
FTSE 100 5,742.07 -0.65%
FTSE 250 11,734.10 -0.17%
Early
gains dissipated in London and by the time Wall Street opened lower
investors were in the mood to bank some of this quarter's handsome
gains; despite today's fall, the top share index still put on close to
250 points in the third quarter.
Sentiment was boosted early
on by consumer confidence data that was not as bad as feared.
Consultancy GfK´s consumer confidence gauge for the month of September
rose by 1 point in September, to -28. The consensus estimate was for a
retreat to -30.
The increase in the index comes after it was
unchanged for four consecutive months and could mark the start of an
improvement in consumer confidence after an extended period of weakness,
commented analysts at Barclays Research.
The UK´s index of
services came in at a 1.1% month-on-month rate of change for July
(Consensus: 1.5%). On a three month basis the gauge rose by 0.1%, ONS
says, as expected.
Admiral on the rocks
Car insurer Admiral
was lower after the Office of Fair Trading (OFT) referred the private
motor insurance market to the Competition Commission, as it is concerned
that the market is not working well for motorists.
Bearing in mind the OFT's move it was not, perhaps, the best day for state-owned lender Royal Bank of Scotland (RBS) to release more details of its proposed flotation of its insurance arm, the Direct Line Group.
The flotation will be priced somewhere between 160p and 195p per share.
The maximum number of shares to be floated will be 575m shares, but the
actual number is expected to be somewhere between 375m and 500m, which
represent between one-quarter and one-third of the existing share
capital of Direct Line.
Final pricing is currently expected to
be announced on or around October 11th, 2012, with conditional dealings
in the shares on the London Stock Exchange beginning the same day.
Bourses operator London Stock Exchange
(LSE) has had a bad week. On Wednesday it revealed the extent to which
equity trading volumes have been hit by worries over the Eurozone
crisis. Today, it was bashed after it warned that proposed European
regulatory changes will cut net treasury income over next financial
year.
Recommendations published by the European Securities and
Markets Authority (ESMA) and the European Banking Authority (EBA) look
set to change the rules of the game, and differ considerably from the
initial proposals published in March 2012.
"If adopted in
their current form, the recommendations will have some implications for
LSE's existing wholly owned subsidiary CCP, CC&G," it added.
The move could significantly reduce net interest income from its
Italian clearing house, which currently accounts for over 15% of total
group revenue.
Nick Buckles, Group Chief Executive Officer (CEO) of security firm G4S, is to keep his job after dodging the blame in the group's internal report into the Olympics staffing fiasco.
David Taylor-Smith, Chief Operating Officer and Regional Chief
Executive Officer of UK and Africa, and Ian Horseman Sewell, Managing
Director, G4S Global Events, have been thrown under the bus, however,
leading to a shake-up in the management structure of G4S.
Electronics components distributor Electrocomponents
blew a fuse after it issued a profit warning. First half performance is
now expected to be lower than anticipated, although the group expect
profits in the second half to benefit from a combination of a return to
sales growth and actions to improve operating margins.
Pubs owner Mitchells and Butlers
said like-for-like (LFL) sales increased 3% in the nine weeks to
September 15th as the Olympic and Paralympic Games had little impact on
overall sales. Total LFL sales for the 51 weeks to September rose 2.1%
with food sales up 2.9% and drink sales up 1.4%.
Multi-national design and engineering consultancy Hyder
said it now expects first half pre-tax profit to be well ahead of
previous forecasts, buoyed by the timing of performance bonuses earned
in Australia.
Package tour operator Thomas Cook issued
the comforting news that it continues to expect full year results will
be in line with market expectations, which were set by the group's
interim management statement in August. The group has enjoyed a late
surge in bookings from Brits anxious to escape the soggy summer.
Vodafone has seen its price target slashed at Goldman Sachs, to 227p from 233p. Analysts at HSBC have upgraded their view on shares of Tesco
to "overweight" but Seymour Pierce has gone the other way, downgrading
their recommendation to "reduce" from "hold". Plumbers' merchant Wolseley was upgraded by Deutsche Bank to "buy" from "hold".
| AIM/Small Cap Report |
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FTSE 100 - Risers
Fresnillo (FRES) 1,853.00p +4.22%
Polymetal International (POLY) 1,085.00p +2.36%
Randgold Resources Ltd. (RRS) 7,615.00p +1.87%
Antofagasta (ANTO) 1,262.00p +1.28%
Vedanta Resources (VED) 1,029.00p +0.98%
Babcock International Group (BAB) 927.00p +0.98%
Evraz (EVR) 246.60p +0.86%
Aberdeen Asset Management (ADN) 311.10p +0.84%
Croda International (CRDA) 2,425.00p +0.83%
G4S (GFS) 265.70p +0.76%
FTSE 100 - Fallers
Compass Group (CPG) 683.50p -2.98%
Admiral Group (ADM) 1,053.00p -2.95%
International Consolidated Airlines Group SA (CDI) (IAG) 149.00p -1.65%
Anglo American (AAL) 1,817.00p -1.65%
Standard Chartered (STAN) 1,400.00p -1.48%
National Grid (NG.) 683.00p -1.44%
Melrose (MRO) 242.20p -1.42%
WPP (WPP) 841.50p -1.35%
RSA Insurance Group (RSA) 110.50p -1.34%
Johnson Matthey (JMAT) 2,413.00p -1.31%
FTSE 250 - Risers
Stobart Group Ltd. (STOB) 117.70p +4.53%
Centamin (DI) (CEY) 92.50p +3.18%
Kentz Corporation Ltd. (KENZ) 430.90p +3.06%
Oxford Instruments (OXIG) 1,375.00p +3.00%
Ophir Energy (OPHR) 608.00p +2.96%
Afren (AFR) 140.10p +2.79%
Unite Group (UTG) 263.60p +2.69%
Mondi (MNDI) 630.00p +2.61%
Genus (GNS) 1,512.00p +2.44%
Telecity Group (TCY) 895.50p +2.28%
FTSE 250 - Fallers
Electrocomponents (ECM) 200.30p -8.83%
London Stock Exchange Group (LSE) 943.00p -8.00%
FirstGroup (FGP) 240.00p -4.46%
NMC Health (NMC) 181.00p -3.72%
Homeserve (HSV) 210.00p -3.63%
National Express Group (NEX) 209.70p -3.36%
New World Resources A Shares (NWR) 265.00p -2.79%
Go-Ahead Group (GOG) 1,312.00p -2.74%
ICAP (IAP) 321.10p -2.70%
Imagination Technologies Group (IMG) 475.00p -2.64%
FTSE TechMARK - Risers
Sepura (SEPU) 86.75p +3.89%
Ark Therapeutics Group (AKT) 3.48p +3.73%
Innovation Group (TIG) 22.00p +3.53%
Psion (PON) 88.00p +2.92%
RM (RM.) 82.62p +2.64%
Kofax (KFX) 306.25p +2.42%
Vectura Group (VEC) 86.50p +2.37%
FTSE TechMARK - Fallers
AEA Technology Group (AAT) 0.055p -8.33%
Skyepharma (SKP) 92.00p -1.60%
Phoenix IT Group (PNX) 152.50p -1.29%
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| Sector movers |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Mixed fortunes in Travel & Leisure
Goals Soccer Centres,
the 5-a-side football centre operator, has expanded its issued share
capital by around one-twentieth through a discounted placing of shares.
The group raised around £2.8m through the placing of 2.43m shares at
115p per share, some 7.5p below last night's closing price. As is usual
when a new pile of shares comes on to the market at a price below the
prevailing level, the shares headed lower in a generally dull Travel
& Leisure sector.
Elsewhere in the sector, however, shares in Thomas Cook,
the package tour operator, were wanted after the group reiterated
full-year profits guidance on the back of late surge in summer bookings.
With the summer season now almost over, cumulative bookings
are tracking ahead of planned capacity in most markets, the travel group
said, while the late rush to escape Britain's soggy summer means price
trends have been better than those reported on back in August; aeroplane
load factors also remain high.
Watermark Global, the
AIM-quoted company with investments in acid mine drainage and coal
briquetting in South Africa, was the best performer in the vaolatile
Industrial Metals & Mining sector which, on Friday, was having one
of its up days.
Watermark was wanted after interim results
revealed it has moved into the black, with profit before tax of £2.72m
versus an interim loss last year of £0.63m.
Possibly of more
interest to shareholders was the assertion of Peter Marks, the Chairman
of Watermark, the company’s assets are worth 0.33p per share, whereas
the shares trade at only 0.15p, even after Friday's 0.45p rise.
Top performing sectors so far today
Forestry & Paper 6,775.18 +2.44%
Industrial Metals & Mining 2,694.24 +0.90%
Real Estate Investment & Services 1,767.45 +0.87%
Software & Computer Services 903.84 +0.75%
Electronic & Electrical Equipment 3,373.50 +0.43%
Bottom performing sectors so far today
Financial Services 5,114.42 -1.12%
Travel & Leisure 4,924.55 -1.11%
Automobiles & Parts 5,036.19 -0.83%
Gas, Water & Multiutilities 5,243.49 -0.79%
Mobile Telecommunications 4,091.53 -0.78%
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| US Market Report |
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Europe Worries, Disappointing Data Weighing On Stocks
Stocks have
moved mostly lower over the course of the trading day on Friday, partly
offsetting the strong gains posted in the previous session. Lingering
concerns about the financial situation in Europe are weighing on the
markets along with disappointing U.S. economic data.
The major averages have been rangebound in recent trading, stuck firmly in negative territory. The Dow is down 77.83 points or 0.6 percent at 13,408.14, the Nasdaq is down 20.71 points or 0.7 percent at 3,115.89 and the S&P 500 is down 8.74 points or 0.6 percent at 1,43.41.
The
weakness on Wall Street comes as traders are keeping a close eye on
developments in Europe, waiting on the release of the results of stress
tests of Spanish banks.
While the unveiling of Spain's budget for
2013 contributed to the rally that was seen on Thursday, analysts have
noted that the country still faces difficult times ahead.
Peter Boockvar,
managing director at Miller Tabak, said, "The initial reaction
yesterday was that maybe the Spanish news was enough to satisfy any
potential conditions brought upon them with an eventual bailout request.
Either way, Spain will be asking for help."
"Noon time we'll see
how much money the Spanish banking system will be thought to need for
recaps, with 60 billion euros expected," he added. "The ESM though won't
give Spain the money until banking oversight in the Euro zone is up and
running and that may not be until 2013."
Further selling
pressure was generated by a report from the Institute for Supply
Management - Chicago showing an unexpected contraction in Chicago-area
business activity in the month of September.
The ISM Chicago
said its business barometer dropped to 49.7 in September from 53.0 in
August, with a reading below 50 indicating a contraction in business
activity. With the drop, the barometer fell to its lowest level in three
years.
A separate report from Reuters and the University of Michigan
showed that consumer sentiment improved by less than previously
estimated in September, although the consumer sentiment index was still
at a four-month high.
Before the start of trading, the Commerce Department released
a report showing that personal income edged up by just 0.1 percent in
August, matching the downwardly revised increase reported for July.
The
report also showed that personal spending rose by 0.5 percent in
August, although the increase was largely due to higher gas prices. When
adjusted to remove price changes, spending edged up by just 0.1
percent.
Among individual stocks, Nike (NKE) has
come under pressure after the athletic apparel giant reported stronger
than expected first quarter results but also reported future orders that
trailed estimates on weak demand from China. Shares of Nike are down by
1.5 percent.
Sector News
Reflecting
concerns about the outlook for global demand, steel stocks have come
under considerable selling pressure on the day. The NYSE Arca Steel Index has fallen by 1.8 percent, extending the sharp downward move seen throughout the past two weeks.
ArcelorMittal (MT) and Cliffs Natural Resources (CLF) are turning in two of the steel sector's worst performances, falling by 3.7 percent and 2.8 percent, respectively.
Networking stocks
are also seeing significant weakness in mid-day trading, dragging the
NYSE Arca Networking Index down by 1.7 percent. Adtran (ADTN) is leading
the sector lower after cutting its third quarter guidance.
Brokerage, trucking, and oil stocks are also posting notable losses, moving to the downside along with most of the major sectors.
| Week Ahead |
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Sainsbury and Tesco go head-to-head
There is a retail theme to next week's results, with supermarket giants Tesco and Sainsbury set to report, along with car products provider Halfords, homewares retailer Dunelm and fashion chain Ted Baker.
On the economic front, central banks will be in focus with the European Central Bank making its interest rate announcement on Thursday, a few hours of the Fed's statement in the US.
On Friday, the big announcement is the US non-farm payrolls figure for September, with the market expecting an increase of 116,000.
Panmure Gordon's view on the trading updates of supermarket rivals Tesco and Sainsbury is that, taking the long term view, neither is very important.
"Sainsbury’s Q2 [second quarter] trading statement is not important in
the context of what we expect will be significant changes to the food
retailers’ strategic priorities over the next 12 months. We expect space
growth to slow, investment to shift online and ultimately significant
and recurring returns of capital to shareholders," the retail team at
Panmure Gordon opined.
"We look for similar like-for-like
sales growth in Q2 to that seen in Q1, which delivered 1.4% (ex-fuel).
We expect to see continued growth online at around double that recorded
by Ocado," the broker added.
Looking at the supermarket sector
as a whole, Panmure Gordon thinks the ending of the "space race" and
the re-focus of investment online is "but the first step to making the
sector investable again and the path that we have outlined should lead
to a significant revaluation."
Seymoure Pierce wants to see how the aggressive money-off coupon campaign has affected sales and profitability at Tesco.
“Attention will also be focused on whether the international business
has slowed much from its Q1 [first quarter] update, particularly South
Korea where new opening hour legislation was introduced at the end of
Q1, as well as an update on the US where losses are still unacceptably
high,” the broker suggests.
The broker is forecasting a 6%
fall in first half profit before tax to £1,603m and a flat dividend per
share of 4.6p. "A fall in profits from the UK is expected to be
partially offset by improvements in Asia, US and the bank and flat
Europe," they predict.
The first quarter interim management statement from Dunelm
sees the group going up easier comparatives figures, as a year ago
like-for-like (LFL) sales were down 2.0% year-on-year (yoy).
"However, given the deterioration in market data, we expect a sharp
slowdown in LFL sales and pencil in a flat quarter for Dunelm. Gross
margin likely to show modest progress yoy," Peel Hunt suggests.
Friday broker round-up
African Minerals: Investec cuts target to 482p from 507p, retains buy
Cairn Energy: Jefferies raises target to 385p from 305p, maintains buy
Schroders: Jefferies upgrades to buy
Tesco: HSBC lifts target to 390p from 360p, upgrades to overweight
Tesco: Seymour Pierce downgrades to reduce from hold, keeps target at 310p
Vodafone: Goldman Sachs trims price target to 227p from 233p, retains buy
Wolseley: Deutsche Bank raises target to 3092p from 2470p, upgrades to buy
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