London open: Footsie lower as Burberry plummets
Market Movers
- techMARK 2,112.49 -0.08%
- FTSE 100 5,780.11 -0.23%
- FTSE 250 11,785.32 -0.47%
- Markets await German ruling on ESM, FOMC meeting
- Burberry sinks after full-year guidance
- Miners provide a drag
The FTSE 100 opened slightly lower on Tuesday morning as markets gear
up for some big 'risk events' later this week; falls in the heavyweight
mining sector and a sharp drop from Burberry were weighing on the blue-chip index early on.
A last minute interjection by Peter Gauweiler, a member of Angela
Merkel's own coalition, threatened to derail what seemed to be the
likely approval by Germany's Constitutional Court of the European Stability Mechanism
(the new Eurozone rescue fund) tomorrow. Gauweiler called on the court
this past weekend to first assess the impact of the European Central
Bank's 'outright monetary transactions', which it announced last week.
Half an hour before today´s open however the Constitutional Court has
confirmed that it will go-ahead with its sentence, tomorrow, as
scheduled.
Meanwhile, the Federal Reserve is starting
its two-day monetary policy meeting tomorrow. "Despite the much improved
data in many areas, there remains a strong belief that the Fed will
announce some form of monetary easing on Thursday, although those
expecting QE3 are likely to be disappointed," said analyst Craig Erlam
from Alpari.
In other news, Spanish Prime Minister
Mariano Rajoy has yet to decide if he will request assistance from the
European Central Bank (ECB) in what would effectively be considered a
'bailout' of the southern European country. "I haven't decided yet if
I'm going to request the ECB's help. I have to think about it," he said.
Worth noting as well, the mixed macroeconomic data out last
night in China: the latest bank lending figures -the most important of
the two- have beat expectations (700bn Yuan in August versus
expectations for 600bn), although the latest auto sales data have come
in slightly lower than forecast.
FTSE 100: Burberry sinks 18% after warning about full-year profits
British fashion house Burberry
plummeted in the opening hour after warning that trading conditions
were becoming more challenging with like-for-like sales flat in the
second quarter. The firm said that ahead of the key retail trading
period in the second half, it expected pre-tax profits for the year to
March 31st 2013 to be at the lower end of market expectations.
Nomura and Seymour Pierce both downgraded their ratings on the stock
this morning. "This news will obviously hit sentiment towards Burberry
and the luxury sector and the shares are likely to underperform until
there is better news on demand," said Seymour analyst Kate Calvert.
Mining stocks were firmly out of favour with Vedanta, Anglo American, Kazakhmys and Antofagasta among the worst performers. Xstrata and Glencore
were slightly lower after Qatar Holding (which owns 12% of the former)
said it hasn't yet made up its mind on whether or not to vote in favour
of amended new terms of Glencore's offer.
Fund manager Ashmore fell after full-year pre-tax profits and assets under management took a small dip in the year to June 30th.
FTSE 250: IG Group gains after first-quarter update
Spread betting firm IG Group
rose strongly after first-quarter revenues came in line with
expectations, though they were still 18% down year-on-year due to a
tough comparative.
Internet gambling group Betfair was
in the red in spite of revenues gaining 13% in the three months to the
end of July, helped by betting on Euro 2012 and Wimbledon.
FTSE 100 - Risers
British American Tobacco (BATS) 3,159.50p +1.12%
ARM Holdings (ARM) 554.50p +1.00%
Imperial Tobacco Group (IMT) 2,272.00p +0.98%
United Utilities Group (UU.) 692.00p +0.73%
GlaxoSmithKline (GSK) 1,425.50p +0.71%
Hargreaves Lansdown (HL.) 657.00p +0.54%
Severn Trent (SVT) 1,699.00p +0.53%
AstraZeneca (AZN) 2,923.00p +0.50%
Unilever (ULVR) 2,256.00p +0.49%
Vodafone Group (VOD) 177.45p +0.48%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,132.00p -17.67%
Vedanta Resources (VED) 951.50p -5.13%
Anglo American (AAL) 1,942.50p -2.95%
Antofagasta (ANTO) 1,217.00p -2.56%
Kazakhmys (KAZ) 669.00p -2.55%
Evraz (EVR) 255.00p -2.00%
Eurasian Natural Resources Corp. (ENRC) 335.80p -1.93%
Rio Tinto (RIO) 3,012.50p -1.84%
Fresnillo (FRES) 1,726.00p -1.71%
Randgold Resources Ltd. (RRS) 6,910.00p -1.64%
FTSE 250 - Risers
IG Group Holdings (IGG) 455.90p +5.19%
Ruspetro (RPO) 119.70p +4.36%
Ocado Group (OCDO) 71.45p +2.14%
Stobart Group Ltd. (STOB) 116.70p +1.48%
Diploma (DPLM) 454.90p +1.45%
Bumi (BUMI) 285.70p +1.35%
Go-Ahead Group (GOG) 1,338.00p +1.13%
Dairy Crest Group (DCG) 347.60p +1.05%
Grainger (GRI) 101.00p +1.00%
TR Property Inv Trust (TRY) 160.80p +1.00%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,285.00p -5.86%
Lonmin (LMI) 599.50p -3.15%
Computacenter (CCC) 382.00p -3.12%
COLT Group SA (COLT) 118.80p -2.94%
St James's Place (STJ) 354.90p -2.77%
Bwin.party Digital Entertainment (BPTY) 101.00p -2.60%
Petropavlovsk (POG) 383.80p -2.59%
Betfair Group (BET) 730.00p -2.41%
Shanks Group (SKS) 90.60p -2.37%
UK Event Calendar
| US Market Report |
US close: Stocks in late swoon
Market movers
Dow Jones: -53 at 13,254
S&P 500: -9 at 1,429
NASDAQ Composite: -32 at 3,104
After markets trod water in the morning session, as hopes for central
bank stimulus cancelled out continuing concerns over Europe, the bears
took control in the afternoon session.
The fate of Greece is
still hanging in the balance after the country's Prime Minister Antonis
Samaras failed to convince his coalition partners to sign up to the
latest round of cuts demanded by lenders.
In Germany, the
entire future of the Eurozone's bailout mechanism is in the balance as
the nation's Constitutional Court decides on the legality of Germany
contributing to the European Stability Mechanism. A decision is expected
this month.
Stateside, markets are eagerly awaiting an
announcement on possible stimulus action by the Fed. If the US central
bank decides to go down that road it will make the announcement on
September 13th.
Increasing the uncertainty 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.
Intel threatened by mobile revolution
Intel
fell after analysts at Morgan Stanley cut their earnings forecast for
the stock. Many believe Intel has been caught unawares by the emergence
of mobile computing, which relies on lower power computer chips, an area
in which Intel is not seen as a market leader.
The world's biggest maker of paper and pulp, International Paper, also got hit by broker commentary, as Deutsche Bank analysts said it would struggle to push price increases on to customers.
In contrast, bubble-wrap envelope maker Sealed Air
got a lift from JPMorgan Chase, which initiated coverage with an
"overweight" rating and a $19 price target. The company's shares have
taken a dive since it acquired Diversey last June, raising the prospect
that it could become a takeover victim itself. "While we understand the
reasons, and the stock has bounced a bit, we still think shares are
oversold," JPMorgan Chase said.
Mobile phone network Sprint Nextel
put on a bit of a spurt, after Nomura upgraded the stock to "buy" from
"neutral" on the back of projected cost savings expected from the
company's network improvement plan.
One of the main victims of the financial crisis in 2008, American International Group dropped on news the US Treasury is planning to sell up to $18bn of shares in the nationalised financial services company.
The technology, financial and industrial sectors were the hardest hit.
Other markets
As
equities retreated, so US Treasuries headed higher. The yields on
10-year notes dipped 2/100 of a percentage point to 1.66%, having risen
to 1.69% at one point.
The front month futures contract for West Texas intermediate crude eased 29 cents to $96.25 a barrel on NYMEX.
S&P 500 - Risers
Sealed Air Corp. (SEE) $15.65 +3.92%
R.R. Donnelley & Sons Co. (RRD) $11.99 +3.18%
Vulcan Materials Co. (VMC) $41.44 +2.70%
Sprint Nextel Corporation (S) $5.15 +2.39%
PPG Industries Inc. (PPG) $115.79 +2.34%
O'Reilly Automotive Inc. (ORLY) $85.06 +2.17%
Fluor Corp. (FLR) $55.86 +2.03%
Chipotle Mexican Grill Inc. (CMG) $332.81 +1.98%
Urban Outfitters Inc. (URBN) $39.48 +1.94%
Janus Capital Group Inc. (JNS) $9.04 +1.92%
S&P 500 - Fallers
Apollo Group Inc. (APOL) $28.04 -7.43%
Teradata Corp. (TDC) $74.63 -6.95%
International Paper Co. (IP) $34.79 -4.16%
Intel Corp. (INTC) $23.26 -3.84%
Chesapeake Energy Corp. (CHK) $19.57 -3.79%
F5 Networks Inc. (FFIV) $96.63 -3.63%
Federated Investors Inc. (FII) $20.92 -3.42%
DeVry Inc. (DV) $20.59 -3.38%
E*TRADE Financial Corp. (ETFC) $8.75 -3.37%
Staples Inc. (SPLS) $11.25 -3.35%
Dow Jones I.A - Risers
Verizon Communications Inc. (VZ) $44.06 +0.78%
International Business Machines Corp. (IBM) $200.95 +0.73%
Merck & Co. Inc. (MRK) $44.26 +0.48%
Johnson & Johnson (JNJ) $68.18 +0.44%
Dow Jones I.A - Fallers
Intel Corp. (INTC) $23.26 -3.84%
Bank of America Corp. (BAC) $8.58 -2.50%
Boeing Co. (BA) $71.08 -2.48%
3M Co. (MMM) $90.67 -2.32%
Cisco Systems Inc. (CSCO) $19.15 -2.10%
JP Morgan Chase & Co. (JPM) $38.76 -1.37%
Caterpillar Inc. (CAT) $87.10 -1.14%
United Technologies Corp. (UTX) $78.61 -1.01%
Nasdaq 100 - Risers
Green Mountain Coffee Roasters Inc. (GMCR) $30.36 +9.09%
O'Reilly Automotive Inc. (ORLY) $85.06 +2.17%
Expeditors International Of Washington Inc. (EXPD) $38.35 +1.51%
Costco Wholesale Corp. (COST) $100.45 +0.73%
Gilead Sciences Inc. (GILD) $59.66 +0.67%
KLA-Tencor Corp. (KLAC) $52.17 +0.62%
Warner Chilcott Plc (WCRX) $12.93 +0.54%
Nasdaq 100 - Fallers
Apollo Group Inc. (APOL) $28.04 -7.43%
Intel Corp. (INTC) $23.26 -3.84%
F5 Networks Inc. (FFIV) $96.63 -3.63%
Staples Inc. (SPLS) $11.25 -3.35%
Avago Technologies Ltd. (AVGO) $34.99 -3.34%
Garmin Ltd. (GRMN) $40.35 -2.82%
Flextronics International Ltd. (FLEX) $6.55 -2.67%
Marvell Technology Group Ltd. (MRVL) $10.20 -2.62%
Apple Inc. (AAPL) $662.74 -2.60%
Expedia Inc. (EXPE) $52.75 -2.51% |
| FX and Commodities round-up |
FX round-up: Dollar pulls off four-month low
The dollar recovered from a four-month low on Monday while the euro nursed losses for the first time in four days.
Focus remained firmly on the US Federal Reserve which is expected to
announce new stimulus measures to stimulate the economy this week.
The euro had rallied almost to a four-month high against the dollar on
Friday following disappointing US jobs figures. The widely anticipated
report further fuelled speculation that the Fed would outline a third
round of quantitative easing.
Sentiment towards the euro was
also lifted after the European Central Bank unveiled a bond-buying plan
to reduce borrowing costs in indebted countries.
However by
Monday, the euro's rally had run out of steam. The single currency fell
to an intra-day low of $1.2756 and later traded at around $1.2763 as
investors took profit on the euro's recent gains and as markets gear up
for the Fed policy meeting this week.
The dollar index, which
measures the US currency against a basket of six major currencies,
climbed to 80.407 from 80.183 in late US trading on Friday.
Against the Japanese yen, the dollar traded at ¥78.31 versus ¥78.25 the
previous session while the euro fell 0.2% to buy ¥99.83 as investors
mulled a sharp downward revision to Japanese GDP for the second quarter.
Sterling's recent also rally ran out steam on Monday, taking the UK currency off a four-month high against the dollar.
Last week the pound rallied against the dollar on fresh hopes about the
Eurozone debt crisis after the ECB unveiled its plan to lower borrowing
costs.
The Australian dollar traded at $1.0336 compared to $1.0397 the previous session.
Commodities: Crude taps into last minute gains
Crude
oil futures shrugged off earlier losses on Monday to eke out a small
gain as focus remains firmly pinned on expectations of a third round on
monetary stimulus from the Federal Reserve.
Crude for October delivery settled up 12 cents at $96.54 a barrel on the New York Mercantile Exchange.
Demand had initially been weighed down by concern about slowing demand
from China, the world's second largest crude consumer after figures
showed oil imports fell to a 22-month low in August. Crude traded at an
intra-day low of $95.34 a barrel on Monday.
Weak US employment
figures out Friday also kept crude gains slim. There is concern about
slowing demand for oil the US, the world's number one consumer. Last
week the Energy Information Administration said weekly petroleum demand
declined 0.9% amid higher unemployment.
Otherwise investors
digested comments from Saudi Arabia's oil minister Ali al-Naimi who said
Saudi, the world's top exporter of crude, is worried that the current
high price of oil does not reflect market fundamentals.
On the ICE futures exchange Brent crude climbed 56 cents to settle at $114.81 a barrel.
Elsewhere gold lost its allure on Monday, as profit takers moved in on the previous session's rally.
Gold futures for December delivery fell $8.70 to settle at $1,731.80 an
ounce on the Comex division of the New York Mercantile Exchange.
Bullion surged over 2% on Friday on bets that the Fed will announce
another round of monetary stimulus. Gold, like all precious metals, is
often used as a hedge against inflation.
Silver for December fell 6 cents to $33.63 an ounce while palladium for the same month added $18 to $672.75 an ounce.
US policy makers will meet on Wednesday and Thursday this week.
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