Stocks slip ahead of German decision on ESM
Market Movers
techMARK 2,108.87 0.00%
FTSE 100 5,777.05 -0.26%
FTSE 250 11,768.15 -0.10%
UK stocks were
slightly lower in early trading on Wednesday ahead of the crucial
German ruling on whether the Eurozone rescue fund is constitutional.
The German Constitutional Court is
expected to announce this morning its decision on the European
Stability Mechanism (ESM). CSU party member Peter Gauweiler had asked
the court on Monday to postpone the decision in order to study the
European Central Bank's bond purchase plan announced last week. The
request was turned down and a decision was confirmed for today.
Markets are
generally expecting the fund to be ruled constitutional although some
analysts do not rule out potential legislative changes in order to limit
Germany's exposure in future bailouts. This scenario would certainly
pressure the markets lower.
Analysts have highlighted several
other “event-risks” over the next day or two, including debt auctions in
Italy and elections in the Netherlands. However, the biggest event of
all will undoubtedly be the upcoming Federal Open Market Committee
(FOMC) two-day meeting in the US which kicks off today. Sluggish labour
figures on Friday have increased hopes that the Fed may move to ease
monetary policy further when the meeting concludes on Thursday.
Meanwhile, European Commission President Jose Manuel Barroso
will outline a draft of the European Banking Union proposals today. He
said recently that "the Eurozone's new banking-supervision mechanism
will have the European Central Bank at its heart".
Asian stocks
jumped overnight after China's Premier Wen Jiabao reassured that his
country would hit its gross domestic product (GDP) growth target of 7.5%
this year.
"It is true that the Chinese economy is under
notable downward pressure, but with our efforts to shift our economic
model, better allocate resources and implement more reform and opening
up, we have the ability to keep the economy in good shape," he told the
World Economic Forum. "We will give greater priority to stabilising
growth and maintaining the continuity and stability of our policies," he
said.
Back in the UK, the Office for National Statistics
will publish its labour market data at 09:30. Consensus is forecasting
the July ILO unemployment rate unchanged aat 8.0% and the claimant count
at 0.
Kingfisher drops as profits fall
Wet weather and adverse exchange rates put a dampener on the first-half performance of do-it-yourself retailer Kingfisher,
causing shares to slip early on. Sales in the 26 weeks to July 28th
were down 3.3% while adjusted pre-tax profits slipped 15.5%. Seymour
Pierce downgraded its rating on the stock this morning from 'hold' to
'sell'.
Insurance group Admiral was a heavy faller early on after going ex-dividend. Other FTSE 350 stocks going ex-div today include: 888, Antofagasta, bwin.party, Capita, Cookson, Ladbrokes, Rentokil and Hargreaves Lansdown.
House-builder Barratt Developments
was firmly in the red despite revealing a 159.3% rise in pre-tax profit
in the year to June 30th. The group signalled its intention to pay a
final dividend in respect of the current financial year, but there was
no pay-out for the financial year just gone.
Telecoms group Vodafone
fell on reports that Verizon Wireless's special dividend may be delayed
after people close to the matter said that the US mobile-phone joint
venture will not discuss it at an upcoming meeting next week.
Oil and gas group Afren
edged higher after saying that it has started drilling at its Simrit-3
well on the East Simrit prospect in the Kurdistan region of Iraq, just
10km east of the successful Simrit-2 well which was drilled a few months
back.
FTSE 100 - Risers
Sage Group (SGE) 310.20p +1.44%
Lloyds Banking Group (LLOY) 37.48p +1.11%
BT Group (BT.A) 229.00p +1.10%
Royal Bank of Scotland Group (RBS) 267.10p +0.91%
Polymetal International (POLY) 1,027.00p +0.79%
Burberry Group (BRBY) 1,096.00p +0.74%
Evraz (EVR) 263.00p +0.73%
Weir Group (WEIR) 1,691.00p +0.71%
Amec (AMEC) 1,142.00p +0.71%
Barclays (BARC) 215.00p +0.70%
FTSE 100 - Fallers
ICAP (IAP) 325.80p -3.67%
Anglo American (AAL) 1,905.50p -2.53%
Admiral Group (ADM) 1,092.00p -2.41%
Hargreaves Lansdown (HL.) 638.50p -2.37%
Wolseley (WOS) 2,640.00p -1.68%
Ashmore Group (ASHM) 327.60p -1.03%
BG Group (BG.) 1,258.50p -0.94%
ARM Holdings (ARM) 547.00p -0.91%
Antofagasta (ANTO) 1,215.00p -0.90%
Land Securities Group (LAND) 786.00p -0.82%
FTSE 250 - Risers
New World Resources A Shares (NWR) 300.00p +3.81%
Aquarius Platinum Ltd. (AQP) 39.43p +3.44%
Diploma (DPLM) 459.70p +2.73%
Menzies(John) (MNZS) 633.07p +2.11%
Hiscox Ltd. (HSX) 482.20p +2.10%
Wetherspoon (J.D.) (JDW) 463.70p +2.02%
St. Modwen Properties (SMP) 198.50p +1.74%
Bumi (BUMI) 291.40p +1.50%
Interserve (IRV) 379.90p +1.50%
Genus (GNS) 1,370.00p +1.48%
FTSE 250 - Fallers
Ruspetro (RPO) 92.75p -7.25%
Lonmin (LMI) 582.50p -4.66%
Barratt Developments (BDEV) 163.00p -3.95%
International Public Partnerships Ltd. (INPP) 120.00p -2.60%
Dixons Retail (DXNS) 19.48p -2.60%
Gem Diamonds Ltd. (DI) (GEMD) 172.90p -2.43%
Raven Russia Ltd (RUS) 64.00p -2.22%
Invensys (ISYS) 243.70p -2.21%
Berendsen (BRSN) 554.00p -1.77%
Informa (INF) 409.30p -1.63%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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UK Event Calendar
INTERIMS
Alkane Energy, Alliance Pharma, Gulf Keystone Petroleum Ltd. (DI),
InterQuest Group, Kingfisher, Modern Water, Netplay TV, OJSC Cherkizovo
Group GDR (Reg S), Tikit Group
INTERIM DIVIDEND PAYMENT DATE
Informa
INTERIM EX-DIVIDEND DATE
32Red, 888 Holdings, Abbey Protection, Admiral Group, Antofagasta,
Avesco Group, Belvoir Lettings, Berendsen, Bwin.party Digital
Entertainment, Capita, Chesnara, Clarke (T.), Clarkson, Concurrent
Technologies, Cookson Group, Densitron Technologies, Fyffes, H&T
Group, International Public Partnerships Ltd., Ladbrokes, Lavendon
Group, Lupus Capital, Macfarlane Group, New Europe Property Investments,
Pennant International Group, Rathbone Brothers, Rentokil Initial,
Restaurant Group, Savills, Stadium Group, Tamar European Industrial Fund
Ltd., Temple Bar Inv Trust, Tex Holdings, Treatt, UTV Media, Zotefoams
QUARTERLY PAYMENT DATE
M Winkworth, Unilever
QUARTERLY EX-DIVIDEND DATE
Alpha Pyrenees Trust Ltd., Land Securities Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Price Index (GER) (07:00)
Crude Oil Inventories (US) (15:30)
Import and Export Price Indexes (US) (13:30)
Industrial Production (EU) (10:00)
MBA Mortgage Applications (US) (12:00)
Wholesales Inventories (US) (15:00)
FINALS
Barratt Developments, Thorntons
SPECIAL EX-DIVIDEND PAYMENT DATE
Admiral Group, Hargreaves Lansdown
AGMS
Enteq Upstream, ITM Power, Liontrust Asset Management, Petro Matad Ltd., Stewart & Wight
UK ECONOMIC ANNOUNCEMENTS
Claimant Count Rate (09:30)
Unemployment Rate (09:30)
FINAL DIVIDEND PAYMENT DATE
Creston
FINAL EX-DIVIDEND DATE
Avarae Global Coins, Cash Converters International Ltd, Catalyst Media
Group, Colefax Group, Dart Group, Darty, Goodwin Plc, Hargreaves
Lansdown, Impala Platinum Holdings Ltd., Medusa Mining Ltd. (DI),
Stewart & Wight, Sweett Group, Vianet Group
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| US Market Report |
US
equities bounced back from Monday's setback, with the bulls once again
banking on some further monetary easing from the Federal Reserve to push
prices higher.
Gains were tempered by the fact that investors
have half an eye out for tomorrow morning’s expected announcement from
Germany’s Constitutional Court regarding the legality of Europe’s
so-called European Stability Mechanism, not to mention Thursday's Fed
meeting outcome.
Ratings agency Moody’s was also a downer on
proceedings, after it warned of the need for the US Congress to take
action to contain the country’s worrisome financial situation.
Morgan Stanley will acquire 14% of its brokerage joint-venture from Citigroup
at a significant discount to Citigroup’s own valuation of the unit. The
terms value the brokerage at $13.5bn, some two-fifths below an earlier
valuation put on the business by Citi.
Fast food chain McDonald’s eased back despite announcing a 3.7% rise in its global same-stores sales for August.
Money manager Legg Mason’s Chief Executive
Officer and Chairman, Mark Fetting, is to quit both roles at the
beginning of next month, but will stay on in an advisory capacity for
the rest of this year.
Computer chip maker Advanced Micro Devices
(AMD) clawed back recent losses after revealing it has bought a stake
in CiiNOW, a technology company that specialises in providing platforms
for cloud-based online games.
Energy stocks were wanted, as commodity prices headed higher. Alpha Natural Resources, Cliffs Natural Resources and Cabot Oil and Gas were tucked in just behind AMD at the top of the S&P leader board.
First Solar was a bright spot on news that it has inked a contact with PG&E.
Organic fair trade gourmet coffee provider Green Mountain Coffee Roasters
perked up after Italian coffee brand Luigi Lavazza said in a filing
after the market closed yesterday that it increased its stake in the US
firm to 6.8%.
Goldman Sachs has downgraded Bristol Myers Squibb
to "buy" from "conviction buy". The US pharmaceuticals giant signed a
deal to license UK drug discovery company Summit's proprietary Seglin
technology to identify and develop drug candidates for up to ten targets
across multiple therapeutic areas. Summit will receive a $100,000
technology access fee and is eligible for research, development and
regulatory milestones of up to $30m per product, plus royalties on
worldwide sales of products arising from the technology.
The profit warning by British luxury brand Burberry had repercussions across the Atlantic, where fashion firm Ralph Lauren was one of the worst performing blue-chips. Expensive handbag maker Coach also came off the rails,
Small business hiring intentions climb
The
US trade deficit fell by 0.2% month-on-month in July, to $42bn
(Consensus: $43.5bn). Exports declined by 1% while imports dipped by
0.8% month-on-month.
The NFIB small business sentiment index rose by 1.7 points in August, to 92.9, its first increase since April.
According to economists at Barclays Research:
"The net percentage expecting improved credit conditions also fell to
-9% from -7%. As has been the case in recent months, taxes (23% of
respondents), poor sales (20%), and government red tape (21%) were the
issues most frequently reported as the single most important problem for
small businesses. On the whole, while it is hard to read too much into
any one report, it is especially encouraging to see the improvements in
the economic outlook and hiring sentiment."
Same-store US retail sales grew by 1.0% week-on-week.
Dow Jones I.A - Risers
Bank of America Corp. (BAC) $9.03 +5.24%
Alcoa Inc. (AA) $9.33 +3.09%
Hewlett-Packard Co. (HPQ) $17.95 +2.98%
Travelers Company Inc. (TRV) $66.95 +2.51%
JP Morgan Chase & Co. (JPM) $39.60 +2.17%
Dow Jones I.A - Fallers
Kraft Foods Inc. (KFT) $39.77 -1.09%
Home Depot Inc. (HD) $56.72 -1.01%
Cisco Systems Inc. (CSCO) $19.04 -0.57%
American Express Co. (AXP) $57.23 -0.50%
Procter & Gamble Co. (PG) $68.26 -0.36%
McDonald's Corp. (MCD) $91.20 -0.11%
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| FX and Commodities round-up |
Dollar falls after Moody's warning shot
The dollar fell
against major currencies on Tuesday, with the dollar index falling
below 80 for the first time since the start of May, after Moody's
Investors Service warned that the US could lose its top credit rating.
The dollar index,
which measures the US against a basket of six other currencies, dropped
to 79.866 from 80.408 the previous session late Monday.
Traders
sold the greenback after Moody's threatened to remove the US AAA rating
if next year's budget talks do no produce policies that reduce the
nation's debt.
There was also caution ahead of the conclusion of the Federal Reserve
meeting on Thursday. Many are expecting the Fed to announce further
stimulus measures at the end of the two-day policy meeting on Thursday.
Investors
also squared positions ahead of a decision by a Germany court on the
legality of the Eurozone’s permanent rescue fund on Wednesday.
The euro made headway, rising to $1.2857 from $1.2765 the previous session.
The Japanese yen remained at three month high against the broadly weaker dollar, at ¥77.78 from the previous session's ¥77.70.
The British pound rose to a four month high against the greenback to buy $1.6067 compared to $1.5994 on Monday.
The pound tracked
the euro’s gains on Tuesday ahead of what is hoped will be a positive
German court ruling on the Eurozone fund. Encouraging UK economic data
also buoyed the UK currency.
Data showed the UK's trade deficit
narrowed more than expected in July, the housing market is not as weak
as expected in August and a separate report from recruitment firm
Manpower said companies were planning to increase hiring.
Crude rises ahead of Fed
Crude oil prices rose for the fifth consecutive session on Tuesday as traders gear up for a key Federal Reserve meeting.
Markets are expecting US Federal Reserve policy makers to announce further stimulus measures at the end of the two-day policy meeting on Thursday.
A string of weak US economic data,
including last Friday's disappointing jobs data, has spurred hopes that
the Fed will undertake a third round of quantitative easing to
stimulate growth.
Expectations of more easing measures were
increased last month when Fed chairman Ben Bernanke indicated, at a key
speech in Jackson, that the Fed may soon take action to boost growth.
However many analysts aren't so sure the Fed will announce additional
stimulus measures on Thursday.
Quantitative easing is seen as
beneficial for oil demand as it reduces the value of the dollar. Oil,
which is priced in dollars, becomes cheaper for holders of other
currencies.
The dollar's weakness on Tuesday encouraged interest in crude oil.
On Tuesday the American Petroleum Institute said US crude oil supplies increased by 221,000 barrels last week. Gasoline stockpiles fell by 4.16m barrels while distillates, which includes heating oil and diesel, increased by 2.55m barrels.
Separately, in its short-term outlook, the EIA said it oil demand in the US to drop 1.5% this year to a 15-year low.
Crude oil for October delivery advanced 63 cents to settle at $97.17 a barrel on the New York Mercantile Exchange.
Meanwhile Moody’s warning that the US could lose its top credit rating sent gold futures higher on Tuesday.
Gold
for December delivery increased $3.10 to settle at $1,734.90 an ounce
on the Comex division of the New York Mercantile Exchange.
The prospect of a possible bond-buying programme from the Fed and the weaker dollar also supported interest in the yellow metal.
Silver for December fell 7 cents to close the day at $33.57 an ounce.
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