Miners bounce back
Market Movers
techMARK 2,133.68 +0.23%
FTSE 100 5,872.75 +0.31%
FTSE 250 11,952.39 +0.20%
Having
taken a hammering yesterday in the wake of the gloomy manufacturing
news from China, miners are bouncing back this morning, dragging the
Footsie higher.
Of all the companies in the mining sector, Xstrata and Glencore are likely to be closely watched ahead of the deadline on Monday relating to their proposed merger.
Also in the spotlight will be UK public finance data for August, which
will be published at 9:30. The consensus is expecting Public Sector Net
Borrowing excluding interventions - PSNBx in economists' jargon - to
have been £15bn and PSNB to have been £13.2bn. The Public Sector Net
Cash Requirement (PSNCR) is expected to come in at -£5.5bn.
Bank of England governor Sir Mervyn King said in a Channel 4
interview last night that if there was a genuine excuse then the
government could afford to allow the burden of public debt to continue
to rise after 2015-16.
Sage goes for a Brazilian
The Sage Group
has acquired EBS Empresa Brasileira de Sistemas, a provider of
accounting, business management and tax software in Brazil. The
acquisition will cost the group up to £10.6m, including a performance
related sum of £1.8m.
The Home Affairs Committee, the group of MPs investigating G4S's
failure to fulfil all of its Olympic Games contractual requirements,
has called on the security firm to waive its fee. "G4S should waive its
£57m management fee and also compensate its staff and prospective staff
who it treated in a cavalier fashion," the damning report says. G4S has
already revealed that it expects to swallow a £50m-or-so loss on the
contract. The committee's verdict seems to have been widely priced in by
the market, judging by the muted share price reaction.
Property company British land
has offloaded seven food stores to institutional investors. The company
sold the gaggle of supermarkets at prices in line with March valuations
to raise £118m, of which British Land's share is £62m. The stores were
sold at net initial yields of between 4.95% and 5.7%.
Going the way of the buggy whip seller
Things just keep getting worse for HMV,
the retailer which left it too late to move away from its dependency on
selling CDs, DVDs and books in their physical forms. The group saw
like-for-like sales decline 11.6% year-on-year in the 20 weeks to
September 15th. Including the impact of previously announced store
closures, total group sales declined by 14.8%.
"The
like-for-like decline was less marked towards the end of the period and
we should be helped in the remainder of the year by a strong pipeline of
new releases in the music, DVD and games markets ahead of Christmas,"
said Trevor Moore, the group's newish Chief Executive.
Tanfield,
a global manufacturer of Powered Access equipment and an investor in
Smith Electric Vehicles, slumped after plans to float Smith were binned.
"We received significant interest from potential investors,
however, we were unable to complete a transaction at a valuation or size
that would be in the best interests of our company and its existing
shareholders," said Bryan Hansel, Smith's Chief Executive Officer.
Other markets
The
price of oil is back on the rise. The most widely traded futures
contract for Brent crude is up 73 cents to $110.76 a barrel.
With investors regaining their appetite for risk, gilts are spurned. The
yield on the benchmark 10-year gilt is up to 1.83% from 1.80%
overnight. Yields move inversely to prices.
FTSE 100 - Risers
Vedanta Resources (VED) 1,082.00p +2.66%
Evraz (EVR) 265.70p +1.88%
Pearson (PSON) 1,201.00p +1.61%
IMI (IMI) 948.00p +1.44%
Kazakhmys (KAZ) 734.50p +1.38%
BHP Billiton (BLT) 1,981.00p +1.36%
Amec (AMEC) 1,157.00p +1.22%
Polymetal International (POLY) 1,100.00p +1.20%
Fresnillo (FRES) 1,851.00p +1.20%
Burberry Group (BRBY) 1,049.00p +1.16%
FTSE 100 - Fallers
National Grid (NG.) 687.00p -1.01%
Imperial Tobacco Group (IMT) 2,387.00p -0.50%
ITV (ITV) 90.75p -0.44%
G4S (GFS) 266.10p -0.41%
British Land Co (BLND) 530.50p -0.38%
Bunzl (BNZL) 1,109.00p -0.36%
Land Securities Group (LAND) 769.50p -0.32%
ARM Holdings (ARM) 577.50p -0.26%
United Utilities Group (UU.) 728.50p -0.21%
Hargreaves Lansdown (HL.) 639.00p -0.16%
FTSE 250 - Risers
NMC Health (NMC) 197.90p +4.16%
Ruspetro (RPO) 108.00p +3.85%
Bumi (BUMI) 258.60p +3.40%
Essar Energy (ESSR) 121.60p +2.88%
Imagination Technologies Group (IMG) 522.00p +2.05%
Ferrexpo (FXPO) 213.70p +1.86%
TR Property Inv Trust Sigma Shares (TRYS) 71.50p +1.78%
Hochschild Mining (HOC) 488.70p +1.60%
Dairy Crest Group (DCG) 345.90p +1.59%
Templeton Emerging Markets Inv Trust (TEM) 558.00p +1.45%
FTSE 250 - Fallers
JD Sports Fashion (JD.) 713.00p -2.26%
Phoenix Group Holdings (DI) (PHNX) 511.00p -1.73%
Spirent Communications (SPT) 162.60p -1.22%
PayPoint (PAY) 745.00p -1.06%
Perform Group (PER) 386.00p -1.03%
Petra Diamonds Ltd.(DI) (PDL) 106.00p -1.03%
BBA Aviation (BBA) 203.30p -1.02%
Ocado Group (OCDO) 63.80p -0.93%
Millennium & Copthorne Hotels (MLC) 487.60p -0.93%
Mitchells & Butlers (MAB) 284.30p -0.91%
| European Market |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Dollar carves out gains on weak data, Spanish auction
The dollar marked gains across the board on Thursday as nerves about global growth were tested following weak Chinese and Eurozone data.
The preliminary HSBC China Manufacturing Purchasing Managers'
Index contracted for an 11th consecutive month while a preliminary
Eurozone purchasing-managers’ index stumbled to its lowest level since
June 2009.
French business activity also tumbled, with its PMI falling almost four points to 44.1.
Along
with all the data, traders were also keeping focus on Spain. The
nation's bond auction drew better than expected demand, selling €4.8bn
in medium and long-term debt ahead of its €4.5bn target. While the
result was good, many analysts pointed out that it could reduce the
chances of a bailout request ahead of the European Union summit.
The dollar index, which measures the US unit against a basket of six major currencies, advanced to 79.429 from 79.114 on Wednesday.
The euro bought
$1.2968 versus $1.3052 on Wednesday while the single currency traded at
¥101.45 from ¥102.22. Against the yen, the dollar bought ¥78.25
compared with ¥78.39 despite the Bank of Japan's extension of its
bond-buying programme earlier in the week.
The yen has gathered pace against major currencies after analysts said the BoJ's moves weren’t bold enough.
Traders
said risk appetite was mostly off the table on fears about global
growth and geopolitical tensions in the Middle East and between China
and Japan.
Sterling bought $1.6216 from $1.6221 and the Australian dollar dropped to $1.0436 from $1.0482 after the Chinese PMI data.
UK Event Calendar
INTERIMS
Oxford Catalysts Group, Toumaz Limited
INTERIM DIVIDEND PAYMENT DATE
Baronsmead
VCT 3, Baronsmead VCT 4, Baronsmead VCT 5, BlackRock World Mining
Trust, Brewin Dolphin Holdings, Catlin Group Ltd., Ferrexpo, Henderson
Group, Kingspan Group, LPA Group, National Express Group, New Europe
Property Investments, Secure Trust Bank, Synectics, Telecity Group, TP70
VCT, Ultra Electronics Holdings, Xaar
QUARTERLY PAYMENT DATE
Real Estate Credit Investments PCC Ltd
FINALS
Asian Citrus Holding, Gleeson (M J) Group
ANNUAL REPORT
Blinkx
SPECIAL DIVIDEND PAYMENT DATE
PHSC
AGMS
Blinkx, Filtronic, Ryanair Holdings
UK ECONOMIC ANNOUNCEMENTS
Public Sector Finances (09:30)
FINAL DIVIDEND PAYMENT DATE
Carclo, Eckoh, First Property Group, Northgate, PHSC, SSE
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| US Market Report |
Stocks Recover From Early Weakness To Close Mixed
After
moving to the downside in early trading on Thursday, stocks staged a
notable recovery attempt over the course of the trading day. The major
averages climbed well off their worst levels of the day, eventually
ending the session mixed.
While the Dow managed to climb into positive territory, the Nasdaq and the S&P 500 remained stuck in the red. The Dow crept up 18.97 points or 0.1 percent to 13,596.93, while the Nasdaq fell 6.66 points or 0.2 percent to 3,175.96 and the S&P 500 edged down 0.79 points or 0.1 percent to 1,460.26.
Disappointing
jobs report contributed to the early weakness on Wall Street, with the
Labor Department releasing a report showing that jobless claims came in
above estimates in the week ended September 15th.
While jobless claims
edged down to 382,000 from the previous week's revised figure of
385,000, economists had expected jobless claims to drop to 373,000 from
the 382,000 originally reported for the previous week.
Peter Boockvar,
managing director at Miller Tabak, said, "Bottom line, the labor market
still can't gain any lasting traction in light of the obvious economic
challenges."
A report showing a continued contraction in Chinese
manufacturing activity also helped to drag stocks lower, although
selling pressure was relatively subdued.
Traders remained reluctant to make any significant moves amid continued uncertainty about the near-term outlook for the markets.
The subsequent recovery attempt was partly due to the release of a report from the Philadelphia Federal Reserve showing that its index of regional manufacturing activity rose by much more than expected.
The Philly Fed said
its diffusion index of current activity rose to a negative 1.9 in
September from a negative 7.1 in August, although a negative reading
still indicates a contraction in regional manufacturing activity.
Among individual stocks, shares of Adobe Systems
(ADBE) moved notably higher even though the publishing and design
software developer reported weaker than expected third quarter revenues
and forecast fourth quarter results below analyst estimates.
Denbury Resources
(DNR) also posted strong gain after announcing an agreement to sell its
Bakken assets in North Dakota and Montana to Exxon Mobil (XOM) for $1.6
billion in cash
Meanwhile, Bed Bath & Beyond (BBBY)
came under pressure after the home furnishings retailer reported second
quarter earnings that came in weaker than expected.
Sector News
Many of the major sectors recovered from their early lows, but substantial weakness remained visible among railroad stocks. The Dow Jones Railroads Index tumbled by 4.9 percent, pulling back further off last Friday's record closing high.
Norfolk Southern
(NSC) helped to lead the railroad sector lower, with the railroad
company plunging by 9.1 after warning of weaker than expected third
quarter earnings.
Brokerage stocks also saw considerable weakness on the day, dragging the NYSE Arca Broker/Dealer
Index down by 1.8 percent. Jefferies (JEF) turned in one of the
sector's worst performances, falling by 7.3 percent despite reporting
better than expected third quarter results.
Commercial real estate, airline, and trucking stocks
also showed notable moves to the downside. On the other hand, housing
stocks saw moderate strength, adding to yesterday's gains.
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| Friday newspaper round-up |
BoE, Spain rescue, BAE
Sir
Mervyn King has prepared the ground for George Osborne to abandon a key
debt reduction target by saying that it would be “acceptable” to fall
short if a global slowdown was responsible. In his first live television
interview the Governor of the Bank of England yesterday denied
finding the job stressful, said that he had never thought of resigning
and rejected suggestions that he had “fired” Bob Diamond as Barclays
chief executive. He conceded that there was a “black cloud of
uncertainty” hanging over business because of the Eurozone crisis. And
admitting that the economy had grown more slowly than predicted, he
implied that the Government may miss its target to reduce public debt as
a proportion of GDP by 2015. “I am more relaxed about missing targets
if it is because the world economy is growing slowly. If it’s because
the world economy has grown slowly, so we have in turn grown slowly,
then that would be acceptable,” he said, according to The Times.
EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme
and unlimited bond buying by the European Central Bank, by helping
Madrid craft an economic reform programme that will be unveiled next
week. According to officials involved in the discussions, talks between
the Spanish government and the European Commission are focusing on
measures that would be demanded by international lenders as part of a
new rescue programme, ensuring they are in place before a bailout is
formally requested. One senior European official said negotiations have
been conducted directly with Luis de Guindos, the Spanish finance
minister. The plan, due to be unveiled next Thursday, will focus on
structural reforms to the Spanish economy long requested by Brussels,
rather than new taxes and spending cuts, The Financial Times reports.
The management of the defence giant BAE Systems
has so far met with 600 UK staff face-to-face to persuade them of the
merits of its proposed £30bn merger with Airbus-owner EADS.Ian King,
chief executive, is holding a series of town hall meetings to reassure
employees that the tie-up, which would create a European champion
capable of taking on the US's Boeing, would create more work in the UK
in the future. Critics of the deal have argued that British staff could
be most vulnerable in any future jobs culls because of the more
stringent labour laws in France and Germany, where so many of Airbus's
workers are based. However, BAE has struggled on its own, having been
forced to cut 20,000 jobs, many of which were in Britain, over the past
five years, The Independent reports.
People watching the £48bn merger expect miner Xstrata
to back the revised offer from commodity trader Glencore, in an
announcement that could come as soon as Friday morning. The boards of
the two FTSE 100 companies were on Thursday said to be locked in
separate talks, as they readied for Xstrata to reveal its decision on
Glencore’s latest offer. Under the new terms, Glencore is offering 3.05
of its shares for each Xstrata share, handing the Qataris and other
Xstrata shareholders more of the combined company. Xstrata’s board have
until 7am on Monday under takeover rules to announce their decision, but
are expected to make their announcement to shareholders imminently, The
Telegraph says.
IG Metall, which represents most of EADS’s
49,000 members in Germany, said that only by pressing ahead with agreed
contracts would jobs be preserved. “We want credible pledges from the
companies about job security, but we also need credible statements from
the governments about military contracts,” said Jürgen Kerner, the
union’s defence and aerospace representative. “That will be the only way
of keeping plants in use and people in work – in Germany, in the UK and
in France,” he said. Both companies have emphasised there is little
overlap between defence giant BAE and Airbus owner EADS,
suggesting the merger would not result in mass job losses. However,
neither company has given definitive assurances on jobs. A combined
company would potentially employ 220,000 people worldwide, The Telegraph
reports.
Italy’s economy will contract by twice as
much as previously forecast this year, hobbling its plans to pare back
public borrowing and dealing a blow to the Prime Minister, Mario Monti.
Rome yesterday was forced to issue revised predictions showing that
gross domestic product will drop by 2.4% in 2012, compared with the 1.2%
forecast in April, after the economy performed weakly in the first half
of the year. Italian GDP is no longer expected to rebound in 2013, with
a further 0.2% slide now pencilled in by official forecasters. Waning
growth will eat away at tax revenues and dislodge efforts to cut the
budget deficit. Public borrowing will come in at 2.6% this year, up from
the 1.7% previously forecast. However, the Economy Minister, Vittorio
Grilli, insisted that the country had no plans to ask for European help
to pare back its borrowing costs, writes The Times.
The managing director of Carphone Warehouse’s
British business has walked out before a restructuring that could
result in hundreds of job losses. The Times has learnt that Matt
Stringer, a former Marks & Spencer high-flier who took the post last
year, has resigned from the company and not lined up a new role. It is
the second major departure at the British business within three months.
Anthony Hemmerdinger, the retail director, quit to rejoin Sainsbury’s in
July after only a year with the mobile phone retailer. The latest
departure coincides with a possible restructuring plan, due to be
announced early next month, that is expected to result in job cuts at
the company’s headquarters in Acton, West London. The offices contain a
number of business units such as the fledgling Talk Mobile unit.
Britain’s shale gas reserves
could create up to 35,000 jobs and meet 10% of the country’s gas
requirements for a century, according to a new report from the Institute
of Directors. The publication comes only weeks before ministers are
expected to give the go-ahead to more “fracking”, despite growing
environmental concerns about the controversial technology. Ed Davey, the
energy secretary, gave warning on Thursday that the industry was no
“silver bullet” for Britain’s energy needs until more was known about
the “scale and costs of shale gas production”. Mr Davey was responding
to an article in the Financial Times by Lord Browne, former head of BP,
who said fracking offered a “substantial prize” to the UK and could play
a “critical role” in terms of energy security, The Financial Times
says.
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