Chinese central bank lends a hand
Market Movers
techMARK 2,118.28 +0.36%
FTSE 100 5,792.07 +0.42%
FTSE 250 11,774.58 +0.31%
Miners
are back in fashion today and driving Footsie higher, as investors
venture back into the market following yesterday's shake-out.
Reports that that China's central bank has pumped record amounts of
liquidity into the banking system sent the Shanghai and Hong Kong stock
markets into overdrive overnight, and have lit a fire under the share
prices of mining companies, such as Rio Tinto, Xstrata and Anglo American. Fellow travellers such as Russian steel maker Evraz and commodities trader Glencore also take the high road.
In company news, sweeteners group Tate & Lyle
said first half adjusted operating profit will be similar to last
year's level, in line with expectations. The company saw an improved
performance in the second quarter in its Speciality Food Ingredients
business. "Overall, while recognising the current level of uncertainty
around the wider economy and volatile corn markets, we continue to
expect to make progress this financial year," the group said.
Sticking with the food theme, contract caterer Compass
said expectations for the full year remain unchanged after a strong
performance in the fourth quarter as its US and emerging markets
continue to underpin growth. In an update ahead of its annual results,
Compass said constant currency revenue growth for the year to September
30th 2012 is expected to be around 8% and organic revenue growth should
be 5.5%. Operating profit is expected to increase 8%.
Package tour operator TUI Travel
is flying high after it said it remains on track to meet its full year
expectations, following strong trading in the summer high season, with
improved margins and load factors versus the prior year.
ICAP,
which on Wednesday warned of subdued trading levels in its core
business, has bought CTI Shipbrokers (India) from Captain Jaideep Kapoor
and Tradex Chartering & Trading Private. The assets acquired have a
gross value of $2.464m, the inter-dealer broker disclosed. CTI India's
main business is in dry, tanker and sale and purchase broking. The
acquisition provides ICAP Shipping with a subsidiary in India with
offices in New Delhi and Mumbai employing 28 people.
Economic agenda
Investors
could be forgiven for keeping more than one eye out for news of the
Spanish austerity budget, due to be unveiled later today, while in the
UK the Office for National Statistics has another stab at estimating UK
gross domestic product (GDP).
The market is not expecting any
revision to the previous GDP reading for the second quarter, which
indicated a 0.5% quarter-on-quarter decline.
Out at the same time (09:30) is UK trade data, which will see the nation's supplies of red ink run low.
"Monthly external trade data are not as bad as assumed in the second
GDP estimate, which also marginally eases its negative effect on the
current account (by £0.2bn to -£10.9bn), but with income struggling
(£2.5bn) and current transfers persistently negative (-£5.5bn) in our
forecast, we expect a current account balance of -£13.9bn. Trade
revisions lead us to expect a small worsening in the Q1 deficit too,"
broker Nomura said.
Other markets
Metals
prices are on the rise on the futures markets. The most actively traded
gold contract is up $7 to $1,760.80 an ounce, while the copper
counterpart is up $2.30 to $373.30 a pound.
Brent crude for November delivery is 22 cents dearer at $110.26 a barrel in early London trading.
Investors turn their backs on gilts to ride the equities rally. The
yield on the benchmark 10-year gilt is down to 1.70% from 1.71%
overnight. Yields move inversely to prices.
| AIM/Small Cap Report |
FTSE 100 - Risers
Evraz (EVR) 243.30p +2.14%
Glencore International (GLEN) 344.80p +1.88%
Rio Tinto (RIO) 2,890.00p +1.72%
Xstrata (XTA) 972.50p +1.69%
Shire Plc (SHP) 1,823.00p +1.56%
Anglo American (AAL) 1,858.50p +1.50%
Eurasian Natural Resources Corp. (ENRC) 316.30p +1.41%
Kazakhmys (KAZ) 700.00p +1.38%
National Grid (NG.) 701.00p +1.37%
Tate & Lyle (TATE) 663.00p +1.30%
FTSE 100 - Fallers
Vodafone Group (VOD) 176.65p -0.42%
GKN (GKN) 213.80p -0.19%
Next (NXT) 3,438.00p -0.17%
Compass Group (CPG) 710.50p -0.14%
Old Mutual (OML) 172.90p -0.12%
Kingfisher (KGF) 267.60p -0.11%
Royal Dutch Shell 'A' (RDSA) 2,175.00p -0.11%
Unilever (ULVR) 2,270.00p -0.09%
Royal Dutch Shell 'B' (RDSB) 2,237.00p -0.07%
Morrison (Wm) Supermarkets (MRW) 289.70p -0.07%
FTSE 250 - Risers
TUI Travel (TT.) 237.40p +3.17%
PayPoint (PAY) 759.50p +3.12%
Oxford Instruments (OXIG) 1,363.00p +2.64%
Jardine Lloyd Thompson Group (JLT) 778.50p +2.03%
Centamin (DI) (CEY) 91.25p +2.01%
Ferrexpo (FXPO) 200.80p +1.88%
Paragon Group Of Companies (PAG) 207.60p +1.86%
Domino Printing Sciences (DNO) 578.50p +1.85%
Hochschild Mining (HOC) 489.50p +1.77%
RIT Capital Partners (RCP) 1,156.00p +1.76%
FTSE 250 - Fallers
Perform Group (PER) 376.80p -4.37%
JD Sports Fashion (JD.) 700.00p -4.11%
Brown (N.) Group (BWNG) 268.70p -2.26%
Ted Baker (TED) 890.00p -2.09%
Unite Group (UTG) 245.60p -2.00%
Telecom Plus (TEP) 835.00p -1.76%
F&C Asset Management (FCAM) 93.80p -1.26%
BH Macro Ltd. USD Shares (BHMU) 18.95 -1.04%
Domino's Pizza Group (DOM) 535.00p -1.02%
Hays (HAS) 79.50p -1.00%
UK Event Calendar
INTERIMS
Circle Holdings , Dolphin Capital Investors Ltd, Fairpoint Group, OSJC
Center for Cargo Container Traffic Transcontainer GDR (Reg S), SimiGon
Ltd. (DI)
INTERIM DIVIDEND PAYMENT DATE
Low & Bonar, Pennant International Group, Prudential, Reckitt Benckiser Group, Schroders, Schroders (Non-Voting)
QUARTERLY PAYMENT DATE
Total SA
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Business Climate Indicator (EU) (10:00)
Continuing Claims (US) (13:30)
Durable Goods Orders (US) (13:30)
Economic Sentiment Indicator (EU) (10:00)
GDP (Final) (US) (13:30)
Initial Jobless Claims (US) (13:30)
M3 Money Supply (EU) (09:00)
Pending Homes Sales (US) (15:00)
PMI Retail (EU) (09:00)
PMI Retail (GER) (08:55)
Unemployment Rate (GER) (08:55)
FINALS
Hansard Global
AGMS
Miton Worldwide Growth Inv Trust, Park Group, Toledo Mining Corp.
TRADING ANNOUNCEMENTS
Compass Group, Tate & Lyle, TUI Travel
UK ECONOMIC ANNOUNCEMENTS
Balance of Payments (09:30)
Current Account (09:30)
GDP (quarterly national accounts) (09:30)
GFK Consumer Confidence (00:01)
Index of Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Fletcher King |
| European Forex preview |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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This is a review of the elements likely to affect foreign exchange (forex) trading in Europe:
Main headlines
Spain to pass reforms, budget cuts with eye on aid - Reuters
Chinese Industrial Profits Fall 6.2% in Fifth Straight Drop - Bloomberg
IMF, EU clash over Greece's bailout prospects - Reuters
QE3 triggers fear of new currency wars - FT
Bill Gross: We're Buying What the Fed and ECB Are Buying - CNBC
Americas wrap-up
Fed’s Evans Calls for More Easing, Warns of ‘Lost Decade’ - Bloomberg
Orders for US Durable Goods Probably Slumped on Airplanes - Bloomberg
Sales of New US Homes Hover Near a Two-Year High - Bloomberg
Corporate America sweats as US nears fiscal cliff - Reuters
Brazil Real Falls on Report of Possible Government Intervention - Bloomberg
Chilean Peso Declines as Copper Drops on Global Stimulus Concern - Bloomberg
Santander unit rises in Mexico debut - FT
Asia-Pacific summary
Asian Stocks Rise on China Stimulus Measures Prospects - Bloomberg
China Central Bank Makes Record Weekly Cash Injection - CNBC
Japan Won’t Compromise With China on Claim to Islands: Noda - Bloomberg
Korean Manufacturer Confidence Holds Near Three-Year Low - Bloomberg
Singapore to Take Expats at 'Comfortable' Pace - Bloomberg
India's Land Acquisition Bill Gets More Business Friendly - WSJ
Singh Policy Steps Augur Bumper Budget With Eye on Vote - Bloomberg
Indonesia’s Robust Demand to Lift Inflation Rate, OECD Says - Bloomberg
US to ease Myanmar import ban - FT
Aussie Rises From 2-Week Low on China Stimulus Prospects - Bloomberg
European news
Euro Zone Misery to Last for Decade: Ernst & Young - CNBC
European law makers warn of banking union split - Reuters
EU companies write off €76bn of goodwill - FT
Madrid Protesters March Again as Spain Braces for Cuts - Bloomberg
Rajoy fights growing Spanish turmoil - FT
Here Are Reasons Not to Lose Faith in Spain... Yet - CNBC
Tens of Thousands in Athens Protest Cuts - WSJ
Germany Still Outperforming Most of Euro Zone - WSJ
Irish house prices post largest monthly rise since 2007 - Reuters
Euro Can Bear Fewer Members as Czech Leader Calls Greeks Victims - Bloomberg
Jacques de Larosière Seductive simplicity of ringfencing - FT
FOREX action
EUR:
The main euro cross-rates edge higher while they keep their recent
consolidating bias. Spain’s economic and political problems continue to
grab the headlines. Madrid will release today the 2013 budget bill;
stronger fiscal retrenchment is expected. Its European peers are
demanding Rajoy vows to commit to fiscal consolidation and new
structural reforms as a prerequisite to launch the sovereign bail-out.
EUR-USD steadies towards 1.2900 after stopping close to the 200-day
moving average.
GBP: The sterling crosses move in synch
with the euro ones. Today, market participants will pay close attention
to the latest estimate of Q2 GDP figures in the UK. Cable trades below
1.6200, while GBP-JPY is a tad under 125.80. EUR-GBP is pivoting in the
0.7960 area.
CHF: The Swiss franc moves forward against
the greenback and sideways versus the common currency. Yesterday,
USD-CHF was able to break the resistance found at 0.9400 but it is now
under that threshold. Meanwhile, EUR-CHF is still trading below but
close to 1.2100. We see little safe-haven demand related to the Swiss
franc.
Nordics: In the last few days we have witnessed
how the Swedish krona is trailing behind the Norwegian kroner. The SEK
is quite weak against the euro and the dollar. The NOK seems to be more
supported by the strength of oil prices. November future contract of the
Brent barrel holds above $110.
USD & JPY: The US
dollar and the Japanese yen give some of their recent gains prompted by
the flight to quality. USD-JPY is still trading below 78.00. A
breakthrough the 77.50 area could pave the way to BOJ intervention.
CAD, AUD & NZD:
The three dollars climb back from the red lead by the aussie. According
to some sources China’s Central Bank has conducted a record weekly
injection to cash-strapped banks. PIMCO sees Chinese GDP growth at
6.5-7.0% over the next 12 months.
|
| US Market Report |
Stocks Close Mostly Lower Amid Lingering Europe Worries
Stocks saw
considerable weakness during trading on Wednesday, adding to the steep
losses posted in the previous session. Lingering concerns about the
financial situation in Europe continued to weigh on the markets along
with a negative reaction to U.S. housing data.
The major averages ended the day firmly in negative territory, although the Dow posted a relatively modest loss. The Dow slipped 44.04 points or 0.3 percent to 13,413.51, while the Nasdaq fell 24.03 points or 0.8 percent to 3,093.70 and the S&P 500 slid 8.27 points or 0.6 percent to 1,433.32.
The
weakness on Wall Street came amid continued worries about the ongoing
European debt crisis, with traders keeping a close eye on protests in
the debt-plagued nations of Spain and Greece.
With the yield on Spain's ten-year bond climbing
above 6 percent, the country seems increasingly likely to seek a
bailout despite the widespread public protests against austerity
measures.
Adding to the concerns about Europe, German newspaper
Bild reported that Bundesbank is preparing a lawsuit against the
European Central Bank claiming that the central bank is overstepping its
mandate in launching the latest round of bond purchases.
Traders also
reacted negatively to a report from the Commerce Department that
unexpectedly showed a modest decrease by U.S. new home sales.
The Commerce Department
said new home sales edged down 0.3 percent to a seasonally adjusted
annual rate of 373,000 in August from the revised July rate of 374,000.
Economists had expected new home sales to climb to an annual rate of
380,000 from the 372,000 rate originally reported for the previous
month.
At the same time, the report also showed a notable
increase in home prices, with the median sales price of new houses sold
in August coming in at $256,900, up 11.2 percent from July. The median
price represented a five-year high.
Among individual stocks, shares of Jabil Circuit (JBL)
came under pressure after the electronic manufacturing services
provider reported weaker than expected fourth quarter earnings and
provided disappointing guidance. Jabil fell 9.9 percent to a two-month
closing low.
Yahoo (YHOO) saw more modest weakness after
the online media giant said Ken Goldman will join the company as chief
financial officer, effective October 22nd. Goldman will succeed Tim
Morse, who has been with Yahoo since June of 2009.
Meanwhile, shares of Copart (CPRT)
moved the upside after the online auctions and vehicle remarketing
services provider reported fourth quarter earnings and revenues that
exceeded analyst estimates.
Sector News
With
traders reacting negatively to the new home sales report, housing
stocks turned in some of the market's worst performances. The Philadelphia Housing Sector Index fell by 3 percent, pulling back further off the nearly five-year closing high set last Friday.
M/I Homes (MHO) and Meritage Homes (MTH) posted particularly steep losses within the housing sector, tumbling by 8 percent and 7.3 percent, respectively.
Oil service stocks also moved sharply lower over the course of the trading day, dragging the Philadelphia Oil Service Index
down by 2 percent. The weakness in the sector came as the price of
crude oil extended a recent downward move, closing below $90 a barrel.
Significant weakness was also visible among electronic storage stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Disk Drive Index.
Networking, software, and biotechnology stocks also posted notable losses on the day, while tobacco and trucking stocks bucked the downtrend.
| Thursday newspaper round-up |
BAE, Debt rule, Spain
Political tensions over the proposed merger of BAE Systems
and EADS have been laid bare after Tom Enders came under pressure in
the German parliament over the terms of the deal. Hans-Joachim Otto,
Germany’s deputy economy minister, said it was “not just a question of
how but whether” the £30bn tie-up should go ahead. Mr Otto is a member
of the Bundestag economic affairs committee that questioned Mr Enders,
the chief executive of EADS, about the deal. Particular concerns were
raised about the proposed 60:40 ratio between EADS and BAE, the threat
of German technology leaking from the country, and the nature of
Germany’s “golden share” in the enlarged company. Mr Enders claimed the
60:40 ratio was “very fair” and also pledged that “what is in Germany,
stays in Germany” in reference to EADS businesses already based in the
country, such as defence division Cassidian, The Telegraph explains.
Wildcat strikes have halted operations at another South African miner
as militant action spreads through the mineral-rich Bushveld region.
AngloGold Ashanti, a gold miner listed in Johannesburg and New York,
said a strike that started at one of its mines nearly a week ago has now
engulfed two others, putting all of its operations in the country
offline. South Africa accounts for a third of its production. The
striking workers have yet to present any demands, however, and, like
the strike at Lonmin’s mine that ended recently after the deaths of 45
people, it is not taking place through formal unions. It is the latest
indication that the agreement with strikers at Lonmin has changed the
rules of the game for collective bargaining between companies and
workers in South Africa, The Times says.
Carl Emmerson, deputy
director at the Institute for Fiscal Studies (IFS), warned that the
Government’s official forecaster was likely to rule in December that
George Osborne would miss his goal of having national debt falling as a
proportion of GDP by 2016. Instead of trying to meet the target by
piling on even more austerity, Mr Osborne “should drop the supplementary
target in his autumn statement”, Mr Emmerson said. “Rather than rushing
to announce a replacement, the Chancellor should instead announce a
consultation on the design of a new target to conclude in time for next
year’s Budget.” A recent survey by Bloomberg also laid to rest concerns
that bondholders would crucify the UK economy by pushing up the cost of
government borrowing if the debt rule were missed, The Telegraph says.
Mariano Rajoy will on Thursday attempt to stave off a backlash from
financial markets by announcing budget plans for next year, as the
Spanish prime minister faces the most testing 48 hours of his
nine-month-old tenure.As protesters descended on Spain’s
parliament for a second night, Mr Rajoy called on Spaniards to ignore
“short-term interests”. His government is also preparing to unveil a new
reform programme and the results of a banking stress test. The
political turmoil in Spain triggered a sell-off of European shares, as
investor concerns mounted about the eurozone’s fourth-largest economy.
Spain’s Ibex share index, which had rallied over the summer, ended down
3.9% and the FTSE Eurofirst 300 index dropped 1.7%. The euro gave up its
gains over the past two weeks, falling to $1.28. The financial
pressures on Mr Rajoy’s government have been intensified by a
constitutional crisis brewing over the Catalonia region, which called
snap elections this week that could hasten a move toward independence.
The mood of optimism
in the City and Wall Street is a little scary (predictably the markets
fell as soon as I pressed publish). Has it been forgotten that the
eurozone is still in a mess, the global economic recovery sluggish,
China slowing and that there is the prospect of another acrimonious
stand-off over the US debt ceiling before the year is out? Well, no (as
the market reaction has shown today), but the view seems to be growing
that we can at least stop worrying so much about some of these troubles -
for a few months at least. After years of blanket black news you can’t
help but feel a little nervous, but it would be churlish to deny that
something seems to be afoot, writes The Times.
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