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Stocks gain on ECB optimism
Market Movers
techMARK 2,093.88 +0.34%
FTSE 100 5,690.38 +0.57%
FTSE 250 11,508.62 +0.55%
Some strong gains from Whitbread, Morrisons
and host of miners assured that the Footsie got off to a decent start
on Thursday morning, as markets awaited a pivotal policy decision from
the European Central Bank (ECB) this afternoon.
All
eyes are on ECB President Mario Draghi who is expected to reveal details
of the bank's bond-buying programme to bring down yields in peripheral
nations.
"If yesterday’s hearsay from unnamed ECB sources is
anywhere near close to being accurate then it’s certainly building up
expectations as to what President Draghi has to say at today’s press
conference, with the hope that the reality matches yesterday’s raised
expectations," said market analyst Michael Hewson from CMC Markets.
According to media reports yesterday afternoon, unnamed central bank
officials have said that Draghi will announce unlimited purchases of
short-dated government debt (with maturities of up to three years) that
will be sterilised, though the ECB would refrain from setting a public
cap on yields.
However, according to Michael Fuchs from
Merkel’s Christian Democratic Union party yesterday, Germany would
oppose the ECB’s bond-buying plan if it purchases “too much” sovereign
debt without ensuring that these nations agree to strict conditions.
The UK's Monetary Policy Committee
(MPC) will also release its policy decision at noon, though the
consensus estimate is for the Bank Rate to be left at 0.5% and the asset
purchase programme to be maintained at £375bn.
"With the
additional £50bn of QE announced in July not due to be completed until
the end of October, we expect no change in policy before November," said
analysts at Barclays.
FTSE 100: Whitbread and Morrisons impress early on
Hotel, restaurant and Costa coffee owner Whitbread
jumped in the opening hour after reporting second-quarter sales growth
of 14.8%, up from 13.9% in the first three months of the year. "Our
brands have outperformed in a tough economic climate," said Chief
Executive Andy Harrison.
Supermarket group Morrisons
also gained after seeing underlying profit rise 1% and turnover increase
by 2.3%."With ongoing commodity inflation continuing to weigh on
already fragile consumer confidence and market conditions becoming ever
more challenging, we have had to work even harder for our customers
during the first half," said Chairman Ian Hibson.
Mining
stocks were also in demand early on with investors hoping that
additional stimulus measures in Europe could provide a boost to the
global economy. Antofagasta, Fresnillo and Vedanta were among the best performers.
Chemicals group Johnson Matthey fell after JPMorgan Cazenove downgraded its rating on the stock to 'neutral', while banking group Barclays was down after Credit Suisse also cut its recommendation to 'neutral'.
FTSE 250: Lonmin gains on union deal
South Africa-focused platinum miner Lonmin
rose strongly on reports that it has reached an agreement with some of
its labour unions following a wave of protests over the last few weeks.
Electrical retailer Dixons rose
after saying it made an 'encouraging' start to the year with decent
growth in the UK, Ireland and Northern Europe, though trading in
Southern Europe continues to be tough.
easyJet gained
after saying that it carried 6% more passengers in August. Yesterday the
firm also announced that it would introduce allocated seating in its
planes.
FTSE 100 - Risers
Whitbread (WTB) 2,207.00p +5.15%
Morrison (Wm) Supermarkets (MRW) 294.00p +4.74%
Antofagasta (ANTO) 1,130.00p +3.10%
Fresnillo (FRES) 1,688.00p +3.05%
Randgold Resources Ltd. (RRS) 6,615.00p +2.48%
Vedanta Resources (VED) 898.00p +2.39%
Sainsbury (J) (SBRY) 329.50p +1.76%
Polymetal International (POLY) 973.50p +1.72%
Eurasian Natural Resources Corp. (ENRC) 301.00p +1.65%
Rio Tinto (RIO) 2,762.50p +1.64%
FTSE 100 - Fallers
Admiral Group (ADM) 1,108.00p -1.60%
Prudential (PRU) 778.00p -0.70%
Smith & Nephew (SN.) 670.50p -0.37%
Shire Plc (SHP) 1,935.00p -0.36%
Barclays (BARC) 181.50p -0.25%
Aviva (AV.) 326.80p -0.21%
Tate & Lyle (TATE) 650.50p -0.15%
Imperial Tobacco Group (IMT) 2,404.00p -0.08%
Pennon Group (PNN) 736.50p -0.07%
Vodafone Group (VOD) 176.40p -0.06%
FTSE 250 - Risers
Lonmin (LMI) 557.00p +5.19%
Avocet Mining (AVM) 89.80p +3.46%
Travis Perkins (TPK) 1,060.00p +2.91%
Aquarius Platinum Ltd. (AQP) 35.49p +2.87%
Centamin (DI) (CEY) 79.95p +2.76%
Invensys (ISYS) 244.90p +2.60%
NMC Health (NMC) 190.80p +2.58%
Barr (A.G.) (BAG) 461.40p +2.49%
Dunelm Group (DNLM) 592.50p +2.42%
Ferrexpo (FXPO) 151.00p +2.37%
FTSE 250 - Fallers
Rank Group (RNK) 129.10p -1.07%
Bovis Homes Group (BVS) 484.90p -1.02%
Witan Inv Trust (WTAN) 467.20p -1.02%
Betfair Group (BET) 704.50p -0.98%
Menzies(John) (MNZS) 619.00p -0.80%
Dechra Pharmaceuticals (DPH) 523.50p -0.76%
London & Stamford Property (LSP) 119.10p -0.75%
JD Sports Fashion (JD.) 655.50p -0.68%
CSR (CSR) 312.00p -0.57%
Diploma (DPLM) 435.50p -0.57%
FTSE TechMARK - Risers
Timeweave (TMW) 22.00p +12.82%
Pace (PIC) 174.00p +2.35%
Oxford Biomedica (OXB) 2.10p +1.20%
Phoenix IT Group (PNX) 142.00p +0.71%
E2V Technologies (E2V) 126.00p +0.60%
Corin Group (CRG) 55.00p 0.00%
Innovation Group (TIG) 20.25p 0.00%
Triad Group (TRD) 6.25p 0.00%
Parity Group (PTY) 20.00p 0.00%
Torotrak (TRK) 37.50p 0.00%
FTSE TechMARK - Fallers
Antisoma (ASM) 1.51p -4.43%
Ark Therapeutics Group (AKT) 2.75p -4.18%
Optos (OPTS) 166.34p -2.08%
BATM Advanced Communications Ltd. (BVC) 14.50p -1.69%
Kofax (KFX) 273.00p -1.09%
Consort Medical (CSRT) 735.00p -0.68%
Psion (PON) 87.50p -0.57%
Corin Group (CRG) 55.00p 0.00%
Innovation Group (TIG) 20.25p 0.00%
Triad Group (TRD) 6.25p 0.00%
| European broker round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Alstom: UBS reiterates NEUTRAL and lowers price target to €29 from €30.
Gecina: Oddo reiterates coverage at UNDERWEIGHT with a price target of €69.
Iberdrola: Exane downgrades to UNDERWEIGHT from hold.
Inditex: Nomura reiterates HOLD and raises price target to €86 from €74.
Nokia: Societe Generale downgrades to SELL from hold.
STMicroelectronics: UBS downgrades to SELL from neutral with a price target of €3.80.
UK Event Calendar
INTERIMS
HydroDec Group, Morrison (Wm) Supermarkets, Randall & Quilter
Investment Holdings, SQS Software Quality Systems AG, Valiant Petroleum
INTERIM DIVIDEND PAYMENT DATE
Domino's Pizza Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Crude Oil Inventories (US) (15:30)
ECB Interest Rate (EU) (12:45)
GDP (1st release) (EU) (10:00)
Initial Jobless Claims (US) (13:30)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
PMI Construction (GER) (08:55)
GMS
Toumaz Limited
FINALS
CPL Resources, Go-Ahead Group
AGMS
1Spatial, ACM Shipping Group, Carclo, Carpetright, Dart Group, Datatec
Ltd. (DI), Dixons Retail , Energy Assets Group, Trakm8 Holdings
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
New Car Registrations (09:30)
FINAL DIVIDEND PAYMENT DATE
Synergy Health, Victoria
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| US Market Report |
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Stocks Close Mixed Ahead Of ECB Meeting
Stocks showed
a lack of direction throughout the trading day on Wednesday before
closing mixed for the second straight session. The lackluster
performance came as traders stayed on the sidelines ahead of tomorrow's
European Central Bank meeting.
The major averages ended the day on opposite sides of the unchanged line, with the Dow inching up 11.54 points or 0.1 percent to 13,047.48, while the Nasdaq slipped 5.79 points or 0.2 percent to 3,069.27 and the S&P 500 edged down 1.50 points or 0.1 percent to 1,403.44.
The
choppy trading on Wall Street came as traders seemed reluctant to make
any significant moves ahead of the European Central Bank's monetary
policy meeting on Thursday.
The ECB is widely expected to
announce details of a plan to purchase bonds from troubled eurozone
countries such as Italy and Spain in order to reduce borrowing costs.
Bloomberg News reported that ECB President Mario Draghi's bond-buying proposal involves unlimited purchases of government debt but will refrain from setting a public cap on yields.
Traders also stayed on the sidelines ahead of Friday's monthly U.S. jobs report, which is expected to show an increase of about 125,000 jobs in August.
Meanwhile,
the markets largely shrugged off a report showing that U.S. labor
productivity increased by much more than previously estimated in the
second quarter.
The Labor Department said productivity
increased by an upwardly revised 2.2 percent in the second quarter
compared to the preliminary estimate for 1.6 percent growth. Economists
had expected the rate of productivity growth to be revised to 1.9
percent.
With the upward revision, the productivity growth in the
second quarter reflects an even more substantial turnaround from the
0.5 percent drop seen in the first quarter.
Among individual stocks, shares of FedEx fell by 2 percent after the delivery giant cut its first quarter earnings guidance due to weakness in the global economy.
FedEx
said it now expects first quarter earnings in the range of $1.37 to
$1.43 per share compared to its original forecast for earnings of $1.45
to $1.60 per share.
Meanwhile, auto parts retailer Pep Boys
saw notable strength after reporting stronger second quarter earnings
growth. The company also announced the appointment of David Stern as its
new CFO. Shares of Pep Boys rose by 8.5 percent on the news.
Shares of DeVry also
showed a strong move to the upside after the educational services
provider said its board has approved a plan to buy back up to $100
million worth of its common stock.
Sector News
Despite the lack of direction shown by the broader markets, railroad stocks
came under considerable selling pressure. Reflecting the weakness in
the railroad sector, the Dow Jones Railroads Index fell by 2 percent to
its lowest closing level in over a month.
Within the railroad sector, Providence and Worcester (PWX) and Union Pacific (UNP) posted notable losses, sliding by 2.7 percent and 2.5 percent, respectively.
Electronic storage, trucking, and networking stocks also moved to the downside, although selling pressure was relatively subdued.
On the other hand, airline stocks moved sharply higher on the day, driving the NYSE Arca Airline
Index up by 2 percent. The gain by the airline index came after it
ended the previous session at its lowest closing level in a month.
US Airways (LCC) and United Continental (UAL) turned in two of the airline sector's best performances, advancing by 7.4 percent and 5.4 percent, respectively.
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| FX and Commodities round-up |
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Euro firms ahead of ECB meeting
The euro marked
decent gains against the dollar on Wednesday on strong hopes that the
European Central Bank will announce measures to combat the Eurozone
financial crisis.
Investors are expecting the ECB to outline a
bond-buying programme of up to three years maturity, in countries like
Spain and Italy to help lower borrowing costs at its meeting on
Thursday.
The euro's advance was give a boost after Bloomberg
reported that the ECB may buy an unlimited amount of government bonds
from nations like Spain and Italy.
The euro advanced to an intra-day high of $1.2624 before settling at around $1.2596 versus $1.2568 the previous session.
Meanwhile
European economic data provided grim reading on Wednesday after the
Markit euro-zone composite purchasing-managers’ index, or PMI, revealed
private-sector activity slowed in August. The PMI fell to 46.3 last
month from 46.5 in July after a preliminary reading of 46.6.
In
US economic data, non-farm labour productivity rose at an annual rate of
2.2% in the second quarter, higher than estimates of 1.8% growth.
The ICE dollar
index, which measures the US dollar against a trade basket of six other
currencies, slipped to 81.253 from 81.328 in late US trading on
Tuesday.
Against the Japanese yen, the dollar remained steady at ¥78.40 yen. The Australian dollar skidded
to an eight-week low against the US dollar on expectations that the
Reserve Bank of Australia will slash interest rates in the wake of poor
economic data.
Sterling rose against the dollar to buy $1.5906 compared to $1.5876 on Tuesday.
Oil captures modest gains
Crude oil futures
eked out a small gain on Wednesday, in skittish trade, as markets await
the European Central Bank's policy meeting and US jobs data due Friday.
Crude
prices spent most of the day moving in and out of negative territory as
markets nervously look ahead to the ECB talks. Investors are expecting
the central bank to launch a bond-buying programme to lower borrowing
costs for struggling Eurozone nations.
Hops are pinned on plans to buy short-term bonds, of up to three years maturity, of countries like Spain and Italy.
Crude for October delivery rose 6 cents to settle at $95.36 a barrel on the New York Mercantile Exchange.
Oil
had been given a boost after US economic data showed non-farm labour
productivity rose at an annual rate of 2.2% in the second quarter,
higher than estimates of 1.8% growth. However gains were short-lived as
nerves resumed.
Traders are also looking ahead to US weekly
inventory data which is released a day later than usual due to Monday's
Labor Day holiday. Analysts are expected big draws on crude oil
stockpiles in the wake of Hurricane Isaac after refineries were
temporarily shut down.
In London, ICE North Sea Brent for October fell $1.09 to settle at $113.09 a barrel.
European
economic data failed to provide any cheer on Wednesday after the Markit
euro-zone composite purchasing-managers’ index, or PMI, revealed
private-sector activity slowed in August. The PMI declined to 46.3 last
month from 46.5 in July after a preliminary reading of 46.6.
The index for the services sector also fell to 47.2 from 47.9 in July. A figure below 50 indicates a contraction.
Gold
lost its allure on Wednesday as investors preferred to stay on the
sidelines ahead of Thursday's ECB meeting and the US jobs report on
Friday.
Gold for delivery in December fell $2 to settle at $1,694 an ounce on the Comex division of New York Mercantile Exchange.
Elsewhere palladium for December delivery added $5.50 at $646.95 an ounce while October platinum piled on $8.10 to $1,575.60 an ounce.
Silver for December tracked gold's losses to fall 8 cents at $32.33 an ounce.
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