London open: Stocks flat early on despite mining strength
Market Movers
- techMARK 2,111.75 -0.23%
- FTSE 100 5,785.50 -0.16%
- FTSE 250 11,813.11 +0.04%
- Stocks pause after last week's ECB rally
- Markets await FOMC meeting
- Miners up early on, UBS sees QE boost for sector
London's blue-chip index opened broadly flat in early trading on Monday
as investors remained nervous ahead of another pivotal week for the
global economy.
Stocks were given a boost towards the end of last week after European Central Bank
(ECB) President Mario Draghi unveiled details of the bank's bond-buying
programme, which included unlimited and sterilised purchases of
sovereign debt with maturities over between one and three years.
Market strategist Ishaq Siddiqi from ETX Capital said this morning:
"European markets kick off the week in a cautious manner as investors
hold back from building risk exposure ahead of key events this week."
Wednesday will see the German Constitutional Court ruling on the European Stability Mechanism, while Thursday's focus will be on the Federal Open Market Committee meeting in the US, "both of which are major event risks", Siddiqi said.
"Germany's opposition of the ECB's bond buying plan and the mixed data
picture of the US economy prompt a huge degree of uncertainty over both
events."
Meanwhile, sentiment will be pressured lower today by some gloomy economic data from China.
The world's second-largest economy reported a worse-than-expected trade
surplus in August, as imports fell for the first time in a non-holiday
period since 2009. The trade surplus was $26.7bn last month, compared
with the $19.75bn forecast.
Xstrata and the miners make gains early on
Mining stocks were performing well this morning, with Xstrata among the risers following Friday's eleventh-hour adjustment to the offer by Glencore.
Glencore released its proposal to Xstrata this morning, saying that "it
is content with Xstrata's request for Xstrata management and senior
employees to receive appropriate retention and incentive packages."
UBS said that the outlook for the UK mining sector is improving with
quantitative easing (QE) measures now expected. The broker said: "QE
triggers a return of capital flows to emerging markets, incentivising
companies to stop running for cash and embark on a commodity bullish
restocking phase. As in the past, QE is likely to drive up commodity
prices and in turn mining equities." Vedanta, Rio Tinto and Kazakhmys were high risers early on.
Banking group Barclays
was making gains after UBS raised its target for the stock from 205p to
235p and reiterated its 'buy' recommendation. The broker said that
there is "potentially significant upside if new CEO changes strategy".
Oil major BP
rose on rumours that it is in advanced talks to sell a group of
oilfields in the Gulf of Mexico to US outfit Plains Exploration &
Production.
Primark and sugar group AB Foods was out of
favour despite saying that adjusted operating profits in the second
half will be well ahead of last year and in line with expectations.
Spirax-Sarco was performing well after Goldman Sachs upgraded the stock to 'buy' and raised its target from 2,100p to 2,510p. Meanwhile, Laird headed the other way after the US broker cut its recommendation to 'sell'.
FTSE 100 - Risers
Vedanta Resources (VED) 1,014.00p +3.95%
Marks & Spencer Group (MKS) 371.30p +2.80%
Xstrata (XTA) 1,040.00p +2.56%
Kazakhmys (KAZ) 673.00p +2.36%
Fresnillo (FRES) 1,756.00p +1.86%
Weir Group (WEIR) 1,680.00p +1.57%
Rio Tinto (RIO) 3,059.00p +1.26%
Antofagasta (ANTO) 1,240.00p +1.14%
Eurasian Natural Resources Corp. (ENRC) 341.90p +0.94%
Burberry Group (BRBY) 1,386.00p +0.87%
FTSE 100 - Fallers
Unilever (ULVR) 2,242.00p -1.45%
SABMiller (SAB) 2,725.00p -1.36%
Admiral Group (ADM) 1,122.00p -1.32%
Glencore International (GLEN) 373.90p -1.10%
Associated British Foods (ABF) 1,292.00p -1.07%
ARM Holdings (ARM) 541.50p -1.01%
GlaxoSmithKline (GSK) 1,395.00p -0.99%
Tate & Lyle (TATE) 629.00p -0.87%
Tesco (TSCO) 344.05p -0.86%
Hammerson (HMSO) 464.50p -0.85%
FTSE 250 - Risers
Spirax-Sarco Engineering (SPX) 2,102.00p +3.29%
Bumi (BUMI) 283.50p +2.94%
Dunelm Group (DNLM) 595.00p +2.67%
Ocado Group (OCDO) 70.35p +2.55%
Hays (HAS) 78.30p +1.95%
Petropavlovsk (POG) 385.30p +1.93%
Bwin.party Digital Entertainment (BPTY) 97.85p +1.72%
Henderson Group (HGG) 111.80p +1.64%
Dixons Retail (DXNS) 19.58p +1.56%
BBA Aviation (BBA) 204.20p +1.49%
FTSE 250 - Fallers
Laird (LRD) 233.20p -3.08%
Rathbone Brothers (RAT) 1,310.00p -2.96%
Menzies(John) (MNZS) 615.00p -2.38%
Millennium & Copthorne Hotels (MLC) 492.60p -1.77%
Bank of Georgia Holdings (BGEO) 1,225.00p -1.76%
Edinburgh Dragon Trust (EFM) 236.10p -1.67%
Marston's (MARS) 113.60p -1.65%
Talvivaara Mining Company (TALV) 139.00p -1.56%
Dechra Pharmaceuticals (DPH) 551.00p -1.43%
UK Event Calendar
Monday September 10
INTERIMS
Brady, PowerFilm Inc. (Reg S), Telit Communications
INTERIM DIVIDEND PAYMENT DATE
LSL Property Services
QUARTERLY PAYMENT DATE
Canaccord Financial Inc., IBM Corp., Lilly (Eli) & Co
QUARTERLY EX-DIVIDEND DATE
Canadian General Investments Ltd.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Credit (US) (20:00)
Factory Orders (GER) (11:00)
Harmonised Competitiveness Indicators (EU) (09:00)
FINALS
Murgitroyd Group
AGMS
Unitech Corporate Parks
TRADING ANNOUNCEMENTS
Associated British Foods
FINAL DIVIDEND PAYMENT DATE
Greene King
FINAL EX-DIVIDEND DATE
News Corp. 'A' Shares
| US Market Report |
US close: Hedge-fund managers left in the dust?
-Credit Suisse ups S and P 500 target to 1,500 from 1,425
-NASDAQ advance/decline ratio at 0.95 on Friday
-Intel warns, weighs on Nasdaq
-Google again atop $700 per share
-Employment data moves Fed closer to QE3
-Hedge-fund managers´ performance lagging year-to-date -WSJ
-Net long positions in 10 year Treasuries at 4 year highs
-Small-cap stocks (Russell 2000) outperform slightly, rise 0.5%
Dow Jones: 0.11%
Nasdaq Comp.: 0.02%
S&P 500: 0.40%
New York equities finished the day slightly higher, thanks to a
late-session push, despite a profit-warning out of predominantly PC
chip-maker Intel and after a weaker than forecast monthly employment report.
The latter has led to increased market chatter and speculation
regarding the possibility of further Fed action –QE3 that is- to fend
off downside-risks to the economy. A few commentators seem a bit wary of
forecasting another round of QE3 for the Fed's next meeting however;
although at the very least today's data is thought to have moved it
closer.
Linked to the above, we witnessed a large 1.08% fall
in the Dollar index and big rise in some metals' prices, such as copper
futures, which headed 3.65% higher.
Hedge-fund managers bite the dust?
Interestingly as well, The Wall Street Journal (WSJ)
carries a report today on how many defensive hedge-fund and mutual-fund
managers did not partake of the most recent public servant inspired
(a.k.a.: the Europeans´ Mario Draghi-inspired rally). The S&P 500
now sports an 11.6% year-to-date gain, versus the 2.6% "achieved" by
stock hedge-funds.
The potential importance of this lies in
the fact that some of these managers (some of which hold cash positions
of up to 20%) may be tempted –if not forced- to get back into the
market.
On the other hand, the WSJ reminds its readers that several potential flash-points do still exist- such that these managers may yet be vindicated in their views.
Chief amongst those is the European crisis (whether in Spain or
Greece). As well, some managers highlight that even leaving the
aforementioned aside cyclically adjusted price-to-sales ratios are high.
Ergo: stocks are not cheap.
Lastly, adds the WSJ, a Fed
announcement of further QE3 next week might be a negative trigger for
these hedge-funds, adding to the pressure their managers´ could face as
regards their performance. This should stocks rally further in response
to any Fed actions, something of which there can never be any sort of
guarantee.
Intel below technical support (although RSI is flashing "over-sold")
Intel
has warned of lower demand from corporate clients and lesser than
expected sales in emerging markets. Nevertheless, there is quite a bit
of commentary in the market at the moment regarding the worsening
long-term outlook for the PC industry versus tablets.
Shares of Google on the other hand are again atop the $700 per share barrier, for the first time since 2007.
From a sector stand-point the best performers on Wall Street were
companies from the following sectors: coal (9.27%), non-ferrous metals
(7.16%) and industrial metals (6.51%). Semiconductor related shares were
the worst performing ones (-1.62%).
Coal miner Alpha Natural Resources led gains on the S&P 500 (much as Evraz
did on the FTSE 100). The rise in coal prices aside, they may also have
benefitted from news that China will increase infrastructure spending
in a bid to stimulate economic activity.
Kraft was off by 5% after providing guidance for its grocery business.
Green Mountain Coffee Roasters
shot higher by 13% despite the impending expiry of two patents. Some
market commentary holds that this event is already priced into the
shares´ price.
Worth pointing out, the KBW Bank index is fast approaching technical resistance at the 50 point mark (intra-day high: 49.41).
Five years on, people are still leaving the work force …
Non-farm payrolls rose by 96,000 in August (Consensus: 125,000).
The unemployment rate fell by two tenths of a percentage point as the labour force shrank in size.
10 year US Treasuries drop after net longs hit 4 year record
Front month West Texas crude futures rose by 0.93% to the $96.42 mark on NYMEX.
10 year US Treasuries fell 10/32 dollars, with yields at 1.67%, up 3 basis points.
Treasuries
rose for the first week in three, influenced perhaps by a record
build-up in net long speculative positions in 10 year note futures –to a
4 year high- in the previous week, to 108,685 contracts on the CBoT,
according to the latest CFTC data available.
S&P 500 - Risers
Alpha Natural Res (ANR) $6.90 +16.75%
Cliffs Natural Resources Inc. (CLF) $39.91 +14.49%
Peabody Energy Corp. (BTU) $23.71 +10.79%
United States Steel Corp. (X) $20.89 +8.75%
Freeport-McMoRan Copper & Gold Inc. (FCX) $39.43 +8.50%
Chipotle Mexican Grill Inc. (CMG) $326.35 +7.94%
CONSOL Energy Inc. (CNX) $31.21 +6.99%
Bank of America Corp. (BAC) $8.80 +5.39%
Morgan Stanley (MS) $17.08 +5.11%
Titanium Metals Corp. (TIE) $12.71 +4.95%
S&P 500 - Fallers
Advanced Micro Devices Inc. (AMD) $3.45 -5.74%
Kraft Foods Inc. (KFT) $39.99 -5.49%
Micron Technology Inc. (MU) $6.42 -3.82%
Intel Corp. (INTC) $24.19 -3.61%
Seagate Technology Plc (STX) $30.60 -3.47%
Western Digital Corp. (WDC) $41.86 -2.90%
NRG Energy Inc. (NRG) $21.78 -2.46%
Nvidia Corp. (NVDA) $13.40 -2.40%
CenturyLink Inc. (CTL) $41.93 -2.37%
LSI Corporation (LSI) $7.87 -2.36%
Dow Jones I.A - Risers
Bank of America Corp. (BAC) $8.80 +5.39%
Caterpillar Inc. (CAT) $88.10 +3.90%
Alcoa Inc. (AA) $9.10 +3.88%
JP Morgan Chase & Co. (JPM) $39.30 +1.58%
E.I. du Pont de Nemours and Co. (DD) $50.56 +1.42%
General Electric Co. (GE) $21.59 +1.31%
Exxon Mobil Corp. (XOM) $89.92 +1.05%
Chevron Corp. (CVX) $114.00 +0.86%
American Express Co. (AXP) $57.73 +0.56%
Procter & Gamble Co. (PG) $68.52 +0.41%
Dow Jones I.A - Fallers
Kraft Foods Inc. (KFT) $39.99 -5.49%
Intel Corp. (INTC) $24.19 -3.61%
Wal-Mart Stores Inc. (WMT) $73.82 -1.32%
Microsoft Corp. (MSFT) $30.95 -1.26%
Verizon Communications Inc. (VZ) $43.72 -0.97%
Hewlett-Packard Co. (HPQ) $17.42 -0.97%
Cisco Systems Inc. (CSCO) $19.56 -0.84%
Home Depot Inc. (HD) $57.26 -0.68%
Coca-Cola Co. (KO) $37.90 -0.66%
3M Co. (MMM) $92.82 -0.49%
Nasdaq 100 - Risers
Green Mountain Coffee Roasters Inc. (GMCR) $27.83 +13.22%
Research in Motion Ltd. (RIMM) $7.19 +7.07%
Amazon.Com Inc. (AMZN) $259.14 +3.09%
Electronic Arts Inc. (EA) $14.04 +3.01%
Priceline.Com Inc. (PCLN) $621.55 +2.91%
Sigma-Aldrich Corp. (SIAL) $73.43 +2.84%
Randgold Resources Ltd. Ads (GOLD) $111.47 +2.55%
Infosys Technologies Ltd. (INFY) $45.66 +2.26%
Virgin Media Inc. (VMED) $29.32 +2.09%
Viacom Inc. Class B (VIAB) $50.86 +2.07%
Nasdaq 100 - Fallers
Kraft Foods Inc. (KFT) $39.99 -5.49%
Micron Technology Inc. (MU) $6.42 -3.82%
Intel Corp. (INTC) $24.19 -3.61%
Seagate Technology Plc (STX) $30.60 -3.47%
Baidu Inc. (BIDU) $109.59 -2.79%
Nvidia Corp. (NVDA) $13.40 -2.40%
Activision Blizzard Inc. (ATVI) $12.02 -1.72%
Autodesk Inc. (ADSK) $32.22 -1.68%
Ross Stores Inc. (ROST) $68.13 -1.62%
Citrix Systems Inc. (CTXS) $80.59 -1.42%
|
| FX and Commodities round-up |
Dollar whacked by US jobs gloom
Weaker than expected US jobs data sent the dollar close to a four month low against the euro on Friday as markets increasingly bet on a third round of stimulus.
The euro surged
to a high of $1.2814 against the dollar before later trading at around
$1.2811, an increase of nearly 1.5 per cent. On the week, the euro
gained 1.8 per cent.
The dollar index, which measures
the greenback against a basket of six currencies, declined to 80.182
from 81.088 on Thursday. The index registered a weekly loss of 1.3%.
The widely anticipated US jobs
data failed to provide investors with any cheer. Figures from the Labor
Department showed only 96,000 new jobs were added, missing market
estimates of around 125,000. August's figure was also well below July’s
figure of 141,000. The report also said the unemployment rate fell to
8.1%.
The poor August jobs data is the latest in a long line
of weak US economic data. Friday's report underlined that any third
quarter recovery has failed to materialised and instead markets are
increasing expecting that the Fed will take action to stimulate growth
by rolling out a third round of quantitative easing.
Analysts also increasingly expect the Fed will further extend its close to zero interest rate policy to 2015.
The gloomy jobs data gave the Japanese yen a boost against the dollar. It traded 0.8% higher at ¥78.24. For the week the yen lost 0.2%.
Sterling climbed to $1.6004 from $1.5926 late the previous session while the Australian dollar advanced to $1.0397 after the nation’s July trade deficit came in worse than expected.
Gold bounces after weak US jobs data
Gold prices
surged over two per cent on Friday as the prospect of a third round of
stimulus was bolstered by a weaker than expected US jobs report.
Bullion for December delivery gained $34.90 to settle at $1,740.50 an ounce on the Comex division of the New York Mercantile Exchange, the highest settlement in over six months.
Figures from the Labor Department showed US employers added fewer than
expected jobs in August. Nonfarm payrolls rose by 96,000, missing market
estimates of around 125,000. It also came in well below July’s figure
of 141,000. The report also showed the unemployment rate fell to 8.1%.
The dire jobs data opens the door even further to the Federal Reserve
announcing new policy measures at its upcoming policy meeting.
Among other precious metals silver for December delivery surged $1.014 to settle at $33.633 an ounce while palladium for December delivery rose $7 to $654.75 an ounce.
Crude oil
futures overcame earlier weakness on Friday to register mild gains as
focus turned to the possibility of more stimulus measures in the wake of
the gloomy jobs data.
Crude for October delivery climbed 89 cents to close at $96.42 a barrel on the New York Mercantile Exchange.
Oil futures had been given a boost on Thursday after the European Central Bank's Mario Draghi outlined plans to buy unlimited bonds in a bid to relieve pressure on Eurozone nations struggling with debt. For the week, oil prices were little changed.
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