Footsie thunders ahead
Market Movers
techMARK 2,109.44 +0.37%
FTSE 100 5,829.75 +0.92%
FTSE 250 11,898.39 +0.59%
Better
than expected US jobless figures gave a little early afternoon boost to
a London market already going along nicely, as investors shrugged off a
downgrade of Spain's credit rating by S&P, leaving the Iberian
nation's debt status barely above a junk rating.
Initial
weekly unemployment claims dropped by 30,000 to 339,000 last week in the
US. The market had been expecting a reading of 370,000.
Back in fashion
Burberry,
the luxury fashion chain, led the way, as it said disappointing
like-for-like sales growth in the July-September quarter started to pick
up in September.
Burberry also had good news on the operating
margin front, saying the Retail/wholesale operating margin in the six
months to September 30th 2012 is now expected to be at least in line
with the same period last year (14.9%), rather than lower as previously
guided.
Elsewhere in the world of retail investors were far
from sanguine about the impending departure of Kate Swann, the Chief
Executive Officer of newsagent chain WH Smith.
The
share price fall is recognition of how well Swann has maximised returns
from what was considered at the onset of her stewardship a cash cow with
little growth potential. She will leave the company on June 30th 2013
after nine years as boss and will be replaced by Steve Clarke, Managing
Director of the firm's high street business.
Swann is the
second high profile women boss in recent weeks to jack it in; just over a
week ago Marjorie Scardino, the Chief Executive Officer of publishing
group Pearson decided to call it quits at the end of the year.
Mining firm Kenmare Resources flagged after it said its markets remained weak, though it is confident of a pick up in the medium term.
Greggs,
the hot pastry-based snack dispenser of choice for British politicians
seeking a photo-opportunity, left a sour taste after it said LFL sales
will remain negative in the final quarter of 2012.
LFL sales
fell 2.6% year-on-year in the 14 weeks to October 6th as consumers
continued to tighten their purse strings. Rising ingredient costs are
also a concern, the group revealed.
Supermarket chain Morrisons
was friendless after Credit Suisse downgraded to a neutral stance,
having previously expecting the shares to out-perform. Market research
from Kantar Worldpanel suggests Morrisons has not regained its mojo
after a mediocre first half of the year.
"Although management
expects negative like-for-like again for the second half (the first was
down 0.9%), we were initially more hopeful, but, following the new data,
we have now revised down our expectation of second half like for like
to -3.0% from 0.0%," the broker revealed.
In other broker action, French broker SocGen is sweet on Tate & Lyle, moving to "buy" from "hold".
Irish broker Goodbody, meanwhile, has initiated coverage of building-materials company Wolseley with a "buy" recommendation and a share-price target of 3,400 pence.
Royal Bank of Scotland (RBS) said it has priced Direct Line
at 175p a share, valuing the insurance firm at over £2.6bn. The offer
comprises 450m existing shares, representing 30% of the 1.5bn total,
raising RBS £787m. The flotation price is in the bottom half of the
indicated range of between 160p and 195p a share.
Hot on the heels of its failed merger with Airbus owner EADS, defence firm BAE Systems
has confirmed that trading since its interim results at the beginning
of August has been in line with management expectations. The shares are
higher on speculation that following the collapse of the deal with EADS,
the firm could be a break-up candidate.
Peace could be about to break out at Bumi,
the Indonesia-focused mining giant. It has received a proposal from
major shareholder, the Bakrie Group, which wants to swap its stake in
the group for a stake of equivalent value in Bumi Resources, Bumi's
Indonesia-listed affiliate which is under investigation for alleged
financial irregularities.
The group has been the subject of a
board room battle between the influential Bakrie family and blue-blooded
London financier Nat Rothschild. The shares shot up on hopes that the
complicated cross-holdings situation at the firm would be simplified by
the new proposals.
Packaging firm DS Smith said its
purchase of SCA Packaging was expected to deliver a return on investment
above the cost of capital this financial year, together with
substantial earnings enhancement.
Other markets
The
most actively traded futures contract for Brent crude rose 77 cents to a
price of $115.10 a barrel. With investors piling into equities, gilts
were neglected. The yield on the 10-year gilt edged up to 1.70% from
1.67% overnight.
| AIM/Small Cap Report |
FTSE 100 - Risers
Burberry Group (BRBY) 1,136.00p +13.26%
Barclays (BARC) 232.65p +4.80%
Croda International (CRDA) 2,322.00p +4.55%
Royal Bank of Scotland Group (RBS) 273.80p +4.23%
Eurasian Natural Resources Corp. (ENRC) 331.80p +3.43%
Vedanta Resources (VED) 1,094.00p +3.21%
Kazakhmys (KAZ) 746.00p +3.18%
Petrofac Ltd. (PFC) 1,630.00p +2.77%
British Land Co (BLND) 524.00p +2.64%
BG Group (BG.) 1,333.50p +2.38%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 269.50p -1.64%
GlaxoSmithKline (GSK) 1,427.50p -0.59%
Smith & Nephew (SN.) 651.50p -0.53%
Next (NXT) 3,576.00p -0.47%
SABMiller (SAB) 2,660.00p -0.30%
United Utilities Group (UU.) 727.00p -0.27%
National Grid (NG.) 689.00p -0.22%
Severn Trent (SVT) 1,671.00p -0.18%
Serco Group (SRP) 583.00p -0.09%
Bunzl (BNZL) 1,099.00p -0.09%
FTSE 250 - Risers
Bumi (BUMI) 259.00p +39.47%
Home Retail Group (HOME) 105.00p +6.38%
Premier Oil (PMO) 374.70p +5.79%
Essar Energy (ESSR) 128.40p +5.07%
Pace (PIC) 166.80p +4.25%
Centamin (DI) (CEY) 100.60p +3.93%
Smith (DS) (SMDS) 197.30p +3.84%
Ruspetro (RPO) 106.20p +3.81%
Informa (INF) 411.80p +3.49%
Travis Perkins (TPK) 1,135.00p +3.46%
FTSE 250 - Fallers
Kenmare Resources (KMR) 36.51p -5.29%
Man Group (EMG) 88.85p -4.87%
Greggs (GRG) 495.50p -4.07%
Diploma (DPLM) 456.70p -3.87%
JD Sports Fashion (JD.) 731.00p -3.69%
WH Smith (SMWH) 631.00p -3.22%
Fenner (FENR) 370.00p -2.63%
Dixons Retail (DXNS) 21.16p -2.44%
Savills (SVS) 391.20p -2.25%
Talvivaara Mining Company (TALV) 148.00p -2.12%
FTSE TechMARK - Risers
Gresham Computing (GHT) 69.00p +6.98%
CML Microsystems (CML) 400.00p +4.99%
Sepura (SEPU) 89.25p +3.78%
XP Power Ltd. (DI) (XPP) 909.00p +3.77%
Wolfson Microelectronics (WLF) 198.00p +2.59%
NCC Group (NCC) 975.00p +2.09%
Vislink (VLK) 28.75p +1.77%
RM (RM.) 84.25p +1.35%
Oxford Biomedica (OXB) 2.60p +0.97%
Phoenix IT Group (PNX) 157.25p +0.72%
FTSE TechMARK - Fallers
Hiwave Technologies (HIW) 1.15p -6.12%
Torotrak (TRK) 34.00p -4.23%
Optos (OPTS) 196.00p -3.80%
E2V Technologies (E2V) 116.00p -3.13%
BATM Advanced Communications Ltd. (BVC) 16.50p -2.94%
Xaar (XAR) 247.50p -2.56%
Kofax (KFX) 292.00p -2.01%
Ark Therapeutics Group (AKT) 3.30p -1.49%
Antisoma (ASM) 1.68p -1.47%
Skyepharma (SKP) 86.88p -1.00%
|
| Europe Market Report |
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European Markets Finished Solidly Higher Despite Spanish Downgrade
The European markets rallied
higher on Thursday, thanks to some positive corporate news from the
region. The better than expected U.S. jobless claims report in the
afternoon helped the markets to extend their early gains. A Spanish
ratings downgrade from S&P and lingering concerns over Greece were
unable to hinder the day's positive move. Investors are hoping that the
Spanish downgrade may bring the country closer to a bailout request.
Banks stocks turned in a strong performance Thursday, as well as shares
of luxury goods companies.
Standard & Poor's Ratings
Services downgraded its sovereign ratings on Spain by two notches to the
lowest investment grade, highlighting the mounting risks to public
finances from rising economic and political pressures.
The
outlook on the long-term rating remained negative, reflecting S&P's
assessment of significant risks to the country's economic growth and
budgetary performance and a lack of a clear direction in Eurozone
policy.
The long-term sovereign credit rating on Spain was
reduced to 'BBB-', one level above junk, from 'BBB+'. The agency also
warned of possible further downgrade.
Italy's borrowing costs for
three-year funds increased at a bond auction as Spain's rating
downgrade coupled with the uncertainty about that country's bailout
request weighed on investor sentiment.
The Treasury sold
EUR 3.75 billion of its three-year benchmark BTPs. The yield climbed to
2.86 percent from 2.75 percent at the prior auction on September 13.
International Monetary Fund Managing Director Christine Lagarde
said the struggling euro area member Greece requires two more years to
meet its budget targets and should be brought back to its feet.
"This
is what we advocated for Portugal, this is what we advocated for Spain,
and this is what we are advocating for Greece, where I said repeatedly
that an additional two years was necessary for the country to actually
face the fiscal consolidation program that is considered," Lagarde said
on Thursday at a news conference ahead of the IMF-World Bank annual
meetings in Tokyo.
German Finance Minister Wolfgang Schaeuble
said Eurozone governments will not share losses on Greek debt holdings.
Everyone in Europe agrees to wait for Troika report and will then
decide on Greece, he said in Tokyo. He added that no country is thinking
about exiting from the euro.
Germany's leading economic research
institutes downgraded economic outlook as the euro crisis is putting a
strain on the economy. The think tanks said economic growth will remain
weak for the moment and only looks set to recover again slightly over
the course of next year.
The institutes lowered 2012
growth outlook to 0.8 percent from 0.9 percent. The institutes forecast 1
percent expansion next year, slower than the 2 percent growth estimated
in April.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.29 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, advanced by 0.79 percent.
The DAX of Germany climbed by 1.06 percent and the CAC 40 of France gained 1.42 percent. The FTSE 100 of the U.K. rose by 0.92 percent and the SMI of Switzerland added 0.38 percent.
In Frankfurt, Siemens fell by 1.56 percent. Deutsche Bank downgraded the stock to "Hold" from "Buy." HSBC
downgraded Fresenius to "Neutral" from "Overweight." The stock finished
higher by 0.54 percent. Deutsche Bank rose by 3.69 percent and
Commerzbank gained 2.70 percent. Suedzucker climbed by 2.54 percent,
after reporting a higher first-half profit.
Pfeiffer Vacuum
dropped by 5.49 percent, after Deutsche Bank downgraded the stock to
"Sell" from "Hold." Carl Zeiss fell by 2.84 percent, after HSBC reduced
its rating on the stock. Qiagen decreased by 2.33 percent, following a
broker downgrade.
In Paris, EADS declined by 1.11 percent.
Several analysts upgraded the stock after the company dropped its
merger plan with BAE Systems. BAE Systems also received positive broker
recommendations after the decision and closed higher by 2.37 percent in
London.
Carrefour increased by 3.69 percent, after the
retailer's third quarter report showed signs of improvement in its home
market. Shares of LVMH Moet Hennessy Louis Vuitton rose by 3.84 percent, following the surge in shares of Burberry in the U.K.
Credit Agricole climbed by 4.35 percent, Societe Generale advanced by 4.86 percent and BNP Paribas finished up by 2.92 percent.
In London, Burberry surged
by 13.59 percent. The luxury group said in a trading update that
first-half revenues improved despite weakness in China and the U.K. Tate & Lyle gained 1.23 percent, after Societe Generale upgraded the stock to "Buy" from "Hold."
Barclays increased by 4.80 percent and Royal Bank of Scotland rose by 4.23 percent. Lloyds Banking Group gained 2.00 percent and HSBC climbed by 1.29 percent.
WM Morrison Supermarkets fell by 1.64 percent, after Credit Suisse reduced its rating on the stock. WH Smith dropped
by 3.22 percent. The retailer reported lower revenues for the year and
announced the departure of its Chief Executive Kate Swann after nine
years in the role.
Germany's EU harmonized inflation weakened in
September as estimated earlier, final data released by the Federal
Statistical Office showed Thursday. The harmonized index of consumer
prices (HICP) decelerated to 2.1 percent in September from 2.2 percent
in August, in line with the preliminary estimates.
France's EU
harmonized consumer prices increased at a slower rate than expected by
economists in September, data released by statistical office Insee
showed Thursday. The harmonized index of consumer prices (HICP)
increased 2.2 percent year-on-year in September, slower than the 2.4
percent gain economists had forecast.
| US Market Report |
Stocks Give Back Ground But Hold On To Modest Gains
While stocks showed
a strong upward move in early trading on Thursday, buying interest has
waned over the course of the trading day. The major averages have
subsequently pulled back well off their best levels of the session.
Currently, the major averages are clinging to modest gains. The Dow is up 23.29 points or 0.2 percent at 13,368.26, the Nasdaq is up 6.63 points or 0.2 percent at 3,058.41 and the S&P 500 is up 5.32 points or 0.4 percent at 1,437.88.
Bargain
hunting contributed to the early strength on Wall Street, with some
traders picking up stocks at reduced levels following the weakness seen
in recent sessions.
Adding to the buying interest was the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended October 6th.
The report said initial jobless claims tumbled
to 339,000 from the previous week's revised figure of 369,000. The drop
surprised economists, who had expected jobless claims to edge up to
370,000 from the 367,000 originally reported for the previous month.
With the unexpected decrease, jobless claims fell to the lowest level since a matching number in the week ended February 16th, 2008.
However, the steep drop may reflect a distortion due to an irregular filing by a large state. Labor Department officials declined to name the state.
Peter Boockvar,
managing director at Miller Tabak, said, "After talking to a contact
listed on the Labor Department press release in this morning's jobless
claims data, I was told the state not revealed subtracted 30,000 from
the weekly initial jobless claims figure."
"This would take the 'adjusted' number to 369,000, about in line with the original expectations of 370,000," he added.
Lingering
concerns about the global economic outlook may have also helped to
limit the upside for the markets, with a report from the Commerce
Department showing a notable drop in U.S. exports in August.
Among individual stocks, Sprint Nextel (S) continues to post a standout gains after the Wall Street Journal reported that Japanese mobile carrier Softbank is
in advanced talks to buy the company in a deal expected to exceed $12.8
billion. Shares of Sprint Nextel are up by 15.7 percent.
Sector News
Despite
the pullback by the broader markets, significant strength remains
visible among steel stocks. The NYSE Arca Steel Index has pulled back
off its high for the session but remains up by 1.9 percent.
Mechel (MTL) and U.S. Steel (X) are turning in two of the steel sector's best performances, advancing by 5.2 percent and 4.7 percent, respectively.
Oil service stocks
are also holding on to strong gains, as reflected by the 1.8 percent
gain being posted by the Philadelphia Oil Service Index. The continued
strength among oil service stocks comes amid an increase by the price of crude oil.
Brokerage, gold, and healthcare provider
stocks are also seeing continued strength in mid-day trading, while
most of the other major sectors are showing more modest moves.
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Footsie thunders ahead
Market Movers
techMARK 2,109.44 +0.37%
FTSE 100 5,829.75 +0.92%
FTSE 250 11,898.39 +0.59%
Better
than expected US jobless figures gave a little early afternoon boost to
a London market already going along nicely, as investors shrugged off a
downgrade of Spain's credit rating by S&P, leaving the Iberian
nation's debt status barely above a junk rating.
Initial
weekly unemployment claims dropped by 30,000 to 339,000 last week in the
US. The market had been expecting a reading of 370,000.
Back in fashion
Burberry,
the luxury fashion chain, led the way, as it said disappointing
like-for-like sales growth in the July-September quarter started to pick
up in September.
Burberry also had good news on the operating
margin front, saying the Retail/wholesale operating margin in the six
months to September 30th 2012 is now expected to be at least in line
with the same period last year (14.9%), rather than lower as previously
guided.
Elsewhere in the world of retail investors were far
from sanguine about the impending departure of Kate Swann, the Chief
Executive Officer of newsagent chain WH Smith.
The
share price fall is recognition of how well Swann has maximised returns
from what was considered at the onset of her stewardship a cash cow with
little growth potential. She will leave the company on June 30th 2013
after nine years as boss and will be replaced by Steve Clarke, Managing
Director of the firm's high street business.
Swann is the
second high profile women boss in recent weeks to jack it in; just over a
week ago Marjorie Scardino, the Chief Executive Officer of publishing
group Pearson decided to call it quits at the end of the year.
Mining firm Kenmare Resources flagged after it said its markets remained weak, though it is confident of a pick up in the medium term.
Greggs,
the hot pastry-based snack dispenser of choice for British politicians
seeking a photo-opportunity, left a sour taste after it said LFL sales
will remain negative in the final quarter of 2012.
LFL sales
fell 2.6% year-on-year in the 14 weeks to October 6th as consumers
continued to tighten their purse strings. Rising ingredient costs are
also a concern, the group revealed.
Supermarket chain Morrisons
was friendless after Credit Suisse downgraded to a neutral stance,
having previously expecting the shares to out-perform. Market research
from Kantar Worldpanel suggests Morrisons has not regained its mojo
after a mediocre first half of the year.
"Although management
expects negative like-for-like again for the second half (the first was
down 0.9%), we were initially more hopeful, but, following the new data,
we have now revised down our expectation of second half like for like
to -3.0% from 0.0%," the broker revealed.
In other broker action, French broker SocGen is sweet on Tate & Lyle, moving to "buy" from "hold".
Irish broker Goodbody, meanwhile, has initiated coverage of building-materials company Wolseley with a "buy" recommendation and a share-price target of 3,400 pence.
Royal Bank of Scotland (RBS) said it has priced Direct Line
at 175p a share, valuing the insurance firm at over £2.6bn. The offer
comprises 450m existing shares, representing 30% of the 1.5bn total,
raising RBS £787m. The flotation price is in the bottom half of the
indicated range of between 160p and 195p a share.
Hot on the heels of its failed merger with Airbus owner EADS, defence firm BAE Systems
has confirmed that trading since its interim results at the beginning
of August has been in line with management expectations. The shares are
higher on speculation that following the collapse of the deal with EADS,
the firm could be a break-up candidate.
Peace could be about to break out at Bumi,
the Indonesia-focused mining giant. It has received a proposal from
major shareholder, the Bakrie Group, which wants to swap its stake in
the group for a stake of equivalent value in Bumi Resources, Bumi's
Indonesia-listed affiliate which is under investigation for alleged
financial irregularities.
The group has been the subject of a
board room battle between the influential Bakrie family and blue-blooded
London financier Nat Rothschild. The shares shot up on hopes that the
complicated cross-holdings situation at the firm would be simplified by
the new proposals.
Packaging firm DS Smith said its
purchase of SCA Packaging was expected to deliver a return on investment
above the cost of capital this financial year, together with
substantial earnings enhancement.
Other markets
The
most actively traded futures contract for Brent crude rose 77 cents to a
price of $115.10 a barrel. With investors piling into equities, gilts
were neglected. The yield on the 10-year gilt edged up to 1.70% from
1.67% overnight.
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FTSE 100 - Risers
Burberry Group (BRBY) 1,136.00p +13.26%
Barclays (BARC) 232.65p +4.80%
Croda International (CRDA) 2,322.00p +4.55%
Royal Bank of Scotland Group (RBS) 273.80p +4.23%
Eurasian Natural Resources Corp. (ENRC) 331.80p +3.43%
Vedanta Resources (VED) 1,094.00p +3.21%
Kazakhmys (KAZ) 746.00p +3.18%
Petrofac Ltd. (PFC) 1,630.00p +2.77%
British Land Co (BLND) 524.00p +2.64%
BG Group (BG.) 1,333.50p +2.38%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 269.50p -1.64%
GlaxoSmithKline (GSK) 1,427.50p -0.59%
Smith & Nephew (SN.) 651.50p -0.53%
Next (NXT) 3,576.00p -0.47%
SABMiller (SAB) 2,660.00p -0.30%
United Utilities Group (UU.) 727.00p -0.27%
National Grid (NG.) 689.00p -0.22%
Severn Trent (SVT) 1,671.00p -0.18%
Serco Group (SRP) 583.00p -0.09%
Bunzl (BNZL) 1,099.00p -0.09%
FTSE 250 - Risers
Bumi (BUMI) 259.00p +39.47%
Home Retail Group (HOME) 105.00p +6.38%
Premier Oil (PMO) 374.70p +5.79%
Essar Energy (ESSR) 128.40p +5.07%
Pace (PIC) 166.80p +4.25%
Centamin (DI) (CEY) 100.60p +3.93%
Smith (DS) (SMDS) 197.30p +3.84%
Ruspetro (RPO) 106.20p +3.81%
Informa (INF) 411.80p +3.49%
Travis Perkins (TPK) 1,135.00p +3.46%
FTSE 250 - Fallers
Kenmare Resources (KMR) 36.51p -5.29%
Man Group (EMG) 88.85p -4.87%
Greggs (GRG) 495.50p -4.07%
Diploma (DPLM) 456.70p -3.87%
JD Sports Fashion (JD.) 731.00p -3.69%
WH Smith (SMWH) 631.00p -3.22%
Fenner (FENR) 370.00p -2.63%
Dixons Retail (DXNS) 21.16p -2.44%
Savills (SVS) 391.20p -2.25%
Talvivaara Mining Company (TALV) 148.00p -2.12%
FTSE TechMARK - Risers
Gresham Computing (GHT) 69.00p +6.98%
CML Microsystems (CML) 400.00p +4.99%
Sepura (SEPU) 89.25p +3.78%
XP Power Ltd. (DI) (XPP) 909.00p +3.77%
Wolfson Microelectronics (WLF) 198.00p +2.59%
NCC Group (NCC) 975.00p +2.09%
Vislink (VLK) 28.75p +1.77%
RM (RM.) 84.25p +1.35%
Oxford Biomedica (OXB) 2.60p +0.97%
Phoenix IT Group (PNX) 157.25p +0.72%
FTSE TechMARK - Fallers
Hiwave Technologies (HIW) 1.15p -6.12%
Torotrak (TRK) 34.00p -4.23%
Optos (OPTS) 196.00p -3.80%
E2V Technologies (E2V) 116.00p -3.13%
BATM Advanced Communications Ltd. (BVC) 16.50p -2.94%
Xaar (XAR) 247.50p -2.56%
Kofax (KFX) 292.00p -2.01%
Ark Therapeutics Group (AKT) 3.30p -1.49%
Antisoma (ASM) 1.68p -1.47%
Skyepharma (SKP) 86.88p -1.00%
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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European Markets Finished Solidly Higher Despite Spanish Downgrade
The European markets rallied
higher on Thursday, thanks to some positive corporate news from the
region. The better than expected U.S. jobless claims report in the
afternoon helped the markets to extend their early gains. A Spanish
ratings downgrade from S&P and lingering concerns over Greece were
unable to hinder the day's positive move. Investors are hoping that the
Spanish downgrade may bring the country closer to a bailout request.
Banks stocks turned in a strong performance Thursday, as well as shares
of luxury goods companies.
Standard & Poor's Ratings
Services downgraded its sovereign ratings on Spain by two notches to the
lowest investment grade, highlighting the mounting risks to public
finances from rising economic and political pressures.
The
outlook on the long-term rating remained negative, reflecting S&P's
assessment of significant risks to the country's economic growth and
budgetary performance and a lack of a clear direction in Eurozone
policy.
The long-term sovereign credit rating on Spain was
reduced to 'BBB-', one level above junk, from 'BBB+'. The agency also
warned of possible further downgrade.
Italy's borrowing costs for
three-year funds increased at a bond auction as Spain's rating
downgrade coupled with the uncertainty about that country's bailout
request weighed on investor sentiment.
The Treasury sold
EUR 3.75 billion of its three-year benchmark BTPs. The yield climbed to
2.86 percent from 2.75 percent at the prior auction on September 13.
International Monetary Fund Managing Director Christine Lagarde
said the struggling euro area member Greece requires two more years to
meet its budget targets and should be brought back to its feet.
"This
is what we advocated for Portugal, this is what we advocated for Spain,
and this is what we are advocating for Greece, where I said repeatedly
that an additional two years was necessary for the country to actually
face the fiscal consolidation program that is considered," Lagarde said
on Thursday at a news conference ahead of the IMF-World Bank annual
meetings in Tokyo.
German Finance Minister Wolfgang Schaeuble
said Eurozone governments will not share losses on Greek debt holdings.
Everyone in Europe agrees to wait for Troika report and will then
decide on Greece, he said in Tokyo. He added that no country is thinking
about exiting from the euro.
Germany's leading economic research
institutes downgraded economic outlook as the euro crisis is putting a
strain on the economy. The think tanks said economic growth will remain
weak for the moment and only looks set to recover again slightly over
the course of next year.
The institutes lowered 2012
growth outlook to 0.8 percent from 0.9 percent. The institutes forecast 1
percent expansion next year, slower than the 2 percent growth estimated
in April.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 1.29 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, advanced by 0.79 percent.
The DAX of Germany climbed by 1.06 percent and the CAC 40 of France gained 1.42 percent. The FTSE 100 of the U.K. rose by 0.92 percent and the SMI of Switzerland added 0.38 percent.
In Frankfurt, Siemens fell by 1.56 percent. Deutsche Bank downgraded the stock to "Hold" from "Buy." HSBC
downgraded Fresenius to "Neutral" from "Overweight." The stock finished
higher by 0.54 percent. Deutsche Bank rose by 3.69 percent and
Commerzbank gained 2.70 percent. Suedzucker climbed by 2.54 percent,
after reporting a higher first-half profit.
Pfeiffer Vacuum
dropped by 5.49 percent, after Deutsche Bank downgraded the stock to
"Sell" from "Hold." Carl Zeiss fell by 2.84 percent, after HSBC reduced
its rating on the stock. Qiagen decreased by 2.33 percent, following a
broker downgrade.
In Paris, EADS declined by 1.11 percent.
Several analysts upgraded the stock after the company dropped its
merger plan with BAE Systems. BAE Systems also received positive broker
recommendations after the decision and closed higher by 2.37 percent in
London.
Carrefour increased by 3.69 percent, after the
retailer's third quarter report showed signs of improvement in its home
market. Shares of LVMH Moet Hennessy Louis Vuitton rose by 3.84 percent, following the surge in shares of Burberry in the U.K.
Credit Agricole climbed by 4.35 percent, Societe Generale advanced by 4.86 percent and BNP Paribas finished up by 2.92 percent.
In London, Burberry surged
by 13.59 percent. The luxury group said in a trading update that
first-half revenues improved despite weakness in China and the U.K. Tate & Lyle gained 1.23 percent, after Societe Generale upgraded the stock to "Buy" from "Hold."
Barclays increased by 4.80 percent and Royal Bank of Scotland rose by 4.23 percent. Lloyds Banking Group gained 2.00 percent and HSBC climbed by 1.29 percent.
WM Morrison Supermarkets fell by 1.64 percent, after Credit Suisse reduced its rating on the stock. WH Smith dropped
by 3.22 percent. The retailer reported lower revenues for the year and
announced the departure of its Chief Executive Kate Swann after nine
years in the role.
Germany's EU harmonized inflation weakened in
September as estimated earlier, final data released by the Federal
Statistical Office showed Thursday. The harmonized index of consumer
prices (HICP) decelerated to 2.1 percent in September from 2.2 percent
in August, in line with the preliminary estimates.
France's EU
harmonized consumer prices increased at a slower rate than expected by
economists in September, data released by statistical office Insee
showed Thursday. The harmonized index of consumer prices (HICP)
increased 2.2 percent year-on-year in September, slower than the 2.4
percent gain economists had forecast.
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| US Market Report |
Stocks Give Back Ground But Hold On To Modest Gains
While stocks showed
a strong upward move in early trading on Thursday, buying interest has
waned over the course of the trading day. The major averages have
subsequently pulled back well off their best levels of the session.
Currently, the major averages are clinging to modest gains. The Dow is up 23.29 points or 0.2 percent at 13,368.26, the Nasdaq is up 6.63 points or 0.2 percent at 3,058.41 and the S&P 500 is up 5.32 points or 0.4 percent at 1,437.88.
Bargain
hunting contributed to the early strength on Wall Street, with some
traders picking up stocks at reduced levels following the weakness seen
in recent sessions.
Adding to the buying interest was the release of a report from the Labor Department showing an unexpected drop in initial jobless claims in the week ended October 6th.
The report said initial jobless claims tumbled
to 339,000 from the previous week's revised figure of 369,000. The drop
surprised economists, who had expected jobless claims to edge up to
370,000 from the 367,000 originally reported for the previous month.
With the unexpected decrease, jobless claims fell to the lowest level since a matching number in the week ended February 16th, 2008.
However, the steep drop may reflect a distortion due to an irregular filing by a large state. Labor Department officials declined to name the state.
Peter Boockvar,
managing director at Miller Tabak, said, "After talking to a contact
listed on the Labor Department press release in this morning's jobless
claims data, I was told the state not revealed subtracted 30,000 from
the weekly initial jobless claims figure."
"This would take the 'adjusted' number to 369,000, about in line with the original expectations of 370,000," he added.
Lingering
concerns about the global economic outlook may have also helped to
limit the upside for the markets, with a report from the Commerce
Department showing a notable drop in U.S. exports in August.
Among individual stocks, Sprint Nextel (S) continues to post a standout gains after the Wall Street Journal reported that Japanese mobile carrier Softbank is
in advanced talks to buy the company in a deal expected to exceed $12.8
billion. Shares of Sprint Nextel are up by 15.7 percent.
Sector News
Despite
the pullback by the broader markets, significant strength remains
visible among steel stocks. The NYSE Arca Steel Index has pulled back
off its high for the session but remains up by 1.9 percent.
Mechel (MTL) and U.S. Steel (X) are turning in two of the steel sector's best performances, advancing by 5.2 percent and 4.7 percent, respectively.
Oil service stocks
are also holding on to strong gains, as reflected by the 1.8 percent
gain being posted by the Philadelphia Oil Service Index. The continued
strength among oil service stocks comes amid an increase by the price of crude oil.
Brokerage, gold, and healthcare provider
stocks are also seeing continued strength in mid-day trading, while
most of the other major sectors are showing more modest moves.
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| Broker tips |
RBS, Morrisons, Providence Resources
Credit Suisse has increased its target for Royal Bank of Scotland to 190p from 180p, while maintaining its 'underperform' rating.
RBS reports its third quarter results on November 2nd and Credit Suisse
has reduced its estimated 2012 underlying loss per share from 7.6p to
3.3p, following the Swiss Bank’s own upgrade on revenue expectations for
markets.
As well, Credit Suisse has moderately increased its 2013 earnings per share estimates for RBS from 8.9p to 12.2p.
However, RBS is still its “least preferred UK bank” as it sees below
sector profitability and ultimately believes that a more substantial
restructuring will be necessary.
It still doesn’t expect RBS to resume dividend payments over its forecast period 2012-2015.
Analysts at Seymour Pierce have initiated coverage of Ireland-focused oil exploration group Providence Resources with a 'buy' recommendation.
Providence’s success at Barryroe has had a transformational effect on
its share price, the broker notes, but "the company's exploration and
appraisal campaign is far from over," Seymour Pierce reckons. The
company intends to target multiple prospects across five further
geological basins.
"2013 should focus on high impact
exploration at Dalkey Island, Dunquin and the Rathlin Basin; and
moderate risk development drilling at Spanish Point,” the broker
discloses.
Seymour Pierce has a 1,539p price target for Providence.
Credit Suisse has cut its target for Morrisons supermarket to 290p from 320p, downgrading it from 'outperform' to 'neutral'.
Analysts at the Swiss Bank said that after weak first half sales, they
thought that Morrisons needed to get back on form, but it hasn’t. "It
appears to us that Morrisons' marketing, promotions and in-store
execution are currently not sharp enough. We still hope this is a
temporary loss of form and not a longer-term strategic issue."
The broker is thus reducing its target following cuts to its full year
earnings estimates by 2%-3% and a less optimistic long-term margin
outlook.
Credit Suisse analysts conclude: "We still think
Morrisons can deliver a solid full year profit performance, even given
weak like for like, but it needs some sales momentum. Meantime, although
it does not look high-rated at 9.4 times 2013/14 estimated price
earnings, we do not expect it to outperform near-term and cut our rating
from Neutral to Outperform."
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