London close: Markets rebound on low volumes
Market Movers
- techMARK 2,102.68 +0.54%
- FTSE 100 5,849.90 +0.95%
- FTSE 250 11,954.25 +0.28%
With US stock markets remaining closed for a second straight day as
Hurricane Sandy continues to batter the shores of America's East Coast,
equities across the Pond rebounded as investors celebrated decent
results from a number of heavy hitters across Europe.
"Trading
remained thin today as the NYSE's decision to keep shut, the first time
weather has halted trading for two straight days since 1888, put off
many investors from engaging in risk-on assets and instead many
investors opted to await news regarding the impact of Hurricane Sandy," said financial trader Shavaz Dhalla from Spreadex.
"However, the few investors still willing to trade the markets were
clearly bullish as the remaining open markets traded positively. Thus,
it seems these scarce investors have preferred to build on positive news
from European stocks, including BP which has today announced a
big dividend increase, instead of focusing on the potential financial
consequences of Hurricane Sandy," Dhalla said. Heavyweights including ENI, Deutsche Bank, Bayer and Imperial Tobacco also lifted sentiment today.
Markets were also focusing on some key macroeconomic indicators in the Eurozone today: Spanish gross domestic product
(GDP) figures showed that the country remained in recession in the
third quarter, contracting by 0.3% quarter-on-quarter but better than
the 0.4% decline expected; meanwhile German unemployment gained
for a seventh consecutive month in September despite the jobless rate
remaining stable at 6.9% - unemployment increased by 20,000, double the
10,000 gain expected.
In other news, Greek Prime Minister Antonis Samaras
has announced that a deal has been reached for a €13.5bn austerity
package and negotiations with the 'Troika' have concluded. The austerity
deal was a necessary step so that Greece can receive its next tranche
from its bailout programme with international creditors.
The Bank of Japan
has expanded its asset-purchase programme for the second consecutive
month. Markus Huber, the head of German HNW trading at ETX Capital, said
this morning that the news was "less well-received as many had hoped
for much more aggressive easing to counteract renewed weakness seen in
the Japanese economy."
FTSE 100: BP jumps after Q3 beat and raised dividend
Oil giant BP
gained nearly 5% today after profits came in well ahead of forecasts in
the third quarter and the company moved early on a dividend increase to
nine cents per share (up 12.5%). In its first quarterly announcement
since the recent deal with Rosneft, BP reported a clean net income of
$5,170m on an underlying replacement cost (RC) basis, well ahead of
Investec's $4,020m estimate.
Imperial Tobacco rose
after profits came in broadly in line with expectations in the year to
the end of September, helping the firm to raise its payout ratio and
increase its full-year dividend by over a tenth.
Insurance
stocks were surprisingly making gains today in spite of the dreadful
weather Stateside as markets get ready for the UK insurance and life
assurance nine-month results season, which kicks off tomorrow with
statements due out from Standard Life, St James's Place and Phoenix. UBS lifted targets across the sector today but said that its preferred life stocks remain Aviva and Prudential.
Resolution
was also rated as a 'buy' by the Swiss broker "based on valuation, and
given improving governance, its own restructuring momentum, and
underperformance year to date."
Banking stocks were mixed with Barclays and Lloyds making gains whilst Standard Chartered
disappointed with its third-quarter results. Nomura said that
StanChart's results were broadly in line but a "touch below if we are
nit picking". StanChart said that third-quarter ALM income was slightly
down on the first half run rate due to lower reinvestment yields; Nomura
highlighted this this would be a "negative read-across for BSM at HSBC" whose shares finished flat.
Airline group IAG
was being dampened after having to cancel flights as a result of
Hurricane Sandy. Meanwhile, it was being reported that the firm could
add more wide-body planes at Gatwick in a review of capacity at a base
dominated by ageing single-aisle jets that generate lower profit margins
than operations at its main Heathrow hub, one of the company's Managing
Directors has told Bloomberg.
FTSE 250: Centamin plummets on Sukari concerns
Centamin
tanked shortly before trading in the shares was suspended on concerns
that it could lose its flagship Sukari gold mine in Egypt. According to
media reports, an Egyptian court has said that the gold miner's contract
to mine Sukari has been withdrawn, after a decision in 2005 to award
the company the contact was over-ruled. However, the company responded
today that mining operations are still ongoing and no official written
judgement on the concession has been given.
Lonmin
shareholders saw their shares jump after the platinum producer announced
a chunky $800m rights issue to improve its chances of passing banking
covenant tests. On top of that work at Lonmin's Saffy mine in South
Africa was back up and running after striking workers bowed to a
deadline to go bad to work.
Regus also had a good day
after it announced plans to open more offices this year than originally
expected in order to meet growing demand for flexible and mobile
working.
FTSE 100 - Risers
BP (BP.) 442.85p +4.20%
Barclays (BARC) 238.80p +3.35%
Resolution Ltd. (RSL) 213.70p +3.14%
GKN (GKN) 210.10p +2.74%
Weir Group (WEIR) 1,764.00p +2.56%
CRH (CRH) 1,147.00p +2.41%
Kazakhmys (KAZ) 729.50p +2.39%
Amec (AMEC) 1,058.00p +2.32%
Wood Group (John) (WG.) 848.00p +2.05%
Rio Tinto (RIO) 3,142.50p +2.03%
FTSE 100 - Fallers
United Utilities Group (UU.) 695.00p -2.66%
Randgold Resources Ltd. (RRS) 7,250.00p -1.16%
Standard Chartered (STAN) 1,483.50p -0.93%
National Grid (NG.) 702.50p -0.78%
British Sky Broadcasting Group (BSY) 712.50p -0.49%
Schroders (SDR) 1,520.00p -0.46%
British American Tobacco (BATS) 3,112.50p -0.43%
Pennon Group (PNN) 724.50p -0.41%
Polymetal International (POLY) 1,116.00p -0.27%
Tullow Oil (TLW) 1,382.00p -0.22%
FTSE 250 - Risers
Lonmin (LMI) 513.50p +6.98%
Man Group (EMG) 82.15p +4.72%
Regus (RGU) 102.70p +4.26%
Kenmare Resources (KMR) 39.00p +3.53%
Playtech Ltd. (PTEC) 415.90p +2.69%
Morgan Crucible Co (MGCR) 251.90p +2.57%
Ferrexpo (FXPO) 200.00p +2.51%
FirstGroup (FGP) 191.70p +2.19%
Filtrona PLC (FLTR) 580.50p +2.02%
Premier Oil (PMO) 357.40p +2.00%
FTSE 250 - Fallers
Centamin (DI) (CEY) 63.83p -35.40%
IP Group (IPO) 115.00p -3.36%
COLT Group SA (COLT) 114.30p -3.30%
New World Resources A Shares (NWR) 271.40p -2.93%
Anite (AIE) 142.00p -2.41%
African Barrick Gold (ABG) 431.40p -2.40%
Rathbone Brothers (RAT) 1,271.00p -2.38%
Computacenter (CCC) 364.50p -2.33%
Restaurant Group (RTN) 373.50p -2.23%
Stobart Group Ltd. (STOB) 110.10p -2.13%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe midday: Germany and Greece working on Greek solution
-Moscovici: Greece to be discussed tomorrow
-Italian DMO head says current bond yield levels manageable
-PIMCO (Balls) says Spain will ask for aid relatively shortly -Bbg
-PIMCO (Balls) says no longer underweight Spanish debt
FTSE-100: 0.86%
Dax-30: 1.06%
Cac-40: 1.40%
FTSE Mibtel 30: 0.98%
Ibex 35: 1.31%
Stoxx 600: 0.81%
The main European equity benchmarks are now registering a strong
bounce-back, more than reversing yesterday´s price action. That as New
York equity futures resumed trading overnight, and actually turned
positive.
More important, of course, millions have been left
without power in the Mid-Atlantic and North-Eastern United States, but
the floodwaters have receded from the streets of New York City.
Nevertheless, the New York City Metropolitan Transit System may take
weeks to return to normalcy and remains flooded, according to some
reports. Even so, insurers are now amongst the best performers on the
Continent, in apparent relief. As an aside, but worth monitoring, some
of the first estimates available are putting the cost of the storm at
approximately $20bn.
Acting as a back-drop, overnight the Bank
of Japan approved a ninth consecutive increase in the size of its asset
repurchase program. That following the release of very weak data on
industrial production, consumer spending and the labour market.
Markets, however, had apparently been expecting firmer actions analysts
say. Hence today´s fall in the benchmark Nikkei-225 and rise in the
Yen.
According to the French Finance Minister, Pierre
Moscovici, his country and Germany are working towards a complete
solution of the Greek situation with November´s Eurogroup meeting
in mind as the target date, although Greece´s plight will also be
discussed at tomorrow´s summit.
Strong results out of Deutsche Bank
Shares of Deutsche Bank are now rising after reporting third quarter net profits of €747m, which came in well ahead of the €564m consensus forecast.
Shares of UBS
are this morning tacking on another 5% after confirming plans to pursue
cost cutting measures with an aim to lifting its return on equity –or
on the funds its shareholders have invested- to at least 15% by 2015.
Allianz has raised its full-year operating profit target.
Denmark´s largest lender, Danske Bank, has announced its intention to sell $1.2bn (£745bn) in new shares.
From a sector stand-point the best performance can now be seen in the
following industrial groups: Oil (1.95%), Automobiles (1.48%) and
Insurance (1.45%).
German unemployment rises for first time in 3 years
German unemployment increased by 20,000 in October, ahead of consensus
forecasts for a rise of 10,000. The unemployment rate came in at 6.9%,
as expected, but the previous month´s level was revised up by a tenth of
a percentage point. Last month´s increase was the first in three years.
Spanish gross domestic product contracted at a 0.3%
quarter-on-quarter rate in the third quarter, less than the 0.4%
contraction that had been foreseen.
The European Commission´s
economic sentiment indicator for the Eurozone in the month of October
fell to a three year low, at 84.5 points, after 85.2 for September
(Consensus: 84.4). Single currency holding above 1.29
The euro/dollar is now is now rising by 0.40% to the 1.2960 dollar mark.
Front month Brent crude futures are down by 0.45 dollars to the 108.95 dollar level.
| US Market Report |
NYSE Euronext has
announced that it will close all its trading venues on Tuesday, in
coordination with all US equities, bonds, options and derivatives
markets.
The above comes as 85 mile-per-hour winds
from Hurricane Sandy hone in on New York city, thus paralysing capital
markets, with flooding expected in lower Manhattan, precisely where the
financial district is concentrated.
Nevertheless, NYSE has indicated that it intends to reopen on Wednesday, October 31st, conditions permitting.
| Broker Tips |
Broker tips: BP, StanChart, Premier Foods
Investec has reiterated its bullish stance on oil giant BP, saying that the company's third-quarter results were 'much strong than we and the market anticipated'.
The broker said: "Overall, we have seen a much better result than the
poor Q2 and the company has moved early on a dividend increase to
9c/share (+12.5%)."
A 'buy' rating and 460p target for the stock has been retained.
Emerging markets lender Standard Chartered's
third-quarter results were broadly in line with expectations, according
to Nomura, but 'a touch below if we are nit picking'.
Nevertheless, the broker has maintained its 'buy' rating and 1,600p
target for the shares, saying that the business is "motoring away as
expected".
Panmure Gordon says that the recent disposals at Premier Foods do not rule out further divestments in the future.
Panmure maintained its 'hold' rating and 90p target for the stock,
saying even after these disposals, the business will remain highly
geared with a very large pension deficit "which has to be serviced from a
smaller cash generative base".
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