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Stocks flat with US earnings and EU summit in focus
Market Movers
techMARK 2,114.94 +0.11%
FTSE 100 5,915.30 -0.03%
FTSE 250 12,069.96 -0.01%
Worse-than-expected
results from some US blue chips and the EU summit were in the spotlight
on Friday morning, keeping UK stocks flat early on.
"European equities are trading lower this morning pressured by weak US tech earnings where Microsoft and also internet search engine powerhouse Google both missed expectations by a wide margin," said Markus Huber, the head of German HNW Trading at ETX Capital.
He also said that '"there haven’t been many new revelations coming out of Brussels so far where currently a two-day EU summit is being held."
European leaders announced that they would set up a Eurozone bank
supervisor run by the European Central Bank (ECB) by the end of the
year. “We have a date in place now for the legislative framework, which
we didn’t have before – and that in itself is an important step
forward," said European Council President Herman Van Rompuy.
FTSE 100: Aggreko sinks after giving mixed guidance
Temporary power and temperature control group Aggreko
got an Olympics revenue boost in the third quarter, but guidance for
the full year was mixed, with some parts of the business performing
better and worse than expectations and currency movements likely to have
a negative impact on the bottom line. Shares sunk nearly 7% in the
opening hour.
Distribution and outsourcing group Bunzl
was a heavy faller after the third quarter saw a moderation in the
underlying revenue growth rate, particularly in North America, where the
company is going up against tough comparatives.
Barclays
continues to trade lower after announcing last night that it has set
aside a further £700m in provisions against the possible costs
associated with compensating customers for mis-sold payment protection
insurance (PPI), taking it total provisions to £2bn.
Financial peers Standard Life and Lloyds
were also out of favour in early trading: the former was hit by a
downgrade from Berenberg to 'sell'; with the latter was weighed down by a
ratings cut from JPMorgan Cazenove to 'underweight'.
Oilfield support services Petrofac
gained after saying that it is experiencing high levels of bidding
activity, which should see its backlog pile up over the coming months.
FTSE 250: Spectris jumps after 'resilient' performance
Specris
saw a robust performance in the final quarter of its financial year and
while like-for-like (LFL) sales growth had slowed from the first half,
analysts said that this was as expected. The instrumentation and
controls company said that reported sales during the last quarter were
up 12%.
High flying small loans specialist Provident Financial
was in the red despite saying its Vanquis Bank credit card division
continued to trade ahead of expectations in the third quarter.
| AIM/Small Cap Report |
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FTSE 100 - Risers
Burberry Group (BRBY) 1,192.00p +1.02%
Johnson Matthey (JMAT) 2,309.00p +0.96%
Royal Dutch Shell 'B' (RDSB) 2,219.00p +0.77%
Wood Group (John) (WG.) 871.00p +0.69%
Land Securities Group (LAND) 812.00p +0.56%
Unilever (ULVR) 2,333.00p +0.56%
Prudential (PRU) 867.50p +0.52%
Royal Dutch Shell 'A' (RDSA) 2,166.00p +0.51%
Diageo (DGE) 1,764.50p +0.46%
Compass Group (CPG) 689.00p +0.44%
FTSE 100 - Fallers
Aggreko (AGK) 2,150.00p -6.60%
Bunzl (BNZL) 1,047.00p -3.23%
ITV (ITV) 90.10p -1.74%
Lloyds Banking Group (LLOY) 41.31p -1.34%
Barclays (BARC) 238.65p -0.85%
Morrison (Wm) Supermarkets (MRW) 269.20p -0.81%
BT Group (BT.A) 221.60p -0.81%
Capita (CPI) 730.00p -0.61%
GKN (GKN) 212.70p -0.61%
Randgold Resources Ltd. (RRS) 7,525.00p -0.59%
FTSE 250 - Risers
Spectris (SXS) 1,763.00p +10.60%
Bumi (BUMI) 256.40p +4.61%
New World Resources A Shares (NWR) 277.80p +2.89%
Grainger (GRI) 110.10p +2.42%
Stobart Group Ltd. (STOB) 116.00p +2.29%
Savills (SVS) 410.50p +1.99%
Essar Energy (ESSR) 133.60p +1.91%
PayPoint (PAY) 763.00p +1.73%
Devro (DVO) 341.70p +1.70%
TalkTalk Telecom Group (TALK) 181.70p +1.68%
FTSE 250 - Fallers
Redrow (RDW) 152.00p -6.46%
Daejan Holdings (DJAN) 2,860.00p -2.72%
Drax Group (DRX) 536.00p -2.55%
Phoenix Group Holdings (DI) (PHNX) 498.20p -2.03%
Dechra Pharmaceuticals (DPH) 607.00p -1.78%
Micro Focus International (MCRO) 556.50p -1.77%
Greggs (GRG) 478.10p -1.54%
Brewin Dolphin Holdings (BRW) 175.10p -1.52%
Fidessa Group (FDSA) 1,340.00p -1.47%
Chemring Group (CHG) 348.60p -1.33%
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| European broker round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Antena 3: Barclays rates UNDERWEIGHT and lowers target price to €3.50 from €3.75. Bankinter: Nomura rates UNDERWEIGHT and lowers price target to €2.40 from €2.80. ING: AlphaValue downgrades to ADD from buy with a price target of €8.30. Mediaset: Barclays rates UNDERWEIGHT and lowers price target to €4.20 from €4.40. Renault: AlphaValue downgrades to REDUCE from add and raises price target to €37.70 from €37.20.
UK event Calendar
INTERIM DIVIDEND PAYMENT DATE
AZ Electronic Materials SA (DI), Barr (A.G.), Bilfinger Berger Global
Infrastructure Sicav S.A.(DI), Christie Group, Computacenter, CRH, G4S,
Glanbia, International Public Partnerships Ltd., John Laing
Infrastructure Fund Ltd, Melrose, Networkers International, Petrofac
Ltd., Playtech Ltd., Robert Walters, Serco Group, Total Produce, Treatt,
Tribal Group, Witan Pacific Inv Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Payments (EU) (09:00)
Balance of Trade (EU) (10:00)
Current Account (EU) (09:00)
Existing Home Sales (US) (15:00)
Producer Price Index (GER) (07:00)
Q3
Schlumberger Ltd.
IMSS
Aggreko, Petrofac Ltd., Provident Financial
SPECIAL DIVIDEND PAYMENT DATE
Highland Gold Mining Ltd.
AGMS
Argos Resources Ltd. (DI), Brooks Macdonald Group, Dechra Pharmaceuticals, PME African Infrastructure Opportunities
UK ECONOMIC ANNOUNCEMENTS
Public Sector Finances (09:30)
FINAL DIVIDEND PAYMENT DATE
City of London Investment Group, Dart Group, TP70 2008 (I) VCT, TP70 2008 (II) VCT, Tricorn Group, Utilico Investments Ltd (DI)
| US Market Report |
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Stocks Close In The Red As Google Weighs On The Tech Sector
With disappointing earnings news from Google (GOOG)
weighing on the technology sector, stocks ended Thursday's trading
mostly lower. The major averages all closed in the red, although the
tech-heavy Nasdaq underperformed its counter parts by a wide margin.
The Nasdaq regained
some ground going into the close but still ended the session down 31.25
points or 1 percent at 3,073.87. The Dow edged down by a more modest
8.06 points or 0.1 percent to 13,548.94, while the S&P 500 slipped 3.57 points or 0.2 percent to 1,457.34.
Tech
stocks showed a notable move to the downside in afternoon trading after
internet search giant Google released its third quarter results ahead
of schedule.
Google reported adjusted third quarter
earnings of $9.03 per share, well below analyst estimates for $10.65 per
share. The company also reported revenues that came in below analyst
estimates.
The markets experienced choppy trading earlier in the session following the release of a mixed batch of economic data.
Early
selling pressure was generated by the release of a report from the
Labor Department showing a bigger than expected rebound by initial
jobless claims.
The report showed that jobless claims
jumped to 388,000 in the week ended October 13th after falling to a
four-year low of 342,000 in the previous week. Economists had been
expecting jobless claims to rise to 365,000 from the 339,000 originally
reported for the previous week.
However, a positive reaction to a batch of largely upbeat Chinese economic data helped to limit the downside for the markets.
Stocks
subsequently regained some ground following the release of a pair of
upbeat reports on Philadelphia manufacturing activity and leading U.S.
economic indicators.
The Philly Fed said its diffusion
index of current activity jumped to a positive 5.7 in October from a
negative 1.9 in September, with a positive reading indicating an
increase in regional manufacturing activity. With the increase, the
index returned to positive territory for the first time since April.
Separately,
the Conference Board said its leading economic index rose by 0.6
percent in September following a revised 0.4 percent drop in August.
Economists had expected the index to edge up by 0.2 percent compared to
the 0.1 percent dip originally reported for the previous month.
Traders also
reacted to the latest batch of earnings news, including results from
big-name companies such as Morgan Stanley (MS), Verizon (VZ), and
Travelers (TRV).
Sector News
While many of the major
sectors ended the day showing only modest moves, significant weakness
was visible among gold stocks. The NYSE Arca Gold Bugs Index fell by 3 percent to its lowest closing level in over a month.
The
weakness among gold stocks came amid a decrease by the price of the
precious metal, with gold for December delivery sliding $8.30 to
$1,744.70 an ounce.
Considerable weakness also emerged in the electronic storage sector, as reflected by the 2.2 percent loss posted by the NYSE Arca Disk Drive Index. With the loss, the index ended the session at a three-month closing low.
Internet
stocks also came under pressure, with Google helping to lead the way
lower. Reflecting the weakness in the internet sector, the NYSE Arca Internet Index fell by 1.2 percent.
Tobacco, biotechnology, and brokerage stocks also saw notable weakness, while strength was visible among oil service and commercial real estate stocks.
Looking Ahead
With
Google releasing its results ahead of schedule, the earnings spotlight
shifts to Microsoft (MSFT) after the close of today's trading.
Advanced Micro Devices (AMD), Capital One (COF), and ETrade (ETFC) are also releasing their quarterly results after the close, while General Electric (GE), McDonald's (MCD), and Honeywell (HON) are among the companies due to report their results before the start of trading on Friday.
Housing
data may also attract some attention on Friday, with the National
Association of Realtors scheduled to release its report on existing home
sales in the month of September.
Other Markets
In
overseas trading, stock markets across the Asia-Pacific region saw
considerable strength on the heels of the upbeat Chinese economic data.
Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang
Seng Index advanced by 0.5 percent.
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| Friday newspaper round-up |
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Tesco, Vodafone, Redrow
Tesco Bank
has sparked a possible mortgage price war by taking advantage of cheap
government money to launch cut-price deals. Chief executive Benny
Higgins unveiled what he called “market-leading rates” after announcing
that Tesco was accessing the Bank of England’s Funding For Lending
Scheme. Edinburgh-based Tesco Bank is now offering two-year fixed
mortgages with rates starting at 1.99 per cent. Higgins said: “We
welcome the Funding for Lending Scheme, and are delighted to be able to
pass on the benefit to our customers. “We are committed to responsible
lending and hope to enable our customers to borrow a further 1bn pounds,
over the next year, at affordable rates.” Rates on other products are
also lower, he said, adding that the bank will be launching a cash ISA
before the end of the year, The Scotsman reports.
India’s government has confirmed plans to make mobile operators including Bharti Airtel and Vodafone
pay a one-time “spectrum charge” that could amount to as much as
$4.24bn, dealing a further blow to the debt-strapped industry. A
ministerial group meeting in New Delhi confirmed moves to charge for
so-called “excess spectrum” owned by operators in certain areas.
Government estimates have previously suggested this charge could raise
as much as Rs226bn ($4.24bn). The move is the latest blow to an industry
which was once viewed as an emblem of the economic dynamism of Asia’s
third-largest economy, but has since become increasingly known for
incompetent regulation, fierce price competition, stagnant revenues and
ballooning debts, The Financial Times writes.
Redrow
chairman Steve Morgan last night ditched his plan to buy the
housebuilder he founded in 1974 – bringing seven weeks of takeover talks
to an end. The 59-year-old entrepreneur, who left the Flintshire-based
company in 2000 but returned as executive chairman in a boardroom coup
nine years later, proposed a 152p-a-share-offer at the end of August
worth £560million. But in a statement to the stock exchange at 16:50
yesterday, after shares closed up 2.8p to 162.5p, he revealed that talks
‘have now been terminated’. The approach – first revealed in the Daily
Mail – was made through Morgan’s investment vehicle Bridgemere
Securities which holds a 40% stake in Redrow.
When the University of Oxford’s investment chief was invited to address private equity
titans at one of the industry’s biggest annual events, she was asked to
give an investor’s perspective. Her explosive remarks were perhaps not
quite what the industry had in mind. Sandra Robertson startled the
audience at the British Private Equity and Venture Capital Association’s
annual summit on Thursday, accusing managers of failing their clients
by charging excessive fees and delivering lacklustre returns. “Why on
earth as a rational investor would I allocate blindly to private
equity?” she asked, in a speech calculated to provoke debate among
quiescent private equity investors as much as those handling their
money. “We need proof that the time and resources required to invest in
private equity is worthwhile. You need to earn your place in our
portfolios,” she told the audience at London’s Landmark hotel, The
Financial Times says.
The new financial regulator should be given explicit powers to block big bank mergers to avoid a repeat of Royal Bank of Scotland ’s
near collapse after its purchase of the Dutch lender ABN Amro, say MPs.
“We need a regulator with the self-confidence to intervene, even if it
might cause some destabilisation in the short term,” the Treasury select
committee says in a report published on Friday.
The ill-fated 2007
ABN deal, which came shortly before a global meltdown in financial
markets, left RBS requiring a £45bn government bail-out. Responding to a
Financial Services Authority analysis of the failure of RBS, the
committee said the regulator “should and could have intervened” in the
bank’s acquisition of ABN, The Financial Times reports.
Web search giant Google’s
stock crashed by as much as 11% and wiped more than $22bn (£13.7bn) off
the value of the company after the inadvertently published figures
revealed a 20% fall in profits. The announcement was scheduled for
publication after markets closed in New York, but they were accidentally
published four hours early. The release even contained a space for a
quote from Google’s chief executive, Larry Page. The mistake sent
Google’s share price plummeting – before their trading was suspended,
more than 9% down at $687.30 – amid fears that the stock would crash,
The Telegraph writes.
The board of BP is expected to
accept a landmark cash and shares offer from Rosneft for its stake in
the Russian joint venture TNK-BP when it meets today. A speedy sale is
on the cards after the Kremlin-backed giant was the sole bidder for BP’s
50% share by yesterday morning’s deadline. The deal means that BP will
finally cut its ties with the four Russian oligarchs behind AAR, who
co-own TNK-BP, and secure its place as a junior partner in Rosneft.
Rosneft yesterday offered BP between $25 billion and $28 billion, with
the share element expected to give the British company a stake of
between 10% and 20% of the enlarged business, The Times says.
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