Stocks decline ahead of US GDP
Market Movers
techMARK 2,088.78 -0.35%
FTSE 100 5,780.50 -0.42%
FTSE 250 11,932.65 -0.33%
The
FTSE 100 index declined in early trading on Friday as markets showed
caution ahead of a pivotal gross domestic product (GDP) report due out
in the US this afternoon.
The report, scheduled for realise at 13:30 (London time), is expected to see the US economy expand at an annualised rate of 1.9% in the third quarter, an acceleration from the 1.3% growth in the preceding three months.
However, sentiment was dampened overnight after corporate earnings for
some American heavyweight disappointed over night - specifically Apple
and Amazon.
Markus Huber, the head of German HNW at ETX Capital said this morning: "So far as a whole the US earnings season has turned out mixed at best,
despite expectations coming into the reporting season had already been
reduced substantially many especially heavyweights like Google, IBM and
Apple haven’t been able to live up to expectations.
"At least
so far it seems to be the case that the recent improvement seen in some
of the US economic data hasn’t completely filtered through to the
corporate sector yet; also with other parts of the world - mainly China
and especially Europe - still struggling badly, many of those global
companies are expected to ‘suffer’ under the harsh business environment
for at least a couple more quarters," Huber said.
Stocks finished flat the day before despite a better-than-expected reading in UK GDP:
the UK economy expanded by 1.0% in the third quarter, compared with the
0.4% decline seen in the second quarter and well ahead of the 0.6%
increase expected. That was the strongest reading since late 2007 and
means that the economy exited from its double-dip recession.
In other news, Greece is thought to be close to agreeing a deal with the Troika which should then be voted on by parliament.
Market analyst Craig Erlam from Alpari explained: "The deal appears to
centred around the idea that Greece will have an extra two years to hit
its fiscal targets, something Germany has refused to confirm at this
point. There is still no guarantee it will be signed off by Greece's
creditors, however they are likely to respect the Troika's report."
FTSE 100: Banks take a hit on LIBOR probe
Banking
stocks were under pressure this morning after The Wall Street Journal
reported last night that the probe into the manipulation of the London
Interbank Offered Rate (LIBOR) has spread to nine more banks.
These nine, which include Lloyds, Credit Suisse and Bank of America, have received subpoenas in connection with a probe, the paper said citing a person close to the matter. In London, Lloyds, RBS and Barclays were among the worst performers.
Pharmaceuticals giant Shire
was a heavy faller despite Deutsche Bank, UBS and Credit Suisse
reiterated their 'buy' and 'overweight' ratings on the stock this
morning. Shares were pulling back after a solid rise yesterday on the
back its third-quarter results.
Leading the risers was diversified mining titan Anglo American
after announcing that it is on the look out for another CEO after
Cynthis Carroll revealed her decision to resign. "It is a very difficult
decision to leave, but next year I will be entering my seventh year as
Chief Executive and I feel that the time will be right to hand over to a
successor who can build further on the strong foundations we have
created," she said.
FTSE 250: Elementis sinks on oilfield drilling slowdown
Speciality chemicals group Elementis
was a heavy faller after saying that full-year headline operating
profits will be hit by a temporary slowdown in oilfield drilling.
Nevertheless, the group said it remains on track to hit earnings per
share (EPS) forecasts this year due to a lower tax rate.
African Barrick Gold
also dropped after scaling back its production guidance for the full
year following a "challenging" third quarter which saw output and sales
shrink dramatically year-on-year.
Berendsen, the
work-wear and wash-room facilities provider, also fell after reporting
that trading in the three months to the end of September was in line
with expectations with group underlying revenue up 2%.
| AIM/Small Cap Report |
FTSE 100 - Risers
Weir Group (WEIR) 1,732.00p +2.61%
Anglo American (AAL) 1,891.50p +1.83%
Pearson (PSON) 1,234.00p +1.82%
British Sky Broadcasting Group (BSY) 723.00p +0.42%
Sainsbury (J) (SBRY) 354.80p +0.37%
Associated British Foods (ABF) 1,380.00p +0.36%
Admiral Group (ADM) 1,108.00p +0.36%
Morrison (Wm) Supermarkets (MRW) 271.10p +0.33%
Bunzl (BNZL) 1,024.00p +0.29%
InterContinental Hotels Group (IHG) 1,551.00p +0.26%
FTSE 100 - Fallers
Kazakhmys (KAZ) 713.50p -3.06%
Shire Plc (SHP) 1,727.00p -2.37%
Aviva (AV.) 327.00p -1.86%
Eurasian Natural Resources Corp. (ENRC) 327.30p -1.83%
Rio Tinto (RIO) 3,048.00p -1.68%
Lloyds Banking Group (LLOY) 40.05p -1.59%
Fresnillo (FRES) 1,900.00p -1.55%
CRH (CRH) 1,097.00p -1.53%
Prudential (PRU) 840.00p -1.52%
Polymetal International (POLY) 1,092.00p -1.44%
FTSE 250 - Risers
NMC Health (NMC) 189.70p +3.10%
JD Sports Fashion (JD.) 775.00p +3.06%
Diploma (DPLM) 484.70p +2.15%
Computacenter (CCC) 376.90p +1.95%
Utilico Emerging Markets Ltd (DI) (UEM) 163.90p +1.17%
Oxford Instruments (OXIG) 1,352.00p +1.12%
Barr (A.G.) (BAG) 447.90p +1.06%
Raven Russia Ltd (RUS) 67.40p +1.05%
Cairn Energy (CNE) 278.40p +0.80%
BH Global Ltd. GBP Shares (BHGG) 1,135.00p +0.80%
FTSE 250 - Fallers
Elementis (ELM) 204.90p -5.58%
Lonmin (LMI) 483.00p -3.03%
Centamin (DI) (CEY) 97.00p -2.71%
African Barrick Gold (ABG) 469.20p -2.55%
F&C Asset Management (FCAM) 99.00p -1.98%
Ferrexpo (FXPO) 190.30p -1.91%
Bodycote (BOY) 364.20p -1.59%
Pace (PIC) 167.30p -1.59%
SIG (SHI) 105.10p -1.59%
Ashtead Group (AHT) 356.80p -1.57%
|
| European broker round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Air Liquide: CM-CIC reiterates HOLD rating with a price target of €100.
Atos: Natixis reiterates BUY rating with a price target of €62.
bioMérieux: AlphaValue downgrades to ADD from buy and raises price target to €85.80 from €85.70.
Nexity: AlphaValue downgrades to ADD from buy and raises its price target to €28 from €27.90.
Volvo: AlphaValue downgrades to REDUCE from add.
INTERIMS
African Medical Investments, Gail (India) Ltd GDR (Reg S)
INTERIM DIVIDEND PAYMENT DATE
Amati Vct 2, Brightside Group, British Smaller Companies VCT 2, Costain
Group, Dignity, EMIS Group, F&C Asset Management, Fairpoint Group,
Filtrona PLC, Good Energy Group, H.R. Owen, Henry Boot, InterQuest
Group, Kentz Corporation Ltd., Morgan Sindall Group, North American
Income Trust (The), Primary Health Properties, Quarto Group Inc., Real
Estate Investors, Rentokil Initial, Severfield-Rowen, Smurfit Kappa
Group, Vitec Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
GDP (Advance) (US) (13:30)
U. of Michigan Confidence (Final) (US) (15:00)
Q2
Gail (India) Ltd GDR (Reg S)
Q3
Norwegian Property ASA, Polski Koncern Naftowy Orlen S.A. GDR(Reg S)
IMSS
CPP Group, Elementis
AGMS
Transense Technologies, URU Metals Ltd. (DI)
FINAL DIVIDEND PAYMENT DATE
Consort Medical, Development Securities
|
| US Market Report |
Stocks Close Modestly Higher But Well Off Best Levels
After
once again failing to sustain an initial upward move, stocks turned in a
lackluster performance over the course of the trading day on Thursday.
Nonetheless, the markets eventually ended the day showing a slightly
positive bias.
The major averages managed to close modestly higher but well off their best levels of the day. The Dow edged up 26.34 points or 0.2 percent to 13,103.68, the Nasdaq inched up 4.42 points or 0.2 percent to 2,986.12 and the S&P 500 climbed 4.22 points or 0.3 percent to 1,412.97.
The
initial strength on Wall Street was partly due to a positive reaction
to a batch of largely upbeat economic data, including a report showing
that the U.K. emerged from recession in the third quarter.
The report from the U.K. Office for National Statistics said the U.K. economy grew by 1 percent in the third quarter after contracting in each of the three previous quarters.
The U.S. Labor Department also released a report showing a bigger than expected drop by initial jobless claims in the week ended October 20th.
The
report showed that initial jobless claims dropped to 369,000 from the
previous week's revised figure of 392,000. Economists had been expecting
jobless claims to fall to 372,000 from the 388,000 originally reported
for the previous week.
Additionally, a report from the Commerce Department showed that durable goods orders rebounded by more than expected in September after falling sharply in August.
The
report said durable goods orders jumped by 9.9 percent in September
after tumbling by 13.1 percent in August. Economists had been expecting
durable goods orders to increase by about 7 percent.
However,
many economists pointed to the report's reading on orders for
non-defense capital goods excluding aircraft, which is seen as an
indicator of business spending. The report showed that the orders were
unchanged in September following a 0.2 percent increase in August.
A
separate report from the National Association of Realtors showing a
much smaller than expected increase in pending home sales also helped to
limit the upside for the markets.
NAR said its pending
home sales index edged up by 0.3 percent to 99.5 in September after
falling by 2.6 percent to 99.2 in August. Economists had been expecting a
more substantial rebound by the index of about 2.5 percent.
Stocks subsequently gave back some ground amid rumors that Fitch Ratings intends to downgrade its AAA credit rating for the U.S.
A
Fitch spokesman later referred to the agency's July statement
indicating that its negative outlook on the rating is unlikely to be
resolved until late 2013.
While many of the major sectors ended
the day showing only modest moves, considerable strength was visible
among gold stocks. The NYSE Arca Gold Bugs Index surged up by 3.2
percent, bouncing off its lowest closing level in over a month.
The
strength among gold stocks was partly due to an increase by the price
of the precious metal, with gold for December delivery climbing $11.40
to $1,713 an ounce. Agnico-Eagle Mines (AEM) and Goldcorp (GG) also
posted notable gains after reporting better than expected quarterly
earnings.
Semiconductor stocks also saw significant
strength on the day, with the Philadelphia Semiconductor Index rising by
1.4 percent after ending Wednesday's trading at a three-month low.
Trucking, brokerage, and natural gas stocks also posted notable gains.
On the other hand, housing stocks
came under pressure on the heels of the disappointing pending home
sales data, dragging the Philadelphia Housing Sector Index down by 1.7
percent. Meritage Homes (MTH) helped to lead the sector lower, falling
8.2 percent after releasing its third quarter results.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index advanced by 1.1 percent, while Hong Kong's Hang Seng Index edged up by 0.2 percent.
In the bond market, treasuries ended
the session firmly in the red despite some mid-day volatility. As a
result, the yield on the benchmark ten-year note, which moves opposite
of its price, rose by 5.3 basis points to a one-month closing high of
1.828 percent.
Looking Ahead
Trading on Friday is
likely to be impacted by reaction to quarterly results from Apple
(AAPL), with the iPad and iPhone maker releasing its fiscal fourth
quarter results after the close of today's trading.
Amazon (AMZN), Expedia (EXPE), and Las Vegas Sands (LVS) are also releasing their quarterly results after today's close, while Merck (MRK), Comcast (CMCSA), and Goodyear (GT) are among the companies due to release their results before the start of trading on Friday.
Economic data
may also attract attention on Friday, with the Commerce Department
scheduled to release its initial report on U.S. GDP in the third
quarter.
|
| Friday newspaper round-up |
ECB, Apple, Libor
Data from the European Central Bank (ECB)
show that the tentative rebound in the money supply over the summer may
have stalled again in September. The broad M3 gauge -- watched by
experts as an early warning signal for the economy a year or so ahead --
shrank by 30bn euros and is now down by 143bn euros since April. This
is highly unusual. The narrow M1 gauge watched for signals of activity
six months head has held up better but also contracted in September,
falling by 16bn euros. "The message is clear," said Lars Christensen
from Danske Bank. "The ECB needs to stop obsessing about fiscal issues
and do real quantitative easing (QE) if it wants to stop the eurozone
going the way of Japan." Loans to firms and households fell 1.3 per cent
as banks continue to shrink their balance sheet to meet tougher rules.
Private bank lending has been falling almost continuously since April,
The Telegraph says.
Shares in the technology company Apple
were briefly suspended before the release of its results and then fell
up to 4% in after-hours trading in New York. A drop in iPad sales in the
fourth quarter left profits at $8.22bn, trailing the $8.3bn that
analysts had forecast. While sales of iPad, Apple's newest product,
missed forecasts, iPhone sales beat them. The stunning success Apple has
enjoyed since the launch of the iPhone in 2007 has left the Californian
company facing ever higher bars to sustain its valuation as the world's
most valuable company. "What people are going to focus on is that the
iPad was a bit weak and the iPhone was solid during the quarter," said
Shannon Cross, an analyst at Cross Research, The Telegraph reports.
Nine of the world’s biggest banks are facing increased scrutiny from US
state prosecutors probing alleged attempts to manipulate the lending
gauge known as Libor. Eric Schneiderman, New York
attorney-general, and George Jepsen, Connecticut attorney-general, have
sent subpoenas to Bank of America, Bank of Tokyo Mitsubishi UFJ, Credit
Suisse, Lloyds Banking Group, Rabobank, Royal Bank of Canada, Société
Générale, Norinchukin Bank and West LB as they investigate whether the
banks participated in any schemes to rig the London Interbank Offered
Rate, a person familiar with the matter said, according to the Financial
Times.
It was once the dirtiest coal-fired carbon dioxode-emitting power plant in Western Europe. From next year Drax
will become Britain’s biggest weapon in the race to produce renewable
energy. Drax has been Britain’s single biggest electricity-producing
plant for decades, providing at times as much 10% of the nation’s energy
production. However, in plans unveiled yesterday, the South
Yorkshire-based plant is to convert three of its six units to burning
biomass rather than the black stuff. It is a move that will produce 2
gigawatts of green electricity, enough to power millions of homes a
year. Dorothy Thompson, the chief executive of Drax, which is a £1.8bn
stockmarket-listed company, said the leap to pushing Britain into a
greener future was “enormous,” The Times explains.
Troubled fund manager Man Group
drew the market’s attention yesterday after the company revealed
Crispin Odey has been building up a stake in the business. Man said Odey
Asset Management, the hedge fund founded and run by Mr Odey, held 5.15%
of the group’s voting rights, including ordinary shares and contracts
for difference. The announcement gave a lift to the shares, which traded
at over 150p in March, but closed up 3 at 80.05p today. The FTSE 250
company has come under pressure as it struggles to stop clients from
withdrawing money from its funds. The group revealed net third-quarter
outflows of $2.2bn (£1.4bn) earlier in October, the fifth consecutive
quarter of withdrawals, The Telegraph explains.
The vicious
circle linking the outlook for banks with their economies continued on
Thursday night after Standard & Poor’s rating agency cited increased
economic risks as the main reason for downgrading BNP Paribas,
France’s biggest bank and changed the outlook to negative for 10 other
French banks, including Societe Generale and Credit Agricole. “The
economic risks under which French banks operate have increased in our
view, leaving them moderately more exposed to the potential of a more
protracted recession in the eurozone,” S&P said in a statement. BNP
Paribas’s rating was downgraded by one notch to A plus from AA minus
with a negative outlook. The A rating of SocGen and Credit Agricole
rating was confirmed but their outlook was cut to negative from stable,
The Telegraph writes.
Oilfield engineering firm Sparrows Offshore
has landed financial backing from a US-private equity firm understood
to be worth more than £100m. The Aberdeen-based company said the support
from AEA Investors LP would give it “funds for acquisitions and organic
growth and will help the company fast track its global expansion
strategy”. The heavily indebted crane engineering specialist grew sales
from £149.5m in 2011 to £172m and narrowed pre-tax losses from £66.6m to
£20.1m. The investment from the New York and London-based private
equity firm comes well ahead of a debt repayment deadline. In August
Sparrows had refinanced its £200m net debt which was brought forward to
be repayable in June next year, The Scotsman reports.
Santander
has raised the prospect of a fresh wave of mis-selling claims against
banks by taking a £232m provision to cover future payments. The
Spanish-owned lender refused to give details, but banks are braced for a
raft of legal claims from small businesses over allegations that they
were mis-sold insurance products to cover the risk of rising interest
rates. Further claims may also come in the form of compensation to
customers who dealt with CPP, the credit card protection company. The
bank said yesterday that the £232m provision was made in September “in
relation to conduct remediation for historic customer conduct issues,”
The Times says.
EE, which owns Orange and T-Mobile, will
employ the frequencies it uses for 2G services for 4G when it launches
Britain’s first service on Tuesday, ahead of its rivals who cannot go
live until next summer. However, the airwaves that will be used for EE’s
new network are in a high-frequency range that means the mobile phone
signals will struggle to penetrate the walls of buildings. An EE
spokesman told The Times that it had initially focused its efforts on
building out its 4G network to cover outdoor areas and that it would
fill in gaps to boost indoor coverage over the coming months. He said
customers would receive a 4G signal indoors and could connect to Wi-Fi
for a stronger signal. Vodafone, one of EE’s main rivals, has
warned that this could leave many early adopters of the new 4G network
frustrated when using their new smartphones at home, at work or in a
shopping centre.
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