Stocks gain ahead of central bank announcements
Market Movers
techMARK 2,150.97 +0.40%
FTSE 100 5,841.46 +0.27%
FTSE 250 11,922.60 +0.42%
European
stock markets have opened with moderate gains ahead of what is likely
to be a busy day on the economic front, with rate decisions due out from
the Bank of England (BoE) and European Central Bank (ECB) later today, as well as the minutes of the latest Federal Reserve meeting.
The BoE's
Monetary Policy Committee (MPC) is set to reveal whether it has made
any alterations to its key interest rate and asset purchase programme
(also known as quantitative easing, or QE) at noon.
The smart
money is on there being no change, with the interest rate staying at
0.5% and the asset purchase (quantitative easing, or QE) pot staying at
£375bn. However, some are expecting an increase in QE and a 25 basis
point rate cut in November.
The ECB is also expected to
remain in 'wait-and-see' mode when it reveals its policy decision after
midday. Analysts believe that the ECB will wait for Spain to make the
next move considering that it already announced its bond purchase plan
for ailing countries that request aid. The key interest rate currently
stands at 0.75% after it was cut by 25 basis points early in the year.
The deposit rate is at 0%.
Analyst Craig Erlam from Alpari
said: "There's been a lack of volatility in the markets in recent weeks
as investors look beyond central banks to the governments for
reassurance on the next step in the debt crisis. The uncertainty
surrounding Spain has left investors unsure on how to position
themselves as we approach near end. Given a lack of details out of the
eurozone, there is a hope that the ECB will give us some valuable
insight into this."
Meanwhile, the Federal Open Market Committee
(FOMC) minutes are also on the agenda for later. Analyst Moyeen Islam
from Barclays Research said this morning that the minutes should provide
more "granularity regarding what the Fed may judge to be a 'sustainable
improvement' in the labour market that would underpin any decision to
end the current open-ended commitment to asset purchases.
FTSE 100: Tate & Lyle gains after broker upgrade
Sweeteners and food products group Tate & Lyle
was the high riser in early trading after Credit Suisse raised its
recommendation for the stock from 'neutral' to 'outperform'.
The broker said: "There is no easy way to value Tate & Lyle, but it
does seem to us to be a better business for all the changes we have seen
and that this is not reflected in the share price (which is down 8%
year to date versus a staples sector up 18%)."
Evraz fell
after acquiring an indirect controlling interest in OJSC Raspadskaya,
one of Russia's largest producers of coking coal and a supplier to the
Russian steel firm.
Pharmaceuticals behemoth GlaxoSmithKline gained
after saying its joint venture company, Shionogi-ViiV Healthcare, has
completed an initial clinical registration package for dolutegravir, its
treatment for HIV patients.
Supermarket peers Tesco and Sainsbury
were among the stocks in the red following their results and trading
update yesterday, respectively. Exane BNP Paribas reduced its target for
Tesco this morning from 325p to 300p and reiterated its 'underperform'
rating on the shares.
FTSE 250: Halfords surges after impressive Q2, new CEO appointment
Car and bike parts retailer Halfords jumped
after appointing a new Chief Executive Officer following the abrupt
departure of David Wild in the summer, as it revealed that full-year
profits would be at the top end of guidance after a strong second
quarter.
The company expects pre-tax profit to be in the
region of £40-42m in the first half on the back of its second quarter
performance and an acceleration of operating cost investment. The
consensus estimate currently stands at just £35.8m.
Fashion chain Ted Baker
was in demand after saying that the reaction to its autumn/winter
collections has been positive as it unveiled a solid first-half trading
performance.
FTSE 100 - Risers
Tate & Lyle (TATE) 691.50p +2.52%
Standard Chartered (STAN) 1,421.00p +1.21%
Prudential (PRU) 833.00p +1.09%
Carnival (CCL) 2,336.00p +0.99%
InterContinental Hotels Group (IHG) 1,655.00p +0.98%
Barclays (BARC) 222.30p +0.93%
International Consolidated Airlines Group SA (CDI) (IAG) 165.20p +0.92%
Royal Bank of Scotland Group (RBS) 260.40p +0.89%
Diageo (DGE) 1,795.00p +0.84%
ITV (ITV) 91.95p +0.82%
FTSE 100 - Fallers
Evraz (EVR) 239.60p -3.11%
BHP Billiton (BLT) 1,929.00p -0.72%
Tesco (TSCO) 325.75p -0.67%
G4S (GFS) 266.50p -0.56%
BG Group (BG.) 1,302.00p -0.53%
BP (BP.) 436.85p -0.50%
CRH (CRH) 1,183.00p -0.50%
Johnson Matthey (JMAT) 2,406.00p -0.46%
Amec (AMEC) 1,145.00p -0.43%
British Land Co (BLND) 521.00p -0.29%
FTSE 250 - Risers
Halfords Group (HFD) 302.00p +13.53%
Ted Baker (TED) 945.00p +3.45%
Victrex (VCT) 1,372.00p +3.08%
Stobart Group Ltd. (STOB) 115.40p +2.58%
Ocado Group (OCDO) 67.70p +2.27%
Rentokil Initial (RTO) 84.85p +2.23%
Computacenter (CCC) 385.00p +2.18%
Paragon Group Of Companies (PAG) 212.30p +2.07%
Lonmin (LMI) 548.00p +2.05%
FirstGroup (FGP) 197.30p +2.02%
FTSE 250 - Fallers
Rank Group (RNK) 146.90p -2.39%
Hansteen Holdings (HSTN) 76.30p -2.18%
Carpetright (CPR) 630.00p -2.10%
IP Group (IPO) 118.60p -1.58%
JD Sports Fashion (JD.) 709.00p -1.53%
Dechra Pharmaceuticals (DPH) 583.00p -1.10%
Bovis Homes Group (BVS) 495.20p -1.06%
Kenmare Resources (KMR) 39.75p -1.00%
Petra Diamonds Ltd.(DI) (PDL) 115.20p -0.95%
Utilico Emerging Markets Ltd (DI) (UEM) 160.12p -0.86%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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ECB in focus, but wary eye also on Spain
FTSE 100: 0.27%
Dax-30: 0.39%
Cac-40: 0.17%
FTSE-Mibtel 30: 0.27%
Ibex 35: 0.62%
Stoxx 600: 0.23%
European equities
are heading slightly higher this morning following yesterday’s rise in
global composite purchasing managers’ data, in no mean measures due to
positive macro-surprises Stateside. That with central banks expected to
be firmly in focus today ahead of the release, tomorrow, of the
all-important monthly employment report on the other side of the
Atlantic, in the United States.
“Market focus today will be on the European Central Bank’s
policy meeting in Frankfurt. After yesterday’s “ECB sources” story
suggesting that the ECB was still open to further Greek debt
restructuring, President Draghi will like be questioned on the ‘outright
monetary transactions (OMT)’ as well as the ECB’s position on ‘official
sector involvement (OSI)’, wrote Barclays Research this morning.
Investors will
also be keeping tabs on a short-term debt auction by Spain’s treasury
this morning. That as The Telegraph reports this morning that senior
officials from Germany and other parts of the Eurozone's AAA core have
warned Spain privately that angry parliaments are likely to impose
stringent conditions on any further rescue loans. Fear of escalating
demands by Germany, Finland and Holland is a key reason why Spanish
premier Mariano Rajoy continues to drag his feet on a full sovereign
bail-out.
Worth watching out for, the US Federal Reserve will release the minutes of its last rate setting meeting this evening, at 19:00.
EdF to go on a hiring spree
Nobel Biocare
is sinking by 7% after saying a drop in the Japanese market in the
third quarter is “materially impacting” full-year sales and profit.
Telefonica plans to reduce its fleet of private jets as part of an effort to lower costs.
EdF has said it will hire 6,000 workers in France this year.
Central banks in focus
The
European Central Bank’s rate announcement will come at 12:45, followed
by governing council President Mario Draghi’s press conference at 13:30.
Small rise in single currency
The euro/dollar is now up by 0.31% to the 1.2950 level.
Front month Brent crude futures are rising by 0.679 dollars to the 108.9 dollar mark on the ICE.
UK Event Calendar
INTERIMS
Ted Baker
INTERIM DIVIDEND PAYMENT DATE
Amlin, Antofagasta, ARM Holdings, Churchill China, Croda International,
Eurasian Natural Resources Corp., Phoenix Group Holdings (DI), Shire
Plc, Tullow Oil
QUARTERLY PAYMENT DATE
GlaxoSmithKline
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)
Factory Orders (US) (15:00)
FOMC Interest Rate Minutes (US) (19:00)
Goods Orders (US) (15:00)
Initial Jobless Claims (US) (13:30)
PMI Construction (GER) (08:55)
Q3
Sandvine Corp.
FINALS
Animalcare Group, Matchtech Group
IMSS
Carillion
EGMS
Public Power GDR SA (Reg S)
AGMS
F&C US Smaller Companies, Oil & Gas Development Company Ltd GDR (Reg S), VietNam Holding Ltd
TRADING ANNOUNCEMENTS
Halfords Group, Victrex
FINAL DIVIDEND PAYMENT DATE
Medusa Mining Ltd. (DI)
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| US Market Report |
Upbeat Economic Data Leads To Strength On Wall Street
With
traders reacting positively to a pair of upbeat U.S. economic reports,
stocks moved mostly higher during trading on Wednesday. Buying interest
remained relatively subdued, however, limiting the upside for the
markets.
The major averages all ended the day in positive territory, although they Dow posted only a modest gain. While the Dow inched up 12.25 points or 0.1 percent to 13,494.61, the Nasdaq rose 15.19 points or 0.5 percent to 3,135.23 and the S&P 500 climbed 5.24 points or 0.4 percent to 1,450.99.
The
strength on Wall Street was partly due to the release of a report from
payroll processor Automatic Data Processing showing stronger than
expected private sector job growth in the month of September.
ADP
said private sector employment increased by 162,000 jobs in September
compared to economist estimates for an increase of about 140,000.
At
the same time, job growth in previous months was revised lower, with
July growth reduced by 17,000 to an increase of 156,000 jobs and August
growth lowered by 12,000 to an increase of 189,000 jobs.
A
separate report from the Institute for Supply Management also helped
push stocks higher, as it showed an unexpected acceleration in the pace
of service sector growth in the month of September.
The ISM said
its non-manufacturing index climbed to 55.1 in September from 53.7 in
August, with a reading above 50 indicating an increase in activity in
the service sector. The increase surprised economists, who had expected
the index to edge down to 53.5.
With the unexpected increase, the non-manufacturing index rose to its highest level since coming in at 56.0 in March.
Peter Boockvar,
managing director at Miller Tabak, said, "Bottom line, the U.S. economy
is hanging in there, especially compared to its other developed world
brethren in Europe."
Nonetheless, buying interest remained
relatively subdued, as traders expressed caution ahead of Friday's
monthly jobs report from the Labor Department, which includes both
public and private sector jobs.
Disappointing guidance from Hewlett-Packard
also helped to limit the upside for the markets, with the PC giant
tumbling by 13 percent after forecasting earnings for fiscal 2013 well
below analyst estimates. The loss pulled shares of HP down to a nearly
ten-year closing low.
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| Thursday newspaper round-up |
FirstGroup, Spain, RBS
FirstGroup
is considering legal action against the Department for Transport after
it pulled the controversial West Coast rail bid in a humiliating
about-turn, plunging the entire industry into chaos. The bus and rail
operator, which had been awarded the contract after bidding £13.3bn to
run the London-to-Scotland services until 2028, saw its shares dive by
more than a fifth, falling 50.6 to 193.4p. Analysts said the potential
loss of £40m cash flow this year and £50m of operating profits next
could lead to fresh fears over FirstGroup's balance sheet and signalled a
near-certain dividend cut. Karl Burns, at Shore Capital, said: "This
could lead to fears over the loss of the franchise and subsequent
balance sheet concerns." Gert Zonneveld at Panmure Gordon said: "I don't
think the dividend looks sustainable." The decision by new Transport
Secretary Patrick McLoughlin to pull the contract came after the
"discovery of significant technical flaws in the way the franchise
process was conducted". Three DfT officials have been suspended, The
Telegraph says.
Senior officials from Germany and other parts of the Eurozone's AAA core have warned Spain
privately that angry parliaments are likely to impose stringent
conditions on any further rescue loans. Fear of escalating demands by
Germany, Finland and Holland is a key reason why Spanish premier Mariano
Rajoy continues to drag his feet on a full sovereign bail-out. Spain's
refusal to act has frozen the Eurozone rescue machinery and begun to
rattle markets. The European Central Bank will not buy Spanish bonds
until the country requests aid from the European Stability Mechanism
(ESM) and signs a "Memorandum" giving up fiscal sovereignty. Finance
minister Luis de Guindos told Spain's parliament Wednesday that there
will be no bail-out until the terms are clear. "The government will take
the best decision for Spain and its European allies when it knows all
the details," he said, The Telegraph writes.
Royal Bank of Scotland
has been left facing an €212m (£170m) loss after the collapse of one of
Spain’s largest housebuilders. Rivero y Soler, which is controlled by
the Rivero family and Bautista Soler, yesterday filed one for one of the
largest bankruptcies in Spanish history with debts totalling €1.6bn.
RBS is among the largest creditors to the struggling Spanish builder,
along with several domestic lenders. The bankruptcy follows the failure
by two of the company’s subsidiaries, Alteco and MAG Import, to
refinance an outstanding loan. Together the two companies own a 31%
stake in Gecina, France’s largest property company, raising questions
about the future of the holding. RBS is unlikely to have to write-off
the entire loan and the state-backed lender has already made substantial
provisions for new losses, according to The Telegraph.
Capita
has lost a flagship contract to manage the Criminal Records Bureau —
and some analysts believe the reason is that the company has had it too
good for too long. Kevin Lapwood, at the brokers Seymour Pierce, said:
“There’s a suspicion that Capita has been earning too high a margin on
certain central government contracts.” The Home Office will drop Capita,
which has provided IT support to the CRB for more than a decade, in
favour of a rival bidder, named by unions as the Indian-owned Tata
Consultancy Services, when its £400m deal expires in March. Capita said
it was “disappointed” to lose the contract, which involves vetting the
background of anybody who gets a job working with children or vulnerable
adults. Among those who are routinely screened are teachers, social
workers and clergy, The Times reports.
Royal Bank of Scotland
is said to have found buyers for the full 33 per cent stake of Direct
Line it is selling to stock market investors, just three days into a
nine-day marketing drive. The bank is selling Direct Line, Britain’s
biggest motor insurer, to win European Union regulatory approval for a
government bailout it received during the 2008 financial crisis that
left it 82% state-owned. A source close to the flotation said: “The book
is now fully covered within the range, and to get that done three days
in is pretty encouraging.” Direct Line, which also includes the
Churchill and Green Flag brands, would be worth £2.66bn at the mid-point
of the 160p to 195p a share price range, at the lower end of market
forecasts. Another source said banks handling the sale had so far
focused on attracting British investors, and would now turn to marketing
the shares in North America and continental Europe. If priced at 195p,
the insurer could raise as much as £975m, making the sale London’s
biggest IPO in over a year. Order books, which opened on 28 September,
are due to close on 10 October, The Scotsman explains.
Spread-betters readied sell orders before a trading update from Michael Page
International next week. The recruitment giant may have the global
footprint to cope with economic lethargy in the West, but with Australia
feeling the pinch and China slowing, punters suspect that it, too, may
struggle. GFT Markets offered 357.3p-358.7p on Michael Page, The Times
says.
Canny punters were keeping a close eye on Premier Gold,
2.7% easier at 0.36p. The word is that results from soil samples in
Kyrgyzstan are back from the lab and geologists think that it should
look at multiple targets over 5 sq km, similar to bigger gold mines in
that area. Premier plans to dig deeper next year to determine the amount
of gold, writes The Times.
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