London open: Stocks slip after IMF cuts growth forecasts
Market Movers
- techMARK 2,138.90 -0.33%
- FTSE 100 5,827.90 -0.24%
- FTSE 250 11,944.09 -0.26%
- IMF cuts global growth estimates
- Q3 US earnings season to kick off this evening
- Capita and Aggreko dented by broker downgrades
UK stocks continued to fall on Tuesday morning following a steep drop
the day before, as concerns about the global economy were fuelled by a
downgrade to growth forecasts from the International Monetary Fund (IMF).
The IMF has cut global economic growth forecasts for this year and next
because "prospects have deteriorated further and risks increased". The
IMF said: "The recovery has suffered new setbacks, and uncertainty
weighs heavily on the outlook. Downside risks have increased and are
considerable."
According to its "World Economic Outlook", the IMF now expects the world economy
to grow 3.3% in 2012 compared to the prior 3.5% July estimate and just
3.6% in 2013, down from the previous 3.9% forecast. Forecasts for the
Eurozone, UK and emerging markets were all cut.
Losses were seen in the US last night ahead of the start of the third-quarter earnings season
as investors fretted about how a subdued global economy will affect
corporate profits, while strong gains were seen on the Hang Seng in Asia
.
Finance ministers from the European Union are
meeting in Luxembourg today to discuss the region's top issues ahead of a
summit in Brussels in a couple of weeks. Eurozone ministers yesterday
said that the €500bn European Stability Mechanism was operational.
FTSE 100: Capita and Aggreko hit by downgrades
Outsourcing company Capita
was a heavy faller after Seymour Pierce downgraded its recommendation
on the stock to 'hold'. Meanwhile, temporary power solutions provider Aggreko was hit by a ratings cut from HSBC to 'neutral'.
In contrast, asset manager Schroders was given a lift by Morgan Stanley which upgraded the shares to 'equal weight' and lifted its target from 1,535p to 1,665p.
Rio Tinto
was making gains this morning despite saying at an investor seminar:
"The short-term macroeconomic outlook remains volatile. Economic growth
in China is robust but moderating, and is slow and uneven in developed
economies."
Sector peer Vedanta was also higher despite
seeing production and sales of iron ore from Goa fall in the second
quarter as the government's ban on mining activities in the state starts
to bite.
Banking group Barclays was in the red after
announcing to say that it is to acquire the deposits, mortgages and
business assets of ING Direct UK from Dutch finance house ING.
Defence group BAE Systems
continues to register losses as opposition to its proposed merger with
European aerospace giant EADS mounts. According to the Financial Times
this morning, more than 30% of shareholders in BAE have expressed
"significant concerns" with the deal.
Power systems firm Rolls-Royce was in the red despite being awarded a $103.3m MissionCare contract by the US Department of Defense.
FTSE 250: Hays impresses with first-quarter IMS
In spite of a mixed trading update, recruitment firm Hays
jumped early on. The company said that markets were overall stable
through the first quarter though group net fees fell by 1% year-on-year.
Satellite communications services firm Inmarsat fell
despite saying that trading in the third quarter remained consistent
with trends in the second quarter and in line with full year
expectations.
Egypt-focused gold miner Centamin also
disappointed after revealing that third-quarter production was 10% down
on the record second quarter. Nevertheless, the group said it was on
track to hit full-year output guidance.
| UK Event Calendar |
Tuesday October 09
INTERIM DIVIDEND PAYMENT DATE
Abbey Protection, Bwin.party Digital Entertainment
QUARTERLY EX-DIVIDEND DATE
Marsh & Mclennan Cos Inc.
FINALS
CAP-XX Ltd., DotDigital Group, Utilitywise
IMSS
XP Power Ltd. (DI)
SPECIAL EX-DIVIDEND PAYMENT DATE
InterContinental Hotels Group
TRADING ANNOUNCEMENTS
May Gurney Integrated Services
UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
BRC Sales Monitor (00:01)
Industrial Production (09:30)
Manufacturing Production (09:30)
FINAL DIVIDEND PAYMENT DATE
Colefax Group
|
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe mid-morning: Leaders at loggerheads over Greece
-IMF cuts global growth forecasts
-Portugal receives one year extension on adjustments
-Greek Finance Minister says lenders may give country more time
-Germany and France pushing for financial transactions tax
-Spanish 10 year benchmark bond changes today
-Italian 10 year bond yields flat at 5.09%
-China CB injects 42.2bn dollars in reverse repos
FTSE-100:-0.40%
Dax-30: -0.72%
Cac-40: -0.43%
FTSE-Mibtel 30: -0.75%
Ibex 35: -0.90%
Stoxx 600: -0.31%
European equity markets have veered lower, following an initial start in the blue.
That after yesterday´s meeting of Eurozone finance ministers, which saw
them grant Portugal an extra year to carry out its adjustment, although
authorities –Greece´s lenders- are being described as still at
loggerheads over how to tackle the country´s crisis.
As if to
underline the risks which the world economy is currently facing, the
International Monetary Fund (IMF) yesterday forecast that global growth
will only rise by 3.3% this year and 3.6% next year. The Washington
based lender´s 2012 forecast is the lowest since 2009. Furthermore, the
IMF is now said to see "alarmingly high risks" of a steeper slowdown,
with a one-in-six chance of the rate of expansion dropping south of 2%
(commonly accepted to be the threshhold for recessions at the global
level).
Particularly worth highlighting, at first glance, are
the Fund´s new estimates of the peak levels which Greece and Spain´s
public debt piles are now expected to hit. Many observers see them as
proof that excessive austerity may backfire.
Acting as a
backdrop, China´s central bank last night injected $42.2bn into the
country´s money markets via so-called reverse repos, in what some
consider a bid to stimulate growth.
Fiat to cut outlook for European car market
Peugeot´s
Chief Executive has rebuffed French industry minister Arnaud
Montebourg´s remarks to the effect that he will wring concessions from
the carmaker in talks on its restructuring - Peugeot plans to cut 8,000
jobs and close an assembly plant, Reuters reports.
Luxury goods company Hermes's Chief Executive, Patrick Thomas, told the Wall Street Journal (WSJ) that it remains optimistic about the Chinese market.
Fiat
will cut its outlook for the European auto market when the company
updates its five-year plan that runs through 2014, Chief Executive
Officer Sergio Marchionne told Bloomberg.
From a sector
stand-point the worst performance is now being seen in the following
sectors: Household goods (-0.67%), Utilities (-0.63%) and Industrial
goods and services (-0.58%).
French trade deficit narrows
The French trade deficit improved to €5.3bn in August, after -€4.2bn in the month before (Consensus: -€5bn).
Dutch industrial production fell by 0.1% month-on-month in August. Slight drop in the single currency
The euro/dollar is now falling by 0.27% to the 1.2931 dollar mark.
Front month Brent crude futures rising by 0.419 dollars to the 112.29 dollar mark on the ICE. |
| US Market Report |
US close: Stocks fall ahead of Q3 earnings season
Market Movers
Dow Jones: 13,584 (-0.19%)
Nasdaq: 3,112 (-0.77%)
S&P 500: 1,456 (-0.34%)
US stocks finished with moderate losses on Monday ahead of the start of
the third-quarter earnings season as investors fretted about how a
subdued global economy will affect corporate profits.
According to estimates from S&P Capital IQ, analysts expect an average 1.3% decline in corporate earnings this quarter.
Trading was said to be on the light side today as the US bond market was closed for Columbus Day.
The World Bank
has cut its 2012 growth estimate for China from 8.2% to 7.7%, saying
that the economy has been hit by weak export demand and investment
growth.
"In order to get the global economy moving again, the
world needs countries like China to remain strong so news such as this
is a bit of a reality check for investors. We may be seeing
indices hitting new highs but the overall economy paints a very
different picture," said analyst Craig Erlam from Alpari.
"This will become more apparent when companies publish their third quarter earnings starting tomorrow with Alcoa.
I expect we'll see stocks paring some of their recent gains over the
next month or so, with investors fleeing risky assets and looking back
towards the traditional safe havens," he said.
In the Eurozone,
the region's finance and economic ministers met in Luxembourg today to
discuss the euro area's top issues with Madrid and Athens at the top of
the agenda.
European Central Bank (ECB) governing council
member Jorg Asmussen was cited over the weekend as saying that Greece
cannot be given more time by the ECB to meet its commitments as that
would amount to state financing. Meanwhile, German Finance Minister
Wolfgang Schauble has reiterated that Spain does not need a bailout. All eyes on Alcoa
Aluminium group Alcoa
finished the day slightly higher ahead of its results tomorrow; the
firm's quarterly results traditionally mark the start of earnings season
in the US.
Marathon Petroleum gained after agreeing
with BP to buy the British oil firm's 475,000-barrels-per-day refinery
and associated assets in Texas for $2.5bn.
Shares in online video-streaming group Netflix surged today after Morgan Stanley upgraded its rating on the stock from 'equal weight ' to 'overweight'.
Car-maker General Motors
was in the red after revealing that Chinese sales in September grew at
the slowest rate in eight months. Deliveries of GM cars and mini-vans in
the country rose 1.7% in September.
S&P 500 - Risers
Netflix Inc. (NFLX) $73.52 +10.46%
Carmax Inc. (KMX) $31.86 +9.15%
Cliffs Natural Resources Inc. (CLF) $40.58 +5.79%
Marathon Petroleum Corporation (MPC) $57.92 +5.56%
Eli Lilly and Company (LLY) $50.78 +5.29%
Sears Holdings Corp. (SHLD) $58.58 +3.17%
Alpha Natural Res (ANR) $6.78 +3.04%
AutoNation Inc. (AN) $47.93 +3.01%
United States Steel Corp. (X) $20.37 +2.72%
Lexmark International Inc. (LXK) $22.10 +2.55%
S&P 500 - Fallers
JDS Uniphase Corp. (JDSU) $10.88 -4.23%
LSI Corporation (LSI) $6.83 -3.80%
Jabil Circuit Inc. (JBL) $17.39 -3.66%
Eastman Chemical Co. (EMN) $57.00 -3.60%
PulteGroup Inc. (PHM) $16.09 -3.25%
Tesoro Corp. (TSO) $41.90 -3.10%
Masco Corp. (MAS) $15.57 -2.50%
Alexion Pharmaceuticals Inc. (ALXN) $115.24 -2.46%
Sherwin-Williams Co. (SHW) $152.23 -2.22%
D. R. Horton Inc. (DHI) $21.17 -2.22%
Dow Jones I.A - Risers
McDonald's Corp. (MCD) $91.54 +0.59%
American Express Co. (AXP) $58.82 +0.44%
3M Co. (MMM) $95.37 +0.43%
Alcoa Inc. (AA) $9.12 +0.33%
Cisco Systems Inc. (CSCO) $18.90 +0.21%
Wal-Mart Stores Inc. (WMT) $75.25 +0.16%
Exxon Mobil Corp. (XOM) $92.68 +0.14%
Merck & Co. Inc. (MRK) $46.34 +0.13%
Chevron Corp. (CVX) $117.62 +0.10%
Caterpillar Inc. (CAT) $85.44 +0.01%
Dow Jones I.A - Fallers
Home Depot Inc. (HD) $61.88 -2.09%
Hewlett-Packard Co. (HPQ) $14.46 -1.83%
Walt Disney Co. (DIS) $52.33 -1.21%
Verizon Communications Inc. (VZ) $46.57 -1.02%
Mondelez International Inc. (MDLZ) $27.55 -0.93%
General Electric Co. (GE) $22.92 -0.87%
Procter & Gamble Co. (PG) $69.10 -0.76%
Intel Corp. (INTC) $22.51 -0.75%
AT&T Inc. (T) $37.66 -0.53%
Pfizer Inc. (PFE) $25.40 -0.47%
Nasdaq 100 - Risers
Netflix Inc. (NFLX) $73.52 +10.46%
Sears Holdings Corp. (SHLD) $58.58 +3.17%
Green Mountain Coffee Roasters Inc. (GMCR) $22.53 +1.83%
Bed Bath & Beyond Inc. (BBBY) $62.54 +1.53%
Dell Inc. (DELL) $9.80 +1.45%
Viacom Inc. Class B (VIAB) $56.64 +1.31%
Staples Inc. (SPLS) $11.70 +0.60%
Fiserv Inc. (FISV) $74.63 +0.57%
Gilead Sciences Inc. (GILD) $69.81 +0.55%
Akamai Technologies Inc. (AKAM) $39.60 +0.48%
Nasdaq 100 - Fallers
Alexion Pharmaceuticals Inc. (ALXN) $115.24 -2.46%
Apple Inc. (AAPL) $638.17 -2.21%
QUALCOMM Inc. (QCOM) $61.40 -1.98%
Autodesk Inc. (ADSK) $32.45 -1.96%
Infosys Technologies Ltd. (INFY) $47.89 -1.76%
VeriSign Inc. (VRSN) $48.39 -1.67%
Dollar Tree Stores Inc. (DLTR) $47.27 -1.66%
eBay Inc. (EBAY) $47.92 -1.66%
Avago Technologies Ltd. (AVGO) $33.88 -1.63% |
| FX and Commodities round-up |
FX round-up: Dollar in demand after China warning
The
dollar made headway against the euro on Monday as the spotlight turned
to China's downgrade and a meeting of Eurozone finance ministers.
Uncertainty about Spain asking for a bailout persisted as German
Finance Minister Wolfgang Schauble reiterated that the nation does not
need a bailout.
Monday's talks in Luxembourg focused on Spain
and whether Greece will agree with its lenders on additional austerity
measures. Leaders also formally started a €500bn European Stability
Mechanism, the bailout fund struggling Eurozone nations.
The
ICE dollar index, which measures the US currency against a basket of six
major rivals, rose to 79.596 from 79.351 on Friday on the back of
jitters about global growth and ongoing Eurozone worries.
Concern about the global outlook deteriorated after the World Bank cut
its 2012 growth estimate for China from 8.2% to 7.7%, citing concern
about weak export demand and investment growth. The World Bank also
warned that China's slowdown could continue longer than previously
forecast.
Reduced risk appetite took the euro down to $1.2972 from $1.3032 on Friday.
Trading was lighter than usual with US bond markets closed for the Columbus Day holiday.
Against the yen the greenback bought ¥78.33 from ¥78.65 the previous
session as investors sought the safe haven quality of the Japanese
currency. The euro fell to ¥101.54 from ¥102.80 on Friday as nerves
ahead of the start of the third quarter season also increased safe haven
flows.
Sterling was down at $1.6032 from $1.6142 as risk
currencies moved out of favour. The UK currency was also hurt by
recently uninspiring economic data showing the economy is likely to
remain subdued in the short - term.
The Australian dollar changed hands at $1.0176 from $1.0175.
Commodities: Oil and gold down again after China downgrade
Crude
oil futures fell on Monday, for a second day running, as investors fret
about China's downgrade and as markets await any sign that Spain is
ready to ask for a bailout.
Crude for November delivery settled down 55 cents or 0.6% at $89.33 a barrel on the New York Mercantile Exchange.
Concern about deteriorating demand from China was sparked after the
World Bank cut its 2012 growth estimate for China from 8.2% to 7.7%
citing concern about weak export demand and investment growth. The World
Bank also warned that China's slowdown could last longer than
previously thought.
Elsewhere in Europe, Eurozone finance
ministers met in Luxembourg on Monday with Spain and Greece at the heart
of talks. German Finance Minister Wolfgang Schauble reiterated that
Spain does not need a bailout.
Meanwhile the spread between
the US and European benchmark reached its widest level in a year. On the
ICE Futures Europe exchange Brent crude fell 4 cents to $111.98 a
barrel.
Among precious metals gold, like oil, was down again on Monday after China's downgrade hurt market confidence.
Gold for December delivery fell $5.10 to settle at $1,775.70 an ounce
on the Comex division of the New York Mercantile Exchange.
Silver for December delivery dropped 55 cents to $34.02 an ounce while
December copper futures lost 6 cents to close at $3.72 a pound.
January platinum declined $8.40 to $1,698.80 an ounce and palladium for December reduced $6.25 to $656.95 an ounce.
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