Footsie bolstered by miners ahead of US data
Market Movers
techMARK 2,151.74 +0.04%
FTSE 100 5,843.73 +0.27%
FTSE 250 11,964.30 +0.08%
Stocks edged higher on Friday morning ahead of some closely-watched jobs data from the US later today; Burberry, Wood Group and the miners were among the highest risers on the FTSE 100 early on.
The monthly jobs report from the US Labor Department
is due out this afternoon. Non-farm payrolls are expected to have
increased by 111,000 last month, up from the previous gain of 96,000.
Meanwhile, the unemployment rate is forecast to rise to 8.2% from 8.1%.
The Footsie finished flat yesterday after both the Bank of England
(BoE) and the European Central Bank (ECB) left rates unchanged and ECB
President Mario Draghi said that the "euro is irreversible".
According to German paper Handelsblatt, the International Monetary Fund (IMF) will reduce its global gross domestic product
(GPD) growth forecast to 3.3% this year, down from the prior 3.4%
estimate. In 2013, growth will accelerate to 3.6%, though still below
the prior expectation of a 3.9% rise.
Meanwhile, Greek
Prime Minister Antonis Samaras has signalled that his country could not
survive beyond November if it isn’t granted the next tranche of bailout
aid.
FTSE 100: Burberry and Wood Group lead the riser
Luxury brand Burberry was among the best performers after Morgan Stanley upgraded the stock to 'overweight' this morning. In contrast, B&Q owner Kingfisher fell after the same US broker downgraded its rating to 'equal weight'.
Oilfield services firm Wood Group
rose early on after saying that it is still confident in hitting
full-year profit targets, with conditions in energy markets remaining
favourable. "We anticipate strong operating cash flow in the second
half, and our strong balance sheet provides a robust platform for
growth," the group's interim management statement said.
Mining stocks were also in demand early on, with Vedanta, ENRC, Evraz, Kazakhmys and Rio Tinto making gains.
Technology firm Smiths Group
was higher after saying that it will launch a $400m bond offering,
saying that the funds will be used for general corporate funding
purposes and to repay certain existing debt.
Engineering group IMI was a high riser after Morgan Stanley and JPMorgan Cazenove both reiterated their 'overweight' ratings on the shares.
Supermarket group Tesco
continued to fall, extending losses after its profits disappointed the
markets on Wednesday. Shares are now down over 5% on the week. Both
Seymour Pierce and Espirito Santo reduced their target prices for the
stock this morning.
FTSE 250: KCOM sinks after update
Broadband and communications provider KCOM
has performed in line with expectations in the first half of its fiscal
year, but shares sank after it said that orders in its enterprise
division have been a bit below expectations.
Utilities services provider Telecom Plus
gained after dangling the prospect of a sharply increased interim
dividend in front of shareholders' eyes after a first-half surge in
profits. With the group's business proving to be less seasonal these
days the group is moving towards a more even split between its interim
and final dividend payments each year.
FTSE 100 - Risers
Vedanta Resources (VED) 1,098.00p +3.10%
Eurasian Natural Resources Corp. (ENRC) 322.70p +2.54%
IMI (IMI) 974.00p +2.42%
Evraz (EVR) 249.90p +1.96%
Kazakhmys (KAZ) 720.00p +1.91%
Rio Tinto (RIO) 2,975.50p +1.80%
Anglo American (AAL) 1,845.00p +1.71%
Rexam (REX) 447.60p +1.61%
Burberry Group (BRBY) 1,016.00p +1.60%
CRH (CRH) 1,191.00p +1.36%
FTSE 100 - Fallers
British Land Co (BLND) 513.00p -1.63%
Land Securities Group (LAND) 763.00p -1.04%
United Utilities Group (UU.) 728.50p -1.02%
Next (NXT) 3,556.00p -1.00%
Pennon Group (PNN) 725.50p -0.96%
Diageo (DGE) 1,779.00p -0.92%
Tesco (TSCO) 315.25p -0.91%
Johnson Matthey (JMAT) 2,349.00p -0.84%
Smith & Nephew (SN.) 679.50p -0.80%
InterContinental Hotels Group (IHG) 1,657.00p -0.72%
FTSE 250 - Risers
Ruspetro (RPO) 108.00p +3.85%
Telecom Plus (TEP) 897.50p +2.92%
NMC Health (NMC) 196.80p +2.77%
Hunting (HTG) 847.50p +2.48%
Ferrexpo (FXPO) 202.70p +2.32%
Afren (AFR) 142.20p +1.94%
Petropavlovsk (POG) 431.90p +1.86%
Rentokil Initial (RTO) 88.80p +1.78%
BH Global Ltd. GBP Shares (BHGG) 1,156.00p +1.76%
Redrow (RDW) 161.50p +1.64%
FTSE 250 - Fallers
KCOM Group (KCOM) 78.25p -7.23%
PayPoint (PAY) 745.50p -2.55%
Atkins (WS) (ATK) 710.50p -2.54%
Great Portland Estates (GPOR) 440.10p -2.31%
Millennium & Copthorne Hotels (MLC) 490.00p -2.00%
Rank Group (RNK) 148.80p -1.72%
ICAP (IAP) 328.50p -1.62%
Investec (INVP) 383.60p -1.34%
Pace (PIC) 169.50p -1.34%
Derwent London (DLN) 1,930.00p -1.33%
| European broker round-up |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Accor: Oddo reiterates BUY rating with a price target of €32.
Deutsche Lufthansa: AlphaValue downgrades to SELL from reduce and lowers price target to €9.40 from €9.80.
Eramet: AlphaValue upgrades to BUY from add and raises price target to €120.40 from €112.00.
UK Event Calendar
INTERIM DIVIDEND PAYMENT DATE
32Red, Aggreko, Arbuthnot Banking Group, Cape, Cineworld Group,
Communisis, Densitron Technologies, Devro, Elementis, Evraz, Grafton
Group Units, Greggs, Hammerson, International Personal Finance, Irish
Continental Group Units, Maintel Holdings, Meggitt, Michael Page
International, Millennium & Copthorne Hotels, Ocean Wilsons Holdings
Ltd., Regus, Resolution Ltd., SEGRO, Shaft Sinkers Holdings
QUARTERLY PAYMENT DATE
British Assets Trust
QUARTERLY EX-DIVIDEND DATE
Verizon Communications
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Credit (US) (20:00)
GDP (2nd release) (EU) (10:00)
Non-Farm Payrolls (US) (13:30)
Unemployment Rate (US) (13:30)
GMS
Sperati CA
FINALS
Imperial Innovations Group
IMSS
Wood Group (John)
AGMS
Abbey, Immofinanz AG, Madagascar Oil Ltd (DI)
TRADING ANNOUNCEMENTS
KCOM Group
FINAL DIVIDEND PAYMENT DATE
ACM Shipping Group, Darty, ECO Animal Health Group, Pennon Group
Q1
Elringklinger AG
| US Market Report |
Stocks Close Mostly Higher In Reaction To Economic Data
Stocks moved
mostly higher during trading on Thursday, adding to the gains that were
posted in the previous session. The markets benefited from a positive
reaction to the latest U.S. economic data, although buying interest was
somewhat subdued ahead of tomorrow's jobs report.
The major averages moved roughly sideways going into the close, ending the day firmly in positive territory. The Dow rose 80.75 points or 0.6 percent to 13,575.36, the Nasdaq climbed 14.23 points or 0.5 percent to 3,149.46 and the S&P 500 advanced 10.41 points or 0.7 percent to 1,461.40.
The
strength on Wall Street was partly due to the release of a report from
the Labor Department showing that initial jobless claims rose by less
than expected in the week ended September 29th.
While jobless claims
edged up to 367,000 from the previous week's revised figure of 363,000,
economists had expected jobless claims to climb to 370,000.
Peter Boockvar,
managing director at Miller Tabak, said, "Bottom line, it's encouraging
to see the pace of firings moderate over the past 2 weeks but we'll see
tomorrow how the recent pace of hirings are going."
A separate
report from the Commerce Department showed a notable decrease in factory
orders in the month of August, although orders actually rose when
excluding a steep drop in orders in the volatile transportation sector.
Traders
also reacted positively to comments from European Central Bank
President Mario Draghi, who spoke following the central bank's widely
expected decision to leave interest rates unchanged.
Draghi said the ECB is
prepared to start buying government bonds and said the decision to
institute the bond buying program has helped to alleviate tensions in
euro area financial markets.
Meanwhile, the markets largely
shrugged off the release of the minutes of the Federal Reserve's
September monetary policy meeting.
During the meeting, the
members of the Fed agreed to a controversial third round of quantitative
easing last month, gambling that inflation risks can be managed.
The
minutes showed that most meeting participants believe the resulting
inflation risks can be managed by making adjustments to the purchases in
response to economic developments or changes in the Fed's assessment of
their efficacy and costs.
Sector News
Gold stocks turned in some of the market's best performances on the day, resulting in a 2.7 percent gain by the NYSE Arca Gold Bugs Index. Despite the gain, the index remained stuck in a recent trading range.
The strength among gold stocks
came amid a notable increase by the price of the precious metal, with
gold for December delivery climbing $16.70 to $1,796.50 an ounce.
Significant strength was also visible among banking stocks, as reflected by the 2 percent gain posted by the KBW Bank Index. Bank of America (BAC) and Zions Bancorp (ZION) turned in two of the banking sector's best performances.
Brokerage, steel, oil service, and electronic storage stocks also posted notable gains, moving to the upside along with most of the major sectors.
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| Friday newspaper round-up |
BAE, Gold, Corporate bonds
Alistair Darling has made a forceful intervention in the plans by EADS to combine with BAE Systems,
saying British interests were bound to suffer because the UK government
would have no equity stake in the enlarged group. The former chancellor
of the exchequer told the Financial Times he saw the logic for a new
European civil aerospace and defence giant to compete with Boeing of the
US. But he said it was “totally unacceptable” that the French and
German governments were pushing to have equity stakes while Britain
would not.
Gold could hit an all-time high of $2,400 by
next summer, driven up by a third round of quantitative easing in the
US. The first round of QE in February 2009 caused the gold price to
increase rapidly from a base of $900/oz – from which it has never looked
back. BlackRock fund manager Evy Hambro who invests in the precious
metal and gold equities, predicted that QE3 could result in the gold
price hitting US$2,400/oz by the middle of next summer. In his gold
report this week he said: "The gold chart has turned decidedly bullish
with the 50-day moving average rising above the 200-day moving average.
The last time this happened was in February 2009, which interestingly
was shortly after the implementation of QE1. Then, gold was $900/oz and
never looked back. Should we witness a similar rally, prices would be
taken to $2,400/oz by midsummer next year – and $1,760/oz would be the
new floor," The Telegraph reports.
Private equity firms are
set to take billions of pounds out of UK companies in a refinancing glut
that has raised fears of a new credit bubble. Dozens of private
equity-backed companies from the RAC to Formula One and Birds Eye owner
Iglo are lining up to take advantage of the buoyant corporate bond market.
In many cases, buy-out groups are recapitalising the companies in order
to pay themselves dividends and return money to their investors.
However, industry sources have warned that overloading businesses with
too much leverage could threaten growth and damage profitability,
especially when interest rates begin to creep up from historic lows.
Simon Walker, formerly chief executive of the British Venture Capitalist
Association and now head of the Institute of Directors, said: "Private
equity needs to be careful because there is no doubt that there are
risks. There are a few horrendous examples in the past that shouldn't be
repeated. It is very possible to overdo things," The Telegraph writes.
Bank bosses will in future have to put profit growth
to one side and make sure they are operating in “the public interest”,
the country’s top financial regulator has warned. Andrew Bailey, head of
the Prudential Business Unit at the Financial Services Authority, has
said new rules that come into force next year will put “the emphasis on
economic well-being as an ultimate goal” of bank regulation. “This
public interest can diverge from the private interest of a firm in
profit maximisation,” he said. “One of the biggest lessons I take from
the financial crisis is the need to ensure that the boards and
management of firms appreciate and act consistent with the public
interest.” Mr Bailey’s comments will unsettle bank executives who
already fear that the regulators are being too interventionist, The
Telegraph says.
Russia is considering allowing western companies to own oil licences
in its Arctic waters, a bold concession that would make the world’s
second largest crude producer much more attractive to foreign investors.
Alexander Novak, energy minister, told the Financial Times that the
proposal would allow foreign majors not only to operate offshore
projects but “have access to production” and become “co-owners of the
licences”. This would be a radical break from a longstanding policy of
awarding offshore exploration licences only to state-owned groups such
as Gazprom and Rosneft . His comments come as interest intensifies from
western energy groups in the hydrocarbon riches of the Arctic.
Petroceltic International
has been given the go-ahead by the Bulgarian government for the reverse
takeover of Edinburgh-based oil and gas producer Melrose Resources,
which has major operations in the country. A court hearing to sanction
the deal will be held on 9 October and, if the takeover is given the
green light, then shares in the enlarged firm will begin trading on 11
October on the Alternative Investment Market. The pair yesterday said:
“Petro-celtic and Melrose are pleased to announce that the Bulgarian
commission on protection of competition approved the merger without
conditions and all regulatory conditions of the merger have now been
satisfied or waived.” The deal was unveiled in August and will see
Robert Adair, executive chairman at Melrose, become non-executive
chairman of the new entity, The Scotsman explains.
Profits at Tesco Bank
more than doubled in the first half of the year, boosted by a £30m
payment as it settled a dispute with a “former business partner”. The
Edinburgh-based bank, launched in 1997 as a joint venture between the
supermarket and Royal Bank of Scotland, refused to give more details on
the payment, citing the confidential nature of the settlement. Trading
profits at the bank, headed by chief executive Benny Higgins, jumped
114% to £94m, but revenues fell 1.5% to £514m as it held back a
marketing push while it switched customer accounts over to new computer
systems. The group said: “We are pleased to report that the final
transition – of our 2.8m credit card accounts – went smoothly, with all
of our six million customer accounts now successfully transferred,” The
Scotsman explains.
Relief could be on the way for millions of
people who suffer itchy eyes and stuffed up noses at the sight of a
household cat. A company chaired by Sir Richard Skyes, the former
GlaxoSmithKline boss, is to carry out large-scale clinical trials of a
potential breakthrough treatment for cat allergies. Circassia, an
Oxford-based biotechnology company, intends to test the drug, called
ToleroMune, in a phase three study involving 1,200 patients in Europe,
the US and Canada after generating £105m from investors in a series of
fundraisings. Steve Harris, chief executive of Circassia, said cat
allergies cause considerable discomfort and can lead to more serious
conditions such as asthma, writes The Times.
Norcros,
the tile and shower maker, is one of those benighted companies dwarfed
by its own final-salary pension fund. Its market value is just £70m
while its pension fund has assets of £360m — as well as a £36m deficit
at the last valuation in March 2009. For years to come its fortunes will
be tied to its ability to meet pension promises made to 10,200
employees, most of them long since retired, The Times reports.
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