Footsie closes at worst levels since July
Market Movers
techMARK 2,021.39 -0.99%
FTSE 100 5,605.59 -1.27%
FTSE 250 11,576.98 -0.91%
The
FTSE 100 sunk to its lowest level since July on Friday as rising
tensions in the Middle East, Eurozone debt concerns and the worries
about the impending ‘fiscal cliff’ in the US combined to dampen risk
appetite.
The Footsie finished just above 5,600, its lowest closing price since July 26th when it finished at 5,573.
According to Sky News, two rockets have been fired at an uninhabited area near Jerusalem, with Israel Defence Forces confirming that the attack came from Gaza. No injuries have been reported.
Also causing some concern this afternoon was the news of a fire on an oil platform
in the Gulf of Mexico. While rumours suggest that it is not a deep-sea
drilling operation and is located in shallow water, the USA Today
reported that the fire has resulted in the deaths of two workers and
several injuries.
The news comes at an unfortunate time for sentiment in the oil industry after BP
reached a $4.5bn settlement with US authorities about their part in the
Macondo oil spill in 2010, which cost 11 lives and resulted in the
world’s largest-ever offshore oil spill for its environmental
implications.
Stateside today, US President Barack Obama met
with Democratic and Republican congressional leaders to discuss a deal
that would negotiate a reduction to the deficit in a bid to avoid the
so-called US 'fiscal cliff'. Stocks began to pick up on Wall
Street this afternoon after lawmakers emerged from the White House,
labelled the discussions as “constructive”.
Acting as a backdrop for markets were ongoing fears about the Greek debt crisis, as investors speculate that the country could need another ‘haircut’ on its debt. Bundesbank President Jens Weidmann said today the country's debt level is not sustainable.
Market analyst Craig Erlam from Alpari said: “This notion of a
‘haircut’ is nothing new and for many in the markets, it has been clear
all along that Greece were not necessarily going to be capable of paying
all their debts.”
Italy's Finance Minister has told Bloomberg
he is optimistic that Europe can reach an agreement on Greece next
week. The International Monetary Fund's Managing Director, Christine
Lagarde, on the other hand, has been cited in a slightly more sceptical
vein.
FTSE 100: Melrose plummets; IMI climbs after ‘in-line’ trading
Industrial turnaround specialist Melrose
tanked today after saying some of its businesses have seen a slow-down
in business in recent weeks. The overall weekly rate of order intake in
the second half of the year has been 8% lower than the first half, but
Melrose said it is too early to tell how this will affect 2013, and in
any case the order intake rate is varying on a business by business
basis.
Engineering giant IMI gained after saying that
second-half trading has been in line with expectations so far in spite
of some expected weakness in the Fluid Power division.
Serco
rose strongly after it delivered the anticipated pick-up in performance
in the second half and said it is on track to meet full-year
expectations.
Pennon Group saw its shares take a hit
after several brokers, including Nomura, UBS and Morgan Cazenove,
lowered their target for the stock. The company warned yesterday that
full-year profits at its recycling unit Viridor would be "somewhat below
the bottom of the current range of market expectations".
Cruise operator Carnival
was flat despite announcing a special payout of $0.50 per share to be
paid next month, in addition to its previously announced quarterly
dividend.
Banking peers RBS and Lloyds were registering
losses. A Public Accounts Committee report said today that while the
government would look to make a profit for taxpayers on the sale of its
stake in the two banks, this may not happen "for many years". It also
said that there is a risk that the £66bn invested in RBS and Lloyds "may
never be recovered"
| AIM/Small Cap Report |
FTSE 250: Bodycote gains after solid revenue growth
Bodycote,
the world’s largest thermal processing services provider, has reported
revenue growth of 2.9% in the four months to the end of October compared
to the same period the previous year. At constant currency rates,
revenue rose to 7.6%.
Defence contractor Ultra Electronics
fell after saying that uncertainty and cutbacks in the defence sector
will hit it profits for the year. In addition, the Finance Director has
decided to move on.
Property consultancy Savills adds
to yesterday's gains which it racked up after announcing that its
overall underlying result for the full year will be slightly ahead of
its original expectations. In the UK, investment activity has continued
to be strong in the Central London market, but for the most part has
remained subdued elsewhere.
FTSE 100 - Risers
IMI (IMI) 958.00p +1.70%
Serco Group (SRP) 550.00p +1.01%
Compass Group (CPG) 692.00p +0.65%
Polymetal International (POLY) 1,111.00p +0.63%
Croda International (CRDA) 2,292.00p +0.61%
Associated British Foods (ABF) 1,394.00p +0.58%
Severn Trent (SVT) 1,524.00p +0.33%
Babcock International Group (BAB) 960.00p +0.31%
Intertek Group (ITRK) 2,836.00p +0.28%
Aggreko (AGK) 2,095.00p -0.05%
FTSE 100 - Fallers
Melrose (MRO) 208.90p -11.48%
Eurasian Natural Resources Corp. (ENRC) 259.60p -5.39%
Pennon Group (PNN) 599.50p -4.61%
Lloyds Banking Group (LLOY) 43.98p -3.77%
Fresnillo (FRES) 1,877.00p -3.64%
Evraz (EVR) 218.60p -3.06%
BT Group (BT.A) 219.00p -2.75%
Wood Group (John) (WG.) 770.00p -2.59%
Aviva (AV.) 320.00p -2.59%
Amec (AMEC) 994.50p -2.50%
FTSE 250 - Risers
Bodycote (BOY) 376.40p +3.78%
Oxford Instruments (OXIG) 1,318.00p +2.97%
Computacenter (CCC) 373.90p +2.52%
Barr (A.G.) (BAG) 467.00p +2.52%
Centamin (DI) (CEY) 69.30p +2.29%
Bank of Georgia Holdings (BGEO) 1,092.00p +2.06%
Ashtead Group (AHT) 378.30p +1.37%
Telecom Plus (TEP) 855.00p +1.24%
Genesis Emerging Markets Fund Ltd. (GSS) 520.00p +0.97%
Dairy Crest Group (DCG) 352.10p +0.92%
FTSE 250 - Fallers
Ruspetro (RPO) 88.00p -7.56%
Supergroup (SGP) 638.50p -7.46%
Essar Energy (ESSR) 119.00p -6.67%
Shanks Group (SKS) 79.80p -5.56%
COLT Group SA (COLT) 100.00p -4.76%
Brewin Dolphin Holdings (BRW) 169.80p -4.61%
Lonmin (LMI) 471.30p -3.89%
KCOM Group (KCOM) 69.00p -3.83%
Bumi (BUMI) 264.20p -3.72%
Cable & Wireless Communications (CWC) 34.91p -3.64%
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| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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European Markets Weakened Further On U.S. Fiscal Cliff Concerns
The European markets
declined again on Friday, extending their losses from the previous two
trading sessions. Bank stocks were among the weakest performers at the
end of the week, but technology stocks performed well. The escalation of
the conflict between Israel and Hamas in the Gaza strip has raised
concerns that the situation could develop into all out war in the
region.
International Monetary Fund Managing Director Christine Lagarde
said the lender is committed to ensure that Greece economy return to a
sustainable path. She will meet Eurozone leaders in Brussels on November
20 to forge a deal that would help Greece to get back on its feet.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 1.25 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.94 percent.
The DAX of Germany dropped by 1.32 percent and the CAC 40 of France fell by 1.21 percent. The FTSE 100 of the U.K. decreased by 1.27 percent and the SMI of Switzerland finished lower by 1.00 percent.
In Frankfurt, Henkel declined
by 4.65 percent. The detergent maker reported higher quarterly profit,
but said it expects the volatility and uncertainties in its markets to
persist.
Commerzbank and Deutsche Bank fell by 4.97 percent and 3.76 percent, respectively. JPMorgan upgraded Bayer to "Overweight" from "Neutral.'' The stock closed down by 0.17 percent.
In Paris, Credit Agricole decreased by 2.86 percent, while Societe Generale lost 2.80 percent and BNP Paribas fell by 2.59 percent.
In London, Melrose sank
by 11.48 percent. The manufacturing buy-out specialist said revenue
trends have slowed and sales outlook for 2013 has become more uncertain.
Evraz fell by 3.06 percent. Eurasian Natural Resources and Rio Tinto dropped 5.25 percent and 2.18 percent, respectively.
BP finished down by 2.07 percent. The oil giant
agreed to pay about $4.5 billion to the U.S. government to settle
criminal and securities claims over the 2010 Deepwater Horizon accident
in the Gulf of Mexico that claimed 11 lives and led to a massive oil
spill.
Serco Group climbed by 1.01 percent, after reporting results for the first half of the year.
Lloyds Banking Group declined by 3.77 percent and HSBC fell by 0.88 percent. Barclays decreased by 2.11 percent and Royal Bank of Scotland lost 1.70 percent.
Zurich Insurance fell by 1.03 percent in Zurich, following a broker downgrade.
The euro area
current account surplus declined to EUR 0.8 billion in September from
EUR 10.9 billion in August, the European Central Bank said Friday.
Eurozone
trade surplus increased in September as the decline in imports exceeded
the fall in exports, indicating that weak domestic demand was one of
the factors behind the recent recession.
The trade surplus increased
to EUR 9.8 billion in September from EUR 5.2 billion in August, data
from Eurostat revealed Friday. The surplus was also bigger than a EUR
1.7 billion excess in September 2011. Economists had forecast a surplus
of EUR 10 billion.
| US newspaper round-up: |
'Fiscal cliff', Hostess Brands, FHA...
President
Obama opened negotiations with congressional leaders Friday on ways to
avert a looming 'fiscal cliff' of huge spending cuts and tax hikes,
saying that Americans want 'action' from government leaders instead of
political bickering. 'I think we’re all aware that we have some urgent
business to do,' Obama said before beginning the talks. 'We’ve got to
make sure that taxes don’t go up on middle-class families, that our
economy remains strong, that we’re creating jobs. And that’s an agenda
that Democrats and Republicans and independents, people all across the
country share.' [The Washington Post]
News that Hostess Brands
is closing shop is creating a host of business questions, including the
fate of iconic brands such as Twinkies and Wonder Bread. The company,
which had been in and out of bankruptcy restructuring, was already
struggling from a high cost structure and sluggish consumer demand for
its products. Its fate was sealed by a confluence of negative events
including rising commodity costs and competitive pressures, says Erin
Lash, analyst at Morningstar. [USA Today]
The Federal Housing Administration,
which has played a crucial role in stabilizing the housing market, said
it ended September with $16.3 billion in projected losses -- a possible
prelude to a taxpayer bailout. The precarious financial situation could
force the FHA, which has been self-funded through mortgage insurance
premiums since it was created during the Great Depression, to tap the
U.S. Treasury to stay afloat. The agency said a determination on whether
it needs a bailout won't come until next year. [Los Angeles Times]
The head-to-head battle between Apple Inc. and Google Inc.
in mobile maps is drawing nearer.Google has distributed a test version
of its new mapping app that will work on Apple's iPhones to some
individuals outside the company, said a person with direct knowledge of
the matter. Google has been putting the finishing touches on the app
before submitting it for approval to the Apple iTunes store, this person
said, though it's unclear exactly when that will happen. If Google's
new mapping app is accepted into the iTunes store, it will directly
compete against Apple's new mapping software that is preinstalled on its
mobile devices. [The Wall Street Journal]
As its policy on highly caffeinated energy drinks is scrutinized, the Food and Drug Administration
publicly released records on Thursday about fatality and injury filings
that mentioned the possible involvement of three top-selling products.
The Web posting of the records by the agency included 13 previously
undisclosed injury filings that mentioned Rockstar Energy. The F.D.A.
also released filings related to 5-Hour Energy, a popular energy shot,
and Monster Energy, another popular brand. [The New York Times]
The U.S. is targeting America's two biggest shipping companies, FedEx Inc. and United Parcel Service Inc., as part of an expanding crackdown against illegal sales of prescription painkillers.
The Drug Enforcement Administration has been probing whether the
companies aided and abetted illegal drug sales from online pharmacies
for several years, according to company filings, although the
investigation has gone largely unnoticed. Both companies were served
with subpoenas starting more than four years ago, according to their
disclosures. [The Wall Street Journal]
Regulators failed to adequately protect customers of the failed brokerage MF Global
because they did not communicate with each other leading up to the
firm’s collapse, a report released Thursday by Republicans on a House
panel concluded. The 100-page report hammers Jon S. Corzine, the former
head of Goldman Sachs and a Democrat who served as a U.S. senator and
governor of New Jersey before taking the helm at MF Global. It blames
Corzine’s risky investment strategies and “authoritarian” management
style for the firm’s demise, assertions Corzine has denied. [The Washington Post]
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| Broker tips |
BP, Melrose, Morrison
Nomura has
maintained its 'neutral' rating and 455p target for oil giant BP
following Thursday's 4.5bn-pound settlement with US regulators.
The broker said
that in order to become more positive on BP, it would need to see a
greater evidence of an "operational and financial turnaround".
"An upstream day in December will provide a framework, but we maintain a turning point for E&P is unlikely till 2014."
Investec
has pared its target for industrial group Melrose from 270p to 260p
after Friday's disappointment, but has reiterated its 'buy' rating for
the stock, saying that the long-term outlook for the business is
positive.
"Longer term, we still expect Melrose to offer above
average revenue growth with the prospect of margin upside (predominantly
from [recent acquisition] Elster)."
UBS has cut its
recommendation for supermarket giant Morrison from 'buy' to 'neutral',
saying that the stock's sector premium is perhaps not appropriate right
now.
The broker highlighted that the trading momentum has
fallen "alarmingly adrift of the competition" in recent months. UBS is
concerned that Morrison could struggle to diagnose and effectively sort
out the underlying issues.
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