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Miners surge on US hopes
Market Movers
techMARK 2,106.84 +1.21%
FTSE 100 5,870.30 +1.15%
FTSE 250 12,026.57 +1.14%
Hopes about the US economy
were driving gains on Thursday as investors reacted positively to
comments from politicians about the 'fiscal cliff' and decent economic
data Stateside.
US Republican Speaker of the House John Boehner said
that he was “optimistic that we can continue to work together to avert
this crisis sooner rather than later.” He said that Republicans were
willing to put “revenue on the table” as long as it is accompanied by
spending cuts.
Meanwhile, President Barack Obama told
the public in a press conference today to pressure Congress to act to
avert the automatic tax increases, saying: “When the American people
speak loudly enough, lo and behold, Congress listens." He said he
expects a deal by Christmas.
Nevertheless, market strategist Ishaq Siddiqi from ETX Capital said that "markets remain extremely sensitive
over the fiscal cliff issue – it could take just one negative headline
suggesting the talks are stalling to send the bulls running back to the
exit so today’s move to the upside is unlikely to sustainable in the
sessions ahead.
"For now however, Eurozone debt worries are in
the back seat and improved US macro data is driving the afternoon
cheer," he said.
US gross domestic product (GDP) growth
in the third quarter was revised higher from the initial flash estimate
of 2% to 2.7%. Meanwhile, jobless claims declined last week and pending
home sales surged in October.
Market analyst Craig Erlam from
Alpari said: "The housing market is naturally a good barometer of
economic conditions as it highlights not only the consumer’s confidence
in the economy but also the banks’ willingness to lend. The improvement
we’ve seen in recent months suggests that the US economy could be
performing better than the Federal Reserve are suggesting and is likely
to be reflected in the fourth-quarter data."
Economic news
German unemployment
rose for the eighth consecutive month in November, up a seasonally
adjusted 5,000 to 2.94m, according to the Federal Labor Agency. However,
this was much less than the 16,000 increase predicted.
The Confederation of British Industry's (CBI) distributive trades survey index for the month of November rose to 33 points, after 30 in the previous month (Consensus: 18).
The latest Bloomberg poll has the world economy in its ‘best shape’
for 18 months, as the US is expected to avoid the fiscal cliff, albeit
with political manoeuvres expected before hand, and as China’s prospects
improve.
FTSE 100: Miners surge on US and Chinese hopes
Mining
stocks jumped this afternoon after the robust economic figures from the
world's largest economy, America, and upbeat comments yesterday about
the second-biggest powerhouse, China. Chinese Commerce Minister Chen
Deming said on Wednesday that the country would definitely hit its
growth target of at least 7.5% this year. Sector peers Kazakhmys, Antofagasta, ENRC and Anglo American were among the best performers.
Rio Tinto
gained after Chief Executive Tom Albanese boasted at an investors
seminar that the company was "very well positioned despite the
challenging global environment". The company said it is targeting $5bn
of cost savings by the end of 2014.
BHP Billiton was
also in demand after its Chief Executive Officer Marius Kloppers gave a
cautiously optimistic outlook at the company's annual general meeting.
He highlighted the company's diversified portfolio, which he stressed
means it is "poised to capture the opportunities presented by markets in
all stages of the demand cycle".
Utilities firm Pennon,
which owns South West Water and waste business Viridor, was another
high riser after delivering half-year pre-tax profits in line with
expectations, up 3.4% to £111.1m.
Energy services giant Wood Group lead the fallers on reports that the Wood family trust and members of the Wood family reduced its stake in the firm by 4.4%.
DIY group Kingfisher
was lower after seeing like-for-like sales fall 2.8% in the third
quarter. In the UK, Kingfisher's biggest market, total sales declined by
0.7% to £1.05bn, and were down 3.8% in like-for-like terms.
Pay-TV and broadband group BSkyB
was lower after Jefferies downgraded its rating on the stock from
'hold' to 'underperform' and cut its target from 700p to 650p. In
contrast, water group Severn Trent rose after RBC upped its view on the shares to 'market perform'.
Standard Chartered
was making decent gains as it continued to boosted by hopes that it is
close to a settlement regarding the transactions with Iranian clients
that may have violated US sanctions against the country. The Wall Street
Journal reported yesterday that the bank is close to agreeing on a
$300m fine with US authorities.
FTSE 250: Invensys continues to soar
Technology group Invensys
extended yesterday's surge after announcing last night that it is to
sell its rail division to Siemens for £1.742bn, pay down its pension
deficit and return £625m in cash to shareholders.
Shares in translation and communications software group SDL have recovered somewhat since the company issued a profit warning on Monday.
Transport company National Express Group was also on the up having cheered investors with news of a contract wins in both America and Spain.
Meanwhile, rigid plastic packaging supplier RPC Group dropped after seeing net profit halve in the first half as it was hit by restructuring costs and impairment losses.
Imagination Technologies
shares took a hit after Jefferies reduced its target from 724p to 628p,
although kept its buy recommendation. UBS upgraded the stock from sell
to neutral.
| AIM/Small Cap Report |
FTSE 100 - Risers
Kazakhmys (KAZ) 719.00p +5.97%
Rio Tinto (RIO) 3,090.00p +5.08%
Pennon Group (PNN) 624.50p +4.34%
Antofagasta (ANTO) 1,292.00p +4.28%
Johnson Matthey (JMAT) 2,388.00p +3.92%
Severn Trent (SVT) 1,637.00p +3.74%
Eurasian Natural Resources Corp. (ENRC) 274.80p +3.66%
Weir Group (WEIR) 1,879.00p +3.41%
Burberry Group (BRBY) 1,317.00p +3.38%
Anglo American (AAL) 1,764.00p +3.34%
FTSE 100 - Fallers
Wood Group (John) (WG.) 780.00p -4.29%
Hargreaves Lansdown (HL.) 750.50p -1.70%
ARM Holdings (ARM) 762.50p -1.29%
British Sky Broadcasting Group (BSY) 771.50p -0.96%
Kingfisher (KGF) 279.00p -0.57%
Diageo (DGE) 1,872.50p -0.32%
Pearson (PSON) 1,175.00p -0.25%
Imperial Tobacco Group (IMT) 2,504.00p -0.20%
Melrose Industries (MRO) 212.70p -0.14%
Tate & Lyle (TATE) 768.50p 0.00%
FTSE 250 - Risers
Invensys (ISYS) 305.00p +8.93%
Centamin (DI) (CEY) 59.50p +6.82%
National Express Group (NEX) 175.50p +6.69%
SDL (SDL) 473.00p +6.65%
Kenmare Resources (KMR) 32.70p +5.83%
New World Resources A Shares (NWR) 262.10p +4.84%
Balfour Beatty (BBY) 258.20p +4.49%
Supergroup (SGP) 610.50p +4.45%
Dialight (DIA) 1,106.00p +4.24%
Taylor Wimpey (TW.) 59.25p +4.13%
FTSE 250 - Fallers
RPC Group (RPC) 390.00p -8.43%
Imagination Technologies Group (IMG) 411.20p -3.52%
JD Sports Fashion (JD.) 712.00p -2.47%
Stobart Group Ltd. (STOB) 103.10p -2.27%
NMC Health (NMC) 176.00p -2.22%
Rank Group (RNK) 144.00p -1.84%
COLT Group SA (COLT) 101.60p -1.45%
PayPoint (PAY) 843.00p -1.40%
Travis Perkins (TPK) 1,120.00p -1.15%
Cranswick (CWK) 791.00p -1.12% |
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European Markets Rallied On Fiscal Cliff Optimism
The European markets
finished solidly to the upside Thursday on investor optimism that a
deal can be reached on the looming fiscal cliff in the United States.
Statements made yesterday by both President Barack Obama and Speaker of
the House John Boehner suggested that a deal to avoid a budget crisis
could be reached before the end of the year. A strong upward revision to
U.S. GDP and a surge in pending home sales also provided a boost to
investor sentiment.
Bank of England Governor Mervyn King on Thursday warned that British banks are understating their capital requirements.
Releasing the Financial Stability Report, King said banks currently report substantial buffers over the minimum level allowed.
"But,
in judging whether banks are adequately capitalised, we need to ensure
that reported capital ratios do in fact provide an accurate picture of
banks' health," he said. "At present there are good reasons to think
that they do not."
The U.S. Federal Reserve revealed in
its Beige Book release yesterday that factory activity in the U.S. has
tailed off in recent weeks. Seven of the twelve Districts reported
either slowing or outright contraction in manufacturing, and two others
gave mixed reports.
A number of respondents blamed uncertainty
about the 'fiscal cliff' for the slowdown. Analysts say the impact of
Hurricane Sandy also contributed to the dim view of conditions in the
New York and other parts of the Northeast.
The Euro Stoxx 50
index of eurozone bluechip stocks increased by 1.30 percent, while the
Stoxx Europe 50 index, which includes some major U.K. companies, added
0.98 percent.
The DAX of Germany advanced by 0.78 percent and the CAC 40 of France rose by 1.53 percent. The FTSE 100 of the U.K. gained 1.15 percent and the SMI of Switzerland climbed by 1.07 percent.
In Frankfurt, Commerzbank rose by 2.44 percent and Deutsche Bank added 1.52 percent.
Volkswagen gained 1.53 percent, after Morgan Stanley its price target on the stock and reiterated its "Overweight" rating.
In Paris, Societe Generale advanced by 2.45 percent. Credit Agricole climbed by 1.89 percent and BNP Paribas gained 1.67 percent.
Electricite de France fell by 1.33 percent, after a Paris court ruled that the company has been overcharging its customers since 2009.
GDF Suez climbed by 2.72 percent. Credit Suisse upgraded its rating on the stock to "Neutral" from "Underperform."
In London, Royal Bank of Scotland increased by 1.49 percent and Barclays added 1.01 percent. Lloyds Banking Group climbed by 1.22 percent and HSBC rose by 1.49 percent.
Invensys surged by 8.93 percent, after Siemens offered
to buy its rail automation business for about 2.2 billion euros or
1.742 billion pounds. Siemens closed higher by 0.39 percent in Germany.
Kingfisher
declined by 0.61 percent. The company reported a third-quarter retail
profit of 257 million pounds, down 5.9 percent on a reported basis.
Rio Tinto
gained 5.08 percent. The miner said that it targets cumulative savings
of more than $5 billion by the end of 2014 in order to tide over the
challenges from the volatile economic environment.
Pennon Group
advanced by 4.34 percent. The company increased its dividend and report
a 3.4 percent increase in pre-tax profit for the first half of the
year.
Despite the 17-nation economy moving into a deep recession,
Eurozone economic confidence strengthened in November, marking the
first improvement since February, survey results from the European
Commission showed Thursday.
The corresponding index rose
to 85.7 from 84.3 in October and was above the consensus forecast of
84.5. Confidence strengthened in industry and retail trade, which was
partly offset by decreases among consumers and construction.
Eurozone
leading economic index dropped for the second consecutive month in
October, suggesting weak outlook for the currency bloc, the Conference
Board said Thursday. The leading index dropped 0.2 percent in October,
after decreasing 0.3 percent in September and rising 0.5 percent in
August.
Germany's unemployment rate for October declined from the
same month last year, data released by the Federal Statistical Office
showed Thursday. The adjusted jobless rate, which is based on the
calculation concept of the International Labour Organization (ILO), fell
to 5.4 percent from 5.7 percent last year. Meanwhile, the figure held
steady from September.
The number of people out of work in
Germany rose for an eighth month in November, as subdued economic growth
forced firms to shed jobs to contain costs, data from the Federal Labor
Agency revealed Thursday.
The unemployment total rose by
5,000 from a month earlier in November to 2.939 million. That was weaker
than the expected increase of 16,000. In October, the number of
unemployed increased by 19,000. The jobless rate for November was 6.9
percent, unchanged from October. The figure was in line with economists'
forecast.
The Swiss economy expanded more than expected
in the third quarter fueled by strong consumption and goods trade, the
latest figures from the State Secretariat for Economic Affairs (SECO)
showed Thursday.
Gross domestic product expanded 0.6
percent sequentially in the third quarter, strongly recovering from a
0.1 percent contraction in the previous three months. Economists had
expected just 0.2 percent growth.
U.K. house prices
dropped for a ninth month in a row in November, according to the results
of a house price survey released on Thursday. Prices are expected to
remain subdued in the months ahead as downward pressure on wage growth
will weigh on prospects of house price growth.
House
prices were down 1.2 percent from a year ago following a 0.9 percent
drop in October, the Nationwide Building Society said. The rate of
decline exceeded the 1 percent drop forecast by economists.
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Stocks Come Under Pressure On Disappointing Boehner Comments
Stocks have
shown a notable move to the downside in recent trading on the heels of
comments by House Speaker John Boehner. The pullback by the markets
reflects the recent focus on any headlines regarding the looming fiscal
cliff.
The major averages are currently turning in a mixed performance, as the Dow has turned negative. While the Dow is
down 4.69 points or less than a tenth of a percent at 12,980.42, the
Nasdaq is up 10.92 points or 0.4 percent at 3,002.70 and the S&P 500 is up 1.96 points or 0.1 percent at 1,411.89.
After
seeing early strength on the heels of a batch of largely upbeat U.S.
economic data, stocks came under pressure after Boehner told reporters
that "no substantive progress" has been made in fiscal cliff talks with
the White House.
Boehner went on to say that he was disappointed
with the lack of progress and argued that Democrats in Washington need
to get "serious about spending cuts."
The pullback by the
markets reflects a notable reversal from the performance seen in the
previous session, when stocks rallied after Boehner expressed optimism
about reaching an agreement.
Earlier in the session, traders
reacted positively to some key economic data, including a report from
the National Association of Realtors showing a much bigger than expected
jump in October pending home sales.
The Labor Department
also reported a drop in weekly jobless claims, while the Commerce
Department said GDP increased by more than previously estimated in the
third quarter.
Positive sentiment was also generated by a report
from the European Commission showing that Eurozone economic confidence
strengthened in November, marking the first improvement since February.
Sector News
Following
the Boehner-inspired pullback by the broader markets, most of the major
sectors are showing only modest moves in mid-day trading.
Nonetheless, notable strength remains visible among biotechnology stocks, as reflected by the 1.2 percent gain being posted by the NYSE Arca Biotechnology Index. Regeneron Pharmaceuticals (REGN) and InterMune (ITMN) are posting strong gains.
While healthcare, networking, and steel stocks are also seeing some strength, moderate weakness has emerged among gold and tobacco stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region saw notable strength during trading on Thursday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day up by 1 percent, while Australia's All Ordinaries Index advanced by 0.6 percent.
In the bond market, treasuries have
climbed back near the unchanged line following the comments from
Boehner. The yield on the benchmark ten-year note, which moves opposite
of its price, is up by less than a basis point at 1.62 percent after
reaching a high 1.644 percent.
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BSkyB, Invensys, Dixons
Jefferies has downgraded its rating for pay-TV and broadband provider British Sky Broadcasting (BSkyB) from 'hold' to 'underperform' and slashed its target from 700p to 650p.
"With shares re-rating 20% since April, we no longer believe Sky's
valuation reflects the challenges it faces as the UK's incumbent pay TV
platform as the market matures," the broker said in a research report.
Nomura has raised its target for technology group Invensys
from 330p to 370p, saying that last night's proposed disposal of its
rail division "crystallises value and warrants a re-rating".
"We believe the prospects for the new leaner Invensys are good, and we
do not view the smaller size as a material headwind. Top-line growth
looks to us supported by positive end-market trends (particularly in
appliances and in Oil & Gas sector) and by bolt-on M&A
opportunities."
Panmure Gordon has reiterated its 'buy' rating for electrical retailer Dixons
saying that the company's first-half results were better than
expectations and there are clear signs of potential value creation in
its loss-making businesses.
Panmure said: "The fact that
Dixons’ domestic business is back in profit in H1 for the first time in
five years is excellent news. After the repayment of the Bonds and with a
more appropriate financial structure likely to evolve, management now
needs to resolve the hole in profits that is Southern Europe and
PIXmania."
Broker snap: StanChart nearing Iran settlement, Investec says 'buy'
Investec has reiterated its 'buy' rating and 1,800p target for emerging markets bank Standard Chartered on the back of reports that the lender is close to a settlement over the 'Irangate' saga.
According to media report, from The Wall Street Journal
and others, a final $300m settlement is pending to settle all residual
US regulatory issues regarding transactions with Iranian clients that
may have violated US sanctions against the country. This follows the
$340m that StanChart paid in August to the New York regulator.
Analyst Ian Gordon from Investec said: "A combined settlement of
c.$600m would appear very large in relation to the small number of
technical breaches which Standard Chartered committed, and arguably
disproportionate when compared with previous regulatory sanctions for
more material breaches by other banks.
"Be that as it may, we
believe that such a settlement is now broadly in line with market
expectations, and would be taken as a small positive."
Gordon
said he expects StanChart's pre-close trading update on December 6th to
offer "fresh encouragement" that the company can still grow revenues by
10% this year in spite.
"Moreover, after delivering c.$19.4bn
of revenues in 2012e, as headwinds abate, expect a slight acceleration
in reported revenue growth in 2013e."
Investec said that "STAN appears cheap and the operational outlook is bright".
Shares were up 1.52% at 1,465.5p on Thursday afternoon.
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