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Stocks end the week in a cautious mood
Market Movers
techMARK 2,106.76 -0.00%
FTSE 100 5,866.82 -0.06%
FTSE 250 12,034.22 +0.06%
UK
stocks finished broadly flat on Friday, paring gains by the close of
trade as markets headed into the weekend with a cautious mood on the
back of uncertainty surrounding the US budget and disappointing economic
data in the Eurozone.
After a subdued start, the FTSE 100
edged into positive territory by midday after German parliament approved
the Greek rescue deal. The Bundestag voted with a large majority
(463 for versus 100 against, 11 abstained) to push through the next
Greek aid package which was approved by the Eurogroup on Monday.
Neverthless, markets were hit by jobless figures from Europe: Eurozone unemployment rose to a record 11.7% in October, from 11.6% in Septmeber. Inflation slowed by more than expected to 2.2%, a 23-month low.
Meanwhile in the States, worse-than-expected consumer spending
data for October dampened already-fragile sentiment on Wall Street, as
investors remain concerned that US politicians could fail to avert the 'fiscal cliff'.
Financial trader Shavaz Dhalla from Spreadex said: "Since a deal has
not yet been agreed between Democrats and Republicans investors are
still cautious about taking on too much risk as over the next few weeks
there is still the risk that any news headline which indicates that a
deal is far from being agreed could reverse recent gains within the
equities market."
In domestic news, UK consumer confidence
measured by GfK surged to an 18-month high in November, rising to -22
from -30 the month before. Consensus estimates were for no change.
FTSE 100 movers: Broker upgrades lift Johnson Matthey and Croda
Blue-chip constituents Johnson Matthey, Croda, Pennon and Intertek were performing well on Friday afternoon following a number of upbeat broker comments.
Chemical peers Johnson Matthey and Croda International were
lifted higher after Credit Suisse upgraded the companies from 'neutral'
to 'outperform' and from 'underperform' to 'neutral', respectively.
Water supplier Pennon gained after Citigroup upgraded the stock to 'neutral' and The Telegraph's Questor column recommended to buy the shares. Meanwhile, quality and safety testing group Intertek was wanted after Berenberg upped to stock from 'hold' to 'buy' and raised its target from 2,710p to 3,340p.
In contrast, B&Q and Screwfix owner Kingfisher was under the weather after UBS lowered its rating for the stock from 'buy' to 'neutral', citing near-term risks.
Food retail peers Tesco, M&S, Morrison and Sainsbury
were in demand this afternoon in spite of an OFT investigation into
food pricing display and promotional practices, which ruled that
supermarkets should not artificially inflate prices to mislead
customers. These four retailers, along with Waitrose, Aldi, the Co-op
and Lidl, have agreed to adopt the measures.
Royal Bank of Scotland fell after saying that it is no longer selling its Indian retail and commercial banking operations to HSBC. Instead, it will be winding down what was a profitable business. HSBC was registering decent gains today.
Mining giant Rio Tinto was
on the rise after yesterday's investor seminar announced aggressive
open and capex cuts. Jefferies recommended to buy the stock this
morning, saying that the group can deliver around 40% earnings per share
growth from 2012 to 2015 "even if commodity prices do not increase from
average 2012 levels as significant volume growth and cost cutting
should lead to better unit margins and higher overall profitability for
the company."
FTSE 250 movers: Dixons continues to surge
Electrical retailer Dixons
surged today, one day after beating first-half forecasts, after its CEO
Sebastian James said expressed optimism that his company can benefit
from Comet's demise.
James said that its Curry and PC World
divisions haven't seen "much disruption" from the fire sale by bankrupt
rival Comet. He expects the group to take a bigger market share when
hundreds of Comet stores close.
Exane BNP Paribas upgraded the
stock to 'neutral' today and lifted its target for the shares from 15p
to 25p. The stock has now gained a third over the past month, up a
whopping 180% over the year to date.
House builders Taylor Wimpey and Bellway were lifted higher today after UBS upgraded both stocks to 'buy' as part of its review of the sector.
The broker reiterated 'buys' for sector peers Barratt Developments, Berkeley and Persimmon, saying that the macro environment potentially could be "more favourable" next year.
Coal and coke producer New World Resources edged higher despite announcing that a 23-year-old worker died at its CSM Mine in the Czech Republic yesterday.
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FTSE 100 - Risers
ARM Holdings (ARM) 774.00p +1.51%
Aberdeen Asset Management (ADN) 338.00p +1.44%
IMI (IMI) 1,054.00p +1.35%
Polymetal International (POLY) 1,062.00p +1.34%
Meggitt (MGGT) 389.40p +1.30%
British Land Co (BLND) 550.00p +1.29%
Croda International (CRDA) 2,381.00p +1.28%
Babcock International Group (BAB) 996.50p +1.22%
CRH (CRH) 1,142.00p +1.06%
Xstrata (XTA) 1,034.00p +1.03%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,287.00p -2.28%
Anglo American (AAL) 1,732.50p -1.79%
United Utilities Group (UU.) 681.50p -1.73%
Eurasian Natural Resources Corp. (ENRC) 270.20p -1.67%
British Sky Broadcasting Group (BSY) 759.00p -1.62%
Evraz (EVR) 234.20p -1.56%
Severn Trent (SVT) 1,615.00p -1.34%
Vedanta Resources (VED) 1,071.00p -1.29%
Royal Bank of Scotland Group (RBS) 295.20p -1.27%
GlaxoSmithKline (GSK) 1,334.50p -1.22%
FTSE 250 - Risers
Dixons Retail (DXNS) 27.49p +6.72%
Invensys (ISYS) 315.50p +3.44%
Bumi (BUMI) 268.00p +3.00%
Taylor Wimpey (TW.) 61.00p +2.95%
Hunting (HTG) 814.00p +2.45%
Cobham (COB) 212.00p +2.37%
Euromoney Institutional Investor (ERM) 783.00p +2.35%
Senior (SNR) 198.40p +2.27%
Bodycote (BOY) 412.60p +2.26%
Domino Printing Sciences (DNO) 594.00p +2.24%
FTSE 250 - Fallers
CSR (CSR) 335.10p -8.17%
Lonmin (LMI) 258.10p -4.97%
Domino's Pizza Group (DOM) 506.50p -2.41%
Ruspetro (RPO) 84.00p -2.33%
BTG (BTG) 357.00p -2.25%
Micro Focus International (MCRO) 573.00p -2.22%
Dialight (DIA) 1,083.00p -2.08%
Devro (DVO) 306.50p -2.05%
Dunelm Group (DNLM) 615.50p -1.83%
Savills (SVS) 447.40p -1.76%
FTSE TechMARK - Risers
RM (RM.) 83.25p +4.72%
Antisoma (ASM) 1.75p +4.48%
Emblaze Ltd. (BLZ) 48.00p +3.23%
Promethean World (PRW) 16.50p +3.12%
Torotrak (TRK) 30.50p +2.52%
Phoenix IT Group (PNX) 170.00p +2.10%
Filtronic (FTC) 36.75p +2.08%
Innovation Group (TIG) 22.50p +1.12%
E2V Technologies (E2V) 112.00p +0.90%
BATM Advanced Communications Ltd. (BVC) 17.62p +0.71%
FTSE TechMARK - Fallers
XP Power Ltd. (DI) (XPP) 961.50p -3.95%
Oxford Biomedica (OXB) 2.38p -2.86%
Ark Therapeutics Group (AKT) 3.23p -2.27%
Gresham Computing (GHT) 66.50p -1.48%
Optos (OPTS) 172.25p -1.43%
Phytopharm (PYM) 9.12p -1.35%
Wolfson Microelectronics (WLF) 190.00p -1.04%
Ricardo (RCDO) 358.00p -0.90%
NCC Group (NCC) 835.00p -0.60%
Vectura Group (VEC) 85.00p -0.29%
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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European Markets Finished Mixed On Fiscal Cliff Concerns
The
European markets finished with mixed results Friday, after some weak
European economic data and concerns over the looming fiscal cliff in the
United States. Investors continue to worry that a deal on the fiscal
cliff may not be reached before the end of the year, after statements
made yesterday by Congressional leaders.
A rally in Asia helped
to provide early support to the European markets. A second round of
economic stimulus was approved in Japan in an attempt to jump start the
economy ahead of the elections in December. Some strong economic data
from Japan also contributed to the positive mood. Meanwhile, the German
Parliament has approved the latest bailout plan for Greece by a wide
margin.
During a press conference around midday Thursday, House
Speaker John Boehner said "no substantive progress" was made in talks
with the White House on the fiscal cliff. Boehner also stated that
"Despite the claims that the President supports a balanced approach, the
Democrats have yet to get serious about real spending cuts." "No
substantive progress has been made in the talks between the White House
and the House over the last two weeks."
Meanwhile, Senate Majority
Leader Harry Reid, D-Nev., spoke shortly afterward and claimed that it
was Republicans that had not put a serious offer on the table.
The
large imbalances in the euro area will make the conduct of monetary
policy much more challenging, European Central Bank President Mario
Draghi said on Friday.
The crisis has made it absolutely clear
that large imbalances within the euro area can become a fundamental
issue for the stability of economic and monetary union, he said in
Paris.
A union of sovereign states can become fragile if some
states are permanent creditors and others are permanent debtors. Such a
situation undermines mutual trust.
Implementation of the
commitments made by Greece and its European partners constitute the main
challenge to the debt deal, agreed earlier this week, the International
Monetary Fund said Thursday.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.08 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.17 percent.
The DAX of Germany rose by 0.06 percent, but the CAC 40 of France decreased by 0.33 percent. The FTSE 100 of the U.K. dropped by 0.06 percent and the SMI of Switzerland fell by 0.12 percent.
In Frankfurt, HeidelbergCement climbed by 2.28 percent. Morgan Stanley upgraded its rating on the stock to "Overweight" from "Equal weight."
Hugo Boss fell
by 0.79 percent. Goldman Sachs downgraded its rating on the stock to
''Neutral'' from ''Buy.'' Carl Zeiss Meditec declined by 2.66 percent,
after Commerzbank reduced its rating on the stock.
In Paris, LVMH increased by 1.28 percent. Goldman Sachs upgraded the stock to ''Buy'' from ''Neutral.'' Schneider Electric gained 1.29 percent. The stock was upgraded at HSBC to "Overweight" from "Neutral."
In London, Royal Bank of Scotland
fell by 1.27 percent. The lender failed to sell its banking operations
in India to HSBC and would begin to wind-down its Retail &
Commercial banking business in the country. HSBC rose by 0.97 percent.
Croda International climbed by 1.45 percent, after Credit Suisse upgraded the stock to "Neutral" from "Underperform."
Acal plunged by 3.98 percent, after the technology firm reported a decline in first-half profit amid a drop in revenues.
The euro area
unemployment rate reached a fresh high in October as unfolding severe
austerity forced both governments and companies to shed jobs. The jobless rate
rose marginally to 11.7 percent, in line with expectations, from 11.6
percent in September, data from Eurostat showed Friday.
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| US Market |
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Stocks Seeing Modest Weakness Amid Lingering Uncertainty
After
initially showing a lack of direction, stocks have moved modestly lower
over the course of the trading day on Friday. Selling pressure has
remained relatively subdued, however, limiting the downside for the
markets.
The major averages have recently climbed off their lows for the session but remain in the red. The Dow is down 21.85 points or 0.2 percent at 12,999.97, the Nasdaq is down 8.02 points or 0.3 percent at 3,004.01 and the S&P 500 is down 2.88 points or 0.2 percent at 1,413.07.
The
modest weakness that has emerged on Wall Street reflects lingering
uncertainty about whether lawmakers in Washington will be able to reach
an agreement to avoid the looming fiscal cliff.
While leaders of
both parties have said they remain hopeful that a deal can be reached,
familiar disagreements over taxes on the wealthy and entitlement reform
remain major sticking points.
Some negative sentiment may also
have been generated by a report from the Commerce Department showing an
unexpected drop in U.S. personal spending.
The Commerce Department
said personal spending fell by 0.2 percent in October after climbing by
0.8 percent in September. The drop came as a surprise to economists,
who had expected spending to inch up by 0.1 percent.
The report
also showed that personal income came in nearly unchanged in October
following a 0.4 percent increase in September. Economists had expected
income to increase by about 0.3 percent.
However, the data
reflected the impact of Hurricane Sandy, with the Commerce Department
noting that it cannot quantify the total impact of the storm.
Meanwhile, the Institute for Supply Management -
Chicago released a separate report showing that its business barometer
climbed to 50.4 in November from 49.9 in October. A reading above 50
indicates an increase in activity.
Sector News
While most of the major sectors continue to show only modest moves, gold stocks have shown a notable move to the downside on the day. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index is down by 1.1 percent.
The weakness among gold stocks comes amid a decrease by the price of the precious metal, with gold for February delivery sliding $12.20 to $1,717.30 an ounce.
Transportation, electronic storage, and tobacco stocks have also come under pressure, while modest strength remains visible among utilities stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both advanced by 0.5 percent, while Australia's All Ordinaries Index ended the day up by 0.6 percent.
Meanwhile, the major European markets turned in a mixed performance, ending the day roughly flat. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index fell by 0.3 percent and the U.K.'s FTSE 100 Index edged down by 0.1 percent.
In the bond market, treasuries have pulled back near the unchanged line after moving higher in early trading. Subsequently, the yield on the benchmark ten-year
note, which moves opposite of its price, is down by less than a basis
point at 1.615 percent after hitting a low of 1.596 percent.
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| Broker tips |
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Kingfisher, Rio Tinto, Wolseley
UBS has lowered its rating for B&Q and Screwfix owner Kingfisher from 'buy' to 'neutral' and reduced its target from 300p to 290p, citing near-term risks.
The broker said: "In most markets DIY demand remains depressed by a mix
of low consumer confidence and weak housing markets, affecting big
ticket and trade sales in particular.
"While the UK may show
some stability next year if mortgage lending improves, there are no
signs yet that Continental Europe will follow suit."
Jefferies has reiterated its 'buy' rating and 4,000p target for mining giant Rio Tinto following yesterday's investor seminar in which the company announced aggressive open and capex cuts.
"For Rio Tinto, the combination of higher volumes, higher realised
prices, and lower unit costs should lead to significant earnings growth.
Our impression is that many investors are highly sceptical about the
earnings growth story for Rio, and if growth is delivered in line with
our expectations, Rio Tinto shares should perform well. This is one
reason why Rio continues to be one of our top picks in the sector."
Panmure Gordon has maintained its 'hold' rating and 2,500p target for plumbing merchant Wolseley ahead of the group's first-quarter trading statement next week.
The broker said that Wolseley's solid full-year results and a recent
capital markets day in the US suggests a "steady Q1 outturn".
Broker snap: Goldman Sachs upgrades LVMH to 'buy'
Goldman Sachs has upgraded its rating for French luxury firm LVMH
to 'buy' from 'neutral', explaining that the stock has underperformed
the rest of the sector by 20 per cent, thus creating a good entry
opportunity. Analysts at the US bank also raised the stock's price target to €197 from €184.90.
They believe that organic margin opportunities and positive cash flow
for top LVMH brands should produce long-last results and a better
performance in the stock market . Higher margins are particularly expected in the Wine & Liquors and Watches & Jewelry businesses.
On the other hand, LVMH faces the risk of moderation in the dynamics of
the Louis Vuitton brand and a slowdown in global demand for luxury
products, Goldman Sachs explains. Shares were up 2.93% at €137.10 by 12:10 in Paris.
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