London open: Stocks gain on optimism about 'fiscal cliff'
Market Movers
- techMARK 2,030.62 +0.46%
- FTSE 100 5,653.90 +0.86%
- FTSE 250 11,664.03 +0.75%
Equity markets rose sharply on Monday morning as hopes about US lawmakers nearing a resolution to the 'fiscal cliff' sparked investors' appetites for riskers assets, such as mining stocks.
Markus Huber, the head of German HNW trading at ETX Capital said this
morning: "After Friday's heavy sell-off European equities are starting
out the new week on a positive note regaining a large chunk of the
losses incurred. Comments by US politicians with both parties
showing optimism that a deal will be reached to avert the 'fiscal cliff'
is giving markets a sharp lift to the upside this morning."
Markets were also digesting comments made by Bank of England policy maker David Miles
this weekend. In an interview with Sky News, he said: "if it turns out
that not enough has been done, that the economy's going to stay in a
recessionary state and that's going to drive inflation down, there is
more we can do. We have not run out of ammunition."
Little
data elsewhere is due out this morning, with the focus of investors
likely to be on developments of fiscal cliff talks Stateside and
tomorrow's Eurogroup meeting on Greece in Brussels.
ETX's Huber said: "It will be interesting to see how long the current
optimism will last and how quickly the focus will shift to Greece, so
far in the US all we have are words and any kind of deal still seems to
be far off at this stage and concerning Greece there are still huge
divisions between individual countries how to raise the additional funds
needed."
He noted that this week is likely to see volumes decline substantially as the week progresses with US markets closed for Thanksgiving on Thursday.
FTSE 100: Miners gain as risk appetite increases
Mining stocks were benefitting from the bullish mood this morning with ENRC, Kazakhmys, EVRAZ, Vedanta and Fresnillo making decent gains.
Resources peer BP
was also a high riser on reports that it is considering a share
repurchase programme of around $4bn after it banks the proceeds of the
TNK-BP sale to Rosneft.
Banking giant HSBC rose after
confirming press speculation that it is mulling a sale of its minority
stake in Chinese insurance giant Ping An Insurance. HSBC holds a 15.57%
stake in Ping An, China's second-largest insurance firm by assets, which
is worth an estimated $9.5bn.
Financial services giant Old Mutual
was in demand after snapping up a majority stake in Latin American AIVA
Business Platforms in an effort to strengthen its distribution
capability in selected emerging markets.
Temporary power and temperature control giant Aggreko gained after winning a $75m contract in Cte d'Ivoire to provide short-term power supply.
Cruise operator Carnival
continued to rise after announcing Friday that it will be paying 50 US
cents a share to investors next month as a special dividend, in
additional to the previously-announced regular quarterly payout of $0.25
per share.
Quality and safety testing group Intertek
fell after admitting that revenue growth slowed down from 29.9% in the
first half to 20.1% during the 10 months to the end of October.
FTSE 250: Ocado soars after finding time and money
Online grocer Ocado
jumped after saying it had secured more time to pay off debts and would
raise 35.8m through a placing of shares. The firm said it would use the
extra time and money to increase its ranges, improve the customer
experience and go on a marketing drive.
Siberian explorer RusPetro surged after reporting that increased oil production led to a 22% jump in revenue in the third quarter.
| UK Event Calendar |
Monday November 19
INTERIMS
FFastFill, Majestic Wine, Mitie Group
INTERIM DIVIDEND PAYMENT DATE
NTT DoCoMo Inc
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Existing Home Sales (US) (15:00)
Q3
Latchways
GMS
Valirx
FINALS
Diploma
ANNUAL REPORT
BowLeven, Netcall
IMSS
FBD Holdings, Ruspetro
FINAL DIVIDEND PAYMENT DATE
Hansard Global, JPMorgan Emerging Markets Inv Trust, Petmin Ltd. (DI)
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| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe open: Stocks bounce back on fiscal cliff optimism
-Diplomacy to avoid escalation in Gaza increases
-Israel says ready to move into Gaza if necessary
-Banks deposited 215.9bn euros overnight at ECB
-Spanish banks' bad loan ratio rose to 10.7 per cent in August from 10.52 per cent
FTSE-100: 0.99%
Dax-30: 1.34%
Cac-40: 1.28%
FTSE-Mibtel 30: 1.28%
Ibex 35: 0.78%
Stoxx 600: 0.93%
European equities have begun the week with a moderate bounce back, in
what is to be a holiday shortened week Stateside, due to the
Thanksgiving Day celebrations.
Helping markets move higher
today is a bevy of positive news. Chief amongst these, over the weekend
leading US lawmakers waxed optimistic that a deal on avoiding the fiscal
cliff will be reached.
Furthermore, speaking to German broadcaster ARD the country's Finance Minister, Wolfgang Schaeuble,
indicated that an agreement on giving Greece access to the next tranche
of aid will be reached tomorrow. As well, and contrary to earlier
remarks, "he now appears to be open to adding about EUR 14 billion over
the next two years to the funds already committed to Greece, to close
the financing gap up to 2014," add economists at Barclays Research.
For her part, International Monetary Fund (IMF) managing director
Christine Lagarde has said she will push for a permanent solution to
Greece's debts to avoid prolonged uncertainty.
Acting as a
backdrop, the latest news reports point to increased diplomatic activity
aimed at avoiding an escalation in the recent clashes between Israel
and Palestinians in Gaza.
Santander will invest in Spanish "bad bank"
Spain's Santander
is planning to invest in the country's so-called "bad bank," which
constitutes a positive sign for the country's financial system.
Spanish oil major Repsol
hopes to reach an agreement with the Argentinian government regarding
compensation for the nationalisation of Repsol's YPF subsidiary,
according to published reports on Sunday.
ING is moving up by 2% after the commission extended the company's deadline to sell its insurance businesses.
From a sector stand-point the best performance is now to be seen in the
following sectors within the DJ Stoxx 600: Automobiles (1.84%),
Technology (1.45%) and Construction&Materials (1.44%). Foreign orders for Italian goods drop sharply
Italian industrial orders fell by 4% in September (Consensus: -1%),
after a decrease of 0.7% in the previous month, led by a 7.4% fall in
foreign orders. Slight rise in single currency
The euro/dollar is now rising by 0.27% to the 1.2777 dollar mark.
Front month Brent crude futures are up by 0.720 to the 109.73 dollar mark on the ICE. |
| US Market Report |
US close: Stocks gain after 'constructive' fiscal cliff talks
Market movers
Dow Jones: 12,588 (+0.36%)
Nasdaq: 2,853 (+0.57%)
S&P 500: 1,360 (+0.49%)
Wall Street closed Friday's session with moderate gains after the
statements of political leaders optimistic about 'constructive'
negotiations about the 'fiscal cliff'.
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 'fiscal cliff'. Lawmakers must come to an agreement in
order to avoid $607bn in spending cuts and tax increases that, if not changed, will take effect on January 1st.
Democratic Senate Majority Leader Harry Reid
said after the meeting today: "We have the cornerstones of being able
to work something out. We all know something has to be donethere 's no
more 'Let's do it some other time.' We're going to do it now.
"This isn't something we're going to wait until the last day of December
to get it done," Reid said. "We have a plan, we're going to move
forward on it."
Zane Brown, fixed income strategist at Lord
Abbett, told CNBC: "What we've heard so far has been nice compared to
what awaits us in the current year I still think that nothing will
happen until the end of the year. We have before us an ugly period of
volatility, "he added.
Investors were also fretting about US dividend taxes: these have been at 15% for nearly a decade but could automatically increase when the 2003 deal expires in 2013. ECONOMY
US industrial production
contracted at a 0.4% month-on-month pace in October (Consensus: 0.2%).,
as manufacturing output fell by no less than 0.9% month-on-month.
However, according to the Federal Reserve hurricane Sandy is estimated
to have subtracted up to a full percentage point from production.
CORPORATE MOVERS
Computer giant Dell
dropped after missing estimates last night. The company's quarterly
profit dropped by nearly 50%. In addition, the firm forecast a difficult
economic environment for the coming months.
JP Morgan Chase finished higher despite reports that it faces a government investigation into money laundering, according to WSJ.
Fashion retail group GAP
was higher after upping its full-year guidance following a strong third
quarter. The shares were also given a lift by Canaccord Genuity which
raised its rating to 'hold' from 'sell'.
Sports apparel giant Nike
rose after selling the brand Cole Haan to Apax Partner for $570m. The
company also raised its quarterly dividend by 17% to 21 cents per share.
| FX and Commodities round-up |
FX round-up: Dollar buoyed by fiscal cliff nerves
The dollar was boosted by safe haven flows on Friday as worries about the looming fiscal cliff dominated market play.
The dollar index, which measures the greenback against a basket of six
others, rose to 81.285 from 81.038 late Thursday. For the week the index
climbed 0.5%.
US political leaders started 'encouraging'
talks over the fiscal cliff when a string of tax cuts expire and
dramatic cuts to government spending come into force unless Republican
and Democrats can reach a deal.
There is concern that if a
deal is not reached, the resulting tax increases and spending cuts will
tip the US economy back into recession.
The yen skidded to a
seven-month low against the dollar on Friday, despite a strong start to
the session, after an election was called for December.
Opposition Liberal Democratic Party leader Shinzo Abe is widely expected
to become the nation's next prime minister. He has already said he
would call for the Bank of Japan to take further monetary easing
measures to boost growth.
The dollar traded at 81.59, its highest level against the yen since late April. The euro was also up against the yen.
Against the dollar the euro declined to $1.2624 from $1.278 as Eurozone
minister meet again to discuss Greece's next instalment of financial
aid
Sterling changed hands at $1.5883 from $1.5864 the previous session.
Commodities: Crude rallies one per cent
Crude oil futures raced higher on Friday and logged a weekly gain as focus turned to escalating tensions in the Middle East.
Conflict between the Israel and Palestine intensified as Israel
increased its air attack campaign in the Gaza Strip and started
mobilising thousands of troops on the Gaza border. There is growing
concern that hostilities could worsen and while neither nation is a key
oil producer, there is concern that the conflict could spread to other
countries in the region.
Reports said the Egyptian prime minister, Hisham Kandil, arrived in Gaza for an unprecedented show of solidarity.
Markets also followed any news related to the so-called 'fiscal cliff'
when several tax cuts expire and severe cuts to government spending are
triggered unless Republican and Democrats can reach a deal.
Crude oil for December delivery, which expired after the close of
trading on Friday, rose $1.22 to settle at $86.67 a barrel on the New
York Mercantile Exchange. For the week the contract gained 0.7%.
The January contract traded at $86.92 a barrel, up $1.05.
Meanwhile on the ICE futures exchange Brent crude rose 95 cents at $108.96 a barrel.
Among precious metals gold plunged 1% on Friday after a report from the
World Gold Council said global demand for bullion weakened in the third
quarter.
Gold for December delivery tumbled $16.30 to $1,713.80 an ounce on the Comex division of the New York Mercantile Exchange.
Global demand declined 11% from the same a year ago during the third quarter as demand from China dwindled.
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