London close: Stocks pare gains after US ISM data
Market Movers
- techMARK 2,110.01 +0.15%
- FTSE 100 5,871.24 +0.08%
- FTSE 250 12,027.44 -0.06%
- US manufacturing sector in contraction
- Chinese and India data lifts markets early on
- Banking fall after BoE FLS details
The FTSE 100 index was set to finish Monday's session with decent gains until a worse-than-expected reading of US manufacturing caused markets across Europe to trim gains by the close.
"Europe's markets have once again struggled near their recent range
highs with the FTSE 100 in particular underperforming, as investors try
to dissect a raft of fairly mixed economic data from across Asia, Europe
and the US," said market analyst Michael Hewson from CMC Markets.
Markets opened strongly this morning after the HSBC China purchasing managers' index (PMI)
increased from 49.5 to 50.5 in November, in line with the preliminary
estimates. Meanwhile, the official PMI from National Bureau of
Statistics rose to a seven-month high of 50.6, up from 50.2 in October.
Elsewhere, India's manufacturing PMI recorded its fastest growth in five months, coming in at 53.7.
The Markit UK manufacturing PMI
rose to 49.1 in November, up from a three-month low of 47.3 in October
and above the consensus prediction of 48. However the sector still
remains in contraction with figures staying below 50.
Markets gave a muted reaction to the details of Greece's bond buy-back
offer today with the Footsie holding on to gains after Athens said this
morning that it will be repurchasing up to €10bn of its own debt.
However, sentiment was dampened after the US Institute for Supply Management (ISM) PMI fell from 51.7 to 49.5 in November, well below the 51.4 forecast.
"Though construction spending in the US and vehicle sales from major
auto giants rose sharply, the damage by the ISM number was enough to
push the bulls to run for cover," said market strategist Ishaq Siddiqi
from ETX Capital.
FTSE 100: Banks fall after BoE lending scheme underwhelms
UK banking group Lloyds
was under the weather after the release of the details of the Bank of
England's (BoE's) Funding For Lending (FLS) scheme in the third quarter.
The BoE revealed that Lloyds, along with RBS, had cut net lending by £2.77bn and £642m, respectively, in the three months to the end of September, while banking peer Barclays had increased it by £3.8bn.
Analyst Ian Gordon from Investec said: "Lest we forget, Lloyds has
promised to keep shrinking its core lending book until mid-2013."
Net lending by all participants of the scheme totalled just £500m while total FLS drawdowns from the Bank were £4.4bn.
After an earlier rise, precious metals giant Polymetal
fell into the red despite announcing this morning that it has doubled
its mineral resources estimate at its Albazino project in the Khabarovsk
territory, Russia.
Meanwhile, some ratings changes were having their usual effect on stocks this morning: RSA Insurance gained after Deutsche Bank lifted its recommendation to 'buy'; Schroders rose after Bank of America ML raised it to a 'buy'; while Shell fell after Deutsche Bank downgraded the stock to 'hold'.
Terrestrial broadcaster ITV
was higher after reporting that the final of reality TV show 'I'm a
Celebrity Get Me Out of Here' had a peak audience of 10.6m, which was an
impressive 47% share of TV viewers, according to Investec.
FTSE 250 movers: C&W Comms jumps after disposal
Cable & Wireless Communications surged
on Monday after agreeing to sell the majority of its businesses in its
Monaco & Islands division as it attempts to scale back its
geographic footprint and pay down debt.
CWC is selling the
assets to Bahraini telecoms firm Batelco Group for an enterprise value
of $680m. Batelco also has the option to buy the remaining 75% stake in
Compagnie Monegasque de Communication for $345m.
The total
proceeds of $1,025m, when the sale of the remaining stake in CMC is
factored in, is some 35% ahead of analysts' valuations of $750m.
Mortgage provider Paragon Group of Companies was
wanted after backing up press speculation by confirming that it is
thinking about acquiring small private bank Hampshire Trust. The
purchase would grant the company banking licence for the first time,
allowing it offer savings accounts for its customers.
Regeneration specialist St. Modwen Properties was in demand after saying expectations for the full year remain unchanged following strong momentum across the entire group.
Mining stocks were mixed this afternoon with platinum group Lonmin and iron ore producer Ferrexpo on the rise, while gold miner Centamin and diamond firm Petra under pressure.
FTSE 100 - Risers
Melrose Industries (MRO) 219.30p +2.91%
British Sky Broadcasting Group (BSY) 772.00p +1.71%
Rolls-Royce Holdings (RR.) 905.50p +1.68%
Schroders (SDR) 1,621.00p +1.57%
International Consolidated Airlines Group SA (CDI) (IAG) 171.30p +1.54%
RSA Insurance Group (RSA) 119.30p +1.53%
ITV (ITV) 100.40p +1.52%
Pearson (PSON) 1,195.00p +1.44%
Reed Elsevier (REL) 650.50p +1.25%
Admiral Group (ADM) 1,131.00p +1.07%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 736.50p -2.71%
Lloyds Banking Group (LLOY) 45.74p -1.62%
Evraz (EVR) 230.80p -1.45%
Sainsbury (J) (SBRY) 336.70p -1.38%
Wolseley (WOS) 2,864.00p -1.14%
Kingfisher (KGF) 275.30p -0.97%
Morrison (Wm) Supermarkets (MRW) 266.20p -0.97%
Royal Bank of Scotland Group (RBS) 292.60p -0.88%
Prudential (PRU) 897.50p -0.83%
Tesco (TSCO) 322.45p -0.82%
FTSE 250 - Risers
Daejan Holdings (DJAN) 2,935.00p +2.98%
CSR (CSR) 343.20p +2.42%
Grainger (GRI) 113.90p +2.15%
Informa (INF) 429.30p +2.12%
Ophir Energy (OPHR) 508.50p +2.11%
Redrow (RDW) 161.90p +2.02%
Micro Focus International (MCRO) 584.50p +2.01%
Genesis Emerging Markets Fund Ltd. (GSS) 534.50p +2.00%
Homeserve (HSV) 244.10p +1.84%
Hikma Pharmaceuticals (HIK) 768.00p +1.79%
FTSE 250 - Fallers
Stobart Group Ltd. (STOB) 96.25p -5.27%
Kenmare Resources (KMR) 31.00p -4.02%
Ocado Group (OCDO) 71.00p -3.92%
Bank of Georgia Holdings (BGEO) 1,010.00p -3.81%
Domino Printing Sciences (DNO) 576.00p -3.03%
Centamin (DI) (CEY) 57.00p -2.90%
Petra Diamonds Ltd.(DI) (PDL) 103.50p -2.73%
IP Group (IPO) 109.00p -2.68%
Rathbone Brothers (RAT) 1,212.00p -2.65%
Carpetright (CPR) 681.50p -2.64%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe midday: Greek long-term bond yields slide
-Merkel said Greek debt hair-cut a possibility in the medium term
-Equity strategists waxed optimistic on 2013 outlook
-Noyer said inflation expectations well anchored
-Greek 10 year bond yields below 15 per cent, down 129 basis points
-Greece announced the details of its debt buy-back
FTSE-100: 0.52%
Dax-30: 0.94%
Cac-40: 0.99%
FTSE-Mibtel 30: 1.52%
Ibex 35: 0.08%
Stoxx 600: 0.59%
By midday European equities were trading moderately higher for both the
day and the month. That after Greece unveiled the details of its bond
buy-back offer - due to take place this next Friday – setting off a
sharp decline in the country's long-term borrowing costs.
Yet
as incredible as that may seem it was perhaps not what most caught
investors' attention. Those were the remarks out from Germany's
Chancellor, Angela Merkel, this past weekend, to the effect that
euro-area leaders might consider writing off Greek debt once the country
has a budget surplus. That marks an abrupt about-face for Germany.
Acting as a backdrop however, it remained to be seen whether investors
might not react poorly to the less-than-constructive remarks out over
the weekend from politicians on both sides of the aisle on Capitol Hill
as regards the fiscal cliff.
Likewise, whether or not there would be a sufficient degree of take-up for Greece's exchange offer remained in doubt.
Despite the above, early Monday morning saw a torrent of positive
remarks out from equity strategists on the positive outlook for equities
in 2013, particularly in Europe. Amongst some of those brokers were
names like Credit Suisse, Goldman Sachs, Morgan Stanley and JP Morgan.
EADS to restructure shareholder structure
| US Market Report |
US mid-morning: Weak ISM data brakes stocks
-Fitch: US fiscal ratings stable for 2013
-ISM quite a bit weaker than expected
-Hurricane Sandy did not affect ISM data
Dow Jones Industrials: -0.06%
Nasdaq Comp.: 0.16%
S&P 500: 0.06%
The main US equity benchmarks were trading mixed on Monday afternoon.
That following the release of apparently positive final Chinese
manufacturing data for the month of November over the weekend and after
Greece unveiled the details of its bond buy-back plan, this morning.
Nevertheless, and acting as a backdrop, even under the best scenario it
is hard to describe the sound bites coming out from Washington as
anything better than not-too-constructive.
Thus, US Treasury
Secretary Timothy F. Geithner warned that it would be Republicans' fault
if they refused to raise tax rates on the highest-income earners and in
turn damaged the economy. The speaker of the House, Republican John
Boehner, retorted that the White House is wasting time; which has left
him "flabbergasted."
As well, some economic figures out this afternoon – such as the latest ISM report - were quite weak.
Chrysler's US vehicle sales grew by 14% in November, below the 16% expected by some.
PC maker Dell was rising by 6% after an upgrade out of analysts at Goldman Sachs.
Early goings-on today saw a bevy of merger and acquisition activity. Equifax will pay $1bn for CSC's credit unit, Archer Daniels Midland will fork out 2.8bn Australian dollars for Grain Corp., Soporta will purchase one of Dean Food's units for $1.45bn.
For its part, hospital operator HCA will pay out a special dividend of $2 per share.
ISM goes into reverse, shows contraction
The
US Institute for Supply Management's (ISM) purchasing managers' index
for the month of November has come in at 49.5 versus 51.7 for the month
before (Consensus: 51.4). The new orders sub-index dropped to 50.3 after
54.2 and the employment gauge fell back to 48.4 after 52.1. Only one
sector - primary metals - cited the impact from Sandy as a factor behind
the slowdown. On the other hand, respondents cited the fiscal cliff as a
major source of concern and in general expected the slowdown in demand
seen so far during the second half of 2012 to persist.
This is what Barclays Research
has to say on the possible impact of hurricane Sandy on today's ISM
data: "Some respondents mentioned that storms along the East Coast
delayed shipments, and we expect that the lingering hurricane effects
provided a slight drag. That said, even without the Sandy effect, the
print would likely have remained close to the break-even level of 50."
Construction spending grew by 1.4% month-on-month in October (Consensus: 0.5%).
Crude and Treasuries more or less flat
Front month West Texas crude futures are now rising by 0.32% to the $89.23/barrel level on the NYMEX.
10 year US Treasury yields are now higher by 1 basis point, to the 1.63% level.
S&P 500 - Risers
Advanced Micro Devices Inc. (AMD) $2.40 +9.09%
VeriSign Inc. (VRSN) $36.37 +6.50%
Dell Inc. (DELL) $10.18 +5.62%
Equifax Inc. (EFX) $53.72 +4.84%
Computer Sciences Corp. (CSC) $39.54 +3.89%
International Game Technology (IGT) $14.34 +3.39%
Pitney Bowes Inc. (PBI) $11.54 +3.10%
Estee Lauder Co. Inc. (EL) $59.99 +2.99%
Cabot Oil & Gas Corp. (COG) $48.46 +2.88%
Sears Holdings Corp. (SHLD) $43.14 +2.69%
S&P 500 - Fallers
Janus Capital Group Inc. (JNS) $7.93 -3.29%
J.C. Penney Co. Inc. (JCP) $17.36 -3.23%
Netflix Inc. (NFLX) $79.17 -3.11%
DeVry Inc. (DV) $25.41 -2.53%
Owens-Illinois Inc. (OI) $19.56 -2.37%
Big Lots Inc. (BIG) $27.52 -2.25%
Staples Inc. (SPLS) $11.44 -2.18%
Exelon Corp. (EXC) $29.64 -1.92%
Newmont Mining Corp. (NEM) $46.26 -1.76%
FLIR Systems Inc. (FLIR) $20.05 -1.74%
Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $19.15 +1.29%
Travelers Company Inc. (TRV) $71.39 +0.80%
Merck & Co. Inc. (MRK) $44.65 +0.79%
Home Depot Inc. (HD) $65.47 +0.61%
JP Morgan Chase & Co. (JPM) $41.29 +0.51%
American Express Co. (AXP) $56.12 +0.39%
Verizon Communications Inc. (VZ) $44.29 +0.38%
AT&T Inc. (T) $34.19 +0.19%
Pfizer Inc. (PFE) $25.06 +0.16%
Alcoa Inc. (AA) $8.42 +0.12%
Dow Jones I.A - Fallers
E.I. du Pont de Nemours and Co. (DD) $42.75 -0.90%
Mondelez International Inc. (MDLZ) $25.72 -0.68%
Coca-Cola Co. (KO) $37.74 -0.47%
General Electric Co. (GE) $21.03 -0.47%
Chevron Corp. (CVX) $105.23 -0.44%
Bank of America Corp. (BAC) $9.83 -0.30%
Microsoft Corp. (MSFT) $26.54 -0.30%
Boeing Co. (BA) $74.06 -0.30%
3M Co. (MMM) $90.69 -0.28%
Walt Disney Co. (DIS) $49.53 -0.26%
Nasdaq 100 - Risers
VeriSign Inc. (VRSN) $36.37 +6.50%
Dell Inc. (DELL) $10.18 +5.62%
Green Mountain Coffee Roasters Inc. (GMCR) $38.08 +3.85%
Sears Holdings Corp. (SHLD) $43.14 +2.69%
Garmin Ltd. (GRMN) $39.75 +2.21%
Sirius Satellite Radio Inc. (SIRI) $2.83 +2.17%
Sandisk Corp. (SNDK) $39.82 +1.84%
Priceline.Com Inc. (PCLN) $674.20 +1.66%
Baidu Inc. (BIDU) $97.56 +1.30%
Cisco Systems Inc. (CSCO) $19.15 +1.29%
Nasdaq 100 - Fallers
Netflix Inc. (NFLX) $79.17 -3.11%
Staples Inc. (SPLS) $11.44 -2.18%
Vertex Pharmaceuticals Inc. (VRTX) $38.98 -2.04%
Maxim Integrated Products Inc. (MXIM) $28.63 -1.92%
Nuance Communications Inc. (NUAN) $21.82 -1.89%
CA Inc. (CA) $21.80 -1.62%
Akamai Technologies Inc. (AKAM) $36.08 -1.46%
CH Robinson Worldwide Inc (CHRW) $60.99 -1.21%
Electronic Arts Inc. (EA) $14.65 -1.08%
Expeditors International Of Washington Inc. (EXPD) $37.04 -1.02% |
| Broker Tips |
Broker tips: Unilever, ITV, C&W Comms
Following a Unilever
investor and analyst seminar in Paris, Investec has raised its price
target for the consumer products stock from 2,300p to 2,400p but has
kept its 'hold' rating on the stock.
"ULVR needs more bottom line juice for our ongoing admiration to turn into renewed conviction."
Furthermore, the broker warns about the 'January effect' on the shares:
the stock has underperformed the FTSE in 13 out of the last 18
Januarys, including four out the last five. Plus, the shares are trading
near an all-time high.
Panmure Gordon has reiterated its 'buy' rating and 140p target for terrestrial broadcaster ITV after the final of its reality TV show 'I'm a Celebrity Get Me Out of Here' had a peak audience of 10.6m.
Panmure analyst Alex DeGroote said: "This is significant because the
ability to deliver major prime-time audiences is key to advertising and,
in turn, content/format sales. If anything, the entertainment genre –
as opposed to drama – has been tougher for ITV this year."
Jefferies has kept its 'hold' recommendation and 35p target for Cable & Wireless Communications
(CWC), saying that while the proceeds of the Monaco & Islands
disposal are attractive, it has potential implications for dividend
prospects.
The broker highlighted that the M&I division
contributes 22% of group operating free cash flow "so investors will
need to understand how management intends to replace these cash flows".
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