London close: Stocks rally on 'fiscal cliff' optimism
Market Movers
- techMARK 2,124.90 +0.09%
- FTSE 100 5,921.63 +0.12%
- FTSE 250 12,178.15 -0.08%
- Obama-Boehner meeting sparks optimistic mood
- Italian PM steps down
- Economic data from Asia comes in mixed
Optimism that US law-makers can agree over the impending 'fiscal cliff'
managed to offset concerns regarding political uncertainty in Italy,
with the FTSE 100 rallying to finish with small gains by the close.
Markets started Monday's session in the red after Mario Monti,
Italy's current technocrat Prime Minister, announced this weekend that
he would step down as soon as parliament passes a budget bill, paving
the way for an early generation election in spring next year. Monti
explained that he made the decision based on constant criticism from
what had been his largest source of support in Parliament: Il Popolo
della Libert party (PDL), run by ex-PM Silvio Berlusconi.
Market strategist Ishaq Siddiqi from ETX Capital said this afternoon
that Monti's departure has sparked fears about who will lead the country
next year - "pro-austerity government or anti-austerity government?"
He said: "The early general election remains a major event risk in 1Q
2013 and one that markets perhaps didn't expect so soon, but for now,
the outcome seems supportive of a government that will continue Monti's
work."
However, stocks on Wall Street started strongly this
afternoon as investors reacted to the news that US President Barack
Obama and House Speaker John Boehner had an unscheduled face-to-face
meeting yesterday to discuss the 'fiscal cliff'.
"This
is the first time that the pair have met at the White House in a couple
of month's to discuss the fiscal cliff so naturally investors are a
little more optimistic on the matter," said market analyst Craig Erlam
from Alpari.
"This does not necessarily mean that any progress
has been made however it shows that both are willing to enter serious
negotiations on a deal, which can only be positive for the markets," he
said.
Though there was little significant economic data out today in the UK and US, there was there was plenty from Asia
for investors to sink their teeth into: Japan officially entered
recession in the third quarter; while industrial production in China
beat forecasts in October, though exports were weak.
Meanwhile, Greece
has announced that it will extend its debt repurchase plan by one more
day in order to receive additional offers from bond holders. "We have
decided to extend the invitation to offer designated securities for
exchange to 11 December 2012," Stelios Papadopoulos, the head of the
Public Debt Management Agency, said in a statement.
FTSE 100: AB Foods and Tullow Oil lead the risers
Primark and food products giant Associated British Foods
was the high riser on the Footsie on Monday afternoon, extending gains
after Friday annual general meeting at which it revealed a strong start t
o the new financial year.
Oil group Tullow Oil was
performing well today, rebounding after its recent sell-off. The shares
have lost 8.35% of their value over the last week after the company said
that its Zaedyus-2 appraisal well offshore French Guiana came up dry.
However, Galvan Research reiterated its 'buy' rating for the stock
today, saying that the stock is now in "oversold territory" after
falling sharply to its one-year support level.
Sweeteners and food products group Tate & Lyle
was on the rise after last week's investor seminar in Chicago.
Investec, which maintained its 'buy' rating for the shares, said it was
impressed by the meeting and the key takeaways were "innovation and
collaborative capabilities, plus a potential cost advantage". Canaccord
Genuity also kept its 'buy' recommendation, raising its target for the
stock this morning from 780p to 840p.
Investec was also providing a lift to medical technology group Smith & Nephew
after upgrading its rating from 'hold' to 'buy' to reflect: a more
attractive valuation; a more positive view on the recent acquisition of
Healthpoint Biotherapeutics; and "our sense that the benefits of the
cultural shift driven by the CEO will become increasingly apparent over
the next 12 months."
Mining titan Eurasian Natural Resources Corporation (ENRC)
was leading the fallers after saying that it is to buy the remaining
49.5% stake in Democratic Republic of the Congo (DRC) focused group
Camrose Resources for $550m. The acquisition is an attempt to simplify
its organisational structure and consolidate its position within the
DRC.
Power systems group Rolls-Royce was still under
pressure after Thursday's news that it was under investigation by the
Serious Fraud Office (SFO) after matters of bribery and corruption
involving so-called "intermediaries" were discovered in Indonesia and
China. According to media reports this weekend, Rolls-Royce has been
accused of giving $20m and a new car to the son of the former Indonesian
President to help the company win an engine contract.
Advertising and media giant WPP
was under the weather after Deutsche Bank lowered its rating for the
stock to 'hold' and cut its target for the share from 945p to 930p.
FTSE 250: AZ Electronic Materials hit by downgrade
Speciality chemicals producer AZ Electronic Materials
was leading the fallers on the FTSE 250 after UBS cut its rating from
'buy' to 'neutral' on valuation grounds, removing the stock from its
'Pan-euro Midcap Key Call List'. UBS said that following its strong
performance - up 50% in 2012 - it has now closed the valuation gap
compared with its UK speciality chemicals sector.
Hedge fund manager Man Group
jumped after announcing that CEO Peter Clarke is to retire at the end
of February. He will be succeeded by Emmanuel Roman, currently the
company's President and Chief Operating Officer.
British TV decoder maker Pace
slumped on rumours that it is in discussions with Google regarding the
purchase of its Motorola Home business. The speculation was later
confirmed by the company but shares were suspended from trade as the
potential acquisition is being classed as a "reverse takeover".
Ken McMeikan, the Chief Executive Officer of bakery and hot snacks retailer Greggs,
is to leave the company for catering firm Brakes Group. Shares fell
after the CEO of four years said that he would leave as soon as a
successor could be found. Shore Capital cut its recommendation for the
shares to 'hold' this morning.
FTSE 100 - Risers
Smith & Nephew (SN.) 678.50p +1.88%
Evraz (EVR) 246.20p +1.57%
Associated British Foods (ABF) 1,506.00p +1.41%
GlaxoSmithKline (GSK) 1,367.50p +1.37%
Tate & Lyle (TATE) 769.00p +1.32%
Petrofac Ltd. (PFC) 1,706.00p +1.19%
Kazakhmys (KAZ) 754.00p +1.14%
Johnson Matthey (JMAT) 2,467.00p +0.98%
Shire Plc (SHP) 1,918.00p +0.95%
Croda International (CRDA) 2,368.00p +0.89%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 716.00p -2.58%
Eurasian Natural Resources Corp. (ENRC) 276.20p -2.40%
Aviva (AV.) 359.70p -1.80%
Weir Group (WEIR) 1,813.00p -1.20%
Aggreko (AGK) 2,218.00p -1.16%
WPP (WPP) 860.00p -1.09%
Admiral Group (ADM) 1,118.00p -1.06%
Sage Group (SGE) 292.10p -1.02%
Experian (EXPN) 1,041.00p -0.95%
Barclays (BARC) 249.55p -0.80%
FTSE 250 - Risers
Centamin (DI) (CEY) 54.90p +9.91%
Man Group (EMG) 77.30p +4.96%
Petropavlovsk (POG) 334.20p +4.08%
Ruspetro (RPO) 86.05p +3.18%
ITE Group (ITE) 232.00p +3.11%
Domino Printing Sciences (DNO) 610.00p +2.87%
Lonmin (LMI) 272.00p +2.64%
Daejan Holdings (DJAN) 3,004.00p +2.53%
Genus (GNS) 1,401.00p +2.41%
Michael Page International (MPI) 375.00p +2.29%
FTSE 250 - Fallers
AZ Electronic Materials SA (DI) (AZEM) 363.70p -4.37%
Carpetright (CPR) 666.50p -4.10%
New World Resources A Shares (NWR) 270.10p -3.54%
Pace (PIC) 185.30p -3.39%
Sports Direct International (SPD) 386.00p -3.26%
COLT Group SA (COLT) 97.55p -3.22%
Talvivaara Mining Company (TALV) 93.60p -3.21%
Perform Group (PER) 368.00p -3.16%
Micro Focus International (MCRO) 543.00p -3.12%
Phoenix Group Holdings (DI) (PHNX) 518.00p -2.91%
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| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe open: Italian political manouvering dents periphery stocks
-Italian 10 year bond yields up 27 basis points to 4.8 per cent
FTSE-100: -0.14%
Dax-30: -0.38%
Cac-40: -0.49%
FTSE Mibtel 30: -2.33%
Ibex 35: -2.15%
Stoxx 600; -0.36%
For the most part the main European equity benchmarks began the week
with small losses, following some mixed economic reports out over the
weekend and this morning in China.
On the periphery however it
was a whole other matter, following Italian Prime Minister Mario
Monti's unexpected announcement that he will hand in his resignation at
year's end. That came after Silvio Berlusconi's party's which has lost a
large part of its following - decision to withdraw support from the
government last week, he said, which means that the next elections will
have to be brought forward slightly.
While it may just be a
case of political manouvering, even analysts who believe that stability
will eventually be restored are warning that: "Overall, Italy should be
very careful not to erode the credibility capital accumulated by PM
Monti's government so far."
On a more positive note, speaking
to The Wall Street Journal the head of the country's largest political
formation, Pier Luigi Bersani, indicated that he would honour all of the
commitments made by his predecessor, should he win. That may assuage
worries of the reform-friendliness of any centre-left government or
coalition that might coalesce.
Greece extended the deadline
for its debt buy-back offer until tomorrow, so as to allow the country's
banks time to make up for a small short-fall in the amount of debt
offered. The government however is expected to be successful in its bid
to lower the country's debt load by repurchasing the now cheaper debt on
the secondary market. In turn, that will open the way for the
Mediterranean nation to receive the next tranche of aid from its
international lenders.
Meantime, and in Spain, reports
indicate that the main business lobby CEOE- shifted its support in
favour of the Prime Minister's cautiousness on formally asking the
European Central Bank (ECB) for aid in lowering the country's financing
costs. It is worried that in exchange for their help European
governments may ask for an excessively rapid decline in borrowing.
ST Microelectronics moves sharply higher
Chip-marker ST Microelectronic's shares were climbing after saying it will exit its joint venture with Ericsson AB.
RWE dropped, weighed down by a downgrade out of analysts at Bank of America.
From a sector stand-point the worst performance was to be seen in
shares of the following groups of companies: Banks (-1.58%), Insurance
(-1.18%) and Construction&Materials (-0.76%).
Larger than expected decline in French and Italian production
Italian industrial production contracted at a 1.1% month-on-month pace in October (Consensus: -0.3%).
French manufacturing output declined by 0.9% in October (Consensus: 0.2%).
The Eurozone Sentix index of investor confidence dropped to -16.8 in
December (Consensus: -16.9), after a reading of -18.8 in the month
before.
Germany's trade balance improved to 15.8bn in October (Consensus: 15.5bn). Small drop in single currency
The euro/dollar is now off by 0.15% to the 1.2907 dollar mark.
Front month Brent crude futures are rising by 0.53 dollars to the 107.59 dollar mark on the ICE. |
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| US Market Report |
US open: Obama and Boehner met over the weekend
- Both parties refuse to comment on weekend contacts
- Gap led falls on S&P 500
Dow Jones Industrials: 0.20%
Nasdaq Composite: 0.60%
S&P 500: 0.21%
The main US equity benchmarks were registering slight gains in the
early going, as investors 'brushed off' the bad news out of Italy over
the weekend.
Mario Monti's resignation as Italian Prime
Minister initially dented market sentiment across the globe on Monday,
and Wall Street was no exception at the start of the day, but it has
since recovered.
Back in the US, markets were digesting news of an unscheduled face-to-face meeting yesterday between President Barack Obama and House Speaker John Boehner to discuss the 'fiscal cliff'. Yet both sides declined to comment on the result of those contacts.
"Negotiations over the fiscal cliff are going nowhere and with only three weeks now until the deadline, investors are getting jittery.
While a deal is expected to be completed, it is entirely understandable
that people are slowly but surely taking their money out of stocks,"
said market analyst Craig Erlam from Alpari.
Shares of fashion retailer Gap were leading fallers on the S&P 500, as analysts feared that the company is accumulating unwanted stock.
In company news, McDonald's
stock made gains after November sales rose 2.4%, much better than the
0.2% increase expected by analysts. Sales in Europe, Asia, Africa and
the Middle East all managed to beat consensus estimates.
Analysts at Jefferies lowered their price target on shares of Apple on Monday.
Insurance group AIG announced plans to offload an 80% interest of International Lease Finance Corp., its aircraft leasing unit, for $4.2bn.
Front month West Texas crude futures are now rising by 0.64% to the 86.50 dollar mark on the NYMEX.
10 year US Treasury yields are now falling by 1 basis point to the 1.61% mark.
S&P 500 - Risers
J.C. Penney Co. Inc. (JCP) $18.78 +3.36%
Phillips 66 Common Stock (PSX) $54.02 +3.21%
Cliffs Natural Resources Inc. (CLF) $30.41 +3.05%
Altera Corp. (ALTR) $32.43 +2.69%
Hewlett-Packard Co. (HPQ) $14.31 +2.65%
Teradyne Inc. (TER) $16.26 +2.65%
Micron Technology Inc. (MU) $6.61 +2.64%
Wyndham Worldwide Corp. (WYN) $50.90 +2.54%
Forest Laboratories Inc. (FRX) $36.61 +2.49%
Celgene Corp. (CELG) $80.60 +2.44%
S&P 500 - Fallers
Brown Forman Corp. Class B (BF.B) $65.01 -5.19%
Gap Inc. (GPS) $30.32 -4.70%
Priceline.Com Inc. (PCLN) $631.80 -4.14%
Federated Investors Inc. (FII) $19.55 -3.60%
Expedia Inc. (EXPE) $57.93 -3.26%
EQT Corp. (EQT) $57.41 -2.41%
Metropcs Communications Inc. (PCS) $10.28 -2.28%
Marathon Oil Corp. (MRO) $30.25 -2.17%
Southwestern Energy Co. (SWN) $33.64 -2.15%
Apache Corp. (APA) $74.92 -2.08%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $14.31 +2.65%
Cisco Systems Inc. (CSCO) $19.70 +1.89%
Microsoft Corp. (MSFT) $26.90 +1.68%
Mondelez International Inc. (MDLZ) $25.97 +1.52%
McDonald's Corp. (MCD) $89.35 +0.98%
3M Co. (MMM) $92.19 +0.74%
International Business Machines Corp. (IBM) $193.23 +0.67%
Alcoa Inc. (AA) $8.55 +0.59%
Boeing Co. (BA) $74.98 +0.46%
Caterpillar Inc. (CAT) $87.37 +0.44%
Dow Jones I.A - Fallers
Home Depot Inc. (HD) $63.74 -1.10%
JP Morgan Chase & Co. (JPM) $42.29 -0.63%
Pfizer Inc. (PFE) $25.43 -0.50%
Verizon Communications Inc. (VZ) $44.19 -0.50%
Bank of America Corp. (BAC) $10.60 -0.38%
Intel Corp. (INTC) $20.10 -0.27%
Wal-Mart Stores Inc. (WMT) $72.11 -0.25%
General Electric Co. (GE) $21.41 -0.23%
E.I. du Pont de Nemours and Co. (DD) $43.10 -0.19%
Chevron Corp. (CVX) $106.80 -0.18%
Nasdaq 100 - Risers
Green Mountain Coffee Roasters Inc. (GMCR) $39.08 +3.25%
Baidu Inc. (BIDU) $91.90 +2.85%
Altera Corp. (ALTR) $32.43 +2.69%
Micron Technology Inc. (MU) $6.61 +2.64%
Vertex Pharmaceuticals Inc. (VRTX) $39.83 +2.44%
Celgene Corp. (CELG) $80.60 +2.44%
CH Robinson Worldwide Inc (CHRW) $61.92 +2.18%
F5 Networks Inc. (FFIV) $94.37 +2.17%
Alexion Pharmaceuticals Inc. (ALXN) $93.48 +2.16%
VeriSign Inc. (VRSN) $37.02 +2.04%
Nasdaq 100 - Fallers
Priceline.Com Inc. (PCLN) $631.80 -4.14%
Expedia Inc. (EXPE) $57.93 -3.26%
Marvell Technology Group Ltd. (MRVL) $8.56 -2.67%
Staples Inc. (SPLS) $11.17 -2.02%
Research in Motion Ltd. (RIMM) $11.84 -1.42%
Flextronics International Ltd. (FLEX) $5.88 -1.05%
Amazon.Com Inc. (AMZN) $251.43 -0.73%
Apollo Group Inc. (APOL) $20.04 -0.65%
Wynn Resorts Ltd. (WYNN) $109.57 -0.63%
Starbucks Corp. (SBUX) $53.38 -0.48%
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| Broker Tips |
Broker tips: Resolution, Tate & Lyle, AZ Electronic Materials
Prime Markets has labelled insurance giant Resolution as a 'buy', following Monday's announcement that it is nearing the final stretch of its simplified governance structure.
The broker said that, having touched 190p in late June, Resolution is
looking like an "increasingly solid recovery play" within the insurance
sector.
Investec has reiterated its 'buy' rating and 850p target for sweeteners and food products group Tate & Lyle, saying it was impressed by last week's investor seminar in Chicago.
Analyst Martin Deboo said that the key takeaways from the meeting were
"innovation and collaborative capabilities, plus a potential cost
advantage".
UBS has lowered its recommendation for speciality chemicals producer AZ Electronic Materials from 'buy' to 'neutral' on valuation grounds, removing the stock from its 'Pan-euro Midcap Key Call List'.
The broker said: "We continue to like the fundamentals of the AZ
investment case but we feel currently much of this is being priced in:
1) organic growth opportunities; 2) defensive margin profile; 3) strong
cash generation; and 4) strong market positions."
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