|
Gains pared after White House comments on 'fiscal cliff'
Market Movers
techMARK 2,129.53 +0.41%
FTSE 100 5,961.59 +0.43%
FTSE 250 12,402.41 +0.89%
The
UK stock market staged a slight ‘Santa rally’ on Wednesday, with risk
appetite increasing before Christmas on the back of a Greek ratings
upgrade and a better-than-expected reading of German confidence.
“Santa has returned to the markets,
bringing some much needed cheer before the Christmas break – traders
are feeling risky as such,” said market strategist Ishaq Siddiqi from
ETX Capital.
However, gains across Europe were pared by the close after US stocks opened mixed on Wall Street with worries over the ‘fiscal cliff’ resurfacing.
The White House Communications Director Dan Pfeiffer said that
President Barack Obama would veto any ‘plan B’ from House Speaker John
Boehner.
“This is a concern to anyone relying on a deal being
done by the end of the year,” said market analyst Craig Erlam from
Alpari.
“The fact that Republicans are preparing a plan B
suggests they are not willing to meet Obama in the middle on spending
and tax issues. Obama’s rejection of the plan therefore suggests going
over the fiscal cliff is yet again a possibility. These
negotiations are starting to become a bit of a rollercoaster ride and
I’m sure there’s going to be many more ups and downs between now and the
end of the year.”
Nevertheless, providing a lift to the
markets early on was last night’s news that Standard & Poor’s had
upgraded its rating for Greece from 'selective default' to
'B-minus' to reflect “our view of the strong determination of Eurozone
member states to preserve Greek membership”, the ratings agency said.
The yield on a 10-year Greek bond dropped to its lowest level since
March 2011 this morning.
Meanwhile, the IFO institute reported that the German business climate
index improved to 102.4 in December, above the 101.4 reading the month
before and ahead of the 102.0 forecasts. Meanwhile, while the current
assessment survey missed estimates, the expectations survey provided a
beat.
In other news, the Bank of England's Monetary Policy Committee
(MPC) voted eight-to-one in favour to keep its asset purchase programme
at £375bn in this month's meeting. The MPC voted unanimously to keep
the Bank Rate at 0.5%.
FTSE 100: Financials, IAG and CRH lead the risers
Insurance
and banking stocks were performing well this afternoon after Credit
Suisse upgraded its ratings on both sectors this morning. Lloyds was up after the Swiss broker
raised its view on European banks to ‘benchmark’ from ‘small
underweight’, saying that the stock looks “abnormally cheap” versus its
peers. Banking groups RBS, Standard Chartered and Barclays were also in demand. Car insurer Admiral was also higher after Credit Suisse raised the insurance sector from ‘benchmark’ to ‘overweight’. However, sector peers British American Tobacco and Imperial Tobacco were lower after the same broker downgraded the tobacco sector from ‘benchmark’ to ‘underweight’. Airline group IAG was flying high on news that its subsidiary British Airways is set to launch a new route to the Chinese city of Chengdu. Building materials firm CRH was
also gaining after a broker upgrade. Deutsche Bank raised its
recommendation for the stock to ‘buy’ in spite of its still-subdued
performance in European markets. "After having been severely penalised by its sizeable developed market exposure in 2012, our economic
recovery expectations combined with high private construction exposure,
high operating leverage and additional cost savings lead us to believe
that the stock should re-rate strongly in 2013," analysts said. Distribution and outsourcing firm Bunzl
fell sharply after buying McCordick Glove & Safety based near
Toronto, Canada, and Atlas Health Care in Adelaide, Australia. The news
comes as the group said that group revenue growth in 2012 is expected to
be 6% at constant exchange rates. United Utilities was in the red after going ex-dividend, along with Burberry.
FTSE 250: Vesuvius's shares price adjusts to de-merger
Vesuvius,
previously known as Cookson, was showing as the heaviest faller on the
FTSE 250, down around 50% after the de-merger of its Performance
Materials division to Alent became effective. Vesuvius now only
consists mainly of Cookson's Engineered Ceramics division so the sharp
drop in the share price was as expected this morning.
Central Europe-focused hard coal and coke producer New World Resources
continued to surge after the International Energy Agency (IEA) said
yesterday that coal will come close to surpassing oil as the world’s top
energy source by 2017.
Berendsen, the European textile
maintenance company, edged higher after saying that trading continues
to be in line with expectations and that it expects to report "good"
year-on-year progress for 2012.
Oil and gas producer Salamander Energy
rose after it signed two new borrowing facilities together totalling
$350m, designed to extend the maturity of the group's financing,
simplify Salamander's borrowing structure and lower its cost of debt.
| AIM/Small Cap Report |
|
FTSE 100 - Risers
CRH (CRH) 1,224.00p +4.88%
Admiral Group (ADM) 1,199.00p +4.53%
Lloyds Banking Group (LLOY) 49.20p +4.37%
International Consolidated Airlines Group SA (CDI) (IAG) 188.50p +4.32%
Standard Chartered (STAN) 1,568.00p +3.57%
Royal Bank of Scotland Group (RBS) 315.40p +3.38%
Wolseley (WOS) 2,880.00p +3.00%
Old Mutual (OML) 179.50p +2.51%
Evraz (EVR) 278.40p +2.39%
ARM Holdings (ARM) 775.00p +2.38%
FTSE 100 - Fallers
Bunzl (BNZL) 1,020.00p -4.32%
British American Tobacco (BATS) 3,095.00p -2.55%
Rio Tinto (RIO) 3,506.50p -1.72%
United Utilities Group (UU.) 688.00p -1.64%
Fresnillo (FRES) 1,911.00p -1.60%
BAE Systems (BA.) 341.90p -1.19%
Burberry Group (BRBY) 1,249.00p -0.95%
Imperial Tobacco Group (IMT) 2,397.00p -0.87%
BG Group (BG.) 1,023.00p -0.78%
Randgold Resources Ltd. (RRS) 6,105.00p -0.73%
FTSE 250 - Risers
New World Resources A Shares (NWR) 308.50p +6.38%
SIG (SHI) 123.50p +5.65%
Synthomer (SYNT) 192.30p +5.37%
Diploma (DPLM) 527.00p +4.98%
Regus (RGU) 104.90p +4.90%
Dixons Retail (DXNS) 29.80p +4.89%
Bwin.party Digital Entertainment (BPTY) 113.70p +4.89%
Talvivaara Mining Company (TALV) 101.30p +4.87%
William Hill (WMH) 350.50p +4.85%
Petropavlovsk (POG) 361.80p +4.63%
FTSE 250 - Fallers
Vesuvius (VSVS) 324.00p -49.77%
Telecity Group (TCY) 800.00p -4.19%
Homeserve (HSV) 233.10p -3.48%
JD Sports Fashion (JD.) 710.00p -2.67%
Shanks Group (SKS) 83.30p -2.29%
Halfords Group (HFD) 339.20p -2.11%
Grainger (GRI) 117.40p -1.92%
Hochschild Mining (HOC) 484.60p -1.90%
Centamin (DI) (CEY) 41.46p -1.52%
NMC Health (NMC) 172.40p -1.49%
| European Market |
 |
| FTSE 100 | Euronext | Dax perf | CAC 40 |
 |  |  |  |
|
|
European Markets Climbed After Greek Upgrade
The European markets
ended Wednesday's trading session in the green, following an upgrade of
Greece's credit rating by S&P. Investor sentiment also received a
boost from the stronger than expected German Ifo business confidence
result. Shares of banks turned in a solid performance, after Credit
Suisse upgraded its rating on the European banking sector.
The
continuing fiscal cliff negotiations between Democrats and Republicans
has made investors optimistic that a deal can be reached before the end
of the year. The White House threatened to veto the 'Plan B' presented
by House Speaker John Boehner. Senate Majority Leader Harry Reid had
already said that Boehner's plan could not pass the Senate. Plan B would
extend tax cuts for people making up to $1 million.
Standard and
Poor's on Tuesday upgraded Greece's credit rating from 'selective
default' (SD), citing the successful completion of the country's debt
buyback program and the subsequent decision by European leaders to
disburse loan installment.
Greece's long and short-term foreign
as well as local currency sovereign credit ratings were lifted to 'B-'
from 'SD'. Further, the ratings on all the outstanding issues, including
those guaranteed by Greece, were upgraded to 'B-/B'. The outlook is
'stable'.
Bank of England policymakers voted 8-1 to leave
the stimulus programme unchanged at GBP 375 billion as seen in November,
the minutes of the latest monetary policy meeting showed Wednesday.
David Miles
was the only member to call for more quantitative easing. According to
minutes, the Monetary Policy Committee members said the current size of
the asset purchase programme seemed appropriate for the present.
Further, the nine-member MPC unanimously decided to hold the key interest rate at a record low 0.50 percent. The meeting was held on December 5 and 6.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.41 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.23 percent.
The DAX of Germany climbed by 0.25 percent and the CAC 40 of France gained 0.44 percent. The FTSE 100 of the U.K. rose by 0.43 percent and the SMI of Switzerland advanced by 0.71 percent.
In Frankfurt, Heidelberg Cement climbed by 5.17 percent. Deutsche Bank reiterated its "Buy" rating on the stock.
Merck
dropped by 2.10 percent. The drug-maker announced that its
investigational product L-BLP25, formerly referred to as Stimuvax,
failed to demonstrate a statistically significant improvement in overall
survival in the START study.
ThyssenKrupp rose by 2.59 percent, after Credit Suisse upgraded its rating on the stock to "Outperform" from "Neutral."
Commerzbank advanced by 0.60 percent and Deutsche Bank climbed by 1.40 percent. In Paris, BNP Paribas gained 1.60 percent and Credit Agricole added 2.30 percent. Lafarge gained 3.02 percent, after Deutsche Bank upgraded the stock to "Buy" from "Hold."
In London, Acta SpA
surged by 8.46 percent. The clean energy products company said it has
signed a Letter of Intent with Indian supplier of industrial gas
equipment and solutions MVS Engineering.
Lloyds Banking Group climbed by 4.37 percent and Barclays added 2.07 percent. Royal Bank of Scotland rose by 3.38 percent and HSBC gained 2.0 percent.
CRH finished higher by 4.88 percent, after Deutsche Bank upgraded its rating on the stock to "Buy" from "Hold."
British American Tobacco declined by 2.55 percent. Credit Suisse reduced its rating on the tobacco sector to "Underweight."
Diageo increased by 0.49 percent and SAB Miller gained 0.76 percent. Credit Suisse upgraded the beverage sector to "Overweight."
UBS decreased by 0.20 percent in Zurich. The banking giant
agreed to pay nearly 1.4 billion Swiss Francs in fines and disgorgement
to settle a multi-regulator probe over allegations that it tried to
manipulated yen Libor and euroyen contracts.
Eurozone's current account surplus increased in October, but was lower than expected by economists, a report from the European Central Bank
showed Wednesday. The seasonally adjusted current account surplus rose
to EUR 3.9 billion in October from EUR 2.4 billion in September.
Economists expected the surplus to rise to EUR 6.5 billion.
Euro
area construction output in October declined at a faster annual rate
again, data released by Eurostat, the statistical office of the European
Union, revealed on Wednesday.
Construction output fell
further by a seasonally adjusted 4.1 percent year-on-year in October,
after recording a decline of 3.8 percent in September, which was revised
from 2.6 percent reported earlier. In August, output decreased 1.5
percent.
German business confidence improved for the
second straight month in December as expectations for next six months
counteracted the deterioration in current assessment, survey results
from the Ifo Institute showed Friday.
Surpassing economists'
expectations, the headline business climate index rose to a five-month
high of 102.4 from 101.4 in November. The reading was forecast to climb
to 102.
Germany's leading economic indicator remained
unchanged in October, ending the downward trend started in March, data
from a survey by the Conference Board showed Wednesday. The leading
economic index remained unchanged at 101.6 in October after dropping 0.6
percent in the previous month..
|
| US Market Report |
|
Stocks Continue To Show A Lack Of Direction
With
traders taking a breather following the recent rally, stocks continue
to show a lack of direction in mid-day trading on Wednesday. The major
averages have spent the session bouncing back and forth across the
unchanged line.
Currently, the major averages continue to turn in a mixed performance, with the tech-heavy Nasdaq posting a modest gain. While the Nasdaq is up 2.05 points or 0.1 percent at 3,056.58, the Dow is down 11.40 points or 0.1 percent at 13,339.56 and the S&P 500 is down 2.20 points or 0.2 percent at 1,444.59.
The
choppy trading on Wall Street comes as traders seem reluctant to make
any significant moves after the gains seen over the two previous
sessions lifted the major averages to their best closing levels in about
two months.
Traders are keeping a close eye on
developments in Washington, as President Barack Obama and House Speaker
John Boehner continue to work toward an agreement to avoid the looming
fiscal cliff.
While signs of progress toward a compromise helped to drive stocks higher earlier in the week, traders may be waiting for more concrete signs of an agreement.
Earlier
in the day, a statement from White House Communications Director Dan
Pfeiffer indicated that Obama would veto Boehner's proposed "Plan B"
legislation, which would extend tax cuts for people making up to $1
million.
Boehner unveiled the "Plan B" proposal on Tuesday as an alternative if lawmakers are unable to reach a broader budget agreement.
Pfeiffer
claimed the legislation continues large tax cuts for the very
wealthiest individuals while eliminating tax cuts that 25 million
students and families struggling to make ends meet depend on and ending
critical incentives for the nation's businesses.
On the economic front, the Commerce Department released a report before the start of trading showing that U.S. housing starts came in below economist estimates in November.
The
report said housing starts fell 3.0 percent to an annual rate of
861,000 in November from the revised October estimate of 888,000.
Economists had expected housing starts to fall to 865,000 from the
894,000 originally reported for the previous month.
At the same time, the Commerce Department said building permits rose 3.6 percent to an annual rate of 899,000 in November from the revised October rate of 868,000.
Sector News
While
most of the major sectors are showing only modest moves, airline stocks
have shown a strong move to the upside on the day. The NYSE Arca Airline Index has surged up by 1.6 percent, reaching its best intraday level in well over a year.
Brazilian airline GOL (GOL) has helped to lead the sector higher, advancing by 5 percent. Delta (DAL) and US Airways (LCC) are also posting notable gains.
Brokerage stocks are also seeing some strength, with Knight Capital (KCG) posting a standout gain after agreeing to be acquired by GETCO Holding Company in a deal valued at $1.4 billion.
Electronic storage, software, and networking stocks are also moving higher, while weakness is visible among health insurance, gold, and utilities stocks
Other Markets
In overseas trading, stock markets
across the Asia-Pacific region moved mostly higher during trading on
Wednesday. Japan's Nikkei 225 Index surged up by 2.4 percent, while Hong
Kong's Hang Seng Index rose by 0.6 percent.
In the bond market, treasuries are
regaining ground following recent weakness. Subsequently, the yield on
the benchmark ten-year note, which moves opposite of its price, is down
by 3.8 basis points at 1.789 percent after ending the previous session
at its highest closing level in well over a month.
|
| Broker tips |
|
Bunzl, GKN, Vesuvius
Panmure Gordon has trimmed its target for distribution and outsourcing group Bunzl following the company's poorly-received pre-close trading update on Wednesday morning.
"We adjust our FY expectations marginally for foreign exchange, though
we believe the shares remain a 'hold' and Bunzl one of the more
consistent performers out there." The target is cut from 1,051p to
1,023p.
Nomura has initiated coverage of engineering group GKN with a 'neutral' rating and 245p target, saying that it is "waiting for the green shoots of an EU car demand recovery".
"An attractive valuation is what limits underperformance from here. We
would turn more positive on GKN on signs of a recovery in EU car volumes
with the focus on German and UK consumer indicators and a bottoming of
France, Italy and Spain."
Investec has expressed optimism regarding the long-term outlook for newly de-merged company Vesuvius, but has started with a 'hold' recommendation for the shares.
"Today’s de-merger of the former Cookson Group presents an opportunity
to leave behind an unfortunate legacy. The group was a serial equity
fund-raiser – to finance acquisitions or survival – and it had a record
of value destruction.
"In spite of the undoubted cyclicality
of its markets, we believe that Vesuvius can break with the past and be
managed prudently to generate robust cash flows, underpinning a good and
progressive dividend."
|
|
|
No comments:
Post a Comment