Stocks finish flat on US budget uncertainty
Market Movers
techMARK 2,131.98 +0.12%
FTSE 100 5,958.34 -0.05%
FTSE 250 12,422.77 +0.16%
The FTSE 100
index finished broadly flat on Thursday afternoon, taking a pause of
two days of decent gains, with the focus remaining on the US 'fiscal
cliff' ahead of the Christmas holiday.
Even a positive
surprise in US gross domestic product (GDP) failed to give markets a
boost. The American economy expanded at an adjusted annual rate of 3.1%
in the third quarter, well ahead of the previously estimated 2.7% growth
forecast.
"European markets have struggled to retest
yesterday’s highs despite gaining momentum in the first few hours of
trading," said sales trader Toby Morris from CMC Markets.
"Investors saw the early recovery from yesterday’s late sell off halted
with traders unable to find any real distractions to the politics in the
US to push markets to new levels," he said.
Stocks finished
slightly higher on Wednesday after Standard & Poor's upgraded
Greece's credit rating to 'B-minus' and the IFO German business climate
index beat expectations. However, gains were pared by the close after
the White House Communications Director Dan Pfeiffer said that President
Barack Obama would veto any ‘plan B’ for the 'fiscal cliff' from House
Speaker John Boehner.
FTSE 100: Carnival drops after full-year revenue decline
Carnival ,
the largest cruise company in the world, reported a fall in full-year
revenues after what it called its most challenging year ever.
Shares dropped nearly 6% on Thursday afternoon after the company
reported that revenue came in at $15.4bn, down from $15.8bn previously.
Among the risers was engineering solutions group Weir rose
after announcing that it is to buy pressure control rental equipment
firm Mathena for £148m. Investec this morning raised its target for the
stock from 2,020p to 2,100p and reiterated its 'buy' rating, saying that
the purchase "fits in nicely with Seaboard and diversifies Oil &
Gas revenues away from the pressure pumping market".
Outsourcing giant Serco
fell despite saying that it is on track to meet expectations for 2012
as it announced the sale of two operations at a loss. The firm said it
expected to deliver a year of strong total revenue growth, including
good organic growth.
Distribution and outsourcing firm Bunzl extended losses following yesterday's pre-close trading update. JP Morgan Cazenove and UBS both cut their target for the stock this morning.
Defence and aerospace group BAE Systems
rebounded following yesterday's admission that it is struggling to
agree on a price for the supply of 72 Typhoon aircraft with Saudi
Arabia. The company said that if it cannot come to an agreement, it
would reduce its full-year underlying earnings per share by around three
pence per share.
FTSE 250 movers: Vesuvius gains after de-merger
Vesuvius,
the de-merged Engineered Ceramics division of former FTSE 250 group
Cookson, surged on Thursday, on day after its split from the chemicals
division (now called Alent) became effective. In a research
report yesterday, Investec said: "we believe that Vesuvius can break
with the past and be managed prudently to generate robust cash flows,
underpinning a good and progressive dividend."
Insurance outfit Lancashire Holdings fell after estimating the impact Hurricane Sandy on the business will be in the region of $40-60m. Sector peer Amlin was flat after puttting its losses from the US superstorm at £145m, most of which comes from reinsurance claims.
Construction firm Balfour Beatty gained after saying its half-owned Hong Kong builder, Gammon Construction, had won a contract worth £270m.
Transport group Go-Ahead
was lower after saying that it has compensated London Midland customers
with £7m of benefits after they were disrupted by cancellations and
delays last year.
| AIM/Small Cap Report |
FTSE 100 - Risers
ITV (ITV) 107.00p +3.08%
InterContinental Hotels Group (IHG) 1,710.00p +3.07%
Weir Group (WEIR) 1,863.00p +2.81%
Aggreko (AGK) 1,742.00p +2.47%
CRH (CRH) 1,249.00p +2.04%
Aberdeen Asset Management (ADN) 365.20p +1.90%
BAE Systems (BA.) 348.00p +1.78%
Kingfisher (KGF) 283.30p +1.72%
Whitbread (WTB) 2,521.00p +1.57%
Tullow Oil (TLW) 1,246.00p +1.47%
FTSE 100 - Fallers
Carnival (CCL) 2,391.00p -6.05%
Evraz (EVR) 267.00p -4.09%
Randgold Resources Ltd. (RRS) 5,965.00p -2.29%
United Utilities Group (UU.) 674.00p -2.03%
Polymetal International (POLY) 1,159.00p -1.78%
Fresnillo (FRES) 1,878.00p -1.73%
BG Group (BG.) 1,008.50p -1.42%
Reckitt Benckiser Group (RB.) 3,909.00p -1.41%
International Consolidated Airlines Group SA (CDI) (IAG) 186.00p -1.33%
National Grid (NG.) 702.00p -1.27%
FTSE 250 - Risers
Vesuvius (VSVS) 352.00p +8.64%
Talvivaara Mining Company (TALV) 106.70p +5.33%
Perform Group (PER) 389.60p +5.30%
Genus (GNS) 1,431.00p +3.77%
Man Group (EMG) 86.50p +3.59%
Ocado Group (OCDO) 82.80p +3.56%
Stobart Group Ltd. (STOB) 101.50p +3.05%
Centamin (DI) (CEY) 42.71p +3.02%
ITE Group (ITE) 242.40p +2.54%
Petra Diramonds Ltd.(DI) (PDL) 109.70p +2.52%
FTSE 250 - Fallers
New World Resources A Shares (NWR) 294.90p -4.41%
Ferrexpo (FXPO) 249.50p -3.26%
Ruspetro (RPO) 76.55p -3.10%
Telecity Group (TCY) 775.50p -3.06%
Chemring Group (CHG) 234.60p -3.06%
Heritage Oil (HOIL) 182.60p -2.98%
Computacenter (CCC) 410.00p -2.94%
Rank Group (RNK) 144.10p -2.64%
Victrex (VCT) 1,606.00p -2.61%
Workspace Group (WKP) 306.00p -2.49% |
| Europe Market Report |
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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
ended Thursday's trading session with mixed results. The stalemate in
the U.S. fiscal cliff negotiations has investors concerned, as the end
of the year draws ever closer. The strong upward revision in U.S. GDP
for the third quarter initially sparked gains in Europe, which then
quickly eroded.
The White House Wednesday threatened to
veto a plan put forward by leading House Republicans aimed at delaying
the onset of the 'fiscal cliff.' The plan, called 'Plan B,' was
presented by House Speaker John Boehner.
According to a White
House, Boehner's proposal would only raise roughly a third of the $1
trillion in tax increases from high-income households that had
previously been proposed by the Speaker.
The White House Communications Director Dan Pfeiffer said President Barack Obama
is still seeking "a significant, balanced deal that is good for
American families, the economy and for our nation's future" and has put
forward a proposal that offers to meet Boehner halfway on taxes and
spending.
The European Commission on Thursday approved
restructuring plans of four Spanish banks, allowing those banks to
receive aid from the Eurozone bailout fund. The commission concluded
that the restructuring plans of four Spanish banks, namely Liberbank,
Caja3, Banco Mare Nostrum (BMN) and Banco CEISS, are in line with EU
state aid rules.
The Italian Senate has approved Prime Minister
Mario Monti's budget bill for 2013. Monti had previously announced that
he will resign as Prime Minister once the budget receives final
approval. His resignation will lead to a general election.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.21 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, declined by 0.05 percent.
The DAX of Germany climbed by 0.05 percent and the CAC 40 of France gained 0.50 percent. The FTSE 100 of the U.K. fell by 0.05 percent and the SMI of Switzerland decreased by 0.48 percent.
In Frankfurt, Volkswagen ended the session with a gain of 0.52 percent. JP Morgan initiated coverage on the stock with an "Overweight" rating.
Car parts manufacturer Rheinmetall dropped by 2.67 percent. Citigroup downgraded the stock to ''Sell'' from ''Neutral.''
In Paris, STMicroelectronics rose
by 0.60 percent. Sweden's LM Ericsson Telephone, which has a 50 percent
stake in ST-Ericsson, a joint venture with STMicroelectronics, said it
would not acquire the majority of the joint venture and would explore
various strategic options for the assets.
Peugeot climbed by 0.64 percent, after the announcement that it is expanding its alliance with General Motors.
In London, Weir Group
advanced by 2.81 percent. The engineering solutions provider announced
the acquisition of US-based Mathena, Inc., a provider of pressure
control rental equipment and services for onshore oil and gas drilling
applications.
Diageo climbed by 0.54 percent, after JPMorgan upgraded the stock to ''Neutral'' from ''Underweight.'' British American Tobacco rose by 0.48 percent, after Nomura increased its price target on the stock.
Consort Medical increased by 3.67 percent. The medical device maker is selling its King Systems unit to Denmark's Ambu for $170 million.
Germany's
producer price inflation weakened to a four-month low in November as
expected by economists, data released by statistical office Destatis
showed Thursday.
The producer price inflation slowed to
1.4 percent in November from 1.5 percent in October, in line with
economists' forecast. The November growth was the smallest since July,
when prices moved up 0.9 percent.
U.K. retail sales remained
unchanged in November as consumers remained cautious ahead of the
Christmas shopping season, official data showed Thursday. The Office for
National Statistics said retail sales including automotive fuel failed
to expand after easing 0.7 percent in October. Sales were forecast to
grow 0.4 percent.
| US Market Report |
Stocks Nearly Flat As Traders Keep Close Eye On Washington
Stocks continue
to turn in a lackluster performance in mid-day trading on Thursday amid
renewed uncertainty about the looming fiscal cliff. The focus on
developments in Washington has overshadowed a batch of largely upbeat
economic data.
Currently, the major averages are nearly flat on the day. While the S&P 500 has edged up 1.62 points or 0.1 percent to 1,437.43, the Dow is down 1.80 points or less than a tenth of a percent at 13,250.17 and the Nasdaq is down 1.64 points or 0.1 percent at 3,042.72.
The
choppy trading on Wall Street comes as traders continue to keep a close
eye on Washington, as uncertainty about the fiscal cliff has crept back
into the markets following recent comments by President Barack Obama
and House Speaker John Boehner.
Boehner has indicated that
he will bring his "Plan B" legislation to the floor of the House for a
vote despite a veto threat from the White House.
The "Plan B"
legislation would extend the Bush-era tax cuts for people making up to
$1 million, but Democrats claim it would raise taxes on millions of
working families.
Boehner has argued that the president would be
responsible for the largest tax increase in American history if he can't
persuade Senate Democrats to approve the legislation.
As a
result of the focus on the budget negotiations, traders have largely
shrugged off the latest batch of U.S. economic data, including reports
showing stronger than expected existing home sales growth and a rebound
in Philadelphia-area manufacturing activity.
The National Association of Realtors
said existing home sales rose 5.9 percent to an annual rate of 5.04
million in November from a downwardly revised 4.76 million in October.
Economists had expected existing home sales to climb to 4.90 million.
With the bigger than expected increase, existing home sales rose to their highest level since spiking to 5.44 million in November of 2009.
Separately, the Philadelphia Federal Reserve said
its diffusion index of current activity climbed to a positive 8.1 in
December from a negative 10.7 in November, with a positive reading
indicating an increase in regional manufacturing activity. Economists
had expected the index to remain negative.
The Commerce Department
also released a report showing a bigger than expected upward revision
to the pace of GDP growth in the third quarter, while the Labor
Department reported a modest rebound in weekly jobless claims.
Sector News
While
most of the major sectors are showing only modest moves, gold stocks
are seeing substantial weakness in mid-day trading. The NYSE Arca Gold Bugs Index has tumbled by 2.4 percent to its lowest intraday level in over four months.
The weakness among gold stocks comes amid a sharp drop by the price of the precious metal, with gold for February delivery plunging $29.70 to $1,638 an ounce.
Meanwhile, electronic storage stocks have moved to the upside over the course of the session, pushing the NYSE Arca Disk Drive Index up by 1 percent. Commercial real estate and banking stocks are also seeing some strength on the day.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 fell by 1.2 percent following recent strength, Hong Kong's Hang Seng Index inched up by 0.2 percent.
In the bond market, treasuries are
pulling back near the unchanged line after moving higher earlier in the
session. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is down by less than a basis point at 1.793
percent after hitting a low of 1.77 percent.
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| Broker tips |
Vodafone, Serco, Weir
Nomura has kept its 'neutral' rating for telecoms group Vodafone,
saying that the higher-than-expected costs from last week's Dutch
spectrum auction raise more questions of the company's 'inflated'
dividend.
"Paying an inflated ordinary dividend has been
discredited as a way to reward shareholders, it restricts strategic
flexibility and it leaves Vodafone dependent on Verizon Wireless cash
flows which compromises its ability to negotiate with Verizon. A review
of cash return policy is overdue, we believe."
Seymour Pierce has reiterated its 'buy' recommendation and 700p target for outsourcing giant Serco following the firm's pre-close trading statement on Thursday.
"We remain buyers of the shares on account of the company’s
geographical and operational diversity which we believe puts the company
in a strong position to deliver growth," said analyst Caroline de La
Soujeole.
Investec has raised its target for engineering group Weir
from 2,020p to 2,100p and reiterated its 'buy' rating for the stock,
following Thursday's announcement that it is set to acquire pressure
control provider Mathena.
"This acquisition fits in nicely with Seaboard and diversifies Oil & Gas revenues (31% of FY13E sales) away from the pressure pumping market," the broker said.
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