Stocks edge higher as markets look to US jobs report
Market Movers
techMARK 2,117.17 +0.15%
FTSE 100 5,901.42 +0.16%
FTSE 250 12,149.23 +0.38%
London's
blue-chip index finished with slight gains on Thursday after central
banks in the UK and Europe announced that they had kept policy on hold,
with the market's focus now turning to the key employment report in the
US due out tomorrow.
As expected, the Bank of England's Monetary Policy Committee
voted to maintain the Bank Rate at 0.5% at today's meeting and left its
asset purchase programme unchanged at £375bn, the Bank announced at
noon. Meanwhile, the European Central Bank (ECB) held the main refinancing rate at 0.75%, the deposit rate at zero and the marginal lending rate at 1.5%, as anticipated.
The market reaction to the central banks' decisions was pretty subdued
but the focus was on the subsequent press conference with ECB President Mario Draghi in which he hinted that the ECB did in fact discuss the possibility of a rate cut at this month's meeting.
"He turned slightly dovish on the rate front, with expectations now
building for a cut early next year," said ETX Capital's head of trading
Joe Rundle.
Looking ahead to tomorrow's session, all eyes will
be on the US employment report with the consensus predicting a 90,000
gain in non-farm payrolls in November, much worse than the 171,000
increase seen in October. The unemployment rate is expected to remain at
7.9%.
However ETX's Rundle said that it is "difficult to put
firm guesstimate on the outcome given the mixed data signals out of the
US this week [weaker ADP, better non-mfg ISM, poor ISM mfg] – but the
reaction should be seen as a litmus test for upside momentum heading into the year-end.
"If markets shrug off a weaker reading and continue their positive bias, a Santa rally may return," he said.
FTSE 100: Rolls-Royce drops on corruption investigation
Power systems giant Rolls-Royce
tanked after saying that it is to report to the Serious Fraud Office
(SFO) after matters of bribery and corruption involving so-called
"intermediaries" were discovered in Indonesia and China.
Defence group BAE Systems
performed well today. US peer Lockheed Martin is close to winning
Pentagon backing to build all 29 F-35 fighters planned for the coming
fiscal year after three years of cutbacks in orders for the nation’s
costliest weapon, officials told Bloomberg. The British firm is
one of the leading contractors in the consortium responsible for the
manufacture of the Royal Navy's next generation carrier based
interceptor.
Accountancy software group Sage was a
heavy faller after yesterday's full-year results with Natixis
downgrading the stock to 'neutral' this morning. UBS also cut its price
target for the shares.
Meanwhile, mining stocks were doing a good job of propping up the Footsie as metal prices rose. Antofagasta, ENRC, Vedanta, Anglo American, Xstrata, and Glencore were all making strong gains.
Sector peer BHP Billiton
advanced on rumours that it could be ready to make a $55-a-share cash
offer for Alabama-based 'pure play' metallurgical coal producer Walter
Energy. However, when contacted BHP remained tight-lipped, a
spokesperson said: “It is market speculation and not something we care
to comment on.”
Shares in Wolseley were heading back down after getting a boost from a number of broker upgrades on Wednesday.
FTSE 250: Imagination Technologies in the top spot
Imagination Technologies Group
rose into the top spot, rising over 6%, on the same day that JPMorgan
Chase reiterated its 'overweight' rating on the chip designer.
Electronics components supplier Premier Farnell was also a high riser despite saying profit in the third quarter fell amid challenging market conditions.
Electrical retailer Dixons
was given a lift by Barclays, which upgraded the stock to 'overweight',
saying that it would be boosted by the decline of Comet. The broker
more than doubled its target for the shares from 16p to 33p.
| AIM/Small Cap Report |
FTSE 100 - Risers
Antofagasta (ANTO) 1,337.00p +3.16%
Eurasian Natural Resources Corp. (ENRC) 283.30p +2.20%
Vedanta Resources (VED) 1,118.00p +2.19%
Johnson Matthey (JMAT) 2,411.00p +2.03%
Xstrata (XTA) 1,041.50p +1.91%
Anglo American (AAL) 1,812.00p +1.80%
Rexam (REX) 448.40p +1.77%
Next (NXT) 3,712.00p +1.75%
Barclays (BARC) 250.50p +1.66%
Aberdeen Asset Management (ADN) 339.50p +1.56%
FTSE 100 - Fallers
Weir Group (WEIR) 1,817.00p -3.40%
Rolls-Royce Holdings (RR.) 885.00p -3.12%
Pennon Group (PNN) 601.00p -2.91%
Meggitt (MGGT) 384.00p -2.27%
Sage Group (SGE) 294.00p -2.13%
Capita (CPI) 757.00p -2.07%
Hargreaves Lansdown (HL.) 728.50p -2.02%
Imperial Tobacco Group (IMT) 2,485.00p -1.70%
Wolseley (WOS) 2,843.00p -1.66%
Severn Trent (SVT) 1,551.00p -1.34%
FTSE 250 - Risers
Imagination Technologies Group (IMG) 426.50p +6.36%
Electrocomponents (ECM) 213.10p +4.31%
Dixons Retail (DXNS) 27.55p +4.24%
Halfords Group (HFD) 335.80p +3.90%
Ruspetro (RPO) 83.00p +3.75%
Elementis (ELM) 232.60p +3.70%
Renishaw (RSW) 1,882.00p +3.35%
Kenmare Resources (KMR) 31.82p +3.31%
Home Retail Group (HOME) 125.00p +3.31%
Premier Farnell (PFL) 182.70p +3.16%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,336.00p -4.64%
JD Sports Fashion (JD.) 721.50p -3.80%
Lancashire Holdings (LRE) 783.50p -3.57%
Centamin (DI) (CEY) 50.20p -3.00%
Bwin.party Digital Entertainment (BPTY) 105.40p -2.41%
Carillion (CLLN) 290.00p -2.32%
Hiscox Ltd. (HSX) 472.00p -2.20%
Supergroup (SGP) 601.50p -2.12%
Talvivaara Mining Company (TALV) 93.10p -2.10%
New World Resources A Shares (NWR) 270.00p -1.82%
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| Europe Market Report |
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European Markets Held Gains After Central Bank Decisions
The European markets
held on to their gains on Thursday, after both the European Central
Bank and the Bank of England made no changes with regard to interest
rates. Investors continue to watch the negotiations on the looming
fiscal cliff with great interest. However, political tension in Italy
grabbed the attention of investors today.
The European Central Bank
left its benchmark interest unchanged at its final rate-setting session
of this year after economic sentiment improved and borrowing costs
eased for troubled members of the currency-bloc.
The central bank
of 17 nations held the refinancing rate unchanged at 0.75 percent for a
fifth successive month in December following the Governing Council
meeting in Frankfurt on Thursday. The decision was in line with
economists' expectations.
The European Central Bank on
Thursday slashed the growth outlook for the 17-nation economy for this
year and next, and unveiled its first projection for 2014 that showed a
recovery in the currency-bloc.
The latest Eurosystem staff
macroeconomic projections show annual real GDP growth in a range
between -0.6 percent and -0.4 percent for 2012. This means the mid-point
was lowered to -0.5 percent from -0.4 percent seen in September.
GDP
growth is seen between -0.9 percent and 0.3 percent for 2013. This
compares to -0.4 percent and 1.4 percent predicted three months ago. The
economy is expected to recover in 2014 with GDP expansion seen between
0.2% and 2.2% that year.
European nations are unlikely to
finalize a bank supervision framework this year, European Central Bank
Executive Board member Jorg Asmussen reportedly said Wednesday. His
remarks came a day after an attempt by European Union leaders to strike a
deal on a single supervisor for euro area banks failed, largely due to
rift between France and Germany.
Standard and Poor's on
Wednesday lowered the credit rating on Greece to 'selective default'
(SD) from 'CCC', days after the country announced a debt buyback plan to
rid the country of its mounting debt. S&P said the decision follows
the Greek government's invitation to private sector bondholders on
December 3 to participate in a series of debt buyback auctions. Under
S&P's criteria, this move amounted to a 'selective default.'
The Greek government's
ambition is to bring 'spectacular change' to the struggling Eurozone
member, Prime Minister Antonis Samaras said in an interview to German
daily Bild on Thursday.
The Euro Stoxx 50 index of eurozone
bluechip stocks increased by 0.45 percent, while the Stoxx Europe 50
index, which includes some major U.K. companies, added 0.72 percent.
The DAX of Germany climbed by 1.07 percent and the CAC 40 of France rose by 0.31 percent. The FTSE 100 of the U.K. gained 0.15 percent and the SMI of Switzerland advanced by 0.82 percent.
In Frankfurt, ThyssenKrupp rose by 2.34 percent. The steel giant said three of its executive board members are stepping down.
Daimler
increased by 1.23 percent. The company plans to cut its stake in Airbus
maker EADS by up to 7.44 percent before year-end.
Beiersdorf
climbed by 1.95 percent, after lifting its sales forecast for the year.
MunichRe finished higher by 0.61 percent, after Societe Generale
reduced its rating on the stock. Sky Deutschland closed higher by 0.20 percent, after Citigroup downgraded the stock.
In Paris, EADS surged
by 7.97 percent. The company announced a new shareholding structure
late Wednesday whereby France, Germany and Spain have agreed on a capped
government shareholding of about 12 percent, 12 percent and 4 percent,
respectively, with Germany taking a direct stake in EADS for the first
time. Merrill Lynch also upgraded the stock to ''Buy'' from ''Neutral.''
GDF Suez sank
by 11.31 percent. The utility expects recurring income to decline year
over year in 2013. Merrill Lynch downgraded the stock to ''Neutral.''
Lagardere fell by 2.78 percent, following a broker downgrade.
In London, mining stocks were notably higher. Antofagasta increased by 3.16 percent, Vedanta Resources gained 2.19 percent and Eurasian Natural Resources added 2.20 percent.
Standard Chartered
rose by 0.77 percent. The lender said it expects to pay around $330
million as settlement to U.S. regulators for its failure to comply with
sanctions against Iran.
Sage Group, which reported results yesterday, declined by 2.13 percent.
Premier Farnell advanced by 3.16 percent. The electronic components distributor reported third-quarter results. TUI Travel gained 0.60 percent. Deutsche Bank downgraded the stock to ''Hold'' from ''Buy.''
easyJet finished
up by 0.96 percent, after the low-cost airline reported increases in
passengers and load factor for the month of November.
The euro area
economy slid into recession in the third quarter, an updated report
from Eurostat confirmed Thursday. The gross domestic product fell 0.1
percent from a quarter ago, when it dropped 0.2 percent. The figures
matched the preliminary estimate released on November 15.
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| US Market Report |
Stocks Moving Mostly Higher, Apple Shows Notable Rebound
While
buying interest has remained relatively subdued, stocks have moved
mostly higher over the course of the trading day on Thursday. Technology stocks have helped to lead the way higher, with Apple (AAPL) rebounding after ending the previous session sharply lower.
The major averages are all in positive territory, although the Nasdaq is outperforming its counterparts. The Nasdaq is up 20.99 points or 0.7 percent at 2,994.69, while the Dow is up 14.31 points or 0.1 percent at 13,048.80 and the S&P 500 is up 3.41 points or 0.2 percent at 1,412.69.
The modest upside for the markets is partly due to strength in the tech sector, as reflected by the more substantial gain by the tech-heavy Nasdaq.
Shares of Apple have shown a notable rebound, with the iPad and iPhone maker rising by 2.4 percent after tumbling by 6.4 percent on Wednesday.
The markets may
also be benefiting from the release of a report from the Labor
Department showing a bigger than expected drop by initial jobless claims
in the week ended December 1st.
The Labor Department said
jobless claims fell to 370,000, a decrease of 25,000 from the previous
week's revised figure of 395,000. Economists had expected jobless claims
to drop to 380,000 from the 393,000 originally reported for the
previous week.
With the drop, jobless claims continued to settle
down after seeing considerable volatility due to the impact of
Superstorm Sandy.
Nonetheless, many traders remain on the sidelines ahead of tomorrow's closely watched monthly employment report.
Economists
expect an increase of about 90,000 jobs in November following the
addition of 171,000 jobs in October. The unemployment rate is expected
to edge up to 8.0 percent from 7.9 percent.
Continued uncertainty
about the looming fiscal cliff may also be helping to limit the upside
for the markets, with lawmakers in Washington struggling to reach an
agreement to avoid the approximately $600 billion in automatic tax
increases in spending cuts due to take effect at the end of the year.
Sector News
Computer hardware stocks
have shown a strong move to the upside on the day, driving the NYSE
Arca Computer Hardware Index up by 1.7 percent. With the gain, the index
has risen to its best intraday level in well over a month.
Seagate Technology (STX) and Western Digital (WDC) are turning in two of the hardware sector's best performances, advancing by 3.8 percent and 3.3 percent, respectively.
Notable strength has also emerged among internet stocks, as reflected by the 1.1 percent gain being posted by the NYSE Arca Internet Index. Akamai Technologies (AKAM) has helped to lead the sector higher, jumping 9.1 percent after announcing a partnership with AT&T (T).
Semiconductor, commercial real estate, and airline stocks are also seeing some strength on the day, while modest weakness is visible among trucking and defense stocks.
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 Index advanced by 0.8 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
Meanwhile, the major European markets all moved to the upside on the day. The German DAX Index surged up by 1.1 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index rose by 0.3 percent and 0.2 percent, respectively.
In the bond market, treasuries continue
to see modest strength, extending the upward move seen over the two
previous sessions. Subsequently, the yield on the benchmark ten-year
note, which moves opposite of its price, has dipped 1.9 basis points to
1.572 percent.
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| Broker tips |
StanChart, Sage, Premier Farnell
Investec has reiterated its 'buy' rating and 1,800p target for emerging markets lender Standard Chartered following the group's pre-close trading update, saying the business is 'sitting pretty'.
"STAN may have travelled well ahead of today's statement, but with
improving momentum into 2013e, we remain committed buyers," analyst Ian
Gordon said.
UBS has cut its target for accountancy software group Sage
from 305p to 300p and kept its 'neutral' rating for the stock, saying
that the second half was "solid" but upgrades to forecasts are unlikely.
The broker said: "We believe management’s FY13 targets are in
line with current consensus estimates and see little likelihood of
upgrades."
Premier Farnell may have received a pleasing
market reaction to its third-quarter statement on Thursday, but Panmure
Gordon has reiterated its 'sell' rating for the stock, saying that
conditions remain tough for the electronics components supplier.
Analyst Andy Brown said: "Recent results from the group have tended to
come in on the disappointing side. Senior management change is unlikely
to signal a shift in strategy. Global PMI data also remains uncertain
suggesting some difficult months ahead." |
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