Markets boosted by US jobs report
Market Movers
techMARK 2,123.03 +0.28%
FTSE 100 5,914.40 +0.22%
FTSE 250 12,187.56 +0.32%
The
Footsie finished with slight gains on Friday afternoon as some
better-than-expected jobs data from the US managed to outweigh concerns
about Germany’s economy.
Stocks started to the day on the back foot on the news that the Bundesbank
now expects German gross domestic product (GDP) to grow by just 0.4%
next year, down from its previous prediction in June for a 1.6%
expansion.
However, the closely-watched US employment report,
out at 13:30 (London time), provided a boost to markets across the
globe after non-farm payrolls rose by 146,000 in November, versus the
85,000 expected by the market. Meanwhile, the unemployment rate dropped
from 7.9% to 7.7% over the month, compared with forecasts for no change.
“On a day that’s seen lamentable GDP figures from both
Portugal and Greece, as well as terrible industrial production numbers
for Germany and the UK, continued chatter surrounding the seemingly
inevitable removal of the UK’s AAA rating and the single currency
significantly marked down, the market’s relative resilience seems an apt synopsis of 2012,” said market analyst Michael Hewson from CMC Markets.
“It appears that no matter what picture the European macro backdrop paints, markets continue to take their lead from the US recovery story and a belief that equity valuations are attractive in its context,” he said.
In this regard, it is understandable why markets were volatile in late afternoon trade, with the University of Michigan consumer confidence index (released at 14:55) dropping from 82.7 to 74.5 in December, much worse the expected fall to 82.0.
Rolling on in the background was increasing speculation that the European Central Bank (ECB) may be considering cutting rates at the next policy meeting on January 10th. Bloomberg
cited three officials close to the Governing Council’s discussions who
said that “a majority of the Council were open to cutting the benchmark
rate yesterday”.
Analysts at Barclays Research said in an
e-mail this afternoon: “Overall, such comments are in line with our
baseline view that the ECB will lower the main policy rate during Q113,
and they raise the chance that a rate cut could come as early as the
next monetary policy-based meeting.”
FTSE 100: Defensive stocks lead risers
Defensive
stocks, such as those in the utilities, tobacco and pharmaceuticals
categories, were performing well today, as they benefited from risk
aversion which has put a dent in the mining sect this morning. Centrica, Imperial Tobacco and Shire were among the best performers.
Polymetal
was also putting in a decent performance. Shares have gained steadily
over the last few days after the company revealed on Wednesday that it
would give $191m back to shareholders following a solid set of financial
results.
Meanwhile, IAG was a stand-out faller. The
company's airline, Iberia, is gearing up to deal with strikes ahead of
the busy Christmas period. Workers are protesting over the company's
plan to slash 22% of its workforce in 2013.
Commodities trader and mining giant Glencore
was trading lower despite receiving the approval from the Ministry of
Commerce of the People's Republic of China for its acquisition of
Viterra, the final regulatory green light needed to take over the
Canadian agribusiness. Merger partner Xstrata joined Glencore in the red.
Marks & Spencer
was pulling back after a strong rise on Thursday. Market rumours
yesterday linked retail tycoon Sir Philip Green to a possible bid for
the High Street giant, as speculation followed Green's sale of a 25%
stake in Top Shop last week. However an Arcadia spokesperson denied such
speculation yesterday when questioned by Sharecast.
FTSE 250: Berkeley boosted by strong interims
House builder Berkeley Group
jumped early on after seeing revenue and profit surge in the first
half, as it declared an interim dividend of 15p per share, compared with
nil the year before. Revenue increased 69.4 per cent and pre-tax profit
rose 40.7 per cent in the six months to October 31st.
ITE Group made decent gains after Goldman Sachs raised its target from 315p to 325p and reiterated its ‘buy’ recomendation.
Meanwhile, Kenmare Resources shares retreated back after making gains the previous day following takeover speculation.
| AIM/Small Cap Report |
FTSE 100 - Risers
Polymetal International (POLY) 1,088.00p +2.06%
Shire Plc (SHP) 1,900.00p +1.93%
Burberry Group (BRBY) 1,305.00p +1.87%
IMI (IMI) 1,090.00p +1.68%
Centrica (CNA) 337.00p +1.63%
Experian (EXPN) 1,051.00p +1.45%
Johnson Matthey (JMAT) 2,443.00p +1.33%
Diageo (DGE) 1,878.50p +1.32%
Rolls-Royce Holdings (RR.) 896.50p +1.30%
Evraz (EVR) 242.40p +1.21%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 171.20p -1.83%
ITV (ITV) 101.80p -1.17%
G4S (GFS) 249.20p -1.15%
Pearson (PSON) 1,177.00p -1.09%
Marks & Spencer Group (MKS) 393.60p -1.06%
Standard Chartered (STAN) 1,485.50p -1.00%
Admiral Group (ADM) 1,130.00p -0.88%
Tesco (TSCO) 336.75p -0.84%
British Sky Broadcasting Group (BSY) 761.50p -0.65%
Serco Group (SRP) 545.00p -0.64%
FTSE 250 - Risers
ITE Group (ITE) 225.00p +5.04%
Berkeley Group Holdings (The) (BKG) 1,728.00p +4.73%
Home Retail Group (HOME) 130.00p +4.00%
PayPoint (PAY) 893.50p +3.90%
Talvivaara Mining Company (TALV) 96.70p +3.87%
New World Resources A Shares (NWR) 280.00p +3.70%
Victrex (VCT) 1,630.00p +3.69%
Lonmin (LMI) 265.00p +3.15%
RPS Group (RPS) 212.00p +3.11%
AZ Electronic Materials SA (DI) (AZEM) 380.30p +3.06%
FTSE 250 - Fallers
Kenmare Resources (KMR) 30.57p -3.93%
Man Group (EMG) 73.65p -3.73%
Jupiter Fund Management (JUP) 274.50p -3.68%
Petropavlovsk (POG) 321.10p -3.14%
Salamander Energy (SMDR) 172.30p -2.87%
EnQuest (ENQ) 114.90p -2.63%
Dialight (DIA) 1,073.00p -2.54%
RIT Capital Partners (RCP) 1,120.00p -1.84%
BH Macro Ltd. EUR Shares (BHME) € 19.00 -1.81%
WH Smith (SMWH) 651.00p -1.66%
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| European Market |
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European Markets Finished Mixed Despite Strong U.S. Jobs Data
The European markets
ended Friday's session with mixed results. The markets were weak in
early trading, after the Bundesbank lowered Germany's growth forecast,
but bounced back in the early afternoon, following the much better than
anticipated U.S. jobs report for November. However, the markets pared
those gains in late trading, following the release of the disappointing
U.S. consumer sentiment data.
The Bundesbank on Friday
slashed Germany's growth forecast for next year, citing widespread
uncertainty and difficult economic situation in parts of the euro area.
Gross domestic product
is now expected to grow 0.4 percent in 2013, slower than 1.6 percent
expansion forecast in June. This year, growth is estimated at 0.7
percent, down from the previous forecast of 1 percent.
Growth is
seen picking up to 1.9 percent in 2014. "The phase of weak economic
momentum will not last very long and that Germany will soon return to a
growth path," the bank said in its December monthly report.
Employment in
the U.S. increased by much more than anticipated in the month of
November, according to a report released by the Labor Department on
Friday, with the report indicating that Hurricane Sandy did not
substantively impact the data.
The Labor Department said
non-farm payroll employment increased by 146,000 jobs in November
compared to economist estimates for an increase of about 85,000 jobs.
However, the report also showed a notable downward revision to the pace
of job growth in the two previous months.
The Labor Department
also said the unemployment rate dropped to 7.7 percent in November from
7.9 percent in October. The drop surprised economists, who had expected
the rate to edge up to 8.0 percent.
Consumer sentiment in the
U.S. has unexpectedly deteriorated in the month of December, according
to a preliminary report released by Thomson Reuters and the
University of Michigan on Friday. The report showed that the consumer
sentiment index tumbled to 74.5 in December from the final November
reading of 82.7.
The steep drop by the consumer sentiment index came as a surprise to economists, who had expected the index to inch up to 83.0.
The Euro Stoxx 50 index of eurozone bluechip stocks declined by 0.16 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.04 percent.
The DAX of Germany fell by 0.34 percent, but the CAC 40 of France climbed by 0.11 percent. The FTSE 100 of the U.K. gained 0.15 percent and the SMI of Switzerland rose by 0.09 percent.
In Frankfurt, Deutsche Telekom declined by 2.11 percent after reducing its dividend. PATRIZIA Immobilien
dropped by 2.56 percent. The real estate services firm was downgraded
at HSBC. Deutsche Wohnen lost 1.04 percent. HSBC downgraded its rating
on the stock to ''Underweight'' from ''Neutral.''
Linde
climbed by 0.04 percent. JPMorgan reinitiated the stock with an
''Overweight'' rating. JPMorgan initiated CTS Eventim with an
''Overweight'' rating. The stock rose by 1.23 percent.
In Paris, Alcatel Lucent
decreased by 2.94 percent. The stock will be removed from the benchmark
index, effective December 24. Deutsche Bank and HSBC reduced their
ratings on GDF Suez. The stock fell by 0.49 percent. Publicis Groupe
gained 0.92 percent, after announcing two acquisitions in India. Air France-KLM fell by 0.56 percent, after reporting increases in traffic and capacity for November.
In London, BG Group
decreased by 0.05 percent. A report said the company is exploring the
sale of some non-strategic assets related to its $20 billion natural gas
development in Australia, as it tries to unlock more capital to meet
its spending commitments.
Marks & Spencer dropped by 1.13 percent. Goldman Sachs
downgraded the stock to ''Sell'' from ''Neutral,'' while raising its
rating on Next, whose shares dipped by 0.19 percent. Photo-Me
International fell by 2.61 percent after reporting lower revenues in the
first half of the year.
Thomas Cook surged by 12.50 percent, after Morgan Stanley upgraded the stock. Berkeley Group rose by 4.67 percent, after the company reported increased profit in the first half and resumed its dividend.
Julius Baer climbed by 2.32 percent in Zurich. Credit Suisse
reinitiated the stock with an ''Outperform'' rating. Syngenta was
upgraded to ''Neutral'' from ''Underweight'' at JPMorgan. The stock finished up by 0.11 percent.
| US Market Report |
Upbeat Jobs Data Pushes Stocks Higher At The Open
While
upbeat employment data helped to push stocks higher at the start of
trading on Friday, buying interest waned not long after the open. The
major averages have subsequently pulled back well off their highs for
the young session.
Currently, the major averages remain in positive territory, adding to the gains posted in the previous session. The Dow is up 51.75 points or 0.4 percent at 13,125.79, the Nasdaq is up 3.39 points or 0.1 percent at 2,992.66 and the S&P 500 is up 3.65 points or 0.3 percent at 1,417.59.
The
initial strength on Wall Street came on the heels of the release of a
report from the Labor Department showing stronger than expected job
growth in the month of November.
The Labor Department said
non-farm payroll employment increased by 146,000 jobs in November
compared to economist estimates for an increase of about 85,000 jobs.
However, the report also showed a notable downward revision to the pace of job growth in the two previous months.
While the Labor Department also
said the unemployment rate fell to a nearly four-year low of 7.7
percent, the drop reflected a decrease in the size of the labor force as
some unemployed people gave up looking for work.
Lingering
concerns about the looming fiscal cliff may have also helped to limit
the upside for the markets, with traders keeping an eye on negotiations
in Washington.
Most of the major sectors are showing only modest
moves in early trading, although considerable strength is visible among
gold stocks. Reflecting the strength in the gold sector, the NYSE Arca Gold Bugs Index up by 1.1 percent.
Steel,
banking, and health insurance stocks are also seeing moderate strength,
while modest weakness has emerged among software and networking stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance. While Australia's All Ordinaries Index advanced by 0.9 percent, Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index edged down by 0.2 percent and 0.3 percent, respectively.
The major European markets have also turned mixed on the day. The German DAX Index is down by 0.1 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index are both up by 0.3 percent.
In the bond market, treasuries have
come under considerable pressure on the heels of the upbeat jobs data.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price is up by 4.7 basis points at 1.628 percent
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| Broker tips |
PZ Cussons, Berkeley, Cape
Investec has raised its price target for cosmetic products group PZ Cussons from 300p to 335p after the firm confirmed that it is to return to profit growth in the first half.
However, the broker kept its 'hold' rating, saying that much depends on
how Nigeria (described as "fragile" by PZ Cussons) performs in the
second half.
Panmure Gordon has raised its target for house builder Berkeley Group from 1,390p to 1,650p, saying that first-half profits were "ahead of what we were looking for at this stage".
However, a 'hold' rating on the stock was maintained by Panmure, with the broker saying that the shares look "up with events".
UBS has downgraded its rating for engineering support services firm Cape from 'buy' to 'neutral', saying that fine-tuning the business model has highlighted more downside.
"We reiterated our 'buy' rating on Cape after the company’s profit
warning on November 12th (albeit with a caveat that uncertainties
remained) citing the underlying steady business in the UK and the
potential for recovery under the new CEO.
"While we still
think those positive points hold, recent newsflow on Australia, further
refinements of our model and considerations of the long-term investment
case have turned us more cautious and so we downgrade the stock to
'neutral'," the broker said in research report on Friday.
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