London open: Stocks rise after Chinese manufacturing figures
Market Movers
- techMARK 2,113.94 +0.34%
- FTSE 100 5,888.76 +0.37%
- FTSE 250 12,067.90 +0.28%
UK stocks opened in positive territory on Monday morning following some
upbeat economic data from China and India, but gains were only moderate
with the focus likely to be on Greece as Eurozone finance ministers
meet in Brussels.
The final reading for the HSBC China purchasing managers' index (PMI)
increased from 49.5 to 50.5 in November, in line with the preliminary
estimates. Meanwhile, the official PMI from National Bureau of
Statistics rose to a seven-month high of 50.6, up from 50.2 in October.
What's more India's manufacturing PMI recorded its fastest growth in five months, coming in at 53.7.
"Thus, better than expected manufacturing data from two export giants
is sending a clear signal to investors which is the pace of the global economic recovery is back-on-track," said financial trade Shavaz Dhalla from Spreadex.
However, Dhalla noted that markets will have to digest a barrage of
other economic data elsewhere today "which could dictate the flow of
sentiment", including manufacturing data from the Eurozone, UK as well
as the US.
"Therefore, investors should brace for a day of potential volatility
as today's reported better than expected manufacturing data from China
and India is unlikely to compensate for a raft of poor manufacturing
data from other nations," he said.
Meanwhile, the Eurogroup
is meeting today to focus on Greece and the controversial voluntary
debt buy-back scheme. German Chancellor Angela Merkel told the Bild newspaper at the weekend that Germany would considering writing off debt once Greece tips into a budget surplus.
"Given that these private bond holders have already seen their holdings
undertake a haircut once already this year, they could well resent
being asked to take yet another loss on their holdings, while EU
governments continue to refuse one of their own," said market analyst
Michael Hewson from CMC Markets.
Polymetal gains after doubling estimates at Albazino
Precious metals giant Polymetal rose
after doubling its mineral resources estimate at its Albazino project
in the Khabarovsk territory, Russia. The miner said that as of August
1st, mineral resources at Albazino were estimated at 37Mt with an
average grade of 4.8g/t of gold (Au) containing 5.7Moz of Au.
Sector peers Kazakhmys, ENRC and Rio Tinto were also higher this morning on the back of increased hopes for demand after the Chinese data.
Tullow Oil was performing well after HSBC upgraded its rating to 'neutral', while RSA Insurance gained after Deutsche Bank lifted its recommendation to 'buy'.
Cable & Wireless Communications
surged after agreeing to sell the majority of its businesses in its
Monaco & Islands division as it attempts to scale back its
geographic footprint and focus on its core operations. CWC is selling
the assets to Bahraini telecoms firm Batelco Group for an enterprise
value of $680m.
Mortgage provider Paragon Group of Companies
was wanted after backing up press speculation by confirming that it is
thinking about acquiring small private bank Hampshire Trust. The
purchase would grant the company banking licence for the first time,
allowing it offer savings accounts for its customers.
Regeneration specialist St. Modwen Properties was in demand after saying expectations for the full year remain unchanged following strong momentum across the entire group.
| UK Event Calendar |
Monday December 03
INTERIM DIVIDEND PAYMENT DATE
Andrews Sykes Group, Sony Corp.
QUARTERLY PAYMENT DATE
JPMorgan Claverhouse Inv Trust
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Construction Spending (US) (15:00)
ISM Manufacturing (US) (15:00)
ISM Prices Paid (US) (15:00)
PMI Manufacturing (EU) (09:00)
GMS
Silvermere Energy
FINALS
Evocutis
ANNUAL REPORT
Diploma
IMSS
City of London Investment Group
EGMS
Alpha Bank GDR (Reg S) USD, Integra Group GDR (Reg S)
AGMS
Avation, Henderson Fledgling Trust , Skywest Airlines Ltd.
UK ECONOMIC ANNOUNCEMENTS
PMI Manufacturing (09:30)
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| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe open: Greece and Merkel push stocks higher
-Merkel says Greek debt hair-cut a possibility in the medium term
-Equity strategists wax optimistic on 2013 outlook
-Noyer says inflation expectations well anchored
-Greek 10 year bond yields below 15 per cent
-Greece announces details of debt buy-back
FTSE-100: 0.27%
Dax-30: 0.29%
Cac-40: 0.42%
FTSE-Mibtel 30: 0.70%
Ibex 35: 0.12%
Stoxx 600: 0.30%
European equities began the day – and the month - with small advances.
That as Greece unveiled the details of its bond buy-back offer, which is
due to take place this next Friday.
Yet what most caught
investors' attention were the remarks out from Germany's Chancellor,
Angela Merkel, this past weekend, to the effect that euro-area leaders
might consider writing off Greek debt once the country has a budget
surplus. That marks an abrupt about-face for Germany.
Acting
as a backdrop however, it remained to be seen whether investors might
not react poorly to the less-than-constructive remarks out over the
weekend from politicians on both sides of the aisle on Capitol Hill as
regards the fiscal cliff.
Despite the above, early Monday
morning saw a torrent of positive remarks out from equity strategists on
the positive outlook for equities in 2013, particularly in Europe.
EADS to restructure shareholder structure
Some reports out over the week hinted at the possibility of a special dividend pay-out from EADS as part of plans to restructure its shareholder base.
German insurer Allianz
is ready to increase its offer for Provinzial NordWest to
"substantially" more than the €2.5bn previously offered, the Financial
Times Deutschland reports.
Analysts at JP Morgan raised their recommendation on shares of Banco Espirito Santo to overweight.
From a sector stand-point the largest gains were to be seen in the
following sectors within the DJ Stoxx 600: Media (1.04%), Basic
resources (0.95%) and Financial Resources (0.63%). In-line economic data
The Markit purchasing managers index for the Eurozone's manufacturing
sector came in at 46.2 for November (Consensus: 46.2), after a reading
of 45.4 in October. Slight gains in the single currency
The euro/dollar was rising slightly, to the 1.3029 dollar mark.
Front month Brent crude futures were gaining by 0.135 dollars to the 111.39 dollar mark on the ICE. |
| US Market Report |
US close: Norwegian wealth fund looking at US real estate
-Moody's cuts ratings on EFSF and ESM
-Poor Chicago NAPM data
-Sandy distorted personal income figures
-S and P 500 at 50 day moving average technical resistance
-Norway wealth fund to invest 11bn dollars in US real estate -Bbg
Dow Jones: 0.03%
Nasdaq Composite: -0.07%
S&P 500: 0.00%
The main US equity averages ended the day on a mixed footing following
weaker than forecast economic figures out on Friday afternoon. Trading
volumes on the S&P 500 were higher than usual, probably as a result
of the announced quarterly rebalancing of MSCI's equity indices.
Some of the securities being shifted about included Microsoft, Cisco, Abbott Laboratories or United Technologies.
The former two are now considered to be value stocks (and not growth)
whereas the opposite is now true of the latter two firms.
Acting as a backdrop, investors had to digest the negative (for markets)
– and sometimes conflicting - remarks out from some leading Republican
politicians last night, although some market commentary was also
criticising what it saw as President Obama's inflexibility.
Thus, early in the evening the speaker of the US House of
Representatives, Republican John Boehner, said that his party wants to
reach a bipartisan solution in the next few days. However, he accused
Democrats of stalling only to then present proposals which in their
opinion were not "serious".
Fortunately however, news that
ratings agency Moody's had cut its rating on the European Financial
Stability fund and European Stability Mechanism did not reach markets
until after the close.
Both Tellabs and Whole Foods Markets
announced special dividends, in anticipation of changes to the taxation
on dividends in the new year, after Bush era tax cuts on those are
allowed to lapse.
Games designer Zynga fell sharply after modifying the terms of a long-standing alliance with Facebook. Groupon was another big faller in the tech space after the company opted to keep its Chief Executive, Andrew Mason, on the job.
Blackstone will purchase Apple REIT for $1.26bn.
Analysts at Goldman Sachs downgraded their view on shares of Brown Forman to sell.
The best performing sectors were Tires (1.5%), Multiutilities (1.48%) and Real estate services (1.29%).
As an aside, in remarks to Bloomberg Yngve Slyngstad, Chief Executive Officer of Oslo-based Norges Bank Investment Management, which oversees Norway's wealth fund,
said that it is now looking to invest 5% of assets in real estate and a
third of that in the US. It currently holds 0.3% in real estate.
Weak economic data
US
personal income was flat month-on-month in October (Consensus: 0.2%)
whereas spending fell by 0.2% month-on-month (Consensus: 0.0%).
According to economists at Barclays Research:
"It appears likely that Hurricane Sandy had a significant negative
effect. While the Bureau of Economic Analysis were unable to quantify
the significance with regard to spending, the effect is clearer on the
income side - an estimated $18.2bn reduction in wages and salaries at an
annualized rate as a result of disruption to workers on the east
coast."
The Chicago NAPM's regional manufacturing index for
the month of November has come in at 50.4, just below the 50.5 expected
but above the 49.9 registered last month.
The new orders
sub-index dropped to 45.3 from 50.6 (its lowest since the most recent
recession), while the prices paid gauge shot higher, to 70.1 from 59.3.
Barclays had this to say, "While a possible lack of action in dealing with the fiscal cliff presents a substantial downside risk, we would expect that regional surveys will continue to fluctuate around breakeven levels in the coming months."
Treasuries little changed
10 year US Treasury yields are now flat, at 1.62%.
Front month West Texas crude futures gained 0.84% to the 88.91 dollar per barrel mark on NYMEX. |
| FX and Commodities round-up |
FX round-up: Euro rises to five week high against dollar
The
euro charged higher against the dollar on Friday while the greenback
soared against the yen as the spotlight remained on whether a deal can
reached to avert the upcoming 'fiscal cliff'.
The single
currency rose struck a high of $1.3026 before later trading at around
$1.3002 after German lawmakers approved Greece's bailout deal by a large
majority. Over the month, the euro logged a 0.3% gain against the
dollar.
The ICE dollar index, which measures the US currency
against a basket of major currencies, fell 80.130 from 80.191 on
Thursday. Over the week it was hardly changed and over the month rose
0.3%.
Against the yen, the greenback rallied to its highest
level since April on Friday as traders bet that the Bank of Japan will
unleash further monetary easing to boost its economy.
The
dollar advanced ¥82.45 from ¥82.11 the previous session. Over the month
the dollar was up 3.3% against the Japanese currency.
The euro rose to ¥107.26 from ¥106.46 the previous session and climbed 3.8% for the month of November.
Sterling changed hands at $1.6021 compared to $1.6041 on Thursday.
Commodities: Crude rises despite 'fiscal cliff' stalemate
Crude oil futures rose on Friday as investors kept a close eye on the latest negotiations on the 'fiscal cliff'.
House Speaker John Boehner said his party wants to reach a bipartisan
solution in the next few days and accused the Democrats of stalling
their presentation of proposals. He added that President Barack Obama's
proposal of $1.6trn in new tax revenue and around $400bn in spending
cuts wasn't 'serious.'
Crude for January delivery rose 84
cents to $88.91 a barrel on the New York Mercantile Exchange despite the
continued stalemate between Repubicans and Democrats. Oil prices had
jumped 1.8% on Thursday, logged a weekly gain of 0.7% and a 3% monthly
increase.
Focus also turned to the day's economic data. The
Chicago NAPM's regional manufacturing index for the month of November
rose to 50.4 compared to 49.9 the previous month but missed estimates of
50.5. Any reading above 50 indicates an expansion in manufacturing
activity.
Meanwhile US personal income was unchanged in October and spending slipped 0.2%, figures from the Commerce Department showed.
On the ICE futures exchange Brent crude advanced 34 cents to $111.10 a barrel.
Among precious metals gold fell 1% on Friday as focus remained on 'fiscal cliff' talks continue in Washington.
Gold for February delivery lost $16.80 to settle at $1,712.70 an ounce
on the Comex division of the New York Mercantile Exchange. For the week
bullion fell 2.3% and over the month dropped 0.5%.
March silver eased $1.15 to settle at $33.28 an ounce while January platinum futures dropped $14.90 to $1,604.60 an ounce.
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