London open: 'Fiscal cliff' hopes drive stocks early on
Market Movers
- techMARK 2,112.04 +0.20%
- FTSE 100 5,928.58 +0.28%
- FTSE 250 12,248.63 +0.25%
The FTSE 100 opened strongly on Tuesday morning on the back of
increasing optimism that US President Barack Obama and House Speaker
John Boehner will be able to strike a deal by the end of the year to
avert the 'fiscal cliff'.
Without a deal by the January
1st deadline, the $600bn in automatic spending cuts and tax increases
which come into effect are expected to pull the US economy back into
recession.
Markus Huber, the head of German HNW trading at ETX
Capital said this morning that with the end of the year approaching
fast and an empty economic data schedule, focus will mostly be on US
budget negotiations and "the smallest hint of progress or setback can
have a substantial impact on the markets.
"Overall for now,
any indication at all that there is some movement as the budget
negotiations are concerned and that the two parties are making an effort
to find a solution is enough to keep markets moving higher.
Obama has reportedly proposed raising taxes for those that earn over
$400,000, a higher threshold than the $250,000 annual salary he had
previously targeted. While Boehner's proposal at the weekend offered to
raise taxes on those earnings over $1m in exchange for cuts to
entitlement spending, it appears that the real negotiations have
officially begun.
FTSE 100: Miners making gains
Resource peers Vedanta, EVRAZ and BHP Billiton
were in demand this morning on the back of hopes that US politicians
can come to an agreement. Metals prices were firmer as the Dollar Index
held near a two-month low.
However, Kazakhmys was bucking the red after Deutsche Bank downgraded its rating on the stock to 'hold' and cut its target from 1,066p to 746p.
Oilfield services giant Petrofac
was on the up after reiterating its target of achieving net profit
growth of at least 15% this year, saying that operations continue to
perform in line with expectations.
Whitbread gained
after saying that it has raised £51.04m from the sale and leaseback of
seven Premier Inns and joint-site restaurants. The price represents a
profit over book value of £19.6m.
Engineering group Rolls-Royce
rose after signing a $1bn contract, at list prices, with Japan's
Skymark Airlines for Trent 900 engines to power six Airbus A380
aircraft.
FTSE 250: Insurers hit by Sandy loss estimates
Sector peers Hiscox and Catlin
were lower after revealing their estimates for the impact of Superstorm
Sandy. Hiscox estimates net claims of around £90m, while Catlin
predicts Sandy-related losses of $200m.
Support services and construction group Interserve gained after acquiring Advantage Healthcare from Rutland Partners and management for a cash consideration of £26.5m.
Tuesday December 18
INTERIMS
OSJC Center for Cargo Container Traffic Transcontainer GDR (Reg S), Park Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ABC Consumer Confidence (US) (22:00)
Balance of Payments (US) (13:30)
Current Account (US) (13:30)
Q3
OSJC Center for Cargo Container Traffic Transcontainer GDR (Reg S)
FINALS
Hiwave Technologies
ANNUAL REPORT
Finsbury Growth & Income Trust
EGMS
Datang International Power Generation Co Ltd., INA-Industrija Nafte D.D. GDR (Reg S), Lukoil 'B' GDR (Reg S)
AGMS
DotDigital Group, Henderson Far East Income Ltd., Paragon Entertainment Ltd (DI), Standard Life Equity Income Trust
TRADING ANNOUNCEMENTS
Keller Group, Petrofac Ltd.
UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Producer Price Index (09:30)
Retail Price Index (09:30)
| US Market Report |
US close: Hopes over 'fiscal cliff' provide a lift
Market movers
Dow Jones: 13,235 (+0.76%)
Nasdaq: 3,011 (+1.32%)
S&P 500: 1,430 (+1.19%)
US stocks finished with decent gains on Monday on the back of
increasing optimism that US politicians can come to an agreement over
the 'fiscal cliff' before the January 1st deadline.
If not, then $600bn
in spending cuts and tax increase would automatically come into effect
which is expected to plunge the US economy back into recession.
President Barack Obama and House Speaker John Boehner resumed talks today to discuss the matter, but neither party has revealed details.
Boehner made an offer over the weekend that proposed increasing taxes
on those who earn over $1m. While the Obama administration declined the
proposal – it wants higher taxes for those who take in more than
$250,000 a year – the White House described the offer as "progress".
Also helping sentiment today were hopes for economic stimulus in Asian powerhouses China and Japan.
According to Chinese news agency Xinhua, Beijing leaders said that they
wanted to boost imports and increase urbanisation to boost domestic
consumption. Meanwhile, the pro-stimulus Liberal Democratic Party
celebrated a landslide victory in the Japanese elections this weekend. Apple shrugs off downgrade
Tech giant Apple finished with moderate gains, shrugging off a downgrade by Citigroup from 'buy' to 'neutral'.
Insurance giant AIG gained after saying that it would sell up to $6.5bn of shares in AIA Group.
Sprint Nextel
finished flat despite winning the backing of Clearwire Corp.'s board
after raising its bid to take over the smaller carrier, in a transaction
now valued at $2.2bn.
Compuware rocketed higher after Elliott Management offered to acquire the company for $2.3bn.
Smith & Wesson led selling in shares of gun makers on the back of the political fall-out following the shootings in Connecticut.
New York Fed manufacturing gauge slightly below forecasts
The
Empire State manufacturing index fell to a post-recession low of -8.1
in December, in spite of analysts expecting an increase from last
month's -6.5 to -1.
Net long-term capital flows to the US decreased to $1.3bn after $3.2bn in the previous month (Consensus: $25bn).
S&P 500 - Risers
PulteGroup Inc. (PHM) $18.04 +5.25%
D. R. Horton Inc. (DHI) $19.69 +5.07%
Sears Holdings Corp. (SHLD) $44.07 +4.28%
TripAdvisor Inc. (TRIP) $43.45 +4.27%
Citigroup Inc. (C) $39.15 +4.12%
Lowe's Companies Inc. (LOW) $35.85 +4.03%
Lennar Corp. Class A (LEN) $38.80 +3.99%
Bank of America Corp. (BAC) $11.00 +3.97%
First Horizon National Corp. (FHN) $9.77 +3.94%
Wells Fargo & Co. (WFC) $34.38 +3.71%
S&P 500 - Fallers
R.R. Donnelley & Sons Co. (RRD) $8.58 -5.61%
Peabody Energy Corp. (BTU) $26.63 -3.79%
Hewlett-Packard Co. (HPQ) $14.21 -3.66%
Micron Technology Inc. (MU) $6.61 -3.58%
Alpha Natural Res (ANR) $9.47 -2.17%
Dell Inc. (DELL) $10.26 -1.68%
First Solar Inc. (FSLR) $32.03 -1.63%
J.C. Penney Co. Inc. (JCP) $20.64 -1.62%
Ryder System Inc. (R) $48.82 -1.57%
Perrigo Company (PRGO) $102.67 -1.47%
Dow Jones I.A - Risers
Bank of America Corp. (BAC) $11.00 +3.97%
Home Depot Inc. (HD) $63.31 +2.01%
JP Morgan Chase & Co. (JPM) $43.48 +1.57%
General Electric Co. (GE) $21.93 +1.43%
Cisco Systems Inc. (CSCO) $20.11 +1.26%
Walt Disney Co. (DIS) $49.28 +1.25%
E.I. du Pont de Nemours and Co. (DD) $44.63 +1.22%
McDonald's Corp. (MCD) $89.91 +1.16%
Travelers Company Inc. (TRV) $74.19 +1.12%
American Express Co. (AXP) $57.27 +1.09%
Dow Jones I.A - Fallers
Hewlett-Packard Co. (HPQ) $14.21 -3.66%
Coca-Cola Co. (KO) $37.50 -0.42%
Verizon Communications Inc. (VZ) $44.12 -0.20%
Procter & Gamble Co. (PG) $69.93 -0.00%
Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $44.07 +4.28%
QUALCOMM Inc. (QCOM) $62.04 +3.69%
Intuitive Surgical Inc. (ISRG) $550.82 +3.32%
Expedia Inc. (EXPE) $60.66 +2.83%
Ross Stores Inc. (ROST) $54.66 +2.74%
Avago Technologies Ltd. (AVGO) $31.99 +2.73%
Comcast Corp. (CMCSA) $37.53 +2.72%
Google Inc. (GOOG) $720.78 +2.68%
News Corp. Class A (NWSA) $25.06 +2.52%
F5 Networks Inc. (FFIV) $92.60 +2.42%
Nasdaq 100 - Fallers
Micron Technology Inc. (MU) $6.61 -3.58%
Green Mountain Coffee Roasters Inc. (GMCR) $38.93 -3.45%
Activision Blizzard Inc. (ATVI) $11.13 -2.50%
Dell Inc. (DELL) $10.26 -1.68%
Perrigo Company (PRGO) $102.67 -1.47%
Baidu Inc. (BIDU) $96.26 -1.17%
Monster Beverage Corp (MNST) $52.76 -1.16%
Symantec Corp. (SYMC) $18.52 -0.86%
Warner Chilcott Plc (WCRX) $11.60 -0.85%
Research in Motion Ltd. (RIMM) $13.93 -0.82%
| FX and Commodities round-up |
FX round-up: Dollar surges against yen
The
dollar rallied to a 19-month high against the yen on Monday after the
Liberal Democratic Party won a landslide in Japan's general election on
Sunday.
Japan's new Prime Minister, Shinzo Abe, has pledged
aggressive easing from the Bank of Japan to stimulate growth and tackle
deflation in the world's third largest economy.
Reports suggest the BoJ may outline details of more stimulus at the end of its monetary-policy meeting on Thursday.
The central bank is widely expected to increase its asset-purchase plan
by ¥5trn to ¥10trn and Abe is expected to put pressure on the BOJ to
double its current inflation target to 2%.
The dollar surged
to a high of ¥84.48 after Sunday's election and traded at ¥83.80 in late
afternoon trading on Monday compared to ¥83.51 on Friday.
Meanwhile the ICE dollar index, which measures the US unit against a
basket of six major currencies, advanced to 79.556 compared to 79.542 on
Friday.
The euro changed hands at $1.3159 from $1.3157 on Friday while the British pound exchanged at $1.6203 from $1.6113.
Commodities: Crude buoyed by 'fiscal cliff' hopes
Crude
oil futures settled higher on Monday on hopes that US politicians can
avoid the looming 'fiscal cliff' while continued tensions in the Middle
East also spurred demand.
Crude for January delivery rose 47 cents or 0.5% to settle at $87.20 per barrel on the New York Mercantile Exchange.
There was renewed optimism at the start of the week that US leaders are
moving closer to striking a deal that will avoid pending tax hikes and
spending cuts after the New Year.
House Speaker John Boehner
proposed increasing taxes on those who earn over $1m but President
Barack Obama's administration said it wants higher taxes for those who
take in more than $250,000 a year. The White House said progress had
been made in talks over the weekend.
Elsewhere in the Middle
East, Syria's Vice President Farouk al-Sharaa called for a negotiated
settlement to save the country from ruin. In Iran, its foreign minister
said the country must find a way to resolve its deadlock with major
powers over its nuclear programme.
Brent oil futures settled down 54 cents at $107.64 per barrel on the ICE futures exchange.
Otherwise in US economic news a key New York Fed manufacturing gauge
came in below forecasts. The Empire State manufacturing index declined
to -8.1 in December, confounding expectations of an increase from last
month's -6.5 to -1.
Among precious metals gold futures nudged
higher on Monday but remained below the key $1,700 an ounce mark as
traders digested the disappointing US manufacturing data.
Gold for February delivery climbed $1.20 to $1,698.20 an ounce on the Comex division of the New York Mercantile Exchange.
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