London close: Markets nervous ahead of Bernanke Q&A
Market Movers
- techMARK 2,190.95 -0.77%
- FTSE 100 6,107.86 -0.22%
- FTSE 250 12,759.14 -0.30%
- Bernanke could spark market volatility
- Traders cautious ahead of US earnings season
- Eurozone industrial production disappoints
Dovish comments from a member of the Federal Reserve weren't enough to
lift stocks on Monday, as markets remained cautious ahead of a speech by
Ben Bernanke this evening and earnings reports from Wall Street heavyweights later this week.
Markets across Europe were supported early on by remarks from Federal Reserve Bank of Chicago President Charles Evans
who said that the government should put "in place policies that slowly
but surely bring the prospects of future revenues into balance with
future spending".
He said that "monetary policy has an
important contribution to make" and that the central bank will maintain
its expansionary policies until its main goals are met.
However, as analyst Craig Erlam from Alpari explained this afternoon: "There's been an element of caution in the markets today,
ahead of Bernanke's speech later at the University of Michigan. We tend
to see a lot more volatility in the markets when Bernanke speaks and
with the markets being caught off-guard by the apparent three-way split
at the last meeting, over when to end the current asset purchases,
Bernanke is likely to be bombarded with questions."
Meanwhile, following on from Wells Fargo's results on Friday, traders are now awaiting results from other banking giants this week, including Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America.
Erlam said: "Expectations are extremely low around fourth-quarter earnings,
despite stock indices trading at multi-year highs, which suggests
there's plenty of room for the rally to continue in the short - term."
Weighing on market sentiment today was worse-than-expected industrial production data from the Eurozone. Output fell at an annual rate of 3.7% in November, the largest contraction since November 2009.
FTSE 100: ENRC and G4S gain after Credit Suisse upgrade
Mining giantENRC
was among the risers after Credit Suisse upgraded the stock from
'neutral' to 'outperform' and hiked its target from 350p to 400p. The
broker said that its previous cautious stance in the second half of 2012
was due to concerns over earnings, balance sheet and M&A. "We think
downside risks are now limited with potential re-rating catalysts in
2013."
Security solutions group G4S was also making
gains after Credit Suisse raised its recommendation from 'neutral' to
'outperform' and lifted its target from 275p to 330p. "The price does
not reflect the organic growth potential, driven by New Markets, of the
group, its ability to add value via acquisitions nor its improving
prospects within the UK market," the broker said.
Asset management peers Schroders and Aberdeen
were on the up after positive comments from JPMorgan Cazenove. The
broker raised its targets and kept 'overweight' ratings for both stocks,
saying that despite a strong year in 2012, "the rating of the sector
remains relatively modest by historical standards, especially if we
further adjust for estimated surplus cash and cash generation in the
current year".
Other financials were benefitting from broker commentary today: Resolution was higher after Credit Suisse raised its target from 250p to 265p, retaining its 'neutral' rating; while Lloyds rose after Redburn raised its 2013 and 2014 forecasts for the bank.
In contrast, Associated British Foods was feeling the effects of a downgrade by Nomura from 'buy' to 'neutral', while Sage was falling after Barclays cut the stock from 'equal weight' to 'underweight'.
Oil giant BP
was down after taking legal steps to cut the civil damages it faces for
the Deepwater Horizon disaster by up to $3.4bn. The firm has asked a
New Orleans court hearing the case against it for civil penalties and
damages to rule that at least 810,000 barrels of oil had been captured
during the spill and it should not be fined for them.
FTSE 250: Imagination drops after downgrade
Chip designer Imagination Technologies
was a heavy faller today after Goldman Sachs cut the stock from its
'conviction buy' list. While analyst Simon Schafer still gives the
shares a 'buy' rating, he said that market-share loss and competition
concerns are key risks for the company.
News that tech giant
Apple has cut its order for components for the iPhone 5 due to
weaker-than-expected demand could have also hit the shares today.
Coal and coke producer New World Resources
also fell sharply after warning that as a result of recent declines in
energy demand and broader market conditions, thermal coal inventories
have been above the historical average levels. These conditions are
likely to create pricing volatility and continued downwards pressure on
thermal coal prices in the near term, it said.
Pubs group Greene King edged higher after seeing record Christmas Day trading which underpinned growth in like-for-like sales.
FTSE 100 - Risers
Eurasian Natural Resources Corp. (ENRC) 334.00p +3.53%
Schroders (SDR) 1,868.00p +2.69%
Resolution Ltd. (RSL) 266.60p +2.22%
Lloyds Banking Group (LLOY) 54.92p +1.63%
Aberdeen Asset Management (ADN) 397.70p +1.58%
ITV (ITV) 111.70p +1.55%
Burberry Group (BRBY) 1,325.00p +1.53%
International Consolidated Airlines Group SA (CDI) (IAG) 210.40p +1.35%
Royal Bank of Scotland Group (RBS) 364.50p +1.14%
Petrofac Ltd. (PFC) 1,696.00p +1.07%
FTSE 100 - Fallers
Kazakhmys (KAZ) 785.50p -2.84%
Wood Group (John) (WG.) 783.50p -2.18%
Associated British Foods (ABF) 1,500.00p -1.96%
Whitbread (WTB) 2,413.00p -1.95%
Polymetal International (POLY) 1,136.00p -1.90%
Aggreko (AGK) 1,749.00p -1.74%
Intertek Group (ITRK) 3,053.00p -1.52%
Severn Trent (SVT) 1,550.00p -1.46%
United Utilities Group (UU.) 685.00p -1.44%
Meggitt (MGGT) 425.20p -1.44%
FTSE 250 - Risers
JD Sports Fashion (JD.) 720.00p +5.80%
Centamin (DI) (CEY) 58.75p +5.29%
Lonmin (LMI) 332.60p +4.26%
Supergroup (SGP) 603.00p +3.97%
ITE Group (ITE) 249.80p +3.65%
Henderson Group (HGG) 148.00p +2.92%
Jupiter Fund Management (JUP) 321.70p +2.62%
Soco International (SIA) 383.30p +2.60%
Dialight (DIA) 1,117.00p +2.38%
Invensys (ISYS) 351.60p +2.33%
FTSE 250 - Fallers
New World Resources A Shares (NWR) 292.50p -7.82%
Imagination Technologies Group (IMG) 435.30p -6.37%
CSR (CSR) 357.30p -5.02%
Ocado Group (OCDO) 84.10p -4.43%
Spirent Communications (SPT) 149.20p -4.36%
Cable & Wireless Communications (CWC) 37.72p -4.26%
Savills (SVS) 457.50p -3.68%
Domino Printing Sciences (DNO) 628.50p -3.01%
Ferrexpo (FXPO) 267.40p -2.90%
PayPoint (PAY) 838.00p -2.78%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe midday: Eurozone industrial production drops by most since 2009
- OECD leading indicators show growth stabilising
- Praet (ECB): Too early to talk about exit
- Spanish 10 year bond yields 8bp higher ahead of Thursday auction
- Yen at 20-month low versus the single currency
FTSE-100: 0.15%
Dax-30: 0.58%
Cac-40: 0.42%
FTSE Mibtel 30: 0.43%
Ibex 35: 0.16%
Stoxx 600: 0.03%
European equities are continuing to trade slightly higher despite the
release of weaker than expected Eurozone and Italian industrial
production figures earlier on and ahead of several policy speeches from
different members of the US Federal Reserve, including the President Ben
Bernanke himself, tonight.
That comes after two members of the US Fed expressed unease with the current policy settings last week.
Acting as a backdrop, most market commentary is calling attention to
remarks out from the chief of the Chicago Federal Reserve, Charles
Evans, overnight, to the effect that markets can rest assured that the
central bank will maintain its expansionary policies until its main
goals are met.
Worth mentioning, industrial production in the
Eurozone contracted by 3.7% year-on-year in November, the largest
contraction since November 2009, with widespread weakness by sectors but
while at the same time being concentrated in periphery countries.
Production from the capital goods sector rose by 0.7% versus the prior
month, albeit after the previous two months' sharp drops.
The
Organisation for Economic Cooperation and Development's (OECD) composite
leading indicator for the Eurozone, during the month of November, rose
to 99.5 points from 99.4 in the previous month, and points to growth
stabilising.
Acting as a backdrop, the Yen hit a 20 month low versus the single currency today.
Swatch mis-priced Deutsche Bank says, Burberry's target hiked
Meantime, and on the corporate front, French construction group Saint-Gobain is rising after Ardagh Group said it has agreed to buy Verallia North America, its glass bottle-and-jar unit, for $1.7bn.
Shares of Dutch package delivery firm TNT are plummeting by 42% after UPS withdrew its take-over bid in anticipation that European Commission antitrust regulators will block the €5.16bn transaction.
Swatch Group
is moving higher after saying it is buying the Harry Winston watch and
jewelry brand for about $1bn. Also buttressing the shares are positive
remarks from analysts at Deutsche Bank who consider them to be one of
the most mis-priced (in a positive sense) within the luxury goods sector
(as an aside, Deutsche bank has today lifted its price target on
UK-listed Burberry).
German car manufacturer Daimler
aims to cut its debt to €6.5 bn ($8.7bn) from about €7bn, its Chief
Executive Bernd Scheifele told the Frankfurter Allgemeine
Sonntagszeitung in an interview, Reuters says.
Separately, German magazine Der Spiegel reported that Daimler will extend Chief Executive Dieter Zetsche's contract by five years, two years more than expected.
Spanish banks' net ECB borrowings fell to €313.1bn in December, down from €340.8bn in November.
From a sector stand-point the best performers now on the DJ Stoxx 600
are Automobiles & parts (1.31%), Banks (0.67%), and Construction
(0.61%).
Spanish house transactions fall
The German wholesale price index for the month of December remained flat versus the previous month (Consensus: 0.1%).
Eurozone industrial production decreased by 0.3% month-on-month in
November (Consensus: 0.2%), weighed down by very large falls in the
periphery countries, such as Ireland, Italy and Spain.
Italy's industrial production dropped by an unexpected 1.0% month-on-month in November (Consensus: 0%).
Spanish house transactions fell at a 6.1% year-on-year pace in November, versus a rise of 12.8% in the previous month. Euro/dollar still trading higher
The euro/dollar is now up by 0.20% to the 1.3369 dollar level.
Front month Brent crude futures are now rising by 0,557 dollars to the 111.26 mark on the ICE.
| US Market Report |
US open: Apple weighs on Wall Street
- Apple down 3 per cent on reports of lower component orders
- Gartner says global PC shipments fell 4.9 per cent in Q4
- Obama to speak at 16:30
Dow Jones Industrials: 0.02%
Nasdaq Comp.: -0.40%
S&P 500: -0.21%
The major US equity benchmarks are now trading mixed following a lower
open and on a day bereft of economic data or first tier company earnings
announcements.
Filling the vacuum is Apple. Its shares dropped by almost 5% after the Nikkei newswire reported that the company is reducing its production plans following lower than expected sales of its iPhones.
For its part The Wall Street Journal
cited two unnamed sources according to which the company has lowered
its first quarter orders for iPhone screens by almost half.
Some market commentary is also calling attention to the potential impact
which new open source operating systems could end up having on
incumbents such as Apple.
Billionaire investor Charles Icahn has acquired a stake in offshore rig contractor Transocean.
Hewlett Packard is higher after JP Morgan upgraded its views on the company's shares to neutral from underperform.
IBM has been downgraded by JP Morgan to neutral from overweight.
Ten-year US Treasury yields are now falling by 2 basis points, to the 1.84% mark.
Front month West Texas crude futures are now down by 0.12% to the 93.75 dollar mark on the NYMEX.
S&P 500 - Risers
Sears Holdings Corp. (SHLD) $44.16 +7.84%
Coach Inc. (COH) $61.29 +4.08%
Hewlett-Packard Co. (HPQ) $16.69 +3.27%
Noble Corp (NE) $37.24 +2.25%
Big Lots Inc. (BIG) $28.80 +2.24%
Netflix Inc. (NFLX) $103.53 +2.21%
Limited Brands Inc. (LTD) $45.31 +2.10%
VF Corp. (VFC) $151.98 +2.00%
St Jude Medical Inc. (STJ) $38.95 +1.72%
Janus Capital Group Inc. (JNS) $9.74 +1.72%
S&P 500 - Fallers
H&R Block Inc. (HRB) $19.21 -3.85%
Sprint Nextel Corporation (S) $5.72 -3.46%
Alpha Natural Res (ANR) $9.22 -3.46%
First Solar Inc. (FSLR) $30.98 -3.22%
J.C. Penney Co. Inc. (JCP) $17.77 -2.68%
Apple Inc. (AAPL) $506.71 -2.61%
Hasbro Inc (HAS) $35.96 -2.52%
Halliburton Co. (HAL) $35.73 -2.43%
Pitney Bowes Inc. (PBI) $11.63 -2.36%
Lincoln National Corp. (LNC) $27.20 -2.30%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $16.69 +3.27%
Cisco Systems Inc. (CSCO) $20.77 +1.42%
Pfizer Inc. (PFE) $26.84 +1.21%
Boeing Co. (BA) $76.04 +1.16%
Procter & Gamble Co. (PG) $69.91 +1.00%
E.I. du Pont de Nemours and Co. (DD) $46.46 +0.67%
United Technologies Corp. (UTX) $85.60 +0.49%
Johnson & Johnson (JNJ) $72.69 +0.47%
3M Co. (MMM) $96.70 +0.44%
Unitedhealth Group Inc. (UNH) $53.05 +0.44%
Dow Jones I.A - Fallers
Bank of America Corp. (BAC) $11.46 -1.46%
International Business Machines Corp. (IBM) $192.17 -1.17%
Intel Corp. (INTC) $21.78 -1.00%
Verizon Communications Inc. (VZ) $42.94 -0.83%
Caterpillar Inc. (CAT) $94.43 -0.79%
JP Morgan Chase & Co. (JPM) $45.90 -0.52%
American Express Co. (AXP) $60.99 -0.41%
Wal-Mart Stores Inc. (WMT) $68.35 -0.41%
AT&T Inc. (T) $34.15 -0.35%
Alcoa Inc. (AA) $8.92 -0.22%
Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $44.16 +7.84%
Amazon.Com Inc. (AMZN) $272.20 +1.59%
Priceline.Com Inc. (PCLN) $665.31 +1.50%
Cisco Systems Inc. (CSCO) $20.77 +1.42%
Intuitive Surgical Inc. (ISRG) $511.15 +1.02%
Verisk Analytics Inc. (VRSK) $54.42 +0.96%
Micron Technology Inc. (MU) $7.61 +0.93%
DIRECTV (DTV) $52.87 +0.90%
O'Reilly Automotive Inc. (ORLY) $88.74 +0.83%
Starbucks Corp. (SBUX) $55.42 +0.75%
Nasdaq 100 - Fallers
Apple Inc. (AAPL) $506.71 -2.61%
Altera Corp. (ALTR) $34.50 -2.18%
Maxim Integrated Products Inc. (MXIM) $29.05 -1.89%
Citrix Systems Inc. (CTXS) $70.13 -1.87%
Broadcom Corp. (BRCM) $34.17 -1.87%
Microchip Technology Inc. (MCHP) $33.06 -1.58%
Facebook Inc. (FB) $31.23 -1.55%
NetApp Inc. (NTAP) $32.58 -1.44%
Alexion Pharmaceuticals Inc. (ALXN) $98.98 -1.40%
Liberty Global Inc. Series A (LBTYA) $66.58 -1.36%
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| Broker Tips |
Broker tips: ENRC, JD Sports, ICAP
Credit Suisse has raised its rating for Eurasian Natural Resources Corp (ENRC) from 'neutral' to 'outperform', saying that it foresees catalysts ahead for the mining company.
The broker said on Monday morning: "Our cautious stance in H212 was due
to concerns over earnings, balance sheet and M&A. We think downside risks are now limited
with potential re-rating catalysts in 2013. Importantly, the company's
acquisition run has finally ended and could kick into reverse with small
divestments in '13/14 in our view."
Seymour Pierce has reiterated its 'buy' recommendation and 1,000p target for JD Sports, saying that while Blacks continues to struggle, shares are cheap.
"Although we are yet to be persuaded on the Blacks' recovery plans, we
believe JD Sports, which has underperformed the sector by c.20%, is
oversold. On our revised forecasts, the stock is now valued at 7.9 times
FY13 earnings declining to 6.6 times in the following year."
ICAP is a "recovery to buy into", according to analysts at Prime Markets, who said that the interdealer broker's shares are responding to the strong Christmas and New Year rally.
"As an interdealer broker and provider of post trade risk and
information services, ICAP's fortunes are entirely dependent on market
confidence, and just as last year saw trading volumes fall to record
lows, the recovery in the run up to Christmas and the strong start to
the new year would indicate an improvement is on the cards," the broker
said.
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