London close: Markets flat as central banks hold rates
Market Movers
- techMARK 2,192.46 -0.05%
- FTSE 100 6,101.51 +0.05%
- FTSE 250 12,730.78 +0.17%
The FTSE 100
swung between gains and losses for most of Thursday's session as
investors digested a host of economic data, bond auctions in the
Eurozone and policy decisions by the Bank of England (BoE) and European Central Bank (ECB).
Nevertheless, the Footsie managed to finish in positive territory, extending a near four-year high
from the day before. The index finished at 6,099 on Wednesday and at
6,102 today, its highest closing level since May 22nd 2008.
Chinese trade
rebounded strongly last month, boosting sentiment early on. The trade
surplus totalled $31.6bn in December, well ahead of the $19.6bn surplus
reported in November and the $20bn forecast. Exports jumped by 14.1%
year-on-year, ahead of the 5% estimate, while imports also beat
expectations rising by 6%, ahead of the 3.5% estimate.
Meanwhile, solid debt auctions in Spain and Italy
also provided some support this morning, as Eurozone peripheral bond
yields on the secondary market plunged. Specifically, Spanish benchmark
10-year yields dropped below 5% for the first time since March 2011.
At midday, the BoE announced
that it has kept its official Bank Rate at 0.5% and its asset purchase
programme at £375bn. Analyst Philip Shaw from Investec said that
'on-hold' decision was widely expected. "We characterise recent economic
data as mixed rather than gloomy and share some of the MPC's optimism
over the potential effects from the FLS. Accordingly we consider the
chances that the committee sanctions more QE to be less than 50-50,
especially as we expect inflation to exceed 3% later this year."
Shortly after, the ECB
also decided to keep rates on hold at 0.75%. In the following press
conference, ECB President Mario Draghi reiterated that medium-term
inflation expectations remained well anchored and that he expected
inflation to come in below or very close to the 2% target this year.
While he said that risks to the economic outlook remain on the downside,
the Eurozone recovery is expected to begin at the year.
Markets looked like they would finish higher today, but disappointing jobless claims figures in the US
erased gains in afternoon trade. Claims for unemployment benefits
increased to 371,000 last week, higher than the 365,000 consensus
forecast.
FTSE 100: Bunzl rises on acquisition update
International distribution and outsourcing giant Bunzl
was a strong riser after completing three further purchases in South
America and the US, bringing its 2012 total acquisition spend to 270m
pounds. The stock was given an extra lift this morning by Numis which
upgraded the shares to 'buy' and lifted its target from 987p to 1,248p.
Following close behind was industrial group Melrose after Citigroup raised its view on the stock to 'buy' and hiked its target from 220p to 270p.
Internet purchases supported a moderate rise in sales at Tesco,
according to the supermarket chain's latest trading statement. Group
sales in the six weeks to January 5th increased by 3.8% including
petrol, causing shares to rise. Oriel Securities also upgraded the stock
to 'buy'.
Meanwhile, High Street giant Marks & Spencer
was heading lower after reporting worse-than-expected sales figures for
the key Christmas period in a trading update that was partially leaked
the night before. Like-for-like sales in the UK dropped by 1.8%, worse
than the 1.4% decline expected by Nomura.
Associated British Foods fell after Goldman Sachs moved its target from 1160p to 1190p and maintained a 'sell' rating. Imperial Tabacco Group dropped after Goldman Sachs lowered the target from 2,500p to 2,470p and reiterated a 'neutral' rating.
Intertek
shares were lower after Jefferies downgraded the stock from 'hold' to
'underperform', saying the company could be more at risk from continued
weakness in commodities and the challenging situation within the
industry.
FTSE 250: SIG leaps despite 2013 forecast
Building materials group SIG
surged today despite warning that construction markets in 2013 are to
'remain challenging'. Revenues in 2012 totalled around £2,635m, flat on a
constant currency basis, though down by 4.0% in sterling due to
exchange rate movements. Underlying profit is expected to be no less
than £82m. Shares were up around 6%.
Recruitment company Hays
jumped despite reporting 3% decline in quarterly net fee income and
saying that conditions are to remain fragile. Commenting on the group's
second quarter, Chief Executive Alistair Cox said: "Whilst several
markets around the world were fragile, the fact that we've built such a
well-diversified and balanced business enabled us to deliver a solid
result in the quarter."
TV decoder maker Pace rose
after saying that full-year revenue is expected to be ahead of previous
forecasts and 4% higher than last year. The West Yorkshire based firm
said it expects revenue to be around $2.4bn after a strong second half.
FTSE 100 - Risers
ARM Holdings (ARM) 863.50p +4.41%
Bunzl (BNZL) 1,049.00p +3.35%
Melrose Industries (MRO) 241.10p +2.81%
Eurasian Natural Resources Corp. (ENRC) 321.60p +2.65%
Wood Group (John) (WG.) 794.50p +2.65%
TUI Travel (TT.) 280.80p +2.15%
GKN (GKN) 240.00p +2.00%
Resolution Ltd. (RSL) 260.70p +2.00%
Royal Bank of Scotland Group (RBS) 356.80p +1.97%
Tesco (TSCO) 355.40p +1.79%
FTSE 100 - Fallers
Intertek Group (ITRK) 3,100.00p -1.90%
Associated British Foods (ABF) 1,520.00p -1.68%
Aviva (AV.) 368.00p -1.53%
ITV (ITV) 107.70p -1.46%
Tullow Oil (TLW) 1,225.00p -1.45%
Tate & Lyle (TATE) 769.50p -1.28%
Johnson Matthey (JMAT) 2,295.00p -1.25%
G4S (GFS) 261.60p -1.17%
Fresnillo (FRES) 1,750.00p -1.13%
BHP Billiton (BLT) 2,132.00p -1.09%
FTSE 250 - Risers
SIG (SHI) 135.00p +6.30%
Hays (HAS) 90.05p +5.32%
Dialight (DIA) 1,060.00p +4.43%
Pace (PIC) 200.80p +4.15%
Lonmin (LMI) 310.00p +4.10%
Unite Group (UTG) 282.00p +3.64%
COLT Group SA (COLT) 103.00p +3.00%
Chemring Group (CHG) 274.10p +2.89%
ICAP (IAP) 326.30p +2.87%
Soco International (SIA) 380.60p +2.86%
FTSE 250 - Fallers
African Barrick Gold (ABG) 364.50p -4.08%
Heritage Oil (HOIL) 203.50p -2.68%
Rentokil Initial (RTO) 91.95p -2.60%
Debenhams (DEB) 104.00p -2.26%
Smith (DS) (SMDS) 203.90p -2.25%
Dechra Pharmaceuticals (DPH) 610.00p -2.24%
Capital & Counties Properties (CAPC) 241.20p -2.19%
Spectris (SXS) 1,971.00p -2.18%
BTG (BTG) 335.30p -2.07%
St. Modwen Properties (SMP) 232.30p -2.07%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe midday: Periphery bond yields move lower
-Investors wating for ECB press conference
-Successful Spanish and Italian Treasury debt auctions
-Spanish 10 year bond yields drop 18bp to 4.95 per cent
FTSE-100: 0.09%
Dax-30: 0.21%
Cac-40: 0.23%
FTSE Mibtel: 0.68%
Ibex 35: -0.05%
Stoxx 600: -0.05%
The tone to trading on the main European equity benchmarks has improved
somewhat but remains mixed ahead of European Central Bank President
Mario Draghi's press conference, which is scheduled to start at 13:30.
Both the European Central Bank and the Bank of England opted to maintain their current monetary policy settings.
It will be interesting to see if the Basel Committee on Banking
Supervision's decision to relax the requirements for bank's liquidity
buffers –taken this past Sunday – influences the ECB's thinking.
Both the Spanish and Italian treasury auctions this morning have been successful.
For its part the Spanish Treasury sold €5.8bn in debt instruments,
versus the €5bn that were expected. The bid-to-cover ratio for the 5
year debt on offer rose to 2.6, versus 1.57 last time, and to 2.9 for
the tranche of 13 year debt being sold, versus 2.06 the last time
around. "Influenced by this past Sunday's decision from the Basel
Committee on Banking Supervision?" economists at Digital Look are asking.
Acting as a backdrop, speaking on Bloomberg TV PIMCO's Andrew Bosomworth forecast that the ECB will cut rates, but not at today's meeting.
Automobile sector revs motor
The minority owner of Chrysler Group LLC
on Wednesday pushed the US automaker to take the first step toward
becoming a public company again by demanding that company parent Fiat SpA register shares with US regulators, Reuters reports.
Volkswagen has announced that it wishes to take full control over Munich based truck manufacturer Man.
Banque PSA, the financial arm of loss-making French car maker Peugeot, will sign around €5bn (£4,3bn) of loans as part of an €18.5bn debt rescue plan in the next few days, according to bankers.
The best performance from a sector stand-point is now to be seen in the
following industrial groups: Technology (2.06%), Automobiles (1.15%)
and Banks (0.66%).
Sharp rise in business confidence
French manufacturing production grew by 0.2% month-on-month in November (Consensus: -0.2%).
The French central bank's business confidence gauge rose to 95 for December from 91 for the previous month (Consensus: 91).
Dutch consumer prices increased to a 2.9% year-on-year rate in
December, after a 2.8% pace in the month before (Consensus: 2.6%).
German machinery orders fell by 3% in November, according to business group VDMA. Slight gains in single currency
The euro/dollar is now edging higher by 0.35% to the 1.31 dollar mark.
Front month Brent crude futures are rising by 0,869 dollars to the 112.73 dollar per barrel mark on the ICE.
| US Market Report |
US open: Stocks waver at resistance
- Acampora sees multi-year advance on Wall Street
- In-line initial weekly unemployment claims
Dow Jones Industrials: 0.27%
Nasdaq Comp.: 0.42%
S&P 500: 0.34%
The major US equity benchmarks are now registering modest advances.
Helping to hold stocks aloft are the better than expected export figures which were released overnight in China.
Nevertheless, levels of technical resistance have yet to fall, with the
S&P 500 having reached an intra-day high of 1,469, versus
resistance at 1,471 which some analysts are now watching.
Of
interest, technical analyst and Wall Street legend Ralph Acampora
believes investor sentiment toward US stocks is poised to change for the
better and contribute to a multi-year advance, Bloomberg reports.
Ford has doubled its quarterly dividend payment to 10 cents per share.
Jeweler Tiffany's share price is plummeting after guiding towards the lower end of forecasts.
Weekly US initial unemployment claims rose by 4,000 to 371,000
(Consensus: 365,000). The previous week's reading was revised down by
5,000 to 367,000.
Front month West Texas crude futures are now rising by 1.19% to the 94.16 dollar level on the NYMEX.
10 year US Treasury yields are now rising by 3 basis points, to the 1.90%.
S&P 500 - Risers
Urban Outfitters Inc. (URBN) $42.36 +3.95%
Best Buy Co. Inc. (BBY) $11.91 +2.76%
Morgan Stanley (MS) $20.13 +2.57%
Ford Motor Co. (F) $13.79 +2.38%
Jabil Circuit Inc. (JBL) $19.50 +2.25%
Lam Research Corp. (LRCX) $38.12 +2.23%
Tesoro Corp. (TSO) $41.34 +2.15%
Alpha Natural Res (ANR) $10.11 +2.12%
Advanced Micro Devices Inc. (AMD) $2.68 +1.90%
Altria Group Inc. (MO) $32.48 +1.82%
S&P 500 - Fallers
Tiffany & Co. (TIF) $59.41 -6.09%
Coach Inc. (COH) $56.45 -2.61%
Fastenal Co. (FAST) $46.51 -2.19%
W.W. Grainger Inc. (GWW) $202.18 -1.40%
Pepco Holdings Inc. (POM) $19.76 -1.30%
Chesapeake Energy Corp. (CHK) $16.86 -1.29%
CSX Corp. (CSX) $20.28 -1.27%
Allegheny Technologies Inc. (ATI) $30.97 -1.21%
Abercrombie & Fitch Co. (ANF) $46.84 -1.14%
Staples Inc. (SPLS) $11.59 -1.02%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $16.12 +1.70%
Bank of America Corp. (BAC) $11.62 +1.66%
Intel Corp. (INTC) $21.66 +0.98%
Microsoft Corp. (MSFT) $26.96 +0.97%
Chevron Corp. (CVX) $110.42 +0.80%
Unitedhealth Group Inc. (UNH) $52.78 +0.78%
Merck & Co. Inc. (MRK) $42.92 +0.77%
JP Morgan Chase & Co. (JPM) $45.80 +0.73%
Cisco Systems Inc. (CSCO) $20.43 +0.64%
American Express Co. (AXP) $60.61 +0.58%
Dow Jones I.A - Fallers
Home Depot Inc. (HD) $62.96 -0.33%
Alcoa Inc. (AA) $9.06 -0.22%
Boeing Co. (BA) $76.71 -0.07%
Nasdaq 100 - Risers
Baidu Inc. (BIDU) $107.29 +2.83%
Avago Technologies Ltd. (AVGO) $33.40 +1.80%
News Corp. Class A (NWSA) $26.85 +1.74%
Celgene Corp. (CELG) $93.91 +1.70%
Dell Inc. (DELL) $11.10 +1.56%
Altera Corp. (ALTR) $34.89 +1.54%
Micron Technology Inc. (MU) $7.41 +1.44%
Wynn Resorts Ltd. (WYNN) $123.24 +1.42%
Apple Inc. (AAPL) $524.11 +1.36%
KLA-Tencor Corp. (KLAC) $48.48 +1.34%
Nasdaq 100 - Fallers
Fastenal Co. (FAST) $46.51 -2.19%
Staples Inc. (SPLS) $11.59 -1.02%
Fossil Inc. (FOSL) $98.66 -0.79%
Ross Stores Inc. (ROST) $56.58 -0.56%
Discovery Communications Inc. Class A (DISCA) $67.43 -0.49%
Costco Wholesale Corp. (COST) $100.94 -0.29%
Sigma-Aldrich Corp. (SIAL) $76.39 -0.25%
Amgen Inc. (AMGN) $88.45 -0.25%
Facebook Inc. (FB) $30.56 -0.10%
Yahoo! Inc. (YHOO) $19.32 -0.05%
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| Broker Tips |
Broker tips: Tesco, Sainsbury, M&S
Seymour Pierce has maintained its 'reduce' recommendation for supermarket titan Tesco in spite of headline sales figures coming in ahead of expectations on Thursday.
Like-for-like UK sales excluding petrol and VAT rose 1.8% in the six
weeks to January 5th, above the consensus estimated growth range of
0.5-1%.
However, Seymour said that while this is an improving
trend from the third quarter - UK LFL excluding petrol and VAT were down
0.6% in the 13 weeks to November 24th - "it is a poor return when one
takes into account that Tesco has invested 1% of its margin in FY13 to
achieve this."
While Credit Suisse has labelled
Sainsbury's third-quarter performance as "robust", the broker decided to
take a more cautious view for the supermarket's outlook for 2013/14.
"We are not revising our 2012/13 estimates which, in the context of the
tough market and recent negative revisions to UK peers, we consider a
very solid result. But, for outer-years, we are now taking a slightly
more cautious view. Given both the CEO's view that the current trend of
negative volumes has maybe another year to run and Sainsbury's slower Q3
growth, we think it now prudent to cut our 2013/14E LFL assumptions –
to +1%, from +2.5%."
Panmure Gordon reiterated its 'hold' rating for High Street giant Marks & Spencer following some weaker-than-expected third-quarter sales.
Panmure said that, overall, the figures are likely to lead to a full-year 1.5-2.0% profit before tax downgrade
to £660-665m, compared to the broker's initial estimate of £666.8m. The
broker has slashed its target for the stock from 397p to 379p "to
reflect a greater level of risk to forecasts".
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