London close: Markets cautious as US debt fears resurface
Market Movers
- techMARK 2,181.78 -0.42%
- FTSE 100 6,117.31 +0.15%
- FTSE 250 12,774.79 +0.12%
- Anglo sinks into the red by the close
- Burberry jumps after Q3 update
- Debt ceiling concerns resurface, Obama takes hard-line approach
The FTSE 100 finished with only slight gains on Tuesday afternoon as markets continued to be range-bound with concerns over the US debt ceiling weighing on the mood.
"Today saw investors pause for breath and a degree of selling took
place halfway through the session only for the losses to be reversed and
the FTSE 100 has ended up back in positive territory," according to
Angus Campbell, the head of market analysis at Capital Spreads.
"This degree of indecision
has still yet to force the hands of those sellers in putting more
downward pressure on stocks to create a more convincing retracement,
whilst at the same time there is little impetus to send the markets
higher for the next leg upwards."
He said that investors "seem
to be sitting on their hands waiting for the next big event", reflected
in the FTSE 100 trading within a narrow range of around 40-50 points over the last few days.
Debt ceiling fears resurface
President Barack Obama said last night that he would not negotiate with Republicans over raising the debt ceiling, declining to trade cuts in government spending in exchange for increasing the borrowing limit.
"If the goal is to make sure that we are being responsible about our
debt and our deficit - if that's the conversation we're having, I'm
happy to have that conversation," Obama told a news conference. "What I
will not do is to have that negotiation with a gun at the head of the
American people."
The ceiling will be reached within the next month or two, according to Treasury Secretary Tim Geithner.
"While this is at least a month away, there's already a sense of anxiety
in the markets due to the inability in the past of US lawmakers to come
to an agreement until the 11th hour," said market analyst Craig Erlam
from Alpari.
Mixed newsflow elsewhere ensured that stocks lacked direction today, as traders reacted to disappointing growth figures in Germany, a solid bond auction in Spain and hints about further stimulus measures in Japan by the central bank governor.
Meanwhile, the Centre for Economics and Business Research warned that Britain may be stripped of its AAA credit rating as national debt continues to soar through the roof.
FTSE 100: Anglo drops late on as platinum shake-up prompts backlash
After a positive start, shares in mining group Anglo American
sunk into the red by the close as its plans to mothball mines and cut
jobs in Rustenburg prompted a backlash from South African politicians
and unions. South African Mineral Resources Minister Susan Shabangu has
said that the government has been "blindsided" by the company's
shake-up. She said that there hadn't been a proper consultation with the
company on such important business decisions "which impact on the
country's economy".
Banking group RBS was also heavy
faller on reports that it could face a fine of 800m dollars as soon as
next week to settle allegations that traders attempted to rig LIBOR.
Luxury brand Burberry
made impressive gains after saying that total revenue rose 9% to £613m
in the third quarter. Retail revenue, which makes up the bulk of sales,
rose 13% to £464m on an underlying basis while wholesale underlying
revenue fell by 5% to £120m. Bank of America Merrill Lynch upgraded its
view on the firm to 'buy' this morning and raised its target from 1,260p
to 1,470p.
Chip designer ARM Holdings is widely
regarded as the 'best in class' in the UK tech sector, but analysts at
both Morgan Stanley and Investec took the shares down a peg this
morning, deciding to lower their ratings after a recent strong run. The
stock, down around 4% today, has still gained around 50% in the last
three months, up 70% during the past half-year.
Diversified mining giant Rio Tinto
rose after managing to surpass its own iron ore production targets in
2012, while its other commodity classes also delivered large increases
year-on-year.
FTSE 250: Imagination provides a lift
Chip company Imagination Technologies
was higher after saying that it has signed a further license agreement
with semiconductor firm MediaTek for wireless communications and digital
multimedia solutions.
Online grocery store Ocado rose
after reporting on the six trading weeks to January 6th. Gross sales
rose 14.2% as the firm said that the February launch of its CFC2
distribution centre is going to plan.
Bike and car parts retailer Halfords
was also making gains after a strong performance at its autocentres
helped to lift total sales by 1.5% in the 15 weeks to January 11th.
Spreadbetting firm IG Group was in the red after reporting "satisfactory" interim results with a 21% fall in profits.
FTSE 100 - Risers
Burberry Group (BRBY) 1,386.00p +4.60%
Pearson (PSON) 1,221.00p +3.30%
BG Group (BG.) 1,073.50p +2.43%
Associated British Foods (ABF) 1,532.00p +2.13%
Severn Trent (SVT) 1,583.00p +2.13%
Reckitt Benckiser Group (RB.) 4,028.00p +1.97%
United Utilities Group (UU.) 697.50p +1.82%
WPP (WPP) 962.00p +1.80%
Eurasian Natural Resources Corp. (ENRC) 339.60p +1.68%
Aggreko (AGK) 1,775.00p +1.49%
FTSE 100 - Fallers
Anglo American (AAL) 1,961.00p -3.71%
ARM Holdings (ARM) 841.00p -3.67%
Royal Bank of Scotland Group (RBS) 354.10p -2.85%
Polymetal International (POLY) 1,104.00p -2.82%
International Consolidated Airlines Group SA (CDI) (IAG) 206.20p -2.00%
CRH (CRH) 1,215.00p -1.70%
Smiths Group (SMIN) 1,199.00p -1.56%
BAE Systems (BA.) 343.20p -1.55%
Vedanta Resources (VED) 1,184.00p -1.42%
BT Group (BT.A) 240.30p -1.23%
FTSE 250 - Risers
Alent (ALNT) 346.80p +5.41%
Essar Energy (ESSR) 124.90p +5.05%
Howden Joinery Group (HWDN) 178.10p +4.52%
Imagination Technologies Group (IMG) 454.30p +4.36%
Pace (PIC) 217.70p +4.26%
Lonmin (LMI) 346.00p +4.03%
Redrow (RDW) 181.20p +3.72%
Regus (RGU) 109.70p +3.49%
Wetherspoon (J.D.) (JDW) 532.00p +3.10%
New World Resources A Shares (NWR) 301.00p +2.91%
FTSE 250 - Fallers
Elementis (ELM) 218.20p -3.45%
Spirent Communications (SPT) 144.40p -3.22%
Invensys (ISYS) 340.50p -3.16%
Ashmore Group (ASHM) 369.80p -3.07%
Chemring Group (CHG) 274.80p -2.90%
Dixons Retail (DXNS) 27.19p -2.82%
Victrex (VCT) 1,549.00p -2.64%
Centamin (DI) (CEY) 57.20p -2.64%
Rathbone Brothers (RAT) 1,285.00p -2.58%
Perform Group (PER) 380.00p -2.56%
| Europe Market Report |
 |
| FTSE 100 | Euronext | Dax perf | CAC 40 |
 |  |  |  |
|
Europe midday: Unlikely Spain will ask for a bail-out this year, Fitch says
- Fitch: Unlikely Spain will ask for a rescue in 2013
- Slight falls in most benchmarks
- German GDP contracted towards end of year
- Spanish long-term bond yields reverse course and fall
FTSE 100: 0.03%
Dax-30: -0.49%
Cac-40: -0.21%
FTSE Mibtel 30: 0.05%
Ibex 35: -1.05%
Stoxx 600: -0.07%
The main European equity benchmarks were trading slightly lower by midday for the most part.
This following a warning by ratings agency Fitch that a delay in
increasing the US federal debt limit could put the country's triple A
rating at risk. As well, Fitch has indicated that it does not expect
Spain to petition the European Stability Mechanism (ESM) for a rescue
this year.
That last observation seems to have been what
weighed on Spanish bonds in the early going, despite what looked to have
been a fairly successful auction of €5.7bn of bills.
Of
interest as well, Bank of England Governor Sir Mervyn King was cited as
insisting that a banking union is not the solution to the Eurozone's
problems.
All of the above came after slight losses last night on
Wall Street and the reappearance of tensions on Capitol Hill over the
federal government debt limit and the need for fiscal consolidation.
Of interest, however, yesterday evening ratings agency Standard&Poor's (S&P) raised its outlook on the sovereign debt ratings for Finland and Luxembourg.
SAP misses forecasts
German software giant SAP unveiled lower than forecast fourth quarter operating profits.
French utility EdF will announce cost cuts of €1bn by 2015 when it releases its full-year results next month, French daily Le Figaro said.
Daimler
is not aware of China Investment Corp's (CIC) plans to take a stake in
the company and is not in talks with CIC, Chief Executive Dieter Zetsche
told reporters at the Detroit auto show on Monday, Reuters reports.
From a sector stand-point the best performance is now to be seen in the
following: Personal&Household goods (0.68%), Media (0.60%) and
Retail (0.53%).
Weaker than expected German GDP
Germany's gross domestic product (GDP) grew at an 0.7% year-on-year
pace in 2012, below the 0.8% pace expected and the previous year's rate
of 3%.
Economic activity contracted at a 0.5% pace in the last three months of 2012 the country's Statistics Office added.
Italian consumer prices increased at a 2.3% year-on-year clip in December, versus a rise of 2.4% in November.
The Eurozone trade surplus for the month of November rose to €11bn,
after a reading of €7.4bn for the previous month (Consensus: €8bn).
The Netherlands' trade surplus rose to €4.3bn in November, after a reading of €3.6bn for the month before. Single currency nudges higher
The euro/dollar is now falling by 0.45% to the 1.3318 dollar mark.
Deutsche Bank expects the single currency to reach 1.40 in its cross
versus the US unit this year.
Front month Brent crude futures are down slightly, by 0,116 dollars, to the 112.17 dollar mark on the ICE. |
| US Market Report |
Stocks Seeing Modest Weakness After Early Downward Move
After
moving to the downside in early trading, stocks have seen continued
weakness over the course of morning trading on Tuesday. The major
averages remain stuck in negative territory after ending the previous
session mixed.
The weakness on Wall Street comes
as worries about continued gridlock in Washington regarding the debt
ceiling has overshadowed a Commerce Department report showing stronger
than expected retail sales growth.
Selling
pressure has remained somewhat subdued, however, as traders continue to
wait for earnings season to pick up steam before making any significant
moves.
Nonetheless, computer
hardware stocks are seeing notable weakness, with the NYSE Arca Computer
Hardware Index down by 1 percent. Logitech is posting a steep loss
after being downgraded to underperform by Credit Suisse.
Semiconductor and bio stocks have also moved to the downside on the day, while some strength is visible among gold stocks.
The major averages have moved to the upside in recent trading but remain in the red. The Dow is down 19.52 points or 0.1 percent at 13,487.80, the Nasdaq is down 16.24 points or 0.5 percent at 3,101.26 and the S&P 500 is down 3.07 points or 0.2 percent at 1,467.61.
|
| Broker Tips |
Broker tips: ARM, Burberry, Ocado
Chip designer ARM Holdings
is widely regarded as the 'best in class' in the UK tech sector, but
analysts at both Morgan Stanley and Investec took the stock down a peg
on Tuesday morning, deciding to take a more cautious stance after a
recent strong run.
Morgan Stanley has slashed its rating from 'overweight' to 'equal weight'
but raised its target for the shares from 725p to 911p. "While we
remain very impressed by ARM and its partners' progress, we believe the
current absolute share price is not attractive enough for new money,"
Morgan Stanley said.
In a similar move, Investec has moved its recommendation from 'buy' to 'hold' and raised its target from 800p to 900p.
Nomura has increased its target for luxury brand Burberry from 1,210p to 1,350p after raising its earnings forecasts by 1% following the company's third-quarter results.
However, while the broker says that Burberry is "executing well on retail and merchandising strategies", it has retained its 'hold' rating on the shares.
Panmure Gordon continues to label grocery group Ocado as a 'sell', saying that company is still underperforming expectations and its multi-channel competitors.
The broker said that while 'Click & Collect" will gain momentum in
online food retailing, Ocado will be unable to deliver on this. "Much
depends upon February's launch of CFC2 [distribution centre] going to
plan, but we think that there is a lot that can go wrong."
|
|
|
No comments:
Post a Comment