Stocks boosted by upbeat US data
Market Movers
techMARK 2,201.42 +0.76%
FTSE 100 6,132.36 +0.46%
FTSE 250 12,847.61 +0.66%
Following a subdued morning session, stocks across Europe raced into positive territory on Thursday afternoon on the back of some decent economic data Stateside.
Better-than-expected US housing starts and jobless claims figures
lifted the mood this afternoon, prompting a strong start on Wall
Street, as investors shrugged off some disappointing fourth-quarter
earnings from banking heavyweights Bank of America and Citigroup.
However, as market strategist Ishaq Siddiqi from ETX Capital explained:
“Markets on both sides of the Atlantic leapt higher with market
participants moving out of the sidelines to build positions, latching on
the positives; solid Spanish auction which propelled the euro and eased peripheral bond yields; expectations of strong China data
due in the early hours of tomorrow morning which is supporting
commodity prices at the moment and the fact that we have had some
relatively upbeat earnings from Europe, particularly out of the UK retailers.”
FTSE 100: Associated British Foods surges after Primark performance
Sugar and retail group Associated British Foods
was registering impressive gains this morning after saying that
year-to-date trading has been ahead of its expectations. This was helped
by an "outstanding" performance by its Primark division, which saw
constant currency sales jump 27% in the first 16 weeks of its fiscal
year. Both Canaccord Genuity and Panmure Gordon raised their target for
the stock today.
Airline group IAG blasted off as its carrier British Airways announced new routes and terminal changes for summer 2013.
Temporary power and temperature controls group Aggreko
also rose after announcing it had completed a nine-month contract to
provide back-up energy during the construction of a £190m extension of
the Thames Water Sewage Treatment Works at Beckton, east London.
Aberdeen Asset Management
was among the worst performers despite saying that assets under
management rose 3% in its first quarter. However the group warned that
while stock markets have begun strongly in the 2103, "we believe that
uncertainty still persists and that further periods of volatility remain
likely in the months ahead".
Rio Tinto was unwanted
after its Tom Albanese stepped down as Chief Executive Officer following
an announcement by the company that it expects to recognise a non-cash
impairment charge of approximately $14bn in its 2012 full-year results.
While the stock suffered heavy losses early on, these were trimmed after
analysts said that any weakness today should be seen as a buying
opportunity. In a similar vein, Citigroup its recommendation for the
firm today from ‘neutral’ to ‘buy’.
Anglo American was
extending losses following Tuesday’s shake-up of its platinum division,
which includes the closure and several mines and thousands of job
losses. With workers now staging protests, the stock has now dropped
around 9% over the past week, weighed down further by a downgrade from
Exane BNP Paribas today to ‘underperform’. The same broker also cut its
rating for Xstrata.
Cruise operator Carnival
rose after boosting its share buy-back programme and declaring a
quarterly dividend of 25 cents per share. The company has already
completed $835m of its $1bn of its buy-back programme announced back in
September 2007, but has now decided to raise the limit back up to $1bn,
taking the total of repurchases to $1.835bn.
FTSE 250: Home Retail impresses with Argos sales
Home Retail Group
soared to the top of the FTSE 250 after Britain’s biggest household
retailer lifted its full-year profit guidance. The group said its annual
pre-tax profit would be £10m pounds ahead of current market consensus
at £73m after strong demand for tablet devices drove the group to better
than expected third-quarter sales at its Argos business.
Petropavlovsk followed closely behind after the mining group said gold production increased 13% in 2012 and realised gold prices rose 3%.
Dragging behind in the race was Stobart Group
which fell following the multimodal logistics company’s announcement
that operating performance for the current year could be “slightly
lower” than market expectations.
New World Resources
was a heavy faller on the second-tier index after Exane BNP Paribas cut
the stock to ‘underperform’ and reduced its target from 270p to 230p.
| AIM/Small Cap Report |
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 211.80p +4.33%
Associated British Foods (ABF) 1,606.00p +3.21%
ITV (ITV) 113.60p +3.18%
Aggreko (AGK) 1,818.00p +2.71%
Experian (EXPN) 1,086.00p +2.26%
Old Mutual (OML) 186.10p +2.20%
Admiral Group (ADM) 1,169.00p +1.74%
Legal & General Group (LGEN) 151.30p +1.54%
BT Group (BT.A) 244.80p +1.49%
Reed Elsevier (REL) 678.50p +1.42%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 385.00p -1.71%
National Grid (NG.) 682.50p -1.44%
Petrofac Ltd. (PFC) 1,673.00p -1.30%
Polymetal International (POLY) 1,084.00p -1.19%
Kingfisher (KGF) 285.10p -1.14%
Eurasian Natural Resources Corp. (ENRC) 343.30p -1.07%
Randgold Resources Ltd. (RRS) 5,840.00p -0.85%
Amec (AMEC) 1,081.00p -0.73%
BHP Billiton (BLT) 2,061.50p -0.72%
Antofagasta (ANTO) 1,281.00p -0.62%
FTSE 250 - Risers
Home Retail Group (HOME) 136.60p +12.43%
Petropavlovsk (POG) 403.30p +8.88%
Computacenter (CCC) 450.00p +7.14%
Moneysupermarket.com Group (MONY) 180.20p +5.38%
Bumi (BUMI) 330.00p +5.03%
Intermediate Capital Group (ICP) 349.90p +3.64%
Senior (SNR) 204.40p +3.39%
Pace (PIC) 220.00p +3.33%
International Personal Finance (IPF) 393.00p +3.15%
Telecom Plus (TEP) 951.50p +2.98%
FTSE 250 - Fallers
New World Resources A Shares (NWR) 294.50p -5.82%
Stobart Group Ltd. (STOB) 92.55p -2.63%
SDL (SDL) 499.50p -2.63%
Domino Printing Sciences (DNO) 627.50p -2.56%
Centamin (DI) (CEY) 55.25p -2.47%
CSR (CSR) 350.00p -1.88%
Hiscox Ltd. (HSX) 454.20p -1.75%
Grainger (GRI) 124.00p -1.74%
Ashtead Group (AHT) 453.80p -1.58%
Ferrexpo (FXPO) 257.00p -1.49%
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| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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European Markets Climbed On U.S. Economic Data
The European markets
finished in the green on Thursday, after the release of some better
than expected economic data in the United States. The surge in U.S.
housing starts and the larger than expected decrease in weekly jobless
claims provided a boost to the markets in the afternoon. Investors will
be watching for the Chinese fourth-quarter GDP data, which is scheduled
to be released tomorrow.
The ECB said in its monthly
bulletin that the Euro-area economy will begin a gradual recovery later
in 2013 because of the accommodative monetary policy, together with
significantly improved financial market confidence and reduced
fragmentation.
The International Monetary Fund on
Wednesday decided to release the next slice of bailout money to Greece
after the euro member successfully carried out a bond buyback and passed
further budget measures to ease the country's debt load.
After announcing the Executive Board's decision to disburse EUR 3.24 billion to Greece, IMF Managing Director Christine
Lagarde said "the program is moving in the right direction" though it
encountered a delay in implementation due to political crisis initially.
Lagarde
said Wednesday that Greece has made progress with structural reforms,
which is reflected in recent actions to reduce non-wage labor costs and
reform the product market. "However, much more remains to be done to
achieve the critical mass of reforms needed to boost productivity and
lower prices."
Separately, the IMF granted EUR 838.8 million loan
disbursement to Portugal, under a EUR 78 billion bailout package
approved in 2011. IMF Deputy Managing Director and Acting Chair Nemat Shafik said that Portugal has made "considerable progress in fiscal and external adjustment."
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.51 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.19 percent.
The DAX of Germany climbed by 0.58 percent and the CAC 40 of France rose by 0.96 percent. The FTSE 100 of the U.K. advanced by 0.41 percent and the SMI of Switzerland gained 1.64 percent.
In Frankfurt, ThyssenKrupp AG
climbed by 2.35 percent. The Wall Street Journal said steel giant
Arcelormittal SA is one of the leading contenders among those who have
floated offers to acquire the steel operations of the German industrial
conglomerate in the United States.
Deutsche Telecom rose by 0.55 percent, on reports it is mulling further job cuts.
In Paris, Carrefour Group surged
by 5.54 percent. The retailer reported a slight increase in the
fourth-quarter sales, helped by good growth in emerging markets of Latin
America and Asia.
Credit Agricole increased by 2.42 percent. BNP Paribas gained 2.91 percent and Societe Generale added 0.66 percent.
Remy Cointreau rose by 8.05 percent, after reporting a 6.5 percent increase in sales during the third quarter.
JCDecaux surged by 6.55 percent, after Societe Generale upgraded the stock to "Hold" from "Sell."
In London, Rio Tinto
declined by 0.75 percent. The miner said it expects to recognize a
non-cash impairment charge of approximately $14 billion, post tax, in
its 2012 full year results. The company's CEO, Tom Albanese, also
announced that he would step down.
Royal Bank of Scotland climbed by 1.09 percent and Barclays added 0.95 percent. HSBC advanced by 0.95 percent and Lloyds Banking Group gained 0.45 percent.
Euro area construction fell further in November, data released by Eurostat, the statistical office of the European Union, showed on Thursday.
Construction
output declined a seasonally adjusted 4.7 percent year-on-year in
November, after falling a revised 3.3 percent in October. Building
construction fell 5.3 percent, while civil engineering output declined
by 3.3 percent.
A leading indicator of the Spanish economy
increased for the third successive month in November, indicating that
the pace of contraction in the Spanish economy may ease in the near
term, data from a survey by the Conference Board showed Thursday.
The
leading economic index increased 0.5 percent month-on-month to 103.7 in
November, marking the third monthly growth in a row. The largest
contributions to the index came from the order books survey and Spanish
contribution to Euro M2.
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| US Market Report |
Stocks Mostly Higher On Upbeat Economic Data
Stocks
have moved mostly higher over the course of the trading day on Thursday
after moving roughly sideways in recent sessions. The markets have
benefited from a positive reaction to upbeat employment and housing
reports.
The major averages are currently posting notable gains, near their highs for the session. The Dow is up 67.62 points or 0.5 percent at 13,578.85, the Nasdaq is up 16.08 points or 0.5 percent at 3,133.62 and the S&P 500 is up 6.92 points or 0.5 percent at 1,479.55.
With the gains on the day, the Dow and the Nasdaq have reached three-month highs, while the S&P 500 has risen to its best intraday level in five years.
The
strength on Wall Street is partly due to the release of a report from
the Labor Department showing that initial jobless claims fell to a
five-year low last week.
The report showed that jobless claims
fell to 335,000 in the week ended January 12th from the previous week's
revised figure of 372,000. Economists had been expecting jobless claims
to show a much more modest decrease to 368,000.
With the much bigger than expected drop, jobless claims fell to their lowest level since the week ended January 19, 2008.
Buying
interest was also generated by a separate report from the Commerce
Department showing a much bigger than expected increase in housing
starts in the month of December.
The Commerce Department
said housing starts jumped 12.1 percent to an annual rate of 954,000 in
December from the revised November estimate of 851,000. The increase
lifted housing starts to their highest annual rate since June of 2008.
However, a negative reaction to quarterly results from Bank of America (BAC) and Citigroup
(C) has helped to limit the upside for the markets, with the financial
giants down by 3.7 percent and 2.9 percent, respectively.
Bank of America
reported fourth quarter earnings that fell year-over-year but exceeded
analyst estimates, while Citigroup reported much weaker than expected
fourth quarter earnings.
Sector News
With the housing starts report generating buying interest, housing stocks have shown a strong move to the upside on the day. The Philadelphia Housing Sector Index has surged up by 2 percent to its best intraday level in over five years.
PulteGroup (PHM) has helped to lead the housing sector higher, advancing by 4.1 percent to a more than five-year intraday high.
healthcare
provider stocks are also seeing significant strength on the day,
resulting in a 1.7 percent gain by the Morgan Stanley Healthcare
Provider Index. The index reached a record intraday high earlier in the
session.
Considerable strength is also visible among
semiconductor stocks, as reflected by the 1.4 percent gain being posted
by the Philadelphia Semiconductor Index. KLA-Tencor (KLAC) is turning in one of the sector's best performances, jumping 6.1 percent.
Trucking, natural gas, and health insurance stocks are also seeing notable strength on the day, moving higher along with most of the major sectors.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index inched up by 0.1 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
Meanwhile, the major European markets all moved to the upside on the day. The French CAC 40 Index jumped 1 percent, while the German DAX Index and the U.K.'s FTSE 100 Index advanced by 0.6 percent and 0.5 percent, respectively.
In the bond market, treasuries have
come under pressure on the heels of the upbeat economic data. As a
result, the yield on the benchmark ten-year note, which moves opposite
of its price, is up by 4.7 basis points at 1.871 percent.
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| Thursday broker round-up |
African Barrick Gold: Westhouse Securities reduces target from 335p to 305p, while its sell recommendation is unchanged.
Anglo American: Exane cuts target from 2000p to 1650p and downgrades from neutral to underperform.
Antofagasta: Exane ups target from 1400p to 1500p keeping an outperform rating.
Aquarius Platinum: Exane shifts target from 50p to 55p, while retaining a neutral rating.
Asos: Seymour Pierce increases target from 2350p to 2500p, while its hold recommendation is kept.
Associated British Foods: Panmure Gordon raises target from 1450p to 1670p, while staying with its hold recommendation.
Barratt Developments: UBS ups target from 210p to 250p retaining its buy rating.
BHP Billiton: Exane takes target from 1800p to 2000p, while the neutral rating is maintained.
Brown N Group: Oriel Securities upgrades to buy with its target still at 420p.
Burberry Group: Alphavalue increases target from 1194p to 1198.80p and downgrades to sell.
Cable & Wireless Communications: Alphavalue shifts target from 46.40p to 46.50p and upgrades to buy.
Cineworld: Panmure Gordon moves target from 229p to 238p and maintains a sell recommendation.
Diploma:
Jefferies raises target from 520p to 615p and reiterates a buy
recommendation. Espirito Santo increases target from 481p to 604p
keeping a buy rating.
Dixons Retail: Alphavalue shifts target from 29.40p to 29.30p and upgrades to add.
Drax Group: RBC Capital upgrades to outperform.
easyJet: Alphavalue moves target from 741.90p to 742.10p and downgrades to reduce.
Experian: Jefferies increases target from 1150p to 1200p and upgrades from hold to buy.
Faroe Petroleum: Panmure Gordon cuts target from 205p to 200p and still recommends to buy.
Fenner: Credit Suisse raises target from 345p to 400p retaining a neutral rating.
First Quantum Minerals: Exane moves target from 1350p to 1470p and keeps a neutral rating.
French Connection Group: Oriel Securities downgrades to hold with its target still at 30p.
Genel Energy: Liberum Capital initiates with a hold recommendation and a target of 850p.
Glencore: Exane raises target from 370p to 400p, while its neutral rating remains unchanged.
Halma: Credit Suisse shifts target from 455p to 510p, while reiterating an outperform rating.
Home Retail Group:
Seymour Pierce ups target from 70p to 115p and upgrades from sell to
hold. Bank of America increases target from 130p to 155p keeping a buy
recommendation.
IMI: Credit Suisse moves target from 860p to 1460p and upgrades to outperform.
Invensys: Credit Suisse takes target from 220p to 368p, while its neutral rating is not changed.
Kazakhmys: Exane ups target from 480p tu 620p retaining an underperform rating.
Melrose: Credit Suisse raises target from 220p to 245p, while its neutral rating is reiterated.
New World Resources: Exane lowers target from 270p to 230p and downgrades to underperform.
Pearson: Societe Generale increases target from 1020p to 1090p, but still recommends to sell.
Reed Elsevier: Societe Generale raises target from 690p to 750p, while its buy recommendation is reiterated.
Renishaw: Credit Suisse ups target from 1530p to 1985p, while the neutral rating remains unchanged.
Rio Tinto:
Morgan Stanley takes target from 3450p to 3710p and downgrades to
equal-weight. Exane ups target from 4450p to 4900p keeping an outperform
rating. Citigroup moves target from 3300p to 4000p and leaves its buy
recommendation unchanged.
Rotork: Credit Suisse upgrades its target from 2430p to 2780p, while the outperform rating is kept.
SAB Miller: Macquarie upgrades from neutral to outperform.
SDL: Panmure Gordon cuts target from 538p to 524p maintaining a hold rating.
Senior: Credit Suisse raises target from 210p to 260p upgrading from neutral to outperform.
Spectris: Credit Suisse takes target from 2075p to 2370p and stays with an outperform rating.
Spirax-Sarco-Engineering: Credit Suisse increases target from 1950p to 2340p reiterating a neutral rating.
Stobart Group: Investec reduces target from 150p to 130p and retains a buy recommendation.
Tate & Lyle: Credit Suisse ups target from 750p to 845p reiterating an outperform rating.
TUI Travel:
Morgan Stanley upgrades from underweight to equal-weight keeping its
target of 250p. Exane cuts target from 300p to 280p and downgrades from
neutral to underperform. Nomura starts with a target of 168p and a
neutral rating.
UBM: UBS lowers target from 720p to 700p keeping its neutral rating.
Vesuvius: Credit Suisse starts with a target of 400p and a neutral rating.
Weir Group: Credit Suisse ups target from 1815p to 1970p, while its neutral rating is kept.
Wetherspoon JD: Morgan Stanley reduces target from 560p to 540p, while its equal-weight rating remains unchanged.
WPP Group: Societe Generale increases target from 970p to 1110p maintaining a buy rating.
Xcite Energy: Merchant Securities initiates with a target of 167.8p and a buy recommendation.
Xstrata: Exane takes target from 1150p to 1050p and downgrades from outperform to neutral.
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