London close: Stocks extend gains on quiet day
Market Movers
- techMARK 2,222.99 +0.21%
- FTSE 100 6,180.98 +0.43%
- FTSE 250 12,994.94 +0.38%
With Wall Street closed for Martin Luther King Day
on Monday, the UK stock market took advantage of low volumes to push
London's benchmark index close to levels not seen in five years.
"European stock markets benefitted from the lack of news, earnings and economic data released today with the major indices higher by around 0.5%," said Market Analyst Craig Erlam from Alpari this afternoon.
"The FTSE 100 moved ever closer to May 2008 highs as the stock market
bubble continued to rise supported by monetary stimulus measures from
all over the globe, a lack of bad news out of the Eurozone and extremely
low earnings expectations," he said.
Eurozone finance ministers (the Eurogroup)
are meeting in Brussels today where they are expected to elect the a
new head with Jean-Claude Juncker stepping down from the post after
having served for eight years. Holland's Finance Minister Jeroen
Dijsselbloem is expected to take the helm.
Stocks also made gains as a two-day Bank of Japan
meeting commenced, with expectations high for bond-buying
announcements. According to a Bloomberg survey, most analysts expect a
10tn-yen increase in asset purchases.
FTSE 100: Admiral, IAG and RBS provide a lift
Insurance giant Admiral
surged today after Goldman Sachs upped its view on the shares from
'neutral' to 'buy' and hiked its price target from 1,160p to 1,500p.
Admiral was followed closely by sector peer Aviva.
Airline operator IAG
was performing well after Credit Suisse lifted its recommendation from
'neutral' to 'outperform', citing "expected progress" at Spanish unit
Iberia. "The market has begun to price in Iberia progress. However
resolution of labour challenges would likely drive significantly greater
confidence in management's ability to achieve 2015 targets", the broker
said.
Royal Bank of Scotland (RBS) rose on reports it
is planning to divide its investment bank into two separate divisions.
The transformation would see the RBS's markets business split from its
international banking division.
Gold miner Randgold
also gained after saying that production has returned to normal at its
Tongon mine after a fire in the mills section of plant three weeks ago.
Leading the downside was publishing and education company Pearson
after its cutting its full-year profit guidance slightly. Meanwhile,
the company said that the tough market conditions and structural
industry changes seen at the end of 2012 have continued into 2013.
Shares in aerospace engineer Meggitt
were weighed down by concerns that one of the group's subsidiaries'
products could be linked to the grounding of Boeing 787 Dreamliners.
Aggreko was hit by a downgrade from analysts at Bank of America to 'neutral', while luxury brand Burberry fell after sector peer Richemont after missed revenue forecasts.
Drinks group Diageo was lower after UBS cut its recommendation to 'neutral'. Rival SABMiller
was also down after saying that it is to sell its Panama-based milk and
juice business to narrow the focus of the Cerveceria Nacional division.
SAB is to present its third-quarter trading update tomorrow.
FTSE 250: Afren up after record performance
Oil and gas group Afren
was a high riser after saying that production levels last year hit a
record-high as it labelled its exploration and appraisal campaign a
"significant success". Net production in 2012 totalled 42,830 barrels of
oil equivalents per day (boepd), in line with the guidance range of
42,000-46,000 boepd given at the half-year results statement in August.
Transport and logistics group Stobart also rose after saying that Non-Executive Chairman Rodney Baker-Bates is to retire.
easyJet
finished lower after founder Sir Stelios Haji-Ioannou warned directors
he will sell his 37% family stake in the airline if they enforce plans
to buy new aircraft, according to reports. He voiced his concern over
the company's expansion plans in an open letter published today,
accusing directors of "squandering" cash on new planes.
FTSE 100 - Risers
Admiral Group (ADM) 1,211.00p +4.94%
Aviva (AV.) 374.90p +2.38%
Weir Group (WEIR) 1,950.00p +2.31%
Royal Bank of Scotland Group (RBS) 366.90p +2.26%
GlaxoSmithKline (GSK) 1,405.00p +2.11%
International Consolidated Airlines Group SA (CDI) (IAG) 212.50p +1.97%
GKN (GKN) 248.10p +1.97%
Smith & Nephew (SN.) 710.00p +1.79%
National Grid (NG.) 695.00p +1.68%
British American Tobacco (BATS) 3,223.50p +1.67%
FTSE 100 - Fallers
Pearson (PSON) 1,202.00p -2.91%
Meggitt (MGGT) 429.40p -1.78%
Kingfisher (KGF) 268.90p -1.47%
Burberry Group (BRBY) 1,367.00p -1.37%
Aggreko (AGK) 1,806.00p -1.31%
Diageo (DGE) 1,819.50p -1.28%
Shire Plc (SHP) 2,071.00p -0.96%
Tullow Oil (TLW) 1,154.00p -0.94%
Rexam (REX) 459.70p -0.91%
SABMiller (SAB) 2,960.50p -0.80%
FTSE 250 - Risers
Ocado Group (OCDO) 95.05p +9.25%
Brewin Dolphin Holdings (BRW) 222.00p +5.46%
WH Smith (SMWH) 646.00p +4.96%
Henderson Group (HGG) 158.70p +4.96%
Centamin (DI) (CEY) 57.80p +4.24%
Stobart Group Ltd. (STOB) 95.00p +3.83%
Ferrexpo (FXPO) 271.20p +3.47%
ITE Group (ITE) 255.20p +3.40%
Drax Group (DRX) 580.50p +3.20%
Lonmin (LMI) 342.90p +3.07%
FTSE 250 - Fallers
Pace (PIC) 213.60p -2.24%
Wetherspoon (J.D.) (JDW) 500.00p -1.96%
Telecom Plus (TEP) 962.00p -1.89%
Bwin.party Digital Entertainment (BPTY) 101.70p -1.74%
Informa (INF) 482.90p -1.69%
easyJet (EZJ) 857.50p -1.66%
Workspace Group (WKP) 330.00p -1.64%
Computacenter (CCC) 445.80p -1.57%
EnQuest (ENQ) 123.20p -1.44%
Domino Printing Sciences (DNO) 649.00p -1.37%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe midday: Eurogroup to discuss direct bank recapitalisation
- Eurogroup to discuss bank liquidity injections
- Bundesbank does not expect weakness to last long
- Merkel's CDU loses elections in Lower Saxony
- Juncker sees no decision tonight on Cyprus
- Richemont down on weakness in Asia Pacific
FTSE-100: 0.23%
Dax-30: 0.39%
Cac-40:0.25%
FTSE-Mibtel 30: 0.06%
Ibex 35: 0.23%
Stoxx 600: 0.16%
The major European equity benchmarks were trading near unchanged by the
midday point of the session. That despite the unexpected election
defeat of German Chancellor Angela Merkel's CDU in the state of Lower
Saxony and ahead of this evening's meeting of Eurogroup finance
ministers.
The SPD/Greens won another state from Merkel's CDU/CSU/FDP coalition, even if only by one seat. Nevertheless, Barclays Research
did not see the results as affecting policy-making at the federal
level. Also to be taken into account, Merkel and her allies in the FDP
continue to lead very comfortably in national polls (at 47% versus the
SPD/Greens at 38%). Even so, the national elections could still become a
tighter race than the latest polls suggest, those economists indicated.
Of interest, some reports indicated that Germany's Economics
minister – Rosler- had offered to tender his resignation following the
defeat.
Discussions at Monday evening's Eurogroup meeting were
expected to include the option of direct bank recapitalization by the
European Stability Mechanism (ESM), the aid program for the Spanish
banking sector, according to analysts, and the naming of the grouping's
new President. No decision was expected on Cyprus.
Acting as a
backdrop, US markets were to remain closed in observance of the Martin
Luther King Holiday. No less relevant was the start of the Bank of
Japan's two day policy meeting, after which it might unveil aggressive
new policy measures – at least on the monetary policy side.
Richemont weighs on the Stoxx
Luxury goods maker Richemont
announced that sales in the last quarter of 2012 were flat in the Asia
Pacific region, even if that follows on several years of exceptional
growth in that area of the world, especially in China. To be had in
account are the demanding comparative figures for the same quarter last
year. As well, wholesale sales growth was lower than in the first six
months and in the comparative period due to the cautious approach taken
by the Group's retail partners in Hong Kong and mainland China.
Over the weekend German power producer E.On asked unions to return to talks.
In the latest edition of Der Spiegel EADS
Chief Executive Tom Enders told the German government that it would not
accept interference in the company's decisions on when and where to
develop aircraft in the future.
Nokia might be looking
to sell £625m in debt to benefit from the recent fall in market rates,
according to a source cited by Bloomberg.
From a sector
stand-point the worst performers were Personal and household goods
(-0.75%), Media (-0.71%) and Real Estate (-0.19%).
Better than expected economic data
The Dutch consumer confidence index for the month of January improved to -36
points from -39 in the month before (Consensus: -39).
Spain's trade deficit narrowed to 29.5bn euros in the 11 month until
the end of November, but exports declined by 6% versus a year ago.
German producer prices fell by 0.3% month-on-month in December (Consensus: 0.0%).
In its monthly report for January the Bundesbank said that the weak business cycle should not last long. Euro steady despite election results
The euro/dollar was standing 0.02% lower at 1.3318.
Front month Brent crude futures were down by 0.206 at $111.67.
| US Market Report |
| The US Markets were closed today |
| Broker Tips |
Broker tips: Meggitt, IAG, Unilever
Shares in aerospace engineer Meggitt were weighed down on Monday morning by concerns that one of the group's products could be linked to the grounding of Boeing 787 Dreamliners.
However, analysts at Jefferies gave the company the benefit of the doubt, saying that it's too early to point fingers.
"[…] It is possible that Meggitt, as supplier of the B787 BCU, will be
affected by some negative sentiment in the short - term. We believe,
however, that it would still be premature and quite possibly mistaken to identify lithium-ion battery technology as the villain of the piece."
Given the expected progress made by the Spanish airline Iberia, Credit Suisse has lifted its recommendation for parent company International Consolidated Airlines Group (known as IAG) from 'neutral' to 'outperform'.
"If Iberia management can negotiate a satisfactory deal with labour, or
unilaterally reduce headcount (plan B), we think Iberia should limit
its 2013E operating loss to c€100m (despite 1Q weakness)," Credit Suisse
said. This compares with the estimate €334m loss in 2012.
Investec has upgraded its recommendation for consumer good group Unilever from 'hold' to 'buy' ahead of this week's fourth-quarter results.
"The principle catalysts for our change of view are the potential for margins to surprise on the upside in FY13 and a belief that the Developing Market business is still being undervalued," said analyst Martin Deboo.
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