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Markets start 2013 in bullish mood
Market Movers
techMARK 2,157.14 +0.29%
FTSE 100 6,047.34 +0.33%
FTSE 250 12,651.25 +0.31%
London’s
blue-chip index was able to build on Wednesday’s massive surge today in
the aftermath of the fiscal cliff deal Stateside on New Year’s Day.
Market analyst Michael Hewson
from CMC Markets said this afternoon: “While currency markets appear
somewhat dismissive of the agreement on the fiscal cliff, equity markets
have still managed to hold on to a good chunk of yesterday’s gains,
helped by better than expected German and Spanish unemployment data and
some extremely robust US ADP payrolls numbers for December.”
Stock markets across
the globe rallied strongly on Wednesday after US politicians decided to
allow some tax increases on America's wealthiest workers and delay
specifics on spending cuts by two months. The FTSE 100 jumped 130
points, or 2.2%, yesterday.
However, despite the strong end to
today’s session, the Footsie started out with slight losses early on as
investors digested the agreement and what it means for the US economy
in the coming months.
Market strategist Ishaq Siddiqi from ETX Capital
said today that the agreement “only addressed certain facets of the
fiscal cliff”. He said: “Lawmakers will need to kick-off another round
of negotiations to compromise on a matter that both Republicans and
Democrats are at total opposite ends; longer term spending cuts.”
In other news, the yield on a 10-year UK bond
surpassed 2% for the first time since May 2012. The borrowing rate has
jumped from 1.83% to 2.07% over the past three days since the fiscal
cliff deal, as the demand for safety diminished.
Economic news comes in mixed
Providing some support to stocks early on was the China non-manufacturing purchasing managers' index
(PMI) which rose from 55.6 to 56.1 in December, "providing yet more
evidence that the turnaround of the Chinese economy is gaining pace with
stronger economic growth likely in the months ahead," according to
Markus Huber, the head of German HNW trading at ETX Capital.
However, sentiment was dampened slightly after Markit's construction PMI for the UK dropped from 49.3 to 48.7 in December, missing forecasts for a slight rise to 49.5. Nationwide also reported that UK average house prices fell by 0.1% month-on-month in December; forecasts were for no change.
German unemployment increased by 3,000 in December, well below the 10,000 gain expected. Meanwhile, Spain
registered its first drop in unemployment in four months in December,
down 59,094, much to the surprise of economists who had forecast a
62,000 increase.
FTSE 100: Serco makes strong gains after upgrade
Making headlines today was High Street giant Next,
which jumped after saying in a Christmas trading statement that its
full-year results would come in towards the top of expectations. The
company said although 2012 sales had been in line with forecasts, cost
control measures, markdowns and gross margins had all been slightly
better than expected.
Panmure Gordon hiked its profit
forecasts and target for the stock this morning, while Prime Markets
told clients in an email that it sees "little on the horizon to stand in
the way of the Next retailing juggernaut".
Serco Group was a high riser after the outsourcing company was upgrade by Espirito Santo. Compass Group, the contract caterer, was downgraded by the same broker, prompting shares to fall.
Building materials group CRH
fell after announcing that full-year development activity in 2012
totalled over €0.6bn, helped by 18 acquisition and investment
initiatives undertaken in the second half.
Experian was on the up after the Financial Times
reported that Bank of America is ramping up mortgage and corporate
lending. Seymour Pierce upgraded its rating for Experian this morning
from 'reduce' to 'add', saying that the article suggests a "return to
health" in the US mortgage market which is beneficial to the business.
FTSE 250: Fresh blood for Chemring
Defence firm Chemring
was one of the top risers after its Chief Executive put boots on the
ground in the form of new directors of finance and human resources.
Investec has reiterated its 'buy' rating for the stock, hailing today’s
appointment of Finance Diretor Steve Bowers. "We regard Steve highly
and the market should welcome a further strengthening of the executive
team charged with steering the group after a difficult year," the broker
said.
Without any discernible evidence to explain the 10.17% jump in Imagination Technologies,
it would be nice to think it was an acknowledgement of Hossein
Yassaie's recent Knighthood. The Chief Executive was given the award in
her majesty’s New Year Honours 2013 in recognition of his services to
technology and innovation.
With little news on the biggest
FTSE 250 fallers either, it looks likely there was profit taking after
yesterday's buying fever in the wake of the fiscal cliff deal. A certain
amount of sobriety has returned now investors have started thinking
about further obstacles ahead for the US economy, such as the $109bn
spending cuts and talks over the debt ceiling.
For example, Elementis, one of the big risers on Wednesday with a 2.4% gain, gave most of this back today.
WH Smith
said it will open eight stores at New Doha International Airport when
panes begin landing their later this year, however, this hardly seems to
be a reason for shares to drop off almost 3%.
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FTSE 100 - Risers
Next (NXT) 3,873.00p +2.68%
BP (BP.) 441.70p +2.41%
Tesco (TSCO) 350.00p +2.12%
Aberdeen Asset Management (ADN) 383.20p +2.05%
Serco Group (SRP) 550.50p +1.66%
Marks & Spencer Group (MKS) 388.40p +1.49%
Imperial Tobacco Group (IMT) 2,412.00p +1.13%
Evraz (EVR) 280.60p +1.08%
InterContinental Hotels Group (IHG) 1,772.00p +1.08%
British American Tobacco (BATS) 3,124.00p +1.07%
FTSE 100 - Fallers
CRH (CRH) 1,266.00p -1.32%
Croda International (CRDA) 2,357.00p -1.30%
Capital Shopping Centres Group (CSCG) 358.30p -1.27%
Centrica (CNA) 336.80p -1.17%
Associated British Foods (ABF) 1,573.00p -1.13%
Intertek Group (ITRK) 3,185.00p -1.06%
Johnson Matthey (JMAT) 2,363.00p -1.05%
Severn Trent (SVT) 1,590.00p -0.93%
Reckitt Benckiser Group (RB.) 3,939.00p -0.91%
Rio Tinto (RIO) 3,658.50p -0.88%
FTSE 250 - Risers
Imagination Technologies Group (IMG) 439.70p +7.77%
Chemring Group (CHG) 253.60p +6.42%
Kenmare Resources (KMR) 34.98p +6.00%
Fenner (FENR) 435.20p +3.69%
SDL (SDL) 534.50p +3.29%
AZ Electronic Materials SA (DI) (AZEM) 363.50p +3.27%
Vesuvius (VSVS) 367.10p +3.06%
Domino Printing Sciences (DNO) 609.00p +3.05%
Cairn Energy (CNE) 277.60p +2.93%
easyJet (EZJ) 817.00p +2.90%
FTSE 250 - Fallers
Howden Joinery Group (HWDN) 171.50p -2.78%
ITE Group (ITE) 237.40p -2.74%
WH Smith (SMWH) 636.00p -2.68%
Dechra Pharmaceuticals (DPH) 608.50p -2.41%
Renishaw (RSW) 2,031.00p -2.40%
Computacenter (CCC) 400.00p -2.22%
JD Sports Fashion (JD.) 670.00p -2.19%
Elementis (ELM) 231.50p -1.99%
Ashtead Group (AHT) 436.80p -1.89%
Capital & Counties Properties (CAPC) 246.00p -1.76%
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European Markets Finished Mixed Following Yesterday's Strong Rally
The European markets ended
Thursday's trading session with mixed results. The markets rallied
strongly yesterday, due to the 11th hour agreement between Democrats and
Republicans to avoid the fiscal cliff in the United States. With the
fiscal cliff resolved, investors have now shifted their focus to the
U.S. debt ceiling issue.
Banks and miners were among the
biggest gainers on Wednesday, but turned in a much weaker performance
Thursday. The markets pared their losses, or climbed into the green,
following the release of the better than expected ADP private employment
data from the United States. Investors will be watching for the release
of the U.S. jobs report for December on Friday.
The U.S. reached
its statutory borrowing limit on December 31, 2012 and the treasury has
begun employing extraordinary measures, giving two months time to the
law makers to raise debt ceiling. The debt ceiling would do more damage
to the world's largest economy than the fiscal cliff. After passing the
deal to avert the fiscal cliff, Republicans said they would press their
demand to secure new spending cuts.
Moody's Investors Service
said it expects further fiscal measures in months ahead to lower future
budget deficits, which are necessary if the negative outlook on the
government's bond rating is to be returned to stable.
The Euro Stoxx 50
index of eurozone bluechip stocks lost 0.34 percent, while the Stoxx
Europe 50 index, which includes some major U.K. companies, added 0.67
percent.
The FTSE 100 of the U.K. climbed by 0.27 percent and the SMI of Switzerland surged by 2.90 percent. The DAX of Germany fell by 0.29 percent and the CAC 40 of France decreased by 0.34 percent.
In Frankfurt, fertilizer firm K+S dropped by 3.67 percent. Citigroup downgraded its rating on the stock to ''Neutral'' from ''Buy.''
EON
climbed by 0.28 percent. The utility has agreed to sell a 43 percent
stake in E.ON Thüringer Energie, a supplier of electricity, natural gas
and district heat, to a municipal consortium Kommunaler
Energiezweckverband Thüringen.
Bayer gained 0.01 percent.
The conglomerate said a Phase III trial of Nexavar met primary endpoint
of improving progression-free survival in patients with radioactive
idine refractory differentiated thyroid cancer.
Rhoen-Klinikum fell by 2.19 percent, after JPMorgan downgraded the stock to ''Underweight'' from ''Neutral.'' In Paris, Lafarge finished lower by 0.79 percent. Citigroup added the stock to its ''Most Preferred List.''
Alcatel Lucent advanced by 9.75 percent, following a broker upgrade. Societe Generale declined by 0.92 percent, while Credit Agricole lost 0.03 percent.
In
London, CRH decreased by 1.33 percent. The building materials company
revealed 18 acquisition and investment initiatives undertaken during the
second half of 2012. Citigroup added the stock to ''Least Preferred
List.'' Next climbed by 2.68 percent after the retailer raised its profit outlook for the year.
Mining stocks
turned in a weak performance. Vedanta Resources declined by 0.49
percent and Rio Tinto fell by 0.88 percent. BHP Billiton dropped by 0.41
percent and Antofagasta lost 0.94 percent.
Germany's
unemployment rate remained unchanged in November, data released by the
Federal Statistical Office showed Thursday. The adjusted unemployment
rate, which is based on the calculation concept of the International
Labor Organization (ILO), remained unchanged month-on-month at 5.4
percent in November. In November 2011, the jobless rate was 5.6 percent.
Germany's
unemployment increased in December, but the increase was
less-than-expected, as the economy likely entered a contraction in the
fourth quarter of 2012. The number of unemployed rose only 3,000 in
December, following an increase of 5,000 a month ago, the Federal Labor
Agency said Thursday. Economists had forecast an increase of 11,000 for
December.
Spain's unemployment decreased for the first time in
five months in December as service providers increased their head-counts
during the holiday season, giving rise to hopes that the country might
emerge from recession in late 2013, latest data showed Thursday.
The
number of unemployed persons decreased 1.2 percent from the previous
month to around 4.85 million in December, the Labor Ministry said.
U.K. construction sector contracted
at the fastest pace in six months in December, driven mainly by a steep
reduction in housing activity, data from a survey by Markit Economics
and the Chartered Institute of Purchasing & Supply (CIPS) showed
Thursday.
The seasonally adjusted purchasing managers' index
(PMI) for the construction sector dropped to 48.7 in December from 49.3
in November, hitting the lowest level since June. Economists had
forecast the index to rise to 49.5.
U.K. house prices
declined in December as demand and supply conditions in the housing
market remained weak, a survey by the Nationwide Building Society showed
Thursday. House prices declined 0.1 percent month-on-month in December,
after recording no change in the previous month. Economists had
expected prices to remain flat in December.
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Stocks Roughly Flat After Moving Lower At The Open
After
moving modesty lower at the open, stocks have moved back to the upside
over the course of the trading day on Thursday. Buying interest has
remained subdued, however, leading to a lackluster performance on Wall
Street.
The major averages are currently turning in a mixed performance, with the Dow just below the unchanged line. While the Dow is down 5.09 points or less than a tenth of a percent, the Nasdaq is up 2.94 points or 0.1 percent at 3,115.20 and the S&P 500 is up 1.21 points or 0.1 percent at 1,463.63.
The
choppy trading on Wall Street comes on the heels of the substantial
rally that was seen in the previous session, which came amid news of a
last-minute fiscal cliff agreement in Washington.
With the strong gains on Wednesday, the Dow and the Nasdaq reached their best closing levels in well over two months, while the S&P 500 reached a three-month closing high.
Profit
taking contributed to the initial weakness, although traders seem
reluctant to make any significant moves ahead of the release of the
Labor Department's monthly jobs report on Friday.
An upbeat
report on private sector employment may have helped to lift stocks off
their lows, with payroll processor ADP reporting stronger than expected
private sector job growth.
ADP said private sector
employment increased by 215,000 jobs in December following an upwardly
revised increase of 148,000 jobs in November. Economists had expected
employment to rise by about 150,000 jobs.
On the other hand, the
Labor Department release a separate report showing that initial jobless
claims climbed to 372,000 in the week ended December 29th, an increase
of 10,000 from the previous week's revised figure of 362,000.
Jobless claims had been expected to climb to 363,000 from the 350,000 originally reported for the previous week.
Sector News
While most of the major sectors are showing only modest moves, considerable strength has emerged among oil service stocks. The Philadelphia Oil Service Index has advanced by 1.4 percent, reaching its best intraday level in over two months.
Transocean
(RIG) has helped to lead the oil service sector higher, advancing by
5.1 percent after the Wall Street Journal reported that the company has
reached a $1.4 billion settlement to resolve all civil and criminal
issues related to the 2010 Deepwater Horizon accident in the Gulf of
Mexico.
Natural gas stocks have also shown a strong move
to the upside on the day, driving the NYSE Arca Natural Gas Index up by
1.2 percent. The strength in the sector comes despite a decrease by the
price of natural gas.
Computer hardware, airline, and housing stocks are also seeing notable strength in mid-day trading, while weakness remains visible among health insurance stocks.
Other markets
In overseas trading, stock markets
across the Asia-Pacific region moved mostly higher on Thursday, adding
to yesterday's gains. Hong Kong's Hang Seng Index rose by 0.4 percent,
while Australia's All Ordinaries Index advanced by 0.8 percent. The
markets in Japan and mainland China remained closed.
In the bond market, treasuries have
moved modestly lower, extending the sharp downward move seen over the
two previous sessions. Subsequently, the yield on the benchmark ten-year
note, which moves opposite of its price, is up by 2.1 basis points at
1.86 percent.
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US unemployment rates to be unveiled
The US is set to release unemployment rate figures on Friday as leaders continue to tackle the country's financial deficit.
Lawmakers are
expected to announce that 155,000 jobs were added to the economy in
December which would be considerably less than is needed to bring down
unemployment. It adds another spanner in the works as the US works
through its economic crisis.
President Barack Obama and
congressional Republicans reached a budget deal on Tuesday to avert
$600bn in tax hikes and spending cuts, but they face a political
showdown over the next two months as the troubles are far from over.
Some argue the deal, which raises taxes for high earners, has done
little to curb the budget strains.
The debacle has weighed
heavily on the jobs sector as the country tries to recover from its
financial struggles. A slump in Asian trading has also slowed down jobs
creation.
The US needs to add more than 356,000 jobs
each month over the next three years in order to lower unemployment rate
to 6%, but analysts say the government is setting its sights too high
given its current policies.
EGMs
Great Eastern Energy Corp Ltd. GDR
GMs
London & St lawrence Inv Co.
Sound Oil
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Big Yellow Group
Brown (N.) Group
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Cello Group
City of London Group
Dee Valley Group
Dee Valley Group (Non-Voting)
JD Sports Fashion
Juridica Investments Ltd.
Majestic Wine
Rolls-Royce Holdings
Sainsbury (J)
Slingsby H.C
Tate & Lyle
Value and Income Trust
UK ECONOMIC ANNOUNCEMENTS
Consumer Credit (09:30)
M4 Money Supply (09:30)
Mortgage Approvals (09:30)
Official Reserves (09:30)
PMI Services (09:30)
Trends in Lending (09:30)
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
PMI Composite (GER) (08:55)
PMI Services (GER) (08:55)
PMI Services (EU) (09:00)
Non-Farm Payrolls (US) (13:30)
Unemployment Rate (US) (13:30)
Factory Orders (US) (15:00)
Goods Orders (US) (15:00)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
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