Stocks rally after US data
Market Movers
techMARK 2,173.83 +0.77%
FTSE 100 6,089.84 +0.70%
FTSE 250 12,694.90 +0.34%
London’s stock market started 2013 strongly in the aftermath of the fiscal cliff deal in the US on New Year’s Day, with the FTSE 100 gaining 192.5 points over the first three trading sessions of the year.
Equities on Friday were helped by some better-than-expected economic
figures Stateside, which bolstered the outlook for the world’s largest
economy. The FTSE 100 finished up 0.7% on the day at 6,090; it has not closed higher than this level since May 2008.
After a subdued start on markets this morning - owing to the minutes of
the latest Federal Reserve meeting released last night - the Footsie
rallied after American non-farm payrolls increased by 155,000 in
December, ahead of the 152,000 consensus estimate. Meanwhile, gains were
cemented this afternoon after the US ISM service-sector purchasing managers’ index rose from 54.7 to 56.1, surprising analysts who had expected a slight fall to 54.2.
Investors seemed to shrug off the news that the UK services PMI fell to 48.9 last month, after a reading of 50.2 in November. Consensus forecasts for no change.
The minutes of the December Federal Open Market Committee knocked market sentiment early on this morning. While they showed a
clear majority in favour of further asset purchases (the third round of
quantitative easing, or QE3), members were divided on the timing of
these purchases
“Indecision between members pointed to a
split between those who believe QE is a necessary ongoing task, and
those who believe it is proving ineffective,” explained research analyst
Joshua Mahony from Alpari.
FTSE 100: BP gains after Transocean settlement
Deepwater Horizon rig owner Transocean has reached a $1.4bn settlement with the US Department of Justice, causing shares in operator BP
to rise in London. Transocean, the world's largest offshore drilling
contractor, agreed yesterday to plead guilty to one misdemeanour
violation of the Clean Water Act for "negligent discharge of oil into
the Gulf of Mexico".
Nevertheless, the wider resource sector was under the weather, with Fresnillo, Randgold, Petrofac and Polymetal all registering losses. Fresnillo
was the heaviest faller after UBS cut its recommendation for the shares
to 'neutral'. Analyst Chris Lichtenheldt noted that the stock currently
trades at 1.26 times net asset value and 18.7 times 2013 cash flow, 48%
and 44% higher than the North American peer group, respectively.
Sector peer Anglo American
was also in the red after agreeing to sell its 70% interest in the
Amapá iron ore mine in Brazil. The terms of the deal with Zamin Ferrous
are confidential and subject to state regulatory approval, but the
company said it was expected to complete in 2013.
High Street retailer Marks & Spencer
fell after Nomura lowered its full-year (ending March 2013) profit
before tax forecast from £694m to £666m, based on recent Kanta market
data.
Real estate investment trust Hammerson was dampened by Credit Suisse after the broker downgraded its rating for the stock to 'neutral'.
Power systems giant Rolls-Royce
rose after revealing that it is to provide repair and support services
for aircraft engines operated by the US Marine Corps and Air Force as
part of a contract worth $52.2m.
FTSE 250: Bank of Georgia up after Numis boost
Bank of Georgia Holdings was among the best performers after Numis initiated its rating on the stock at 'buy', with a target of 1,453p.
Balfour Beatty,
the global infrastructure group, was also on the up after it announced
that it has been awarded a five-year highway maintenance contract by
Wiltshire Council worth £150m.
As on the top tier index, miners were registering the biggest falls, tracking metal prices lower. Hochschild, Petropavlovsk, Bumi and Lonmin all took a hit.
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FTSE 100 - Risers
BP (BP.) 453.50p +2.67%
Hargreaves Lansdown (HL.) 721.00p +2.41%
Burberry Group (BRBY) 1,290.00p +2.30%
Schroders (SDR) 1,802.00p +2.21%
BT Group (BT.A) 242.80p +1.89%
Experian (EXPN) 1,033.00p +1.77%
Vodafone Group (VOD) 160.05p +1.68%
Standard Life (SL.) 352.10p +1.65%
British American Tobacco (BATS) 3,174.50p +1.62%
Xstrata (XTA) 1,147.00p +1.37%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 5,975.00p -4.09%
Fresnillo (FRES) 1,810.00p -3.98%
Polymetal International (POLY) 1,174.00p -3.69%
Marks & Spencer Group (MKS) 376.40p -3.09%
Antofagasta (ANTO) 1,343.00p -1.97%
Kazakhmys (KAZ) 811.50p -1.76%
Rio Tinto (RIO) 3,613.00p -1.24%
Johnson Matthey (JMAT) 2,335.00p -1.18%
Tullow Oil (TLW) 1,275.00p -1.09%
Wood Group (John) (WG.) 741.50p -1.00%
FTSE 250 - Risers
Chemring Group (CHG) 264.10p +4.14%
Vesuvius (VSVS) 380.80p +3.73%
Bank of Georgia Holdings (BGEO) 1,140.00p +3.64%
Jupiter Fund Management (JUP) 304.10p +3.61%
Premier Farnell (PFL) 201.10p +3.50%
Laird (LRD) 222.10p +3.49%
JD Sports Fashion (JD.) 690.00p +2.99%
Senior (SNR) 214.20p +2.88%
KCOM Group (KCOM) 72.05p +2.56%
RPS Group (RPS) 215.90p +2.52%
FTSE 250 - Fallers
Petropavlovsk (POG) 359.30p -4.21%
Hochschild Mining (HOC) 473.30p -3.72%
Kentz Corporation Ltd. (KENZ) 381.30p -3.08%
Fenner (FENR) 425.00p -2.34%
Bumi (BUMI) 268.70p -2.29%
Ted Baker (TED) 1,130.00p -1.99%
Kenmare Resources (KMR) 34.30p -1.94%
COLT Group SA (COLT) 96.00p -1.94%
Betfair Group (BET) 670.50p -1.90%
Lonmin (LMI) 290.80p -1.89%
| Europe Market Report |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Stocks edge higher on US jobs
FTSE-100: 0.70%
Dax-30: 0.26%
Cac-40: 0.24%
FTSE-Mibtel 30: 0.30%
Ibex 35: 0.39%
Stoxx 600: 0.35%
The
main European equity benchmarks ended on a high note Friday after the
US revealed the creation of more jobs. The Labor Department said
payrolls rose by 155,000 workers last month, calming investors’ nerves
and bringing global stocks higher.
The unemployment rate stayed at 7.8% after the November figure was revised up from a previously reported 7.7%.
The news followed the release of the Federal Open Market Committee minutes on the $85bn monthly bond-purchase program.
Policy makers seemed divided over how long the program should last.
Some put forward the possibility of halting its current bond repurchase
program towards the middle of the year.
Spain taps pension fund
Spanish
authorities have been employing the state’s pension reserve fund as a
last ditch buyer of sovereign bonds, The Wall Street Journal reported.
The move raises questions over the role of the Social Security Reserve
Fund as a guarantor of future pension payouts, the newspaper said.
Spanish debt has been paid by at least 90% of the €65bn fund, according
to official figures, and the government is now taking out cash for
emergency payments.
It comes as Spain tackles a prolonged economic crisis.
Euro zone inflation unchanged
Euro
zone inflation remained unchanged at 2.2% in the year to December,
according Eurostat statistics. The inflation across the 17 European
Union countries holds just above the European Central Bank’s (ECB)
target of keeping the annual rate of price rises under 2%.
The ECB will make its monthly decision regarding interest rates and wider monetary policy next week.
Ortac Resources lifts market
Ortac Resources lifted 22.82% to a mid of 0.635p, showing a trend of major gold companies, according to broker Seymour Pierce.
Investors were focusing on the potential of gold production from the
Šturec Gold Deposit in Slovakia where the results of the pre-feasibility
are due this quarter.
BMW said its US December sales rose 34.8% to 43,855 vehicles. The German automobile manufacturer’s shares were up 0.90% to €50.34.
Bankia, the lender that received the largest Spanish bailout, was the highest gain on the Stoxx 600 as it rose 20% to €49.5.
Daimler´s US unit unveiled sales in December which came to a total of 31,372 vehicles, up 12% from the same month last year.
Euro climbs against dollar
The
euro/dollar rose modestly at 0.02% to the 1.3051 dollar mark. Front
month Brent crude futures remained off by 1.145 dollars to the 110.87
dollar level.
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| US Market Report |
Stocks Seeing Modest Strength On Upbeat Economic Data
While buying interest
remains somewhat subdued, stocks are seeing modest strength in mid-day
trading on Friday. The markets are benefiting from a positive reaction
to some relatively upbeat economic data.
The major averages have moved to the upside in recent trading, reaching new highs for the session. The Dow is up 29.76 points or 0.2 percent at 13,421.12, the Nasdaq is up 3.85 points or 0.1 percent at 3,104.42 and the S&P 500 is up 5.07 points or 0.4 percent at 1,464.44.
The
modest strength on Wall Street comes following the release of a report
from the Labor Department showing that U.S. employment increased in line
with economist estimates in the month of December.
The report showed that non-farm payroll employment increased by 155,000 jobs in December following an upwardly revised increase of 161,000 jobs in November.
Economists
had expected employment to increase by about 155,000 jobs compared to
the addition of 146,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate came in at 7.8 percent in December, unchanged from the previous month's revised figure.
A separate report from the Institute for Supply Management showed that economic activity in the U.S. service sector unexpectedly expanded at a faster rate in December.
The ISM
said its non-manufacturing index climbed to 56.1 in December from 54.7
in November, with a reading above 50 indicating growth in the service
sector. The increase surprised economists, who had expected the index to
edge down to 54.5.
With the unexpected increase, the non-manufacturing index rose to its highest level since reaching 57.3 in February of 2012.
However, traders seem
somewhat reluctant to continue buying stocks after the rally that was
seen earlier in the week lifted the major averages to their best levels
in over two months.
Traders also continue to digest
yesterday's release of the minutes of the latest Federal Reserve
meeting, which suggested that the central bank could end its
quantitative easing program earlier than anticipated.
Sector News
While many of the major sectors are showing only modest moves, considerable strength has emerged among networking stocks. The NYSE Arca Networking Index has surged up by 2.2 percent to an eight-month intraday high.
Acme Packet (APKT) and Alcatel-Lucent (ALU) are turning in two of the networking sector's best performances, jumping by 11 percent and 8.9 percent, respectively.
healthcare
provider stocks have also shown a strong move to the upside on the day,
driving the Morgan Stanley Healthcare Provider Index up by 1.8 percent.
With the gain, the index has risen to a record intraday high.
Transportation and energy stocks
also seeing significant strength in mid-day trading, while gold stocks
have come under pressure amid a sharp drop by the price of the precious
metal.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index surged up by 2.8 percent in its first trading day of the new year, Hong Kong's Hang Seng Index fell by 0.3 percent.
Meanwhile, the major European markets all moved to the upside over the course of the session. The U.K.'s FTSE 100 Index advanced by 0.7 percent, while the German DAX Index and the French CAC 40 Index rose by 0.3 percent and 0.2 percent, respectively.
In the bond market, treasuries are
seeing continued weakness, extending the sharp downward move seen in
recent sessions. Subsequently, the yield on the benchmark ten-year note,
which moves opposite of its price, has risen by 3.6 basis points to
1.935 percent.
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| Broker tips |
Fresnillo, RBS, M&S
Shares in precious metals miner Fresnillo were hammered on Friday morning on the back of a downgrade by UBS from 'buy' to 'neutral' after the stock's recent strength.
Since September 10th 2012, Fresnillo has
gained 7% while silver prices have fallen 9%. This compares with the
average fall for silver stocks (under UBS's coverage) of 2%.
Analyst Chris Lichtenheldt notes that the stock currently trades at 1.26
times net asset value and 18.7 times 2013 cash flow, 48% and 44% higher
than the North American peer group, respectively.
While an upcoming LIBOR settlement at Royal Bank of Scotland (RBS) may just be a drop in the ocean compared with last year's PPI redress, Investec has retained its 'sell' recommendation on the stock.
Analyst Ian Gordon said: "In 2013-15e, we see a return to profit with a
modest improvement in core profitability (despite an offset from
EC-mandated business disposals). However, with a very weak outlook for
RoE [return on equity], we remain sellers."
Nomura has lowered its forecasts for High Street retailer Marks & Spencer (M&S) ahead of the group's third-quarter trading update, but has retained its 'buy' rating and 420p target for the stock.
"In our view, M&S
is changing trading stance from one driven by market share (and often
promotion), to a more full-price-oriented approach. In our view, this
will result in difficult quarters in top-line terms, but over time could
help deliver a significant margin opportunity relative to peers."
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