ADVFN III Evening Euro Markets Bulletin (January 8, 2013).

ADVFN III Evening Euro Markets Bulletin

Daily world financial news Tuesday, 08 January 2013

London Market Report

FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts

London close: Slight losses seen on FTSE Market Movers techMARK 2,173.65 +0.08% FTSE 100 6,053.63 -0.18% FTSE 250 12,635.01 -0.68% UK stocks ended Tuesday's session with small losses, influenced in part by some weaker-than-expected economic indicators from the Eurozone, marking the second day of losses this year. Eurozone unemployment hit a new record high of 11.8% in November, according to official figures. This was a slight rise on the 11.7% rate the 17-nation bloc registered in October. More than 26m people are now unemployed across the EU, with that number totalling 18.8m in the Eurozone. Also of concern was the British Retail Consortium's (BRC) prediction for this 2013. How will 2013 go you say? "Underwhelming" is the BRC's answer. After reviewing the data economists at Barclays Research are of a similar mind, saying that: "With consumer confidence remaining depressed and spending power growth likely to be measured, we do not expect the retail environment to improve significantly this year." Sales at stores open at least a year gained 0.3% in December versus a year ago, the worst performance since 2010, when adverse weather conditions deterred shoppers. Meanwhile, research by a leading business group shows the UK economy grew in the fourth quarter of 2012, despite widespread fears of a triple dip recession. The British Chamber of Commerce (BCC) Quarterly Economic Survey showed a pick up in both the manufacturing and service sectors in the last three months of the year. The survey of 7,662 businesses also found that levels of confidence and investment had increased over the period, despite remaining weak by historical standards. In other news, the session saw Deutsche Bank upwardly revise its price targets for the majority of the construction & materials shares under its coverage, with its favourite picks being Bovis Homes, Barratt Developments and Berkeley Group. The broker raised its price target on Barratt Developments to 278p (from 224p), Bovis Homes to 667p (from 599p) and on Berkeley Group to 1,941 (from 1,925). They explain that, "through 2012 the UK house builder sector re-rated, moving from 0.69 times 2012 Net Tangible Asset Value (NTAV) to 1.0 times 2013 NTAV. However, as the sector reaches returns that cover its cost of capital in 2013, moving to mid teen levels by 2014/2015, we believe a further rerating is available. A sector creating mid teen return on capital employed (ROCE) on a sustainable basis (the upside being based on self-help measures rather than any housing market pick-up) we believe deserves to trade at a 20% premium to its NTAV (mid-range of its 2000-2005 valuation range)." Of possible import, an adviser to China's central bank was cited as saying that it will be more cautious in the second half of the year regarding its monetary policy. Vodafone gains; Insurers take a tumble Telecoms titan Vodafone was a high riser after Verizon Communication's CEO said that a purchase of Vodafone's stake in their joint venture Verizon Wireless is feasible, according to The Wall Street Journal. Insurance peers Standard Life, Legal & General and RSA Insurance were seen falling throughout the day after Bank of America Merrill Lynch downgraded its ratings for all three groups. Investors welcomed Anglo American's appointment of Australian Mark Cutifani as its new Chief Executive. The mining giant pinched Cutifani from AngloGold Ashanti to replace Cynthia Carroll. Cutifani will take the reins in April with a pay packet worth around £2.38m, including salary and bonuses. ARM Holdings was also up in the top 10 after Swiss broker Credit Suisse updated its forecasts for the chip maker so as to reflect the changes made to its forecasts for the handset industry in 2013. More specifically, analyst Kulbinder Garcha has raised his smartphone market volume estimates by 6%/15% and tablet estimates by 5%/13% for 2012/13. Sainsbury was seen heading higher as confidence grew ahead of tomorrow's trading announcement, and after data from Kantar Worldpanel showed that it was the only grocer to gain market share these past holidays. Meanwhile, Tullow Oil shares fell after Societe Generale cut its target on the stock from 1,450p to 1,390p, while the hold rating remained unchanged. Investec also reduced its target from 1,399p to 1,000p and downgraded the stock from hold to sell. TUI Travel fell after Morgan Stanley downgraded the group from equal weight to underweight. Croda International was also a big faller after Canaccord Genuity reiterated its 'sell' rating on the stock. Debenham's was lower after saying that it now expects gross margin for the year to be 10 basis points higher than last year rather than 20 basis points as previously guided. Nautilus Minerals rocketed higher following a hostile bid from Michael Bailey, an individual, and an entity controlled by him, to purchase all of the outstanding shares of the company. Roxi Petroleum saw its shares almost double in value after a Kazakh businessman, Alpamysovich Satylganov, said he would invest $40m in the firm at a huge premium to the current price. FTSE 100 - Risers Shire Plc (SHP) 1,963.00p +2.56% Sainsbury (J) (SBRY) 339.00p +2.20% Vodafone Group (VOD) 162.40p +1.72% Resolution Ltd. (RSL) 254.90p +1.59% Carnival (CCL) 2,435.00p +1.46% Anglo American (AAL) 2,028.00p +1.37% Wood Group (John) (WG.) 749.50p +1.35% Capital Shopping Centres Group (CSCG) 365.10p +1.25% Aggreko (AGK) 1,769.00p +1.14% ARM Holdings (ARM) 808.50p +1.13% FTSE 100 - Fallers Tullow Oil (TLW) 1,225.00p -3.62% TUI Travel (TT.) 276.80p -3.42% Antofagasta (ANTO) 1,288.00p -2.57% CRH (CRH) 1,221.00p -2.55% Whitbread (WTB) 2,462.00p -2.03% Fresnillo (FRES) 1,742.00p -1.86% Aviva (AV.) 381.90p -1.67% Randgold Resources Ltd. (RRS) 5,780.00p -1.62% Kazakhmys (KAZ) 806.50p -1.59% GKN (GKN) 231.30p -1.45% FTSE 250 - Risers Centamin (DI) (CEY) 44.18p +8.95% Bumi (BUMI) 303.70p +5.27% Interserve (IRV) 415.80p +4.34% Man Group (EMG) 89.55p +2.23% Barratt Developments (BDEV) 215.90p +1.79% SIG (SHI) 126.00p +1.61% St. Modwen Properties (SMP) 241.10p +1.60% Ferrexpo (FXPO) 273.00p +1.56% Kentz Corporation Ltd. (KENZ) 394.00p +1.55% Bovis Homes Group (BVS) 600.00p +1.52% FTSE 250 - Fallers African Barrick Gold (ABG) 352.10p -20.70% Debenhams (DEB) 108.10p -7.69% Michael Page International (MPI) 398.80p -3.83% Dechra Pharmaceuticals (DPH) 619.50p -3.65% Fenner (FENR) 411.00p -3.48% Betfair Group (BET) 655.50p -3.39% Renishaw (RSW) 1,885.00p -3.33% Regus (RGU) 105.10p -3.31% Unite Group (UTG) 275.60p -3.09% Brewin Dolphin Holdings (BRW) 204.00p -3.09% Europe Market Report FTSE 100 Euronext Dax perf CAC 40 Europe midday: Stocks push higher ahead of the BoE and ECB - Banks deposit 244.5bn euros overnight at ECB - Weak German import and export data - Italian banks downgraded - BoJ to buy ESM bonds FTSE-100: 0.11% Dax-30: 0.04% Cac-40: 0.56% FTSE Mibtel 30: 0.81% Ibex 35: 0.58% Stoxx 600: 0.21% European stocks had moved back into the blue by midday following an earlier start lower. That following the small losses seen on Wall Street overnight and cautious remarks out from some Chinese policy makers. Weaker than forecast German export data was surely another factor weighing on European shares early in the session. Even so, this is what economists at Barclays Research were saying, "We therefore believe that the recent weakness in German trade figures is mainly the lagged response to the slowdown in global growth that occurred earlier in 2012. Despite the recent weakness, however, Germany's trade performance in 2012 through November has been much better than expected at the beginning of last year." Those economists also seem to have given short shrift to the drop seen in imports. All of the above came ahead of the start of the regular earnings season, Stateside, later today, with the release of Alcoa's results, which are due after the close. Also worth noting, the Bank of Japan (BoJ) has announced its intention to acquire bonds issued by the European Stability Mechanism (ESM), which is a positive for the wider market. Italian banks downgraded Airbus has been selected as the preferred bidder to supply six A330 aerial refueling tankers to India. As well, Hawaiian Airlines plans to buy Airbus A321-neo planes in an order valued at up to $2.8bn. Novartis will limit acquisition deals to $4bn in 2013 Chief Executive Joe Jimenez told Bloomberg. The board of Generali, Italy's biggest insurer, is to discuss buying the 49% of a joint venture with Czech group PPF it does not already own, three sources with knowledge of the situation told Reuters. Verizon Communications could bid for Vodafone's stake in their joint-venture, The Wall Street Journal reports. Intesa Sanpaolo and Banca Monte dei Paschi di Siena have both been downgraded by JPMorgan Chase & Co., to underperform from neutral. From a sector stand-point the best performance is now to be seen in the following industrial groups: Telecommunications (1.02%), Banks (1.0%) and Health Care (0.60%). Weak German import and export data Italian unemployment remained at an 11.1% rate in November (Consensus: 11.2%). France's trade deficit improved to -€4.33bn in November, following a reading of -€4.71bn in the previous month (Consensus: -€4.8bn). Germany's trade surplus shrank in that same month, to €14.6bn from €15.2bn in October (Consensus: €15bn). The country's exports fell by 3.4% month-on-month (Consensus: -0.5%). Imports decreased by a similarly large 3.7%, which may denote underlying weakness in the economy. Switzerland's unemployment rate rose to 3.3% for December, after a reading of 3.1%. Slight drop in the single currency The euro/dollar is now falling by 0.35% to the 1.3078 dollar mark. Front month Brent crude futures are up by 0.589 dollars to the 112.09 level on the ICE. US Market Report US open: Hedge funds expect S&P 500 to rise - State and local governments back to health - Overwhelming majority of hedge funds expect S and P 500 to rise Dow Jones: -0.51% Nasdaq Comp.: -0.54% S&P 500: -0.54% US equities are now registering moderate losses ahead of this evening's results from aluminium giant Alcoa, which typically marks the start of the corporate earnings season on the other side of the pond. Of interest, state and local governments are in their best financial shape since the recession, giving them leeway to cushion the US economy from federal budget cuts with spending and hiring of their own, according to analysis by Moody's Analytics, Bloomberg reports. Respondents to a December survey of hedge fund managers carried out by Trimtabs overwhelming expect the S&P 500 to go up this year, but few expected as strong a performance as 2012. Seed company Monsanto has surpassed first fiscal-quarter earnings and boosted its full-year forecast. Yum! Brands, owner of the KFC fast-food chain, reported same-store sales which fell more than expected after a Chinese government probe into one of its former suppliers. Merck&Co. may be interested in acquiring Bausch&Lomb. Analysts at BB&T Capital Markets have downgraded their view on Boeing. Large drop in retail sales Same store retail sales dropped 4.2% last week, according to the latest survey data from ICSC. The NFIB's small company confidence index improved slightly, to 88 points in November (Consensus: 87.2) after a reading of 87.8 in the month before. Slight rise in cure futures West Texas crude futures are now rising by 0.39% to the 92.893 dollar mark on the NYMEX. 10 year US Treasury yields are now lower by 3 basis points, to 1.87%. S&P 500 - Risers Celgene Corp. (CELG) $88.68 +3.44% Monsanto Co. (MON) $98.44 +2.61% Coach Inc. (COH) $56.80 +2.10% Southwest Airlines Co. (LUV) $11.13 +2.02% Tesoro Corp. (TSO) $41.03 +2.01% Occidental Petroleum Corp. (OXY) $81.38 +1.87% Boston Scientific Corp. (BSX) $6.05 +1.25% MetLife Inc. (MET) $36.17 +1.06% McKesson Corp. (MCK) $101.02 +1.02% Gilead Sciences Inc. (GILD) $77.61 +0.95% S&P 500 - Fallers GameStop Corp. (GME) $23.10 -6.67% Sears Holdings Corp. (SHLD) $40.42 -5.82% Yum! Brands Inc. (YUM) $64.89 -4.42% J.C. Penney Co. Inc. (JCP) $19.10 -4.31% Alpha Natural Res (ANR) $10.15 -4.29% NetApp Inc. (NTAP) $31.93 -3.94% Electronic Arts Inc. (EA) $13.91 -3.74% Genworth Financial Inc. (GNW) $8.02 -3.73% AutoZone Inc. (AZO) $343.41 -3.58% Metropcs Communications Inc. (PCS) $9.22 -3.56% Dow Jones I.A - Risers Merck & Co. Inc. (MRK) $42.42 +0.72% Pfizer Inc. (PFE) $26.15 +0.64% Home Depot Inc. (HD) $63.02 +0.28% Alcoa Inc. (AA) $9.12 +0.22% Intel Corp. (INTC) $21.29 +0.19% Wal-Mart Stores Inc. (WMT) $68.50 +0.15% Johnson & Johnson (JNJ) $71.49 +0.13% Travelers Company Inc. (TRV) $73.11 +0.06% Dow Jones I.A - Fallers Verizon Communications Inc. (VZ) $43.29 -3.13% AT&T Inc. (T) $34.31 -3.07% Boeing Co. (BA) $75.08 -1.38% Hewlett-Packard Co. (HPQ) $14.97 -1.31% Caterpillar Inc. (CAT) $94.03 -1.24% Bank of America Corp. (BAC) $11.96 -1.08% Unitedhealth Group Inc. (UNH) $51.54 -1.06% General Electric Co. (GE) $20.91 -1.04% Cisco Systems Inc. (CSCO) $20.08 -1.01% Coca-Cola Co. (KO) $36.94 -0.98% Nasdaq 100 - Risers Celgene Corp. (CELG) $88.68 +3.44% Catamaran Corp (CTRX) $52.50 +1.41% Vertex Pharmaceuticals Inc. (VRTX) $47.96 +1.41% Check Point Software Technologies Ltd. (CHKP) $47.85 +1.38% Gilead Sciences Inc. (GILD) $77.61 +0.95% Fossil Inc. (FOSL) $96.61 +0.79% Verisk Analytics Inc. (VRSK) $53.66 +0.75% Mondelez International Inc. (MDLZ) $26.80 +0.53% Fiserv Inc. (FISV) $81.42 +0.26% Intuitive Surgical Inc. (ISRG) $503.07 +0.21% Nasdaq 100 - Fallers Sears Holdings Corp. (SHLD) $40.42 -5.82% Regeneron Pharmaceuticals Inc. (REGN) $173.01 -5.22% NetApp Inc. (NTAP) $31.93 -3.94% F5 Networks Inc. (FFIV) $93.56 -2.78% Dell Inc. (DELL) $10.76 -2.70% Altera Corp. (ALTR) $34.44 -2.35% Western Digital Corp. (WDC) $41.95 -2.21% Microchip Technology Inc. (MCHP) $32.44 -2.20% Dollar Tree Stores Inc. (DLTR) $39.10 -2.15% CH Robinson Worldwide Inc (CHRW) $61.89 -2.00% Broker Tips Broker tips: Construction stocks, Morrison, ARM Holdings Analysts at Deutsche Bank have today delivered a glowing review of the prospects for the UK's homebuilders, in turn raising their price targets on all of the companies within their universe. Thus, they explain that, "through 2012 the UK house builder sector re-rated, moving from 0.69 times 2012 Net Tangible Asset Value (NTAV) to 1.0 times 2013 NTAV. However, as the sector reaches returns that cover its cost of capital in 2013, moving to mid teen levels by 2014/2015, we believe a further rerating is available. A sector creating mid teen return on capital employed (ROCE) on a sustainable basis (the upside being based on self-help measures rather than any housing market pick-up) we believe deserves to trade at a 20% premium to its NTAV (mid-range of its 2000-2005 valuation range)." Its analysts have raised their price target on Barratt Developments to 278p (from 224p), on Bovis to 667p (from 599p) and on Berkeley Group to 1,941 (from 1,925). Swiss broker Credit Suisse has today updated its forecasts for chip maker ARM Holdings so as to reflect the changes made to its forecasts for the handset industry in 2013. More specifically, analyst Kulbinder Garcha has raised his smartphone market volume estimates by 6%/15% and tablet estimates by 5%/13% for 2012/13. Ironically enough, growth in emerging markets is set to drive chip set prices – and the resulting royalties for ARM – lower by 2% per year. Thus, for example, the sub-$200 smartphone category is expected to grow from 19% of global volumes to 43% from 2012 to 2015, as emerging markets power smartphone growth and represent 70% of annual shipments by 2017. Even so, royalties per smart phone are still expected to grow at a 1.6% per cent compound annual rate through 2017 as customers license more expensive IP that commands higher royalty rates, as well as take-up more Mali graphics. As well, high-end networking could become more material. Due to all of the above Credit Suisse raises its target to 780p from 645p before, even though it maintains its recommendation at hold. Morrison did not warn as some feared. That said, we think the company remains cautious, and we are adopting a similar tone with both our estimates and target, analysts at Credit Suisse wrote on Tuesday. Weak Christmas/New Year ex-fuel like-for-like (LFL) sales of -2.5% was disappointing although not unexpected, they add. Thus the key is now whether the company will be successful in its stated goals of promoting innovation and communicating better its key points of difference, with a new advertising campaign to be launched in February. The Swiss broker's target falls from 280p to 265p, in-line with the above revisions, although the recommendation on the grocer's shares remains neutral.