Index closes at highest level since 2008
Market Movers
techMARK 2,193.52 +0.91%
FTSE 100 6,098.65 +0.74%
FTSE 250 12,709.06 +0.59%
UK
markets closed significantly higher on Wednesday, up 45 points equal to
11.41bn pounds, with the index closing at its highest level since May
22nd 2008.
The gains were led by banking stocks after UBS hiked its targets for the Lloyds, Barclays and RBS, saying 'the UK is over its experiment of combining fiscal and monetary austerity'.
The broker revised its price target on Lloyds to 60p from 50p, for Barclays to 315p from 255p and RBS to 410p.
This came in anticipation of an expected improvement in mortgage
lending and a reduced need to raise capital after the Basel committee on
banking supervision last Sunday eased financial institutions’ liquidity
requirements.
The result, which has ‘read-across’ to other
countries is that “Britain’s experiment of combining fiscal and monetary
austerity may be over and the incoming Bank of England governor’s
openness to monetary policy innovation may not even need to be tested
if,” as UBS expects, banks return to lending.
On a more realistic note – sombre even - plenty of long-term policy challenges remain.
UK shop prices steady, food inflation still an issue
Shop
price inflation remained unchanged at a 1.5% year-on-year pace in
December, according to the latest data released today by the British
Retail Consortium (BRC).
More specifically, food inflation
fell to 4.1% in December from 4.6% in November. Non-food prices were
broadly flat in December after falling 0.3% in November.
Meanwhile, the Recruitment and Employment Confederation's (REC)
seasonally adjusted index of permanent staff placements fell to 53.2 in
December from 56.0 in November. That was the highest since April 2011.
Readings above 50 indicate growth compared to a month earlier.
UK trade gap narrowed in November
The
UK's trade deficit closed in November as exports caught up slightly
with imports, according to the Office for National Statistics.
The deficit on goods and services totalled £3.5bn in November, compared
with £3.7bn in October. There was a deficit of £9.2bn on goods, partly
offset by an estimated surplus of £5.7bn on services.
Income disparity 'biggest risk to global security'
The
biggest single threat to global security in the next ten years is
severe income disparity, according to the World Economic Forum’s annual
Global Risks Report.
The survey of more than 1,000 experts
from industry, government, academia and civil society, also found the
risk that would cause the most damage - were it to happen - is major
systemic financial failure.
Two risks appeared in the top five
risk categories in terms of impact and likelihood – chronic fiscal
imbalances and water supply crisis.
Sainsbury fails to meet lowered expectations
Sainsbury
may have enjoyed a record-breaking Christmas and increased its market
share, but investors did not share the firm's celebratory mood. The
company's shares were down as investors latched onto news that
like-for-like sales growth of 0.9% in the third quarter had dropped
markedly from the 1.9% rise in the previous three months. The firm also
warned its festive bonanza would probably not last into the new year.
“We suspect Sainsbury will struggle to outperform in 2013 as Tesco
continues its fight back and there is some margin vulnerability as
momentum slows,” Seymour Pierce analysts said in reaction.
Aerospace components engineer Meggitt
announced on Wednesday that its Chief Executive, Terry Twigger, has
said he intends to retire from the role and the board is set to replace
him with Stephen Young, who has been Finance Director of Meggitt since
2004. This morning Bank of America raised its target on the stock from
430p to 470p and upgraded it from neutral to buy, prompting a strong
rise in the share price.
Mining company Xstrata climbed
after the Bank of America Merrill Lynch anticipated the merged
Glencore-Xstrata would produce net earnings of more than $7bn per year
by 2014, buoyed by coal and copper.
Aviva was lower
over last night announcing that it had disposed of its remaining 19.4%
stake in Delta Lloyd at a discount of 1.6% to the insurance group's
closing price. The company is planning to reduce its underperforming
businesses by a quarter.
Severn Trent dropped after Nomura cut its target on the stock from 1,645p to 1,550p, and retained its neutral rating.
House builder Galliford Try announced that it remains on track to meet its full year expectations and that half year profit is ahead of its targets.
Designer brand Ted Baker
announced a solid rise in sales over the festive period as Chairman
Robert Breare confirmed he will step down after more than 11 years in
the role. David Bernstein, currently Senior Independent Non-Executive
Director, will succeed Breare with immediate effect.
Greggs sees its full year results broadly in line, although ‘tough’ trading conditions have continued into 2013.
Yesterday evening, after the close, Shire’s
(another one of yesterday's big gainers) Chief Executive Officer stated
that he is increasingly confident of reaching double digit full year
earnings growth and on meeting current consensus earnings expectations
for 2013.
African Barrick Gold (ABG) was recovering
after yesterday dropping on the news that Canadian miner Barrick Gold
abandoned plans to sell its majority stake in ABG to a Chinese buyer.
Today's gains came despite Deutsche Bank reducing its target from 520p
to 490p and Nomura cutting its target from 525p to 435p and downgrading
the stock from buy to neutral.
Meanwhile, restaurant and pub operator Restaurant Group fell after it cautioned that trading conditions in 2012 are likely to persist in 2013. UBM was also lower after Goldman Sachs cut the stock to buy from conviction buy, and reduced its target from 975p to 910p.
Morgan Stanley downgrades BSkyB
Lastly, analysts at Bank of America have raised their view on shares of GKN and Meggitt to buy. Morgan Stanley downgraded British Sky Broadcasting to equalweight from overweight.
| AIM/Small Cap Report |
FTSE 100 - Risers
Lloyds Banking Group (LLOY) 53.37p +4.94%
Royal Bank of Scotland Group (RBS) 349.90p +3.83%
Meggitt (MGGT) 425.00p +3.79%
Wood Group (John) (WG.) 774.00p +3.27%
Standard Chartered (STAN) 1,657.50p +3.17%
Evraz (EVR) 279.70p +2.87%
Barclays (BARC) 294.75p +2.63%
Kazakhmys (KAZ) 825.50p +2.36%
Shire Plc (SHP) 2,008.00p +2.29%
ARM Holdings (ARM) 827.00p +2.29%
FTSE 100 - Fallers
Sainsbury (J) (SBRY) 329.20p -2.89%
Aviva (AV.) 373.70p -2.15%
British Sky Broadcasting Group (BSY) 778.00p -1.83%
British Land Co (BLND) 568.50p -1.47%
Weir Group (WEIR) 1,912.00p -1.29%
Severn Trent (SVT) 1,578.00p -1.13%
Reed Elsevier (REL) 640.50p -1.08%
Polymetal International (POLY) 1,135.00p -1.05%
Whitbread (WTB) 2,442.00p -0.81%
Unilever (ULVR) 2,393.00p -0.75%
FTSE 250 - Risers
Centamin (DI) (CEY) 49.98p +13.13%
African Barrick Gold (ABG) 380.00p +7.92%
Travis Perkins (TPK) 1,167.00p +4.38%
RPS Group (RPS) 228.50p +4.34%
Cable & Wireless Communications (CWC) 37.78p +3.65%
Kenmare Resources (KMR) 34.00p +3.63%
KCOM Group (KCOM) 75.00p +3.45%
Savills (SVS) 480.00p +3.23%
Ophir Energy (OPHR) 551.50p +3.18%
Balfour Beatty (BBY) 290.00p +3.02%
FTSE 250 - Fallers
Restaurant Group (RTN) 364.00p -4.76%
FirstGroup (FGP) 197.90p -3.46%
JD Sports Fashion (JD.) 675.00p -2.17%
Enterprise Inns (ETI) 100.90p -2.13%
BBA Aviation (BBA) 225.50p -1.96%
UBM (UBM) 720.50p -1.71%
Stagecoach Group (SGC) 304.40p -1.65%
St. Modwen Properties (SMP) 237.20p -1.62%
Debenhams (DEB) 106.40p -1.57%
Spectris (SXS) 2,015.00p -1.52%
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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 After Positive Report From Alcoa
The European markets
finished in positive territory Wednesday. Banks were among the best
performing stocks of the session. Investors were encouraged by the
fourth quarter profit reported by aluminum producer Alcoa, which is
viewed as the start of the earnings reporting season in the United
States. Alcoa's earnings were in line with expectations, while sales
topped estimates. The company also expects global aluminum demand to
grow 7 percent this year, up from 6 percent in 2012.
Policymakers
of the Bank of England are set to adopt a "wait and see" stance at the
start of the year as policymakers see little compelling case for another
stimulus.
The Monetary Policy Committee headed by Mervyn
King is expected to keep the size of its bond buying program unchanged
at GBP 375 billion and the interest rates unchanged at record low 0.50
percent on Thursday. The announcement is due at 7.00 am ET.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.57 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.75 percent.
The DAX of Germany climbed by 0.32 percent and the CAC 40 of France advanced by 0.31 percent. The FTSE 100 of the U.K. rose by 0.74 percent and the SMI of Switzerland gained 1.09 percent.
In Frankfurt, Commerzbank gained
3.07 percent and Deutsche Bank added 1.45 percent. Air Berlin,
Germany's second-largest airline, increased its capacity utilization
rate in December 2012 by 3.1 percentage points to 77.82 percent. The
stock climbed by 4.37 percent.
ProSiebenSat.1 Media rose by 3.56 percent. Goldman Sachs
added the stock to its ''Conviction Buy" list. Machinery &
equipment firm Rational advanced by 2.23 percent. Berenberg upgraded the
stock to ''Hold'' from ''Sell.'' Kuka, which received a downgrade, fell
by 0.94 percent.
Lanxess dropped by 2.20 percent, after
Citigroup downgraded the stock to ''Sell'' from ''Neutral.'' Insurer
Allianz decreased by 1.87 percent, following a downgrade at Credit
Suisse. PATRIZIA Immobilien declined by 2.88 percent, after JPMorgan reduced its rating on the stock.
In Paris, Societe Generale and Credit Agricole rose 3.43 percent and 4.63 percent, respectively. However, BNP Paribas fell by 0.12 percent. Vivendi increased by 0.06 percent, after Goldman Sachs downgraded the stock to ''Neutral'' from ''Buy.''
Renault finished up by 0.83 percent. Peugeot gained 1.58 percent, after stating that annual sales of assembled vehicles and CKD units fell 16.5 percent.
CGG Veritas
fell by 4.42 percent, after Goldman Sachs downgraded it to "Neutral"
from "Buy." LVMH Moët Hennessy Louis Vuitton dropped by 0.97 percent,
after Credit Suisse downgraded it to "Neutral" from "Outperform."
In London, Lloyds Banking surged by 4.94 percent. UBS upgraded the stock to ''Buy'' from ''Neutral.'' Standard Chartered advanced by 3.17 percent. Barclays climbed by 2.63 percent and Royal Bank of Scotland added 3.83 percent.
Meggitt
increased by 3.79 percent, after Merrill Lynch upgraded it to "Buy"
from "Neutral." J. Sainsbury dropped by 2.89 percent. The company
reported third-quarter sales. Aviva fell by 2.15 percent, after selling
its remaining stake in Dutch insurer Delta Lloyd.
AMEC
finished up by 1.55 percent, after Goldman Sachs upgraded it to "Buy"
from "Neutral." John Wood Group advanced by 3.27 percent, after Goldman
Sachs upgraded it to "Conviction Buy" from "Neutral." Richemont gained 4.51 percent in Zurich, after Credit Suisse upgraded it to "Outperform" from "Neutral."
Germany's industrial production
rose 0.2 percent in November from a month ago, the Federal Ministry of
Economics and technology showed Wednesday. Although it reversed a 2
percent fall logged in October, the growth rate was weaker than the 1
percent rise forecast by economists.
The U.K. visible trade
deficit narrowed to GBP 9.2 billion in November from GBP 9.5 billion in
October, the Office for National Statistics reported Wednesday. The
deficit was seen at GBP 9 billion.
British shop price
inflation remained at 1.5 percent for a third consecutive month in
December, but food inflation eased noticeably, a report from the British Retail Consortium (BRC) showed Wednesday. Economists expected the shop price index to rise 1.7 percent year-on-year. Food inflation fell to 4.1 percent in December from 4.6 percent in November.
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| US Market Report |
Earnings Optimism Leads To Strength On Wall Street
With quarterly results from Alcoa (AA)
generating some optimism about the outlook for corporate earnings,
stocks have moved mostly higher during trading on Wednesday after ending
the two previous sessions in the red.
The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 83.69 points or 0.6 percent at 13,412.54, the Nasdaq is up 17.49 points or 0.6 percent at 3,109.30 and the S&P 500 is up 6.21 points or 0.4 percent at 1,463.36.
The strength on Wall Street
is partly due to a positive reaction to quarterly results from Alcoa,
which unofficially kicked off the earnings season after the close of
trading on Tuesday.
Alcoa reported fourth quarter adjusted
earnings of $0.06 per share compared to a year ago loss of $0.03 per
share, matching analyst estimates.
The aluminum giant also
reported fourth quarter revenues that came in above expectations and
forecast a 7 percent increase in aluminum demand in 2013.
While shares of Alcoa rose
as much as 2.5 percent at the open and reached a three-month high, the
stock has given back some ground since then. Alcoa is currently up by
0.7 percent.
The news from Alcoa has generated some optimism
about the unfolding earnings season, although traders still seem
reluctant to add to the substantial rally that was seen last week.
A lack of major U.S. economic data may also be keeping some traders on the sidelines, with today reflecting the third straight quiet day on the economic front.
Among individual stocks, shares of Clearwire (CLWR) are moving sharply higher after the wireless broadband operator received an unsolicited takeover bid from Dish Network (DISH) valuing the company at $3.30 per share.
Social
media giant Facebook (FB) is also posting a strong gain after the
company issued a mysterious invitation to journalists to "Come and see
what we're building." Some are speculating that the company plans to
unveil a Facebook phone.
On the other hand, shares of Apollo Group
(APOL) have come under pressure after the parent of the University of
Phoenix reported first quarter earnings that fell year-over-year amid a
continued drop in new enrollment.
Sector News
Housing stocks
have shown a strong move to the upside over the course of the trading
day, driving the Philadelphia Housing Sector Index up by 1.6 percent.
With the gain, the index has reached its best intraday level in well
over five years.
Hovnanian Enterprises (HOV) and M/I Homes (MHO) are turning in two of the housing sector's best performances, advancing by 5.3 percent and 4.2 percent, respectively.
Considerable
strength has also emerged among defense stocks, as reflected by the 1.3
percent gain being posted by the Philadelphia Defense Sector Index.
Boeing (BA) is posting a notable gain after falling sharply in the two
previous sessions.
health insurance, railroad, and computer hardware stocks are also seeing significant strength, while most of the other major sectors are showing more modest moves.
Other markets
In overseas trading, stock markets
across the Asia-Pacific region moved mostly higher on Wednesday.
Japan's Nikkei 225 Index advanced by 0.7 percent, while Hong Kong's Hang Seng Index ended the day up by 0.5 percent.
In the bond market, treasuries have
pulled back near the unchanged line after moving modestly higher in
early trading. Subsequently, the yield on the benchmark ten-year note,
which moves opposite of its price, is currently unchanged at 1.871
percent.
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| Thursday preview |
Tesco unveils trading results
Tesco
will be on everyone’s lips Thursday as the world’s third largest
retailer releases a trading update. The supermarket giant was falling
0.80% to 348.65p on Wednesday afternoon ahead of the announcement.
That, despite a hike in shares in the lead up to trading results from other major retailers including Sainsbury which boasted it would emerge as a “clear winner” in Christmas sales despite reporting slowed growth over the holidays.
However, according to Kantar Worldpanel, Tesco raised its core grocery sales ahead of Sainsbury, Asda and Morrison in the lead up to Christmas.
The market researcher said Tesco’s cash sales grew 4.2% in the four
weeks to December 23rd, confirming the group led the UK majors for the
second period running.
The grocer saw a 6.7 % jump in food and drink sales.
Asda’s sales grew 3.7 % while Sainsbury rose 3.3% and Morrison fell 0.6%.
TRADING ANNOUNCEMENTS
Bwin.party Digital Entertainment, Goals Soccer Centres, Hays, Hilton Food Group, Rathbone Brothers, SIG, Tesco
IMS
Hilton Food Group, JD Sports, XP Power
INTERIM DIVIDEND PAYMENT DATE
Caledonia Investments, Creston, Mckay Securities, Morgan Crucible Co, Whitbread
QUARTERLY PAYMENT DATE
Land Securities Group, XP Power Ltd. (DI)
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Spanish and Italian Treasury debt auctions
ECB Interest Rate (EU) (12:45)
Weekly initial unemployment claims (US) (13:30)
Wholesale inventories (US) (15:00)
Q4
Sandvine Corp.
GMS
Capital & Regional
FINALS
Sandvine Corp.
IMSS
Marks & Spencer Group
EGMS
Bridge Energy Asa, NetDimensions Holding Ltd. (DI)
AGMS
Baronsmead VCT, Baronsmead VCT 2, Cardiff Property
UK ECONOMIC ANNOUNCEMENTS
MPC policy decision
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