Fiscal cliff deal ignites risk appetite
Market Movers
techMARK 2,132.00 +1.07%
FTSE 100 5,982.99 +1.44%
FTSE 250 12,506.33 +1.06%
The
FTSE 100 surged on Wednesday morning as investors celebrated the news
that the fiscal cliff deal Stateside, with mining and banking stocks
benefitting from the increase in risk appetite.
“It may have
come at the last minute, but US lawmakers finally managed to find some
common ground by voting through a package of policies designed to avoid
the immediate fiscal cliff," said Joe Rundle, head of trading at ETX
Capital.
"Financial markets have responded accordingly with
Asian shares performing strongly and European markets posting sharp
gains in the first trading day of 2013 and US markets are likely to
react in the same fashion."
US President Barack Obama praised a
last minute deal to avoid the fiscal cliff, speaking at a press
conference shortly after the House of Representatives passed a
Senate-backed bill to stop massive tax rises and spending cuts, by 257
votes to 167. A day before it had cleared the Senate by a majority of 89
votes to 8.
The fiscal cliff - scheduled tax rises of around
$536bn and spending cuts of $109bn - was widely expected to throw the US
economy back into recession if politicians couldn't break months of
impasse. But the fiscal headache is far from over as talks over spending
cuts go on and the US Treasury announced the country has hit its
borrowing limit again.
Miners and banks jump early on
Riskier assets in the mining and banking sectors were among the best performers in London this morning, with Glencore, Barclays, Rio Tinto, Vedanta and Lloyds making decent gains.
Oil giant BP
rose after announcing the "successful start of production" at the Skarv
field in the Norwegian Sea, adding new output from one of its core
higher-margin areas.
Sector peer Shell was subdued on reports that its Kulluk drilling rig has ran aground off the coast of Alaska after being caught in a storm.
Engineering support services firm Babcock was higher after saying that it has acquired liquid gas plant unit LGE Process from Weir for £23m.
| AIM/Small Cap Report |
FTSE 100 - Risers
Evraz (EVR) 271.50p +4.87%
Rio Tinto (RIO) 3,666.50p +4.41%
Barclays (BARC) 273.20p +4.12%
Eurasian Natural Resources Corp. (ENRC) 295.50p +4.05%
Melrose Industries (MRO) 232.00p +3.80%
Antofagasta (ANTO) 1,372.00p +3.63%
Vedanta Resources (VED) 1,198.00p +3.54%
Glencore International (GLEN) 363.10p +3.36%
Anglo American (AAL) 1,955.00p +3.22%
Lloyds Banking Group (LLOY) 49.45p +3.19%
FTSE 100 - Fallers
British American Tobacco (BATS) 3,101.50p -0.62%
Morrison (Wm) Supermarkets (MRW) 261.70p -0.49%
FTSE 250 - Risers
Chemring Group (CHG) 240.90p +4.92%
Centamin (DI) (CEY) 40.88p +4.15%
Essar Energy (ESSR) 124.00p +3.77%
Fidessa Group (FDSA) 1,562.00p +3.31%
Kenmare Resources (KMR) 32.10p +3.22%
Ferrexpo (FXPO) 259.10p +3.14%
Hays (HAS) 84.65p +2.86%
Hochschild Mining (HOC) 498.20p +2.81%
Man Group (EMG) 85.00p +2.72%
Redrow (RDW) 170.40p +2.71%
FTSE 250 - Fallers
KCOM Group (KCOM) 70.80p -3.08%
Barr (A.G.) (BAG) 485.00p -2.08%
Direct Line Insurance Group (DLG) 212.80p -1.66%
Dunelm Group (DNLM) 689.00p -1.22%
Computacenter (CCC) 416.90p -1.21%
Dairy Crest Group (DCG) 380.00p -1.09%
BH Macro Ltd. GBP Shares (BHMG) 1,950.00p -1.02%
Pace (PIC) 186.50p -1.01%
ITE Group (ITE) 244.20p -0.85%
Telecom Plus (TEP) 917.00p -0.81%
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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Panmure highlights ASOS and Dunelm as top retail picks
Panmure Gordon has highlighted ASOS and Dunelm as its 'conviction buys' in the UK retail sector ahead of the critical Christmas reporting season in the next few weeks.
General retail was the best-performing FTSE sector in 2012 according to prices at December 27th, the broker said.
Panmure said: "As a result, the sell-side is more polarised than ever
on individual stocks. Analysis from our economic advisors suggests that
it is too early to sell out of the sector completely however, and we
remain conviction buyers of mid cap names ASOS and Dunelm."
While consumer data was "mixed at best" during 2012, the broker said
that this has not held back the retail sector's top-tier performance.
"Though there have been some casualties in the retail space, ASOS, NBrown, Debenhams, Dunelm and Ted Baker shares have all increased by more than 55% year to date."
As for the data from the all-important Christmas season, the broker
said: "early indications are that December was only ‘ok’ with the CBI
survey delivering a +19 result vs. expectations from retailers of +25".
BDO weekly data has been weak for fashion but strong in homewares in
recent weeks, however consumer confidence slumped in both November and
December.
Next, labelled 'hold', will be the first to
update on trading on January 3rd, while most other retailers will report
next week and the week after.
Panmure concluded by saying:
"Our top large cap general retail sector pick is category killer and
number one UK homewares market share holder Dunelm [rated 'buy']. Our model suggests that Dunelm could return another £80m-90m to shareholders by FY2016E."
ASOS ('buy') saw its target price raised from 2,875p to 3,050p. Supergroup also remains a 'buy'. In contrast, Panmure has singled out Mothercare as its only 'sell' "ahead of what we expect will be a tough Q3 update".
General retail stocks were trading an average 0.87% higher on Wednesday morning.
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| US Market Report |
Equities break higher on possibility of fiscal-cliff agreement
Dow Jones Industrial: 1.28%
Nasdaq Comp.: 2.00%
S&P 500: 1.69%
The main market averages finished sharply higher on Monday. That
followed on the back of rather heavy and optimistic market-chatter
regarding the possibility of an agreement – at least in the Senate –
that could allow the US to avoid much of the negative impact which going
over the fiscal cliff might have on the economy.
Of
particular note in that regard were the positive statements to be heard
from some Republican Senators, such as Jon Llewellyn Kyl (Arizona) or
Borb Corker (Tennessee) as they entered the upper chamber of Congress
for today´s meetings. The former was cited as saying that a lot of
progress had been made, although he was not sure that a pact could be
reached tonight.
In a similar vein, Senate Republican leader
Mitch Mc.Connell remarked that agreement has been reached on all tax
aspects of the fiscal cliff negotiations and that Congressmen are very,
very close to a broader agreement.
Optimists undaunted
The
Standard & Poor’s 500 Index will probably surpass its record high
in 2013 as bears capitulate and the lure of a four-year bull market
pulls “everyone in the pool,” according to the former Salomon Brothers
Inc. executive, Laszlo Birinyi, Bloomberg reports. The 69-
year-old money manager says the bull market that began in March 2009
resembles advances that pushed equities up more than threefold in the
1980s and fourfold in the 1990s.
Carlyle Group and other investors agreed to buy investment- banking firm Duff & Phelps for $665.5m. Private equity group Kohlberg Kravis Roberts was mulling a £1.8bn ($2.9bn) bid for Trader Media Group.
Cal-Maine Fooods unveiled a 39% drop in fiscal second-quarter earnings as higher feed costs hit the bottom line. US regulators have approved Bristol-Myers Squibb´s blood thinner Eliquis for marketing.
The Federal Reserve Bank of Dallas´s manufacturing sector index for the
month of December increased to 6.8 points (Consensus: -0.5), after a
reading of -2.8 for the previous month.
Long-term yields edge higher
Yields
on 10 year US Treasuries were rising by 6 basis points to the 1.76%
mark. Front month West Texas crude futures rose by 1.09% to the 91.79
dollar mark on NYMEX.
S&P 500 - Risers
Cliffs Natural Resources Inc. (CLF) $38.57 +8.40%
Advanced Micro Devices Inc. (AMD) $2.40 +5.26%
Alpha Natural Res (ANR) $9.74 +5.07%
Phillips 66 Common Stock (PSX) $53.10 +5.00%
Best Buy Co. Inc. (BBY) $11.85 +4.96%
FMC Technologies Inc. (FTI) $42.83 +4.95%
Peabody Energy Corp. (BTU) $26.61 +4.93%
Abercrombie & Fitch Co. (ANF) $47.97 +4.83%
Sears Holdings Corp. (SHLD) $41.36 +4.71%
Macy's Inc. (M) $39.02 +4.44%
S&P 500 - Fallers
Watson Pharmaceuticals Inc. (WPI) $86.00 -3.41%
NYSE Euronext Inc. (NYX) $31.54 -0.28%
Windstream Corp. (WIN) $8.28 -0.24%
LSI Corporation (LSI) $6.86 -0.00%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $14.25 +4.17%
Caterpillar Inc. (CAT) $89.61 +3.22%
General Electric Co. (GE) $20.99 +2.69%
Bank of America Corp. (BAC) $11.61 +2.20%
Alcoa Inc. (AA) $8.68 +2.12%
Home Depot Inc. (HD) $61.85 +1.98%
Intel Corp. (INTC) $20.62 +1.93%
Exxon Mobil Corp. (XOM) $86.55 +1.70%
JP Morgan Chase & Co. (JPM) $43.97 +1.69%
Chevron Corp. (CVX) $108.14 +1.59%
Dow Jones I.A - Fallers
Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $41.36 +4.71%
Apple Inc. (AAPL) $532.17 +4.43%
Fossil Inc. (FOSL) $93.10 +4.24%
News Corp. Class A (NWSA) $25.51 +3.66%
Symantec Corp. (SYMC) $18.82 +3.63%
Expedia Inc. (EXPE) $61.44 +3.50%
Micron Technology Inc. (MU) $6.34 +3.43%
Liberty Interactive Corp (LINTA) $19.68 +3.14%
Randgold Resources Ltd. Ads (GOLD) $99.21 +3.00%
Facebook Inc. (FB) $26.62 +2.73%
Nasdaq 100 - Fallers
Sirius XM Radio Inc (SIRI) $2.89 -0.00%
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Fiscal cliff, Shell, Goldman Sachs...
The US House of Representatives has voted to avert the the fiscal cliff,
sparing most Americans from tax hikes and spending cuts that had
threatened to plunge the economy into recession in 2013. The financial
compromise Bill, which was passed 257 – 167 after a chaotic, late night
session in the Republican dominated House, will now move to President
Obama’s desk for his signature, which is expected to come quickly. The
vote, which relied heavily on Democrats to win passage contained the
first American income tax rise in two decades but leaves many budget
issues unresolved before another fiscal deadline in about two months on
the need to raise the federal borrowing limit. [The Times]
A large drill ship belonging to the oil company Shell
has run aground off Alaska after drifting in stormy weather, company
and government officials said. The ship, the Kulluk, broke away from one
of its tow lines on Monday afternoon and was driven, within hours, on
to rocks just off Kodiak Island, where it grounded at about 9pm Alaska
time, officials said. The 18-member crew had been evacuated by the
coastguard late on Saturday because of risks from the ongoing storm.
There was no known spill and no reports of damage, but the Kulluk had
about 155,000 gallons of fuel on board, said coastguard commander Shane
Montoya, the leader of the incident command team. [The Guardian]
Goldman Sachs
chief executive Lloyd Blankfein and departing chief financial officer
David Viniar both exercised restricted stock units on New Year's Eve
that delivered them $4.2m in cash apiece. Other executives, including
vice-chairmen Michael Evans and John Weinberg, global head of human
capital management Edith Cooper, chief of staff John Rogers, general
counsel Greg Palm, global head of compliance Alan Cohen, and chief
accounting officer Sarah Smith, also exercised restricted stock units
that generated anywhere from $1.5m to $3.8m, according to filings with
the US Securities and Exchange Commission. [The Telegraph]
A London-listed company's plans to create the world's first underwater goldmine on the Pacific seabed have hit the rocks. Nautilus Minerals'
problems come as China and Russia's duel for riches at the bottom of
the ocean intensifies. Nautilus was planning to mine gold, copper and
silver under the Pacific Ocean but has run into conflict with its
partner, the government of Papua New Guinea, about the cost of the
project. The company, part-owned by the Anglo American mining group, has
put its Solwara 1 prospect on ice, laid off staff and postponed
equipment orders, and is looking at taking its subsea mineral operations
elsewhere. [The Guardian]
Britain will have to “acclimatise” to the “hard grind” of another year of squeezed wages, rising unemployment and low growth,
leading economists warned, as the Government was accused of hoping
“something just turns up” to deliver the recovery. The majority of City
economists polled by The Daily Telegraph reckon growth will undershoot
the official 1.2pc forecast this year, resulting in the fifth year in
six of sub-1pc growth, with the Centre for Economics and Business
Research warning of a 50pc chance of a triple-dip recession. [The Telegraph]
After finishing 2012 on a high note, investors believe US equities
are bound to extend last year’s run. Progress made in US fiscal
negotiations, easing eurozone fears and recent supportive economic data
from China and other developing nations may help set the stage for
higher corporate profits and stock gains, analysts say.
“As we
begin the new year, improved confidence is perhaps the result of
strides made on many fronts,” says Jim Paulsen, chief investment
strategist at Wells Capital Management. Mr Paulsen is forecasting that
the benchmark S&P 500 will rise to record levels in the year to
come, after notching an impressive 13.4 per cent gain in 2012 in spite
of recession fears and a jump in global market volatility. [Financial Times]
The retail sector
is "certain" to see further collapses and large swaths of stores closed
this year, following a sharp jump in administrations in 2012. Deloitte,
the accountancy firm, blamed the continued squeeze on household
finances and the inexorable shift of spending to the internet for its
gloomy forecast, predicting more chains would fold in the first quarter
of this year. It said 194 retailers called in administrators last year, a
6 per cent jump on 2011 and an 18 per cent leap on the previous year. [The Independent]
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