London open: Stocks flat as earnings season kicks off
Market Movers
- techMARK 2,204.64 -0.15%
- FTSE 100 6,118.72 -0.05%
- FTSE 250 12,833.71 +0.28%
London's benchmark index opened more or less flat in early trading on Monday ahead of the official start of corporate earnings season in the US.
"Attention remains on corporate earnings this week; in particular the banks with Goldman Sachs and JP Morgan
among others due to report. With earnings expectations so low for the
fourth quarter, it's difficult to see how the banks can disappoint.
Earnings estimates have already dropped significantly in the past couple
of weeks, which surely leaves any surprises firmly to the upside" said
market analyst Craig Erlam from Alpari.
"This again raises
questions over the sustainability of the recent stock market rally. Over
the past few earnings seasons, the bar has been lowered so much to
accommodate the rally that all we're doing is creating a huge bubble
that is ready to blow. When this happens is likely to depend on how long
we have until the next Eurozone issue rears its ugly head."
Providing some support for stocks this morning were comments from Federal Reserve Bank of Chicago President Charles Evans,
who said that the government should put "in place policies that slowly
but surely bring the prospects of future revenues into balance with
future spending". He said that "monetary policy has an important contribution to make".
ENRC and G4S boosted by broker upgrades
Mining giantENRC
was leading the risers early on after Credit Suisse upgraded the stock
from 'neutral' to 'outperform' and hiked its target from 350p to 400p.
The broker said that its previous cautious stance in the second half of
2012 was due to concerns over earnings, balance sheet and M&A. "We
think downside risks are now limited with potential re-rating catalysts
in 2013."
Security solutions group G4S was also making
gains after Credit Suisse also raised its recommendation from 'neutral'
to 'outperform' and lifted its target from 275p to 330p. "The price does
not reflect the organic growth potential, driven by New Markets, of the
group, its ability to add value via acquisitions nor its improving
prospects within the UK market," the broker said.
Chip designer ARM Holdings was out of favour early on after The Wall Street Journal reported that tech giant Apple has cut its orders for components for the iPhone 5 due to weaker-than-expected demand. ARM designs chips for Apple gadgets.
Real estate investment trust Hammerson was flat after saying that Chairman John Nelson will retire in the spring and will be succeeded by Sainsbury's Chairman David Tyler.
Pubs group Greene King was slightly lower despite seeing record Christmas Day trading which underpinned growth in like-for-like sales.
Drinks peers AG Barr and Britvic
were higher after saying that they will have to wait until at least
February to see if their merger will get the thumbs up from the
regulator as the Office for Fair Trading (OFT) continues to probe the
deal.
| UK Event Calendar |
Monday January 14
INTERIM DIVIDEND PAYMENT DATE
British Smaller Companies VCT
INTERIM EX-DIVIDEND DATE
Tongaat-Hulett Ltd.
QUARTERLY PAYMENT DATE
Yamana Gold Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Harmonised Competitiveness Indicators (EU) (09:00)
GMS
Asia Digital Holdings, IPSO Ventures
IMSS
Big Yellow Group, Greene King
TRADING ANNOUNCEMENTS
Hydrogen Group, Taylor Wimpey
FINAL DIVIDEND PAYMENT DATE
Barloworld Ltd.
|
| Europe Market Report |
 |
| FTSE 100 | Euronext | Dax perf | CAC 40 |
 |  |  |  |
|
European Stocks May Follow Asian Equities Higher
European
stocks may rise on Monday, tracking widespread gains across Asia on
optimism that China's economic recovery is gaining traction. The
Japanese yen hit a 2-1/2-year low versus the dollar after Japanese Prime
Minister Shinzo Abe urged the Bank of Japan to set a medium-term
inflation target, increasing speculation that the central bank will
expand its monetary easing efforts at its policy meeting next week.
China's
Shanghai Composite index is climbing 2.6 percent ahead of reports on
the nation's GDP, retail sales and industrial output due later this
week, while benchmark indexes in Australia, Hong Kong, India, Indonesia,
New Zealand and South Korea are up between 0.3 percent and 1 percent.
The Japanese market is closed for the Coming of Age Day holiday.
Closer
home, the British economy contracted in the fourth quarter, adding to
fears of a triple-dip recession, a report from the National Institute of
Economic and Social Research showed. According to NIESR, gross domestic
product fell 0.3 percent. The institute cited 'artificially high'
output during the third quarter as reason behind the distortion.
Eurozone
industrial production data due later in the day may show that output
probably rose 0.2 percent month-over-month in November after falling 1.4
percent in the previous month.
Across the Atlantic, traders
await a speech from Fed Chairman Ben Bernanke at the University of
Michigan later today after Chicago Fed President Charles Evans said the
U.S. central bank should keep policy accommodative to boost employment
while lawmakers take steps to cut back spending.
Investors also
look forward to a slew of reports on retail sales, industrial
production, housing starts, and consumer and producer price inflation
this week for further cues about the health of the world's largest
economy.
On the earnings front, JP Morgan, Goldman Sachs,
American Express, Bank of America, UnitedHealth, Citigroup, Intel and
General Electric are among the companies that will unveil their
quarterly results this week.
The euro is holding steady after the
Greek Parliament approved a tax bill designed to raise up to EUR 2.3
bln this year, in a bid to meet its commitment to lenders.
In
corporate news, British energy giant BP Plc has filed a motion seeking
to cut the civil liabilities it faces according to the Clean Water Act
related to the 2010 Deepwater Horizon accident in the Gulf of Mexico.
Swiss-based
offshore drilling contractor Transocean revealed in a regulatory filing
that billionaire activist investor Carl Icahn and certain of his
affiliates hold a minority stake in the company.
Private equity
firm CVC Capital Partners and U.K-based lender Royal Bank of Scotland
Group Plc have raised a combined $289 million by selling shares in Hong
Kong-listed luggage maker Samsonite International S.A., media reports
suggest.
German car giant Volkswagen reported a 12.7 percent
increase in passenger car deliveries for 2012, but said 2013 would be a
very demanding year.
Jaguar Land Rover, a subsidiary of India's
Tata Motors, posted a 30 percent growth in sales for 2012, driven by
strong performances in the U.K., China and the U.S. markets.
European
stocks ended mostly higher on Friday after Japan unveiled a huge
stimulus package to revive the economy and help create 600,000 new jobs.
Higher-than-expected inflation numbers from China weighed on investor
sentiment to some extent, limiting any major upside. The German DAX and
France's CAC 40 rose about 0.1 percent each, while the FTSE 100 of the
U.K. added 0.3 percent and Switzerland's SMI advanced 0.6 percent.
U.S.
stocks finished largely unchanged on Friday after showing a lack of
direction throughout the session as traders seemed reluctant to make any
significant moves amid the ongoing earnings season. Wells Fargo &
Co. led banks lower after the lender reported a decline in its net
interest margin.
|
| US Market Report |
US close: Stocks flat as Wells Fargo kicks off Q4 earnings season
Market movers
Dow Jones: 13,488 (+0.12%)
Nasdaq: 3,126 (+0.14%)
S&P 500: 1,472 (-0.01%)
US stock markets finished broadly flat on Friday ahead of a big week
for the banks as the fourth-quarter earnings season kicks into gear.
The Chicago Board Options Exchange Volatility Index
fell by 1% to 13.36, its lowest level since June 2007. The 3.4% fall
across the past week was the largest decline in the index's history.
Limiting gains for markets were price rises in China,
with consumer price inflation rising to 2.5% in December, from 2.0% the
month before, as cold weather resulted in an increase in food prices.
The consensus forecast was for a reading of 2.3%.
Higher-than-expected inflation has dampened hopes for further stimulus
in China: "While the figure remains well below the inflation target of
4%, it has raised concerns that it could lead to a tightening of
monetary policy in the first half of this year," according to market
analyst Craig Erlam from Alpari. Wells Fargo
Wells Fargo,
the first bank to report its figures before the opening bell this
morning in New York, finished lower despite earnings and revenues
beating market expectations.
The US bank posted a 24% jump in
fourth quarter profits to $5.1bn. Earnings per share came in at 91 cents
per share, compared to 73 cents a year earlier, to top the Thomson
Reuters consensus estimate of 89 cents. Revenue rose by 7% to $21.9bn
compared to the $21.3bn expected.
However, the net interest margin was 3.56% in the fourth quarter compared to 3.89% a year ago and 3.66% in the third quarter.
"The concerns surround a reduction in the net interest margin which can
have a negative impact on the banks profits. The drop is going to make
it even more difficult for banks to turn a decent profit on its lending,
which isn't good for them or the consumer," Alpari's Erlam said..
Wells Fargo will be followed next week by heavyweights Goldman Sachs, Morgan Stanley, JPMorgan and Bank of America.
In other company news, Boeing was lower after regulators said they will investigate a recent fire on a Japanese 787 Dreamliner.
Meanwhile, car giant Ford accelerated after Goldman Sachs added the stock to its 'conviction buy' list.
Economy
The
US trade deficit widened by an enormous 15.8% last November, to hit
$48.7bn (consensus: $41.3bn), largely as a result of a large rise in
consumers' spending before the arrival of Christmas.
The US budget deficit fell to $260m (consensus: -$1bn) in December after a shortfall of $86bn in the previous month. |
| FX and Commodities round-up |
FX round-up: Euro soars against dollar
The
euro rallied against the dollar on Friday after the European Central
Bank left its benchmark rate unchanged and signalled it would not ease
monetary policy.
ECB chief Mario Draghi hailed a
'normalisation' in financial market conditions, boosting confidence that
the Eurozone is on track to recover later in the year.
The bullish remarks bolstered the euro to $1.3341 from $1.3256 on Thursday.
Draghi also cautioned that risks to growth in the Eurozone 'remain on
the downside' but risk appetite picked up as the ECB left its benchmark
rate unchanged at 0.75%.
The dollar index, which measures the
greenback against a basket of six major currencies, dropped to 79.565
from 79.792 on Thursday.
The Japanese yen tumbled to its
lowest level against the dollar since June 2010 after the Bank of Japan
announced a fresh round of stimulus and after disappointing data.
The dollar traded at ¥88.23 compared to ¥88 the previous session. The euro changed hands at ¥119.03 from ¥117.40.
Sterling bought $1.6128 from $1.6152 before.
Commodities: Oil falls after China inflation data
Oil
futures finished lower on Friday after the latest inflation data from
China fuelled concern about slower demand from the world's largest
energy consumer.
Crude for February delivery settled down 26
cents at $93.56 a barrel on the New York Mercantile Exchange. Over the
week oil prices settled 0.5% higher.
Data out on Friday showed
China's consumer prices rose 2.5% in December from 2% the month before
after a cold weather snap increased food prices. Most analysts forecast a
reading of 2.3%.
The higher than expected inflation report
cooled hopes for further stimulus in China and sparked concern about
slower demand for oil in China.
Over on the ICE futures exchange Brent crude declined $1.34 to $110.55 a barrel.
Gold also settled lower on Friday but managed to produce a weekly gain as investors digested the Chinese inflation figures.
Gold for February delivery dropped $17.40 to settle at $1,660.60 an
ounce on the Comex division of the New York Mercantile Exchange. For the
week bullion settled with 0.7% gain.
March copper fell 5.5 cents to settle at $3.65 per pound while March palladium dropped 75 cents to end at $701.45 an ounce.
|
|
No comments:
Post a Comment