London open: Stocks flat as US debt ceiling fears resurface
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- techMARK 2,180.29 -0.49%
- FTSE 100 6,103.68 -0.07%
- FTSE 250 12,772.73 +0.11%
Concerns about the US debt ceiling and the German economy were weighing
on market sentiment on Tuesday morning, with the FTSE 100 trading
broadly flat in the opening hour.
President Barack Obama
said last night that he would not negotiate with Republicans over
raising the debt ceiling, declining to trade cuts in government spending
in exchange for increasing the borrowing limit.
"If the goal
is to make sure that we are being responsible about our debt and our
deficit - if that's the conversation we're having, I'm happy to have
that conversation," Obama said. "What I will not do is to have that
negotiation with a gun at the head of the American people," he told a
news conference.
Treasury Secretary Timothy Geithner has said that the debt ceiling will be reached between mid-February and early March.
In other news, Germany reported slightly worse-than-expected growth
figures for 2012 as the Eurozone crisis continues to dent demand for
its exports. Berlin said this morning that the country grew 0.7% last
year, below the 0.8% consensus estimate and far below the 3.0% reading
from 2011.
Traders were shrugging off some upbeat comments from Bank of Japan Governor Masaaki Shirakawa who said that the central bank would pursue "powerful monetary easing" to boost the economy.
Meanwhile, Federal Reserve Chairman Ben Bernanke last night downplayed fears that its asset purchase programme would lead to higher inflation.
FTSE 100: Burberry surges after Q3 trading update
Luxury brand Burberry
made impressive gains early on after saying that total revenue rose 9%
to £613m in the third quarter. Retail revenue, which makes up the bulk
of sales, rose 13% to £464m on an underlying basis, driven by customers
choosing the more expensive items and by a strong performance in
outerwear. However, wholesale revenue fell by 5% to £120m on an
underlying basis in the third quarter.
Bank of America Merrill Lynch upgraded its view on the firm to 'buy' this morning and raised its target from 1,260p to 1,470p.
Diversified mining giant Rio Tinto
rose after managing to surpass its own iron ore production targets in
2012, while its other commodity classes also delivered large increases
year-on-year.
Sector peer Anglo American was also in
demand after launching a restructuring and cost savings programme for
its South African platinum operations as it emerged that the division
would record a big loss for 2012 after being hit by strikes and falling
prices. The group said that up to 14,000 jobs could be affected by the
shake-up.
Capital Shopping Centres managed to shrug off
a downgrade by Espirito Santo to 'sell'. The company unveiled plans
this morning to invest £25m in a rebrand and digital proposition.
Heading the other way was chip designed ARM Holdings after Investec downgraded its rating for the stock to 'sell' and Morgan Stanley cut the shares to 'equal weight'.
FTSE 250: Ocado jumps after 70% sales rise
Online grocery store Ocado
was a high rise after seeing a sharp rise in sales over the festive
season, with purchases of Ocado own-label products and non-food items
increasing 70% in the six trading weeks to January 6th.
Bike and car parts retailer Halfords
was also making gains after a strong performance at its autocentres
helped to lift total sale by 1.5% in the 15 weeks to January 11th.
Spreadbetting firm IG Group was in the red after reporting "satisfactory" interim results with a 21% fall in profits.
Imagination Technologies,
the chip company, was higher after saying that it has signed a further
license agreement with semiconductor firm MediaTek for wireless
communications and digital multimedia solutions.
| UK Event Calendar |
Tuesday
January 15th it will be the turn of Spirit Pub Company, who is due to
issue its IMS. Panmure Gordon expects the group to report continued
solid trading benefiting from a fairly strong Christmas and New Year
trading period offsetting more difficult trading in October and
November. When the group last updated the market managed pub
like-for-like (LFL) sales were +4.8%, but Panmure's analysts expect this
to have moderated to approximately 3%.
Furthermore, the
broker expects tenanted and leased pub LFL net income to remain at close
to 5% as the final phase of rent rebasing takes effect. Consensus
expectations are for profit before tax (PBT) of £56.7m (6.5p EPS) for
fiscal year 2013.
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.
Tuesday January 15
INTERIMS
IG Group Holdings
INTERIM DIVIDEND PAYMENT DATE
Alliance Pharma, MDM Engineering Group Ltd. (DI)
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Business Inventories (US) (13:30)
Consumer Price Index (EU) (10:00)
Consumer Price Index (GER) (07:00)
Retail Sales (US) (14:45)
IMSS
Halfords Group
AGMS
Conygar Investment Company, Spirit Pub Company
TRADING ANNOUNCEMENTS
Brown (N.) Group, Burberry Group, Michael Page International
UK ECONOMIC ANNOUNCEMENTS
Balance of Trade (09:30)
Producer Price Index (09:30)
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European Stocks Seen Lower On US Debt Concerns
European stocks may drift lower on Tuesday as investors await earnings results from big U.S. banks including JP Morgan Chase, Citigroup and Bank of America
this week. Concerns about the U.S. debt limit also returned to the fore
after Treasury Secretary Timothy Geithner told Congress that the U.S.
would exhaust the so-called extraordinary measures to avoid breaching
the debt ceiling sometime between mid-February and early March.
Meanwhile, in a speech at the University of Michigan, Federal Reserve
chief Ben Bernanke suggested that he plans to stick with the
bond-buying program until the recovery is on firmer footing. While
answering audience and online questions, Bernanke downplayed speculation
that the central bank plans to scale back its quantitative easing
program in the next few months.
Asian markets are turning in a mixed performance, paring early gains, after Japanese Minister in charge of economic revival, Akira Amari, said the nation faces risks from any excessive declines in the yen. Japan's Nikkei index is adding 0.7 percent after a holiday yesterday and China's Shanghai Composite index is up 0.7 percent, while benchmark indexes in Australia, Hong Kong, Singapore, South Korea and Taiwan are subdued.
In economic releases, British home prices
held steady in December, rising to the highest level since June 2010
helped by the impact of the Funding for Lending Scheme, the Royal
Institute of Chartered Surveyors reported. The RICS House Price Balance
rose to 0 from the November reading of minus-9.
Consumer and
producer prices from the U.K. and foreign trade from euro area due later
in the session could influence investor sentiment to some extent. In
corporate news, department store operator PPR SA and Christopher Kane have signed an agreement for PPR to
acquire 51 percent of the luxury designer brand "Christopher Kane" to
develop the business in partnership with its creator Scottish designer
Christopher Kane.
Mining giant Rio Tinto Plc. posted a two percent increase in its fourth- quarter global iron ore production to 66 million tons compared to last year. German car maker BMW said it is confident of continuing its success in the U.S. - its largest single market - in 2013.
Fraport AG,
the owner and operator of Germany's Frankfurt Airport, reported a 6.3
percent decline in passengers at FRA amounting to nearly 4 million.
European
stocks ended mostly lower on Monday as traders digested weak Eurozone
industrial output data and awaited a speech by Bernanke. The Euro Stoxx 50 index of Eurozone bluechip stocks slipped 0.1 percent and the Stoxx Europe 50 index,
which includes some major U.K. companies, lost half a percent. Around
Europe, benchmark indexes in Germany, France and Switzerland rose
between 0.1 percent and 0.2 percent, but the U.K.'s FTSE 100 slipped 0.22 percent.
U.S.
stocks meandered through largely directionless trade overnight before
ending the session little changed ahead of Bernanke's speech on monetary
policy and the U.S. economy. The Dow and the S&P 500 ended
narrowly mixed showing little change, while the tech-heavy Nasdaq slid
0.26 percent, dragged down by Apple shares on reports it had reduced
orders for iPhone parts.
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| US Market Report |
US Close: Stocks remain mixed as Obama tackles debt ceiling
- Dow Jones Industrials: 0.14%
- Nasdaq Comp.: -0.26%
- S&P 500: -0.09%
- US President Barack Obama refuses to negotiate debt ceiling raise
- Dell gains on news its in talks about going private
- Apple reportedly cuts orders for iPhone components due to weak demand
US equities remained little changed by close as President Barack Obama
refused to negotiate with Republicans over raising the debt ceiling.
Obama declined to trade cuts in government spending in exchange for
increasing the borrowing limit, according to various reports.
Republican leaders continued to stress that the debt limit should be accompanied by spending cuts.
"If the goal is to make sure that we are being responsible about our
debt and our deficit - if that's the conversation we're having, I'm
happy to have that conversation," Obama said.
"What I will not do is to have that negotiation with a gun at the head of the American people," he told a news conference.
It comes two weeks after an agreement to prevent the so-called fiscal cliff of $600bn in spending cuts and tax hikes was made.
While the legislation - which raised taxes for high earners - helped to
ease the burden, the government has a long road ahead to fix the budget
deficit.
Leaders are facing a February deadline to address
the need to raise the debt ceiling, automatic deep spending cuts
temporarily put off in the fiscal cliff deal, and the end of a stopgap
government funding measure.
Dell Inc rocketed 12.96% following reports the PC maker was in talks with at least two private equity firms about going private.
Alpha Natural Resources drove down the S&P 500 as shares declined 3.77%.
Hewlett-Packard
jumped 4.89% following reports the Chief Executive Officer Meg Whitman
received nearly $15.4m in fiscal 2012 during her first full year in the
role, receiving only 70% of her targeted compensation as it posted a net
loss for the year.
Verizon Communications Inc dropped 1.55% as the company continued to kick around the idea of buying Verizon Wireless outright from joint venture partner Vodafone.
Apple Inc.
was making headlines as the company fell 3.57% on news it had cut
orders for components for the iPhone 5 due to weaker-than-expected
demand.
Treasury 10-year note yields traded close to a
one-week low, falling by a one basis point, or 0.01 percentage point, to
1.86%, according to Bloomberg Bond Trader prices.
Front month West Texas crude futures were up 0.69% to the 94.210 dollar mark on the NYMEX. |
| FX and Commodities round-up |
FX round-up: Improved Eurozone outlook lifts euro
The
euro advanced to an eleven month high against the dollar on Monday as
investors cheered comments from Eurozone leaders that the worst of the
Eurozone crisis is over.
The single currency rallied to a high of $1.3404 against the dollar before easing back to $1.339, up 0.3% on the day.
Risk appetite was boosted by European Central Bank President Mario
Draghi's comments about "positive contagion" in European markets as the
ECB left the central bank's benchmark interest rate at 0.75%.
Against the yen, the euro flirted briefly with ¥120 for the first time in eight months before later changing hands at ¥119.50.
The dollar index, which measures the greenback's performance against a
basket of six major currencies, traded at 79.493 compared to Friday's
79.566.
The dollar rose strongly against the yen following
reports that the Bank of Japan would agree to a 2% inflation target. The
bank, which currently has a 1% target, would need to further monetary
easing.
The increased view that Japan will announce further
action to reduce deflation sent the greenback to a high of ¥89.64 yen,
before later trading at ¥89.46.
Sterling fell to $1.6078 from
$1.6127 the previous session and tumbled to a nine and half month low
against the euro amid fears about the UK economic outlook.
The
pound came under pressure on Friday after a report from the National
Institute of Economic and Social Research said the UK economy shrank
0.3% in the final quarter of 2012.
Commodities: Weaker dollar boosts oil
Crude
oil futures rose on Monday as the weaker dollar fuelled interest while
uncertainty over the US debt ceiling kept gains on the small side.
Crude for delivery in February settled up 58 cents at $94.14 a barrel
on the New York Mercantile Exchange after declining 26 cents on Friday.
The weaker dollar against the euro added support to oil. Crude, which
is priced in dollars, becomes cheaper for holders of other currencies.
The dollar index, which measures the greenback's performance against a
basket of six major currencies, traded at 79.493 compared to Friday's
79.566.
The spotlight also turned to President Barack Obama as
he refused to negotiate with Republications over raising the debt
ceiling. He urged Congress to raise the federal debt ceiling so that
government bills can be paid, according to reports.
Meanwhile Republican leaders said the debt limit should be accompanied by spending cuts.
Over on the ICE futures exchange Brent crude for February delivery rose $1.25 to $111.88 a barrel.
Among precious metals gold rose 0.5% on Monday while platinum charged to a three month high.
Gold for February delivery rallied $8.80 to settle at $1,669.40 an
ounce on the Comex division of the New York Mercantile Exchange.
April platinum advanced $27 to settle at $1,658.20 an ounce after hitting a high of $1,665 earlier in the session.
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