Stocks gain as Chinese growth accelerates in Q4
Market Movers
techMARK 2,212.71 +0.51%
FTSE 100 6,148.04 +0.26%
FTSE 250 12,887.19 +0.31%
The FTSE 100 was
making small gains in early trading on Friday with mining stocks
providing a lift after some better-than-expected growth figures from
China.
China’s economic growth seems to have accelerated
for the first time in two years towards the end of 2012 thanks to the
stimulus measures implemented by the government.
Chinese gross domestic product expanded at a 7.9% year-on-year pace in the last three months of 2012, ahead of the 7.8% expected by the consensus.
"Nevertheless,
as always, policy officials were quick to point out that the threat of a
slowdown with China is still a real possibility owing to a potential
slowdown in global growth," said financial trader Shavaz Dhalla from
Spreadex.
"Thus, before investors get too carried away with the
positive data from China, it may be wise to consider that the next
tranche of growth data from China may not be as positive as the fourth
quarter 2012 growth figures."
Dhalla added that with
Morgan Stanley due to report its fourth-quarter figures later,
"financial shares could be vulnerable to seesaw type movements today"
following on from the mixed results from other banking heavyweights seen
earlier in the week. Both Goldman Sachs and JPMorgan smashed
expectations on Wednesday, while Bank of America and Citigroup
disappointed markets yesterday.
FTSE 100: Miners boosted by Chinese data
Mining peers Rio Tinto, ENRC and EVRAZ were
slightly higher this morning as the demand outlook brightened following
the Chinese GDP figures. The latter was making gains even though it
said that steel production fell 6% from the third quarter to the fourth,
as a result of scheduled maintenance at its ZSMK steel mill in the
Siberia region.
The stock was being given a lift this
morning by comments from Credit Suisse this morning about the steel
sector. The broker said: "The cycle is now recovering. Confidence
appears to be returning as the recovery in the financial equities
suggested to us could be the case. Anecdotes we hear suggest that the
demand outlook (non-res in the US, general demand in EU) could be better
than the market believes."
Rio was rebounding from
suffering losses yesterday after announcing that its Chief Executive
Officer had resigned following a non-cash impairment charge of
approximately $14bn in its 2012 full-year results. Analyst James Gurry
from Credit Suisse said this morning: "After the market digests this
news we think the focus should remain on iron ore prices, project
delivery and the larger macro picture, all which remains unchanged
following yesterday's announcement especially given current head of iron
ore (80% of earnings / 65% NPV) takes over as CEO, share price pressure
should be seen as buying opportunity."
However, Glencore and Xstrata were
trading slightly lower after saying that they are to extend the
long-stop date for their merger from the end of this month to March
15th.
Aerospace components engineer Meggitt was a high
riser this morning after Barclays Capital upgraded its rating for the
stock from 'equal weight' to 'overweight' and raised its target price
from 450p to 520p. The broker said that the shares' 20% valuation
discount to peers "will close as investors in the aerospace cycle look
away from the more expensive pure-play names with original equipment or
aftermarket exposure, and seek sector laggards like Meggitt".
| AIM/Small Cap Report |
FTSE 100 - Risers
Meggitt (MGGT) 438.70p +1.79%
Rio Tinto (RIO) 3,488.00p +1.41%
ARM Holdings (ARM) 867.50p +1.40%
Associated British Foods (ABF) 1,627.00p +1.31%
Evraz (EVR) 295.20p +1.30%
CRH (CRH) 1,253.00p +1.13%
Aberdeen Asset Management (ADN) 389.30p +1.12%
Kazakhmys (KAZ) 784.50p +1.10%
Pearson (PSON) 1,244.00p +0.97%
AstraZeneca (AZN) 3,099.50p +0.94%
FTSE 100 - Fallers
Rexam (REX) 459.20p -1.31%
Experian (EXPN) 1,073.00p -1.20%
Wolseley (WOS) 2,961.00p -1.10%
Kingfisher (KGF) 282.90p -0.77%
Sainsbury (J) (SBRY) 325.60p -0.73%
Aggreko (AGK) 1,807.00p -0.61%
BAE Systems (BA.) 342.90p -0.49%
Prudential (PRU) 928.50p -0.43%
Admiral Group (ADM) 1,164.00p -0.43%
Royal Bank of Scotland Group (RBS) 352.30p -0.42%
FTSE 250 - Risers
Spectris (SXS) 2,091.00p +3.36%
New World Resources A Shares (NWR) 303.76p +3.14%
Ophir Energy (OPHR) 543.00p +3.04%
Kentz Corporation Ltd. (KENZ) 400.00p +2.83%
Centamin (DI) (CEY) 56.50p +2.26%
Senior (SNR) 209.00p +2.25%
Morgan Crucible Co (MGCR) 278.70p +2.13%
Jardine Lloyd Thompson Group (JLT) 787.50p +1.61%
Moneysupermarket.com Group (MONY) 183.00p +1.55%
UBM (UBM) 729.00p +1.53%
FTSE 250 - Fallers
Ashmore Group (ASHM) 358.20p -1.73%
PayPoint (PAY) 858.58p -1.71%
COLT Group SA (COLT) 102.42p -1.33%
Dixons Retail (DXNS) 26.95p -1.10%
Home Retail Group (HOME) 135.10p -1.10%
Mondi (MNDI) 714.00p -1.04%
RPS Group (RPS) 230.10p -1.03%
Vesuvius (VSVS) 362.90p -1.01%
Renishaw (RSW) 1,811.00p -0.98%
Kier Group (KIE) 1,359.00p -0.95%
| UK Event Calendar |
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| FTSE 100 | Euronext | Dax perf | CAC 40 |
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UK retail sales results released
UK retail sales results out Friday will offer an insight into the broad performance of the sector during December.
Analysts expect growth to have remained steady last month, with the
consensus estimate for the year-on-year increase in sales being
maintained at 2.0%, the same as November.
The announcement follows mixed trading updates from UK high street stores over the past few weeks.
On Thursday Dixons Retail,
Europe’s second largest supplier of electrical goods, posted a 7%
increase in like for like sales over the Christmas period, while baby
and maternity retailer Mothercare reported a 7.4% decline in sales.
Associated British Foods posted a 10% rise in group revenue, buttressed by a 12% increase in sugar sales and a 25% jump in retail sales.
While there were many retailers who gained from festive season sales, others failed to overcome difficult economic conditions.
Namely HMV, Comet and Jessops which have entered administration over the past two months.
Matthew Hopkinson - director of a retail information provider Local Data Company
– told the Financial Times the collapses this year could drive the
number of empty shops in Britain to an estimated new high of 500.
Meanwhile, the UK's main inflation rate remained at 2.7% for the third
month in a row, in line with economists’ expectations, revealed data
from the Office for National Statistics (ONS).
INTERIM DIVIDEND PAYMENT DATE
Acal, Tarsus Group, UK Mail Group
GMS
SPARK Ventures
TRADING ANNOUNCEMENTS
Bovis Homes Group, Record, Spectris
UK ECONOMIC ANNOUNCEMENTS
Retail Sales (09:30)
FINAL DIVIDEND PAYMENT DATE
Baronsmead VCT, Baronsmead VCT 2, Carr's Milling Industries, K3 Business Technology Group, Northamber
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| US Market Report |
Upbeat Economic Data Leads To Rally On Wall Street
Stocks moved
notably higher over the course of the trading day on Thursday after
moving roughly sideways over the past few sessions. The rally came on
the heels of the release of upbeat employment and housing reports.
The major averages pulled back off their best levels going into the close but still ended the day firmly positive. The Dow rose 84.79 points or 0.6 percent to 13,596.02, the Nasdaq climbed 18.46 points or 0.6 percent to 3,136.00 and the S&P 500 advanced 8.31 points or 0.6 percent to 1,480.94.
The
gains lifted the Dow and the Nasdaq to three-month closing highs, while
the S&P 500 reached its best closing level in five years.
Much
of the strength on Wall Street stemmed from the release of a pair of
upbeat economic reports, including a report from the Labor Department
showing that initial jobless claims fell to a five-year low.
The report showed that jobless claims
fell to 335,000 in the week ended January 12th from the previous week's
revised figure of 372,000. Economists had been expecting jobless claims
to show a much more modest decrease to 368,000.
With the much bigger than expected drop, jobless claims fell to their lowest level since the week ended January 19, 2008.
A
separate report from the Commerce Department showed a much bigger than
expected increase in housing starts in the month of December.
The Commerce Department said housing starts
jumped 12.1 percent to an annual rate of 954,000 in December from the
revised November estimate of 851,000. The increase lifted housing starts
to their highest annual rate since June of 2008.
The employment and housing reports overshadowed a report from the Philadelphia Federal Reserve showing a contraction in regional manufacturing activity.
The
rally on Wall Street might have been even stronger if not for a
negative reaction to quarterly results from financial giants Bank of America (BAC) and Citigroup (C), which fell by 4.2 percent and 2.9 percent, respectively.
Bank of America
reported fourth quarter earnings that fell year-over-year but exceeded
analyst estimates, while Citigroup reported much weaker than expected
fourth quarter earnings.
Sector News
Housing stocks
turned in some of the market's best performances on the heels of the
better than expected housing starts report. The Philadelphia Housing
Sector Index surged up by 2.4 percent to its best closing level in well
over five years.
Significant strength also emerged among
semiconductor stocks, as reflected by the 2 percent gain posted by the
Philadelphia Semiconductor Index. Strong gains by KLA-Tencor (KLAC) and Lam Research (LRCX) helped lift the index to an eight-month closing high.
healthcare
provider and health insurance stocks also saw considerable strength,
with the Morgan Stanley Healthcare Provider Index and the Morgan Stanley
Healthcare Payor Index rising by 1.7 percent and 1.5 percent,
respectively.
Defense, natural gas, trucking, and chemical stocks also posted notable gains on the day, moving higher along with most of the major sectors.
Other markets
In
overseas trading, stock markets across the Asia-Pacific region turned
in a mixed performance during trading on Thursday. While Japan's Nikkei 225 Index inched up by 0.1 percent, Hong Kong's Hang Seng Index edged down by 0.1 percent.
In the bond market, treasuries moved back to the downside on the heels of the upbeat economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.1 basis points to 1.875 percent.
Looking Ahead
With
the economic calendar relatively quiet on Friday following the slew of
data released over the past few days, earnings news is likely to take
center stage.
Intel (INTC), American Express (AXP), and Capital One (COF) are among the companies releasing their quarterly results after the close of today's trading, while General Electric (GE) and Morgan Stanley (MS) are among the companies due to release their results before the start of trading on Friday.
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| Friday newspaper round-up |
Chinese GDP, FT sale, Tesco...
China’s economy
slid to its slowest growth in more than a decade last year, dragged
down by global woes and a domestic campaign to deflate a property
bubble. But the country finished 2012 on a higher note with a rebound
that analysts believe will filter into a stronger performance this year.
China’s gross domestic product expanded 7.8 per cent last year, the
lowest since 1999. In the fourth quarter, growth was 7.9 per cent
year-on-year, breaking a streak of seven consecutive weaker quarters.
“Overall the economy has been stabilising,” the national statistics
bureau said in a statement on Friday. [Financial Times]
The Financial Times is being touted for sale
by investment banks including Nomura and Bank of America Merrill Lynch
for up to £1bn. Some of the banks are also offering publishing group
Pearson’s share inThe Economist magazine, as well as acquisitions
database Mergermarket to potential buyers, according to documents. The
FT owner has repeatedly denied appointing advisors to sell the newspaper
and has indicated to investment banks that it is unlikely to chase a
deal for the title in this way. However, banks are courting potential
buyers so that they can present the media and education group with an
offer, following the pattern of previous Pearson divestments. [The Telegraph]
Philip Clarke, the chief executive of Tesco,
has taken to his Talking Shop blog to hammer home the message that the
supermarket chain is taking the horsemeat scandal head on. "If some of
our customers are angry, so are we," he wrote. "We expect our suppliers
to deliver to a standard, and to meet basic food traceability rules. But
our customers shop with Tesco, not our suppliers, so you won't find us
hiding behind suppliers." Clarke's reaction, according to retail
analysts, was part of a textbook response to the scandal that could yet
see the company avoid long-term damage to its reputation following the
discovery of horsemeat in some of its beefburgers. [The Guardian]
Germany's finance minister Wolfgang Schaeuble
has said that the problem of high indebtedness is not limited to the
crisis-hit eurozone and that the situation in Britain and the US is
worse. Speaking in Parliament, Mr Schaeuble also said he was worried by
the policies pledged by the recently elected government in Japan, which
has vowed a big increase in spending to bolster the econony, AFP
reported. "Britain has a higher state debt than the eurozone average and
I don't even want to mention the United States of America," Schaeuble
said. [The Telegraph]
The first competition investigation into pensions
in 17 years began yesterday as the Office of Fair Trading expressed
concern that savers in workplace retirement plans may be unfairly
treated. The OFT said that it was conducting a market study into
defined-contribution schemes, now run by the majority of private-sector
employers, to see if they were giving value for money. The watchdog is
expected to examine hidden charges in schemes as well as controversial
arrangements such as active-member discounts, which discriminate against
deferred members. [The Times]
High oil prices and the introduction of North Sea tax breaks led to bumper investment in UK waters last year, fuelling hopes of a strong 2013
for the industry. An annual review published today by Deloitte’s
petroleum services group shows 65 exploration and appraisal wells were
drilled on the UK Continental Shelf (UKCS) in 2012, a 33 per cent hike
on the previous year’s total of 49. The UK government also granted 21
field development approvals, the highest for ten years. A further eight
“incremental projects” – investment in older fields for redevelopment –
were given the green light. The report said an increasing number of
purchasers buying fields outright was also a sign of confidence. [The Scotsman]
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