FTSE 100 slips on mixed corporate earnings
Market Movers
techMARK 2,252.68 -0.62%
FTSE 100 6,299.61 -0.37%
FTSE 250 13,025.19 -0.16%
The FTSE 100 slumped in early trading on Thursday with heavyweight stocks AstraZeneca, Diageo, Shell and Vedanta providing a drag after disappointing the market with results.
Stocks were also tracking US and Asian markets lower after yesterday's
news that the US contracted in the fourth quarter of 2012. The world's
largest economy shrank by 0.1% in the last three months of last year, a
stark contrast to the 3.1% growth seen in the third quarter. Forecasts
were for a 1.1% expansion.
Meanwhile, the Federal Open Market Committee
said last night in its January statement that it would keep rates
unchanged and continue to purchase securities at a $85bn-a-month pace.
The Fed said “with appropriate policy accommodation, economic growth will proceed at a moderate pace”. Policy-makers also expect the jobless rate to "gradually decline" towards levels constant with its mandate.
Analyst Michael Gapen from Barclays Research said: "Given the ongoing
volatility in economic activity, fiscal policy driven uncertainty, and
the desire to see a substantial and sustained improvement in labor
market conditions, we continue to expect that the Fed will purchase assets through year-end,
with some tapering of the rate of purchases in the second half of the
year if growth and labour markets improve in the third and fourth
quarter as we expect."
Markets digest barrage of earnings
Pharma titan AstraZeneca
was a heavy faller this morning after reporting that full-year revenue
fell 15% due to a loss of exclusivity on several brands.
Consumer goods giant Diageo
was in the red despite posting profits in line with market
expectations. The Guinness, Smirnoff and Johnnie Walker owner reported a
9.0% organic operating profit growth for the half year ended December
31st.
Oil giant Royal Dutch Shell was lower after full-year profits slipped slightly as a result of oil price volatility.
A third-quarter production report from Vedanta disappointed despite the company saying that oil and gas output rose 21% and mined metal and silver increased strongly.
Leading the risers was Kazakh copper-focused miner Kazakhmys which said that it had hit production targets across all asset classes in 2012.
Broadcaster and broadband group BSkyB
gained after beating profit forecasts in the first half, helped by a
surge in customer numbers. The firm also hiked its dividend by a fifth.
Engineering firm Babcock edged higher after saying it has traded well in first half and is confident of meeting expectations for the full year.
Utilities group SSE
rose after saying that it is on course to deliver increases in both
adjusted profits and its dividend this year despite a slight fall in the
number of customer accounts during the first nine months.
| AIM/Small Cap Report |
FTSE 100 - Risers
Kazakhmys (KAZ) 751.50p +2.11%
British Sky Broadcasting Group (BSY) 824.50p +1.79%
Rolls-Royce Holdings (RR.) 952.50p +1.06%
CRH (CRH) 1,360.00p +1.04%
Petrofac Ltd. (PFC) 1,631.00p +0.99%
SSE (SSE) 1,429.00p +0.92%
Babcock International Group (BAB) 1,041.00p +0.87%
Severn Trent (SVT) 1,635.00p +0.74%
Amec (AMEC) 1,082.00p +0.56%
United Utilities Group (UU.) 744.00p +0.54%
FTSE 100 - Fallers
AstraZeneca (AZN) 3,023.00p -4.11%
Antofagasta (ANTO) 1,142.00p -2.31%
Aberdeen Asset Management (ADN) 400.50p -1.60%
Royal Dutch Shell 'B' (RDSB) 2,326.50p -1.50%
Royal Dutch Shell 'A' (RDSA) 2,273.50p -1.39%
Royal Bank of Scotland Group (RBS) 343.10p -1.18%
Barclays (BARC) 298.60p -1.13%
Kingfisher (KGF) 271.00p -1.06%
Prudential (PRU) 963.00p -1.03%
Marks & Spencer Group (MKS) 379.50p -0.94%
FTSE 250 - Risers
Lonmin (LMI) 337.20p +7.05%
Mitchells & Butlers (MAB) 311.10p +5.10%
JD Sports Fashion (JD.) 769.50p +4.77%
BTG (BTG) 333.30p +3.99%
Centamin (DI) (CEY) 57.00p +2.52%
Bumi (BUMI) 345.00p +1.77%
ITE Group (ITE) 257.90p +1.74%
William Hill (WMH) 388.00p +1.49%
Unite Group (UTG) 279.00p +1.20%
Bank of Georgia Holdings (BGEO) 1,265.00p +1.20%
FTSE 250 - Fallers
Enterprise Inns (ETI) 92.05p -6.74%
Investec (INVP) 457.00p -2.75%
Telecom Plus (TEP) 950.00p -2.31%
Afren (AFR) 141.80p -2.27%
Imagination Technologies Group (IMG) 486.80p -2.23%
Jupiter Fund Management (JUP) 318.80p -2.12%
Brewin Dolphin Holdings (BRW) 210.00p -2.10%
Savills (SVS) 490.00p -1.76%
Henderson Group (HGG) 154.60p -1.53%
Heritage Oil (HOIL) 200.90p -1.52%
|
| US Market Report |
Stocks Close Modestly Lower On Fed Statement, GDP Data
After
showing a lack of direction throughout much of the trading day on
Wednesday, stocks moved modestly lower in the latter part of the session
following the Federal Reserve's latest monetary policy announcement.
The major averages climbed off their lows going into the close but still ended the day in the red. The Dow fell 44.00 points or 0.3 percent to 13,910.42, the Nasdaq dipped 11.35 points or 0.4 percent to 3,142.31 and the S&P 500 slid 5.88 points or 0.4 percent to 1,501.96.
The
modest weakness that emerged on Wall Street came after the Federal
Reserve said growth in economic activity has paused in recent months due
largely to weather-related disruptions and other transitory factors.
The
Fed subsequently announced its widely expected decision to keep
interest rates unchanged and maintain its asset purchase program as part
an effort to stimulate the economy.
The central bank also
said it expects to keep its target for the federal funds rate in an
exceptionally low range as long as the unemployment rate remains above
6.5 percent.
The comments from the Fed were backed up by a
Commerce Department report showing that GDP unexpectedly fell by 0.1
percent in the fourth quarter after surging up by 3.1 percent in the
third quarter.
The modest drop came as a surprise to economists,
who had expected GDP to increase by about 1.0 percent. The decrease also
reflected the first drop in GDP since the second quarter of 2009.
However,
economists suggested that the data was not as bad as it appeared,
noting that the drop in GDP was largely due to a substantial decrease in
defense spending.
Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Frankly, this is the best looking contraction in GDP you'll ever see."
Upbeat
jobs data also helped to offset the negative sentiment generated by the
GDP report, with payroll processor ADP reporting a bigger than expected
increase in private sector employment in the month of January.
ADP
said private sector employment increased by 192,000 jobs in January
compared to economist estimates for an increase of about 172,000 jobs.
Despite the pullback by the broader markets, Amazon (AMZN)
held on to a strong gain even though the online retailer reported
weaker than expected fourth quarter results. Traders responded
positively to the company's increase in sales and North American
operating margin.
Aerospace giant Boeing (BA) also ended
the day higher after reporting fourth quarter earnings that fell
year-over-year but came in above analyst estimates. The company also
said its 2013 guidance assumes no significant financial impact from the
grounding of its 787 Dreamliner jet.
Sector News
Networking
stocks showed a substantial move to the downside over the course of the
trading day, dragging the NYSE Arca Networking Index down by 2 percent.
With the loss, the index pulled back further off the eight-month
closing high it set last Friday.
Alcatel-Lucent (ALU)
helped to lead the networking sector lower, falling by 8.2 percent,
while Infinera (INFN) and Ciena (CIEN) also posted notable losses.
Considerable
weakness was also visible among transportation stocks, as reflected by
the 1.5 percent loss posted by the Dow Jones Transportation Average. Railroad stocks turned in some of the sector's worst performances on the day.
Housing, steel, and biotechnology stocks also came under pressure as the day progressed, contributing to the pullback by the broader markets.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index surged up by 2.3 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.
In the bond market, treasuries ended
the day modestly lower but well off their worst levels of the session.
As a result, the yield on the benchmark ten-year note, which moves
opposite of its price, edged up by 1.8 basis points to 2.006 percent
after reaching a high of 2.037 percent.
Looking Ahead
Earnings news is likely to be in focus on Thursday, with Facebook (FB), Qualcomm (QCOM), Electronic Arts (EA) and ConocoPhillips (COP) among the companies releasing their quarterly results after the close of today's trading.
Additionally, Aetna (AET), Dow Chemical (DOW), MasterCard (MA), Hershey (HSY), UPS (UPS), and Whirlpool (WHR) are among the slew of companies due to report their quarterly results before the start of trading on Thursday.
Traders
are also likely to keep an eye on reports on weekly jobless claims,
personal income and spending, and Chicago-area business activity.
Nonetheless,
trading activity may be somewhat subdued ahead of the release of the
Labor Department's closely watched monthly jobs report on Friday.
|
| Thursday newspaper round-up |
Barclays, Shell, Great Western...
The man responsible for setting boardroom pay at Barclays
was hammered by MPs and peers yesterday and warned not to pay a one
million-pound bonus to the new chief executive. Sir John Sunderland, one
of Britain’s most eminent industrialists and a for- mer CBI president,
was hit by a barrage of hostile questioning and accused of a significant
misjudgment in approving a 2.7 million-pound bonus to Bob Diamond, the
bank’s former chief, last year. He was also told that the embattled
bank’s claim to have undergone a big shift in culture and standards
since the Libor scandal last summer would be dismissed as PR spin if it
pushed on with plans for a big bonus for the new chief, Antony Jenkins.
Sir John’s grilling by the Parliamentary Commission on Banking
Standards came hours after an explosive written statement from his
predecessor as chairman of the Barclays remuneration committee, Alison
Carnwath, who broke her silence to say that she had recommended Mr
Diamond get no bonus at all last year, but received no support from any
other board member. [The Times]
A judge in the Netherlands has ordered Shell
to pay compensation to a Nigerian farmer whose livelihood was wrecked
by oil spilling from a well abandoned by the Anglo-Dutch group. It is
the first time that a court outside Nigeria has ordered Shell to pay out
for its part in causing pollution in the Niger Delta and the ruling
leaves it vulnerable to more claims from other victims. The Delta has
been ravaged by oil spills for decades. Shell, the largest oil firm in
Nigeria, has blamed the pollution on thieves haphazardly siphoning oil
from its pipelines, but its argument has failed to satisfy the farmers
and Friends of the Earth, which took the fight for compensation to The
Hague, where the oil frim has its headquarters. [The Times]
The Government is expected to scrap the bidding competition for another
major rail franchise, just months after it pulled the contract for the
West Coast Main Line, costing the taxpayer more than £50m. Bidders for
the Great Western line are braced for an announcement on Thursday by the Department for Transport (DfT) that FirstGroup, which currently runs the services connecting London to Bristol and Cardiff, has been awarded an extension to its contract. [The Telegraph]
Mothercare's
UK boss is to leave the company as the parent and baby specialist
retailer battles to turn around falling sales. The departure of Mike
Logue comes as Mothercare Australia, a business in which the UK-listed
company owns a minority stake, called in administrators. The collapse of
the Australian business is a blow for Mothercare as its international
division has been driving growth in the last few years amid
disappointing trading at home. Underlying UK sales slumped 5.9% in the
13 weeks to 12 January while international sales rose 12%. Online sales
edged up just 0.9% during the period as the company failed to capitalise
on shoppers switching to the internet.[The Guardian]
Facebook’s
aggressive mobile advertising push through the presidential election
and holiday shopping season helped the social network report its first
quarterly revenue growth since becoming a public company in May but
still left investors wanting more. Revenues for the fourth quarter grew
40 per cent to $1.59bn compared with the same period last year. Revenue
growth was flat for the previous two quarters and had declined the
quarter before that. [Financial Times]
A former tax
chief accused of overseeing sweetheart deals that let big companies off
millions of pounds in tax has found a new role – protecting HSBC
from dealing with tax cheats. David Hartnett, the former chief executive
of HM Revenue & Customs, is to join a committee of the great and
the good set up to advise the bank on how to avoid getting entangled
with tax evaders, terrorists and drug dealers. It follows the $1.9bn
(£1.2bn) fine the bank was forced to pay to United States watchdogs for
breaching rules on money laundering that allowed the bank to be used as a
conduit for a river of money from drug cartels. [The Independent]
The Bank of England’s
flagship scheme to increase the flow of credit to companies has come
under renewed fire after figures yesterday showed lending continued to
shrink last month. The Bank said net lending to businesses fell by £2.1
billion in December, following a £2.5bn contraction the previous month,
prompting calls for the UK government to do more to prop up the ailing
economy. [The Scotsman]
|
|
No comments:
Post a Comment