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Stocks surge as economic data impresses
Market Movers
techMARK 2,289.96 +1.67%
FTSE 100 6,347.24 +1.12%
FTSE 250 13,275.76 +1.88%
The impressive performance by global stock markets last month continued into the first trading day of February, as a barrage of upbeat economic data lifted sentiment.
The FTSE 100 rose a total of 6.4% in January alone, the best January performance since 1989.
Eurozone manufacturing beats forecasts
Manufacturing data from the Eurozone
painted an improving picture for the single-currency economy this
morning, as Markit’s purchasing managers' index (PMI) hit an 11-month
high of 47.9 in January. Forecasts were the PMI to be unchanged from the
preliminary reading (47.5)
While a figure below 50 still
indicates a contraction, "the Eurozone economic picture continues to
brighten", according to Markit Chief Economist Chris Williamson.
Meanwhile, even though official manufacturing PMIs in the UK and China eased last month, they were both still above the crucial 50-point mark, indicating expansion.
Sentiment was shaken around lunchtime on the news that European banks
are expected to pay back a smaller-than-expected amount to the European
Central Bank (ECB) next week as part of the repayments for the Long-Term Refinancing Operations (LTRO) programme.
US data cheers markets late on
A
series of robust economic indicators Stateside lifted the mood this
afternoon, lifting the FTSE 100 in London over one per cent higher by
the close.
US non-farm payrolls increased by 157,000
last month, slightly below expectations, but data from the previous two
months was revised higher. While the unemployment rate ticked higher
from 7.8% to 7.9%, stocks were performing well this afternoon with
analysts labelling the data as “encouraging”.
“While I still
expect the rate of hiring to pick up, revisions to the non-farm payrolls
figures in November and December suggest that plenty of businesses were
never really concerned about the fiscal cliff,” said market analyst
Craig Erlam from Alpari.
“Both were revised significantly
higher and we can probably expect something similar next month with
January’s figure. The revisions are what’s fuelling this afternoons rally as they point to a much stronger jobs market in the lead up to the end of the year than previously thought,” he said.
The closely-watched University of Michigan consumer confidence survey and ISM manufacturing index both came in ahead of analysts’ forecasts this afternoon, sparking a strong start on Wall Street.
FTSE 100: BT impresses with third-quarter statement
Telecoms giant BT
registered impressive gains today after its third-quarter results, as
cost control helped it to beat bottom-line expectations. Pre-tax profit
increased by 7.0% in the quarter to £675m, however revenues fell 6.0% to
£4.5bn.
Miners were also performing well today on the back of
the well-received economic data from the US and China as continued
growth in manufacturing lifted the demand outlook for commodities. Vedanta Resources, Anglo American and Kazakhmys were among the best performers.
Heading the other way was sweeteners and food products group Tate & Lyle
after saying that third-quarter profits, while in line with
expectations, were lower than they were last year. The company also
warned about the elevated levels of volatile corn prices and the impact
of the hot summer last year.
Banking stocks were mixed today. Global lender HSBC
was higher after receiving regulatory approval for the $7.4bn sale of
its stake in China’s Ping An Insurance to Thai billionaire Dhanin
Chearavanont. The stock was able to shrug off a downgrade by Citigroup
this morning to ‘neutral’.
However, Barclays was in the
red after its CEO Antony Jenkins announced that he would waive his
bonus for 2012 as the bank tries to mend its image following a series of
scandals. RBS was also lower after a Sky News report
alleged that it is examining proposals to claw back up to £100m from pay
deals previously awarded to investment bank executives as it prepares
to settle allegations that it played a role in the LIBOR rate-rigging
conspiracy.
FTSE 250: KCOM rises on Q3 statement
Communications services provider KCOM rose after saying in a third-quarter statement that it has seen "positive momentum across all brands".
Platinum producer Lonmin
was continuing to rise after yesterday posting quarterly production
ahead of targets despite strikes that hit the South African mining
sector last year.
De La Rue, the banknote printer,
surged after saying that it had received "some" of the previously
delayed orders that it had referred to in the last trading update. The
company said that results this year would be flat on 2011/12.
Pubs group Greene King
was a high riser this morning after HSBC raised its recommendation for
the shares to 'overweight' and lifted its target from 620p to 750p.
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| AIM/Small Cap Report |
FTSE 100 - Risers
BT Group (BT.A) 264.80p +6.52%
Vedanta Resources (VED) 1,259.00p +4.57%
Reed Elsevier (REL) 713.50p +3.86%
Tullow Oil (TLW) 1,179.00p +3.60%
Anglo American (AAL) 1,954.00p +3.58%
GKN (GKN) 249.30p +3.53%
ARM Holdings (ARM) 893.50p +3.53%
Rio Tinto (RIO) 3,679.00p +3.34%
Kazakhmys (KAZ) 754.00p +3.29%
Melrose Industries (MRO) 240.50p +3.04%
FTSE 100 - Fallers
Tate & Lyle (TATE) 804.00p -1.05%
Royal Bank of Scotland Group (RBS) 340.50p -0.82%
BAE Systems (BA.) 337.90p -0.50%
Legal & General Group (LGEN) 151.80p -0.39%
Hammerson (HMSO) 484.10p -0.33%
Barclays (BARC) 300.00p -0.33%
Resolution Ltd. (RSL) 261.90p -0.23%
United Utilities Group (UU.) 731.50p -0.07%
Lloyds Banking Group (LLOY) 51.64p -0.04%
FTSE 250 - Risers
Afren (AFR) 154.00p +7.39%
Essar Energy (ESSR) 140.20p +7.27%
Kenmare Resources (KMR) 35.63p +7.25%
KCOM Group (KCOM) 77.00p +7.09%
Centamin (DI) (CEY) 60.40p +6.81%
Ferrexpo (FXPO) 270.70p +6.32%
TalkTalk Telecom Group (TALK) 251.40p +6.26%
Elementis (ELM) 223.70p +5.92%
De La Rue (DLAR) 953.50p +5.71%
Lonmin (LMI) 380.10p +5.58%
FTSE 250 - Fallers
Ted Baker (TED) 1,165.00p -3.24%
New World Resources A Shares (NWR) 282.90p -2.45%
PayPoint (PAY) 823.00p -1.61%
BH Macro Ltd. EUR Shares (BHME) € 19.50 -1.37%
Kentz Corporation Ltd. (KENZ) 415.60p -0.95%
Atkins (WS) (ATK) 822.00p -0.90%
Domino's Pizza Group (DOM) 510.00p -0.87%
Direct Line Insurance Group (DLG) 221.00p -0.85%
Fidessa Group (FDSA) 1,526.00p -0.84%
Mitchells & Butlers (MAB) 332.00p -0.51%
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European Markets Climbed Friday Despite U.S. Jobs Data
The European markets
ended Friday's trading session in the green, despite the smaller than
expected increase in U.S. employment for January. Meanwhile, the Chinese
manufacturing sector expanded for the fourth consecutive month,
providing a boost to mining stocks. The remaining U.S. economic data was
largely positive, with the surprisingly strong upward revision to
consumer sentiment and the larger than expected increase in the ISM
manufacturing index.
The Euro Stoxx 50 index of eurozone bluechip stocks increased by 0.23 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.09 percent.
The DAX of Germany climbed by 0.74 percent and the CAC 40 of France advanced by 1.10 percent. The FTSE 100 of the U.K. rose by 1.18 percent and the SMI of Switzerland gained 0.39 percent.
In Frankfurt, Deutsche Bank increased by 0.73 percent. Citigroup upgraded the stock to ''Buy'' from ''Neutral.''
S&P Equity upgraded EON to ''Buy'' from ''Hold.'' The stock closed higher by 0.30 percent. Infineon Technologies advanced by 3.54 percent, after JP Morgan raised its full year 2013 estimate.
In Paris, Credit Agricole
gained 3.30 percent. The lender has recognized a goodwill impairment
charge of 2.676 billion euros in its fourth quarter. Societe Generale
rose by 1.76 percent and BNP Paribas added 1.56 percent.
Saint-Gobain finished up by 0.05 percent, after a broker downgrade. STMicroelectronics climbed by 4.89 percent, after JP Morgan increased its full year 2013 estimate.
In London, BT Group
surged by 7.00 percent after announcing financial results. The company
also stated that its full year guidance remains unchanged.
Tate & Lyle dropped by 1.05 percent, after announcing third-quarter results. Royal Dutch Shell rose by 0.22 percent. UBS and S&P Equity reduced their ratings on the stock.
Mining stocks performed
well, due to the Chinese manufacturing data. Vedanta Resources
increased by 4.32 percent and Anglo American gained 3.79 percent. BHP Billiton advanced by 2.67 percent and Rio Tinto rose by 3.34 percent.
Eurozone
manufacturing activity contracted less than initially estimated in
January, final data from Markit Economics showed Friday. The Final
manufacturing Purchasing Managers Index came in at 47.9 in January, up
from 46.1 in December and slightly above the flash estimate of 47.5.
Eurozone's unemployment rate held
steady at a record high in December as the economy remained mired in
recession at the end of last year. Meanwhile, preliminary data showed
that inflation slowed in January on lower energy prices, providing
relief to policymakers.
The unemployment rate in the
single currency bloc remained unchanged at a record 11.7 percent in
December, after the November rate was revised down by a percentage point
from 11.8 percent. Economists had forecast the rate to rise to 11.9
percent from the initially reported 11.8 percent for November.
Further,
the flash estimate published by Eurostat showed that inflation slowed
unexpectedly in January, moving closer to the central bank's target of
'below, but close to 2 percent'. Final data is due on February 28. Due
to a slowdown in energy prices, Eurozone inflation fell to 2 percent
from 2.2 percent in December. Inflation was forecast to remain at 2.2 percent.
An
indicator of Germany's manufacturing sector performance improved more
than primarily estimated in January, detailed results of a survey by
Markit Economics revealed Friday. The seasonally adjusted purchasing
managers' index for the manufacturing sector rose to 49.8 in January
from 46 during December.
French manufacturing activity sank
further into contraction in January, detailed results of a survey by
Markit Economics confirmed Friday. The purchasing managers' index fell to a four-month low of 42.9 in January from 44.6 in December. The figures matched the preliminary findings.
The U.K. manufacturing sector continued to expand at the start of the year, albeit at a slower than expected pace, survey data from Markit Economics showed
Friday. The Markit/Chartered Institute of Purchasing & Supply
Purchasing Managers' Index came in at 50.8 in January, down from a
15-month high of 51.2 in December.
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| US Market Report |
Upbeat Economic Data Leads To Rally On Wall Street
With
traders reacting positively to the latest batch of economic data,
stocks are turning in a strong performance in mid-day trading on Friday.
The gains on the day have more than offset the modest losses posted in
the two previous sessions.
The Nasdaq and the S&P 500 have reached new highs in recent trading, while the Dow continues to flirt with 14,000. The Dow is up 139.01 points or 1 percent at 13,999.59, the Nasdaq is up 33.89 points or 1.1 percent at 3,176.02 and the S&P 500 is up 14.59 points or 1 percent at 1,512.70.
The
strength on Wall Street reflects a positive reaction to the latest
batch of economic data, including the Labor Department's closely watched
monthly employment report for January.
While the report showed
that employment increased by slightly less than expected in January, it
also showed notable upward revisions to the job growth in previous
months.
The report showed that non-farm payroll employment
increased by 157,000 jobs in January following an upwardly revised
increase of 196,000 jobs in December. Economists had been expecting
employment to increase by about 165,000 jobs.
Along with the
upward revision to the December job numbers, the report also showed that
the increase in jobs in November was upwardly revised to 247,000 from
161,000.
Despite the continued job growth, the unemployment rate unexpectedly
edged up to 7.9 percent in January from 7.8 percent in December. The
increase surprised economists, who had expected to unemployment rate to
dip to 7.7 percent.
However, Chris Low, chief economist at
FTN Financial, noted, "Because the rate rise was caused by an increase
in the number of people looking, it was not an entirely bad thing."
Buying interest
was also generated by a report from the Institute for Supply Management
showing a continued expansion in manufacturing activity in January,
with the index of activity in the sector reaching a nine-month high.
Separate
reports also showed an unexpected improvement in consumer sentiment and
a bigger than expected increase in construction spending.
Among individual stocks, computer giant Dell (DELL)
is posting a notable gain on reports that the company is close to a
buyout agreement. Shares of Dell are currently up by 4.2 percent after
reaching an eight-month intraday high.
Energy giant Exxon Mobil
(XOM) is nearly flat are reporting fourth quarter earnings that rose
year-over-year and exceeded analyst estimates. The company said oil and
gas output fell 5.2 percent.
Meanwhile, shares of Merck (MRK)
have come under pressure after the drug giant reported better than
expected fourth quarter results but issued cautious guidance for 2013.
Sector News
Banking stocks have
shown a strong move to the upside on the day, driving the KBW Bank
Index up by 1.7 percent. With the increase, the index has risen to its
best intraday level in almost two years.
Bank of America (BAC), BB&T (BBT), and Zions Bancorp (ZION) are turning in some of the banking sector's best performances.
Considerable strength has also emerged among software and semiconductor stocks, with the Dow Jones Software Index and the Philadelphia Semiconductor Index both up by 1.5 percent.
Steel stocks
are also seeing notable strength in mid-day trading, as reflected by
the 1.5 percent gain being posted by the NYSE Arca Steel Index.
Biotechnology, internet, and telecom stocks are also posting strong gains, moving higher along with most of the major sectors.
Other markets
In overseas trading, stock markets across the Asia-Pacific region extended a recent trend and turned in another mixed performance on Friday. While Japan's Nikkei 225 Index rose by 0.5 percent, Hong Kong's Hang Seng Index closed just below the unchanged line.
In the bond market, treasuries have
pulled back well off their early highs but continue to see modest
strength. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is down by 2 basis points at 1.965 percent
after hitting a low of 1.926 percent.
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| Broker tips |
BT, Shell, TUI Travel
Nomura has reiterated its 'buy' rating and 280p target for telecoms group BT Group, saying that the firm's third-quarter results have reversed recent negative revenue momentum.
The broker noted that BT has improved its underlying growth (excluding
transit) rate from -5.5% to -3.1% in the quarter ended December 31st,
"backed up by a range of robust, if not exceptional, operational key performance indicators".
UBS lowered its rating for oil major Royal Dutch Shell from 'buy' to 'neutral' on Friday, citing an absence of near-term momentum.
"A 4Q miss
versus UBSe and consensus and no near-term prospect of an improvement
in the main drag on performance – the North American upstream business –
prompt us to cut 2013/14E earnings per share by an average 10%, and to
cut our recommendation to 'neutral'," the broker said.
Panmure Gordon has kept its 'sell' rating for travel and leisure firm TUI Travel ahead of its first-quarter results next week on concerns over current trading.
"We believe current trading is strong reflecting the tailwind of 2012 being the wettest year on record in England, but still see headwinds in continental Europe," the broker said
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