ADVFN III Evening Euro Markets Bulletin (February 4, 2013).

ADVFN III Evening Euro Markets Bulletin

Daily world financial news

London Market Report
FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts
London close: Footsie drops 100 points on political uncertainty in Europe Market Movers techMARK 2,273.92 -0.73% FTSE 100 6,246.84 -1.58% FTSE 250 13,177.02 -0.74% Increased political risk in the Eurozone presented a good opportunity for traders to take profits on Monday, as investors made the most of the recent surge on stock markets worldwide. The FTSE 100 dropped 100 points today, a fall of around 1.6%. This follows the impressive 6.4% gain seen last month, the index's best January performance since 1989. "Last night's power failure at the US Super Bowl appears to have manifested itself into European equity markets today as the sentiment that had fed the strong rally of recent weeks appears to have come to a shuddering halt," said senior market analyst Michael Hewson from CMC Markets. "Investors are once again being spooked by political uncertainty from both Spain and Italy as both countries deal with local political difficulties that could derail ongoing and future reform programmes." Peripheral bond yields rise on political risk Spanish 10-year bond yields were at their highest levels of 2013 today, up 22 basis points at 5.43%, as markets digest rumours over corruption scandals at Prime Minister (PM) Mariano Rajoy's governing People's Party. "The fear for investors is that these allegations, though denied by PM Rajoy, will prompt bouts of civil unrest and the removal of the current government which would pave the way for general elections," explained Joe Rundle, head of trading at ETX Capital. Over in Italy, the borrowing rate on the Italian benchmark note rose 14 basis points to 4.47% as the support gains for former PM Silvio Berlusconi in the public opinion polls. With just a few weeks to go before parliamentary elections, markets are fearing a political deadlock post-election. Meanwhile, back in London, economic data was doing its bit to dampen sentiment. Markit's UK construction purchasing managers' index (PMI) was unchanged at a six-month low of 48.7 in January. Consensus forecasts were for a small up-tick to 49. FTSE 100: Randgold bucks the trend in mining sector Gold miner Randgold surged after saying it achieved record production and profit levels in 2012. Production is expected to increase by at least 13% in 2013 also. However, the wider mining sector didn't fare as well, with resource giants Kazakhmys, ENRC and Glencore suffering steep falls as risk appetite slipped. The cyclical banking sector was also under the weather today after UK Chancellor George Osborne warned lenders that the government could separate retail operations from riskier activities if they break the rules. RBS, Standard Chartered, HSBC, Lloyds and Barclays were all lower. Barclays was also being weighed down after announcing that its long-running Finance Director, Chris Lucas, has stepped down ahead of the group's conclusion of its strategic review in the coming weeks Johnson Matthey was a heavy faller after Citi cut the precious metals and chemicals group from 'buy' to 'neutral'. Meanwhile, telecoms giant Vodafone was also taken down a peg by Citi, which cut its rating for the stock to 'neutral'. FTSE 250: Salamander surges after oil find Oil and gas exploration and production company Salamander Energy rocketed after saying it has discovered oil at the first well in its multi-well programme in the North Kutei Basin. The well, known technically as the South Kecapi-1 DIR/ST exploration well, discovered a combined 40 metres of net oil and gas pay in high quality stacked Pliocene channel sandstones, the group reported. Gold miner Centamin was a high riser on market chatter that a decision over the validity of its flagship Sukari mine contract is imminent. Centamin plummeted in late-October on concerns that it could lose the mining contract. Risk Thakrar, the risk manager and senior dealer at Spread Co, said in an e-mail today: "Despite there being no official announcements, rumours have provided enough momentum to push the stock through [technical] resistance barriers." Transport firm Go-Ahead was advancing after HSBC upgraded the stock to 'overweight and raised its target from 1,180p to 1,415p.
FTSE 100 - Risers Randgold Resources Ltd. (RRS) 6,275.00p +3.12% Shire Plc (SHP) 2,153.00p +0.84% Burberry Group (BRBY) 1,397.00p +0.72% Rolls-Royce Holdings (RR.) 972.50p +0.15% Next (NXT) 4,103.00p +0.12% IMI (IMI) 1,185.00p +0.08% TUI Travel (TT.) 297.20p +0.07% FTSE 100 - Fallers Aviva (AV.) 351.90p -4.40% CRH (CRH) 1,310.00p -4.31% Johnson Matthey (JMAT) 2,243.00p -3.57% Kazakhmys (KAZ) 727.50p -3.51% Royal Bank of Scotland Group (RBS) 328.60p -3.49% Prudential (PRU) 934.50p -3.16% Standard Life (SL.) 337.70p -3.13% Schroders (SDR) 1,913.00p -2.94% Barclays (BARC) 291.50p -2.83% Antofagasta (ANTO) 1,127.00p -2.76% FTSE 250 - Risers Salamander Energy (SMDR) 208.00p +11.83% Centamin (DI) (CEY) 64.15p +6.21% Perform Group (PER) 390.00p +3.17% Regus (RGU) 124.40p +2.81% Euromoney Institutional Investor (ERM) 920.00p +2.79% Essar Energy (ESSR) 144.00p +2.71% Sports Direct International (SPD) 413.00p +2.51% Cranswick (CWK) 995.00p +2.47% Oxford Instruments (OXIG) 1,752.00p +2.16% Telecom Plus (TEP) 985.50p +2.12% FTSE 250 - Fallers National Express Group (NEX) 203.00p -3.70% Lonmin (LMI) 366.40p -3.60% Carpetright (CPR) 676.50p -3.36% Ferrexpo (FXPO) 261.60p -3.36% Carillion (CLLN) 298.90p -3.30% IP Group (IPO) 124.00p -3.12% Laird (LRD) 226.60p -3.08% Barratt Developments (BDEV) 217.50p -3.07% Ocado Group (OCDO) 103.00p -2.83% Taylor Wimpey (TW.) 71.85p -2.77%
Europe Market Report
FTSE 100 Euronext Dax perf CAC 40
Europe midday: Spanish debt falls on higher political risk - Periphery debt and equities seeing some selling pressure - LCH Clearnet lowers margin requirements on Spanish and French debt - Spanish 10 year bond yields rise on political risks FTSE-100: -0.65% Dax-30: -0.46% Cac-40: -0.78% FTSE Mibtel 30: -1.89% Ibex 35: -1.45% Stoxx 600: -0.31% European equities are now all moving clearly lower, with periphery markets clearly under the most pressure. The reason for the latter has to do with the somewhat increased election uncertainty in Italy, where the most recent polls show Mario Monti losing support against his political rivals, particularly former Premier Silvio Berlusconi. In Spain, the centre-right People's Party has come under increasing pressure after the left-leaning El Pais newspaper accused at least a dozen government officials of receiving illicit payments, sometimes from the construction industry. The country´s Prime Minister has denied those allegations, saying that the evidence provided by the newspaper – purportedly from the party´s own Treasurer, Jose Luis Barcenas, who himself was already being investigated - had been tampered with. The above comes against the backdrop of an increasing sense of weariness over the slow pace of the economic recovery in Spain. Somewhat ironically, according to EPFR global equity funds attracted another $18.7bn during the final week of January, with flows into Italy reaching their best level since the financial crisis. Similarly, just this morning LCH Clearnet has cut its margin requirements for trading in Spanish and French public debt. Large increase in profits at Swatch Spanish companies Abertis, Ferrovial and Itinere have offered to invest €3.34bn in state highways in exchange for longer concessions, newspaper Cinco Dias reported. Swatch has reported a 26% increase in 2012 net income to 1.6bn francs ($1.8bn). From a sector stand-point the worst performance is now to be seen in the following industrial groups: Banks (-0.81%), Automobiles (-0.97%) and Construction (-1%). Investor confidence recovers less than expected Eurozone producer prices fell by 0.2% month-on-month in December, as expected. The Sentix index of Eurozone investor confidence improved to -3.9 points for February (Consensus: -1.7) after a reading of -7.0 for the previous month. Slight losses in other asset classes The euro/dollar is now sitting at 1.3563, off by 0.57%. Front month Brent crude futures are now down by 0.725 dollars to the 115.92 dollar level on the ICE.
US Market Report
US open: Inflows into equities surged in January The main US equity averages have begun the day lower by roughly 0.7 per cent on average. That following some negative news-flow on the political front in the Eurozone periphery and Friday´s large move higher on Wall Street. Likewise, speculation regarding the possibility that Chinese authorities may soon decide to move towards a more neutral stance may also be a factor weighing on investor sentiment. That comes at a time when some strategists are critical of the very large (5%) gain seen in US equities during the month of January, as they believe they have outpacing growth by too large a margin. Time will tell, in any case this past Saturday the President of the Federal Reserve of St.Louis, James Bullard, told Bloomberg that if data remained strong then he would favour moderating the pace of quantitative easing. In a similar vein, it was today revealed that investors poured a record $77.4bn into US-listed mutual funds and exchange traded funds during January, smashing the previous record of $53.7bn in February 2000, which was just before the technology stock bubble burst. TrimTabs CEO David Santschi says the inflow should make 'contrarians' very nervous because inflows into funds have historically coincided with market tops. Oracle is to acquire Acme Packet for approximately $1.7bn. About 73% of the 256 S&P 500 components which have released results this earnings season have exceeded projections, with 65% having beaten on the top-line, Bloomberg data shows. Chevron is seeing some selling pressure following a downgrade from analysts UBS. Similarly, JP Morgan has today downgraded Wal Mart. 10 year US Treasury yields are now down by 2 basis points, to 2.05%. That is a technical resistance levels which is being watched closely by some analysts.
Broker Tips
Broker tips: Centrica, Meggitt, 888 Holdings Seymour Pierce has retained its 'buy' rating and 403p target for Centrica after the energy giant revealed on Monday that it would not be proceeding further in nuclear build in the UK and would be launching a buy-back programme. "This announcement removes some uncertainty around Centrica's investment intentions, confirming some recent press speculation. The share buy-back is small, but its impact should be modestly enhancing; and given the group's very strong underlying cash flow, it retains its firepower with respect to other investment options, along with the potential for further capital returns." UBS cut its recommendation for aerospace engineer Meggitt from 'buy' to 'neutral', causing shares to fall on Monday morning. The broker has raised the target for the shares from 440p to 450p, but removed the stock from its M&A watch list "on lack of value-creation grounds". Panmure Gordon has raised its target for online gaming group 888 Holdings after the company revealed details of their record fourth quarter on Monday morning. The broker has kept its 'buy' recommendation for the shares, saying that the stock is "inexpensive given the group's forecast-beating performance and growth potential in regulated and regulating markets." The target has been nudged up from 143p to 145p, implying 18% potential upside from current prices.