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London open: ARM provides a lift early on
techMARK 2,284.65 +0.47% FTSE 100 6,278.65 +0.51% FTSE 250 13,210.31 +0.25%
Strong gains from ARM Holdings and BP helped the Footsie rebound on Tuesday from a sharp sell-off the day before.
FTSE 100: ARM jumps after full-year figuresLondon's benchmark index slumped 100 points on Monday as political uncertainty in the Eurozone dented sentiment: corruption scandals at Spanish Prime Minister (PM) Mariano Rajoy's governing People's Party and rising support for former Italian PM Silvio Berlusconi pushed bond yields in both nations sharply higher. "We could now see a brief return to the risk on/risk off trading that we became accustomed to last year, said market analyst Craig Erlam from Alpair this morning. "It appeared that we had moved away from this over the last month, with traders instead paying more attention to corporate earnings and the economic data, however this could only ever last as long as the eurozone remained stable." ARM Holdings reported a 16% rise in profit before tax for the fourth quarter, boosted by demand for the company's processor technology for smartphones and tablet devices. Normalised pre-tax profits for the British semiconductor and software design firm came to £80m for the three months to December 2012, compared to £69m for the same period a year earlier. Broadcaster and broadband group BSkyB was out of favour after rival Virgin Media confirmed that cable company Liberty Global is considering bid for the firm, which would put it in direct competition with the FTSE 100 market leader. Insurance giant RSA was lower after Nomura downgraded the shares to 'reduce' ahead of the group' results on February 20th. After the stock's outperformance since November, the broker said that it doesn't "think there will be an additional catalyst to push the stock more from here". UK banking group Barclays was lower after putting aside a further £1.0bn to cover compensation for mis-sold products in the fourth quarter. Ahead of the group's full-year results next week, Barclays has warned that it has increased its provision for redress relating to interest-rate hedging products wrongfully sold to small- and medium-sized enterprises by another £400m and is providing a further £600m for Payment Protection Insurance (PPI) claims. Profits at oil titan BP slipped in the fourth quarter owing to lower upstream production levels, but the company assured that it well-positioned for growth after moving past "many milestones" last year, causing shares to rise early on. Underlying replacement cost (RC) profit, adjusted for non-operating items and fair value accounting effects, totalled $4.0bn in the last three months of 2012, down from $5.0bn a year earlier. Natural gas firm BG Group was lower after posting a 29% fall in fourth-quarter earnings on the back of a decline in cargo deliveries. Earnings for the last three months of 2012 came to $1.0bn, down from $1.4bn the previous year, primarily as a result of $277 million tax credit in 2011. FTSE 250: Victrex, UBM fall early on Polymer manufacturer Victrex was a heavy faller after despite saying that the business is showing "resilience in trading" in spite of continuing global economic challenges. The company said that group sales volumes in the four months to January were up 2.0% year-on-year. Business published and events organiser UBM was in the red after receiving an offer from Electra Partners to purchase a portfolio of UBM's Data Services businesses, known as 'Delta', for £160m. Telecoms group TalkTalk was a high riser after saying that it customer base returned to growth for the first time in three years during he third quarter. Europe-focused industrial property specialist SEGRO gained after completing the disposal of its MPM site in Munich one month earlier than originally planned. | ||||||||||||
| UK Event Calendar | ||||||||||||
Tuesday February 05
INTERIMS Allocate Software INTERIM DIVIDEND PAYMENT DATE Anglo Pacific Group, Johnson Matthey, Workspace Group INTERNATIONAL ECONOMIC ANNOUNCEMENTS ISM Non-Manufacturing (US) (15:00) ISM Services (US) (15:00) PMI Composite (EU) (09:00) PMI Composite (GER) (08:55) PMI Services (EU) (09:00) PMI Services (GER) (08:55) Retail Sales (EU) (10:00) Q4 ARM Holdings, BG Group, BP GMS Sports Stars Media FINALS ARM Holdings, BG Group, BP, Low & Bonar, St. Modwen Properties IMSS Victrex AGMS Albion Income & Growth VCT, Dewhurst, Dewhurst (Non-Voting), Numis Corporation, Victrex UK ECONOMIC ANNOUNCEMENTS BRC Sales Monitor (00:01) Official Reserves (09:30) PMI Services (09:30) FINAL DIVIDEND PAYMENT DATE Spirit Pub Company | ||||||||||||
| Europe Market Report | ||||||||||||
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| Just released data by Markit on Eurozone economic
activity continues to be a case of “half empty or half full?” as it
continues to show a further deterioration in output, albeit with the
rate of decline easing in January for the third straight month. In fact, activity in both the Eurozone's manufacturing and service sectors declined at the slowest rates since last March, even though the data came in below the 50 mark that implies a contraction. Thus, the combined final Eurozone composite output index moved up to 48.6, from the preliminary reading of 48.2 and December’s level of 47.2. More specifically, the services sector index also came in at 48.6 compared to 48.3 and 47.8, respectively. The data continues to accentuate the idea of a European economy running at two speeds, or as Markit notes “the diverse picture among the four largest euro members with strong growth in Germany (where output grew at the fastest rate in just over a year and a half) contrasting with ongoing downturns in France, Italy and Spain.” Output in France registered the steepest drop, with the fastest monthly decline since March 2009 “causing the gap between the headline indices for France and Germany to increase to the widest in the survey history.” Markit chief economist Chris Williamson added that “the Eurozone is showing clear signs of healing”, although he admits that the growth is “heavily skewed” towards Germany. French companies are noting the steepest downturn for nearly four years as output falls a much faster rate than in both Spain and Italy. Yet at the same time, German firms reported the strongest growth for almost a year and a half. “More encouragingly, rates of loss of new business eased in France, Italy and Spain, accompanied by a return to growth in Germany, presenting a more consistent picture of demand moving in the right direction across the region,” Williamson concluded. | ||||||||||||
| US Market Report | ||||||||||||
| US close: Obama called out for missing budget deadline
-House Republicans criticise President for missing budget deadline
-Standard & Poor's expects to be target of US lawsuit -US banks anticipate improvements in credit quality Dow 14,010 (-0.93%) Nasdaq 3,179 (-1.51%) S&P 500 1,513 (-1.15%) The main US equity benchmarks were trading lower as House Republicans called out President Barack Obama for missing Monday's deadline to submit his budget to Congress. The House plans on holding a vote Tuesday to draw attention to the lapse – the fourth time in five years the administration's submission will be late, according to reports. The president is required by law to deliver a budget for the upcoming fiscal year to Capitol Hill the first Monday in February. Republican leaders released statements criticising the administration for ignoring the law. "For the fourth time in five years this White House has proven it does not take trillion-dollar deficits seriously enough to submit a budget on time," House Speaker John Boehner said in a statement. His party will take up a bill Tuesday that requires the White House to submit a balanced budget, or else submit a supplemental plan by April 1st that indicates the earliest year they expect the budget to be balanced. Also under the microscope is Standard & Poor's (S&P) which expects to be the target of a US Department of Justice civil lawsuit over its rating of mortgage bonds prior to the financial crisis. S&P said the case will focus on its ratings in 2007 of various US collateralised debt obligations – making it the first federal enforcement action against a credit rating agency over alleged illegal behaviour tied to the economic downturn. Shares in parent company McGraw-Hill Companies tumbled following the news. On the upside, a Federal Reserve survey revealed US banks anticipate credit quality to increase this year after easing standards on loans for autos and businesses of all sizes. "Banks expect improvements in credit quality in most major loan categories" in 2013, the central bank said Monday in its quarterly survey of senior loan officers released in Washington. Randgold Resources climbed after the mining company reported a 16% rise in annual profits. Facebook Inc. plummeted after last week reporting a $64m profit in the fourth quarter of last year, a significant fall compare to $302m in the previous year. Boeing Co. continued to gain on last week's fourth-quarter profits that topped Wall Street estimates. Bank of America plunged as a group of mortgage-backed securities investors said it failed to buy back more than $30bn in loans from investors after the bank modified the mortgages to reduce borrower payments, Reuters reported. 10 year US Treasury yields were down by 2 basis points, to 2.89%. Front month West Texas Intermediate crude futures fell by 1.632 to the 96.200 dollar mark. S&P 500 - Risers Netflix Inc. (NFLX) $174.74 +6.03% Humana Inc. (HUM) $78.86 +4.66% H&R Block Inc. (HRB) $23.82 +4.20% GameStop Corp. (GME) $25.25 +2.27% Frontier Communications Co. (FTR) $4.47 +1.71% JDS Uniphase Corp. (JDSU) $15.02 +1.62% Mattel Inc. (MAT) $38.78 +1.36% Western Union Co. (WU) $14.57 +1.32% Dean Foods Co. (DF) $18.48 +1.32% Newmont Mining Corp. (NEM) $44.10 +0.89% S&P 500 - Fallers McGraw-Hill Companies Inc. (MHP) $50.30 -13.78% Moody's Corp. (MCO) $49.45 -10.66% Gannett Co. Inc. (GCI) $18.51 -6.70% Tiffany & Co. (TIF) $62.17 -4.01% Nabors Industries Ltd. (NBR) $16.25 -3.56% Pitney Bowes Inc. (PBI) $13.34 -3.47% Constellation Brands Inc. Class A (STZ) $31.55 -3.46% Life Technologies Corp. (LIFE) $63.02 -3.40% Allegheny Technologies Inc. (ATI) $32.01 -3.32% PulteGroup Inc. (PHM) $19.68 -3.29% Dow Jones I.A - Risers Boeing Co. (BA) $75.21 +0.45% Dow Jones I.A - Fallers Travelers Company Inc. (TRV) $78.00 -2.37% Merck & Co. Inc. (MRK) $40.85 -2.34% Bank of America Corp. (BAC) $11.48 -1.96% Microsoft Corp. (MSFT) $27.43 -1.79% Hewlett-Packard Co. (HPQ) $16.18 -1.70% Pfizer Inc. (PFE) $27.17 -1.66% Alcoa Inc. (AA) $8.86 -1.56% McDonald's Corp. (MCD) $94.60 -1.41% Home Depot Inc. (HD) $66.36 -1.40% General Electric Co. (GE) $22.31 -1.37% Nasdaq 100 - Risers Randgold Resources Ltd. Ads (GOLD) $98.39 +2.86% Mattel Inc. (MAT) $38.78 +1.36% Seagate Technology Plc (STX) $33.80 +0.39% Perrigo Company (PRGO) $105.68 +0.38% KLA-Tencor Corp. (KLAC) $55.82 +0.11% Nasdaq 100 - Fallers Facebook Inc. (FB) $28.11 -5.45% Life Technologies Corp. (LIFE) $63.02 -3.40% Expedia Inc. (EXPE) $65.16 -3.14% Avago Technologies Ltd. (AVGO) $35.18 -2.98% Oracle Corp. (ORCL) $35.13 -2.97% Celgene Corp. (CELG) $98.59 -2.81% Alexion Pharmaceuticals Inc. (ALXN) $95.22 -2.71% eBay Inc. (EBAY) $55.69 -2.66% Dell Inc. (DELL) $13.27 -2.64% Apple Inc. (AAPL) $442.32 -2.49% | ||||||||||||
| FX and Commodities round-up | ||||||||||||
| FX round-up: Euro dives on Spain, Italy concern
The euro fell sharply against major currencies on Monday as traders fretted about renewed political turmoil in the Eurozone.
Commodities: Investors pause for breathPressure is mounting on Spanish Prime Minister Mariano Rajoy to resign amid a growing corruption scandal. Rajoy denies allegations that he and other members of his party accepted secret payments. The euro changed hands at $1.3511 compared to $1.3661 on Friday. The news also sent Spanish government-bond yields higher. Meanwhile in Italy, former Prime Minister Silvio Berlusconi's party won strong gains in polls ahead of national elections later this month on promises he would refund a property tax paid last year. The strong result sparked concern about reforms in the country, just a few days ahead of a European Central Bank meeting. The dollar index, which measures the US currency against a basket of six rivals, rose to 79.589 versus 79.097 on Friday. Against the dollar, the Japanese yen traded at ¥92.30 compared to ¥92.50 on Friday while the euro fell to ¥124.75 from ¥126.36 the previous session. Sterling advanced to $1.5767 from $1.5716 on Friday as investors opted out of the euro. The pound's advance came despite another round of disappointing economic data. A report out Monday showed UK construction PMI came in slightly below forecasts in January. On Friday traders digested weak UK manufacturing export data.
Crude oil settled lower on Monday as investors took a breather following last week's rally.
Weakness on Wall Street, increased political tensions in Spain and Italy and the rising dollar all drove prices lower. Sentiment was hurt as pressure mounts on Spanish Prime Minister Mariano Rajoy to resign amid a growing corruption scandal. Meanwhile in Italy, former Prime Minister Silvio Berlusconi's party won solid gains in polls ahead of national elections later this month. Crude for March delivery fell $1.60 to settle at $96.17 a barrel on the New York Mercantile Exchange. The dollar rose against the euro, making crude, which is priced in dollars, more expensive for holders of other currencies. On the ICE futures exchange Brent North Sea crude lost $1.15 cents to settle at $115.62 a barrel. Among precious metals, gold perked up 0.4% on Monday as declines among US equities Wall Street increased safe haven flows. Gold for April delivery rose $5.80 to $1,676.40 an ounce on the Comex division of the New York Mercantile Exchange. | ||||||||||||
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