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| London close: Syrian crisis hits stocks despite upbeat economic data Data showing improving confidence in Germany and the States wasn't enough to lift markets on Tuesday as investor sentiment was rattled by escalating tensions between Syria and the West. Business confidence in Germany improved across the board in August as the Eurozone's largest economy continues to build momentum. The IFO report, based on a survey of 7,000 German executives, came in better than expected this morning with the business climate, current assessment and expectations sub-indices all showing improvement month-on-month. Meanwhile, the index of US consumer confidence as measured by the Conference Board edged higher this month, surprising analysts who had expected a slightly decline. Investors however largely shrugged off the figures with markets cementing losses made in early trading. The FTSE 100 in London finished down 51.13 points at 6,440.97. Senior Market Analyst Michael Hewson from CMC Markets said: "The uncertainty being created by the potential for some form of military action in Syria, political uncertainty in Italy and the timing of a Fed tapering programme appears to have convinced a lot of people that the risks of getting involved in these markets somewhat outweighs any potential rewards, hence today's sharp falls." Oil gains on Syrian crisis Oil prices rose strongly today on concerns that heightened tensions in Syria could disrupt Middle East supplies. Brent crude for October delivery was trading at a six-month high of $113.97 a barrel (+2.93% on the day) by the close in London. US Secretary of State John Kerry said last night that Syria would be held accountable for the "moral obscenity" of an alleged chemical weapons attack that has killed well over a thousand people. "By any standard it is inexcusable," he said, sparking speculation of a potential US involvement in the Syrian crisis. Defense Secretary Chuck Hagel said that the US has "assets in place" and forces are "ready to go" if intervention is decided. Meanwhile, UK Prime Minister David Cameron cut his holiday short and recalled parliament to vote on possible response to last week's attack. Syrian Foreign Minister Walid al-Muallem responded by saying that the government - which has not yet claimed responsibility - wouldn't step down and its defences would "surprise" those wanting to step in. | ||||||||||||
| FTSE 100: Petrofac jumps on confident outlook Oilfield services group Petrofac surged today after saying it remains on track to deliver growth this year despite both revenues and profits slipping in the first half. The company reiterated that the full year would be significantly weighted to the second half as it delivered results that beat consensus forecasts on most fronts. Oil producers meanwhile were making gains as crude prices rose on the back of tensions in the Middle East. BP, Shell and BG Group were registering decent gains by the close. Investec was weighing on the share price of airline group IAG after downgrading the stock from 'buy' to 'hold' following its near-70% jump so far this year (as of Friday's closing price). The broker said that rising capacity and stubbornly-high fuel prices will act as headwinds for the industry in 2014. Royal Bank of Scotland slipped after the Financial Times reported that MPs were stepping up their campaign to split the lender into a 'good bank' and 'bad bank'. Antofagasta was also a heavy faller after reporting that revenues in the first half dropped 12.1% to $2.7bn, reflecting a decline in copper prices and increased costs. Precious metals peers Fresnillo and Randgold however were high risers as gold and silver prices edged higher. Retail firms M&S and Next were performing well after the stocks had their ratings upgraded by Citigroup and Bank of America, respectively. FTSE 250: Polymetal hit by broker downgrade While resource stocks such as Centamin, Premier Oil and African Barrick Gold tracked commodity prices higher today, precious metals group Polymetal was hit by a downgrade from HSBC to 'neutral'. In contrast, UBM was performing well after UBS lifted the media and events firm to 'buy', adding the stock to its 'Most Preferred' list. After a period of underperformance, the Swiss bank says that UBM's valuation is "too cheap". FTSE 100 - Risers Petrofac Ltd. (PFC) 1,373.00p +8.54% Fresnillo (FRES) 1,310.00p +7.11% Randgold Resources Ltd. (RRS) 5,335.00p +4.10% BG Group (BG.) 1,210.00p +2.37% Bunzl (BNZL) 1,376.00p +1.62% Marks & Spencer Group (MKS) 479.10p +1.59% Next (NXT) 4,990.00p +1.51% Royal Dutch Shell 'A' (RDSA) 2,092.50p +1.43% Morrison (Wm) Supermarkets (MRW) 296.90p +1.40% Royal Dutch Shell 'B' (RDSB) 2,177.00p +1.35% FTSE 100 - Fallers International Consolidated Airlines Group SA (CDI) (IAG) 300.50p -4.84% GKN (GKN) 331.40p -4.25% Royal Bank of Scotland Group (RBS) 330.10p -4.12% Aberdeen Asset Management (ADN) 352.00p -4.01% Eurasian Natural Resources Corp. (ENRC) 215.00p -3.85% TUI Travel (TT.) 343.90p -3.78% Wolseley (WOS) 3,230.00p -3.70% Standard Chartered (STAN) 1,437.50p -3.69% IMI (IMI) 1,451.00p -3.52% CRH (CRH) 1,358.00p -3.35% FTSE 250 - Risers Perform Group (PER) 520.50p +3.38% Premier Oil (PMO) 355.30p +3.25% Centamin (DI) (CEY) 41.00p +3.14% Genus (GNS) 1,490.00p +2.90% Ocado Group (OCDO) 298.70p +2.65% Alent (ALNT) 345.90p +2.61% African Barrick Gold (ABG) 170.30p +2.34% Menzies(John) (MNZS) 775.00p +2.31% Cranswick (CWK) 1,155.00p +2.12% Cairn Energy (CNE) 278.10p +1.94% FTSE 250 - Fallers Thomas Cook Group (TCG) 136.10p -8.47% Polymetal International (POLY) 741.00p -8.46% JPMorgan Indian Inv Trust (JII) 284.70p -7.32% Hochschild Mining (HOC) 223.10p -7.00% Imagination Technologies Group (IMG) 262.80p -5.67% Bank of Georgia Holdings (BGEO) 1,704.00p -4.75% Jupiter Fund Management (JUP) 341.10p -4.72% Bovis Homes Group (BVS) 757.00p -4.54% Spirent Communications (SPT) 124.20p -4.39% International Personal Finance (IPF) 584.00p -4.34% | ||||||||||||
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| Europe close: Stocks fall as US mulls Syria invasion
- US could invade Syria amid turmoil
- US house prices increase at slower rate - US consumer confidence grows - German business sentiment rises - UK services sector expands FTSE: -0.72% DAX: -2.02% CAC 40: -2.12% FTSE MIB: -2.09% IBEX 35: -2.81% Stoxx 600: -1.68% European stocks were in the red amid reports Western countries could attack Syria within days. US Defence Secretary Chuck Hagel said troops in the world's biggest economy were ready to intervene after the Syrian regime was said to have used chemical weapons against civilians near Damascus on Wednesday. Sources who attended a meeting in Istanbul on Monday between Syrian opposition leaders, US diplomats and other governments told Reuters that rebels were advised to expect military action. The news comes after US Secretary of State John Kerry said President Obama would hold Syria's government under the Assad regime accountable for the attack. The White House confirmed Obama spoke to global leaders about possible international responses to the conflict. The US is said to be looking at ways to invade Syria without the approval of the United Nations, where Russia would likely veto any action. Syria's foreign minister Walid al-Moallem on Tuesday vowed the government would defend itself against any foreign attack. The Arab League "demands that all the perpetrators of this heinous crime be presented for international trials," according to a copy of the statement obtained by Reuters. Policymakers weigh Fed stimulus US policymakers continued to mull over the Federal Reserve's tapering of quantitative easing. The central bank is expected to start scaling back its $85bn per month in bond purchases at its next meeting in September so long as the economy shows enough improvement. Also weighing on markets was remarks from Treasury Secretary Jack Lew who said the US government will reach its debt limit by mid-October unless Congress acts quickly. The debt ceiling was last raised in January and the government can no longer borrow if the limit is reached, which is currently capped at $16.7tn US house prices grow at slower pace The S&P/Case-Shiller index of property values in 20 cities rose 12.1% in June from the same month in 2012 after rising 12.2% in the year ended in May, the biggest gain since March 2006 and in line with expectations. Separately, the Conference Board revealed US consumer confidence unexpectedly jumped in August as citizens grew more optimistic about the outlook for the economy. The sentiment index climbed to 81.5 from 81 in July, beating the consensus estimate of 79. In Germany, business sentiment increased in August as Europe's largest economy showed solid momentum. The Ifo indexes, based on a survey of 7,000 German executives, climbed to 107.5 from 106.2 in July. It was slightly higher than the 107 expected by economists. Meanwhile, the Confederation of British Industry also revealed that Britain's services sector grew at the fastest rate in business volumes since 2007 in the last quarter. Carmakers biggest fallers A gauge of carmakers slid including Renault, Porsche, Volkswagen, Daimler and Bayerische Motoren Werke. They were the biggest fallers on the Stoxx Europe 600 index. Antofagasta retreated after the miner reported a drop in first half profits due to falling copper prices. Petrofac's shares surged after the oilfield services company said it remains on track to deliver growth for the full year. Royal Bank of Scotland decreased following reports MPs were stepping up their campaign to have the bank split into a 'good bank' and 'bad bank'. Polymetal International plunged after HSBC Holdings downgraded the gold miner to 'neutral' from 'overweight'. UBM gained after UBS upgraded the publisher of InformationWeek to 'buy' from 'neutral'. Brent crude soars as Syria tension grows The Syrian crisis pushed Brent crude futures higher, up $2.826 to $113.960 per barrel on the ICE. The euro/dollar rose 0.16% to the 1.3389 dollar mark. | ||||||||||||
| US Market Report | ||||||||||||
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Stocks fall on concerns over Syria, debt ceiling
- John Kerry says Syrian attack 'inexcusable'
- US to hit debt ceiling by mid-October - Durable goods disappoint Dow Jones: -0.43% Nasdaq: -0.01% S&P 500: -0.40% Wall Street stocks finished with moderate losses on Monday, erasing gains by the close of trade, as concerns over Syria and the US debt ceiling weighed on sentiment. US Secretary of State John Kerry said last night that Syria would be held accountable for the "moral obscenity" of the chemical weapons attack that has killed well over a thousand. “By any standard it is inexcusable,” he said. Senior Market Analyst Michael Hewson from CMC Markets said that the comments "raised concerns that some form of confrontation could be being considered". Meanwhile, Treasury Secretary Jacob Lew was reported saying that the US government would reach the debt ceiling by mid-October unless Congress agrees to raise the limit. “Operating the government with no borrowing authority, and with only the cash on hand on a given day, would place the US in an unacceptable position,” Lew said. In other news, durable goods orders came in much worse than estimated, dropping by 7.3% in July following a revised 3.9% gain the month before. Analysts had expected a decline of just 4%. "Overall, given the renewed strength in the surveys the fall in orders could just be a temporary blip, particularly as orders have been fairly robust over the preceding few months," said Paul Ashworth, the Chief US Economist at Capital Economics. "Nevertheless, at the very least it is a reminder that the expected pick-up in economic growth in the second half of the year will be gradual." Drug manufacturer Amgen was a high riser after agreeing to buy Onyx for $10.4bn. Facebook was making gains, rising 2% to $41.34. This means that the social network's market cap surpassed $100bn for the first time. Meat processor Tyson Foods slid after Bank of America downgraded the stock from 'buy' to 'neutral' following a recent strong run. S&P 500 - Risers Amgen Inc. (AMGN) $113.75 +7.72% Big Lots Inc. (BIG) $34.02 +5.49% CH Robinson Worldwide Inc (CHRW) $58.83 +2.85% Peabody Energy Corp. (BTU) $18.25 +2.24% Celgene Corp. (CELG) $141.16 +2.09% Home Depot Inc. (HD) $75.43 +2.08% Best Buy Co. Inc. (BBY) $35.81 +2.08% Owens-Illinois Inc. (OI) $30.31 +1.78% Apollo Group Inc. (APOL) $18.82 +1.73% Alexion Pharmaceuticals Inc. (ALXN) $107.19 +1.64% S&P 500 - Fallers Tyson Foods Inc. (TSN) $29.17 -7.34% Archer-Daniels-Midland Co. (ADM) $34.50 -4.91% Expedia Inc. (EXPE) $47.20 -3.36% Autodesk Inc. (ADSK) $37.89 -2.62% Abercrombie & Fitch Co. (ANF) $37.78 -2.33% Visa Inc. (V) $175.00 -2.29% Hershey Foods Corp. (HSY) $93.36 -2.21% Tesoro Corp. (TSO) $47.96 -2.14% Campbell Soup Co. (CPB) $45.40 -2.13% McCormick & Co. (MKC) $68.77 -1.98% Dow Jones I.A - Risers Home Depot Inc. (HD) $75.43 +2.08% McDonald's Corp. (MCD) $95.31 +0.19% Alcoa Inc. (AA) $8.06 +0.12% Boeing Co. (BA) $105.53 +0.05% Dow Jones I.A - Fallers Procter & Gamble Co. (PG) $78.54 -1.84% Microsoft Corp. (MSFT) $34.15 -1.73% Verizon Communications Inc. (VZ) $46.94 -1.41% AT&T Inc. (T) $33.82 -1.37% Pfizer Inc. (PFE) $28.02 -1.13% Coca-Cola Co. (KO) $38.12 -1.04% Johnson & Johnson (JNJ) $87.53 -1.00% JP Morgan Chase & Co. (JPM) $51.80 -0.99% Intel Corp. (INTC) $22.27 -0.74% General Electric Co. (GE) $23.61 -0.71% Nasdaq 100 - Risers Amgen Inc. (AMGN) $113.75 +7.72% CH Robinson Worldwide Inc (CHRW) $58.83 +2.85% Regeneron Pharmaceuticals Inc. (REGN) $245.01 +2.58% Celgene Corp. (CELG) $141.16 +2.09% Avago Technologies Ltd. (AVGO) $37.48 +2.01% Facebook Inc. (FB) $41.34 +1.95% Alexion Pharmaceuticals Inc. (ALXN) $107.19 +1.64% Dollar Tree Inc (DLTR) $54.12 +1.56% Altera Corp. (ALTR) $35.15 +1.41% Gilead Sciences Inc. (GILD) $60.42 +1.31% Nasdaq 100 - Fallers Expedia Inc. (EXPE) $47.20 -3.36% Autodesk Inc. (ADSK) $37.89 -2.62% Mondelez International Inc. (MDLZ) $30.72 -1.93% Microsoft Corp. (MSFT) $34.15 -1.73% Nuance Communications Inc. (NUAN) $19.01 -1.55% Catamaran Corp (CTRX) $55.33 -1.51% Check Point Software Technologies Ltd. (CHKP) $56.89 -1.44% F5 Networks Inc. (FFIV) $85.86 -1.42% Kraft Foods Group, Inc. (KRFT) $52.08 -1.40% Amazon.Com Inc. (AMZN) $286.21 -1.31% | ||||||||||||
| Broker Tips | ||||||||||||
| Broker tips: IAG, M&S, Premier Foods
Investec has downgraded its rating for British Airways owner International Airlines Group (IAG) from 'buy' to 'hold' after strong gains seen across the airlines sector since the start of the year.
"European airlines have benefited from reduced capacity and a flattening of fuel prices in 2013. Strong yields have led to stellar trading for most airlines, driving a material sector re-rating," said analyst James Hollins. Looking forward in 2014, he said that rising capacity and stubbornly-high fuel prices will act as headwinds. HIgh Street giant Marks & Spencer (M&S) was performing well on Tuesday morning after Citigroup upgraded the stock from 'neutral' to 'buy' and lifted its target from 470p to 535p. "The combination of recent, material upgrades to UK economic growth forecasts, and M&S management initiatives have markedly improved the credibility of double-digit FY15 and FY16 M&S EPS [earnings per share] growth forecasts." Credit Suisse has lifted its recommendation for food manufacturer Premier Foods from 'neutral' to 'outperform' and raised its target from 100p to 155p. "Valuing a business that is structurally over-indebted where profit expectations are falling is nigh on impossible – a deteriorating profit outlook simply crushes the equity value (now only 17% of the enterprise value). However if the profits have stabilised and can even show some growth, then the reverse is true – the equity leverage into a profit upturn is material." | ||||||||||||
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