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| London close: Stocks dented by concerns over Syria, Fed taper Markets were choppy on Tuesday as reports of two ballistic missiles being fired in the Eastern Mediterranean and heightened fears about the scaling back of US stimulus dented investor sentiment. While the launch was later confirmed as a missile test by Israeli forces training with the US Navy, the move undeniably reignited tensions between Syria and the West and prompted investors to take profits after yesterday's strong rise. The FTSE 100 finished down 37.78 points at 6,468.41, a fall of 0.58% on the day, pulling back after hitting a near-three-week high on Monday. Senior Market Analyst Michael Hewson from CMC Markets said "it was a timely reminder of the fluidity and uncertainty of the situation in the region, and kept investors on the back foot somewhat throughout the remainder of the day, despite some positive US economic data". President Barack Obama has asked lawmakers to back military action to chastise Syrian President Bashar al-Assad for allegedly using chemical weapons against civilians which killed hundreds last month. Assad reiterated his denial of the claims on Monday, warning the US and its French allies of retribution. Congress is reportedly split on whether to intervene in Syria and Obama has so far had little success of convincing lawmakers ahead of votes next week. Should lawmakers deny Obama's request for force in Syria it would be the first time Congress had rejected a president's appeal for military action. However, Speaker of the House and Ohio Republican John Boehner showed his support for Obama's call for action, saying that the US should "warn others around the world that this type of behaviour is not going to be tolerated". US data in focus Data from the US came in ahead of expectations this afternoon with the closely-watched ISM manufacturing index rising from 55.4 to 55.7 in August (forecast; 54). Amna Asaf from Capital Economics said: "clearly this is the sort of the news that could prompt the Fed to begin tapering its monthly asset purchases later this month." Economic indicators from the States will be in focus over the next two weeks ahead of the Federal Open Market Committee (FOMC) meeting on September 17-18th with policymakers widely expected to announce that they will begin scaling back stimulus. The all-important monthly employment report in Friday will be likely be the main event this week after Fed Chairman Ben Bernanke said back in May that he was eyeing an improvement in the labour market specifically before making an adjustment to the quantitative easing programme. The consensus forecast is for a 180,000 increase in non-farm payrolls in August, up from the 162,000 gain registered in July. | ||||||||||||
| FTSE 100: Vodafone pulls back after agreeing on VZW disposal Vodafone was in focus today after late last night reaching an agreement to sell its 45% stake in US outfit Verizon Wireless to Verizon Communications in a transaction valued at $130bn (£84bn) in cash and shares. Shareholders are expected to receive 71% of the net proceeds of the disposal. The stock was a heavy faller today, pulling back after a strong rise over the last few days. Real estate groups were under pressure after Deutsche Bank downgraded stocks and targets across the sector. Land Securities and British Land were among the worst performers after the bank cut its ratings for both to 'hold', citing a reduced supply of liquidity in the financial markets over the next 12 months due to the Fed's expected 'taper'. Security solutions firm G4S was also lower after Credit Suisse lowered its recommendation from 'outperform' to 'neutral', saying that the stock has re-rated and is now trading at a premium to its historic average. Leading the upside was Primark owner and food ingredients group AB Foods after Exane BNP Paribas raised the stock to 'outperform'. Mining group Rio Tinto was extending gains after yesterday reporting the first shipment of iron ore from its expanded operations in Western Australia. "We are attracted by Rio's value, quality volume growth and cost cutting potential," said analysts at UBS this morning. FTSE 250: Genus drops after full-year results Genus fell sharply this morning despite increasing its annual dividend by 10%and saying it expected revenue growth to improve as it reported a rise in underlying profits. The animal genetics company's adjusted pre-tax profit rose 2% to £47.2m in the year ended June 30th even as feed costs increased. Statutory profit before tax however fell 30% to £38.1m because of a fall in the value of biological assets under accounting rules. Spirent Communications rose after saying its Chief Executive Officer Bill Burns will step down from the company with immediate effect. Chief Financial Officer Eric Hutchinson will replace Burns in the interim while the technology firm searches for a successor. FTSE 100 - Risers Tullow Oil (TLW) 1,043.00p +2.46% Hargreaves Lansdown (HL.) 1,031.00p +1.58% Associated British Foods (ABF) 1,901.00p +1.22% Randgold Resources Ltd. (RRS) 5,120.00p +1.09% Centrica (CNA) 393.10p +1.08% Imperial Tobacco Group (IMT) 2,154.00p +0.98% Melrose Industries (MRO) 300.80p +0.94% Antofagasta (ANTO) 893.50p +0.90% Capita (CPI) 969.00p +0.78% BHP Billiton (BLT) 1,936.00p +0.78% FTSE 100 - Fallers Vodafone Group (VOD) 202.50p -5.02% Land Securities Group (LAND) 881.00p -3.03% British Land Co (BLND) 552.50p -2.56% Pearson (PSON) 1,278.00p -1.62% Carnival (CCL) 2,385.00p -1.57% William Hill (WMH) 414.90p -1.50% G4S (GFS) 257.40p -1.34% Hammerson (HMSO) 486.00p -1.34% Wood Group (John) (WG.) 803.50p -1.29% Prudential (PRU) 1,102.00p -1.25% FTSE 250 - Risers Dixons Retail (DXNS) 44.18p +6.46% Spirent Communications (SPT) 134.60p +4.67% KCOM Group (KCOM) 89.35p +3.53% Xaar (XAR) 808.00p +3.19% Balfour Beatty (BBY) 258.20p +3.16% Kenmare Resources (KMR) 27.20p +2.99% Bwin.party Digital Entertainment (BPTY) 111.00p +2.68% Cobham (COB) 291.30p +2.57% Mitchells & Butlers (MAB) 447.20p +2.40% COLT Group SA (COLT) 109.30p +2.25% FTSE 250 - Fallers Genus (GNS) 1,348.00p -8.86% St. Modwen Properties (SMP) 287.90p -5.30% Daejan Holdings (DJAN) 3,775.00p -4.55% Workspace Group (WKP) 426.00p -4.42% Derwent London (DLN) 2,279.00p -4.28% Debenhams (DEB) 104.00p -4.15% SEGRO (SGRO) 287.60p -3.59% JPMorgan Indian Inv Trust (JII) 289.60p -3.47% Intu Properties (INTU) 301.60p -3.40% Unite Group (UTG) 353.20p -3.26% | ||||||||||||
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| Europe close: Stocks mixed on Syria woes, US data
- Israeli forces admit to missile test launch in Mediterranean
- US manufacturing and construction expands - UK construction activity rises sharply - UK retail sales values jump - Spanish lender sought by consortium FTSE 100: -0.58% DAX: -0.77% CAC40: -0.80% FTSE MIB: -0.28% IBEX 35: 0.29% Stoxx 600: -0.38% European equities were mixed as concerns over Syria were renewed following a missile launch in the eastern coast of the Mediterranean Sea and as US manufacturing expanded. Israeli forces training with the US Navy in the Mediterranean on Tuesday launched two ballistic objects that set off an alert from the Syrian government's ally Russia. President Barack Obama has asked lawmakers to back military action to chastise Syrian President Bashar al-Assad for allegedly using chemical weapons against civilians which killed hundreds last month. Assad reiterated his denial of the claims on Monday, warning the US and its French allies of retribution. Congress is reportedly split on whether to intervene in Syria and Obama has so far had little success of convincing lawmakers ahead of votes next week. Should lawmakers deny Obama's request for force in Syria it would be the first time Congress had rejected a president's appeal for military action. Meanwhile, a United Nations agency said the number of Syrian refugees has passed the two million mark and warned that the world faces its greatest threat to peace since the Vietnam war. US manufacturing expands in August US manufacturing grew more than expected in August to the fastest rate since June 2011, data showed Tuesday. The Institute for Supply Management's factory index rose to 55.7 from the prior month's 55.4, above the 50 level that signals expansion and beating forecasts for a 54 reading. A separate report from the Commerce Department revealed US construction spending climbed 0.6% in July to an annual rate of $901bn, compared to a fall of 0.6% in June and economists' expectations for a 0.3% jump. In the UK, construction activity rose sharply in August, boosted by residential building. The Markit/CIPS UK construction purchasing managers' index (PMI) jumped to 59.1 last month compared to 57 in July, the fastest pace since September 2007. The British Retail Consortium, meanwhile, said the total value of retail sales was up 3.6% year-on-year in August after a 3.9% increase in July. Private equity groups to buy Spanish bank A consortium of private equity groups are set to buy an arm of Nova Galicia, one of Spain's nationalised lenders, in what would mark the first significant foreign investment in the country's banking system since the start of the financial crisis. The consortium, which includes US buyout firm Centerbridge and London-based Anacap, are in late stage talks to acquire Nova Galicia's subsidiary Evo Banco. The deal is expected to close in the next two weeks, people familiar with the situation told the Financial Times. It would be the first time a lender owned by the Frob, Spain's state bank rescue fund, has been bought by a foreign investor since the crisis prompted the country's government to request a European bailout of its financial sector last year. In another positive note for Spain, unemployment fell for the sixth month running in August, down 31 to 4,698,783, according to data published on Tuesday by the Ministry for Employment and Social Security. It was the first time that unemployment has fallen during any month of August since 2000. Nokia surges on Microsoft deal Nokia shares soared after Microsoft agreed to buy its struggling mobile phone business for €5.44bn. Vodafone declined as it forecast an adjusted operating profit of £5bn for 2014 after Verizon Communications said it would acquire the UK telecommunications company's stake in their joint venture Verizon Wireless. Suedzucker AG fell after Exane BNP Paribas SA reduced its rating of the maker of sugar, starch and bakery additives to 'underperform' from 'neutral', saying the company will require significant restructuring to prosper amid tough competition. Dufry advanced as the operator of duty-free stores said it signed long-term contracts with airports in Brazil and is investing $250m to $275m in its projects in the country. Crude futures rise on Syria woes Brent crude futures jumped $0.513 to 114.920 per barrel on the ICE as fears of a military strike resurfaced. The euro fell 0.31% against the 1.3151 US dollar. | ||||||||||||
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ISM manufacturing beats forecasts
- ISM manufacturing report surprises to the upside
- Obama serious about requesting authorisation - Large rise in 10-year treasury yields Dow Jones Industrials: 0.67% Nasdaq Composite: 1.17% S&P 500: 0.98% US stocks have begun the session higher, keying off of gains in European and Asian equities over the long Labour day weekend in response to recent upbeat prints on manufacturing data around the world. Nevertheless, there are still sore spots, such as the continuing weakness to be seen on Tuesday in the Indian rupee. Acting as a backdrop – and misleading reports of missile launches aside – the news-flow surrounding the situation in Syria is a tad mixed. Some reports indicate that Congress may yet surprise and vote down any strike against targets inside that country. However, President Obama has won over at least one critic, Republican Senator John Mc.Cain, who has been arguing for a bigger attack. In a speech this afternoon Obama stressed that he is serious about requesting Congress to authorise a strike. All of the above comes ahead of this next Friday’s monthly employment report and on the heels of a positive surprise on US manufacturing in the form of the latest ISM manufacturing sector survey data just out. The data comes as policy-makers look for indicators of whether the US has recovered enough for the Fed to begin scaling back its $85bn per month in bond purchases. Economists are still somewhat divided about whether the central bank will start trimming its stimulus at the Fed’s highly awaited policy meeting on September 17th to 18th. Better than expected economic data The US ISM manufacturing sector index for the month of August has risen to the 55.7 point mark from 55.4 in the month before (Consensus: 54.0). The new orders subindex rose to the 63.2 level from 58.3 in the month before. US construction spending for July showed an 0.6% rise, compared to the 0.3% gain forecast by economists. Blue-chips drop after announcing M&A deals On the company front, Microsoft’s shares fell as the US tech giant agreed to buy Nokia’s struggling mobile phone business for €5.44bn. Citigroup advanced following reports the US bank sold more than $6bn in private-equity and hedge-fund assets in the past month. Verizon Communications declined after saying it will buy out Vodafone’s stake in joint-venture Verizon Wireless. Treasury yields at 2-year highs The 10-year US yield rose 0.11 points to 2.90%. Yields are increasing by the most since 2009 as economists predict the Fed will begin reducing quantitative easing this month. Front month West Texas crude futures are now edging higher by 0.31% to the $107.95/barrel mark on the NYMEX. S&P 500 - Risers CBS Corp. (CBS) $53.67 +5.03% Regeneron Pharmaceuticals Inc. (REGN) $253.43 +4.59% Boston Scientific Corp. (BSX) $11.02 +4.21% Micron Technology Inc. (MU) $14.11 +3.98% Owens-Illinois Inc. (OI) $29.44 +3.70% E*TRADE Financial Corp. (ETFC) $14.54 +3.56% Electronic Arts Inc. (EA) $27.51 +3.27% American International Group Inc. (AIG) $47.97 +3.25% LSI Corporation (LSI) $7.65 +3.24% CONSOL Energy Inc. (CNX) $32.24 +3.23% S&P 500 - Fallers Murphy Oil Corp. (MUR) $58.70 -12.93% Microsoft Corp. (MSFT) $31.41 -5.96% Verizon Communications Inc. (VZ) $45.65 -3.65% Plum Creek Timber Co. (PCL) $43.27 -2.35% AvalonBay Communities Inc. (AVB) $121.66 -1.81% Pinnacle West Capital Corp. (PNW) $53.32 -1.75% Monster Beverage Corp (MNST) $56.43 -1.67% Equity Residential (EQR) $51.03 -1.66% Wisconsin Energy Corp. (WEC) $40.41 -1.53% Apartment Investments & Management Co. (AIV) $27.11 -1.53% Dow Jones I.A - Risers United Technologies Corp. (UTX) $102.76 +2.66% JP Morgan Chase & Co. (JPM) $51.58 +2.08% American Express Co. (AXP) $73.11 +1.68% Bank of America Corp. (BAC) $14.35 +1.63% Boeing Co. (BA) $105.61 +1.63% Cisco Systems Inc. (CSCO) $23.62 +1.33% Travelers Company Inc. (TRV) $80.89 +1.24% Hewlett-Packard Co. (HPQ) $22.60 +1.16% Unitedhealth Group Inc. (UNH) $72.53 +1.10% Walt Disney Co. (DIS) $61.45 +1.02% Dow Jones I.A - Fallers Microsoft Corp. (MSFT) $31.41 -5.96% Verizon Communications Inc. (VZ) $45.65 -3.65% Merck & Co. Inc. (MRK) $47.07 -0.47% Coca-Cola Co. (KO) $38.01 -0.45% Pfizer Inc. (PFE) $28.10 -0.39% AT&T Inc. (T) $33.72 -0.33% Caterpillar Inc. (CAT) $82.46 -0.10% Nasdaq 100 - Risers Activision Blizzard Inc. (ATVI) $17.11 +4.84% Regeneron Pharmaceuticals Inc. (REGN) $253.43 +4.59% Micron Technology Inc. (MU) $14.11 +3.98% Western Digital Corp. (WDC) $63.99 +3.21% Amazon.Com Inc. (AMZN) $289.98 +3.20% Xilinx Inc. (XLNX) $44.81 +3.20% Cerner Corp. (CERN) $47.53 +3.19% Fastenal Co. (FAST) $45.34 +3.07% Biogen Idec Inc. (BIIB) $219.50 +3.04% Twenty-First Century Fox Inc Class A (FOXA) $32.22 +2.84% Nasdaq 100 - Fallers Microsoft Corp. (MSFT) $31.41 -5.96% Vodafone Group Plc ADS (VOD) $31.52 -2.57% Monster Beverage Corp (MNST) $56.43 -1.67% Fossil Group Inc (FOSL) $115.74 -0.34% Green Mountain Coffee Roasters Inc. (GMCR) $86.29 -0.02% | ||||||||||||
| Broker Tips | ||||||||||||
| Broker tips: StanChart, G4S, TalkTalk
Barclays has downgraded banking group Standard Chartered from 'overweight' to 'equalweight', citing its exposure to the emerging markets and growing risks in some geographies.
"Although we leave our Standard Chartered earnings estimates unchanged and continue to believe that the shares offer value in the longer term, we see little scope for either earnings upgrades or a re-rating of the shares in the near term," Barclays said. Credit Suisse has cut its recommendation for security solutions firm G4S from 'outperform' to 'neutral' and reduced its target from 290p to 275p after the stock's recent strong performance. "GFS has already re-rated strongly and now trades at 14.3 times 2014E earnings, which is the 91st percentile of its nine-year average and a significant premium to both Securitas and Serco," the bank said. JPMorgan Cazenove has upgraded telecoms group TalkTalk from 'neutral' to 'overweight' and lifted its target from 225p to 300p, saying that its investment in TV should lead to the emergence of a cash cow with low gearing. Concerns over rising competition from BT Sport have meant that the stock has performed in line with the FTSE 250 over the last 12 months despite TalkTalk having beaten expectations on TV adds and churn reduction. JPMorgan said that these fears have been overdone and the first-half results in November should provide early evidence that BT Sport does not pose a significant risk. | ||||||||||||
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