Evening Euro Markets Bulletin.

ADVFN III Evening Euro Markets Bulletin

Daily world financial news Wednesday, 25 September 2013

London Market Report

FTSE 100 Euronext Dax perf CAC 40 Please click on the images to view our interactive charts

FTSE 100 falls to two-week low Heavy falls from Carnival, Tesco and utility stocks weighed on the FTSE 100 on Wednesday while uncertainty over the US budget and Federal Reserve monetary policy continued to dampen sentiment. London's benchmark index finished 19.93 points lower at 6,551.53, a fall of 0.3% on the day. This was the lowest close for the Footsie since September 9th when it ended the day at 6,530.74. Recent mixed economic data and conflicting comments by Fed officials over recent days continue to muddy the outlook for the central bank's stimulus programme. Falling consumer confidence figures yesterday were met with a continuing improvement in the housing market today as US new home sales jump by a better-than-expected 7.9% in August. Meanwhile, the ongoing debate over the US debt ceiling continues to grab the market's attention after Treasury Secretary Jacob Lew said that investor confidence in an eventual deal to raise the limit is probably "greater than it should be". He said: “People have to take seriously that Congress has a lot of work to do in a short period of time.” According to Moody's, a failure by Congress to agree to lift the debt limit would have a worse outcome for financial markets than a government shutdown. The ratings agency said in a report that worries over a default “could roil financial markets and damage business and consumer confidence". FTSE 100: Carnival extends losses after Q3 disappointment Cruise operator Carnival was a heavy faller for the second day in a row after the company disappointed with its third-quarter results and guidance for the full year. Morgan Stanley downgraded its rating on the stock today from 'equalweight' to 'underweight' and cut its full-year earnings per share estimates by 28%, raising concerns with falling revenue yields and rising costs. Supermarket group Tesco was hit by a downgrade by JPMorgan Cazenove from 'neutral' to 'underweight' after the bank said that the company will be the most affected by structural problems in the UK food retailing industry given the rising price/range competition from Aldi and Lidl. Rival supermarkets Morrison and Sainsbury were also lower today. British Gas owner Centrica was registering firm losses after going ex-dividend, meaning that from today investors won't have access to its latest payout. However, the stock was also being weighed down by Labour's plans to freeze gas and electricity bills if it returns to power in 2015. Sector peers SSE was also falling heavily. Financial peers RSA Insurance and Old Mutual were on the decline after going ex-dividend. Leading the upside were banking stocks with RBS, Barclays and Lloyds among the best performers, along with insurance groups Aviva and Admiral. Aerospace and defence group BAE Systems was also making gains on hopes over a United Arab Emirates contract for up to 60 Typhoons. Meanwhile, yesterday's news that South Korea re-opened a tender for a fleet upgrade also helped sentiment. FTSE 250: Workspace climbs on planning permission news Workspace Group, the business premises provider, was rising high on the news it has secured planning permission to redevelop its Canary Wharf business park. Insurance and reinsurance firm Amlin was also in demand after UBS raised the stock from 'neutral' to 'buy', saying that the share price's recent underperformance has been overdone. Drax, Premier Farnell, Kentz, Oxford Instruments, Playtech, Redrow and Bovis Homes were all trading lower after going ex-dividend today.

FTSE 100 - Risers Fresnillo (FRES) 1,006.00p +3.60% Travis Perkins (TPK) 1,661.00p +2.34% BAE Systems (BA.) 461.30p +2.31% International Consolidated Airlines Group SA (CDI) (IAG) 340.50p +2.25% Anglo American (AAL) 1,577.50p +2.07% Vodafone Group (VOD) 217.20p +1.92% Aviva (AV.) 409.40p +1.41% Admiral Group (ADM) 1,229.00p +1.32% Royal Bank of Scotland Group (RBS) 372.70p +1.30% Randgold Resources Ltd. (RRS) 4,550.00p +1.27% FTSE 100 - Fallers Carnival (CCL) 2,106.00p -6.73% SSE (SSE) 1,489.00p -5.76% Centrica (CNA) 375.60p -5.32% Tesco (TSCO) 360.90p -3.50% Sage Group (SGE) 335.50p -3.34% Aberdeen Asset Management (ADN) 385.30p -2.01% RSA Insurance Group (RSA) 122.60p -1.92% Whitbread (WTB) 2,937.00p -1.84% Old Mutual (OML) 190.50p -1.70% Marks & Spencer Group (MKS) 495.30p -1.63% FTSE 250 - Risers Greencore Group (GNC) 147.20p +5.14% Workspace Group (WKP) 433.40p +4.51% Amlin (AML) 415.50p +3.62% Ocado Group (OCDO) 393.80p +3.36% Dunelm Group (DNLM) 975.50p +2.47% Daejan Holdings (DJAN) 3,799.00p +2.37% Cairn Energy (CNE) 265.20p +2.24% Partnership Assurance Group (PA.) 415.00p +2.22% Centamin (DI) (CEY) 45.55p +2.06% Hays (HAS) 115.00p +1.95% FTSE 250 - Fallers Computacenter (CCC) 520.00p -3.35% Telecom Plus (TEP) 1,262.00p -3.29% Barr (A.G.) (BAG) 529.00p -2.31% Close Brothers Group (CBG) 1,162.00p -2.27% Polymetal International (POLY) 662.00p -2.22% Fenner (FENR) 398.00p -2.21% Dairy Crest Group (DCG) 461.50p -2.18% Betfair Group (BET) 1,046.00p -2.15% Ashmore Group (ASHM) 387.90p -1.97% Afren (AFR) 140.00p -1.96%

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Stocks mixed after slate of economic reports FTSE 100: -0.30% DAX: 0.01% CAC 40: -0.01% FTSE MIB: 0.14% IBEX 35: 0.82% Stoxx 600: -0.06% European stocks were mixed following the release of US economic reports and German consumer confidence figures. In Germany, consumer confidence reached a six-year high in October. GfK’s consumer sentiment index forecast for Europe’s largest economy rose from a revised 7.0 in September to 7.1 in October. Consensus had been for a slight increase to 7.0 from the 6.9 initial reading for September. GfK said that the economic expectations are on a “clear upward trend” and noted that the “willingness to buy once again improved on the record value of the previous month”. Tesco slips on downgrade Tesco declined after JPMorgan Chase & Co. reduced the stock to ‘underweight’ from ‘neutral’, saying rival discount retailers would hurt the supermarket chain’s profits. Gas Natural rallied after Goldman Sachs raised its rating to ‘buy’ from ‘neutral’, citing the impending review of gas regulation in Spain as positive for the company. Nordea Bank plunged after Sweden sold its 7% stake in the Nordic lender. ThyssenKrupp advanced after Cevian Capital bought a 5.2% stake in the German steelmaker, Carnival slumped again after reporting a drop in third-quarter income yesterday as the cruise operator continued to try to turn around profits following the sinking of the Costa Concordia ship off the coast of Italy last year. Commerzbank dropped after Equinet downgraded the lender to ‘hold’ from ‘buy’. Euro/dollar climbs The euro rose 0.41% to the 1.3529 US dollar. Brent crude edged up $0.704 to $109.410 per barrel on the ICE.

US Market Report

Stocks largely unchanged following data Dow Jones Industrials: -0.04% Nasdaq Composite: -0.06% S&P 500: -0.08% US stock benchmarks were only slightly lower following the release of several economic reports, such as the latest figures on durable goods orders and new home sales. Separate figures from theMortgage Bankers Association showed US mortgage applications for the week ended September 20th increased by 5.5% following a gain of 11.2% in the previous week. The economic data comes as the Federal Reserve mulls when to begin scaling back its $85bn per month in bond purchases. The central bank last week surprised markets by deciding to keep its stimulus unchanged until it saw signs of further economic recovery. A possible tapering in October is now on the cards. Debt ceiling talks are also in focus as investors fear the government will fail to reach an agreement by the October 1st deadline in order to avoid a shutdown. US Treasury Secretary Jacob Lew said yesterday that President Barack Obama will not negotiate with congressional Republicans on increasing the $16.7trn ceiling on the nation's borrowing authority. He added that the government will probably have less than $50bn in cash on hand by mid-October. However, some experts suggest the fears are overdone. Moody's has said failure to find a solution and a government shutdown will not affect the country's sovereign rating. "Over the next three weeks or so, US lawmakers will be battling it out to find a viable solution to raise the debt ceiling," said ETX Capital Market Strategist, Ishaq Siddiqi said. "But, as we have seen time and time again, markets are of the view that lawmakers will find another patch make-shift solution which kicks the can further down the road." Carnival hits the rocks On the company front, Carnival declined as Morgan Stanley cut its recommendation to 'underweight' from 'equal weight' after the cruise line operator said it would take some time to return to profitability following last year's sinking of the Costa Concordia ship off the coast of Italy. Noble rallied after the offshore rig contractor said it will turn about half its fleet into a separate company to focus on its higher-priced rigs in deeper waters. Largely neutral economic data US durable goods orders rose by 0.1% over the month in August, versus the drop of 0.2% which was expected. However, the previous month´s change was revised down to show a fall of 8.1% month-on-month, instead of the 7.3% drop initially reported. Even so, the key non-defence capital goods, excluding aircraft, orders series showed a 1.5% rise on the month - a solid outcome. US existing home sales rose to an annualised rate of 421,000 in August, versus the 420,000 expected by economists. Other asset classes becalmed US 10-year Treasury yields are how flat at 2.65%. West Texas Intermediate crude futures gained 0.40% to $103.54 per barrel. S&P 500 - Risers Denbury Resources Inc. (DNR) $18.35 +3.15% Noble Corp (NE) $38.97 +2.74% Nabors Industries Ltd. (NBR) $16.67 +2.50% Advanced Micro Devices Inc. (AMD) $3.88 +2.11% CF Industries Holdings Inc. (CF) $212.28 +2.07% Rowan Companies plc (RDC) $37.92 +1.98% Diamond Offshore Drilling Inc. (DO) $63.29 +1.87% Yahoo! Inc. (YHOO) $31.85 +1.85% Express Scripts Holding Co (ESRX) $62.02 +1.77% Harris Corp. (HRS) $59.00 +1.69% S&P 500 - Fallers J.C. Penney Co. Inc. (JCP) $10.68 -10.25% Baxter International Inc. (BAX) $67.95 -4.64% Carnival Corp. (CCL) $33.03 -4.37% Kohls Corp. (KSS) $50.89 -2.25% Carmax Inc. (KMX) $50.63 -2.23% PVH Corp. (PVH) $120.64 -2.00% Stryker Corp. (SYK) $69.43 -1.98% AbbVie Inc (ABBV) $45.10 -1.91% Amgen Inc. (AMGN) $112.63 -1.87% Abbott Laboratories (ABT) $33.73 -1.83% Dow Jones I.A - Risers JP Morgan Chase & Co. (JPM) $50.95 +1.25% Bank of America Corp. (BAC) $14.15 +0.39% Walt Disney Co. (DIS) $64.53 +0.33% AT&T Inc. (T) $34.17 +0.25% Alcoa Inc. (AA) $8.32 +0.24% Pfizer Inc. (PFE) $28.76 +0.19% Boeing Co. (BA) $119.17 +0.14% Cisco Systems Inc. (CSCO) $24.16 +0.08% Travelers Company Inc. (TRV) $85.93 +0.07% Microsoft Corp. (MSFT) $32.47 +0.06% Dow Jones I.A - Fallers Home Depot Inc. (HD) $75.43 -0.80% Wal-Mart Stores Inc. (WMT) $75.21 -0.71% International Business Machines Corp. (IBM) $188.90 -0.57% Johnson & Johnson (JNJ) $87.73 -0.56% Hewlett-Packard Co. (HPQ) $21.13 -0.51% Unitedhealth Group Inc. (UNH) $71.97 -0.48% Procter & Gamble Co. (PG) $78.30 -0.41% General Electric Co. (GE) $24.24 -0.35% Intel Corp. (INTC) $23.63 -0.32% Coca-Cola Co. (KO) $38.44 -0.25% Nasdaq 100 - Risers Yahoo! Inc. (YHOO) $31.85 +1.85% Express Scripts Holding Co (ESRX) $62.02 +1.77% Intuitive Surgical Inc. (ISRG) $369.48 +1.54% Baidu Inc. (BIDU) $152.41 +1.52% Charter Communications Inc. (CHTR) $132.74 +1.21% Vodafone Group Plc ADS (VOD) $34.81 +1.09% Applied Materials Inc. (AMAT) $17.63 +1.03% Garmin Ltd. (GRMN) $44.48 +1.00% Facebook Inc. (FB) $48.90 +0.93% Catamaran Corp (CTRX) $48.11 +0.90% Nasdaq 100 - Fallers Green Mountain Coffee Roasters Inc. (GMCR) $77.25 -2.61% Avago Technologies Ltd. (AVGO) $41.56 -2.00% Amgen Inc. (AMGN) $112.63 -1.87% Maxim Integrated Products Inc. (MXIM) $29.48 -1.86% eBay Inc. (EBAY) $54.35 -1.48% Apple Inc. (AAPL) $482.62 -1.32% Gilead Sciences Inc. (GILD) $61.94 -1.28% Microchip Technology Inc. (MCHP) $40.43 -1.27% Monster Beverage Corp (MNST) $54.06 -1.24% Fossil Group Inc (FOSL) $116.57 -1.21%

Broker Tips

Carnival, BAE Systems, Tesco Morgan Stanley has downgraded its rating for cruise operator Carnival from 'equalweight' to 'underweight', saying that the stock's valuation looks 'very demanding' following its gloomy third-quarter results and guidance. Morgan Stanley labelled the outlook as "disappointing" after Carnival didn't commit to guiding to positive net revenue yields next year. It said it is now questioning the "smoothness" of this sluggish yield recovery as is implied by Carnival's valuation "given the track record of underperformance and still fairly high industry capacity growth". UBS has raised its target for aerospace and defence group BAE Systems from 450p to 490p and retained its 'buy' rating, saying that potential for business in the Middle East can offset a US downturn. The Swiss bank said it understands that a bid for up to 60 of BAE's Typhoons has been submitted to the United Arab Emirates. Analysts Charles Armitage and Rami Myerson said that win could be worth about 30p per share on a net present value basis. They see a 50% probability of a win and so this accounts for 15p of the target increase. Supermarket group Tesco was hit by a downgrade on Wednesday by JPMorgan Cazenove from 'neutral' to 'underweight' after the bank said that the company will be the most affected by structural problems in the UK food retailing industry. "The discounters Aldi, Lidl are disrupting the price/range architecture that the 'Big 4' used for two decades, the customer is demanding a simplified product range, and there is a need for reduced mid-tier pricing," said analysts Jaime Vazquez and Borja Olcese.