Morning Euro Markets Bulletin.

ADVFN III Morning Euro Markets Bulletin

Daily world financial news Friday, 20 September 2013

London Market Report

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

London open: Markets pull back as post-Fed rally fades Markets pulled back on Friday morning after a sharp rise the day before in the aftermath of the Federal Reserve's surprise decision not to taper quantitative easing. The FTSE 100 slipped slightly in early trade, falling 0.1% to 6,617, retreating after a 1% jump pushed it to 6,625.39 on Thursday. Shavaz Dhalla, a Financial Trader from Spreadex, said that the post-Fed rally has "begun to lose steam". "Clearly with many markets trading at such high levels, investors are starting to wonder if the present valuation of equities is too high and maybe taking a step back from the markets and awaiting the next economic disaster could provide a better buying opportunity," he said. Nevertheless, Dhalla highlighted that it has been a very optimistic week for equities, especially given the withdrawal by well-known hawk Larry Summers from the race to become Fed Chairman. "Furthermore, since the Fed also failed to provide a specific calendar for reductions, investors can bask in the knowledge that the lifeline supporting global markets will continue for a bit longer." A speech in New York by Kansas City Fed President Esther George will be closely watched today as she was one of the few policymakers to back a tapering of the Fed's stimulus. George had suggested the central bank reduce its $85bn per month in asset purchases by $15bn to $70bn ahead of this week's policy meeting. Also on investors' minds today will be the looming elections in Germany this weekend, with the outcome still highly uncertain given that a rising Eurosceptic movement across the country could complicate things for Angela Merkel's CDU party. The Fed wasn't the only central bank to surprise markets this week as the Reserve Bank of India (RBI) announced a 25 basis-point rise in its main policy rate, to 7.5% from 7.25%, although it unwound some short-term tightening measures. FTSE 100: Tate & Lyle hit by Credit Suisse downgrade Shares in food and sweeteners manufacturer Tate & Lyle were falling heavily this morning after the stock's rating was cut by Credit Suisse from 'outperform' to 'neutral'. The bank said: "The long-running forward price-to-earnings multiple is 12 versus 13.5 today. That looks right to us." United Utilities was also being dragged down after Beaufort Securities lowered its recommendation to 'hold'. Heading the other way was supermarket chain Sainsbury after Citigroup upgraded the group to 'neutral' ahead of its second-quarter trading update in a couple of weeks. The bank said it expects a "big improvement" in like-for-like sales trends from the first quarter. Falling metal prices were weighing on mining stocks this morning with Fresnillo, Randgold, Vedanta, Antofagasta, Anglo American and ENRC falling sharply as gold, silver and copper values took a hit.

FTSE 100: Miners track metal prices higher Mining stocks were the biggest risers on Thursday as the price of precious metals jumped. Randgold Resources, Fresnillo, Anglo American and Antofagasta were among the miners who gained on an increase in commodity values. Aberdeen Asset Management was rebounding today after yesterday suffering a target cut from Morgan Stanley. Regulatory price increases have allowed water and sewage group United Utilities to raise revenues and profits in the first half of the year, prompting the stock to rise. The company said it anticipated underlying operating profits would be moderately higher than the first half of last year in the six months to the end of September due to tight control of costs. Vodafone was one of just small handful of fallers, which commentators were attributing to recent director sales (some post exercise). Supermarket chain Tesco was down after Nomura cut its rating from 'buy' to 'neutral' and reduced its target to 400p from 430p. FTSE 250: African Barrick Gold rises on appointment of CFO African Barrick Gold led the risers on the news it has appointed a new Chief Financial Officer, Andrew Wray, who originally joined the company as Head of Corporate Development and Investor Relations in 2010. He will retain his existing responsibilities in addition to those of his new role. Jaco Maritz, who assumed the role of Acting Chief Financial Officer earlier this year, will revert to his original position of Vice President of Finance. On the top tier, mining stocks were the biggest risers as precious metal prices jumped. Making the strongest gains were Polymetal, Lonmin, and Hochschild. FTSE 100 - Risers Randgold Resources Ltd. (RRS) 4,841.00p +8.11% Aberdeen Asset Management (ADN) 390.80p +6.40% Fresnillo (FRES) 1,069.00p +6.05% Petrofac Ltd. (PFC) 1,412.00p +4.67% Anglo American (AAL) 1,635.00p +3.65% Schroders (SDR) 2,608.00p +3.57% SABMiller (SAB) 3,303.50p +3.56% Tullow Oil (TLW) 1,080.00p +3.55% Unilever (ULVR) 2,588.00p +3.31% Standard Chartered (STAN) 1,564.00p +3.30% FTSE 100 - Fallers Johnson Matthey (JMAT) 2,852.00p -1.45% easyJet (EZJ) 1,294.00p -1.22% G4S (GFS) 250.00p -0.99% Rexam (REX) 491.60p -0.79% Vodafone Group (VOD) 209.75p -0.76% William Hill (WMH) 419.20p -0.66% GlaxoSmithKline (GSK) 1,576.00p -0.57% Next (NXT) 5,115.00p -0.49% BT Group (BT.A) 341.30p -0.44% Smiths Group (SMIN) 1,406.00p -0.42% FTSE 250 - Risers African Barrick Gold (ABG) 156.70p +15.39% Polymetal International (POLY) 705.50p +7.87% Lonmin (LMI) 348.30p +5.45% Ashmore Group (ASHM) 402.20p +5.32% Ocado Group (OCDO) 420.00p +4.14% Jupiter Fund Management (JUP) 382.50p +3.60% JPMorgan Indian Inv Trust (JII) 328.30p +3.56% Hochschild Mining (HOC) 212.80p +3.10% Barratt Developments (BDEV) 335.00p +2.92% Genesis Emerging Markets Fund Ltd. (GSS) 540.00p +2.76% FTSE 250 - Fallers Rank Group (RNK) 159.00p -3.87% Menzies(John) (MNZS) 774.00p -3.85% Computacenter (CCC) 524.50p -3.76% Euromoney Institutional Investor (ERM) 1,113.00p -3.64% BBA Aviation (BBA) 309.80p -3.19% Daejan Holdings (DJAN) 3,836.00p -3.08% Fidessa Group (FDSA) 2,100.00p -3.05% National Express Group (NEX) 257.20p -3.02% Xaar (XAR) 772.00p -2.77% Beazley (BEZ) 214.90p -2.50% FTSE TechMARK - Risers Ark Therapeutics Group (AKT) 0.44p +4.76% Skyepharma (SKP) 84.88p +4.14% Vislink (VLK) 48.50p +3.74% BATM Advanced Communications Ltd. (BVC) 16.25p +3.17% Promethean World (PRW) 17.50p +2.19% Gresham Computing (GHT) 138.50p +1.28% Filtronic (FTC) 63.75p +0.79% Ricardo (RCDO) 544.50p +0.65% IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 177.34 +0.60% Oxford Biomedica (OXB) 2.60p +0.58% FTSE TechMARK - Fallers RM (RM.) 108.00p -5.47% CML Microsystems (CML) 530.00p -2.03% Puricore (PURI) 40.00p -1.23% E2V Technologies (E2V) 137.50p -0.90% Innovation Group (TIG) 29.75p -0.83% Wolfson Microelectronics (WLF) 178.75p -0.83% NCC Group (NCC) 160.00p -0.78% Sepura (SEPU) 151.00p -0.49% Microgen (MCGN) 127.00p -0.49% Torotrak (TRK) 27.38p -0.45%

UK Event Calendar

Friday September 20 INTERIMS BrainJuicer Group, Public Service Properties Investments Ltd (DI), Tawa INTERIM DIVIDEND PAYMENT DATE Amino Technologies, Baronsmead VCT 3, Baronsmead VCT 4, Baronsmead VCT 5, Catlin Group Ltd., Ferrexpo, Greencoat UK Wind, Henderson Group, Kingspan Group, LPA Group, National Express Group, Secure Trust Bank, Synectics, Telecity Group QUARTERLY PAYMENT DATE BP INTERNATIONAL ECONOMIC ANNOUNCEMENTS Consumer Confidence Indicator (EU) (10:00) SPECIAL DIVIDEND PAYMENT DATE Northern Venture Trust AGMS Associated British Engineering, Frontline Ld, Imagination Technologies Group, Legendary Investments, Masawara, Mobeus Income & Growth 2 Vct, New India Inv Trust, Ryanair Holdings, Top Creation Investments Ltd UK ECONOMIC ANNOUNCEMENTS Public Sector Finances (09:30) FINAL DIVIDEND PAYMENT DATE Eckoh, NCC Group

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Europe open: Stocks fall as German election looms - German election looms - Fed's George to speak in New York - New EU regulation comes under fire FTSE 100: -0.20% DAX: -0.20% CAC 40: -0.21% FTSE MIB: -0.10% IBEX 35: -0.12% Stoxx 600: -0.06% European equities slumped as investors braced themselves for this weekend's German elections. An INSA opinion poll published Friday showed the opposition Social Democrats climbing one percentage point to 28%, 10 points behind Angela Merkel's Christian Democrats party. The parties both fell short of a majority. Another survey, conducted by telephone for the public television network ZDF, showed the Chancellor's centre-right party is backed by 40% of voters, while the centre-left Social Democrats earned the backing of 27%. Despite Merkel's popularity, the fresh polls underline the difficulty she faces ahead. Her Social Democratic rival, Peer Steinbrück, told his party to take advantage of weakening support for the chancellor. The fall in European stocks follow Thursday's surge to a five-year high after the US Federal Reserve surprised the market by saying it would keep up its $85bn per month in bond purchases as it awaits a more sustainable recovery. However, the Fed said this amount could still be scaled back before the end of the year. Later on Friday, Kansas City Federal Reserve President Esther George, who was one of the few policymakers to back a tapering of the Fed's stimulus, will speak in New York. George had suggested the central bank reduce its $85bn per month in asset purchases by $15bn to $70bn ahead of this week's policy meeting. EU regulation faces criticism European finance officials have approved a change to the region's budget policies which allows for lowered austerity requirements among the hardest hit countries in the Eurozone. "The decision to allow an amendment to a calculation by the European Commission to alleviate the requirements in relation to the size of budget deficits being run within each country is certainly controversial and has been met with significant criticism," said Joshua Mahony, Research Analyst at Alpari. "There are worries as to whether such a measure would allow nations to resume normal business and cast aside austerity measures with significantly improved data." However, Mahony noted that many see this as a necessary towards loosening the framework for more troubled nations to pull themselves out of financial ruins. "As is often the case, few will recall this amendment in a years time, by which point the figures could be particularly rosy and that increased confidence does allow for more progressive and optimistic investment and consumption decision." Adidas, Direct Line Adidas declined after cutting the low end of its profit forecast for 2013 by 7.9%. Direct Line dropped after Royal Bank of Scotland sold 300m shares at 210pe each in its third sale of a stake in the insurance company. A gauge of miners including Randgold Resources and Vedanta Resources snapped Wednesday's rise as the prices of commodities retreated.

US Market Report

US close: Stocks pull back from record highs after Fed surprise - Dow and S&P retreat from record highs - Most economic data beats forecasts - JPMorgan, banks weigh on markets Dow Jones: -0.26% Nasdaq: 0.15% S&P 500: -0.18% US markets finished broadly lower on Thursday despite some upbeat economic data as analysts continued to digest the Federal Reserve's decision not to taper its stimulus programme. Both the Dow Jones and S&P 500 snapped a four-day winning streak to pull back from record closing highs the previous session, though the tech-heavy Nasdaq ended in positive territory. "US markets have stalled following their leap yesterday, and may well stay in this mode for the rest of the week," said Chris Beauchamp, Market Analyst at IG. "1,700 [on the S&P 500] might have been firmly breached, but the latest all-time highs will probably provoke a degree of short-term selling, such as we saw in late May and early August," he said. Markets surged on Wednesday after the Federal Open Market Committee (FOMC) surprised the market by maintaining the rate of its asset purchases at $85bn a month as it awaits a more sustainable recovery. However, it did say that this amount could still be scaled back before the end of the year. In its report, the Fed said that while household spending and business fixed investment has advanced, and the housing sector has been strengthening, mortgage rates have risen further and fiscal policy is "restraining economic growth". As such, as part of its goal "to foster maximum employment and price stability", the FOMC "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases". "I feel the Fed failed to seize on the opportunity to send the market a strong message by withdrawing its favourite drug," said Market Strategist Ishaq Siddiqi from ETX Capital. Philly Fed index trounces forecasts US existing home sales increased to an annualised rate of 5.48m in August, from 5.39m in the month before (consensus: 5.25). The Federal Reserve bank of Philadelphia's monthly manufacturing index improved to 22.3 points from 9.3 in August (consensus: 10.3). Initial weekly US unemployment claims rose by 17,000 to 309,000 in the seven days ended on September 7th (consensus: 330,000). The country's current account deficit improved to -$98.9bn in the second quarter, from -$104.9bn for the previous three months (consensus: -$97.0bn). Financials weigh on markets JPMorgan Chase finished in the red as it continues to feel the impact of its 'London Whale' trading losses. The bank was fined a total of $920m, $221m of which was by UK regulators due to failures in risk management and financial reporting systems. Other banking groups also finished lower, providing a drag on markets, including Bank of America, Citigroup and Goldman Sachs. Agilent Technologies jumped after the testing-equipment company announced plans to split into two listed firms by means of a spin-off of its electronic-measurement products unit. Drugstore chain RiteAid surged after the company unveiled quarterly earnings per share which beat consensus estimates by a wide margin. After a sharp fall early on, software marker Oracle managed to push into the blue despite issuing a weaker-than-forecast outlook. Shares of food group ConAgra fell steeply after delivering a mixed set of quarterly results with sales missing estimates. Sector peer General Mills was also lower after Wells Fargo Securities downgraded the stock from 'outperform' to market perform'. Home furnishing group Pier 1 Imports slumped after lowering its full-year earnings guidance after weak second-quarter profits. S&P 500 - Risers Pitney Bowes Inc. (PBI) $18.50 +4.64% CME Group Inc. (CME) $73.86 +4.20% Agilent Technologies Inc. (A) $50.98 +3.37% Iron Mountain Inc. (IRM) $29.02 +3.02% Interpublic Group of Companies Inc. (IPG) $17.51 +2.88% Allergan Inc. (AGN) $91.20 +2.59% Lowe's Companies Inc. (LOW) $48.98 +2.58% T. Rowe Price Group Inc. (TROW) $74.65 +2.54% Williams Companies Inc. (WMB) $36.84 +2.53% Fluor Corp. (FLR) $71.45 +2.20% S&P 500 - Fallers CIGNA Corp. (CI) $77.72 -4.34% Regions Financial Corp. (RF) $9.21 -4.16% ConAgra Foods Inc. (CAG) $30.80 -3.96% Keycorp (KEY) $11.60 -3.89% Lincoln National Corp. (LNC) $42.21 -3.67% Newmont Mining Corp. (NEM) $29.78 -3.53% Cliffs Natural Resources Inc. (CLF) $22.73 -3.24% Monster Beverage Corp (MNST) $56.17 -3.21% MetLife Inc. (MET) $47.08 -3.19% SunTrust Banks Inc. (STI) $33.14 -3.01% Dow Jones I.A - Risers Home Depot Inc. (HD) $78.51 +1.47% Travelers Company Inc. (TRV) $86.90 +1.15% Microsoft Corp. (MSFT) $33.64 +0.96% United Technologies Corp. (UTX) $112.00 +0.89% Boeing Co. (BA) $119.04 +0.54% 3M Co. (MMM) $121.57 +0.23% Johnson & Johnson (JNJ) $90.07 +0.18% Intel Corp. (INTC) $23.92 +0.06% Dow Jones I.A - Fallers Unitedhealth Group Inc. (UNH) $70.84 -3.01% Hewlett-Packard Co. (HPQ) $21.31 -2.23% Walt Disney Co. (DIS) $65.72 -2.07% General Electric Co. (GE) $24.46 -1.61% Alcoa Inc. (AA) $8.44 -1.34% JP Morgan Chase & Co. (JPM) $52.75 -1.24% McDonald's Corp. (MCD) $97.92 -0.79% Cisco Systems Inc. (CSCO) $24.61 -0.73% Bank of America Corp. (BAC) $14.61 -0.71% Coca-Cola Co. (KO) $39.31 -0.71% Nasdaq 100 - Risers Tesla Motors Inc (TSLA) $177.92 +7.04% Sirius XM Radio Inc (SIRI) $3.96 +2.59% Catamaran Corp (CTRX) $52.04 +2.40% Equinix Inc. (EQIX) $183.29 +2.26% Yahoo! Inc. (YHOO) $31.03 +1.95% Fossil Group Inc (FOSL) $118.48 +1.90% Citrix Systems Inc. (CTXS) $76.33 +1.84% Mattel Inc. (MAT) $43.41 +1.69% Facebook Inc. (FB) $45.98 +1.66% Discovery Communications Inc. Class A (DISCA) $81.76 +1.64% Nasdaq 100 - Fallers Monster Beverage Corp (MNST) $56.17 -3.21% Randgold Resources Ltd. Ads (GOLD) $76.86 -2.94% Kraft Foods Group, Inc. (KRFT) $53.98 -2.79% Green Mountain Coffee Roasters Inc. (GMCR) $84.32 -2.64% Sears Holdings Corp. (SHLD) $58.11 -2.53% Staples Inc. (SPLS) $14.77 -2.28% Vodafone Group Plc ADS (VOD) $33.54 -1.85% Bed Bath & Beyond Inc. (BBBY) $75.59 -1.79% Alexion Pharmaceuticals Inc. (ALXN) $114.03 -1.64% Express Scripts Holding Co (ESRX) $61.94 -1.51%

Newspaper Round Up

Friday newspaper round-up: Buffett, RyanAir, Germany Billionaire investor Warren Buffett has compared the Federal Reserve to a hedge fund, as he supported keeping Ben Bernanke in charge of the US central bank. The 82-year-old, who has led Berkshire Hathaway for more than four decades, hailed the Fed's ability to make money from bond purchases as a result of quantitative easing, which in five years has more than tripled its balance sheet to more than $3.6trn. "The Fed is the greatest hedge-fund in history," he said, according to The Daily Telegraph. Ryanair boss Michael O'Leary has thrown down the gauntlet to the major trans-Atlantic airlines with an eye-catching plan for 'ten buck' flights to the United States. The ebullient budget airline Chief Executive said he wanted tickets to start from as little as $10 – or around £6.30 at current exchange rates – to bust open the strangle-hold of the major airlines including rivals British Airways. Mr O'Leary told delegates at the World Low Cost Airlines Congress yesterday that the bargain flights could start in four years' time: 'But we're not going to do it until we've got some planes,' The Daily Mail reports. Germany's top economic adviser has called for a radical rethink of the country's energy policies, warning that the green dream is going badly wrong as costs spiral out of control. "We need a drastic policy shift," said Christoph Schmidt, chairman of Germany's Council of Economic Experts. "They haven't paid any attention to costs. These are now huge." The government has vowed to break dependence on fossil fuels and source 50% of all electricity from wind, solar and other renewables by 2030, and 80% by mid-century. But cost estimates have reached €1trn (£840bn) over the next 25 years, The Daily Telegraph says. Microsoft is counting on rapid growth in some of its new online services to carry it through the transition to the post-PC world, outgoing chief executive Steve Ballmer indicated on Thursday in a valedictory meeting with Wall Street analysts. "Office 365 and Azure have got to be a touchdown," Mr Ballmer said of the worker productivity and cloud platform services that have assumed a central place in the company's arsenal. They have to "really, really kick ass," he added, pointing to their expansion as one of the most important short-term priorities for the company, the Financial Times writes. Foxtons is expected to make a storming debut on the London Stock Exchange today in a listing that could value the estate agency at more than 15 times its earnings. Only three years after it was bailed out by its banks, Foxtons has attracted significant demand from institutions, and its shares are understood to have been heavily oversubscribed. The book-building process closed on Wednesday night and last night the allocations were still being determined. The final price for Foxtons' shares — which had an initial range of between 190p and 230p — will be confirmed this morning, The Times says. The Royal Bank of Scotland is to raise in the region of £650m from selling down its stake in insurer Direct Line. The state-backed bank has announced plans to sell as much as a 20% stake in the FTSE 250 insurer, taking advantage of its recent strong share price and buoyant markets. The bank has hired Goldman Sachs, Morgan Stanley, UBS and RBC Capital Markets to sell the shares through an accelerated book-build process. RBS said it was putting 272.7m shares - or 18.2% of Direct Line's shares - up for sale, with a further 27.3m - or 1.8% - available should demand be high, The Daily Telegraph reports. Car making and exports have surged to their highest levels since the financial crisis began, fuelling the belief that British business is returning to health. The CBI's survey of nearly 400 manufacturers found that total orders rose for the fifth month in a row, while exports orders also swelled, helped by the Eurozone finally pulling out of recession, The Times reports.