Morning Euro Markets Bulletin.

ADVFN III Morning 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

US budget, Fed policy in focus as stocks fall Ongoing budget talks in the States and uncertainty surrounding Federal Reserve monetary policy continues to weigh on market sentiment, with stocks falling into the red on Wednesday morning. Markets across Europe were trading lower early on, following on from a weak session in Asia overnight and the fourth straight day of losses for the Dow Jones and S&P 500 indices on Wall Street. While the ongoing debate over the US debt ceiling continues to grab the market's attention, 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". Recent mixed economic data from the US and conflicting comments by Fed officials over recent days continue to muddy the outlook for the central bank's stimulus programme. Yesterday it was reported that US consumer confidence dropped to its lowest levels in four months in September, while house prices showed their biggest annual jump in over seven years in July. "Stocks continue to retreat from the highs of last week as uncertainty over the Fed’s plans and mixed macro data place hurdles in the path of equity market bulls," said Matt Basi, Head of UK Sales Trading at CMC Markets. "The orderly nature of the pull-back suggests a sensible breather after what has been another phenomenal run up in the major indices, but the longer it goes on the greater the potential for the correction to gather pace," he added. 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 this morning from 'equalweight' to 'underweight' and cut its full-year earnings per share estimates by 28%. The bank said: "CCL's early F14 guidance implies a sluggish yield recovery and a step-up in costs, and we think consensus will drift to our level. A major restructuring and/or cash return look unlikely as supports to the stock." Supermarket group Tesco was also suffering from a downgrade this morning by JPMorgan Cazenove to 'underweight', as the bank said that the company will be the most affected by structural problems in the UK food retailing industry. Insurance group RSA Insurance was a heavy faller this morning after going ex-dividend, meaning that from today investors won't have access to its latest payout. Centrica and Old Mutual also went ex-dividend today. FTSE 250: SOCO gains after well update SOCO International edged higher this morning after saying that two of its three tests on an exploration well offshore Vietnam have exceeded all expectations. Ed Story, President and Chief Executive of SOCO, said he was "very excited" by the results thus far on the H5 Block. Drax, Premier Farnell, Kentz, Oxford Instruments, Playtech, Redrow and Bovis Homes were all trading lower after going ex-dividend today. Publisher Euromoney Institutional Investor was also in the red this morning as the stock pulled back from strong gains made on Tuesday

FTSE 100 - Risers Barclays (BARC) 275.45p +1.47% Fresnillo (FRES) 984.00p +1.34% Anglo American (AAL) 1,561.50p +1.04% Vodafone Group (VOD) 215.30p +1.03% BAE Systems (BA.) 455.40p +1.00% BHP Billiton (BLT) 1,873.00p +0.70% Shire Plc (SHP) 2,501.00p +0.48% Travis Perkins (TPK) 1,629.00p +0.37% Rio Tinto (RIO) 3,117.00p +0.34% Aviva (AV.) 404.60p +0.22% FTSE 100 - Fallers Carnival (CCL) 2,090.00p -7.44% Centrica (CNA) 382.00p -3.71% SSE (SSE) 1,527.00p -3.35% Tesco (TSCO) 363.25p -2.87% RSA Insurance Group (RSA) 121.60p -2.72% Sage Group (SGE) 339.10p -2.30% Old Mutual (OML) 189.70p -2.12% Whitbread (WTB) 2,930.00p -2.07% Rexam (REX) 479.30p -2.00% Experian (EXPN) 1,211.00p -1.78% FTSE 250 - Risers Cairn Energy (CNE) 265.50p +2.35% Ocado Group (OCDO) 388.70p +2.02% African Barrick Gold (ABG) 160.60p +1.90% Workspace Group (WKP) 422.40p +1.86% UK Commercial Property Trust (UKCM) 75.90p +1.81% Greencore Group (GNC) 142.50p +1.79% Daejan Holdings (DJAN) 3,772.00p +1.64% Kazakhmys (KAZ) 296.20p +1.44% Ferrexpo (FXPO) 177.60p +1.43% Amlin (AML) 406.50p +1.37% FTSE 250 - Fallers Essentra (ESNT) 740.50p -2.57% Close Brothers Group (CBG) 1,163.00p -2.19% Betfair Group (BET) 1,046.00p -2.15% Euromoney Institutional Investor (ERM) 1,125.00p -2.09% Bovis Homes Group (BVS) 737.00p -2.06% Premier Farnell (PFL) 210.20p -1.82% Drax Group (DRX) 680.50p -1.80% Murray Income Trust (MUT) 773.00p -1.78% ICAP (IAP) 388.70p -1.77% esure Group (ESUR) 245.50p -1.68%

UK Event Calendar

INTERIMS ACTA S.P.A, Centralnic Group , Graphite Enterprise Trust, GVC Holdings, Havelock Europa, Instem, Iofina, Nationwide Accident Repair Services, S & U INTERIM DIVIDEND PAYMENT DATE Capital & Counties Properties , Lancashire Holdings Limited, St James's Place, Taylor Wimpey INTERIM EX-DIVIDEND DATE Bovis Homes Group, Centrica, Charlemagne Capital Ltd., Christie Group, Drax Group, EMIS Group, Essentra, Fiberweb, H.R. Owen, Henry Boot, Highland Gold Mining Ltd., Hygea VCT, Invesco Perpetual UK Small Companies Inv Trust, Kentz Corporation Ltd., M. P. Evans Group, Maintel Holdings, Morgan Sindall Group, Netplay TV, Networkers International, Northbridge Industrial Services, Old Mutual, Pendragon, Playtech, Premier Farnell, Quarto Group Inc., Real Estate Investors, Rotala, RSA Insurance Group, Smurfit Kappa Group, Stilo International, Vitec Group, Wynnstay Group QUARTERLY EX-DIVIDEND DATE Africa Opportunity Fund Ltd. INTERNATIONAL ECONOMIC ANNOUNCEMENTS Crude Oil Inventories (US) (15:30) Durable Goods Orders (US) (13:30) GFK Consumer Confidence (GER) (07:00) MBA Mortgage Applications (US) (12:00) New Homes Sales (US) (15:00) GMS Fortune Oil FINALS Animalcare Group, Avingtrans, Clinigen Group, Origin Enterprises ANNUAL REPORT Hargreaves Lansdown IMSS PZ Cussons SPECIAL DIVIDEND PAYMENT DATE Miton Income Opportunities Trust SPECIAL EX-DIVIDEND PAYMENT DATE Stilo International EGMS International Consolidated Airlines Group SA (CDI) AGMS Aberdeen Private Equity Fund Ltd. Sterling Part Shares, Alcentra Euorpean Floating Rate Income Fund Ltd Red Ord Shs, CSF Group, F&C Managed Portfolio Trust Growth Shares, F&C Managed Portfolio Trust Income Shares, Fiske, Intercede Group, Max Petroleum, Oil & Gas Development Company Ltd GDR (Reg S), Prime Active Capital, Private Equity Investor, PZ Cussons, WYG TRADING ANNOUNCEMENTS Daily Mail and General Trust 'Ord' Shares, Daily Mail and General Trust A (Non.V) UK ECONOMIC ANNOUNCEMENTS CBI Distributive Trades Surveys (11:00) FINAL DIVIDEND PAYMENT DATE BHP Billiton, Casdon plc, Cohort, TVC Holdings FINAL EX-DIVIDEND DATE Development Securities, Norish Units, Oxford Instruments, Photo-Me International, Prosperity Minerals Holdings Ltd., Redrow, UniVision Engineering Ltd.

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Stocks fall ahead of US data FTSE 100: -0.23% DAX: -0.34% CAC 40: -0.18% FTSE MIB: -0.16% IBEX 35 -0.03% Stoxx 600: -0.21% European equities declined ahead of reports on US durable goods orders and home sales. Orders for long-lasting US manufactured goods in August fell 0.1% compared a 7.3% decline in July, a Commerce Department report is expected to reveal later Wednesday. A separate report on new home sales is pegged to show a 7.9% increase in August from July when sales dropped 13.4%. The Mortgage Bankers Association will also release data on US mortgage applications for the week ended September 20th. The reports come amid speculation over Federal Reserve stimulus and concerns over the debt ceiling. The Fed is weighing up when to begin scaling back its $85bn per month in bond purchases after last week’s shock decision to keep stimulus unchanged until seeing signs of further economic recovery. Debt ceiling talks are also in focus as the government must reach an agreement on the budget to avoid a shutdown by October 1st. 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 probably will have less than $50bn in cash by mid-October. German confidence reaches new high German consumer confidence reached its highest level in six years, even though income expectations dropped, according to the GfK forecast for October published on Wednesday. The GfK consumer confidence for October rose from a revised 7.0 in September to 7.1. Consensus had been expecting a slight increase to 7.0 from the 6.9 first 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”. Gas Natural, ThyssenKrupp 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 both companies. ThyssenKrupp advanced after Cevian Capital bought a 5.2% stake in the German steelmaker, Akzo Nobel fell after the European paintmaker said it will book most of the €256m second-half restructuring charges in the fourth quarter. Carnival slumped after reporting a drop in third-quarter income 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.

US Market Report

Stocks slip as debt-ceiling concerns take hold Dow Jones: -0.43% Nasdaq: 0.08% S&P 500: -0.26% After a slightly positive start, US markets mostly fell into the red by the end of trade on Tuesday with the Dow Jones and S&P 500 indices declining for the fourth straight session. Economic data came in broadly mixed though headlines seemed to focus on a fall in consumer confidence, while concerns over the US debt ceiling and uncertainty regarding monetary policy continued to weigh on sentiment. Debt ceiling talks were high on the agenda on Tuesday after President Barack Obama urged Congress to approve a budget to prevent a government shutdown by October 1st. If the government fails to reach an agreement to raise the borrowing authority, which is currently limited to $16.7tn, it could lead to the first default by the US on its debt obligations. According to Moody's, a failure by the government 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". "At this stage, despite no progress being made, it still seems very unlikely that a deal won’t be struck," said Market Analyst Craig Erlam from Alpari. "That said, one thing we learned from the sequester earlier this year is that just because neither party wants it to happen, it doesn’t mean they won’t put political gains ahead of the best interests of the economy. This is what’s causing concerns in the markets." Economic data comes in mixed, Fed still in focus The Conference Board’s index measuring consumer confidence fell from a revised 81.8 to 79.7 in September, a four-month low and below the 79.9 expected by analysts. “We suspect that if the rebound in equity prices is sustained, along with the drop back in gasoline prices, confidence will rebound,” said analyst Amna Asaf from Capital Economics. Other economic data released today showed that US house prices increased at an annual rate of 12.4% in July, up from the 12.1% rise in June, according to the S&P/Case-Shiller home price index. This was the biggest annual jump since February 2006 and was more or less in line with forecast. Meanwhile, the regional Richmond Fed manufacturing index dropped from 14 to 0 in September (forecast: 12). Last week’s surprise decision by the Federal Reserve to maintain its stimulus programme is still fresh in investors’ minds given that the central bank said the recovery was not strong enough to warrant a ‘taper’. New York Fed President William Dudley on Monday defended the move, saying the US economy had not picked up enough forward momentum, while James Bullard (St Louis Fed) said last week that a taper could still come in October. Market Strategist Ishaq Siddiqi from ETX Capital said that the market is “again having to re-adjust its expectations for the timing of tapering” after figures showed a drop-off in housing and consumer activity – “both being engines of growth for the US”. “Fed members haven’t been helpful, sending out contradictory messages; this all has left investors feeling as confused as ever over when we are likely to see the first round of liquidity reduction by the Fed,” he said. Facebook jumps after broker upgrade Facebook advanced after Citigroup raised its rating from ‘neutral’ to ‘buy’ and hiked its target from $32 to $55. The bank had previously been concerned that the rapid shift from desktop to mobile could create “monetisation challenges”. However, after speaking to advertisers and agencies, it said: “We believe the factors driving the sudden inflection and growth in 2Q13 are sustainable and that there are a number of factors that should contribute to further growth and gains, and potential upside". Semiconductor equipment maker Applied Materials rose strongly after saying it had agreed to buy Japanese peer Tokyo Electron for about $9.3bn in shares, merging the two companies into an entity worth around $29bn. Boeing gained after EADS’ latest Global Market Forecast report said that current global aeroplane fleet could double to 36,560 aircraft by 2032. Investors were shrugging off the news that South Korea has reopened an $8bn tender to upgrade its ageing air force; Boeing’s S-15SE model had been seen as the firm favourite. Software group Red Hat was a heavy faller today after disappointing second-quarter results following the bell last night. The company’s earnings and revenue figures beat analysts’ forecasts but billings growth came in well below expectations. Housebuilders Lennar and KB Home finished with strong gains after both beating expectations with their quarterly earnings. Sentiment was also likely lifted by the upbeat house-price data earlier on. Cruise operator Carnival was a heavy faller after reporting a decline in third-quarter income as it tries to recover from the sinking of its Costa Concordia ship last year. It also said that adjusted per-share results for the fourth quarter would be in the range of a loss of 3 cents to a profit of 3 cents, well below the current consensus forecast of 9 cents and 14 cents the year before. Royal Caribbean Cruises and Norwegian Cruise Line Holdings were also lower. S&P 500 - Risers Applied Materials Inc. (AMAT) $17.44 +9.09% Lennar Corp. Class A (LEN) $36.01 +4.26% Carmax Inc. (KMX) $51.79 +3.56% Denbury Resources Inc. (DNR) $17.79 +3.43% Yahoo! Inc. (YHOO) $31.27 +3.34% Goodyear Tire & Rubber Co. (GT) $22.82 +3.21% Lam Research Corp. (LRCX) $51.00 +3.19% News Corp Class A (NWSA) $17.04 +3.09% Newfield Exploration Co (NFX) $27.74 +2.55% GameStop Corp. (GME) $51.05 +2.49% S&P 500 - Fallers Red Hat Inc. (RHT) $46.73 -11.71% Carnival Corp. (CCL) $34.54 -7.65% J.C. Penney Co. Inc. (JCP) $11.90 -3.72% Citrix Systems Inc. (CTXS) $72.29 -2.81% DIRECTV (DTV) $60.64 -2.65% Philip Morris International Inc. (PM) $87.41 -2.61% Macy's Inc. (M) $43.58 -2.48% Teradata Corp. (TDC) $58.44 -2.40% AbbVie Inc (ABBV) $45.98 -2.38% F5 Networks Inc. (FFIV) $87.07 -2.36% Dow Jones I.A - Risers Boeing Co. (BA) $119.00 +1.27% Unitedhealth Group Inc. (UNH) $72.32 +0.70% United Technologies Corp. (UTX) $110.00 +0.53% McDonald's Corp. (MCD) $97.78 +0.51% Intel Corp. (INTC) $23.70 +0.36% Alcoa Inc. (AA) $8.30 +0.24% Hewlett-Packard Co. (HPQ) $21.24 +0.19% Home Depot Inc. (HD) $76.04 +0.17% General Electric Co. (GE) $24.32 +0.16% Caterpillar Inc. (CAT) $85.11 +0.09% Dow Jones I.A - Fallers JP Morgan Chase & Co. (JPM) $50.32 -2.22% Verizon Communications Inc. (VZ) $47.27 -1.48% Johnson & Johnson (JNJ) $88.22 -0.98% Wal-Mart Stores Inc. (WMT) $75.75 -0.88% Microsoft Corp. (MSFT) $32.46 -0.87% Procter & Gamble Co. (PG) $78.62 -0.83% Chevron Corp. (CVX) $124.49 -0.82% Walt Disney Co. (DIS) $64.32 -0.66% Travelers Company Inc. (TRV) $85.87 -0.59% Cisco Systems Inc. (CSCO) $24.14 -0.56% Nasdaq 100 - Risers Applied Materials Inc. (AMAT) $17.44 +9.09% Yahoo! Inc. (YHOO) $31.27 +3.34% Facebook Inc. (FB) $48.45 +2.67% Western Digital Corp. (WDC) $64.68 +2.23% Vodafone Group Plc ADS (VOD) $34.43 +2.11% Seagate Technology Plc (STX) $41.80 +2.10% Starbucks Corp. (SBUX) $76.55 +1.58% Microchip Technology Inc. (MCHP) $40.95 +1.54% Netflix Inc. (NFLX) $306.49 +1.47% Avago Technologies Ltd. (AVGO) $42.41 +1.29% Nasdaq 100 - Fallers Citrix Systems Inc. (CTXS) $72.29 -2.81% DIRECTV (DTV) $60.64 -2.65% F5 Networks Inc. (FFIV) $87.07 -2.36% Express Scripts Holding Co (ESRX) $60.94 -2.15% Intuitive Surgical Inc. (ISRG) $363.89 -1.87% Kraft Foods Group, Inc. (KRFT) $53.04 -1.74% Charter Communications Inc. (CHTR) $131.15 -1.72% Broadcom Corp. (BRCM) $26.65 -1.66% Vertex Pharmaceuticals Inc. (VRTX) $74.53 -1.40% Stericycle Inc. (SRCL) $113.99 -1.37%

Wednesday newspaper round-up

Iran, Eurozone, bond market President Barack Obama and his Iranian counterpart, Hassan Rouhani, backed a new drive for diplomacy over Iran’s nuclear programme on Tuesday. The US president told the UN that there was “the basis for a meaningful agreement”.Mr Obama said he was directing John Kerry, US Secretary of State, to “pursue this effort with the Iranian government”, together with the other leading powers that have been involved in negotiations over Tehran’s nuclear programme, The Financial Times reports. The Eurozone economy will not grow this year and the region remains ‘a considerable source of risk’ to the rest of the world, the OECD declared yesterday. Pier Carlo Padoan, Chief Economist at the Organisation for Economic Cooperation and Development, told a conference in Lisbon that growth will not return until 2014. He also warned that it will take years to tackle record high unemployment across the region, The Daily Mail explains. A string of borrowers including the Government are aggressively tapping the newly resurgent bond market in the wake of the US Federal Reserve’s surprise wobble last week. The Debt Management Office raised £5bn in the space of 15 minutes yesterday, with investment institutions lapping up a new issue of index-linked gilts. A record 122 pension funds and insurers scrambled to put in bids of £10.8bn for the innovative 55-year issue — the longest-dated index-linked bonds or “linkers” ever offered for sale. Fourteen other borrowers, including Austria, Finland, the World Bank and the European Investment Bank, lined up to take advantage of the favourable market conditions, writes The Times. Britain's biggest energy supplier Centrica has claimed it could not "continue to operate" if Labour's price freeze were implemented while costs are rising. Ed Miliband's policy pledge will also deter investment needed to keep the lights on, increasing the risk of blackouts, industry groups warned on Tuesday. Centrica, which supplies energy to 12m households, issued its stark warning in an unusually strongly-worded statement condemning Ed Miliband's proposal, according to The Daily Telegraph. Miller Group, Scotland’s biggest housebuilder, is weighing up a possible £400 million flotation, trade sale or demerger of the business to capitalise on the recovery in the UK housing market. The Miller family gave up majority control of the business to Blackstone, the private equity giant, in late 2011 and it is understood the company has held a “beauty parade” of possible financial advisers to consider all options. If Miller – which also has construction, commercial property and a small mining business – goes public it will join a flurry of property companies to test the stock market waters recently against a more benign sector backdrop, The Scotsman reports. The bank that was fined a record $1.9bn after an investigation into money laundering for terrorists and Mexican drug dealers is to take on 3,000 more compliance officers. The move by HSBC would bring its total compliance staff to more than 5,000, almost 2% of its global workforce, which has shrunk by over 40,000 in the past two years, The Times says.