Evening Euro Markets Bulletin.

ADVFN III Evening Euro Markets Bulletin

Daily world financial news Wednesday, 02 October 2013

London Market Report

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

Late rally not enough as FTSE 100 falls for fourth straight day A slight bounce in the UK-listed mining sector saw the FTSE 100 rally on Wednesday afternoon but the index still finished firmly in the red, setting a fresh one-month low as political uncertainty in the US and Italy continued to weigh on sentiment. The FTSE 100 finished down 22.51 points at 6,437.5, its fourth consecutive session in negative territory. London’s benchmark index now stands at levels not seen since August 30th when it closed at 6,412.93. “Global markets are notably softer today, as yesterday’s investor complacency is replaced with caution. With quarter-end and continuing uncertainty about the longevity of the US government shutdown, investors have resolved to take some profits,” said Brenda Kelly, Senior Market Strategist at IG. Markets largely gave a subdued reaction to the European Central Bank today which left its benchmark interest rate unchanged at 0.5%, as expected. Comments from Mario Draghi also came as no surprise as the ECB President expressed his commitment to keep rates low for an extended period and said it stands ready to take action if necessary down the track. Meanwhile, the ADP report in the States showed that just 166,000 private jobs were added in September following a revised 159,000 gain August. Analysts were expecting a rise of 180,000. Alex Young, Senior Sales Trader at CMC Markets, said that the ADP data had “greater significance than the private payroll figure is normally afforded” after it was revealed that the US Federal Bureau of Statistics will not be releasing Friday’s official employment report due to the shutdown. US and Italian politics in focus The partial shutdown of the US government continues to grab headlines today as Democrats and Republicans wrangle over the budget. The first shutdown in 17 years has seen some 800,000 federal workers put on unpaid leave for a second straight day today as the government shuts down non-essential agencies indefinitely. The shutdown is expected to shave 0.1 percentage point from economic growth, according to Bloomberg’s median estimate of economists, with costs rising if the closure continues. While investors continue to gauge the impact of the shutdown on economic growth, the focus is now turning to the deadline of the debt ceiling on October 17th. If an agreement is not made to raise this limit, then the government will run out of the cash and will likely default on its debt obligations. Italian Prime Minister Enrico Letta has survived a confidence motion in Parliament moments after Silvio Berlusconi changed his mind about bringing down the coalition. According to Italian news agency Ansa, 235 senators gave their support for Letta while 70 were opposed and six members from Berlusconi's PDL party did not participate in the vote. Young from CMC Markets said the show of confidence “marked a humiliating U-turn for Berlusconi who faced a revolt from many of his most loyal backers in the Italian parliament. The soap opera continues…” FTSE 100: Supermarkets in focus after results Supermarket giant Tesco finished more or less flat today as it managed to almost erase all of its earlier losses following its interim results. Half-year underlying pre-tax profit fell 7.4% to £1.4bn as an improvement in the UK was offset by tough market conditions in Europe and Asia. Smaller rival Sainsbury finished lower despite the company saying it had outperformed rival retailers in its fiscal second quarter. The company reported a 5% increase in sales, accelerating from the 3.6% growth in the first three months of the year, as it continued to grow its market share. Sector peer Morrison was also trading in the red after going ex-dividend, meaning that from today investors will no longer be able to get their hands on the company's latest payout. Intertek, British Land and Weir also went ex-div today. DIY retailer Kingfisher finished with heavy losses, along with drinks bottling group Coca-Cola HBC. Leading the upside were utility stocks including National Grid, Severn Trent, SSE and Centrica. Meanwhile miners recovered after some early falls this morning as metal prices gained - Randgold, Vedanta, Glencore Xstrata, BHP Billiton and Anglo American were among the best performers by the close. Banking group Barclays was in demand after Societe Generale upgraded its rating to 'buy'. However, sector peers RBS, Lloyds, HSBC and Standard Chartered finished with losses. Natural gas giant BG Group was up after it said it found 'excellent' results from its completed drill-stem test in its part-owned Pweza gas field offshore southern Tanzania. Oil major Shell however fell despite saying it has produced oil from the second phase of production at its much sought-after Parque das Conchas project offshore Brazil. FTSE 250: SOCO jumps after update on Vietnam SOCO International rose strongly after it said testing of the TGT-10XST1 exploration well on the H5 fault block of the Te Giac Trang field in Vietnam exceeded expectations. The well flowed at a combined average maximum production from the three zones tested at more than 27,600 barrels of oil equivalent per day. Soft furnishings retailer Dunelm said soaring temperatures eroded sales at the start of the quarter, causing shares to take a hit today. The firm said that first-quarter like-for-like (LFL) sales were down 5.3%. The hot weather also slowed down sales growth at Domino's Pizza, but the stock gained as investors were reassured by LFL sales growth in all its four markets during the third quarter. Mining group Hochschild was a heavy faller after saying it would raise up to $96m via an equity placing to help fund the buy-out of two of its assets in Peru for $280m.

FTSE 100 - Risers National Grid (NG.) 743.00p +1.64% Vedanta Resources (VED) 1,090.00p +1.40% Randgold Resources Ltd. (RRS) 4,396.00p +1.34% Anglo American (AAL) 1,502.50p +1.21% BHP Billiton (BLT) 1,826.00p +1.16% Fresnillo (FRES) 935.00p +1.14% Glencore Xstrata (GLEN) 334.15p +1.10% Rio Tinto (RIO) 3,028.00p +1.07% IMI (IMI) 1,475.00p +1.03% Barclays (BARC) 272.55p +1.02% FTSE 100 - Fallers Kingfisher (KGF) 376.90p -3.23% Coca-Cola HBC AG (CDI) (CCH) 1,771.00p -2.96% Intertek Group (ITRK) 3,266.00p -2.62% Smiths Group (SMIN) 1,382.00p -2.61% Shire Plc (SHP) 2,446.00p -2.36% ITV (ITV) 174.70p -2.24% Aggreko (AGK) 1,508.00p -2.14% Pearson (PSON) 1,225.00p -2.00% Tullow Oil (TLW) 1,011.00p -1.94% Morrison (Wm) Supermarkets (MRW) 274.80p -1.79% FTSE 250 - Risers Soco International (SIA) 415.60p +4.42% Domino's Pizza Group (DOM) 610.50p +3.65% Polymetal International (POLY) 648.00p +3.43% African Barrick Gold (ABG) 158.90p +2.85% Redrow (RDW) 239.50p +2.13% Carillion (CLLN) 315.70p +2.10% Kazakhmys (KAZ) 262.00p +2.06% Hiscox Ltd (HSX) 668.00p +2.06% COLT Group SA (COLT) 119.00p +1.97% Kenmare Resources (KMR) 28.50p +1.79% FTSE 250 - Fallers Hochschild Mining (HOC) 155.00p -11.17% Dunelm Group (DNLM) 880.00p -4.97% Ophir Energy (OPHR) 318.40p -3.95% Mitchells & Butlers (MAB) 389.30p -3.81% Keller Group (KLR) 1,006.00p -3.55% Xaar (XAR) 795.00p -3.52% Genus (GNS) 1,400.00p -3.45% Smith (DS) (SMDS) 277.70p -3.14% Daejan Holdings (DJAN) 4,075.00p -2.98% Chemring Group (CHG) 295.50p -2.92%

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Stocks mixed as ECB's Draghi notes weak recovery FTSE 100: -0.35% DAX: -0.69% CAC 40: -0.92% FTSE MIB: 0.68% IBEX 35: 0.09% Stoxx 600: -0.66% European equities were mixed after the region’s central bank kept its monetary policy unchanged and after Italian Prime Minister Enrico Letta won a confidence vote. European Central Bank  President Mario Draghi said the Eurozone’s recovery remains weak after the monetary authority announced it would maintain interest rates at 0.5%. While recent data has indicated that the Eurozone's economy is improving, Draghi warned that it would take some time before it was out of the woods. He reiterated that the ECB stands ready to provide further accommodative policy if needed in future. “We’ll remaim particularly attentive to developments which may have implications to monetary policy and consider all available instruments,” he said. Draghi was also asked about the political turmoil in Italy as Prime Minister Letta won a confidence vote in the coalition today after centre-right People of Freedom party leader Silvio Berlusconi made a last minute U-turn. Berlusconi had initially demanded that five ministers from his party leave the coalition, which prompted the vote, but he backed down when several of his senators refused to support him. Draghi said that the Eurozone would prove resilient against any instability in Italy as it was stronger than a few years ago. Retail stocks slide Tesco plunged after the UK supermarket chain posted a fall in half year profit that fell short of analysts’ expectations. Rival grocer Sainsbury’s also slumped despite trumping Tesco with a rise in second quarter sales in line with forcasts. A gauge of retailers posted the largest decline on the Stoxx 600 including Carrefour and Casino Guichard Perrachon. KappAhl fell after the clothing retailer proposed paying no dividend this financial year. MorphoSys gained after saying that Novartis AG kicked off a milestone payment for the company by starting a clinical trial. Portugal Telecom SGPS SA advanced after agreeing to merge with Brazil’s Oi SA to form a network operator with 100m subscribers. Euro bounces after Draghi speech The euro jumped up 0.50% to the 1.3593 US dollar following Draghi’s press conference. Brent crude futures rose $0.818 to $108.840 per barrel on the ICE.

US Market Report

Stocks drift as traders opt to sit on their hands Dow Jones Industrials: -0.60% Nasdaq Composite: -0.37% S&P 500: -0.47% The main US stock market averages are standing moderately lower as the government shutdown entered its second day and jitters over the debt ceiling rose. Nevertheless, and as Bloomberg points out, a partial shutdown lasting one week would probably only shave 0.1 percentage points from economic growth, according to the median estimate of economists. Hence, for now the “economic” costs are relatively contained but that would change were no agreement finally to be reached, particularly as regards the debt-ceiling. With no talks scheduled between Republicans and Democrats today, the issue looks unlikely to be resolved any time soon – although there is market chatter regarding possible stop-gap measures. Some economists predict it could take up to two weeks of political infighting over next year’s budget and the debt ceiling. "In fact, it wouldn’t surprise me if neither party was ever really interested in striking a deal over next year’s budget, instead seeing it as a dress rehearsal for the debt ceiling negotiations and an opportunity to rally the public against the opposition," said Craig Erlam, Market Analyst at Alpari UK. The government reached its $16.7trn debt ceiling in May and since then has been using emergency measures to conserve cash. The Treasury will have about $30bn in cash on hand by October 17th, barely enough to pay its bills. Federal Reserve Chairman Ben Bernanke may shed further light on the shutdown when he speaks later in St. Louis. The market will be eager to hear whether the shutdown will have an impact on the central bank’s decision to begin tapering its monetary stimulus at its meeting in October. Meanwhile, the US government confirmed today that it will not be issuing data releases, including non-farm payrolls on Friday if the partial shutdown continues. In the meantime, a report from the ADP Research Institute today showed that companies in the US boosted payrolls by 166,000 in September, up slightly from a 159,000 gain in August but missing estimates for a rise of 180,000. “With the release of the official payrolls figures delayed until the government shutdown is resolved, this ADP report will take on a much greater significance than normal in the markets,” according to Capital Economics. Alcoa, Global Payments, BP Alcoa declined after Deutsche Bank reduced its rating to ‘sell’ from ‘hold’, saying it expects aluminum prices to fall. Monsanto is moving lower after reporting a wider than expected fourth quarter loss. Global Payments rose after the bank-card processor said it expects cash earnings in 2014 will be as much as $4.05 a share, up from a previous estimate of $4. BP slid after being accused in a US court of delaying the capping of its Macondo well in the 2010 Gulf of Mexico oil spill case. The US 10-yield yield slipped five basis points to 2.60%. S&P 500 - Risers Autodesk Inc. (ADSK) $41.72 +3.04% Micron Technology Inc. (MU) $17.94 +1.87% Tenet Healthcare Corp. (THC) $42.10 +1.76% Seagate Technology Plc (STX) $45.48 +1.74% First Solar Inc. (FSLR) $42.85 +1.68% Tesoro Corp. (TSO) $43.76 +1.53% TripAdvisor Inc. (TRIP) $79.58 +1.38% Newmont Mining Corp. (NEM) $27.58 +1.36% Priceline.Com Inc. (PCLN) $1,052.26 +1.35% Expedia Inc. (EXPE) $53.50 +1.21% S&P 500 - Fallers Monsanto Co. (MON) $102.50 -2.83% Electronic Arts Inc. (EA) $25.69 -2.74% Alcoa Inc. (AA) $7.99 -2.14% Yum! Brands Inc. (YUM) $70.09 -2.08% Rockwell Collins Inc. (COL) $67.86 -2.01% Baxter International Inc. (BAX) $64.28 -1.98% Newfield Exploration Co (NFX) $27.38 -1.86% Allegheny Technologies Inc. (ATI) $30.40 -1.84% Pioneer Natural Resources Co. (PXD) $190.92 -1.82% Campbell Soup Co. (CPB) $40.52 -1.67% Dow Jones I.A - Risers Hewlett-Packard Co. (HPQ) $21.43 +0.56% Intel Corp. (INTC) $22.88 +0.22% Bank of America Corp. (BAC) $13.92 +0.14% Dow Jones I.A - Fallers Alcoa Inc. (AA) $7.99 -2.14% McDonald's Corp. (MCD) $94.70 -1.49% American Express Co. (AXP) $74.89 -1.37% United Technologies Corp. (UTX) $106.09 -1.20% Coca-Cola Co. (KO) $37.51 -1.16% Verizon Communications Inc. (VZ) $46.51 -1.02% Merck & Co. Inc. (MRK) $48.31 -0.89% Cisco Systems Inc. (CSCO) $23.06 -0.77% Johnson & Johnson (JNJ) $86.81 -0.75% Procter & Gamble Co. (PG) $75.62 -0.71% Nasdaq 100 - Risers Autodesk Inc. (ADSK) $41.72 +3.04% Micron Technology Inc. (MU) $17.94 +1.87% Seagate Technology Plc (STX) $45.48 +1.74% Baidu Inc. (BIDU) $160.81 +1.37% Priceline.Com Inc. (PCLN) $1,052.26 +1.35% Expedia Inc. (EXPE) $53.50 +1.21% Facebook Inc. (FB) $50.89 +0.93% Broadcom Corp. (BRCM) $26.66 +0.78% Sandisk Corp. (SNDK) $60.50 +0.72% Biogen Idec Inc. (BIIB) $246.17 +0.51% Nasdaq 100 - Fallers Vertex Pharmaceuticals Inc. (VRTX) $75.79 -1.59% Stericycle Inc. (SRCL) $115.21 -1.52% CH Robinson Worldwide Inc (CHRW) $59.02 -1.40% Amgen Inc. (AMGN) $113.02 -1.36% Garmin Ltd. (GRMN) $45.73 -1.25% Expeditors International Of Washington Inc. (EXPD) $43.99 -1.17% Monster Beverage Corp (MNST) $51.99 -1.15% Cerner Corp. (CERN) $53.37 -1.11% Viacom Inc. Class B (VIAB) $83.42 -1.08% Activision Blizzard Inc. (ATVI) $16.72 -1.07%

Broker Tips

Advanced Medical Solutions: N+1 Singer shifts target from 84p to 90p and upgrades from sell to hold. Afren: Nomura lowers target from 180p to 170p and retains a neutral rating. Aveva: Panmure Gordon raises target from 2174p to 2374p and keeps a hold recommendation. Barclays: Societe Generale shifts target from 325p to 320p and upgrades to buy. Cairn Energy: Nomura cuts target from 400p to 370p, while leaving its buy recommendation unchanged. Care Tech: Canaccord Genuity increases target from 185p to 275p and maintains its buy recommendation. Domino's Pizza: Canaccord Genuity reduces target from 500p to 480p and reiterates its sell recommendation. Dragon Oil: Nomura lowers target from 800p to 750p, while its buy recommendation is kept. Enterprise Inns: Deutsche Bank raises target from 190p to 205p maintaining a buy recommendation. Faroe Petroleum: Nomura cuts target from 210p to 190p and maintains a buy recommendation. Fresnillo: Citi reduces target from 1020p to 911p downgrading to sell. Glencore Xstrata: Alphavalue reduces target from 352.20p to 309.50p and downgrades from add to reduce. Hays: Bank of America takes target from 115p to 135p and retains a buy recommendation. Innovation Group: Panmure Gordon shifts target from 38p to 41p maintaining a buy recommendation. Northbridge Industrial Services: Westhouse Securities raises target from 455p to 511p and stays with its buy recommendation. Northern Petroleum: Goldman Sachs cuts target from 105p to 69p and downgrades from a strong buy recommendation to neutral. Ophir Energy: Nomura reduces target from 650p to 430p and downgrades from buy to neutral. Polyus Gold International: Citi cuts target from 224p to 200p and downgrades to neutral. Premier Oil: Nomura takes target from 550p to 450p, while staying with its by recommendation. Prudential: Credit Suisse increases target from 1300p to 1450p and reiterates its outperform rating. Randgold Resources: Citi reduces target from 4733p to 4226p and downgrades to sell. Rolls-Royce Group: Alphavalue moves target from 1010p to 1049.30p and upgrades from sell to reduce. Schroders: Numis downgrades to hold. SOCO International: Nomura cuts target from 425p to 400p keeping a neutral rating. SSE: Societe Generale lowers target from 1385p to 1370p reiterating a sell recommendation. Tullow Oil: Nomura reduces target from 1220p to 1130p, while staying with a neutral rating. Wolseley: Jefferies ups target from 2510p to 2540p and keeps an underperform rating. Credit Suisse reduces target from 3700p to 3500p and reiterates a neutral rating