Evening Euro Markets Bulletin.

ADVFN III Evening Euro Markets Bulletin

Daily world financial news Thursday, 03 October 2013

London Market Report

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

Stocks edge higher but gains limited by US shutdown Ongoing political wrangling in the States limited gains for stocks on Thursday though the FTSE 100 still managed to snap a four-day losing streak to finish slightly higher. However, markets were rangebound as investors digested mixed economic data from across the globe with service-sector activity improving in China and the Eurozone but weakening in the UK and US. The FTSE 100 finished 11.54 points higher at 6,449.04. “The FTSE has been in positive territory for most of the day, as a mixture of short-covering and bargain-hunting has kept stock in demand,” said David Madden, Market Analyst at IG. Debt ceiling in focus as budget impasse continues The partial shutdown of the US government extended into its third straight day today as politicians continue to fail to come up with a solution to the budget. Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a “catastrophic effect” on all aspects of the US economy. It said in a report today that a default could lead to “events of the magnitude of late 2008 or worse”. “Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said. PMIs in focus China's official non-manufacturing purchasing managers' index rose from 53.9 to a six-month high of 55.4 in September, according to the National Bureau of Statistics, strengthening the third-quarter outlook for the world's second-largest economy. Closer to home, the final reading of the Eurozone services PMI for September unexpectedly picked up to 52.2, surprising analysts who had expected no change 52.1. The UK services PMI eased from 60.5 to 60.3 last month forecast: 60.5. However, analyst Blerina Uruci from Barclays said that the data "was broadly stable and remained consistent with a solid pace of expansion". Meanwhile, the ISM survey measuring non-manufacturing activity in the US fell from 58.6 to 54.4 forecast: 57 following a sharp surge the month before. “To be honest, that jump in August always looked a little suspicious, but we didn't expect such a big reversal,” said Chief US Economist Paul Ashworth from Capital Economics. FTSE 100: Miners track metals lower Continuing uncertainty surrounding US politics and falling metal prices weighed heavily on mining stocks on Thursday as investors shrugged off some improving economic data from China. Copper, silver and gold prices were on the decline today, weighing on the outlook for demand for resource stocks. According to Alex Young, Senior Sales Trader at CMC Markets, “global analysts are expecting further potential drops should uncertainty in the States continue”. Fresnillo, Vedanta and Anglo American were among the worst performing stocks on the FTSE 100 by the close of trade, along with Glencore Xstrata, Randgold and BHP Billiton. Supermarket group Tesco was a high riser, rebounding after a subdued reaction to its interim results yesterday. Analysts at Citigroup upgraded their rating for the group today from 'sell' to 'neutral', saying that negatives have already been priced in to the stock. Telecoms group Vodafone gained on the news that its Chief Financial Officer is set to depart the once the sale of Verizon Wireless has completed. Andy Halford, who has commanded the company's finances for almost nine years, will exit in March when Verizon Communication will take full ownership of the business. Consumer goods giant Unilever was also heading north, rebounding after heavy falls on Monday when it warned about slowing growth in the third quarter. Oil major BP share price also headed higher after the decision by the US appeals court to halt some payments related to claims over the giant oil spill in the Gulf of Mexico back in 2010. Sports Direct International was in the red after its Chief Executive Dave Forsey and Finance Director Bob Mellors each netted £6.4m after selling shares from a bonus plan.

FTSE 100 - Risers Unilever (ULVR) 2,367.00p +2.07% Tesco (TSCO) 365.00p +1.96% GlaxoSmithKline (GSK) 1,571.00p +1.58% RSA Insurance Group (RSA) 119.90p +1.44% Vodafone Group (VOD) 222.00p +1.39% Aviva (AV.) 413.10p +1.37% TUI Travel (TT.) 369.80p +1.37% BP (BP.) 437.15p +1.12% Aberdeen Asset Management (ADN) 378.00p +1.07% British Sky Broadcasting Group (BSY) 881.50p +0.92% FTSE 100 - Fallers Vedanta Resources (VED) 1,059.00p -2.84% Fresnillo (FRES) 910.00p -2.67% CRH (CRH) 1,466.00p -2.01% Anglo American (AAL) 1,472.50p -2.00% Intertek Group (ITRK) 3,201.00p -1.99% Weir Group (WEIR) 2,261.00p -1.95% Aggreko (AGK) 1,479.00p -1.92% Smiths Group (SMIN) 1,356.00p -1.88% Wolseley (WOS) 3,196.00p -1.66% United Utilities Group (UU.) 694.50p -1.49% FTSE 250 - Risers Supergroup (SGP) 1,182.00p +3.59% Mitchells & Butlers (MAB) 400.10p +2.77% Catlin Group Ltd. (CGL) 486.90p +2.68% Fenner (FENR) 400.90p +2.66% FirstGroup (FGP) 123.70p +2.49% Close Brothers Group (CBG) 1,225.00p +2.42% Ladbrokes (LAD) 171.20p +2.27% Ocado Group (OCDO) 403.00p +2.08% Amlin (AML) 412.50p +2.03% COLT Group SA (COLT) 121.40p +2.02% FTSE 250 - Fallers Imagination Technologies Group (IMG) 306.30p -5.75% Diploma (DPLM) 632.50p -3.80% Chemring Group (CHG) 284.80p -3.62% Ted Baker (TED) 1,851.00p -3.59% Alent (ALNT) 341.10p -3.51% Polymetal International (POLY) 626.00p -3.40% RPS Group (RPS) 264.70p -3.36% Rathbone Brothers (RAT) 1,505.00p -3.22% Kazakhmys (KAZ) 254.10p -3.02% African Barrick Gold (ABG) 154.40p -2.83%

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Stocks mixed on US default fears FTSE 100: 0.06% DAX: -0.44% CAC 40: -0.74% FTSE MIB: -0.44% IBEX 35: -0.61% Stoxx 600: -0.44% European stocks finished mixed as the US government shutdown moved into its third day. Eurozone and Chinese PMIs Markit’s Eurozone Composite PMI, a measure of services and manufacturing growth, rose to 52.2 in September from 52.1 in August, beating forecasts for a reading of 52.1 and the 50 level that signals expansion. The data comes a day after European Central Bank President Mario Draghi said Europe was recovering albeit at a slow pace and the monetary authority announced its decision to keep its benchmark interest rate unchanged at 0.5%. Separate PMI data showed activity in China's services industry grew at the fastest rate in six months as government stimulus efforts continued to support growth in the world's second-largest economy. The Chinese services PMI for September jumped to 55.4, up from the prior month's reading of 53.9. Draghi asks panel to review another LTRO Draghi has asked a panel to study options for new bank funding, according to two euro-region central bank officials, who spoke on condition of anonymity, Bloomberg reported. The ECB has undertaken technical studies in preparation for the possible roll-out of new bank funding measures, which may include fresh long-term refinancing operations. It will lay the ground work should the central bank be called upon to provide cash operations to lenders, in case the US Federal Reserve’s move to roll-back quantitative easing lead to an undue rise in money market rates. However, no date has been set yet for delivering a verdict. Schibsted ASA, BP Schibsted ASA gained after Goldman Sachs gave the Norway media group a ‘buy’ rating, saying it expects earnings-growth for its online classifieds business. BP advanced after a US appeals court halted some paymentsts related to claims against the company over the Gulf of Mexico oil spill in 2010. Gerresheimer slumped after Credit Suisse downgraded the producer of pharmaceutical and health-care equipment to ‘neutral’ from ‘outperform’. Aviva rallied after the insurer said it received $2.6bn from the sale of its US life-insurance and annuities business to Apollo Global Management. Unicredit jumped after the Italian bank said it offered to buy Rabobank Groep’s Polish unit Bank Gospodarki Zywnosciowej. Sports Direct International declined following reports Chief Executive Dave Forsey and Finance Director Bob Mellors each netted 6.4m pounds after selling shares from a bonus plan. Euro/dollar advances The euro rose 0.37% to the 1.3629 US dollar. Brent crude futures fell $0.174 to $109.000 per barrel on the ICE.

US Market Report

Stocks down, CME hikes margin requirements Dow Jones Industrials: -0.85% Nasdaq Composite: -0.97% S&P 500: -0.94% US stocks are in the red as the government shutdown enters its third day and despite what at first glance seems to be relatively neutral macroeconomic data releases out today. Worth taking into account, overnight the CME hiked its margin requirements for trading in Dow Jones Industrials, S&P 500 and Nasdaq-100 mini contracts by 9%. The government closure continued as Obama and congressional leaders failed to break the budget stalemate in talks on Wednesday. The shutdown began after Congress missed the Monday midnight deadline for agreeing to a budget as Republicans pushed for a delay in the introduction of the President Barack Obama’s controversial healthcare bill, known as Obamacare. Many economists predict lawmakers will continue to argue until the debt ceiling deadline on October 17th. The government reached its $16.7trn debt ceiling in May and since then has been using emergency measures to conserve cash. “The general consensus in the market continues to be that a last minute deal between the Democrats and the Republicans will be struck before the debt ceiling deadline,” according to Craig Erlam, Market Analyst at Alpari. “No resolution would be devastating for the US economy and the markets, and would be felt throughout the world. No one benefits if a deal is not agreed, so one way or another, I'm convinced it will be done.” As a result of the shutdown, the release of some US economic releases have been cancelled. The Bureau of Labor Statistics warned on its website this week that "the BLS will not collect data, issue reports, or respond to public inquiries. Updates to the site will start again when the Federal government resumes operations. Revised schedules will be issued as they become available". Somewhat neutral macroeconomic data However, initial jobless claims were published on Thursday, rising by 1,000 to 308,000 in the week ended September 28th. Economists had expected claims to climb to 313,000. Also out is the Institute for Supply Management’s non-manufacturing composite purchasing managers’ index which expected to fall to 57 in September from 58.6 in August. A reading above 50 signals expansion. Later on Federal Reserve officials will speak including John Williams, Richard Fisher, Dennis Lockhart and Jerome Powell. Turning to moving US company stocks, Tesla fell after the Jalopnik website published a picture of one of its vehicles on fire in Washington state. United Technologies declined following reports the company will lay off about 2,000 Sikorsky Aircraft employees in Connecticut, Florida and Alabama on October 7th due to the government shutdown. Somewhat mixed economic data The US ISM non-manufacturing index for the month of September has come in at 54.4, versus 58.6 one month ago and the 57.0 forecast by the consensus. However, the all-important new orders sub-index barely fell by 0.9 percentage points to 59.6, while the new export orders gauge actually surged to 57.5 from 50.5 previously. Initial weekly US unemployment claims rose by 1,000 to 308,000 in the week ended on September 21st, versus the 315,000 expected by economists. Crude futures down slightly Front month West Texas crude futures are now down by 0.79% to the 103.29 dollar per barrel mark on the NYMEX. The 10-year government yield was up 0.21% to 2.62%. S&P 500 - Risers Tenet Healthcare Corp. (THC) $46.01 +4.81% PVH Corp. (PVH) $122.60 +4.30% Constellation Brands Inc. Class A (STZ) $59.47 +2.08% First Solar Inc. (FSLR) $43.66 +1.58% Baxter International Inc. (BAX) $64.65 +1.19% Harman International Industries Inc. (HAR) $68.17 +1.14% Ralph Lauren Corp (RL) $165.77 +1.07% IntercontinentalExchange Inc. (ICE) $186.03 +1.04% CONSOL Energy Inc. (CNX) $34.87 +0.98% Coach Inc. (COH) $54.81 +0.94% S&P 500 - Fallers HCP Inc. (HCP) $40.08 -4.05% Eli Lilly and Company (LLY) $48.83 -3.39% Teradyne Inc. (TER) $15.89 -2.34% Autodesk Inc. (ADSK) $41.56 -2.33% Ventas Inc. (VTR) $62.03 -2.28% Boeing Co. (BA) $115.27 -2.18% Northrop Grumman Corp. (NOC) $93.25 -2.03% Regeneron Pharmaceuticals Inc. (REGN) $307.44 -1.99% Plum Creek Timber Co. (PCL) $46.51 -1.98% Health Care REIT Inc. (HCN) $61.55 -1.96% Dow Jones I.A - Risers Dow Jones I.A - Fallers Boeing Co. (BA) $115.27 -2.18% Chevron Corp. (CVX) $119.36 -1.22% United Technologies Corp. (UTX) $103.75 -1.17% Hewlett-Packard Co. (HPQ) $21.15 -1.17% American Express Co. (AXP) $73.72 -1.15% General Electric Co. (GE) $24.06 -1.11% Intel Corp. (INTC) $22.65 -1.03% E.I. du Pont de Nemours and Co. (DD) $58.40 -1.00% Johnson & Johnson (JNJ) $86.46 -0.95% Bank of America Corp. (BAC) $13.94 -0.85% Nasdaq 100 - Risers Green Mountain Coffee Roasters Inc. (GMCR) $76.00 +0.71% Micron Technology Inc. (MU) $17.74 +0.42% PACCAR Inc. (PCAR) $55.90 +0.32% Costco Wholesale Corp. (COST) $114.98 +0.14% Vodafone Group Plc ADS (VOD) $35.83 +0.01% Dell Inc. (DELL) $13.83 +0.00% Nasdaq 100 - Fallers Equinix Inc. (EQIX) $169.35 -3.57% Tesla Motors Inc (TSLA) $176.10 -2.68% Autodesk Inc. (ADSK) $41.56 -2.33% Regeneron Pharmaceuticals Inc. (REGN) $307.44 -1.99% Biogen Idec Inc. (BIIB) $242.01 -1.71% Expeditors International Of Washington Inc. (EXPD) $43.35 -1.61% Charter Communications Inc. (CHTR) $131.95 -1.38% Stericycle Inc. (SRCL) $114.06 -1.36% Citrix Systems Inc. (CTXS) $69.85 -1.31% Alexion Pharmaceuticals Inc. (ALXN) $115.25 -1.28%

Broker Tips

Alternative Networks: Westhouse Securities downgrades to neutral with a target of 350p. ARM Holdings: Credit Suisse moves target from 1030p to 1050p and reiterates an outperform rating. Burberry Group: JP Morgan raises target from 1450p to 1550p reiterating a neutral rating. Carnival: Jefferies reduces target from 2200p to 2000p and keeps a hold recommendation. Dunelm Group: Deutsche Bank cuts target from 960p to 935p staying with its hold recommendation. First Group: Investec places its target prev.: 130p under review, while keeping its add recommendation. Fresnillo: RBC Capital upgrades to outperform with a target of 1200p. Hochschild Mining: Westhouse Securities upgrades to buy with a target of 200p. IMI: RBC Capital increases target from 1400p to 1600p upgrading to outperform. Imperial Tabacco: JP Morgan cuts target from 3067p to 2984p and retains a neutral rating. Lookers: Panmure Gordon upgrades from hold to buy with a target of 140p. Mondi: Citi increases target from 810p to 1100p upgrading from sell to neutral. Renold: N+1 Singer ups target from 22p to 44p and upgrades from hold to buy. Robert Walters: Panmure Gordon downgrades from buy to hold with a target of 387p. SABMiller: Credit Suisse reduces target from 3800p to 3250p downgrading to neutral. Sainsbury: Nomura takes target from 350p to 375p and maintains its neutral rating. Standard Chartered: Numis downgrades to hold with a target of 1500p. Tate & Lyle: Deutsche Bank moves target from 1050p to 1030p, while its buy recommendation is kept. Tesco: Nomura cuts target from 400p to 370p retaining a neutral rating. JP Morgan lowers target from 350p to 335p and stays with its underweight rating. Deutsche Bank shifts target from 415p to 405p, while leaving its buy recommendation unaltered. Citi raises target from 285p to 350p and upgrades from sell to neutral. Macquaries lowers target from 400p to 390p and maintains an outperform rating. Unilever: Invectec reduces target from 3000p to 2660p, while staying with its buy recommendation. Walker Greenbank: Investec initiates with a target of 169p and a buy recommendation. Wolfson Microelectronics: JP Morgan cuts target from 175p to 150p and leaves its neutral rating unchanged. Wolseley: Liberum Capital raises target from 3500p to 3700p and retains a buy recommendation.