Morning Euro Markets Bulletin.

ADVFN III Morning 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

FTSE 100 near three-month low as supermarkets disappoint UK markets sank sharply on Wednesday morning given the uncertain outlook for the US economy in light of a partial government shutdown as politicians continue to disagree over a budget proposal for next year. Disappointing results from retail bellwethers Tesco and Sainsbury were also weighing on sentiment this morning in London, with the FTSE 100 dropping over 1.1% early on to levels not seen in nearly three months. By around 09:00 the index was trading at 6,388.38; the last time it closed lower was on July 5th. "European markets refused to show much signs of optimism today as investors pondered the next outcome of the continuing battle between the US President and Congress," said Financial Trader Shavaz Dhalla from Spreadex. The House of Representatives passed a bill at the weekend calling for a one-year delay in the launch of President Barack Obama's 'Affordable Care Act', though this was swiftly voted down by the Senate. As such, some 800,000 federal workers will be on unpaid leave for a second day straight as the US government shuts down non-essential agencies indefinitely until it can agree on a budget. 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. "Given that neither side has been in a rush in the past to negotiate, this could mean two more weeks of uncertainty for the markets and therefore, more risk aversion from investors. That said, once a deal is done, it’s only a matter of time until we’re talking about indices being back at record highs," said Market Analyst Craig Erlam from Alpari. Markets were also showing caution this morning ahead of the all-important European Central Bank policy decision later this afternoon, though the general consensus is expecting the benchmark interest rate to be held at 0.5%. FTSE 100: Tesco, Sainsbury provide a drag No stocks on the FTSE 100 were making gains this morning so the focus was on supermarket giants Tesco and Sainsbury, which were registering steep losses after disappointing the market with their interim results and second-quarter update, respectively. Tesco’s 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. Investors also gave a cool reaction to a 5% increase in sales in Sainsbury's second quarter, despite the top-line growth accelerating from 3.6% in the first three months of the year. Sector peer Morrison was also trading in the red after going ex-dividend this morning, 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. Mining stocks were also lower as metal prices fluctuated after some sharp losses; gold hit an eight-week low on Tuesday.Anglo American and Randgold were in the red. FTSE 250: Dunelm disappoints; Domino's delivers Soft furnishings retailer Dunelm said soaring temperatures eroded sales at the start of the quarter, causing shares to take a hit this morning. 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 company pleased investors this morning as it was still able to grow LFL sales in all its four markets during the third quarter. The firm also said that growth was also boosted by online sales which continue to rise strongly.

FTSE 100 - Risers (no risers) FTSE 100 - Fallers Tesco (TSCO) 346.60p -3.48% Rolls-Royce Holdings (RR.) 1,107.00p -2.38% British Land Co (BLND) 568.50p -2.15% Intertek Group (ITRK) 3,286.00p -2.03% Anglo American (AAL) 1,454.50p -2.02% Morrison (Wm) Supermarkets (MRW) 274.30p -1.97% Tullow Oil (TLW) 1,011.00p -1.94% Burberry Group (BRBY) 1,625.00p -1.93% Glencore Xstrata (GLEN) 324.15p -1.92% Schroders (SDR) 2,566.00p -1.80% FTSE 250 - Risers RPS Group (RPS) 280.30p +2.08% COLT Group SA (COLT) 119.10p +2.06% Enterprise Inns (ETI) 153.90p +1.92% BH Global Ltd. USD Shares (BHGU) 11.78 +1.90% Domino's Pizza Group (DOM) 598.00p +1.53% BH Macro Ltd. USD Shares (BHMU) 20.69 +1.42% Cranswick (CWK) 1,170.00p +1.30% AL Noor Hospitals Group (ANH) 832.50p +1.15% Electrocomponents (ECM) 282.50p +1.15% Diploma (DPLM) 658.50p +1.15% FTSE 250 - Fallers Hochschild Mining (HOC) 167.00p -4.30% Dunelm Group (DNLM) 887.50p -4.16% Smith (DS) (SMDS) 278.10p -3.00% Centamin (DI) (CEY) 44.32p -2.42% AZ Electronic Materials SA (DI) (AZEM) 285.70p -2.16% Capital & Counties Properties (CAPC) 336.80p -2.12% Intu Properties (INTU) 318.00p -2.12% Premier Oil (PMO) 320.80p -2.11% Ophir Energy (OPHR) 324.60p -2.08% Shaftesbury (SHB) 594.50p -2.06%

UK Event Calendar

INTERIMS Tesco INTERIM DIVIDEND PAYMENT DATE Novae Group INTERIM EX-DIVIDEND DATE Advanced Medical Solutions Group, Amati Vct 2, Ashley (Laura) Holding, Barr (A.G.), Bodycote, Braime (T.F.& J.H.) Holdings, BrainJuicer Group, Brammer, Crawshaw Group, Dillistone Group, F&C Asset Management, F&C Private Equity Trust, Fairpoint Group, Fisher (James) & Sons, Huntsworth, Inmarsat, Intertek Group, Journey Group, Morrison (Wm) Supermarkets, Motivcom, Pennant International Group, Somero Enterprises Inc.(Reg S), Tandem Group, Weir Group, Witan Pacific Inv Trust QUARTERLY PAYMENT DATE Blackrock North American Income Trust QUARTERLY EX-DIVIDEND DATE British Land Co, Investors Capital Trust 'A' Shares, Investors Capital Trust 'B' Shares, JP Morgan Chase & Co, Mercantile Investment Trust (The), Schroder Income Growth Fund, Torchmark Corp. INTERNATIONAL ECONOMIC ANNOUNCEMENTS Crude Oil Inventories (US) (15:30) ECB Interest Rate (EU) (12:45) MBA Mortgage Applications (US) (12:00) Producer Price Index (EU) (10:00) GMS Alecto Minerals, Suretrack Monitoring IMSS Domino's Pizza Group SPECIAL EX-DIVIDEND PAYMENT DATE BrainJuicer Group, JPMorgan Mid Cap Inv Trust TRADING ANNOUNCEMENTS Electrocomponents UK ECONOMIC ANNOUNCEMENTS M4 Money Supply (09:30) M4 Sterling Lending (09:30) PMI Construction (09:30) FINAL DIVIDEND PAYMENT DATE Betfair Group, Micro Focus International, Stagecoach Group FINAL EX-DIVIDEND DATE Abbey, Alumasc Group, Animalcare Group, Anite, Edge Performance VCT 'E' Shares, Edge Performance VCT 'F' Shares, Edge Performance VCT 'I' Shares, Edge Performance VCT G Shares, Hansard Global, JPMorgan Mid Cap Inv Trust, Smith (DS), Tricorn Group, Utilico Investments Ltd (DI)

Europe Market Report

FTSE 100 Euronext Dax perf CAC 40

Stocks slide ahead of ECB rate decision FTSE 100: -1.01 DAX: -0.69% CAC 40: -0.98% FTSE MIB: -0.13% IBEX 35: -0.58% Stoxx 600: -0.76% Stocks in the euro-area were little changed as investors waited for the European Central Bank’s rate decision and continued to weigh a partial US government shutdown. The ECB is expected to keep its monetary policy and bank rate unchanged but markets will be eager to hear what President Mario Draghi has to say. Draghi will hold a press conference shortly after announcing the ECB’s interest-rate decision, which is forecast to hold at 0.5%, at 13:45. “Last month, Draghi was very careful with the message he was trying to put across and I expect more of the same time,” said Alpari Market Analyst Craig Erlam. “He’ll be keen to point out the recent improvement in the Eurozone, while highlighting the risks that lie ahead in order to allay any fears of a hike in interest rates.” He is also likely to face questions over the political instability in Italy. Prime Minister Enrico Letta faces a confidence vote in the coalition after Silvio Berlusconi ordered ministers in his centre-right People of Freedom party to leave the government. Letta rejected the resignations of the five PDL ministers and has been trying to rally up support ahead of the confidence vote to hold the coalition together and avoid elections. A day before the vote, leading PDL figures defied Berlusconi, saying they would back Letta. Tesco’s half year figures disappoint Tesco declined 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 forecasts. KappAhl fell after the clothing retailer proposed paying no dividend this financial year.

US Market Report

Markets unfazed by government shutdown Dow Jones: 0.41% S&P 500: 0.80% Nasdaq: 1.23% Wall Street closed Tuesday's session with decent gains despite the partial shutdown of the US government, with analysts saying that the news was largely priced in to markets. "With the Dow sinking 0.79% in anticipation of a lockout yesterday and Asian and European markets remaining fairly stable this could indicate the markets have already reacted to the news," said Alex Conroy, Financial Sales Trader at Spreadex. The US Senate on Monday night voted down a House of Representatives-passed bill that had called for a one-year delay in President Barack Obama's flagship 'Affordable Care Act', something that the Democrats said they would have never agreed to. As the start of the new fiscal year begins in the States some 800,000 federal employees will be placed on unpaid leave and sent home as the US government is forced to shut down non-essential agencies. The last time there was a government shutdown was back in the mid-90s. Meanwhile, without an agreed increase in the debt ceiling, investors are concerned that the US could reach its borrowing limit of $16.7tn by October 17th, by which time the government could run out of cash to fulfil its debt obligations. Nevertheless, upside on markets was boosted by hopes that the Federal Reserve's tapering of stimulus may now be off the table for the next meeting in light of recent events. Brenda Kelly, Senior Market Strategist from IG, said that global equity markets have a "muted response" to the shutdown news with investors "clinging to the view that overall damage will be minimal and that a political resolution will be swift". She said: "Many grasped the opportunity, since the congressional capers and the potentially negative effects on the health of the US economy are not exactly conducive to tapering of quantitative easing." Manufacturing surveys mixed The Institute for Supply Management’s manufacturing sector purchasing managers´ index for September rose to 56.2, the strongest since April 2011, from 55.7 a month earlier. Economists had predicted a reading of 55. A reading above 50 signals expansion. Markit own US manufacturing PMI for September however dropped to 52.8 from 52.9 in August, missing the 53.1 forecast. Apple jumps on buyback hopes Tech giant Apple, the biggest stock by market capitalisation on Wall Street, was providing a lift on the Nasdaq after respected bil. investor Carl Icahn asked its Chief Executive to raise its share repurchase programme by $150bn. Pharmaceutical giant Merck, the second-biggest US drugmaker by sales, rose after saying it will fire 8,500 workers following the delay of new medicines by US regulators. In contrast, online marketplace Amazon.com was in demand after saying it will hire 70,000 workers for the Christmas season, compared to 50,000 workers hired last year. Walgreen gained after the US drugstore retailer said fiscal fourth-quarter profit climbed to $657m in the quarter ended August 31st from $353m. H&R Block Inc. jumped after Morgan Stanley raised its recommendation on the shares to ‘overweight’. Analysts at Citi upped their target on Yahoo stock to $39 per share. S&P 500 - Risers Sears Holdings Corp. (SHLD) $63.76 +7.18% Netflix Inc. (NFLX) $324.62 +4.98% First Solar Inc. (FSLR) $42.14 +4.80% Walgreen Co. (WAG) $56.24 +4.54% H&R Block Inc. (HRB) $27.86 +4.50% Pitney Bowes Inc. (PBI) $18.93 +4.07% Leidos Holdings Inc (LDOS) $47.28 +3.87% F5 Networks Inc. (FFIV) $88.97 +3.68% Goodyear Tire & Rubber Co. (GT) $23.25 +3.56% TripAdvisor Inc. (TRIP) $78.50 +3.51% S&P 500 - Fallers Newmont Mining Corp. (NEM) $27.21 -3.17% PVH Corp. (PVH) $115.21 -2.93% Tesoro Corp. (TSO) $43.10 -2.00% Autodesk Inc. (ADSK) $40.49 -1.65% Paychex Inc. (PAYX) $39.98 -1.62% Discovery Communications Inc. Class A (DISCA) $83.23 -1.41% Crown Castle International (CCI) $72.13 -1.23% Whirlpool Corp. (WHR) $144.69 -1.20% Aon plc (AON) $73.65 -1.06% Intuitive Surgical Inc. (ISRG) $372.40 -1.03% Dow Jones I.A - Risers Merck & Co. Inc. (MRK) $48.74 +2.38% Hewlett-Packard Co. (HPQ) $21.31 +1.52% Unitedhealth Group Inc. (UNH) $72.58 +1.35% General Electric Co. (GE) $24.17 +1.17% Microsoft Corp. (MSFT) $33.58 +0.90% Johnson & Johnson (JNJ) $87.47 +0.90% Procter & Gamble Co. (PG) $76.16 +0.75% Bank of America Corp. (BAC) $13.90 +0.72% AT&T Inc. (T) $34.06 +0.71% Verizon Communications Inc. (VZ) $46.99 +0.67% Dow Jones I.A - Fallers Cisco Systems Inc. (CSCO) $23.24 -0.82% Wal-Mart Stores Inc. (WMT) $73.59 -0.50% United Technologies Corp. (UTX) $107.38 -0.41% Intel Corp. (INTC) $22.83 -0.40% Chevron Corp. (CVX) $121.32 -0.15% Travelers Company Inc. (TRV) $84.66 -0.13% McDonald's Corp. (MCD) $96.13 -0.08% Exxon Mobil Corp. (XOM) $86.00 -0.05% Nasdaq 100 - Risers Sears Holdings Corp. (SHLD) $63.76 +7.18% Netflix Inc. (NFLX) $324.62 +4.98% F5 Networks Inc. (FFIV) $88.97 +3.68% Yahoo! Inc. (YHOO) $34.31 +3.44% Mylan Inc. (MYL) $39.45 +3.35% Priceline.Com Inc. (PCLN) $1,038.27 +2.70% Cerner Corp. (CERN) $53.97 +2.70% Amazon.Com Inc. (AMZN) $320.95 +2.66% Sirius XM Radio Inc (SIRI) $3.97 +2.58% Garmin Ltd. (GRMN) $46.31 +2.48% Nasdaq 100 - Fallers Mondelez International Inc. (MDLZ) $30.85 -1.82% Autodesk Inc. (ADSK) $40.49 -1.65% Paychex Inc. (PAYX) $39.98 -1.62% Randgold Resources Ltd. Ads (GOLD) $70.48 -1.47% Discovery Communications Inc. Class A (DISCA) $83.23 -1.41% Sba Communications Corp. (SBAC) $79.42 -1.29% Intuitive Surgical Inc. (ISRG) $372.40 -1.03% Equinix Inc. (EQIX) $181.92 -0.94% Cisco Systems Inc. (CSCO) $23.24 -0.82% Altera Corp. (ALTR) $37.00 -0.43%

Wednesday newspaper round-up

Iran, Italy, global economy Peter Voser, Chief Executive of Royal Dutch Shell, and Christophe de Margerie, his counterpart at France’s Total, used the Oil & Money conference in London on Tuesday to highlight the potential energy windfall if sanctions preventing international oil companies from dealing with Tehran were lifted. “Longer term, Iran’s oil and gas resources will have to be developed to meet demand,” Voser said. He was echoed by de Margerie, who said that he hoped doing business with Iran would again be permitted “as soon as possible, not just for Total but for the world and for Iran. Any country cannot stay out of the system,” The Daily Telegraph reports. Silvio Berlusconi is facing a growing revolt from his centre-right party over his attempts to bring down Enrico Letta’s coalition government, sending Italian stocks soaring on expectations that the Prime Minister would survive a vote of confidence expected in parliament on Wednesday. Angelino Alfano, the secretary of Berlusconi’s People of Liberty (PDL) who has emerged as the leading voice of centre-right “moderates”, declared after meeting Letta on Tuesday that he remained convinced that the entire party should vote to support the centre-left prime minister, the Financial Times writes. Threats to the global economy from the financial crisis have been defused but not eradicated, while the real economy continues to suffer despite a broad improvement in markets, the head of the International Monetary Fund (IMF) has said. "Global growth is still too weak and too uneven, and the outlook is clouded with risks, old and new," Christine Lagarde said in the IMF's annual report. "In far too many countries, improvements in financial markets have not translated into improvements in the lives of people," The Daily Telegraph says. The controversial high-speed rail link HS2 is likely to boost the British economy by "at least 25% more" than the £15bn official estimate, the Conservative Party conference was told. Bridget Rosewell, a leading economist and director of Network Rail, said the benefit costs calculated by KPMG had only accounted for current productivity being able to move more freely. She argued that the new connectivity would create economic growth that could not yet be seen, The Daily Telegraph reports. Poundland is preparing the ground for a stock market listing as it plans to double its space in the UK to more than 1,000 stores. The private equity-owned discount chain has grown rapidly as Britain recovers from the economic downturn and it intends to expand across Europe within 18 months. Poundland has been at the forefront of the changing face of the high street, where cash-strapped shoppers have turned in droves to discount retailers, according to The Times. New Royal Bank of Scotland (RBS)boss Ross McEwan today admitted to “trepidation” and “fear” as he started the job of returning the lender to a central role in the UK economy. The 56-year-old New Zealander pledged to repay the taxpayer’s support by doing “everything possible” to help the UK economy recover, and promised that RBS would increase lending. In a speech to staff at the company’s London offices McEwan, who previously ran RBS’ retail banking operation, also signalled a new focus on customer service which he hopes will eventually allow the group to put its 2007 collapse behind it, The Scotsman says.