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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London open: Stocks at six-week low as earnings disappoint Heavy falls from Wood Group, CRH and a host of miners were weighing on the FTSE 100 in early trading on Tuesday, pushing the index to levels not seen in over six weeks.
London's benchmark index sunk by around 0.8% this morning, heading towards the 6,400 mark; the last time it closed lower was on July 5th when it finished the day at 6,375.52.
Rising US bond yields and concerns over an impending withdrawal of stimulus by the Federal Reserve have weighed heavily on market sentiment over recent weeks. Investors are now choosing to scale back risk ahead of the minutes of the Federal Open Market Committee (FOMC) meeting due out tomorrow.
"Traders will be meticulously dissecting the minutes with a view to finding out whether the recent spell of positive data from the US will encourage officials to begin with the supposed tapering of stimulus measures," said Financial Trader Shavaz Dhalla from Spreadex.
"Furthermore, with another day thin on economic data, there really isn't much chance for sentiment to be swayed," he said.
FTSE 100: Wood Group, CRH, miners drop sharply
Oil and gas services company Wood Group slumped this morning after scaling back its EBITA growth guidance for the full year from 15% to "10-15%", reflecting some project delays and further weakening in Canada. EBITA in the first half was up 18.6% year-on-year.
CRH also fell sharply after swinging to a loss for the half-year period. The building materials firm reported a loss before tax of €71m, down from €102m the year before, while sales fell 3.0% to €8.01bn.
Mining stocks were also out of favour today as falling metals prices and results from BHP Billiton and Glencore Xstrata failed to impress. Vedanta, Fresnillo and Anglo American were also registering steep losses.
BHP said lower commodity prices wiped $8.9bn off its underlying earnings which plunged 22.4% in the year to the end of June. Meanwhile, Glencore Xstrata was forced to write down $7.7bn in assets as it reported a 9.0% drop in adjusted EBITDA.
Defensive stocks were in demand early on as relatively 'riskier' assets (such as those in the resources sectors) were sold off. Telecom groups BT and Vodafone were among the best performers, along with utility National Grid and real estate firm British Land.
Housebuilder Persimmon was also a high riser after first-half profits jumped 38%. The company also said its order book was running 21% ahead of last year as the government's 'Help to Buy' scheme boosted demand. |
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| | UK Event Calendar | | Tuesday August 20
INTERIMS
Cairn Energy, CRH, Glencore Xstrata, JSC Acron GDR (Reg S), Menzies(John), NMC Health, Wood Group (John)
QUARTERLY PAYMENT DATE
Caterpillar Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Producer Price Index (GER) (07:00)
ANNUAL REPORT
Falkland Islands Holdings, Immofinanz AG
AGMS
Falkland Islands Holdings, Meikles Ltd., World Trust Fund
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | European stocks are likely to fall on Tuesday, taking cues from soft commodity prices, weak Asian equities and rising yields on U.S. dollar-denominated bonds as traders speculate over Fed policy. The minutes of the Federal Reserve's July 30-31 policy meeting, due to be released tomorrow, might offer fresh clues as to whether the Fed will start slowing the pace of its bond-buying program at the next scheduled FOMC meeting on September 17-18. The euro is trading near its highest level in more than a week after Germany's Bundesbank said the European Central Bank's commitment to keeping rates low to spur recovery was not unconditional. The Asian markets are declining across the board. Indonesia's Jakarta Composite index is tumbling 4.3 percent, Japan's Nikkei is down 2.6 percent, South Korea's Kospi is moving down 1.6 percent and the key benchmark indexes in Hong Kong and Malaysia are down about 1.8 percent each. In domestic corporate news, Swiss drug maker Novartis AG announced that it has received FDA breakthrough therapy designation for BYM338, a novel, fully human monoclonal antibody developed to treat pathological muscle loss and weakness. Kudelski Group confirmed its full-year guidance after reporting first-half net income of CHF 10.5 million compared to a loss of CHF 9.8 million last year. Deutsche Wohnen AG said it would make a voluntary public takeover offer to all shareholders of GSW Immobilien AG domiciled in Berlin to acquire their no-par value bearer shares in GSW Immobilien AG by way of an exchange offer, each representing a pro rata amount of the registered share capital of 1.00 euros. The European markets finished in the red on Monday as investors waited for further clues on when the Fed plans to reduce its massive bond-buying program. The German DAX eased 0.3 percent, France's CAC 40 lost a percent and the FTSE 100 of the U.K. shed half a percent. U.S. stocks extended losses for a fourth consecutive session overnight, as investors continued to worry about the recent sharp surge in bond yields and the Federal Reserve's monetary policy outlook. The Dow slid half a percent, the tech-heavy Nasdaq declined 0.4 percent and the S&P 500 retreated 0.6 percent. |
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| | US Market Report | | US close: Stocks fall as bond yields continue to rise - Eyes turn to FOMC minutes on Wednesday
- Benchmark yields continue to rise
- Dow, S&P in longest losing streak since Dec 2012
Dow Jones: -0.47%
NASDAQ: -0.38%
S&P 500: -0.59%
US stocks fell firmly into the red on Monday despite a positive start as rising bond yields and heightened speculation about a tapering of stimulus continued to hit market sentiment.
Following a choppy week last week - volumes are still said to be light with many traders away on summer holidays - both the Dow Jones and S&P 500 finished lower for the fourth straight day, the longest losing streak since December 28th 2012, according to MarketWatch.
Treasury yields were on the advance again on Monday with the majority of analysts now expecting the Fed to begin tapering quantitative easing as early as September. The yield on the US 10-year Treasury note was up seven basis points (bp) at a fresh two-year high of 2.89%, as eyes begin to turn towards the minutes of the Federal Open Market Committee (FOMC) meeting due for release on Wednesday.
US benchmark yields have surged so far in 2013, boosted by Fed Chairman Ben Bernanke's indication in May that the central bank would begin to trim its $85bn-a-month of asset purchases if the economic recovery gathers momentum.
Market Strategist Ishaq Siddiqi from ETX Capital said: "The growing optimism over the US economy/prospects of September Fed tapering drives the spike in bond yields, which are widely seen as unwelcomed due to the negative impact on growth at a time when economies are just starting to show tangible signs of recovery."
Intel, Facebook, Apple on the rise
Chipmaker Intel rose after investment bank Piper Jaffray upgraded the stock from 'underweight' to 'neutral', saying that PCs "are not going away anytime soon" despite the chip industry being solidly in the "post-PC era".
Facebook was making decent gains after Evercore Partners upped its price target for the social media titan from $34 to $45 and maintained an 'overweight' position. Apple was also providing a lift on the Nasdaq today.
Zillow Inc. declined after agreeing to acquire New York City real-estate website StreetEasy.
Industrial technology group Edwards Group surged after Atlas Copco agreed to buy the company for up to $1.6bn.
S&P 500 - Risers
Dollar General Corp (DG) $54.09 +3.09%
Intuitive Surgical Inc. (ISRG) $384.95 +1.75%
Intel Corp. (INTC) $22.28 +1.67%
Nike Inc. (NKE) $64.71 +1.67%
Monster Beverage Corp (MNST) $59.11 +1.49%
Johnson & Johnson (JNJ) $90.45 +1.21%
Boeing Co. (BA) $104.72 +1.21%
Best Buy Co. Inc. (BBY) $30.73 +1.19%
Ball Corp (BLL) $45.54 +1.18%
Covidien Plc (COV) $60.90 +1.08%
S&P 500 - Fallers
Marathon Oil Corp. (MRO) $32.61 -4.82%
Cliffs Natural Resources Inc. (CLF) $21.74 -4.77%
Apache Corp. (APA) $75.37 -4.58%
Genworth Financial Inc. (GNW) $12.02 -4.53%
United States Steel Corp. (X) $17.99 -4.41%
Lennar Corp. Class A (LEN) $32.39 -4.40%
Peabody Energy Corp. (BTU) $16.74 -4.01%
PulteGroup Inc. (PHM) $15.65 -3.87%
D. R. Horton Inc. (DHI) $18.30 -3.68%
Tesoro Corp. (TSO) $47.04 -3.61%
Dow Jones I.A - Risers
Intel Corp. (INTC) $22.28 +1.67%
Johnson & Johnson (JNJ) $90.45 +1.21%
Boeing Co. (BA) $104.72 +1.21%
McDonald's Corp. (MCD) $95.48 +0.47%
Unitedhealth Group Inc. (UNH) $71.71 +0.39%
Pfizer Inc. (PFE) $28.46 +0.32%
Dow Jones I.A - Fallers
JP Morgan Chase & Co. (JPM) $51.83 -2.74%
Alcoa Inc. (AA) $7.94 -2.22%
Hewlett-Packard Co. (HPQ) $25.88 -2.04%
Bank of America Corp. (BAC) $14.15 -1.87%
E.I. du Pont de Nemours and Co. (DD) $57.53 -1.29%
Microsoft Corp. (MSFT) $31.39 -1.28%
AT&T Inc. (T) $33.79 -1.14%
Caterpillar Inc. (CAT) $84.20 -1.13%
Exxon Mobil Corp. (XOM) $86.92 -1.13%
American Express Co. (AXP) $74.34 -1.10%
Nasdaq 100 - Risers
Facebook Inc. (FB) $37.81 +1.97%
Intuitive Surgical Inc. (ISRG) $384.95 +1.75%
Intel Corp. (INTC) $22.28 +1.67%
Monster Beverage Corp (MNST) $59.11 +1.49%
Apple Inc. (AAPL) $507.74 +1.08%
Google Inc. (GOOG) $865.65 +1.02%
Dollar Tree Inc (DLTR) $50.91 +0.91%
Garmin Ltd. (GRMN) $38.07 +0.77%
Gilead Sciences Inc. (GILD) $57.34 +0.76%
Ross Stores Inc. (ROST) $65.18 +0.65%
Nasdaq 100 - Fallers
Activision Blizzard Inc. (ATVI) $16.79 -2.95%
Sears Holdings Corp. (SHLD) $40.12 -2.58%
Randgold Resources Ltd. Ads (GOLD) $78.19 -2.57%
Staples Inc. (SPLS) $16.41 -2.55%
Sirius XM Radio Inc (SIRI) $3.61 -2.43%
Broadcom Corp. (BRCM) $25.29 -2.39%
F5 Networks Inc. (FFIV) $85.70 -2.05%
Liberty Global plc Series A (LBTYA) $74.84 -1.84%
Fossil Group Inc (FOSL) $115.04 -1.81%
Twenty-First Century Fox Inc Class A (NWSA) $15.70 -1.75% |
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| | Newspaper Round Up | | Tuesday newspaper round-up: RBS, Glencore, JP Morgan Andy Higginson, the former finance director of Tesco, said the board of RBS would have to be "very brave" not to not to accept the bid for the so-called "Project Rainbow" branches. "This is not their [RBS's] option. They have an obligation to get rid of this business. I think it would be a very brave board that went to the EU having turned down a deal on the table that values the business at book value," said Mr Higginson. The sale has been forced on RBS, which is 81% owned by the state, by the European Commission as a result of its 2008 £45.5bn bail-out, The Daily Telegraph points out.
McCarthy & Stone is expected to confirm today that 24 existing investors, led by a core group including America's Goldman Sachs, Strategic Value Partners and TPG, have injected £367 million of new equity into the group. They have also agreed to provide a five-year, £160m loan in a transaction that reduces the company´s debt by £350m, The Times writes.
France's Socialist government has set out a gleaming vision of the future marked by full employment and cutting-edge factories thanks to "a third industrial revolution". The vision, presented at a "France in 10 years' time" seminar at the presidential palace, marked an end to the summer holidays before an official cabinet meeting on Wednesday and what is likely to prove a tough legislative agenda to follow. In a speech that ranged from social inclusion to global warming and industrial policy, President François Hollande said at the event that such a long-term vision was necessary because "a decade is time to bring about change". Arguing that France was only just emerging from a "lost decade", he added: "Europe needs a strong France and the world an influential France," according to the FT.
Germany's central bank yesterday said the country's economy should stabilise in the second half of the year as the Eurozone emerges from recession. Official figures last week showed the Germany economy grew by 0.7% between April and June – its strongest performance for more than a year. It helped the 17-nation single currency bloc post growth of 0.3% as its 18-month recession finally came to an end, The Daily Mail reports.
Glencore Xstrata knocked $7.7bn off the value of its mining assets following the complex merger that created the diversified commodities trader and miner this year. The hits to the value of Xstrata's mines show the gloom surrounding the mining industry as prices for many key commodities have fallen amid oversupply and slowing growth in demand, the FT says.
The UK's gold exports have surged nearly tenfold this year as investor selling drives the bullion out of London vaults into the hands of Asian consumers. UK gold exports to Switzerland, the hub of the gold refining industry, leapt to 798 tonnes in the first six months of the year, up from just 83 tonnes in the first half of 2012, according to data from Eurostat, the European Union's statistics office, the FT says.
JP Morgan faces further litigation after it emerged that the US Department of Justice is investigating whether the bank manipulated US energy markets. The Wall Street giant has already agreed to pay $410m to settle a Federal Energy Regulatory Commission (FERC) probe into allegations that it manipulated energy markets in California and the Midwest. The bank did not admit nor deny wrongdoing as part of the settlement, which was agreed last month, The Daily Telegraph reports. | | |
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