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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 close: Markets jump on data, Syria delays UK investors took advantage of low volumes on Monday to push the FTSE 100 nearly 1.5 per cent higher, with impressive manufacturing data and delays to potential action Syria prompting a bullish mood.
"After posting four negative weeks in succession today's market moves on the UK benchmark index could not have been in starker contrast to the moves of the last two weeks," said Senior Market Analyst Michael Hewson from CMC Markets.
The FTSE 100 finished up 93.26 points at 6,506.19, a rise of 1.45% on the day.
Trading volumes across Europe were said to have been low today given that Wall Street was closed for the Labour Day holiday.
Manufacturing data impresses
Manufacturing activity in the UK increased at its quickest pace in two and a half years in August, according to the Markit/CIPS purchasing managers' index (PMI). The index's main gauge hit 57.2, higher than an upwardly revised 54.8 in July and better than the consensus forecast of 55. Any reading above 50 indicates an expansion in activity.
Analyst Blerina Uruci said: "The strong gains made at the start of Q3 were consolidated, providing further evidence that the recovery is taking root. The improvement remained broadly based and the rise in new orders suggests that this solid performance is likely to continue in the coming months."
Meanwhile, China manufacturing PMI rose to the 51.0 point mark in August, according to the National Bureau of Statistics and China Federation of Logistics and Purchasing in Beijing. The consensus estimate had been for a reading of 50.6 and comes after a print of 50.3 in July.
"The news came as a large gasp of air for a market that had become notably bearish on Chinese-linked assets of late," said Financial Trader David White from Spreadex.
Possible Syria intervention hit by delays
Fears of imminent US military action against Syria following the government's alleged chemical weapons attack were calmed over the weekend after President Barack Obama said he would seek approval from Congress before signing off on a strike.
Congress is not due back on Capitol Hill until next week but the Foreign Relations Committee (FRC) said they have arranged meetings on Tuesday and Wednesday to discuss the potential strike.
"Congress's role in US military force has too often been abdicated to presidential authority, so I look forward to a vigorous debate on this important authorization," said US Senator Bob Corker, a ranking member of the FRC.
"The American people deserve to hear more from the administration about why military action in Syria is necessary, what it will achieve and how it will be sufficiently limited to keep the US from being drawn further into the Syrian conflict," he said. |
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| FTSE 100: Vodafone jumps on VZW deal
Vodafone jumped after saying this morning it was in "advanced" talks with Verizon Communications about selling its 45% stake in Verizon Wireless for $130bn (£84bn). The company confirmed after the close that it has now reached an agreement on the transaction. Shareholders are set to receive 71% of the net proceeds and will receive a bigger full-year dividend.
"We are pleased that our long and successful partnership with Verizon will yield a significant return of value to our shareholders, rewarding them for their continuing support of Vodafone's investment strategy," said Chief Executive Vittorio Colao.
Telecoms peer BT was also a standout performer this morning on the back of upbeat comments from Credit Suisse which reiterated its 'outperform' rating for the shares. The broker said that BT's second-quarter update next month will see rising wholesale fibre adds and a slowdown in the rate of line loss.
Mining stocks on the whole were performing well this morning after data from China impressed. Diversified mining group Rio Tinto was in demand after loading the first shipment of iron ore from its expanded port, rail and mine operations in Australia. Rio said this was a "significant milestone" and marks the start of commissioning of the expansion programme, which is expected to see the company's iron ore operations in Western Australia increase capacity to 290m tonnes a year.
Vedanta Resources was higher after Liberum Capital upgraded the stock to 'buy'. Anglo American and Antofagasta were also making gains.
Fresnillo however was lower after UBS downgraded the stock from 'buy' to 'neutral' following its recent outperformance. In August alone, the spare price rose 27%, while silver and gold prices rose only 17% and 7%, respectively. The valuation is now looking a little "stretched", UBS said.
Oil stocks were also out of favour as crude prices edged lower. West Texas oil continues to pull back after hitting a two-year high last week on concerns that tensions in Syria could spill over to surrounding regions, leading to potential supply disruptions across the Middle East. Producers BP and Shell were in the red this morning.
Tullow Oil managed to buck the trend though, rising in morning trade despite saying it has plugged and abandoned its Buzio-1 exploration well offshore Mozambique after failing to encounter hydrocarbons.
FTSE 100 - Risers
Aberdeen Asset Management (ADN) 368.00p +4.49%
Rio Tinto (RIO) 3,035.00p +4.19%
Persimmon (PSN) 1,145.00p +4.19%
easyJet (EZJ) 1,284.00p +4.14%
BT Group (BT.A) 338.20p +3.97%
Anglo American (AAL) 1,536.00p +3.89%
Standard Life (SL.) 343.50p +3.71%
Antofagasta (ANTO) 885.50p +3.57%
Prudential (PRU) 1,116.00p +3.52%
WPP (WPP) 1,237.00p +3.51%
FTSE 100 - Fallers
Fresnillo (FRES) 1,275.00p -2.15%
Royal Dutch Shell 'A' (RDSA) 2,075.00p -0.60%
Randgold Resources Ltd. (RRS) 5,065.00p -0.39%
Royal Dutch Shell 'B' (RDSB) 2,165.00p -0.37%
Eurasian Natural Resources Corp. (ENRC) 227.70p -0.31%
Aggreko (AGK) 1,623.00p -0.25%
BP (BP.) 445.55p -0.15%
FTSE 250 - Risers
Ferrexpo (FXPO) 177.30p +6.68%
Tullett Prebon (TLPR) 361.30p +5.74%
Henderson Group (HGG) 174.30p +5.64%
Inmarsat (ISAT) 732.50p +5.40%
Fenner (FENR) 360.40p +5.07%
Oxford Instruments (OXIG) 1,500.00p +4.97%
Countrywide (CWD) 576.00p +4.73%
Smith (DS) (SMDS) 270.00p +4.73%
Diploma (DPLM) 628.00p +4.67%
Taylor Wimpey (TW.) 103.90p +4.53%
FTSE 250 - Fallers
Xaar (XAR) 783.00p -3.69%
Polymetal International (POLY) 736.00p -2.58%
African Barrick Gold (ABG) 185.70p -2.26%
Rank Group (RNK) 157.00p -2.06%
Ocado Group (OCDO) 323.90p -2.00%
Bwin.party Digital Entertainment (BPTY) 108.10p -1.73%
Hochschild Mining (HOC) 257.60p -1.45%
F&C Asset Management (FCAM) 95.60p -1.44%
Daejan Holdings (DJAN) 3,955.00p -1.37%
Bumi (BUMI) 215.00p -1.19% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Manufacturing data, Syria delay lifts stocks - Manufacturing data points to economic recovery
- Delay of Syria military action calms market
- ECB member says bank is focusing on money market rates
- Copper rises on manufacturing growth
FTSE 100: 1.36%
DAX: 1.60%
CAC 40: 1.64%
FTSE MIB: 1.63%
IBEX 35: 1.47%
Stoxx 600: 1.80%
European equities advanced as manufacturing expanded in the Eurozone, the UK and China and as fears over an imminent strike in Syria eased.
Markit's Eurozone manufacturing purchasing managers' index (PMI) rose to a 26-month high of 51.4 in August, compared to 50.5 in July, driven by growth in Germany, the Netherlands, Italy, Austria and Ireland. A reading above 50 signals expansion.
In China, manufacturing PMI climbed to 50.1 last month from 47.7 in July, according to HSBC Holdings Plc and Markit Economics.
It was the biggest increase in three years and the first reading above 50 since April, pointing to signs the world's second largest economy is strengthening after a two-quarter slowdown.
The UK's Markit/CIP manufacturing PMI jumped to a two-and-a-half year high of 57.2 in August from 54.8 in July, its fifth straight month of expansion.
Meanwhile, news that possible military action on Syria would be delayed gave stocks a lift.
US President Barack Obama said he was seeking congressional authorisation before any strike which is expected to halt any possible intervention by nine days.
Syrian Deputy Foreign Minister Faisal Mekdad accused Obama of indecision and hesitation as the US leader held back on military response to last month's chemical weapons attack near Damascus until after a congressional vote.
Obama tried to win over Congress on Sunday but faced challenging questions from lawmakers.
Syria's government has continued to deny it used chemical weapons against civilians on August 21st.
Craig Erlam, Market Analyst at Alpari Research, said the president was unlikely to act unless there is hard evidence that chemical attacks were carried out by the Assad regime.
"Obama, like his UK counterpart, David Cameron, is likely to face staunch opposition from both inside and outside his party, to military action, with memories of the hugely unpopular war in Iraq still fresh in people's memories," Erlam said.
"Investors are unsurprisingly pleased with this delay, with the risk aversion seen towards the end of last week subsiding and money pouring back into European stocks."
The US was closed for trading on Monday due to the Labor Day holiday.
ECB turns to money market rates
European Central Bank (ECB) member Benoît Coeuré said that the monetary authority is keeping a close watch on money market rates ahead of its interest rate decision next Thursday.
He said the central bank has also noted that the recovery would be slow and that normalising monetary policy is still a way off.
While speculation continues on whether the US Federal Reserve will begin to reduce its monthly bond purchases, European banks have been paying back the long-term low-rate loans received from the ECB.
The reduced liquidity is pushing up rates. "We're watching this process closely and will make sure that money market rates remain at reasonable levels," Coeuré told the Swedish newspaper Dagens Industri.
Coeuré made clear that the ECB was "not in the position where we can begin normalising monetary policy". He explained that recent data had only confirmed that the recovery is in place, "that we are over the worst".
Mining and telecom stocks rally
A gauge of miners surged including Rio Tinto and Anglo American as the price of commodities climbed after manufacturing PMIs grew. Copper jumped 1.62% and silver climbed 2.99%.
UK telecom firm Vodafone gained after saying it was in advanced talks with Verizon Communications about selling is stake in the Verizon Wireless joint venture for $130bn.
Telecom Italia jumped on speculation that it could be the next to sign a merger deal.
Alstom advanced after the French multinational conglomerate signed a contract with Minnesota Power to deliver an emission control system which will help reduce the utility company's emissions.
L'Oreal rose on speculation it may buy the €23bn stake Nestle holds in the French cosmetics company.
Other asset classes slide
The euro fell 0.26% against the 1.3187 US dollar.
Brent crude futures dropped $0.036 to $114.040 per barrel on the ICE. |
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| | US Market Report | | US close: Syria concerns, economic data hits stocks - US still deciding on Syria strike
- Confidence, spending data fails to impress
- Krispy Kreme disappoints with Q2 earnings
Dow Jones: -0.21%
Nasdaq: -0.84%
S&P 500: -0.32%
Disappointing economic data and uncertainty regarding a possible military strike against Syria dampened US stocks on Friday with benchmarks ending August on a dull note.
A three-day weekend in the States was also providing more of a reason for investors to scale back risk appetite and trim positions with Wall Street closed on Monday for Labour Day.
Both the Dow Jones and S&P 500 recorded their worst monthly performance since May 2012, and the choppiness on global equity markets isn't expected to fade next week.
Analysts at Barclays said: "With a number of significant event risks ahead - such as geopolitical risk in the Middle East, uncertainty about US economic data and the Fed's monetary policy, the possible announcement of a nomination for the new Fed Chairman by President Obama and federal elections in Germany, among others - market volatility, which has risen into late summer, is likely to persist in September."
Tensions between Syria and the West escalated on Friday after US intelligence was said to have "high confidence" that Bashar al-Assad's regime was responsible for last week's chemical weapons attack that killed over 1,400 people in Damascus.
US Secretary of State John Kerry condemned the "indiscriminate and inconceivable horror of chemical weapons", though President Barack Obama has said he has not made a final decision on whether or not to take action.
UK Prime Minister David Cameron meanwhile on Thursday lost an initial vote to intervene - oppositions decided to wait for firm evidence from UN inspectors on the alleged use of chemical weapons by the Bashar al-Assad regime. French President Francois Hollande signalled that he could be the main ally to the US in taking action against the Syrian government, saying that the UK vote made no difference to France's position.
Economic data comes up short
Consumer spending edged just 0.1% higher in July, down from a revised 0.6% gain the month before and below the 0.3% increase expected by analysts. Personal incomes only improved by 0.1% as well last month, slowing from the 0.3% rise in June and the 0.2% forecast.
The core personal consumption expenditure price index meanwhile - the Federal Reserve's measure of inflation - rose by 0.1% in July, down from 0.2% in June and below the 0.2% increase expected.
Paul Dales, Senior US Economist at Capital Economics, said that the July data suggests that real consumption in the third quarter may struggle to match the 1.8% growth seen in the second, especially given the recent rise in oil prices.
"What's more, the recent rise in oil prices may restrain real growth as households will pay more to buy the same amount of gasoline. At the moment, incomes aren't rising fast enough to support faster consumption growth," he said.
The closely-watched University of Michigan/Thomason Reuters consumer confidence index fell to a four-month low of 82.1 in August, pulling back from a six-year high of 85.1 the month before. Nevertheless this was still higher than the preliminary August figure of 80 and ahead of the 80.5 consensus forecast.
The Chicago purchasing mangers' index (PMI) rose from 52.3 to 53.0 in August, as expected.
Krispy Kreme fails to meet forecasts
Krispy Kreme Doughnuts tumbled after its second-quarter adjusted earnings came in at 14 cents a share, missing the 16 cents estimate by analysts. Revenue grew by 10% to $112.7m but also missed forecasts.
Salesforce.com Inc. surged after the company issued third-quarter sales and earnings forecasts that beat analysts' estimates.
Exxon Mobil Corp. tumbled as the price of oil declined after a delay of a possible imminent strike in Syria was delayed.
S&P 500 - Risers
Salesforce.Com Inc. (CRM) $49.13 +12.55%
Apache Corp. (APA) $85.68 +8.95%
Sears Holdings Corp. (SHLD) $44.24 +6.45%
Murphy Oil Corp. (MUR) $67.42 +2.45%
Western Digital Corp. (WDC) $62.00 +2.11%
Archer-Daniels-Midland Co. (ADM) $35.21 +1.15%
Quest Diagnostics (DGX) $58.62 +1.14%
Walgreen Co. (WAG) $48.07 +1.03%
Praxair Inc. (PX) $117.40 +0.99%
NRG Energy Inc. (NRG) $26.25 +0.96%
S&P 500 - Fallers
Electronic Arts Inc. (EA) $26.64 -3.37%
Advanced Micro Devices Inc. (AMD) $3.27 -3.25%
Janus Capital Group Inc. (JNS) $8.36 -3.02%
D. R. Horton Inc. (DHI) $17.85 -2.99%
PulteGroup Inc. (PHM) $15.39 -2.96%
Frontier Communications Co. (FTR) $4.33 -2.91%
Lennar Corp. Class A (LEN) $31.81 -2.48%
Teradata Corp. (TDC) $58.56 -2.19%
Adt Corp (ADT) $39.83 -2.16%
Iron Mountain Inc. (IRM) $25.80 -2.16%
Dow Jones I.A - Risers
Wal-Mart Stores Inc. (WMT) $72.98 +0.76%
Procter & Gamble Co. (PG) $77.89 +0.75%
AT&T Inc. (T) $33.83 +0.53%
Merck & Co. Inc. (MRK) $47.29 +0.40%
Pfizer Inc. (PFE) $28.21 +0.39%
3M Co. (MMM) $113.58 +0.23%
Coca-Cola Co. (KO) $38.18 +0.21%
General Electric Co. (GE) $23.14 +0.13%
Chevron Corp. (CVX) $120.43 +0.05%
Caterpillar Inc. (CAT) $82.54 +0.01%
Dow Jones I.A - Fallers
Alcoa Inc. (AA) $7.70 -1.41%
Unitedhealth Group Inc. (UNH) $71.74 -0.97%
Boeing Co. (BA) $103.92 -0.96%
Verizon Communications Inc. (VZ) $47.38 -0.92%
Hewlett-Packard Co. (HPQ) $22.34 -0.80%
Home Depot Inc. (HD) $74.49 -0.75%
Cisco Systems Inc. (CSCO) $23.31 -0.60%
McDonald's Corp. (MCD) $94.36 -0.53%
Microsoft Corp. (MSFT) $33.40 -0.45%
Travelers Company Inc. (TRV) $79.90 -0.44%
Nasdaq 100 - Risers
Sears Holdings Corp. (SHLD) $44.24 +6.45%
Nuance Communications Inc. (NUAN) $19.09 +4.26%
Western Digital Corp. (WDC) $62.00 +2.11%
Tesla Motors Inc (TSLA) $169.00 +1.77%
Vodafone Group Plc ADS (VOD) $32.35 +1.73%
Monster Beverage Corp (MNST) $57.39 +0.72%
Seagate Technology Plc (STX) $38.32 +0.60%
Whole Foods Market Inc. (WFM) $52.75 +0.53%
Intuitive Surgical Inc. (ISRG) $386.52 +0.50%
Sigma-Aldrich Corp. (SIAL) $82.47 +0.46%
Nasdaq 100 - Fallers
Baidu Inc. (BIDU) $135.53 -3.03%
Green Mountain Coffee Roasters Inc. (GMCR) $86.31 -2.78%
Vertex Pharmaceuticals Inc. (VRTX) $75.15 -2.72%
Activision Blizzard Inc. (ATVI) $16.32 -2.57%
eBay Inc. (EBAY) $49.99 -1.96%
Celgene Corp. (CELG) $139.98 -1.82%
Symantec Corp. (SYMC) $25.61 -1.69%
Randgold Resources Ltd. Ads (GOLD) $78.02 -1.65%
Altera Corp. (ALTR) $35.17 -1.46%
Alexion Pharmaceuticals Inc. (ALXN) $107.76 -1.41% |
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| | Broker Tips | | Broker tips: RBS, Fresnillo, BT, National Grid Citigroup has maintained its 'sell' rating for UK lender Royal Bank of Scotland (RBS) and has slashed its profit forecasts for the company citing weak earnings momentum.
The broker said that RBS remains its least-preferred UK bank "based on the shareholder structure, ongoing political and regulatory uncertainty, and a weak medium-term return potential relative to peers".
UBS has cut its recommendation for precious metals group Fresnillo from 'buy' to 'neutral' following the stock's recent strong performance.
In August alone, the share price rose 27%, outperforming a 17% increase in the silver price and a 7% rise in gold. The valuation is now looking "stretched" and less attractive after the stock's recent run. The shares are trading at an "expensive" 36 times forward earnings, compared with its historical average price-to-earnings multiple of 21.
Credit Suisse has reiterated its 'outperform' rating and 350p target for telecoms group BT ahead of the second-quarter update due next month, a 'key' quarter for the company.
"We see BT's Q2 update as the first chance to assess the potential impact (direct & indirect) of BT's content strategy on its underlying business. As a result key fibre and line loss KPIs are likely to prove more interesting than the Q2 financials."
Galvan Research has kept its positive stance on utilities group National Grid, saying it sees strong upside heading towards the end of 2013.
"The July guidance from National Grid provided ample fundamental affirmation to underpin the positive message from the general share price uptrend," said Thomas Light, Senior Analyst at Galvan. He expects the share to rebound back to its best levels of the year. | | |
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