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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Markets were rangebound on Wednesday but managed to eke out small gains by the close of trade as traders digested ongoing developments in Syria and a fall in unemployment in the UK.
The FTSE 100, which swung between gains and losses for most of the day, finished just 4.44 points higher at 6,588.43 - this was its highest closing price since August 13th when it ended the day at 6,611.94.
The STOXX Europe 600 index meanwhile rose to a five-year high today, gaining 0.4% to 310.88 – its highest level since June 2008.
Global stocks rose strongly on Tuesday after Syriaaccepted a Russian proposal to hand over all chemical weapons to international control in an attempt to avoid US military action.
In a nationally televised speech last night, US President Barack Obama asked Congress to delay a vote on military action against Bashar al-Assad's regime in light of recent diplomatic developments. He said that the Russian initiative "has the potential to remove the threat of chemical weapons without the use of force".
“The fact remains that the congressional vote on military action is merely delayed rather than ruled out,” said Brenda Kelly, Senior Market Strategist from IG.
UK jobless rate edges lower
Supporting stocks this morning was a fall in the UK unemployment rate from 7.8% to 7.7% in the three months to July, according to the Office for National Statistics. The number of people claiming jobless benefits fell by 32,600 in August compared to a revised fall of 36,300 in July, the biggest decline since June 1997. Economists had forecast a drop of 21,000.
Bank of England (BoE) Governor Mark Carney has vowed that interest rates would remain at a record low of 0.5% as long as the unemployment rate holds above 7%.
Analyst Sasha Nugent from Caxton FX said that the decent report will "most definitely cause the market to question BoE’s policy ahead of tomorrow’s Inflation Report. All figures are pointing to the fact that maybe the market is right, the BoE may have to raise rates sooner than they think."
Speaking this afternoon, Monetary Policy Committee member David Miles struck a dovish tone as he attempted to downplay tightening fears in the aftermath of the data. He said that the recovery may be in progress but assured that it is only just starting.
FTSE 100: ARM, Glencore lead the risers
Leading the risers today was chip designer ARM Holdings after key customer Apple unveiled two new iPhone models. The phones use a new 64-bit processor, which analysts believe will equate to an increased royalty rate to ARM than the 32-bit previously used.
Glencore Xstrata was continuing to perform well after yesterday raising its target for expected synergies post-merger and cutting capex guidance. Deutsche Bank, JPMorgan and Jefferies all raised their price target for the stock today with the latter saying that it remains "one of our top picks".
Heading the other way were Admiral, G4S, Hargreaves Lansdown, Land Securities and Standard Life after going ex-dividend, meaning that from today investors will not be able to benefit from each companies' latest dividend payments.
Costa and Premier Inn owner Whitbread was extending losses after falling sharply on Tuesday as it announced a slowdown in second-quarter growth. Weighing on the stock this morning was a downgrade by JPMorgan Cazenove to 'neutral' as the bank said the shares are now "fully valued" after their recent 25% outperformance of the UK market over the past year.
The same bank also cut its rating for BSkyB to 'neutral', causing the pay-TV and broadband group to fall this morning.
Home improvement retailer Kingfisher, owner of B&Q and Screwfix, declined after reporting a 1.6% fall in first-half profits as it blamed depressed consumer confidence and cold weather. |
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| | FTSE 100 - Risers
ARM Holdings (ARM) 986.50p +4.84%
Glencore Xstrata (GLEN) 339.00p +3.12%
Experian (EXPN) 1,189.00p +2.24%
Tullow Oil (TLW) 1,073.00p +1.51%
Aggreko (AGK) 1,651.00p +1.29%
GlaxoSmithKline (GSK) 1,619.00p +1.28%
Vodafone Group (VOD) 210.15p +1.08%
Morrison (Wm) Supermarkets (MRW) 297.20p +0.92%
AstraZeneca (AZN) 3,161.50p +0.89%
Shire Plc (SHP) 2,486.00p +0.81%
FTSE 100 - Fallers
Admiral Group (ADM) 1,227.00p -4.14%
Kingfisher (KGF) 408.50p -2.74%
Lloyds Banking Group (LLOY) 75.99p -2.58%
easyJet (EZJ) 1,325.00p -2.43%
International Consolidated Airlines Group SA (CDI) (IAG) 312.10p -2.41%
London Stock Exchange Group (LSE) 1,618.00p -2.06%
Persimmon (PSN) 1,154.00p -2.04%
Associated British Foods (ABF) 1,805.00p -2.01%
G4S (GFS) 254.30p -1.93%
Hargreaves Lansdown (HL.) 1,020.00p -1.92%
FTSE 250 - Risers
888 Holdings (888) 161.60p +8.09%
Perform Group (PER) 547.50p +3.79%
Premier Farnell (PFL) 235.10p +2.93%
F&C Asset Management (FCAM) 98.70p +2.60%
Phoenix Group Holdings (DI) (PHNX) 759.50p +2.57%
Grainger (GRI) 178.90p +2.29%
African Barrick Gold (ABG) 170.00p +2.16%
Carillion (CLLN) 318.00p +2.15%
UBM (UBM) 743.00p +2.13%
Devro (DVO) 336.20p +2.03%
FTSE 250 - Fallers
Bwin.party Digital Entertainment (BPTY) 110.20p -4.67%
Barratt Developments (BDEV) 317.10p -4.57%
Ashtead Group (AHT) 648.50p -3.21%
Synthomer (SYNT) 242.00p -2.89%
Moneysupermarket.com Group (MONY) 163.70p -2.85%
Berkeley Group Holdings (The) (BKG) 2,140.00p -2.64%
Kenmare Resources (KMR) 28.21p -2.59%
Polymetal International (POLY) 736.50p -2.58%
Oxford Instruments (OXIG) 1,369.00p -2.49%
Temple Bar Inv Trust (TMPL) 1,191.00p -2.46%
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | - US delays vote on Syria military action
- US wholesale inventories and MBA mortgage data
- UK unemployment rate falls
- Italy to vote on Berlusconi ousting next week
FTSE 100: 0.07%
DAX: 0.58%
CAC 40: 0.06%
FTSE MIB: 1.33%
IBEX 35: 0.84%
Stoxx 600: 0.35%
European stocks bounced up after the US delayed a vote on a military strike in Syria.
President Barack Obama on Tuesday night said he will pursue Russia’s proposal to have Syria relinquish its chemical weapons to international control.
Syrian President Bashar Hafez al-Assad’s government welcomed the recommendation.
However, Obama maintained that the US must take action, if needed, in response to the Assad regime’s alleged use of chemical weapons against civilians on August 21st.
He said it was “too early to tell whether this offer will succeed”, adding that any agreement must verify that Assad keeps its promise.
Craig Erlam, Market Analyst at Alpari Research, said: “The only question now is whether Assad will go along with the proposal, or whether this is, as some suspect, just a tactic to delay the vote in Congress.
“Whichever it is, the markets are liking it. The news that Obama has asked Congress to hold off on voting on military action spurred on gains in US and Asian equities overnight.”
Ishaq Siddiqi, Market Strategist at ETX Capital, added that the potential Federal Reserve tapering of stimulus remains the narrative driving price-action.
The Fed will announce whether it determines the economy and jobs market has picked up enough to begin scaling back its $85bn per month in bond purchases at the next policy meeting on September 17th to 18th.
Also in the US, wholesale inventories rose in July by 0.1% after falling 0.1% in June, the Commerce Department revealed, missing the consensus for a 0.3% increase.
A separate report from the Mortgage Bankers’ Association showed a 13.5% fall in mortgage applications for the week ending September 6th, a five-week low. The data pointed to signs that rising mortgage rates are having a material impact on the housing market. The average 30-year conforming fixed mortgage rate climbed to 4.80% from 4.73% a week ago.
UK unemployment rate falls
The UK unemployment rate fell to 7.7% in the three months through July from 7.8% in the previous quarter, according to the Office for National Statistics (ONS).
It beat expectations for the rate to hold steady and marked the lowest rate since the quarter through November last year, adding to speculation the Bank of
England (BoE) might raise interest rates sooner than anticipated.
BoE Governor, Mark Carney, has vowed that interest rates would remain at a record low of 0.5% as long as the unemployment rate holds above 7%.
The number of people claiming jobless benefits fell by 32,600 in August compared to a revised fall of 36,300 in July, the biggest decline since June 1997.
Economists had forecast a drop of 21,000.
ARM rises on Apple’s iPhone reveal
British multinational semiconductor and software design company ARM topped the European risers after Apple unveiled its latest iPhone models, which was seen as a potential earnings boost for the firm.
Telefonica edged higher following reports it was considering an offer to help fellow investors in Telecom Italia sell their stakes in the Italian firm.
Kingfisher declined after the home-improvement retailer said first-half adjusted pre-tax profit fell to miss estimates.
Nokia Oyj advanced after Berenberg Bank raised its recommendation on the Finnish phone maker to ‘buy’ from ‘sell’.
Vivendi SA dropped after its biggest shareholder, Vincent Bollore, who was among candidates to fill the role of Chief Executive Officer, said he isn’t seeking a paying position at the French conglomerate.
Campari jumped following reports the alcoholic liquor company opened a new bottling plant in the US.
Brent crude and euro gain
Brent crude futures climbed $0.465 to $111.770 per barrel on the ICE.
The euro rose 0.29% to the 1.3307 US dollar mark.
Italy’s 10-year yield premium rose above that of Spain on Wednesday as investors speculated over the future of the ruling coalition amid reports lawmakers will hold a vote on whether to expel Silvio Berlusconi from the Senate following his conviction for tax fraud.
Italian 10-year yields held at 4.55% on the day while Spanish equivalents were down 1 basis point at 4.52%. |
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| | US Market Report | | - Citigroup to lay-off 2,200 workers at mortgage unit –Fox Business
- Apple shares off 6 per cent
- Mortgage applications down on the week
Dow Jones Industrials: 0.59%
Nasdaq Composite: -0.27%
S&P 500: 0.06%
US stocks were trading in a mixed fashion following the release of economic data and after the US postponed a vote on whether to launch a military strike against Syria.
A report on wholesale inventories from the Commerce Department showed stockpiles at distributors rose less than forecast.
A separate report from the Mortgage Bankers’ Association revealed a 13.5% drop in mortgage applications for the week ending September 6th, a five-week low. The data pointed to signs that rising mortgage rates are having a material impact on the housing market. The average 30-year conforming fixed mortgage rate climbed to 4.8% from 4.73% a week ago.
Nevertheless, Capital Economics thinks that higher rates will slow, but not derail, the recovery in housing market activity. “The bigger picture is that the cost of credit, even at today’s slightly higher rates, is historically very low,” they explain.
On the geopolitical front, President Barack Obama on Tuesday night said he will pursue Russia’s proposal to have Syria relinquish its chemical weapons to international control.
Syrian President Bashar Hafez al-Assad’s government said it would agree to recommendation in exchange for avoiding US military strikes.
However, Obama insisted that the US must take action, if needed, in response to the Assad regime’s alleged use of chemical weapons against civilians on August 21st.
“It’s too early to tell whether this offer will succeed, and any agreement must verify that the Assad regime keeps its commitments,” Obama said.
Ishaq Siddiqi, Market Strategist at ETX Capital said: "This certainly hit his credibility here as his tone changed quickly – Obama had to strike up a balanced tone this time around; the US is prepared to respond with a strike but let’s give diplomacy a chance.
"The market feels somewhat mixed on Syria at the moment as a result – encouraging that an imminent strike is off the cards and negotiations have been thrown to the UN before any action is taken."
Apple falls as critics slam 'expensive' new iPhones
Apple was making headlines on Tuesday night as it unveiled its new iPhone models. Shares in the tech giant fell as critics said the new models were too expensive to increase sales in emerging markets.
At least three of Wall Street’s largest brokers: UBS, Credit Suisse and Bank of America-Merrill Lynch have today downgraded their view on the shares of Apple.
For the latter of these brokers two of the reasons to proceed in the above fashion were the lack of a “lower-end” iPhone and price points that will be too high to increase penetration in emerging markets, as well as the lack of an agreement with China Mobile.
Apple stock is now dropping by 6%.
Verizon declined as the US telephone carrier began selling today $45bn to $49bn of bonds, more than twice the size of Apple’s unprecedented $17bn issue in April.
It will be the largest sale of corporate debt ever. Demand indications are positive although the firm has had to offer a sizeable discount.
Marriott International gained as China’s richest man Wang Jianlin said he has hired two investment banks to buy hotel-management companies.
Weak third-tier economic figures
US wholesale inventories grew by 0.1% month-on-month [Consensus: 0.3%].
Mortgage applications fell by 13.5% last week MBA data showed.
Crude futures edge high
Front month West Texas crude futures are now rising by 0.36% to the $107.79 per barrel level on the NYMEX.
10-year US Treasury yields are now down by 1 basis point to the 2.96% mark.
S&P 500 - Risers
Marriott International Inc. (MAR) $42.83 +2.93%
Computer Sciences Corp. (CSC) $52.07 +2.40%
Philip Morris International Inc. (PM) $86.23 +2.37%
Abbott Laboratories (ABT) $34.85 +2.23%
Sprint Nextel Corporation (S) $6.47 +2.21%
Forest Laboratories Inc. (FRX) $44.50 +2.16%
Cardinal Health Inc. (CAH) $52.17 +2.03%
International Business Machines Corp. (IBM) $190.25 +1.95%
Biogen Idec Inc. (BIIB) $232.78 +1.79%
Dentsply International Inc. (XRAY) $45.16 +1.76%
S&P 500 - Fallers
Apple Inc. (AAPL) $465.76 -5.84%
QUALCOMM Inc. (QCOM) $67.81 -3.26%
Netflix Inc. (NFLX) $305.23 -2.50%
PVH Corp. (PVH) $121.75 -2.33%
ONEOK Inc. (OKE) $51.38 -2.08%
NRG Energy Inc. (NRG) $26.25 -2.02%
Sears Holdings Corp. (SHLD) $55.52 -1.98%
Nabors Industries Ltd. (NBR) $16.09 -1.95%
Williams Companies Inc. (WMB) $35.49 -1.93%
Exelon Corp. (EXC) $30.16 -1.85%
Dow Jones I.A - Risers
International Business Machines Corp. (IBM) $190.25 +1.95%
Microsoft Corp. (MSFT) $32.85 +1.42%
Walt Disney Co. (DIS) $63.69 +1.36%
Merck & Co. Inc. (MRK) $48.49 +1.06%
Exxon Mobil Corp. (XOM) $88.71 +1.02%
AT&T Inc. (T) $34.23 +0.76%
Chevron Corp. (CVX) $123.92 +0.74%
Johnson & Johnson (JNJ) $89.15 +0.70%
Alcoa Inc. (AA) $8.11 +0.68%
United Technologies Corp. (UTX) $106.97 +0.67%
Dow Jones I.A - Fallers
Intel Corp. (INTC) $22.90 -0.39%
Home Depot Inc. (HD) $74.32 -0.38%
Hewlett-Packard Co. (HPQ) $22.23 -0.20%
Procter & Gamble Co. (PG) $77.85 -0.13%
JP Morgan Chase & Co. (JPM) $53.61 -0.11%
Verizon Communications Inc. (VZ) $46.47 -0.01%
Nasdaq 100 - Risers
Baidu Inc. (BIDU) $147.50 +4.91%
Biogen Idec Inc. (BIIB) $232.78 +1.79%
Facebook Inc. (FB) $44.37 +1.77%
Dentsply International Inc. (XRAY) $45.16 +1.76%
CH Robinson Worldwide Inc (CHRW) $60.22 +1.69%
eBay Inc. (EBAY) $54.34 +1.59%
Garmin Ltd. (GRMN) $43.30 +1.52%
Starbucks Corp. (SBUX) $75.33 +1.50%
Microsoft Corp. (MSFT) $32.85 +1.42%
Nvidia Corp. (NVDA) $15.66 +1.36%
Nasdaq 100 - Fallers
Apple Inc. (AAPL) $465.76 -5.84%
QUALCOMM Inc. (QCOM) $67.81 -3.26%
Netflix Inc. (NFLX) $305.23 -2.50%
Vertex Pharmaceuticals Inc. (VRTX) $79.63 -2.08%
Sears Holdings Corp. (SHLD) $55.52 -1.98%
Broadcom Corp. (BRCM) $26.27 -1.83%
Seagate Technology Plc (STX) $40.46 -1.49%
Tesla Motors Inc (TSLA) $164.79 -0.95%
Avago Technologies Ltd. (AVGO) $39.32 -0.86%
Randgold Resources Ltd. Ads (GOLD) $72.88 -0.75% |
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| | Broker Tips | | Panmure Gordon has kept its positive stance on pharmaceuticals group GlaxoSmithKline, despite recent concerns over rising competition from generic versions of its Advair drug, recommending investors to 'buy' on weakness.
The broker said that there are still a number of regulatory process steps and many years before any possible increased competition to Advair: "The market has taken a dim view of developments which provide a good entry level into the stock in our view."
Jefferies has raised its price target for mining group Glencore Xstrata after the company increased the expected synergies target following its merger and scaled back spending guidance.
"Glencore remains one of our top picks, especially as we have recently become more positive on the outlook for the sector. We expect volume growth, opex cuts, capex cuts, asset disposals (including possibly $5bn for Las Bambas) and the cyclical resilience of its Marketing business to lead to strong dividend growth and support a premium equity valuation."
JPMorgan Cazenove has downgraded its rating for cafe, hotel and leisure group Whitbread from 'overweight' to 'neutral', saying that the company is a long-term winner but fully valued for now.
Whitbread has outperformed the UK market by 25% over the past year, outperforming the European leisure sector by 19%. As such, it now trades at 17 times estimated earnings for the year ending February 2014. "With short-term headwinds we believe the shares are now full valued and would wait for a better entry point," JPMorgan said. | | |
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