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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: Stocks sink into the red ahead of FOMC outcome After a range-bound morning session, markets sunk into the red on Wednesday afternoon as investors reduced their appetite for risk ahead of the Federal Reserve policy decision later this evening.
The FTSE 100 closed 11.35 points lower at 6,558.82, the index's second day in negative territory after hitting a six-week high of 6,622.86 on Monday.
"It seems investors are no longer expecting officials to miraculously announce the continuation of stimulus measures to the same extent and are now coming to terms with fact that tapering is now a very likely possibility," said Shavaz Dhalla, a Financial Trader from Spreadex.
"Thus, it seems the trepidation within the markets at present is more centred around how much of the stimulus package will reduce, instead of fixating on whether there will actually be a reduction."
Markets await FOMC decision
The Federal Open Market Committee (FOMC) meeting comes to a close later this evening and will be one of the most closely-watched US policy decisions in recent years, given rising expectations that policymakers will begin to scale back quantitative easing.
The Fed is widely expected to start by tapering its monthly asset purchases by around $10-15bn from the current level of $85bn, with forecasts being pared slightly over the last month given recent mixed economic data as of late, including August's disappointing jobs report.
Just as important will be the new set of macroeconomic projections which the monetary authority will provide. These may help to cement expectations that policy rates are to stay low for quite some time yet.
MPC vote unanimous
The minutes of the Bank of England's Monetary Policy Committee (MPC) meeting released this morning showed that policymakers voted unanimously to leave interest rates and stimulus unchanged, as expected.
The unanimous vote suggests that MPC members were content with how the economic recovery is going, given that two voters had previously been in favour of an expansion of quantitative easing (QE) at the August meeting.
"Given the current strengthening in the economic environment, we only consider a restarting of QE to be feasible in the event of a negative shock to demand, which while not impossible, is not our central case," said Analyst Philip Shaw from Investec. |
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| FTSE 100: ARM jumps on Intel rumours
Chip designer ARM Holdings was the standout performer by the close of trade, surging late on the back of market chatter surrounding a possible bid from larger rival Intel.
Engineering firm Smiths Group was a high riser after raising its full-year dividend by 4% and returning £118m to shareholders by way of a special dividend as annual results came in slightly ahead of analysts' estimates.
Banking group Lloyds was among the best performers, rebounding after a sharp fall yesterday. The government on Tuesday placed a 6% stake as it formally began the process of disposing its stake following the state bailout in 2008. Standard Chartered, HSBC and RBS were also higher.
Sector peer Barclays was trading without the right to buy shares in its £5.95bn rights issue. Shares were still trading above their theoretical ex-rights price (TERP) of 276.2p. Standard Chartered and HSBC were also higher.
Antofagasta, Melrose and Petrofac were all trading lower this morning after going ex-dividend, meaning that from today investors won't be able to get their hands on the companies' latest payouts.
Security solutions group G4S was in the red after Jefferies International trimmed its target for the stock from 310p to 290p. While the broker maintained its 'buy' rating, it said: "The G4S equity recovery story is not as financially or operationally geared as we would like."
FTSE 250: Imagination Tech rises on "steady progress"
Imagination Technologies continued to rise one day after reporting a confident outlook on the basis of royalty growth and steady licensing. JPMorgan reiterated its 'overweight' rating on the stock today, saying that the company is making "steady progress in all divisions". M&A chatter regarding sector peer ARM could have also given the stock a boost.
Ocado shares continued their recent rise, which analysts at the Motley Fool website attributed to "good momentum" after recent struggles and its deal with supermarket chain Morrison, which provided it with an injection of cash.
British housebuilder Redrow gained after revealing a stellar set of full-year results and recommending the return of a final dividend. The group said pre-tax profit surged 63% to £70m for the year to June 30th and adjusted earnings per share jumped 45% to 15.7p.
Ladbrokes was among the worst performers after going ex-dividend, alongside IG Group, Dunelm, Kier, Renishaw, Interserve, and Computacenter.
FTSE 100 - Risers
ARM Holdings (ARM) 984.00p +3.20%
Smiths Group (SMIN) 1,412.00p +2.62%
Lloyds Banking Group (LLOY) 76.25p +2.14%
Tesco (TSCO) 378.30p +1.86%
Standard Chartered (STAN) 1,514.00p +1.37%
Royal Bank of Scotland Group (RBS) 365.50p +0.83%
Pearson (PSON) 1,286.00p +0.70%
Croda International (CRDA) 2,678.00p +0.64%
Rolls-Royce Holdings (RR.) 1,096.00p +0.64%
Experian (EXPN) 1,208.00p +0.58%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 367.30p -3.47%
Fresnillo (FRES) 1,008.00p -3.17%
Persimmon (PSN) 1,112.00p -2.97%
InterContinental Hotels Group (IHG) 1,835.00p -2.91%
Petrofac Ltd. (PFC) 1,349.00p -2.81%
Whitbread (WTB) 3,012.00p -2.49%
Antofagasta (ANTO) 860.50p -2.44%
Land Securities Group (LAND) 901.50p -2.06%
G4S (GFS) 252.50p -2.06%
Carnival (CCL) 2,401.00p -1.80%
FTSE 250 - Risers
esure Group (ESUR) 244.50p +4.49%
Imagination Technologies Group (IMG) 348.90p +4.27%
Ocado Group (OCDO) 403.30p +4.21%
Redrow (RDW) 236.50p +2.47%
Betfair Group (BET) 1,101.00p +2.42%
Wetherspoon (J.D.) (JDW) 746.50p +2.19%
United Drug (UDG) 336.00p +2.13%
BTG (BTG) 384.30p +1.94%
Go-Ahead Group (GOG) 1,630.00p +1.81%
Synthomer (SYNT) 240.00p +1.69%
FTSE 250 - Fallers
Hochschild Mining (HOC) 206.40p -10.07%
Salamander Energy (SMDR) 122.70p -4.59%
African Barrick Gold (ABG) 135.80p -4.43%
Supergroup (SGP) 1,148.00p -3.93%
Ladbrokes (LAD) 193.60p -3.78%
Berkeley Group Holdings (The) (BKG) 2,054.00p -3.66%
Keller Group (KLR) 1,062.00p -3.37%
National Express Group (NEX) 265.20p -3.28%
Bellway (BWY) 1,333.00p -2.91%
IG Group Holdings (IGG) 588.50p -2.65% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed as Fed reveals monetary policy - Fed announces stimulus measures
- US house starts rise less than forecast
- BoE releases meeting minutes
- Cyprus curbs capital controls
FTSE 100: -0.27%
DAX: 0.26%
CAC 40: 0.36%
FTSE MIB: 0.08%
IBEX 35: 0.52%
Stoxx 600: 0.26%
European stocks were little changed before the Federal Reserve's decision on stimulus and after the Bank of England (BoE) released minutes of its last meeting.
The Fed will wrap up the final day of its two-day policy meeting late Wednesday when it is expected to reveal a tapering of its $85bn per month in bond purchases.
Economists predict the Fed will scale back quantitative easing (QE) between $10bn and $15bn per month.
ETX Capital Market Strategist Ishaq Siddiqi said "market participants do not have all their chips on the table today, grinding out the day cautiously before we hear from the Fed".
"Most expect the central bank to initiate the first round of tapering today, despite the fact that momentum in the US labour market is evidently slower than the Fed hoped," he added.
"We could see the Fed stand pat for that reason but many are of the view that the taper genie is out of the bottle, intentions have been made clear by not only Chairman Bernanke but his colleagues, some of who were previously pro-QE, now pro-tapering."
Also in the US, housing starts rose to a 891,000 annualised pace in August from a revised 883,000 rate the previous month, according to the Commerce Department. Economists had forecast a 917,000 annualised pace.
In the UK, the BoE's Monetary Policy Committee (MPC) released minutes of its last meeting in early September when it reiterated that it won't raise borrowing costs until unemployment falls to 7%.
The minutes showed MPC members voted 9-0 for keeping interest rates at the record low of 0.5% and the asset purchase facility at £375bn.
However, some committee members still felt further stimulus might be required at some point, "based in part on their judgements about the speed with which the degree of slack in the economy might be reduced if the momentum in demand continued to grow," the minutes revealed.
Cyprus to end capital controls
Cyprus President Nicos Anastasiades said the government plans to lift all controls on bank deposits and capital by January after nearly a year.
"The goal right now is to create the conditions for growth and tackle the serious problem of unemployment, to stabilise the financial system," Anastasiades said in an interview with Bloomberg in Nicosia.
He added that his country will implement its agreement with international creditors in an effort to boost recovery. The Mediterranean island nation was approved for a €1.5bn payout by euro-region finance ministers on September 13th, the second disbursement under a €10bn rescue programme.
Siemens names new CFO
Siemens advanced after appointing SAP AG's co-Chief Executive Officer Jim Hagemann Snabe to its supervisory board and named Ralf Thomas Chief Financial Officer.
ARM's surged on rumours the electronics company will be taken over by Intel.
Peugeot gained after news the European carmaker may sell a stake to Dongfeng Motor Corp. to raise cash for expansion outside Europe.
Smiths Group rallied after the UK producer of security scanners announced a special dividend of 30p per share and increased its final dividend by 4% to 27p a share.
Aberdeen Asset Management declined after Morgan Stanley cut its earnings forecast for 2014 and 2015 by about 6% and 7% respectively, blaming poor fund performance.
Lanxess AG dropped after the synthetic-rubber maker said it will axe 1,000 jobs as part of a plan to cut costs.
Brent crude gains, euro weakens
Brent crude oil rose $0.570 to $108.810 per barrel on the ICE.
The euro weakened, falling 0.10% against $1.3354. |
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| | US Market Report | | US close: S&P 500 at six-week high ahead of Fed - Markets gear up for FOMC
- Microsoft renews share buyback, lifts divi
- Consumer prices rise less than expected
Dow Jones: 0.23%
Nasdaq: 0.75%
S&P 500: 0.42%
US stocks performed well on Tuesday in spite of the looming Federal Open Market Committee (FOMC) meeting, with the S&P 500 finishing above the 1,700 mark for the first time since August 5th.
The Nasdaq outperformed the other Wall Street benchmarks after software giant Microsoft launched a $40bn share repurchase programme and raised its dividend by 22%.
The two-day FOMC meeting kicked off on Tuesday and will be one of the most closely-watched US policy decisions in recent years, given rising expectations that policymakers will begin to scale back quantitative easing.
The Fed is widely expected to start by tapering its monthly asset purchases by around $10-15bn from the current level of $85bn, with forecasts being pared slightly over the last month given recent mixed economic data as of late, including August's disappointing jobs report.
Just as important will be the new set of macroeconomic projections which the monetary authority will provide. These may help to cement expectations that policy rates are to stay low for quite some time yet.
Acting as a backdrop for the meeting, a Labour Department report showed consumer prices rose less than forecast in August. Policymakers have said they are watching prices to ensure US doesn't slip into a long period of weakening inflation.
"Weaker-than-expected US inflation data in August may indicate that US GDP in the third quarter will fail to meet current expectations," said Brenda Kelly, Senior Market Strategist at IG.
Microsoft renews buyback, ups dividend again
Microsoft shares gained strongly after the company announced that it had renewed its share buyback, replacing a previous programme (started in 2008) which came to an end this month. Meanwhile, a quarterly dividend of 28 cents a share was declared, up from 23 cents the year before. "These actions reflect a continued commitment to returning cash to our shareholders," said Amy Hood, Chief Financial Officer.
Mosaic declined as it said potash sales volumes in the third quarter will be 1.45 m to 1.65m metric tons, down from a previous forecast on July 16th of 1.8m to 2.1m tons.
Outerwall, owner of the Redbox DVD kiosks, slumped after cutting its third-quarter and full-year forecasts due to discounts and shorter rentals.
Huntsman will purchase various units from Rockwood Holdings for $1.1bn.
Consumer prices rise less than expected
Long-term capital flows rose to $31bn in July, after a $67bn fall in the month before [consensus: -$15bn].
Consumer prices in the US rose less than forecast in August. The consumer price index was up 0.1% after a 0.2% gain in July, according to the Labour Department.
Same-store retail store chain sales fell by 0.3% month-on-month in the week ended on September 17th.
The NAHB's housing market index remained unchanged at the 58.0 point mark in September, the same as last month after a downwards revision to the preliminary print of 59.0 for July [consensus: 58.0].
S&P 500 - Risers
Safeway Inc. (SWY) $30.99 +9.74%
DaVita HealthCare Partners Inc (DVA) $59.10 +4.40%
AbbVie Inc (ABBV) $47.60 +3.88%
Garmin Ltd. (GRMN) $44.42 +3.01%
Abercrombie & Fitch Co. (ANF) $38.43 +2.92%
Amazon.Com Inc. (AMZN) $304.17 +2.74%
Centerpoint Energy Inc. (CNP) $23.49 +2.71%
United States Steel Corp. (X) $20.51 +2.60%
Charles Schwab Corp. (SCHW) $22.64 +2.54%
Micron Technology Inc. (MU) $16.84 +2.43%
S&P 500 - Fallers
Sprint Nextel Corporation (S) $6.39 -3.77%
Bemis Co. Inc. (BMS) $38.90 -3.04%
International Paper Co. (IP) $48.11 -2.63%
Sealed Air Corp. (SEE) $29.81 -1.84%
Expeditors International Of Washington Inc. (EXPD) $43.89 -1.68%
Cummins Inc. (CMI) $131.96 -1.41%
Aetna Inc. (AET) $67.75 -1.40%
Phillips 66 Common Stock (PSX) $56.05 -1.37%
Air Products & Chemicals Inc. (APD) $106.54 -1.34%
Amgen Inc. (AMGN) $115.73 -1.24%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $8.26 +1.98%
American Express Co. (AXP) $76.92 +1.75%
Intel Corp. (INTC) $23.74 +1.50%
General Electric Co. (GE) $24.45 +1.28%
Boeing Co. (BA) $117.11 +1.24%
United Technologies Corp. (UTX) $110.39 +0.63%
3M Co. (MMM) $119.93 +0.59%
Verizon Communications Inc. (VZ) $48.57 +0.56%
AT&T Inc. (T) $34.75 +0.52%
Wal-Mart Stores Inc. (WMT) $75.15 +0.49%
Dow Jones I.A - Fallers
Unitedhealth Group Inc. (UNH) $74.31 -1.08%
International Business Machines Corp. (IBM) $192.16 -0.51%
Procter & Gamble Co. (PG) $79.83 -0.41%
Merck & Co. Inc. (MRK) $48.01 -0.37%
Hewlett-Packard Co. (HPQ) $21.67 -0.32%
Pfizer Inc. (PFE) $28.64 -0.24%
Coca-Cola Co. (KO) $38.79 -0.18%
E.I. du Pont de Nemours and Co. (DD) $59.62 -0.13%
Caterpillar Inc. (CAT) $87.07 -0.13%
JP Morgan Chase & Co. (JPM) $53.09 -0.09%
Nasdaq 100 - Risers
Facebook Inc. (FB) $45.07 +6.02%
Garmin Ltd. (GRMN) $44.42 +3.01%
Amazon.Com Inc. (AMZN) $304.17 +2.74%
Randgold Resources Ltd. Ads (GOLD) $73.60 +2.55%
Micron Technology Inc. (MU) $16.84 +2.43%
Vertex Pharmaceuticals Inc. (VRTX) $78.03 +2.43%
Monster Beverage Corp (MNST) $57.03 +2.30%
Avago Technologies Ltd. (AVGO) $40.12 +2.14%
Broadcom Corp. (BRCM) $27.44 +1.99%
QUALCOMM Inc. (QCOM) $69.42 +1.95%
Nasdaq 100 - Fallers
Expeditors International Of Washington Inc. (EXPD) $43.89 -1.68%
Amgen Inc. (AMGN) $115.73 -1.24%
Mylan Inc. (MYL) $38.50 -1.16%
Netflix Inc. (NFLX) $299.55 -0.86%
Celgene Corp. (CELG) $147.04 -0.68%
Gilead Sciences Inc. (GILD) $62.69 -0.52%
Activision Blizzard Inc. (ATVI) $17.16 -0.52%
Cerner Corp. (CERN) $49.48 -0.36%
Sandisk Corp. (SNDK) $60.45 -0.33%
Symantec Corp. (SYMC) $25.30 -0.32% |
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| | Broker Tips | | Broker tips: Smiths Group, Fresnillo, Debenhams Shares in technology firm Smiths Group were making gains on Wednesday morning as the company impressed with its annual results, with Investec providing a boost after raising its target for the stock.
Investec raised its target for Smiths from 1,500p to 1,590p and maintained its 'buy' rating, saying that its current valuation "fails to reflect the quality of the group". "We believe that the group is fundamentally undervalued and today's statement might begin to wake up investors to the potential, even without major disposals."
UBS has reduced its estimates for precious metals producer Fresnillo after the recent news about unexpected increases to mining royalties in Mexico. The target has in turn been lowered from 1,250p to 1,150p and a 'neutral' rating has been maintained.
"Despite opposition from mining companies and uncertainty over the specific tax calculation, we believe it is likely that the more onerous mining royalties will be imposed," UBS said.
N+1 Singer has lowered its recommendation for High Street department store Debenhams from 'buy' to 'hold', raising concerns with heightened competition and higher costs.
"Whilst the various strategic improvements are clear to see, sales momentum has evidently faded in H2. This, coupled with rising online costs and a new competitive threat from M&S, means we are adopting a more cautious approach to future earnings per share growth, cutting outer year numbers by 7%, and moving to 'hold'." | | |
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