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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 to three-week low on policy uncertainty A cautious start turned into a market-wide sell-off by the close of trade on Friday as nervous investors booked profits ahead of the weekend.
The UK's benchmark FTSE 100 index finished 52.93 points lower at 6,512.66, its worst closing level in three weeks. The last time it closed lower was on September 4th when it ended the session at 6,474.74.
"With the end of the quarter looming on Monday and political risks rising it would appear that investors could well be indulging in a little bit of portfolio adjustment and balancing into the end of the week today, and the end of the quarter, the other side of the weekend," said Senior Market Analyst Michael Hewson from CMC Markets.
Ongoing concerns about the US budget, uncertainty surrounding monetary policy on both sides of the Atlantic, as well as political battles in Italy continued to dampen spirits today with mining stocks bearing the brunt of the sell-off in London.
Housing stocks were also under pressure after Bank of England (BoE) Governor Market Carney said that he doesn't see the need to extend quantitative easing (QE) in the UK given the decent economic data as of late. "Mark Carney now feels it is time to put a cap on the QE programme. This has worried traders, as the next step will be to reduce the stimulus level," said Market Analyst David Madden from IG.
Meanwhile, Chancellor George Osborne said that BoE should have greater powers to prevent the 'Help to Buy' scheme from sparking a property boom. He said that the Bank's Financial Policy Committee (FPC) will make annual reviews of the scheme starting next year, instead of the first review coming after three years as previously expected.
Over in the States, conflicting comments from members of the Federal Reserve continue to grab the headlines in the aftermath of the central bank's surprise decision last week not to scale back QE. Fed Bank of Richmond President Jeffrey Lacker spoke on Thursday saying that he supported a scaling back of stimulus this month, while Charles Evans from the Chicago Fed said today that there is "a decent chance" that a 'taper' might not come until early 2014.
Budget negotiations in Washington continue to hammer markets with investors nervous ahead of the October 1st deadline, hoping that politicians can agree on a extension to the current debt-ceiling limit of $16.7tn to avoid a government shutdown when the new fiscal year begins. According to analyst Mark Zandi from Moody's Analytics, a three-to-four-week shutdown could shave 1.4 percentage points off US economic growth in the fourth quarter. He currently estimates an expansion of 3% without a government closure. |
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| FTSE 100: Persimmon drops on Carney, Osborne comments
Housebuilder Persimmon was leading the downside on Friday after Bank of England (BoE) Governor Mark Carney said that he doesn't see the need for more stimulus to prop up the economy. Markets were also reaction to Persimmon's plans to halt building work in some parts of the south Wales valleys after the company said the sites don't generate sufficient profits.
Mining stocks including Antofagasta, Rio Tinto, BHP Billiton and Vedanta Resources were also providing a drag today bearing the brunt of reduced risk appetite. Rio was shrugging off some upbeat comments from Nomura which labelled it as "one of the cheapest stocks" within its peer group.
Randgold Resources and Fresnillo edged lower after Bank of America Merrill Lynch cut its gold-price forecast by 17% to $1,294 an ounce for 2014.
SABMiller and Diageo were under pressure after Credit Suisse downgraded the European beverages sector from 'overweight' to 'benchmark', saying it is the "third-most expensive sector in Europe [...] and has the second-worst earnings revisions".
Engineering group IMI was among the best performers after hiring former Weir boss Mark Selway as its new Chief Executive. He will take the reins from company veteran Martin Lamb who will step down at the end of this year after nearly 13 years at the helm.
Babcock, the engineering support services firm, edged higher after saying that trading in the first half ending September 30th has "remained positive". The company said it "will continue to make further strong progress and that results for the 2013/14 financial year will be in line with its expectations".
FTSE 250: Premier Farnell climbs on UBS comments
Shares in Premier Farnell gained strongly on Friday after analysts at UBS said that an acceleration of growth at the electronic components firm should be "around the corner". "Given forward indicators (e.g. PMIs) only improved from around May, with the normal six-month lag we note company growth should start to improve from November and so are unconcerned by the lack of acceleration seen so far," the bank said.
Housing stocks were falling heavily today after comments from Carney and Osborne prompted investors to take profits. Countrywide, Taylor Wimpey, Barratt Developments and Bellway were registering heavy losses by the close. Mining stocks were also lower including Hochschild Mining, EVRAZ, Kazakhmys and Centamin.
FTSE 100 - Risers
Sports Direct International (SPD) 713.00p +1.78%
Aggreko (AGK) 1,608.00p +1.13%
IMI (IMI) 1,469.00p +1.10%
BT Group (BT.A) 346.40p +0.96%
GKN (GKN) 352.10p +0.83%
Petrofac Ltd. (PFC) 1,410.00p +0.71%
Babcock International Group (BAB) 1,201.00p +0.67%
Carnival (CCL) 2,113.00p +0.62%
ARM Holdings (ARM) 1,010.00p +0.60%
SSE (SSE) 1,468.00p +0.55%
FTSE 100 - Fallers
Persimmon (PSN) 1,061.00p -4.33%
Antofagasta (ANTO) 830.00p -2.75%
Vedanta Resources (VED) 1,073.00p -2.72%
Rio Tinto (RIO) 3,067.00p -2.34%
Tate & Lyle (TATE) 738.00p -2.25%
BHP Billiton (BLT) 1,841.00p -2.23%
SABMiller (SAB) 3,165.00p -2.12%
Unilever (ULVR) 2,457.00p -1.92%
Anglo American (AAL) 1,540.00p -1.88%
Sage Group (SGE) 329.90p -1.79%
FTSE 250 - Risers
Moneysupermarket.com Group (MONY) 150.10p +4.53%
Premier Farnell (PFL) 216.70p +2.75%
Menzies(John) (MNZS) 809.00p +2.34%
Fenner (FENR) 398.90p +2.05%
Millennium & Copthorne Hotels (MLC) 552.00p +1.66%
Crest Nicholson Holdings (CRST) 335.50p +1.64%
RPS Group (RPS) 268.00p +1.63%
Thomas Cook Group (TCG) 147.50p +1.51%
888 Holdings (888) 165.90p +1.47%
Fidessa Group (FDSA) 2,012.00p +1.46%
FTSE 250 - Fallers
Hochschild Mining (HOC) 180.10p -6.15%
Countrywide (CWD) 518.00p -4.87%
Kazakhmys (KAZ) 273.90p -4.46%
Centamin (DI) (CEY) 45.35p -4.10%
Evraz (EVR) 128.00p -4.05%
Taylor Wimpey (TW.) 97.00p -3.87%
AZ Electronic Materials SA (DI) (AZEM) 299.40p -3.67%
Keller Group (KLR) 1,002.00p -3.19%
Barratt Developments (BDEV) 302.10p -3.08%
Bellway (BWY) 1,262.00p -3.07% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after consumer confidence data - US, UK and Eurozone consumer confidence
- US budget deadline looms
- Carney says no to further stimulus
- ECB member says bias remains towards rate cuts
- Italian bonds decline
FTSE 100: -0.81%
DAX: -0.03%
CAC 40: 0.00%
FTSE MIB: -1.27%
IBEX 35: -0.47%
Stoxx 600: -0.27%
European stocks were little changed following mixed consumer confidence reports in the UK, Europe and the US.
Eurozone confidence rose in September more than analysts' expectations. An index of executive and consumer sentiment increased for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels revealed, beating the forecast of 96.
In the UK, consumer confidence in September jumped to highest level since 2010 as signs of economic recovery encouraged spending. Market research group GfK's forward-looking consumer sentiment indicator rose to -10 this month compared to -13 in August. Economists were expecting a reading of -11.
US consumer confidence, on the other hand, declined to a five-month low in September. The Thomson Reuters/University of Michigan final index of sentiment decreased to 77.5 this month from 82.1 in August. However, it trumped forecasts for a reading of 76.8.
The US data came amid concerns the country's government might fail to reach an agreement over the budget in time to avoid a possible shutdown.
Congress has been divided over raising the government's borrowing limit as Monday's deadline for passing the budget looms.
If the chambers do not pass a budget bill on Monday, it could lead to a government shutdown or the country defaulting from October 1st.
Some economists say a shutdown would cut into fourth-quarter economic growth by as much as 1.4 percentage points depending on its length.
"The haggling between US President Barack Obama and the Republicans has already started in the public arena, but in order to ensure that the US does not see its debt downgraded again Mr Obama needs to move this on and quickly," said Alastair McCaig, an analyst at IG.
"This will be the third time in less than two years that the US will have needed to take action to avoid hitting its debt ceiling; rather than once again kicking the can down the road they should tackle the underlying issues."
Following the Federal Reserve's shock decision last week to keep monetary stimulus unchanged, central bank officials were due to speak including Charles Evans and William Dudley.
The market is looking for any hints of whether the Fed will start scaling back its $85bn per month in bond purchases at its next meeting in October.
Carney votes against further QE
Bank of England Governor Mark Carney has said he sees no reason to continue with more quantitative easing (QE).
However, he also said that if the recovery stalls then the Bank would consider the option of further bond-buying, according to the Yorkshire Post.
"The advanced economies as a whole are doing a bit better," he told the newspaper.
"That's going to help the UK as a whole. These are more traditional export markets, so that matters. Within the UK, we are probably leading the pack of the major advanced economies as we speak right now."
His remarks boosted the pound, reaching 1.6121 against the dollar in early trading before falling back to trade a third of a cent higher at $1.6063.
ECB's guidance deterred volatility, says Cœuré
European Central Bank (ECB) member Benoît Cœuré noted that the implementation of a forward guidance has deterred market volatility and the Eurozone monetary authority continues to have an easing bias which makes further rate cuts possible.
While admitting that it was too early to determine if the forward guidance had "worked", Cœuré was convinced that in its absence, "money market rates would have displayed more upward volatility than was observed".
The Frenchman said the central bank was not targeting specific value for money market rates, but sought to make sure that "their fluctuations remain within reasonable bounds and do not hurt economic recovery".
Most analysts expect ECB rates to remain at 0.5% until April 2015 and, rather than a cut, expect another round of long-term refinancing operations (LTROs) designed to flood credit markets with liquidity.
The next ECB policy decision is scheduled for October 2nd.
Tenaris, Vallourec slide
Tenaris tumbled after Bank of America Corp reduced its rating on the steel-pipe maker to 'neutral' from 'buy', citing a weak market in North America and Europe.
Another steel pipe producer, Vallourec, dropped after saying it will buy the assets of Lupatech's tubular services Rio das Ostras unit for €21m.
H&M advanced after Credit Suisse Group, Cantor Fitzgerald LP and Societe Generale lifted their ratings on the European clothing retailer.
Countrywide declined following news Alchemy Partners is selling a 5.9% stake in the UK property broker.
Vestas Wind Systems rallied after the Danish turbine maker formed a venture with Mitsubishi Heavy Industries to develop offshore wind energy.
SEB climbed after Societe Generale lifted its rating of the maker of Tefal pans and Rowenta household appliances to a 'buy' from 'neutral'.
Italian bonds fall
Italy's government bonds declined after an auction of €6bn of debt maturing in 2018 and 2024.
The yield on 10-year securities rose five basis points to 4.39%, extending this week's gain to 11 basis points.
Brent crude futures edged up $0.027 to $109.240 per barrel on the ICE.
The euro climbed 0.39% to the 1.3542 US dollar. |
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- Performance of peers and recent similar IPOs.
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| | US Market Report | | US close: Benchmarks snap five-day losing streak as jobless claims fall - Jobless claims post surprise drop
- Pending homes sales, US GDP disappoints
- Debt-ceiling talks still in focus
Dow Jones: 0.36%
Nasdaq: 0.69%
S&P 500: 0.37%
US markets finished with moderate gains on Thursday with the Dow Jones and S&P 500 ending a five-day losing streak as an upbeat reading of US jobless claims offset concerns about budget negotiations in Washington.
US jobless claims fell by 5,000 last week, surprising the consensus of analysts who had expected a jump of 15,000. IT issues in a number of regions had distorted figures the week before leading to a higher number of claims so markets had largely expected a rebound in claims last week.
"While the lingering issues in California could result in a further uptick in continuing claims in coming weeks, it appears that the improved initial claims numbers are more a result of improved labour-market conditions than technical issues," said analyst Cooper Howes from Barclays.
Markets opened strongly after the figures but upside was limited by some disappointing housing-market data and no upwards revisions to economic growth forecasts.
Meanwhile, investors were cautious ahead of the October 1st deadline, hope that politicians can agree on a extension to the current debt-ceiling limit of $16.7tn to avoid an government shutdown when the new fiscal year begins.
Treasury Secretary Jacob Lew said on Wednesday the US will hit its debt ceiling by October 17th. He said unless the US is allowed to extend its borrowing limit, currently set at $17trn, the government will be left with $30bn of cash - half the money it needs to pay its bills.
The future of Federal Reserve monetary policy continues to be in focus in the aftermath of last week's surprise decision by the Fed to hold off from tapering stimulus as it await a stronger recovery. Conflicting comments from Fed officials since then have sparked further uncertainty as analysts begin speculate over if October will see the first 'taper'.
Fed Bank of Richmond President Jeffrey Lacker spoke on Thursday, saying that he supported a scaling back of stimulus this month but said the Fed would find ot hard to rein in policy without losing face given that last week's shock announcement hurt the central bank's credibility.
"It could be hard to do it [tapering] in October without losing face, but I don't see why we couldn't do it," he said.
Jobless claims in surprise fall
US jobless claims dropped from a revised 310,000 to 305,000 in the week ended September 20th, surprising the consensus of analysts who had expected a jump to 325,000.
"While the lingering issues in California could result in a further uptick in continuing claims in coming weeks, it appears that the improved initial claims numbers are more a result of improved labour-market conditions than technical issues," said analyst Cooper Howes from Barclays.
Pending-home sales fell for the third straight month, dropping 1.6% in August after a revised 1.4% decline the month before. Analysts had expected a fall of just 1%.
The second and final estimate of US gross domestic product (GDP) growth was unrevised at an annualised rate of 2.5% for the second quarter, disappointing analysts who had expected an upwards change to 2.6%.
Commenting on the numbers economists at Barclays Research had this to say: "All in all, the report provides no new information for policymakers, who will be more keenly focused on forward-looking growth indicators. On this front the picture remains mixed - our GDP tracking estimate, for example, currently suggests some easing in the third quarter (as it stands at 1.7%)."
JC Penney leads gains
Fashion retailer JC Penney shares registered a large rise after saying it expects positive sales trends in the second half of this year.
Retailing peer Bed Bath & Beyond rallied after it raised its forecast for full-year adjusted earnings per share to between $4.88 to $5.01 from a previous range of $4.84 to $5.01.
Caesars Entertainment Corp. fell as the casino operator started selling 10m new shares.
Hertz Global Holdings declined after cutting its forecast for full-year revenue and profit due to weaker than expected car rentals at US airports.
Online marketplace eBay surged after paying $800m to cut payment platform Braintree which it said was a perfect fit with it own payments arm PayPal.
S&P 500 - Risers
Regeneron Pharmaceuticals Inc. (REGN) $305.53 +4.55%
Bed Bath & Beyond Inc. (BBBY) $77.54 +4.52%
Yahoo! Inc. (YHOO) $32.75 +4.50%
eBay Inc. (EBAY) $56.64 +4.48%
Cabot Oil & Gas Corp. (COG) $37.12 +4.36%
Discovery Communications Inc. Class A (DISCA) $83.99 +3.73%
Autodesk Inc. (ADSK) $41.94 +3.13%
Range Resources Corp. (RRC) $78.09 +3.08%
Celgene Corp. (CELG) $149.89 +2.97%
J.C. Penney Co. Inc. (JCP) $10.42 +2.96%
S&P 500 - Fallers
Jabil Circuit Inc. (JBL) $21.62 -9.92%
Windstream Holdings Inc (WIN) $8.19 -4.32%
Western Digital Corp. (WDC) $63.32 -3.22%
News Corp Class A (NWSA) $16.29 -3.04%
Eli Lilly and Company (LLY) $51.04 -2.98%
Cisco Systems Inc. (CSCO) $23.77 -2.70%
H&R Block Inc. (HRB) $26.05 -2.62%
McCormick & Co. (MKC) $66.56 -2.19%
Tesoro Corp. (TSO) $44.53 -2.07%
PG&E Corp. (PCG) $41.04 -1.98%
Dow Jones I.A - Risers
Verizon Communications Inc. (VZ) $47.67 +1.54%
Walt Disney Co. (DIS) $65.24 +1.23%
Coca-Cola Co. (KO) $38.74 +1.07%
Microsoft Corp. (MSFT) $32.77 +0.82%
Boeing Co. (BA) $119.38 +0.73%
Home Depot Inc. (HD) $76.07 +0.73%
McDonald's Corp. (MCD) $98.19 +0.58%
AT&T Inc. (T) $34.23 +0.53%
American Express Co. (AXP) $76.32 +0.43%
Procter & Gamble Co. (PG) $78.05 +0.42%
Dow Jones I.A - Fallers
Cisco Systems Inc. (CSCO) $23.77 -2.70%
Intel Corp. (INTC) $23.41 -1.22%
Alcoa Inc. (AA) $8.27 -0.72%
Chevron Corp. (CVX) $123.49 -0.47%
Hewlett-Packard Co. (HPQ) $21.30 -0.47%
Bank of America Corp. (BAC) $14.08 -0.42%
Caterpillar Inc. (CAT) $84.20 -0.36%
Travelers Company Inc. (TRV) $85.83 -0.17%
Exxon Mobil Corp. (XOM) $87.07 -0.08%
Wal-Mart Stores Inc. (WMT) $74.62 -0.04%
Nasdaq 100 - Risers
Regeneron Pharmaceuticals Inc. (REGN) $305.53 +4.55%
Bed Bath & Beyond Inc. (BBBY) $77.54 +4.52%
Yahoo! Inc. (YHOO) $32.75 +4.50%
eBay Inc. (EBAY) $56.64 +4.48%
Discovery Communications Inc. Class A (DISCA) $83.99 +3.73%
Autodesk Inc. (ADSK) $41.94 +3.13%
Celgene Corp. (CELG) $149.89 +2.97%
Micron Technology Inc. (MU) $17.47 +2.95%
Sirius XM Radio Inc (SIRI) $3.93 +2.64%
Alexion Pharmaceuticals Inc. (ALXN) $115.97 +2.58%
Nasdaq 100 - Fallers
Western Digital Corp. (WDC) $63.32 -3.22%
Cisco Systems Inc. (CSCO) $23.77 -2.70%
Seagate Technology Plc (STX) $43.14 -1.66%
Broadcom Corp. (BRCM) $26.37 -1.57%
Monster Beverage Corp (MNST) $53.57 -1.42%
Intel Corp. (INTC) $23.41 -1.22%
KLA-Tencor Corp. (KLAC) $60.96 -0.86%
Randgold Resources Ltd. Ads (GOLD) $72.11 -0.73%
Cerner Corp. (CERN) $48.71 -0.57%
Fiserv Inc. (FISV) $100.94 -0.47% |
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| | Broker Tips | | Broker tips: Rio Tinto, Premier Farnell, Gold miners Nomura has reiterated its 'buy' rating and 3,700p target for diversified mining group Rio Tinto, saying that the company may be able to find the happy balance between growth and returns.
The broker said that Rio remains one of the cheapest stocks within its peer group, trading at just nine times 2014 earnings. It reckons the earliest shareholders will likely see a buy-back will be around the time of the 2014 results in February 2015. This should be around $3-4bn in magnitude.
Shares in Premier Farnell gained strongly on Friday after analysts at UBS said that an acceleration of growth at the electronic components firm should be "around the corner".
"Given forward indicators (e.g. PMIs) only improved from around May, with the normal six-month lag we note company growth should start to improve from November and so are unconcerned by the lack of acceleration seen so far," the bank said. UBS retained its 'neutral' rating for the stock, saying that it trades at 14.6 times current-year earnings compared with its mid-cycle valuation multiple of 13.5.
Randgold Resources and African Barrick Gold remain the top picks of Bank of America Merrill Lynch in the gold sector, but the bank dampened sentiment on the market on Friday by cutting its gold prices sharply for the next two years.
BofA has lowered its gold-price forecasts for 2014 and 2015 by 17% to $1,294 an ounce and by 18% to $1,291 an ounce in real terms, respectively. The bank said: "Gold prices have stabilised and they could remain supported as the US reaches the debt ceiling. However, we believe the focus of investors remains firmly on a gradual normalisation of US monetary policy. Hence, our base case anticipates sustained headwinds to gold prices. | | |
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