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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 flat as investors turn cautious ahead of Fed Markets opened broadly flat on Wednesday morning as investors refrained from building positions ahead of the conclusion of this month's all-important Federal Reserve policy meeting.
However, with an announcement from the US central bank not due out until after markets close this evening, there will be plenty of other economic indicators for traders to digest.
First up, the Bank of England (BoE) will this morning release the minutes of its latest policy meeting at which it left rates and stimulus measures on hold. Senior Market Analyst Michael Hewson from CMC Markets said that in light of recent economic data the minutes "could well see more divergence on members' views about the policy of forward guidance than was evident at previous meetings".
Elsewhere, investors will be focusing on Eurozone construction figures, as well as US building permits and housing starts.
The FTSE 100 was more or less unchanged this morning from last night's close of 6,570.17. The index hit a six-week high of 6,622.86 on Monday, its best close since August 2nd.
Markets await FOMC decision
The Federal Open Market Committee (FOMC) 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.
"A reduction around these levels has to some degree been priced in already whilst for long-term investors, it's irrelevant whether the taper comes in September or later since it's definitely coming by year's end," said Max Cohen, a Financial Sales Trader from Spreadex.
"Having said that, any delay in tapering could see stocks start to sell off with traders possibly fearing that the strength of the economy has not convinced policymakers. It is expected that a larger than forecast taper will also trigger a slide in shares," Cohen said.
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.
FTSE 100: Lloyds rebounds after heavy falls
Banking group Lloyds was among the best performers this morning. The stock was recovering after sinking sharply yesterday following the news that the government placed a 6% stake as it formally began the process of disposing its stake following the state bailout in 2008.
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.
Engineering firm Smiths Group was higher after raising its full-year dividend by 4% and returning £118m to shareholders by way of a special dividend despite reporting a mixed set of annual results, with profits flat on last year.
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: Redrow jumps after strong full-year figures
British housebuilder Redrow revealed a stellar set of full-year results, after progress across the group, as it recommended the return of a final dividend. The FTSE 250-listed 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.
IG Group, Dunelm, Kier, Renishaw, Interserve, Computacenter and Ladbrokes were among the worst performers after going ex-dividend. |
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| FTSE 100: Lloyds falls as government begins stake sale
Banking group Lloyds was in the red after UK Financial Investments sold a 6% stake in the bank for £3.2bn, reducing its shareholding from about 38.7% to approximately 32.7%. The Treasury sold 4.3bn shares at a price of 75p each.
Part-nationalised peer RBS was also lower after UBS downgraded the bank from 'buy' to 'neutral'. Analyst said they like the bank's improving fundamentals - "under a new 'business-focused' management team" - but reckon that the stock's valuation is up with events.
Barclays was also lower after it was reported yesterday that it is facing a £50m fine for allegedly breaching market listing rules over its capital raisings. The bank also said that its adjusted income for July and August was lower than in the same period of the previous year, resulting in a 5% year-on-year decline in adjusted income for the eight-month period to August 31st.
Temporary power and temperature control firm Aggreko was the standout faller on the FTSE 100 after Credit Suisse downgraded the stock from 'neutral' to 'underperform' and slashed its target by 30% from 2,000p to 1,400p to reflect "more challenging trading conditions in the Power Projects division".
Mining group Glencore Xstrata was being weighed down by UBS, which lowered its rating from 'buy' to 'neutral', saying that a "challenging" price outlook will cap share-price performance. Sector peer Randgold, however, rose as gold prices rebounded after hitting a five-week low the day before.
The decline in risk appetite today benefited defensive stocks such as utility groups Severn Trent and United Utilities, as well as consumer products firms Unilever and Diageo.
FTSE 250: Investec drops after disappointing update
Financial services firm Investec took a hit after saying that half-year results will be behind the prior year after the Australian business was negatively affected by significant strategic restructuring and the UK Specialist Banking business was hit by low levels of activity.
Travel stocks were performing well after upbeat comments on the UK bus and rail markets from JPMorgan Cazenove. The US bank raised its ratings for both Go-Ahead and Stagecoach from 'neutral' to 'overweight'.
Debenhams rose after saying it expects annual pre-tax profit in line with market forecasts on the back of growth in market share and like-for-like sales.
FTSE 100 - Risers
United Utilities Group (UU.) 703.00p +2.25%
Severn Trent (SVT) 1,792.00p +1.93%
Randgold Resources Ltd. (RRS) 4,545.00p +1.32%
Reed Elsevier (REL) 828.50p +1.16%
International Consolidated Airlines Group SA (CDI) (IAG) 328.10p +0.95%
Unilever (ULVR) 2,513.00p +0.84%
Shire Plc (SHP) 2,551.00p +0.71%
Schroders (SDR) 2,519.00p +0.68%
Diageo (DGE) 2,025.00p +0.62%
Amec (AMEC) 1,090.00p +0.55%
FTSE 100 - Fallers
Aggreko (AGK) 1,580.00p -4.18%
Lloyds Banking Group (LLOY) 74.65p -3.50%
Standard Life (SL.) 343.90p -2.88%
Meggitt (MGGT) 549.50p -2.57%
IMI (IMI) 1,465.00p -2.27%
Glencore Xstrata (GLEN) 334.20p -2.25%
Vedanta Resources (VED) 1,158.00p -2.11%
Barclays (BARC) 299.00p -2.10%
Sage Group (SGE) 353.00p -2.05%
ARM Holdings (ARM) 953.50p -1.90%
FTSE 250 - Risers
Kazakhmys (KAZ) 300.20p +3.52%
Salamander Energy (SMDR) 128.60p +3.04%
Beazley (BEZ) 222.60p +2.87%
Ocado Group (OCDO) 387.00p +2.84%
Britvic (BVIC) 592.00p +2.60%
Go-Ahead Group (GOG) 1,601.00p +2.23%
Rank Group (RNK) 163.50p +2.19%
Templeton Emerging Markets Inv Trust (TEM) 554.00p +1.74%
Debenhams (DEB) 105.00p +1.74%
IG Group Holdings (IGG) 604.50p +1.68%
FTSE 250 - Fallers
Vesuvius (VSVS) 464.20p -4.64%
Restaurant Group (RTN) 550.00p -3.93%
Moneysupermarket.com Group (MONY) 157.30p -3.79%
Home Retail Group (HOME) 168.70p -3.66%
Investec (INVP) 425.80p -3.64%
Spectris (SXS) 2,214.00p -3.61%
Domino Printing Sciences (DNO) 650.00p -3.49%
Centamin (DI) (CEY) 44.00p -3.45%
Hochschild Mining (HOC) 229.50p -3.33%
Cranswick (CWK) 1,152.00p -3.11% |
| | UK Event Calendar | | Wednesday September 18th
INTERIMS
Brightside Group, Cello Group, EG Solutions, JD Sports Fashion, Serviced Office Group
INTERIM DIVIDEND PAYMENT DATE
Hiscox Ltd, Mobeus Income & Growth Vct
INTERIM EX-DIVIDEND DATE
32Red, Antofagasta, BBA Aviation, Chime Communications, Computacenter, Costain Group, Derwent London, Highcroft Investment, InterQuest Group, Interserve, Irish Continental Group Units, Ladbrokes, Melrose Industries, Molins, Neptune-Calculus Income & Growth VCT, New Europe Property Investments, Octopus Second AIM VCT, Petrofac Ltd., Primary Health Properties, Puma VCT V, RPS Group, Stadium Group, Total Produce, Tribal Group
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Building Permits (US) (13:30)
Crude Oil Inventories (US) (15:30)
FOMC Interest Rate (US) (17:15)
Housing Starts (US) (13:30)
MBA Mortgage Applications (US) (12:00)
FINALS
Redrow, Smiths Group, Town Centre Securities
SPECIAL EX-DIVIDEND PAYMENT DATE
Dunelm Group
AGMS
Cohort, Games Workshop Group, Great Western Mining Corporation, Imaginatik, Marechale Capital , Small Companies Dividend Trust, Small Companies Dividend ZDP shares, Trafalgar New Homes, Triple Point Income VCT
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Minutes (09:30)
FINAL DIVIDEND PAYMENT DATE
Falkland Islands Holdings
FINAL EX-DIVIDEND DATE
AdEPT Telecom, Best of the Best, Brooks Macdonald Group, Consort Medical, Daisy Group, Henderson Smaller Companies Inv Trust, IG Group Holdings, Kier Group, Renishaw, Standard Life UK Smaller Companies Trust, Swan (John) & Sons |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks mixed ahead of Fed stimulus unveiling - Fed to announce stimulus measures
- BoE releases meeting minutes
- Cyprus to end capital control
FTSE 100: 0.05%
DAX: 0.12%
CAC 40: -0.06%
FTSE MIB: 0.32%
IBEX 35: 0.29%
Stoxx 600: 0.11%
European equities were mixed as the Federal Reserve prepared to wrap up the final day of its policy meeting.
The central bank will later Wednesday announce its stimulus measures and interest rate decision.
The Fed is expected to reduce its main rate to 0.25% from 0.3% and scale back its $85bn monthly asset purchases.
"The market expectation is for a $10-15bn asset purchase reduction to be introduced later, where anything less would likely introduce a potential relief rally within indices and tumble in the US dollar," said Joshua Mahony, Research Analyst at Alpari.
"The well-known strategy of 'sell' on the rumours and 'buy' on the news could very well come into play upon occurrence, where expectation is so high that the actual event could in fact come as somewhat of a non-event."
Looking to the UK, the Bank of England (BoE) will release minutes of its last meeting when the central bank reiterated that they won't raise borrowing costs until unemployment falls to 7%.
While the Bank does not expect the unemployment rate to drop to 7% until late 2016, the recent release of upbeat economic data has prompted investors to forecast an earlier increase.
Some analysts anticipate the unemployment rate will drop to 7% at least a year earlier than the Bank's prediction.
BoE Governor Mark Carney on Thursday defended his plan keep interest rates at the record low of 0.5% for up to three years when the central bank expects the jobs market to pick up.
Cyprus to end capital controls
Cyprus President Nicos Anastasiades said the government plans to end all controls on the movement of money in January.
Cyrus seized bank deposits and imposed capital controls to prevent a financial collapse almost a year ago.
"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 to name new board members
Siemens advanced following reports it was poised to appoint a new Deputy Chairman and Finance Chief at a supervisory board on Wednesday.
Barclays fell as it will have to refund at least 300,000 personal loan customers due to mistakes on their paperwork.
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 an additional dividend of 30p per share and increased its final dividend to 27p a share.
Euro falls against dollar
The euro dipped 0.01% to the 1.3358 US dollar.
Brent crude oil rose $0.221 to $108.430 per barrel on the ICE. |
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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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| | Newspaper Round Up | | Wednesday newspaper round-up: Lloyds, China house prices, RBS Retail investors are likely to be able to join in the next sale of the government's stake in Lloyds, the Chancellor said yesterday. Flush from the success of the government's inaugural sale of some of its shares for 3.2bn pounds, George Osborne said: "I will consider all options for later sales of our shareholding in Lloyds, including a retail offering to the public." The sale of 4.28bn pounds of the government's shares in about three hours on Monday evening at 75p each was 2.8 times covered by demand, market sources said. Temasek, the Singaporean sovereign wealth fund, was the single largest subscriber, buying just under 200m pounds of shares, The Times says.
Residential prices soared in China's biggest cities in August, raising the possibility that the government will take fresh measures to cool the red-hot market. Prices for new homes in Beijing, Shanghai and Shenzhen – the country's three largest cities – surged 18-19% year-on-year, accelerating from previous months. Nationwide, new homes prices increased 8.3% year-on-year, up from 7.5% in July, the Financial Times writes.
Four major institutions, including Standard Life, are considering suing Royal Bank of Scotland over its £12bn cash call in 2008, it was confirmed at a court hearing yesterday. The Scotsman revealed earlier this month that international corporate litigation firm Quinn Emanuel had been privately hired by Standard Life Investments and Legal & General Investments Management as they weigh up whether to launch legal action against RBS for allegedly misleading investors in the bumper rights issue. the other two institutions are Prudential and the University Superannuation Fund, the newspaper explains.
Average house prices in England surpassed their all-time peak of January 2008 to a new record high in July in a further sign the property market is heating up, official figures showed today. Home values rose 3.3% over a year ago but 2.5% of that gain was driven by the property market in London and the South East. In the capital properties were worth nearly 10% (9.7%) more in July than a year earlier. The surge prompted one economist to forecast house prices would grow by seven per cent next year and added to fears that Government efforts to boost mortgage lending are creating a housing bubble, according to The Daily Mail.
A plea went out to petrol retailers today not to profiteer from a plunge in wholesale costs and to ease pressure on motorists by cutting prices at the pumps. The RAC said a litre of unleaded petrol was now 6p cheaper on the wholesale market than at the end of August, while diesel was down by 2p a litre, giving petrol stations the power to lower prices on the forecourt, The Daily Mail reports.
Jack Lew, the US Treasury secretary, said on Tuesday that the administration would not negotiate over congressional approval to lift US borrowings, drawing a line in the sand ahead of high-stakes budget talks with Republicans in coming weeks. Yet after a fortnight in which President Barack Obama has zigzagged between diplomacy and military action on Syria, and backed away from nominating Lawrence Summers to head the Federal Reserve, Republicans plan to test the president's resolve, The Financial Times writes. | | |
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