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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 slip despite Merkel victory in German elections Stocks slipped into the red on Monday morning as investors digested this weekend's elections in Germany along with the uncertain outlook for monetary policy in the US.
German Chancellor Angela Merkel's CDU/CSU party won 41.5% of the vote in the federal elections this weekend after winning 311 seats in the Bundestag, though this was four seats shy of an absolute majority.
Meanwhile the current coalition partner, the Liberal Democrats (FDP), missed out of the 5% minimum threshold and will not be represented in parliament meaning that Merkel is left having to build a new coalition with either the Social Democrats (SPD) or the Green Party, who won 25.7% and 8.4% of the vote, respectively.
"Despite Merkel winning her third term at the helm of Europe's biggest economy, the votes came in slightly short of an overall victory. It will now be up to Merkel to convince leftist rivals to join a coalition government," said Financial Sales Trader Lee Mumford from Spreadex.
Stocks gained strongly in the aftermath of last Wednesday's surprise decision by the Federal Reserve not to begin scaling back stimulus. However, gains were mostly erased by the end of the week after one policymaker assured that a 'taper' is still on the cards and could come at any points.
James Bullard, head of the St Louis Fed, admitted that this month's decision to maintain quantitative easing was a close call and that the central bank could still trim asset purchases at its next meeting. He said: "it's possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October."
FTSE 100: Aberdeen upbeat despite volatile markets
Investment group Aberdeen gained after saying that underlying profits should still come in at the higher end of analysts' forecasts despite a slight drop in assets under management (AuM) in the fourth quarter. AuM declined from £209.6bn to £201.7bn during the two months to August 31st (fiscal year-end: September 30th) due to "considerable" volatility across financial markets, it said.
Banking stocks were providing a drag this morning with RBS, Lloyds and Barclays registering losses.
British Gas owner Centrica declined after announcing the decision not proceed with its Baird and Caythorpe gas storage projects due to "weak economics for storage projects and the announcement by the UK government on September 4th ruling out intervention in the market to encourage additional gas storage capacity to be built". Utility peers National Grid and United Utilities were also lower.
Oil major BP was out of favour early on after Beaufort Securities cut its rating for the stock to 'hold'. Meanwhile, chemicals firm Croda was performing well after Credit Suisse upgraded its recommendation to 'outperform'.
Telecoms giant Vodafone gained after UBS raised its target for the shares from 230p to 245p after including Kabel Deutschland in its forecasts whilst removing Verizon Wireless. The bank retained its 'buy' rating, saying that Vodafone's valuation is "attractive".
FTSE 250: AG Barr falls after H1 results
Drinks group A.G BARR's half-year profits rose 12% as a warm UK summer helped to drive sales of soft drinks, but shares fell early on after the company said it expects general trading "to remain challenging".
Dairy foods company Dairy Crest edged higher after saying it continues to perform in line with company expectations, despite the challenging trading environment, and profit targets for the full year remain unchanged.
Animal genetics group Genus fell after announcing the acquisition of Génétiporc, the porcine genetic business of Aliments Breton Foods Group, for £25m. |
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| | UK Event Calendar | | Monday September 23
INTERIMS
Barr (A.G.), Global Ports Investments GDR (REG S), GLOBO, KBC Advanced Technologies, Silence Therapeutics, Toumaz Limited
INTERIM DIVIDEND PAYMENT DATE
African Barrick Gold , GKN, Henderson Opportunities Trust
GMS
Armadale Capital, Hambledon Mining
FINALS
Finsbury Food Group, Haynes Publishing Group
ANNUAL REPORT
City of London Inv Trust, Sacoil Holdings (DI)
AGMS
Bushveld Minerals Limited, Eurasia Drilling Co Ltd GDR (Reg S), Hidong Estate, Invesco Property Income Trust Ltd., Park Group, Trinity Capital, Utilico Emerging Markets Ltd (DI), Vectura Group
|
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks fall after Merkel fails to win majority in election - Merkel fails to win majority in German election
- ECB's Draghi speaks
- Eurozone PMI data
- Investors turn to US Fed speeches
FTSE 100: -0.28%
DAX: -0.16%
CAC 40: -0.05
FTSE MIB: -0.12%
IBEX 35: 0.30%
Stoxx 600: -0.11%
European stocks slumped on Monday as German Chancellor Angela Merkel failed to secure enough votes to win a majority in the country's federal election.
Merkel will need to find a coalition partner after her Christian Democratic Union gained 41.5% of votes - falling short of the required amount to win her third term as leader of Europe's largest economy.
Merke's current coalition partner, the Liberal Democrats, will not be represented in parliament as they missed the 5% minimum threshold.
She will have to build a new coalition with either the Social Democrats which won 25.7% or the Green party which won 8.4%.
Looking ahead, European Central Bank President Mario Draghi will speak on Monday afternoon.
Last Monday he told a conference in Berlin that a single authority was needed in Europe to restore the Eurozone's banking sector.
"We need a mechanism that allows non-viable banks to be wound down without financial stability risks, as we see in the US," he said.
His remarks came two days after Germany said the idea was legally questionable, putting him on a collision course with the country.
Draghi added that despite market improvements, the "recovery is only in its infancy". He said the economy remains fragile and unemployment is still too high so the ECB expects key interest rates to remain at present of lower levels for an extended period of time.
Also high on the European agenda is the release of a Purchasing Managers' Index (PMI) Manufacturing report which is expected to show an increase to 51.7 in September from 51.4 the previous month. A reading above 50 signals expansion.
The PMI Composite is pegged to rise to 51.7 this month from 50.5 in August while PMI Services is anticipated to rise to 51 from 50.7.
In China PMI manufacturing rose to a six-month high in September of 51.2 compared to 50.1 in August and an estimate of 50.9.
Fed speeches after stimulus announcement
Federal Reserve Bank of Atlanta President Dennis P. Lockhart, Fed Bank of New York President William Dudley and Fed Bank of Dallas President Richard Fisher will speak later Monday.
Stocks rose strongly following Wednesday's surprise decision by the Federal Reserve to keep up its $85bn monthly asset purchases until it sees further economic recovery.
However, gains were mostly erased by the end of the week after James Bullard, head of the St Louis Fed, said that a tapering could come in October.
Bullard admitted that this month's decision to maintain quantitative easing was a close call and that the central bank could still trim asset purchases at its next meeting.
Investors will now turn to speeches from three other Fed policymakers for an indication of what's to come.
Centrica, A.G Barr
Centrica's shares declined after announcing a £240m non-cash write off on gas storage projects.
Drinks group A.G BARR slumped after the soft drinks company said it expects general trading "to remain challenging".
Dairy foods company Dairy Crest gained after saying it continues to perform in line with company expectations despite the challenging trading environment.
Animal genetics group Genus fell after announcing the acquisition of Génétiporc, the porcine genetic business of Aliments Breton Foods Group, for £25m. |
| | This major London estate agent is listing on the LSE. | | Your free report on the Foxtons IPO includes: - IPO parameters (price range/market cap etc)
- Full breakdown of dates, including grey-market period.
- Performance of peers and recent similar IPOs.
Click here for your free Foxtons IPO report Losses can exceed deposits. |
| | US Market Report | | US close: Stocks sink as Fed uncertainty grips markets - Bullard comments hit stocks, post-Fed rally fades
- Barclays lifts year-end S&P target
- BlackBerry plummets on job losses, Q2 warning
Dow Jones: -1.19%
Nasdaq: -0.39%
S&P 500: -0.72%
Strong gains made after the Federal Reserve meeting were mostly erased by the end of trade on Friday as uncertainty over the future of monetary policy dampened sentiment.
Markets surged on Wednesday after the Fed's surprise decision not to scale back stimulus with both the Dow Jones and S&P 500 finishing at record highs. The central bank said it "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases".
Stocks however have fallen over the two days since with markets dropping sharply ahead of the weekend after comments from the head of the St Louis Fed, James Bullard.
Bullard admitted that this month's decision to maintain stimulus was a close call and that the central bank could still taper quantitative easing at its next meeting. He said: "it's possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October."
Senior Market Analyst Michael Hewson from CMC Markets said that Bullard's admission so soon after Wednesday's surprise has "introduced an element of sogginess to today's afternoon trading with investors reluctant to take on any significant new positions ahead of the weekend".
The decision not to taper prompted Barclays to raise its year-end target for the S&P 500 from 1,600 to 1,800 with analyst Barry Knapp saying that the "'lower for longer' monetary policy is more probable than we believed a week ago". The closing price of the index was 1,709.91 on Friday.
Also on investors' minds today will be the looming elections in Germany this weekend, with the outcome still highly uncertain given that a rising euro-sceptic movement across the country could complicate things for Angela Merkel's CDU party.
BlackBerry drops sharply
Shares of BlackBerry plunged after the smartphone company said late afternoon that it would be slashing 4,500 jobs as it warned that revenues for the second quarter would come in well below current market forecasts.
Construction and mining equipment group Caterpillar fell after saying that global machine sales dropped 10% in the three months to the end of August.
Coal stocks including Consol Energy and Peabody Energy lost their spark on the back of concerns with emission requirements for new power plants by the Environmental Protection Agency.
NetApp Inc. fell as William Blair & Co lowered its rating on the maker of data-storage products from 'market perform to 'underperform'.
S&P 500 - Risers
Teradata Corp. (TDC) $60.73 +2.79%
Netflix Inc. (NFLX) $313.83 +2.73%
Agilent Technologies Inc. (A) $52.15 +2.30%
Visa Inc. (V) $198.83 +2.12%
Bemis Co. Inc. (BMS) $39.58 +1.67%
Allergan Inc. (AGN) $92.63 +1.57%
Amazon.Com Inc. (AMZN) $316.34 +1.32%
Newfield Exploration Co (NFX) $26.83 +1.28%
Intuitive Surgical Inc. (ISRG) $374.69 +1.27%
Goldman Sachs Group Inc. (GS) $169.75 +1.17%
S&P 500 - Fallers
Darden Restaurants Inc. (DRI) $45.78 -7.14%
Rockwell Collins Inc. (COL) $70.00 -5.76%
Newmont Mining Corp. (NEM) $28.07 -5.74%
GameStop Corp. (GME) $49.43 -4.65%
Sealed Air Corp. (SEE) $28.56 -4.26%
D. R. Horton Inc. (DHI) $20.20 -3.86%
Dun & Bradstreet Corp. (DNB) $103.87 -3.70%
Sprint Nextel Corporation (S) $6.26 -3.54%
Caterpillar Inc. (CAT) $84.75 -3.42%
Cliffs Natural Resources Inc. (CLF) $21.98 -3.30%
Dow Jones I.A - Risers
Pfizer Inc. (PFE) $28.97 +0.45%
Coca-Cola Co. (KO) $39.40 +0.23%
JP Morgan Chase & Co. (JPM) $52.80 +0.09%
Dow Jones I.A - Fallers
Caterpillar Inc. (CAT) $84.75 -3.42%
Microsoft Corp. (MSFT) $32.79 -2.52%
United Technologies Corp. (UTX) $109.58 -2.16%
Boeing Co. (BA) $116.63 -2.02%
Home Depot Inc. (HD) $77.00 -1.92%
General Electric Co. (GE) $24.01 -1.84%
Alcoa Inc. (AA) $8.29 -1.78%
International Business Machines Corp. (IBM) $190.02 -1.74%
E.I. du Pont de Nemours and Co. (DD) $59.42 -1.51%
Verizon Communications Inc. (VZ) $47.78 -1.50%
Nasdaq 100 - Risers
Facebook Inc. (FB) $47.49 +3.28%
Tesla Motors Inc (TSLA) $183.39 +3.07%
Netflix Inc. (NFLX) $313.83 +2.73%
Avago Technologies Ltd. (AVGO) $41.62 +2.13%
Liberty Interactive Corp (LINTA) $24.53 +1.66%
Check Point Software Technologies Ltd. (CHKP) $58.56 +1.54%
Amazon.Com Inc. (AMZN) $316.34 +1.32%
Intuitive Surgical Inc. (ISRG) $374.69 +1.27%
eBay Inc. (EBAY) $54.95 +0.92%
Celgene Corp. (CELG) $149.86 +0.90%
Nasdaq 100 - Fallers
Catamaran Corp (CTRX) $49.52 -4.84%
Randgold Resources Ltd. Ads (GOLD) $73.38 -4.53%
Garmin Ltd. (GRMN) $43.61 -3.05%
NetApp Inc. (NTAP) $43.20 -2.53%
Microsoft Corp. (MSFT) $32.79 -2.52%
Sigma-Aldrich Corp. (SIAL) $85.93 -2.35%
Regeneron Pharmaceuticals Inc. (REGN) $300.80 -2.05%
Mondelez International Inc. (MDLZ) $32.30 -1.94%
Fastenal Co. (FAST) $50.16 -1.61%
Xilinx Inc. (XLNX) $47.12 -1.33% |
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| | Newspaper Round Up | | Monday newspaper round-up: Ernst and Young, Tensions, Gas field Further proof that Britain is hauling itself off the economic rocks is offered today with news that one of the Big Four accountancy firms is to add thousands to its ranks to cope with growing demand for business advice. Ernst and Young will hire 3,700 people in Britain alone by the end of June next year as it embarks on an audacious expansion project that could lead to it overtaking its closest rival, The Times can reveal.
Eurozone tensions are simmering as the bloc faces four more years of tough austerity under the leadership of conservative Chancellor Angela Merkel. German exit polls on Sunday evening indicated that Mrs Merkel's conservative bloc won 42% of the vote, and may be just shy of a historic absolute majority. A projection by broadcaster ARD put Merkel's conservatives on 42.5%, just over the combined total for the left parties who together scored 41.6%, The Daily Telegraph reports.
A crucial North Sea gas field frozen by international sanctions against Iran is set to return to production following Government intervention aimed at lifting the ban. The Rhum gas field is jointly owned by BP and National Iranian Oil and once supplied five per cent of Britain's gas output. But the field has been idle for three years because of US and EU sanctions against Iran. However, the Government is understood to be close to agreeing a waiver for the field in a move that would allow the gas to flow once more. It would deliver a multi-million pound boost to BP and its Iranian partner, The Daily Mail says.
Confidence in the economy and support from US investors is turbocharging demand for stock market flotations in Britain, with the UK heading for its best year since the financial crisis. The value of UK-issued initial public offerings has reached $7.16bn this year – more than eight times the amount raised by the same stage in 2012, according to Dealogic – even before the government presses ahead with the float of Royal Mail, which hopes to raise £1.2bn, the FT writes.
Angela Merkel, the German chancellor, must on Monday start the hunt for a reliable coalition partner for a new government, after election results left her just five seats short of an absolute majority in the Bundestag. The outcome is seen as a remarkable personal victory for the chancellor, who steered her Christian Democrats to their best result in more than 20 years, winning 311 seats in the 630-seat parliament, a swing of 8 points to the largest party group, the FT explains.
Mark Carney's revolutionary "forward guidance" on interest rates is so half-baked it could pose a threat to financial stability, a former Bank of England economist has warned. Richard Barwell, senior European economist at Royal Bank of Scotland, said the central bank's commitment to keep rates at a record low of 0.5% until unemployment drops to 7% was "incomplete" because it did not map out the route back to normal monetary policy. Fuller guidance from Mr Carney, the new Governor, would have been more effective because clarity about the timing of a first increase may "quickly give way to increased uncertainty about the rate of ascent" once the economy is motoring, Mr Barwell, a senior economist at the Bank until 2011, said, according to The Daily Telegraph. | | |
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