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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Stocks surge on signs of progress in Washington Stocks rebounded strongly on Thursday after hitting a three-month low the day before, as hopes that US politicians can resolve the ongoing deadlock in Washington prompted bargain hunters back into the market.
The FTSE 100 finished 92.58 points higher at 6,430.49, a rise of 1.46%. This comes after the index ended Wednesday's session at 6,337.91, its worst level since July 3rd.
"The volume and enthusiasm of buying today appears to represent more of a reshuffling of books than conviction buying; however, regardless, the positive price movement across the markets will have been welcomed by traders battling fatigue from almost a month’s worth of negativity," said Alastair McCaig, Market Analyst at IG.
As expected, the Bank of England's Monetary Policy Committee (MPC) decided to hold the Bank Rate at 0.5%. The central bank has vowed to maintain the rate at its record low until the unemployment rate falls from its current level of 7.7% to 7%. The MPC also kept its asset purchase programme unchanged at £375bn.
Signs of progress in Washington; taper could be delayed
There were some signs of progress among US lawmakers today as Republicans showed their support for a short-term deal to raise the debt ceiling in order to avoid a dreaded default.
House Speaker John Boehner announced a proposal this afternoon to raise the limit for six weeks without conditions tied to changes in policy. He said he hopes that Obama would view the "good-faith" move as an attempt to meet him halfway on negotiations over the budget.
Markets were also reacting to last night's minutes of the latest Federal Open Market Committee meeting which showed that most members at the central bank still thought it would be appropriate to begin tapering quantitative easing before the end of the year. However, given that the meeting took place before the government shutdown, many now believe that a taper could be delayed until next year.
"If the decision on the debt ceiling is pushed back to December, I can’t see how the Fed could justify reducing its support when such a big threat hangs over the economy," said Market Analyst Craig Erlam from Alpari. "It also may not be clear at that stage exactly how big an impact the shutdown has had on the economy, and more importantly, consumer and business confidence."
Also spurring hopes for a continuation of stimulus was yesterday's nomination of well-known dove Janet Yellen as the next chair of the US Federal Reserve. Yellen will be the first female at the head of the US central bank and has been an advocate of the aggressive monetary easing started by her predecessor, Ben Bernanke, who steps down on January 31st 2014.
FTSE 100: Persimmon extends recent gains
House builder Persimmon was a high riser this afternoon as optimism over the government's 'Help to Buy' scheme continues to help the stock bounce off recent lows. Since hitting its worst level in five months at the end of the September, the stock has surged, rising 12% in the last three days alone.
Engineering giant GKN rose strongly after announcing that it has pinched Finance Director Adam Walker from business and events group Informa to replace William Seeger who will step down next year. Speaking in a research note on Informa, analyst Alex DeGroote from Panmure Gordon said that "Walker has been at Informa for almost six years and is well-known and liked by the investor community".
Financials were also performing well this afternoon, with Legal & General, RBS, Standard Life and Schroders making impressive gains.
Whitbread shares leapt on market chatter about a potential spin-off of its Costa Coffee chain. Analyst Jeffrey Harwood from Oriel Securities said Costa could split off on the basis that it "is difficult to believe that the group’s current structure is optimal" based on its role within the company.
Household utility giant SSE was lower after revealing that electricity and gas tariffs are to rise by an average 8.2% from November as the company attempts to pass on rising wholesale energy costs to customers.
FTSE 250: Keller jumps, N Brown slumps
Ground engineering firm Keller jumped today, one day after its announced purchase of Esorfranki Geotechnical, the largest ground engineering business in South Africa, as it looks to accelerate its entry into selected sub-Saharan construction markets.
Meanwhile, catalogue and internet shopping firm N Brown was extending losses after its first-half results yesterday. Citigroup retained its 'neutral' rating for the stock this morning, choosing to sit on the fence with the stock-trading at 14 times earnings.
Newsagent WH Smith surged after booking a full-year profit ahead of expectations, lifting its final dividend 15% and announcing a further £50m share buyback. Pre-tax profit rose 6% to £108m for the year ended August 31st while total sales fell 5% to £1.18bn. |
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| | FTSE 100 - Risers
Persimmon (PSN) 1,195.00p +5.66%
GKN (GKN) 358.20p +4.37%
Legal & General Group (LGEN) 194.50p +4.29%
CRH (CRH) 1,503.00p +4.16%
Royal Bank of Scotland Group (RBS) 384.90p +4.11%
Whitbread (WTB) 3,114.00p +4.08%
ARM Holdings (ARM) 983.50p +4.02%
Standard Life (SL.) 346.40p +3.96%
Schroders (SDR) 2,584.00p +3.65%
International Consolidated Airlines Group SA (CDI) (IAG) 338.60p +3.64%
FTSE 100 - Fallers
Vedanta Resources (VED) 1,015.00p -0.49%
SSE (SSE) 1,449.00p -0.34%
GlaxoSmithKline (GSK) 1,545.50p -0.29%
Shire Plc (SHP) 2,381.00p -0.25%
FTSE 250 - Risers
Keller Group (KLR) 1,050.00p +11.70%
Imagination Technologies Group (IMG) 280.70p +7.10%
Rank Group (RNK) 164.30p +6.83%
Dixons Retail (DXNS) 46.70p +5.82%
Ashtead Group (AHT) 624.00p +5.76%
WH Smith (SMWH) 882.00p +5.63%
EnQuest (ENQ) 128.90p +5.31%
Restaurant Group (RTN) 545.00p +5.21%
Jupiter Fund Management (JUP) 369.30p +4.91%
Fenner (FENR) 399.00p +4.75%
FTSE 250 - Fallers
Brown (N.) Group (BWNG) 475.70p -2.72%
Moneysupermarket.com Group (MONY) 142.50p -2.20%
African Barrick Gold (ABG) 151.50p -1.62%
Greggs (GRG) 433.00p -1.23%
Dunelm Group (DNLM) 856.50p -1.21%
Fisher (James) & Sons (FSJ) 1,120.00p -1.06%
Inmarsat (ISAT) 697.50p -1.06%
Marston's (MARS) 143.00p -1.04%
Essar Energy (ESSR) 126.50p -0.94%
IP Group (IPO) 136.20p -0.87% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Stocks rise on possible US debt ceiling compromise FTSE 100: 1.46%
DAX: 1.99%
CAC 40: 2.21%
FTSE MIB: 1.54%
IBEX 35: 2.24%
Stoxx 600: 1.68%
European stocks rose on reports of a possible compromise between US political parties on the debt ceiling.
Bank of England maintains policy
The Bank of England decided hold its interest rate at 0.5% and the asset purchase programme at £375bn.
The move came as no surprise, particularly since the central bank has vowed to maintain the key rate at a record low until the unemployment rate falls from its current level of 7.7% to 7%.
The European Central Bank, on the other hand, is expected to unveil new liquidity measures at its next policy announcement, according to economists.
About three in four of economists predict President Mario Draghi will reveal new liquidity measures such as longer-term refinancing operations, surveys by Bloomberg showed.
The majority of forecasters also say interest rates will remain unchanged through the first half of 2015.
Separately, the ECB and the People's Bank of China have established a bilateral currency swap agreement “in the context of rapidly growing bilateral trade and investment between the euro area and China, as well as the need to ensure the stability of financial markets”.
The swap agreement will be valid for three years and have a maximum size of 350bn yuan when yuan is provided to the ECB and €45bn when euros are provided to the PBC.
Hays, Givaudan
Hays rose after the UK recruitment agency posted a 2% rise in first-quarter net fees compared to last year on a comparable basis.
Givaudan declined after the fragrance maker reported third-quarter sales that missed estimates.
Tryg rallied after the Nordic property and casualty insurer reported third-quarter pre-tax profit of 907m kroner, compared to the forecast for 885m kroner.
Ladbrokes gained after an undisclosed buyer bought a stake in the UK bookmaker, The Telegraph reported.
CGG advanced after the oilfield surveyor posted a 94% increase in third-quarter vessel production.
Arkema jumped after UBS raised its rating on the French chemicals maker to a ‘buy’ from ‘neutral’.
Brent crude edges higher
Brent crude futures climbed $2.065 to $111.320 per barrel on the ICE.
The euro rose 0.09% to the 1.3536 US dollar. |
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| | US Market Report | | Dow Jones Industrials bounces off of technical support Dow Jones Industrials: 1.41%
Nasdaq Composite: 1.53%
S&P 500: 1,30%
The main US equity benchmarks have surged forward in early trading and are now near their best levels of the session. That came after a report that House Republicans will bring a temporary debt ceiling extension bill to the floor.
Despite a later report indicating that said extension will be “hard” - in the sense that it would not allow for another such move – markets have continued grinding higher, possibly in simple reaction to news that at least some progress seem to be being made.
To be had in account as well, the Dow Jones Industrials – for example – is now bouncing off of technical support in the form of its 200-day moving average.
Congress has until October 17th before hitting the $16.7trn debt ceiling and running out of cash to pay its bills.
The US government has been in shutdown for 10 days since missing last Monday’s deadline for a budget deal as lawmakers continue to wrangle over President Barack Obama’s controversial healthcare bill and raising the debt limit.
“All this essentially means is that negotiations will be delayed by a couple of months, at best, and we’ll be back in the same situation again come Christmas,” said Craig Erlam, Market Analyst at Alpari.
“Unfortunately though, under the circumstances that is a positive thing, not just for the financial markets but the global economy, which would suffer hugely if the US was forced to default on its debt.”
Erlam pointed to the recent spike in short-term debt yields which he believes indicates that traders are preparing for the “worst case scenario”.
He said it was a clear sign that investors are becoming nervous.
US Treasury Secretary Jack Lew warned Congress today that debt default would cause “irrevocable damage”. “The United States should not be put in a position of making such perilous choices for our economy and our citizens. There is no way of knowing the irrevocable damage such an approach would have on our economy and financial markets,” Lew said before the Senate finance committee.
In a more positive development in the US, Obama has nominated Janet Yellen as new Federal Reserve Chair to replace Ben Bernanke next year. Yellen, who has supported the Fed’s stimulus programme, was a widely expected and favoured choice among investors.
The Fed yesterday released the minutes from last month’s meeting which showed it was a close call in the central bank’s decision to maintain its $85bn per month in bond purchases. The central bank is waiting for a bigger pick up in the economy and jobs market before it begins tapering. It is now not expected to announce a tapering until the end of the year, though the ongoing shutdown of the US government could mean that the taper will be pushed out into 2014.
The government shutdown has also been blamed for a spike in US weekly initial jobless claims last week.
According to Capital Economics: “The jump in US weekly initial jobless claims to 374,000 last week, from 308,000, was largely due to a backlog of claims linked to an IT upgrade in California and a wave of private sector temporary layoffs triggered by the Federal government shutdown.”
On the company front, a gauge of banks advanced including Bank of America and JPMorgan.
Citrix Systems declined after the technology company reported preliminary third-quarter earnings that missed the analysts’ expectations.
Gilead Sciences climbed after making progress in a study of patients with chronic lymphocytic leukemia.
Front month West Texas crude futures are now rising by 0.40% to the $102.06/barrel level.
10-year US Treasury yields are now rising by 5 basis points to 2.71%.
S&P 500 - Risers
Best Buy Co. Inc. (BBY) $38.99 +7.53%
Janus Capital Group Inc. (JNS) $9.11 +4.65%
Gilead Sciences Inc. (GILD) $61.61 +4.60%
Time Warner Cable Inc. (TWC) $115.17 +4.44%
Invesco Ltd. (IVZ) $33.57 +4.38%
Netflix Inc. (NFLX) $300.10 +4.05%
Legg Mason Inc. (LM) $34.28 +3.91%
Goodyear Tire & Rubber Co. (GT) $22.85 +3.72%
Electronic Arts Inc. (EA) $25.03 +3.64%
Borg Warner Inc. (BWA) $101.49 +3.58%
S&P 500 - Fallers
Citrix Systems Inc. (CTXS) $58.55 -12.17%
Sears Holdings Corp. (SHLD) $56.41 -5.30%
Quest Diagnostics (DGX) $59.29 -3.91%
L Brands Inc (LTD) $57.59 -2.39%
Laboratory Corporation of America Holdings (LH) $98.65 -1.49%
St Jude Medical Inc. (STJ) $54.86 -1.26%
Chevron Corp. (CVX) $115.01 -0.96%
Teradata Corp. (TDC) $52.30 -0.85%
Consolidated Edison Inc. (ED) $55.38 -0.81%
Hewlett-Packard Co. (HPQ) $22.44 -0.71%
Dow Jones I.A - Risers
American Express Co. (AXP) $73.96 +2.41%
Boeing Co. (BA) $117.13 +2.32%
Intel Corp. (INTC) $23.05 +2.04%
United Technologies Corp. (UTX) $104.93 +2.03%
JP Morgan Chase & Co. (JPM) $51.75 +1.97%
Alcoa Inc. (AA) $8.24 +1.79%
Walt Disney Co. (DIS) $64.72 +1.78%
Bank of America Corp. (BAC) $14.09 +1.77%
Travelers Company Inc. (TRV) $83.68 +1.62%
Unitedhealth Group Inc. (UNH) $72.52 +1.60%
Dow Jones I.A - Fallers
Chevron Corp. (CVX) $115.01 -0.96%
Hewlett-Packard Co. (HPQ) $22.44 -0.71%
Exxon Mobil Corp. (XOM) $85.02 -0.16%
Merck & Co. Inc. (MRK) $47.24 -0.06%
AT&T Inc. (T) $33.74 -0.04%
Nasdaq 100 - Risers
Liberty Interactive Corp (LINTA) $24.44 +6.91%
Gilead Sciences Inc. (GILD) $61.61 +4.60%
Charter Communications Inc. (CHTR) $137.01 +4.19%
Netflix Inc. (NFLX) $300.10 +4.05%
Facebook Inc. (FB) $48.56 +3.83%
Akamai Technologies Inc. (AKAM) $51.05 +3.55%
Liberty Media Corporation - Class A (LMCA) $148.01 +3.28%
Western Digital Corp. (WDC) $65.18 +3.26%
Baidu Inc. (BIDU) $151.25 +3.21%
DIRECTV (DTV) $59.68 +2.99%
Nasdaq 100 - Fallers
Citrix Systems Inc. (CTXS) $58.55 -12.17%
Sears Holdings Corp. (SHLD) $56.41 -5.30%
Monster Beverage Corp (MNST) $53.22 -0.08%
CH Robinson Worldwide Inc (CHRW) $57.97 -0.05%
Dollar Tree Inc (DLTR) $57.65 -0.02% |
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| | Broker Tips | | Ashmore Group: Canaccord Genuity takes target from 380p to 400p and retains a hold recommendation. Numis shifts target from 380p to 390p reiterating its hold recommendation.
Ashtead Group: Numis upgrades to add with a target of 670p.
Berkeley Group: Panmure Gordon moves target from 2150p to 2200p and stays with its hold recommendation.
Britvic: Citi ups target from 590p to 640p and keeps a buy recommendation.
Brown (N) Group: Jefferies takes target from 500p to 575p retaining a buy recommendation.
Burberry Group: Deutsche Bank increases target from 1530p to 1600p and maintains its hold recommendation.
Croda International: UBS raises target from 2370p to 2510p leaving its neutral rating unaltered.
Diageo: Nomura lowers target from 2350p to 2300p staying with its buy recommendation. JP Morgan reduces target from 2200p to 2050p and reiterates an overweight rating.
Drax Group: Investec initiates with a target of 700p and an add rating.
EnQuest: HSBC upgrades to overweight with a target of 143p.
Essentra: Deutsche Bank cuts target from 866p to 845p, while leaving its buy recommendation unchanged.
First Group: RBC Capital moves target from 105p to 125p maintaining a neutral rating.
Gulf Keystone Petroleum: HSBC upgrades to neutral with a target of 185p.
Immunodiagnostic Systems Holdings: N+1 Singer raises target from 395p to 453p, while downgrading to hold.
Informa: Westhouse Securities reduces target from 570p to 513p downgrading to neutral.
ITV: HSBC ups target from 95p to 150p, while reiterating its underweight rating.
Majestic Wine: N+1 Singer initiates with a target of 590p and a buy recommendation.
Marston's: JP Morgan cuts target from 160p to 140p and retains a neutral rating.
Reed Elsevier: UBS takes target from 770p to 820p and stays with its neutral rating.
RSA Insurance Group: Alphavalue shifts target from 143.20p to 143.60p upgrading from add to buy.
Scapa Group: Numis upgrades to buy with a target of 100p.
Shire: Jefferies raises target from 2700p to 2900p and keeps a buy recommendation.
Standard Chartered: Berenberg reduces target from 1450p to 1200p and stays with its sell recommendation.
Telit Communications: Canaccord Genuity raises target from 117p to 204p and stays with its buy recommendation.
Vedanta Resources: Deutsche Bank cuts target from 1100p to 1050p reiterating a hold recommendation. | | |
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