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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Markets rise despite debt-ceiling uncertainty Markets finished at their highest levels in two and a half weeks on Monday despite the ongoing uncertainty surrounding the US debt ceiling, as a deal to raise the borrowing limit still remains elusive.
The FTSE 100 finished 20.46 points higher at 6,507.65, its best level since September 27th when it ended the session at 6,512.66. Alastair McCaig, Market Analyst at IG, said that today’s gains are “more impressive when you consider the lethargy of traders at large today”.
“The City's traders have become increasingly accustomed to delayed trains, slow running undergrounds and increasingly miserable weather, and judging by the market’s reaction this morning we can also add US political indecision to the list,” McCaig said.
Senate Majority Leader Harry Reid said he held productive talks with Republican leader Mitch McConnell over the weekend but failed to reach a plan over the debt ceiling. Nevertheless, he said discussions were “substantive” and that he’s “optimistic about the prospects for a positive conclusion”.
Stocks on Wall Street started today’s session in negative territory but had pared losses by the close in London ahead of a meeting between President Barack Obama and congressional leaders later on this evening. According to a White House official, Obama “will make clear the need for Congress to act to pay our bills, and reopen the government”.
Chinese data comes in mixed
A mixed batch of economic data from China was also in focus today. Trade figures showed an unexpected 0.3% year-on-year decline in exports in September as a result of weak global demand.
However, imports jumped by 7.4% which, along with a pick-up in consumer price inflation to 3.1% in August, suggests that domestic demand is strengthening.
Market Analyst Craig Erlam from Alpari said this is "is crucial for the country to successfully transform away from an export-led model to one more focused on consumer spending".
FTSE 100: Banks provide a drag
Royal Bank of Scotland was a heavy faller today after being hit with a downgrade by Bank of America Merrill Lynch. The US broker lowered its rating for RBS from ‘neutral’ to ‘underperform, cutting its price target from 345p to 325p, and also removed Lloyds (still a ‘buy’) from its ‘Europe 1’ list, saying: “A combination of share-price performance, margin dynamics and capital ‘mist’ push us to turn more cautious on the UK banks.”
Leading the risers this afternoon was chemicals group Johnson Matthey jumped on Monday after the stock was upgraded by JPMorgan Cazenove from 'neutral' to 'overweight'. The US bank hiked its target for the shares from 2,800p to 4,000p, saying that it sees "major potential from a swathe of new global industrial capex".
Travis Perkins shares were also heading higher after Bank of America lifted its rating from 'underperform' to 'buy' and its target from 1,460p to 1,900p.
Beverages group SABMiller was trading in the red after the stock was downgraded by Citigroup from 'buy' to 'neutral' and its target was cut from 3,550p to 3,200p, while Glencore Xstrata dropped after Liberum Capital reduced its rating on the miner from 'buy' to 'hold'.
FTSE 250: Michael Page plunges after mixed update
Recruitment group Michael Page International fell sharply after a mixed third quarter, as improved performances in the UK and US were counterbalanced by flat sales in Europe and declines in Asia Pacific. Gross profit increased by just 0.4% year-on-year at constant currency.
Chemring, the defence firm, continued to extend Friday's heavy losses after the group issued a profit warning, saying that it was suffering as a result of the US crisis, as well as production troubles and unrest in the Middle East. JPMorgan Cazenove cut its rating on the stock to ‘neutral’ today.
Meanwhile, Afren shares were heading north after Goldman Sachs Group reaffirmed its 'conviction buy' rating on the stock.
Set-top box group Pace was also a high riser, jumping the most in over two, after Bloomberg said that Netflix is in talks to add TV subscription-streaming services to set-top boxes of US cable-TV operators. |
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FTSE 100 - Risers
Johnson Matthey (JMAT) 2,987.00p +5.88%
Travis Perkins (TPK) 1,763.00p +5.07%
Resolution Ltd. (RSL) 336.00p +3.35%
Associated British Foods (ABF) 1,963.00p +2.72%
CRH (CRH) 1,540.00p +2.53%
Smith & Nephew (SN.) 786.00p +1.88%
William Hill (WMH) 419.90p +1.87%
BAE Systems (BA.) 443.80p +1.72%
Hargreaves Lansdown (HL.) 1,009.00p +1.61%
BT Group (BT.A) 353.50p +1.55%
FTSE 100 - Fallers
SABMiller (SAB) 2,970.00p -1.46%
Glencore Xstrata (GLEN) 331.20p -1.40%
Royal Bank of Scotland Group (RBS) 371.70p -1.38%
Centrica (CNA) 358.70p -1.27%
Burberry Group (BRBY) 1,585.00p -1.25%
Standard Chartered (STAN) 1,469.50p -1.21%
Diageo (DGE) 1,953.50p -0.99%
Aggreko (AGK) 1,465.00p -0.81%
Petrofac Ltd. (PFC) 1,360.00p -0.80%
easyJet (EZJ) 1,263.00p -0.71%
FTSE 250 - Risers
Afren (AFR) 145.60p +6.98%
Diploma (DPLM) 645.50p +4.96%
Pace (PIC) 274.50p +4.77%
Crest Nicholson Holdings (CRST) 360.00p +4.05%
Beazley (BEZ) 217.00p +3.63%
Greencore Group (GNC) 160.40p +3.62%
Wetherspoon (J.D.) (JDW) 738.50p +3.36%
CSR (CSR) 517.00p +3.30%
Computacenter (CCC) 553.50p +3.17%
Moneysupermarket.com Group (MONY) 146.80p +3.09%
FTSE 250 - Fallers
Michael Page International (MPI) 470.00p -4.95%
Chemring Group (CHG) 211.10p -4.05%
Supergroup (SGP) 1,052.00p -2.41%
Bank of Georgia Holdings (BGEO) 1,971.00p -2.28%
Soco International (SIA) 398.00p -2.14%
Betfair Group (BET) 985.00p -1.99%
Essar Energy (ESSR) 125.30p -1.96%
Kenmare Resources (KMR) 25.25p -1.75%
Senior (SNR) 252.90p -1.48%
Petra Diamonds Ltd.(DI) (PDL) 115.60p -1.37%
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | European stocks were little changed as the US debt ceiling crept closer and as Eurozone industrial production data beat forecasts. In the Eurozone, industrial production rose 1% in August, the strongest pace in more than two years and exceeding the consensus for a 0.8% increase.
Portugal registered the highest increase, with output growing by 8.2%. German output rose 1.8% while French output climbed 0.2% following three consecutive months of decline.
Germany’s SPD lists demands ahead of coalition talks
Germany’s Social Democrats stood their ground on Monday over the introduction of a minimum wage before a second round of talks with Angela Merkel to form a coalition with her Christian Democrats.
Merkel faces difficult coalition talks this week as the SPD raised its demands for a nationwide minimum wage of €8.50 $11.51 an hour.
Merkel is trying to seek a partner for her third term after failing to secure enough votes to win the election last month.
ECB cracks down on banks
European Central Bank Executive Board member Benoit Coeure said there will be three different checks on the balance sheets of European banks to ensure credibility.
The ECB will be taking over supervision of Europe’s lenders to avoid another banking crisis sparked by sovereign debt.
“The way we will do it next year will be very different from the way that the previous two stress tests were done,” Coeure said at an event in Washington yesterday.
“Any number provided by the banks will first be checked by the national supervisor, then there will be a second check at the European level, in Frankfurt. And then there will be a third check by independent auditors.”
The UK has reached a draft deal with the European Union to lift its objections to turning the ECB into a supervisor, two EU officials told Bloomberg.
Britain had blocked approval of the legislation last month on concerns over a potential unwinding on safeguards to prevent the UK from being ostracised in meetings.
RBS, PSA Peugeot Citroen
Royal Bank of Scotland slumped despite saying yesterday that it had booked up 5,000 mortgage appointments with customers within just three hours of the Help to Buy scheme going live last week. The stock was downgraded this morning by Bank of America to 'underperform'.
PSA Peugeot Citroen plunged following a report it plans to sell €3bn of new shares to China’s Dongfeng Motor Corp. and the French government.
Konecranes Oyj declined as the Finnish maker of lifting equipment forecast that 2013 sales will be “slightly lower” than last year.
French maker of design software Dassault Systemes slid after third quarter revenue missed forecasts.
UK platinum refiner Johnson Matthey rose after JPMorgan upgraded the shares to ‘overweight’ from ‘neutral’.
Electricite de France advanced as Energy Secretary Ed Davey said the UK was close to announcing a deal to build a nuclear power plant.
Chinese exports fall, inflation rises
Chinese exports fell in September by 0.3% from a year earlier, against expectations of a 6% rise, data showed on Saturday.
Inflation in China jumped to a seven-month high of 3.1% last month as poor weather drove up food prices, another report revealed.
Separate data showed Brent crude futures fell $0.879 to $110.310 per barrel on the ICE.
The euro rose 0.28% to $1.3582. |
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| | US Market Report | | Stocks pull back as debt ceiling nears US stocks fell on Monday as an agreement over raising the debt ceiling remained elusive ahead of the Thursday deadline with the American government entering its third week in shutdown mode.
Wall Street benchmarks opened with losses of around 0.5% in morning trade, snapping a three-day winning streak, as hopes over an agreement to avert a default began to fade with just three days to go before the US hits its $16.7tn borrowing limit.
“If we go another 48 hours without a deal to avoid the debt ceiling being agreed, we could see the rate of selling pickup, and that comfort replaced with panic,” said Market Analyst Craig Erlam from Alpari.
Senate Majority Leader Harry Reid said he held productive talks with Republican leader Mitch McConnell but they failed to reach a plan over the weekend. He said that the discussions were “substantive” and he’s “optimistic about the prospects for a positive conclusion”.
The Senate and House will meet in Washington on Monday to continue discussions, even though it is the Columbus Day federal holiday.
International Monetary Fund head Christine Lagarde has warned that a US default could send the globe into a recession. In a TV interview with NBC’s Meet the Press she said: “If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over and we would be at risk of tipping yet again into recession."
Whilst developments in Washington continue to rock markets, investors will be keeping a close eye on the corporate earnings calendar which picks up towards the end of the week with Goldman Sachs and Bank of America in focus.
Micron continues to pull back
Semiconductor group Micron Technology slumped sharply for the second straight day following its fiscal fourth-quarter results last week. The company reported on Thursday that it swung to a profit of $1.71bn in the final quarter, compared with a loss of $243m the year. A number of analysts were cited as saying that the declines were as a result of profit-taking following a 160% surge for the stock since the start of 2013.
Wells Fargo on Friday downgraded its rating for Micron to ‘underperform’ from ‘market perform’. The bank said that even after raising its estimates, its target still stands below the current share price.
Merck, the pharmaceuticals firm, was trading in the red after saying it is talking with private-equity groups and investors to share the cost of some clinical trials. Both Bernstein and Barclays downgraded their ratings for the stock today, to ‘market perform’ and ‘equalweight’, respectively.
Handbag designer Coach was in the red after analysts at Canaccord Genuity downgraded the stock to ‘hold’, saying that the firm’s 30% US market share could come under pressure from rising competition at rival Michael Kors. |
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| | Broker Tips | | Admiral Group: JP Morgan cuts target from 1122p to 1022p maintaining an underweight rating.
Balfour Beatty: Numis increases target from 285p to 315p and stays with its add rating.
Bankers Petroleum: Goldman Sachs takes target from 365p to 379p and reiterates a buy recommendation.
Barratt Developments: Bank of America ups target from 365p to 400p and upgrades to buy.
Bunzl: JP Morgan downgrades from overweight to neutral with a target of 1520p.
Capital & Regional: Numis shifts target from 49p to 50p and keeps a buy recommendation.
Centrica: HSBC cuts target from 440p to 400p downgrading to neutral.
Chemring Group: JP Morgan reduces target from 325p to 260p and downgrades from overweight to neutral.
Croda International: JP Morgan cuts target from 2850p to 2450p and downgrades from overweight to neutral.
Dixons Retail: Deutsche Bank shifts target from 53p to 54p retaining its buy recommendation.
Drax Group: HSBC reduces target from 735p to 680p and keeps a neutral rating.
Glencore Xstrata: Liberum Capital downgrades to hold.
Great Eastern Energy Corporation: Goldman Sachs cuts target from 773p to 744p, while leaving its buy recommendation unchanged.
Gulf Keystone Petroleum: Goldman Sachs upgrades to buy with a target of 283p.
IQE: Liberum Capital downgrades to hold with a target of 33p.
Johnson Matthey: JP Morgan raises target from 2800p to 4000p upgrading from neutral to overweight.
Lok'n Store: Panmure Gordon raises target from 137p to 211p and maintains a buy recommendation.
Northern Petroleum: Goldman Sachs shifts target from 69p to 68p and maintains its neutral rating.
Petroceltic International: Goldman Sachs reduces target from 303p to 287p and stays with its neutral rating.
Publishing Technology: Westhouse Securities takes target from 475p to 560p, but downgrades to add.
Rockhopper Exploration: Goldman Sachs lowers target from 326p to 316p, while upgrading to a strong buy recommendation.
Royal Bank of Scotland: Bank of America cuts target from 345p to 325p downgrading to underperform.
SABMiller: Nomura reduces target from 2800p to 2700p and keeps a reduce rating; Citi takes target from 3550p to 3200p and downgrades from buy to neutral.
Secure Trust Bank: Numis moves target from 2065p to 2071p and reiterates a hold recommendation.
SOCO International: Bank of America reduces target from 536p to 420p and downgrades to neutral; Goldman Sachs moves target from 453p to 461p maintaining a neutral rating.
Software Radio Technology: Westhouse Securities shifts target from 26p to 30p and keeps a neutral rating.
SSE: JP Morgan cuts target from 1220p to 1200p keeping its underweight rating; HSBC lowers target from 1630p to 1610p and maintains its neutral rating.
Travis Perkins: Bank of America raises target from 1460p to 1900p upgrading to buy. | | |
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