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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 jump to five-month high after US jobs miss Stocks across Europe rose strongly on Tuesday afternoon with London's FTSE 100 rising to a five-month high following a worse-than-expected US jobs report which spurred hopes of a near-term continuation of quantitative easing (QE) by the Federal Reserve.
"The full impact of the government shutdown is still unknown, and while that remains the case, don't expect the Federal Open Market Committee to start turning off America's QE taps when it meets later this month," said Marcus Bullus, Trading Director at MB Capital.
After a tentative start, the FTSE 100 advanced 41.46 points to 6,695.66, its highest closing high since May 28th when it closed at 6,762.01.
Non-farm payrolls increased by just 148,000 in September, according to the US data this afternoon which was delayed by over two weeks due to the prolonged government shutdown. The consensus forecast was for a much bigger increase of 180,000.
While the unemployment rate fell from 7.3% to 7.2%, the data reinforced speculation that the Fed will refrain from tapering stimulus until next year, given that that the survey was taken before the fiscal stand-off in Washington which is said to have weighed heavily on economic growth.
Analyst Michael Gapen from Barclays said the report was on the "soft side" and that the recent pace of job growth is "unlikely to satisfy [Fed] policymakers". He said that the data reduces the likelihood of the Fed scaling back of stimulus in the near future, as he pushed back his forecast for the first taper of asset purchases to March 2014, from his previous prediction December 2013.
Earnings impress, miners gain
Household products group Reckitt Benckiser was a high riser after lifting its 2013 revenue growth guidance to "at least 6%" following a strong third quarter and a decent performance by recent acquisitions.
BHP Billiton was also in demand after the world's largest miner raised its estimate for annual iron ore production whilst maintaining guidance for oil, copper and coal output.
Engineering firm GKN advanced after a 16% increase in group sales to £1.87bn and a 34% jump in profits in the third quarter, helped by a good performance from its auto and commercial aerospace divisions.
Mining stocks were also providing a lift in London today as metals prices advanced across the board on the back of a weaker US dollar. Precious metals peers Randgold and Fresnillo were rising strongly by the close.
After swinging between gains and losses, chip designer ARM Holdings finished firmly in the red as investors gave a mixed reaction to third-quarter figures despite a strong 36% jump in pre-tax profits to £92.6m.
Whitbread finished broadly flat despite interim earnings rising ahead of expectations as its Premier Inns hotels and Costa coffee shops continued to grab market share. Total sales rose 12.2% in the first half.
SSE was lower after Ofgem banned energy suppliers from increasing prices on fixed-term tariffs in a bid to create a "simpler, clearer and fairer" energy market for customers.
Meanwhile, airline peers IAG and easyJet were dampened after profit guidance from German group Deutsche Lufthansa disappointed analysts due to higher costs from its Score restructuring programme. |
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| FTSE 100 - Risers
Reckitt Benckiser Group (RB.) 4,734.00p +5.20%
BHP Billiton (BLT) 1,950.50p +4.11%
Randgold Resources Ltd. (RRS) 4,665.00p +3.97%
Fresnillo (FRES) 1,006.00p +2.86%
Royal Bank of Scotland Group (RBS) 362.00p +2.52%
Aberdeen Asset Management (ADN) 426.40p +2.30%
Carnival (CCL) 2,141.00p +2.20%
Aggreko (AGK) 1,503.00p +2.04%
Standard Chartered (STAN) 1,522.00p +1.77%
GKN (GKN) 368.80p +1.74%
FTSE 100 - Fallers
ARM Holdings (ARM) 1,004.00p -3.37%
Sports Direct International (SPD) 706.50p -1.88%
Persimmon (PSN) 1,227.00p -1.84%
easyJet (EZJ) 1,336.00p -1.62%
International Consolidated Airlines Group SA (CDI) (IAG) 359.00p -1.48%
ITV (ITV) 192.10p -1.08%
Tullow Oil (TLW) 980.00p -1.01%
Kingfisher (KGF) 373.80p -0.98%
Reed Elsevier (REL) 857.00p -0.87%
Shire Plc (SHP) 2,493.00p -0.87%
FTSE 250 - Risers
African Barrick Gold (ABG) 167.00p +5.23%
Ashmore Group (ASHM) 419.80p +3.96%
Supergroup (SGP) 1,148.00p +3.52%
Ted Baker (TED) 1,754.00p +3.48%
esure Group (ESUR) 238.60p +3.38%
Polymetal International (POLY) 614.00p +3.02%
ITE Group (ITE) 299.70p +2.57%
Bwin.party Digital Entertainment (BPTY) 121.70p +2.53%
Kazakhmys (KAZ) 262.00p +2.38%
AL Noor Hospitals Group (ANH) 885.00p +2.19%
FTSE 250 - Fallers
UBM (UBM) 687.50p -7.59%
Petra Diamonds Ltd.(DI) (PDL) 120.90p -3.28%
Centamin (DI) (CEY) 51.85p -2.63%
888 Holdings (888) 167.40p -2.62%
Capital & Counties Properties (CAPC) 355.00p -2.26%
Beazley (BEZ) 219.00p -2.19%
Kenmare Resources (KMR) 21.77p -2.16%
Imagination Technologies Group (IMG) 287.20p -2.15%
Moneysupermarket.com Group (MONY) 156.30p -2.13%
Bovis Homes Group (BVS) 788.00p -1.93% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks mixed after US jobs report - US unemployment rate falls
- US employers add fewer than expected jobs
- ECB's Coene signals possible policy action
FTSE 100: 0.60%
DAX: 0.86%
CAC 40: 0.35%
FTSE MIB: 0.52%
IBEX 35: -0.38%
Stoxx 600: 0.44%
European equities were little changed as the US unemployment rate fell to the lowest level since November 2008.
Unemployment fell to 7.2% in September from 7.3% in August, beating the forecast for the rate to remain unchanged.
However, employers in the world's biggest economy added fewer workers than expected last month in the lead up to the government shutdown.
Non-farm payrolls fell to 148,000 in September from a revised 193,000 gain in August, according to the Labor Department.
Economists had pencilled in 180,000 jobs for last month.
The report had been delayed due the partial federal government shutdown which started on October 1st after lawmakers failed to reach an agreement over the budget in time.
Federal Reserve policymakers are turning to jobs data to determine whether the US is ready for a rise in the key interest rate and a scaling back of monetary stimulus.
"If there was any question about whether the Fed would taper later this month, this has surely put an end to it," said Craig Erlam, Market Analyst at Alpari.
"Most people had already accepted that it would not happen, but now the earliest date we can possibly be looking at is December. And even that is too early as far as I'm concerned."
The Fed will hold a two-day meeting starting October 29th.
ECB's Coene says inflation fall may prompt policy action
European Central Bank (ECB) Governing Council member Luc Coene has said that a further drop in inflation may warrant "policy action".
"If core inflation or inflation would continue to drop further, that in itself - even regardless of what the exchange rate does - in my view would already be sufficient reason to think about strengthening the accommodative stance of policy," Coene told newsagency MNI.
"Even if it stays where it is for an extended period of time, it's in my view too low."
Eurozone inflation in September was at 1.1%, well below the ECB's target of just below 2%.
Deutsche Lufthansa, Novartis
Deutsche Lufthansa's shares fell after the airline predicted operating profits this year of €600-€700m, well below analysts' expectations.
Swiss drug-maker Novartis rallied after raising its full-year outlook for the second quarter in a row.
German automaker Daimler AG is preparing a two-year investment plan for commercial vehicle production in Brazil and will announce its investments for 2014 and 2015 on Sunday, a spokeswoman cited by Reuters said.
Drugmaker Reckitt Benckiser jumped after saying full-year revenue will grow at least 6%.
Euro/dollar gains
The euro rose 0.67% to $1.3773.
Brent crude futures climbed $0.327 to $110.00 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks rise but pare early gains - Treasuries gain sharply after non-farm payrolls report
- Netflix shares turn around and fall
- Barclays Research now sees Fed tapering in March 2014
Dow Jones Industrials: 0.39%
Nasdaq Composite: 0.00%
S&P 500: 0.38%
The main US benchmarks hit fresh highs following the release of September’s delayed non-farm payrolls report, with market commentary generally indicating that expectations for a start to Federal Reserve tapering had been pushed even further back. After a few of hours of hours of trading however, gains had been pared.
As a result of the above, Barclays Research pushed out the expected date for the start of Fed tapering to March 2014 from December 2013 previously.
In turn, the euro hit a fresh yearly high against the dollar in the aftermath of that report, while long-term US Treasuries registered sharp gains.
US non-farm payrolls grew by 148,000 in September, well below the consensus forecast of an 180,000 increase. Perhaps most importantly, increases in private-sector employment slowed to 126,000 people from 161,000 in the previous estimate.
Average hourly earnings gained 0.1% month-on-month, one tenth of a percentage point less than had been expected.
The previous month's estimate for non-farm payrolls was raised to 193,000, after a preliminary print of 169,000. Unemployment, in the meantime, fell by one tenth of a percentage point to 7.2% (consensus: 7.3%).
United Technologies, Netflix, Texas Instruments and Coach move lower
Several top-tier outfits have today released better-than-forecast earnings. Amongst these were: Netflix, Delta Airlines, Kimberly Clarke, Lockheed Martin, Travelers, VM Ware, United Technologies, Lexmark, andDuPont.
Nevertheless, not all news was good news.
Shares of Netflix, the video-streaming company, rocketed higher at the start of the trading session after soundly beating consensus forecasts with its earnings per share. Those came in at 52 cents, versus the 48 expected. However, the firm believes that it will be many years before cable set-top boxes match the internet in terms of streaming volumes, sending shares lower by mid-morning.
Luxury accessories maker Coach led fallers on the S&P 500 after revealing that foreign exchange headwinds resulted in a drop in international sales. On a constant currency basis however, those were up by 9%.
Data storage provider EMC lowered its full-year guidance for earnings per share and revenues.
United Technologies warned on its full-year sales guidance. As a result of the ongoing weakness in military aerospace markets and the slow pace of recovery in Europe, the company now expects full-year sales of approximately $63bn, versus its previous estimate of $64bn.
Wall Street analysts have raised their forecasts for corporate profits, predicting an average increase of 2.5% for S&P 500 companies in the third quarter, according to estimates compiled by Bloomberg.
That compares well with a 1.7% projection at the beginning of the month. So far this earnings season, companies’ results have grown by 4.5% and their sales by 1.9%, with 51% having beaten analysts’ estimates for sales.
Better-than-forecast construction data
Weekly retail store chain sales expanded at a 1.4% week-on-week pace, according to ICSC.
Construction spending grew by 0.7% month-on-month in August (consensus: 0.4%). The previous month’s estimate has been revised to show a rise of 1.4%, versus the preliminary estimate of a 0.6% gain.
Crude futures are down
10-year US Treasury yields were down by eight basis points to the 2.53% mark.
West Texas crude futures were rising by 0.40% at $99.62/barrel mark on the NYMEX. |
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| | Broker Tips | | Broker tips: Reckitt, GKN, RSA, Coca-Cola HBC Investec has upgraded its rating for household products firm Reckitt Benckiser from 'sell' to 'hold' on the back of the company's upbeat outlook with its third-quarter results.
Analyst Martin Deboo said he was impressed by the company's "confident tone and strength in depth" in its outlook. He added that a "demanding" valuation prevents him from becoming more positive on the stock. "But we think the vista is getting sunnier for Reckitt. Move to 'hold'."
Jefferies has kept its 'buy' rating and 275p target for engineering giant GKN after the company's well-received quarterly results on Tuesday.
The broker said that in a seasonally weak third quarter, results have come in ahead of its expectations: "Apart from Land Systems, where there was an 8% organic decline in sales (1H13, -8%), everything else did pretty much what one might reasonably have expected against a trading backdrop somewhat stronger than that in 1H13, in our view."
Analysts at JPMorgan Cazenove have raised their target for insurance firm RSA, saying that operations in the UK are starting to "turn the corner".
JPMorgan has lifted its target from 132p to 141p and kept an 'overweight' rating on the stock, saying that the shares trade at just 8.8 times earnings, a discount to the wider UK non-life insurance sector which trades at an average multiple of 11.
Credit Suisse has retained its 'neutral' stance on Coke bottling firm Coca-Cola HBC (CCH) ahead of its third-quarter results next month, saying that the company is "still lacking its fizz".
"Volumes in CCH's markets suffered badly post the financial crisis and have yet to recover. There has been no growth for five years now. Full-year volumes this year look set to be down again after what we expect to be a soft Q3." | | |
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