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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 US political deadlock continues A political stalemate in Washington over the debt ceiling weighed on risk appetite on Monday morning, with the FTSE 100 holding steady in early trading after hitting two-week highs the previous session.
London's benchmark index finished at 6,483.79 on Friday, its highest close since September 27th, rebounding strongly following a choppy week as markets reacted to ongoing developments on Capitol Hill.
This weekend's negotiations between US lawmakers failed to conclude in a agreement to raise the debt ceiling ahead of the October 17th deadline as Republicans and Democrats remain divided over a number of issues.
"With three days to go before the US Treasury technically runs out of cash to pay the bills, traders are now fearing the worst-case default scenario being played out. Although many dismiss it as unlikely with hopes that US lawmakers will strike an 11th hour deal, traders are showing reluctance to take risk as we head into the deadline," said Market Strategist Ishaq Siddiqi from ETX Capital.
Meanwhile, Siddiqi pointed out that the US government has now had two full weeks in shutdown mode, which will surely eat away at economic growth in the fourth quarter.
"At a time when the economic recovery in the states is fragile, an erosion of economic growth is highly undesirable – the silver lining however is that the Federal Reserve will not taper asset purchases with this in the backdrop."
FTSE 100: Ratings changes move stocks early on
Chemicals group Johnson Matthey was performing well this morning 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".
The same bank however was weighing on the share price of sector peer Croda after it downgraded its rating from 'overweight' to 'neutral', saying that expectations for the third quarter "look demanding".
Several other blue-chip stocks were hit with downgrades this morning, including SABMiller (Citigroup cut to 'neutral'), Bunzl (JPMorgan lowered to 'neutral') and Glencore Xstrata (Liberum Capital cut to 'hold'). Building materials firm Travis Perkins however was lifted to 'buy' by Bank of America.
RBS was trading lower after Bank of America Merrill Lynch downgraded the stock to 'underperform'. Banking peers Lloyds and Barclays were also in the red. Lloyds frontman António Horta-Osório was quoted by the Financial Times as saying that the government's 'Help to Buy' scheme could risk creating a housing bubble if steps to build new housing are not taken.
FTSE 250: Michael Page slumps on mixed Q3
Recruitment group Michael Page International fell sharply this morning 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.
Plastic packaging company Essentra was heading the other way after saying it is on track to deliver profit growth this year on the back of a strong third quarter.
Elsewhere, Royal Mail continued to rise this morning, extending gains after Friday's stock-market debut led to a 38% surge in the share price. The successful initial public offering has fuelled the debate over whether the shares were underpriced by the government. |
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| | FTSE 100 - Risers
Johnson Matthey (JMAT) 2,948.00p +4.50%
Travis Perkins (TPK) 1,746.00p +4.05%
Severn Trent (SVT) 1,805.00p +1.06%
Associated British Foods (ABF) 1,931.00p +1.05%
National Grid (NG.) 755.50p +1.00%
Smith & Nephew (SN.) 779.00p +0.97%
Vedanta Resources (VED) 1,029.00p +0.88%
Vodafone Group (VOD) 221.60p +0.82%
Antofagasta (ANTO) 866.00p +0.81%
BG Group (BG.) 1,200.00p +0.80%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 369.90p -1.86%
Bunzl (BNZL) 1,313.00p -1.57%
Croda International (CRDA) 2,439.00p -1.53%
SABMiller (SAB) 2,978.00p -1.19%
Diageo (DGE) 1,956.50p -0.84%
Lloyds Banking Group (LLOY) 75.39p -0.83%
Standard Life (SL.) 352.70p -0.79%
GKN (GKN) 359.50p -0.77%
Centrica (CNA) 360.50p -0.77%
IMI (IMI) 1,478.00p -0.67%
FTSE 250 - Risers
Essentra (ESNT) 743.50p +2.48%
Diploma (DPLM) 629.50p +2.36%
Balfour Beatty (BBY) 273.10p +1.71%
Carillion (CLLN) 308.70p +1.71%
Moneysupermarket.com Group (MONY) 144.80p +1.69%
Dialight (DIA) 1,205.00p +1.69%
Bellway (BWY) 1,377.00p +1.62%
Bankers Inv Trust (BNKR) 569.00p +1.61%
Cable & Wireless Communications (CWC) 41.40p +1.42%
Cobham (COB) 284.00p +1.32%
FTSE 250 - Fallers
Michael Page International (MPI) 460.00p -6.98%
Chemring Group (CHG) 215.70p -1.95%
Hays (HAS) 119.60p -1.64%
Alent (ALNT) 333.00p -1.54%
Interserve (IRV) 577.00p -1.54%
Ladbrokes (LAD) 187.80p -1.52%
Xaar (XAR) 783.50p -1.51%
Telecity Group (TCY) 791.50p -1.49%
Soco International (SIA) 402.00p -1.16%
Genus (GNS) 1,329.00p -1.04% |
| | UK Event Calendar | | Monday October 14
INTERIM DIVIDEND PAYMENT DATE
Chesnara, Savills
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Industrial Production (EU) (10:00)
Swiss producer prices (Sw) (08:15)
Q3
Nord Gold NV GDR (Reg S)
FINALS
Nanoco Group, Tristel
AGMS
Greenko Group, Mcbride
TRADING ANNOUNCEMENTS
Software Radio Technology
FINAL DIVIDEND PAYMENT DATE
Stewart & Wight
|
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks mixed on US debt ceiling - US approaches debt ceiling
- ECB tightens checks on European banks
- Merkel faces tough coalition talks
- Chinese exports fall, inflation rises
FTSE 100: 0.16%
DAX: -0.13%
CAC 40: -0.17%
FTSE MIB: 0.56%
IBEX 35: 0.31%
Stoxx 600: 0.06%
European equities were mixed as the US entered its third week of a government shutdown and approached its debt ceiling deadline.
The US is three days away from hitting its $16.7trn borrowing limit. If the government fails to reach a deal by Thursday, the US could default on its debt.
Lawmakers remain at loggerheads after the Democrats rejected a number of GOP offers over the weekend on the debt ceiling.
"It's quite incredible that the uncertainty surrounding the debt ceiling hasn't transformed more into negativity, given that we're now so close to the deadline," said Craig Erlam, Market Analyst at Alpari.
"This suggests that investors remain unconvinced that the debt ceiling will be hit, despite negotiations be unsuccessful so far."
The government has been in a partial shutdown since October 1st after missing its deadline to agree on a budget.
ECB clamps 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 regulation 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."
Merkel faces struggle on coalition talks
Chancellor Angela Merkel faces a difficult challenge this week to form a government as prospective coalition partners increase demands to start official negotiations.
The Social Democrats (SPD) party has commanded a nationwide minimum wage of €8.50 ($11.51) an hour while the Greens party is putting doubts on talks with Merkel's Christian Democratic party.
"It's clear above all that there won't be a government with the SPD" without an obligatory minimum wage, SPD General-Secretary Andrea Nahles told Bild am Sonntag in an interview yesterday. "Our members won't accept anything else."
Merkel is trying to form a coalition after failing to secure enough votes to win the election last month.
RBS mortgage applications rise on Help to Buy
Royal Bank of Scotland slumped after 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.
Chinese exports fell in September by 0.3% from a year earlier, against expectations of a 6% rise, data showed on Saturday.
Separate data showed inflation jumped to a seven-month high of 3.1% last month as poor weather drove up food prices.
The reports refuelled worries about the health of world's second largest economy. |
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| | US Market Report | | US close: S&P 500 at three-week high on hopes over debt talks - Republicans plan proposal to raise debt ceiling
- Shutdown weighs on consumer sentiment in October
- JPMorgan records first quarterly loss since 2004
Dow Jones: 0.73%
Nasdaq: 0.83%
S&P 500: 0.63%
US stocks rose strongly ahead of the weekend with the S&P 500 rising to a three-week high on hopes that lawmakers can agree over a short-term increase in the debt ceiling and avert a default.
The Dow Jones Industrial Average and S&P 500 finished in positive territory for the week - the indices' first week of gains in three - rising 1.1% and 0.8%, respectively. This was helped by Thurday's 323.09-point increase on the Dow, its largest single-day point increase since December 2011.
The government went into partial shutdown on October 1st after failing to approve a budget, as lawmakers clashed over President Barack Obama's controversial healthcare bill, the Affordable Care Act. The Treasury will exhaust its borrowing authority on October 17th and would run out of funds to pay all of its bills sometime between October 22nd and October 31st, according to the Congressional Budget Office (CBO).
Helping sentiment on Friday was a report by the Associated Press which said that the senior aides to House Speaker John Boehner and Majority Leader Eric Cantor were planning a proposal to the White House to raise the borrowing limit and end the government shutdown. However, this would be in exchange for budget talks over possible cuts to Social Security and Medicare programme.
Nevertheless, the latest developments show that Republicans are beginning to narrow their demands for changes in policy as they attempt to meet Obama halfway over spending negotiations.
Consumer sentiment falls in October
The preliminary reading for the Thomson Reuters/University of Michigan's index on US consumer sentiment came in at 75.2 in October, marking a slight fall from 77.5 at the end of September, but more or less in line with the consensus estimate of 75.3.
The decline was due to a fall in the economic outlook index on the back of worries about the fiscal showdown on Capitol Hill, outweighing optimism about income and inflation.
Barclays had expected a sharper decline to 72 this month. Analyst Cooper Howes said: "While the decline in the preliminary October report was smaller than we had expected, the possibility of a prolonged government shutdown suggests that the risks in the final survey remain firmly to the downside, in our view."
JP Morgan records big quarterly loss
JP Morgan was flat after the bank reported its first quarterly loss under Chief Executive Officer Jamie Dimon. The third-quarter loss came to $380m, compared to a profit of $5.71bn a year earlier. This was the first time it has failed to report a profit since the second quarter of 2004. However, its quarterly adjusted pro-forma earnings per share came in at $1.42, better than the $1.30 estimated by analysts.
Lender Wells Fargo & Co ended the day lower despite delivering a record quarterly profit of $5.32bn, up 13% the year before, as investors showed disappointment with weakness in the mortgage business. Mortgage banking income dropped 43% while mortgage originations fell 29% amid rising interest rates and less refinancing loans.
Sector peers Bank of America and Citigroup finished with small losses on Friday.
Safeway shares rose strongly after the grocery-store chain said that identical-store sales will rise as much as 1.9% this year.
US memory chip maker Micron fell 9% despite reporting fiscal fourth-quarter sales that exceeded analysts' estimates. The decline comes after Wells Fargo & Co lowered its rating on the shares to 'underperform' from 'market perform'.
In contrast, consumer products giant Johnson and Johnson rose after the stock was raised to 'neutral' from 'sell' at Goldman Sachs.
S&P 500 - Risers
Safeway Inc. (SWY) $33.75 +6.91%
Cognizant Technology Solutions Corp. (CTSH) $88.85 +5.52%
Tesoro Corp. (TSO) $45.19 +3.84%
CONSOL Energy Inc. (CNX) $38.17 +3.75%
Cliffs Natural Resources Inc. (CLF) $21.43 +3.68%
Constellation Brands Inc. Class A (STZ) $62.99 +3.35%
Lennar Corp. Class A (LEN) $34.82 +3.02%
Marathon Petroleum Corporation (MPC) $67.25 +2.97%
Valero Energy Corp. (VLO) $36.54 +2.73%
C.R. Bard Inc. (BCR) $119.08 +2.63%
S&P 500 - Fallers
Micron Technology Inc. (MU) $16.84 -8.63%
Gap Inc. (GPS) $36.83 -7.18%
Newmont Mining Corp. (NEM) $25.62 -2.59%
Iron Mountain Inc. (IRM) $25.30 -2.17%
Electronic Arts Inc. (EA) $24.72 -1.98%
Mosaic Company (MOS) $45.47 -1.71%
Urban Outfitters Inc. (URBN) $35.90 -1.54%
Ralph Lauren Corp (RL) $161.34 -1.41%
Macy's Inc. (M) $42.64 -1.32%
Philip Morris International Inc. (PM) $85.03 -1.31%
Dow Jones I.A - Risers
Hewlett-Packard Co. (HPQ) $22.80 +2.15%
Johnson & Johnson (JNJ) $89.45 +1.90%
Cisco Systems Inc. (CSCO) $23.28 +1.17%
3M Co. (MMM) $120.72 +1.16%
Chevron Corp. (CVX) $117.67 +1.11%
Microsoft Corp. (MSFT) $34.13 +1.10%
Home Depot Inc. (HD) $76.32 +1.07%
Exxon Mobil Corp. (XOM) $86.95 +1.06%
Caterpillar Inc. (CAT) $85.61 +1.04%
United Technologies Corp. (UTX) $107.01 +1.03%
Dow Jones I.A - Fallers
Boeing Co. (BA) $117.98 -0.77%
E.I. du Pont de Nemours and Co. (DD) $57.93 -0.62%
Merck & Co. Inc. (MRK) $47.29 -0.42%
Alcoa Inc. (AA) $8.32 -0.36%
Bank of America Corp. (BAC) $14.19 -0.28%
Pfizer Inc. (PFE) $28.72 -0.17%
Coca-Cola Co. (KO) $37.77 -0.03%
JP Morgan Chase & Co. (JPM) $52.51 -0.02%
Nasdaq 100 - Risers
Cognizant Technology Solutions Corp. (CTSH) $88.85 +5.52%
Check Point Software Technologies Ltd. (CHKP) $59.04 +3.51%
Tesla Motors Inc (TSLA) $178.70 +3.34%
Wynn Resorts Ltd. (WYNN) $166.61 +2.62%
Whole Foods Market Inc. (WFM) $61.18 +2.29%
Liberty Media Corporation - Class A (LMCA) $149.23 +2.15%
Adobe Systems Inc. (ADBE) $52.19 +2.00%
Amazon.Com Inc. (AMZN) $310.89 +1.87%
Western Digital Corp. (WDC) $66.73 +1.83%
O'Reilly Automotive Inc. (ORLY) $128.19 +1.79%
Nasdaq 100 - Fallers
Micron Technology Inc. (MU) $16.84 -8.63%
Regeneron Pharmaceuticals Inc. (REGN) $290.30 -1.29%
Fastenal Co. (FAST) $47.32 -1.25%
Randgold Resources Ltd. Ads (GOLD) $68.10 -1.13%
Mondelez International Inc. (MDLZ) $30.85 -1.12%
Netflix Inc. (NFLX) $300.85 -1.03%
Catamaran Corp (CTRX) $47.97 -0.86%
Nvidia Corp. (NVDA) $15.26 -0.81%
Broadcom Corp. (BRCM) $26.51 -0.71%
Sears Holdings Corp. (SHLD) $54.89 -0.69% |
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| | Newspaper Round Up | | Monday newspaper round-up: Energy bills, debt ceiling, Royal Mail Energy bills will continue to soar and ministers are powerless to protect households from them, Ed Davey, the Energy Secretary, warned yesterday. Days after one of Britain's biggest utility companies increased its prices by more than 8 per cent, the Lib Dem minister said that politicians could not control the factors behind rising costs. He added that green levies applied to energy bills would not be cut to help consumers. Mr Davey questioned the promise by Ed Miliband to freeze prices for 20 months if he won the next general election because, he said, the costs that make up more than half an energy bill were beyond his control, according to The Times.
Senate leaders were locked in talks on Sunday in a desperate attempt to resolve the stalemate over the US debt ceiling amid warnings of a global recession should the US run out of money to pay its bills. With just four days left before the country faces the risk of default, Christine Lagarde, the Managing Director of the International Monetary Fund, warned that if the debt ceiling - which will be reached at midnight on Thursday - is not lifted, the global economy would be disrupted, the Financial Times writes.
Royal Mail has been accused of "underhand" tactics after it allowed its boss to raid her pension pot despite previously stating she could only get the money when she left the company. It is the second pay controversy to engulf the company's Canadian Chief Executive Moya Greene, who was forced to pay back a £250,000 housing allowance earlier this year. The allegations date back to before the company's listing on Friday, which saw shares rocket 38%. More than 100m shares were traded in the first hour as thousands of retail investors took profits, The Daily Mail reports.
Big banks in the US could be allowed to fail without bringing wholesale disruption to the financial system. In his final speech as Deputy Governor of the Bank of England Paul Tucker revealed that the resolution regime, which would allow one of the world's largest banks to collapse without being rescued, is now in place. "The necessary technology is clear. The necessary restructuring of firms is clear, and the necessary degrees and forms of cross-border co-operation are clear. It is now a matter of just doing it," Tucker told the Institute of International Finance in Washington, The Daily Mail says.
Britain's biggest union was accused of hypocrisy yesterday after it avoided more than £2m in tax. The Times has learnt that Unite has been presented with a bill for £2.3m by Revenue & Customs. HMRC ruled that Unite had been calculating its VAT in a "grossly unfair and unreasonable" way. The union has condemned multinational companies for not paying their fair share of tax. Len McCluskey, its general secretary, even accused one company of "daylight robbery".
Higher vegetable prices helped fuel Chinese inflation in September, although price rises for the year are likely to stay rooted below government targets. China's consumer price index for September rose 3.1% compared with a year earlier, accelerating from August's 2.6% year-on-year increase, according to National Statistics Bureau data released on Monday. Most of the increase was attributed to loftier food prices, which were up 6.1% in the month compared with a year earlier, driven by fresh vegetable prices that jumped nearly 19% and fresh fruit prices, up 12.5%, the Financial Times explains. | | |
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