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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 fall as US shutdown continues Markets look to end the week on a quiet note with stocks lacking direction in the absence of the all-important US jobs report; the FTSE 100 fell slightly in the red on Friday morning.
Since the partial shutdown of the US government has extended into its fourth day, governmental agencies and departments will not be releasing economic data as scheduled, as politicians continue to wrangle over the budget and the crucial debt ceiling limit.
Market Analyst Craig Erlam from Alpari said that the announcement has been expected ever since the Democrats and Republicans failed to agree on a budget in time for Monday night's deadline. "Now that it has been confirmed, there’s going to be very little else driving the markets on Friday, with no progress expected in negotiations on the budget and debt ceiling on Capitol Hill."
Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a “catastrophic effect” on all aspects of the US economy. It said in a report on Thursday that a default could lead to “events of the magnitude of late 2008 or worse”.
House Speaker John Boehner reportedly said that he would not allow a default and would consider using a combination of Republican and Democratic votes to lift the debt ceiling if needed. According to an article in The New York Times, Boehner is willing to violate the so-called Hastert Rule which refers to "not bringing to the floor any measures that does not have a majority of Republican votes", the paper said.
FTSE 100: Miners provide a drag
Mining stocks were among the worst performers early on as risk appetite declined on the back of the continuing uncertainty in the US. Fresnillo, Randgold, Anglo American, Glencore Xstrata and BHP Billiton were all registering moderate losses early on.
Barclays was out of favour despite receiving a ratings upgrade by Investec from 'add' to 'buy'. The broker said it expects the third-quarter results later this month to be "lacklustre" but its upgrade is due to a combination of: the passing of the rights issue, valuation and dividend support; and the potential for "over-delivery" of cost-reduction targets.
Other financials however were performing relatively well this morning with insurers Standard Life, Prudential, Resolution and RSA edging higher, along with banking giant HSBC.
Sweeteners and food ingredients group Tate & Lyle was trading broadly flat after a mixed second- quarter update. The company said that adjusted operating profits in the second quarter were slightly below last year due to softness in the US beverage sector but it still maintained its guidance for "another year of profitable growth" in the 12 months to March 2014.
FTSE 250: Carpetright sinks on CEO exit, profit warning
Shares in carpet and curtains retailer Carpetright plunged this morning after announcing the departure of Chief Executive Darren Shapland as it warned falling sales meant full-year profits would be "significantly" below its previous expectations.
Carpetright reported that underlying sales in the UK were down 2.5% in the 10 weeks ending September 29th and had fallen 7.6% in the rest of Europe in local currency terms. |
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| | FTSE 100 - Risers
Standard Life (SL.) 353.20p +2.26%
Morrison (Wm) Supermarkets (MRW) 280.80p +1.70%
British American Tobacco (BATS) 3,212.50p +0.71%
Sainsbury (J) (SBRY) 390.70p +0.51%
Melrose Industries (MRO) 297.50p +0.47%
HSBC Holdings (HSBA) 672.60p +0.46%
Rolls-Royce Holdings (RR.) 1,110.00p +0.45%
SABMiller (SAB) 3,003.00p +0.42%
Reed Elsevier (REL) 828.50p +0.36%
RSA Insurance Group (RSA) 120.30p +0.33%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,374.00p -1.93%
Standard Chartered (STAN) 1,444.50p -1.43%
Randgold Resources Ltd. (RRS) 4,277.00p -1.29%
Fresnillo (FRES) 898.50p -1.26%
British Sky Broadcasting Group (BSY) 872.50p -1.02%
Wolseley (WOS) 3,165.00p -0.97%
BHP Billiton (BLT) 1,785.00p -0.94%
Smith & Nephew (SN.) 758.00p -0.92%
Glencore Xstrata (GLEN) 327.00p -0.91%
Aggreko (AGK) 1,466.00p -0.88%
FTSE 250 - Risers
Kenmare Resources (KMR) 29.24p +3.36%
Ted Baker (TED) 1,899.00p +2.59%
Eurasian Natural Resources Corporation (ENRC) 218.00p +2.49%
Home Retail Group (HOME) 171.20p +2.09%
Rathbone Brothers (RAT) 1,532.00p +1.79%
Dixons Retail (DXNS) 46.40p +1.64%
Regus (RGU) 193.80p +1.36%
Greggs (GRG) 421.70p +1.35%
Dignity (DTY) 1,418.00p +1.14%
Thomas Cook Group (TCG) 151.80p +1.13%
FTSE 250 - Fallers
Carpetright (CPR) 609.50p -9.50%
Computacenter (CCC) 521.50p -3.16%
Evraz (EVR) 121.90p -1.77%
PayPoint (PAY) 1,058.00p -1.76%
Polymetal International (POLY) 615.50p -1.68%
African Barrick Gold (ABG) 152.30p -1.36%
PZ Cussons (PZC) 404.70p -1.34%
Galliford Try (GFRD) 1,043.00p -1.32%
Mitchells & Butlers (MAB) 395.10p -1.25%
Savills (SVS) 612.00p -1.21% |
| | UK Event Calendar | | INTERIM DIVIDEND PAYMENT DATE
888 Holdings, Aggreko, Arbuthnot Banking Group, ARM Holdings, Bilfinger Berger Global Infrastrcture Sicav S.A.(DI), Camellia, Cineworld Group, Densitron Technologies, Devro, Downing Planned Exit VCT 8, Downing Planned Exit VCT 9, Elementis, Grafton Group Units, Greggs, InterContinental Hotels Group, International Personal Finance, Irish Continental Group Units, Meggitt, Michael Page International, Millennium & Copthorne Hotels, Puma VCT V, Regus, Resolution Ltd., SEGRO, TUI Travel, Xaar
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Non-Farm Payrolls (US) (13:30)
PMI Construction (EU) (09:00)
PMI Construction (GER) (08:55)
Producer Price Index (GER) (07:00)
Unemployment Rate (US) (13:30)
IMSS
Wood Group (John)
SPECIAL DIVIDEND PAYMENT DATE
InterContinental Hotels Group
AGMS
Abbey, Atlantis Japan Growth Fund Ltd., Henderson Smaller Companies Inv Trust
TRADING ANNOUNCEMENTS
Tate & Lyle
UK ECONOMIC ANNOUNCEMENTS
New Car Registrations (09:30)
FINAL DIVIDEND PAYMENT DATE
ACM Shipping Group, Carclo, Darty, Pennon Group |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Stocks mixed on US debt ceiling uncertainty FTSE 100: -0.24%
DAX: -0.15%
CAC 40: 0.15%
FTSE MIB: 0.41%
IBEX 35: -0.12%
Stoxx 600: -0.25%
European stocks were mixed as investors waited to see whether a resolution over the US federal budget could be reached before the week's out.
The US government enters its fourth day of a shutdown after failing to agree on a budget bill by Monday’s deadline.
Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations.
The Treasury Department said a default could have a “catastrophic effect” on all aspects of the US economy and could lead to “events of the magnitude of late 2008 or worse”.
“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said.
Markets expect no progress in negotiations on the budget and debt ceiling on Capitol Hill on Friday. However, a development may have been made after a spokesman for House Speaker, John Bohner, indicated that he is willing to be more flexible in order for the US to avoid hitting the debt ceiling and defaulting on its debt.
“The markets are becoming a little more nervous about the prospect of a US default. So far, investors have been relatively calm, with indices only grinding lower,” said Craig Erlam, Market Analyst at Alpari. “If investors saw this as a genuine threat, losses would be much greater. What we’re seeing now is investors staying on the sideline, as opposed to selling aggressively, although that could be about to change.”
As a result an all-important jobs report in the US has been cancelled.
Italy not out of the woods, says Moody’s
Italy’s Senate panel will on Friday vote on whether to expel centre-right leader Silvio Berlusconi from politics due to the tax fraud conviction.
It comes after he made a U-turn on his efforts to topple the coalition by backing Italian Prime Minister Enrico Letta in a confidence vote on Wednesday.
For the markets, the ousting of Berlusconi has become little more than a sideshow event given Wednesday's activity as Letta confirmed his hold on the current coalition government.
Barclays said dissenters in Berlusconi's own People of Freedom party “should reduce the appetite for the political crisis of center-right political leaders”.
Moody's, however, was more sceptical. While acknowledging that the outcome of the confidence vote was “the best scenario possible”, the credit agency warned that the political developments over the last few weeks have highlighted the fragility of the Italian government.
Tate & Lyle’s second quarter falls
Tate & Lyle’s shares fell after the sweeteners and food ingredients group said that adjusted operating profits in the second quarter were slightly below last year due to softness in the US beverage sector.
Carpetright declined after it announced the departure of Chief Executive Darren Shapland and warned falling sales meant full year profits would be 'significantly' below its previous expectations.
Serco slumped as it said it completed the sale of its UK occupational health business, a move which forms part of the group's strategy to take a more proactive management of its portfolio.
RD |
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| | US Market Report | | Stocks fall but lift off lows after Boehner comments Dow Jones: -0.90%
Nasdaq: -1.07%
S&P 500: -0.90%
US markets finished around one percent lower on Thursday as the government shutdown entered its third day, however benchmarks pulled off their lows after some comments from House Speaker John Boehner.
Markets are hoping that Congress will agree to raise the $16.7tn debt limit by the October 17th deadline to prevent the US government defaulting on its obligations, something that the Treasury Department said could have a “catastrophic effect” on all aspects of the US economy. It said in a report today that a default could lead to “events of the magnitude of late 2008 or worse”.
“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said.
According to an article in The New York Times, a Republican congressman said that Boehner would not allow a default and would consider using a combination of Republican and Democratic votes to lift the debt ceiling if needed. He is said to be willing to violate the so-called Hastert Rule which refers to "not bringing to the floor any measures that does not have a majority of Republican votes", the paper said.
As a result of the shutdown, the release of some US economic releases have been cancelled. The Bureau of Labor Statistics warned on its website this week that it will not collect data, issue reports, or respond to public inquiries. The BLS said: "Updates to the site will start again when the Federal government resumes operations. Revised schedules will be issued as they become available".
Nevertheless, the ISM still managed to release its non-manufacturing index which showed that activity growth in the US services sector slowed dramatically in September to a three-month low following a surge in August, sparking steep losses for US stocks early on.
"To be honest, that Jump in August always looked a little suspicious, but we didn't expect such a big reversal, particularly not after the upbeat September reading in the manufacturing survey, released on Tuesday," said Chief US Economist Paul Ashworth from Capital Economics
Economic data comes in mixed
The ISM non-manufacturing index for the month of September has come in at 54.4, versus 58.6 one month ago and the 57.0 forecast by the consensus.
However, the all-important new orders sub-index barely fell by 0.9 percentage points to 59.6, while the new export orders gauge actually surged to 57.5 from 50.5 previously.
Initial weekly unemployment claims rose by 1,000 to 308,000 in the week ended on September 21st, under the 315,000 expected by economists.
United Technologies announces lay-offs
United Technologies was making headlines today, falling after reports the company will lay off about 2,000 Sikorsky Aircraft employees in Connecticut, Florida and Alabama on October 7th due to the government shutdown.
Boeing also finished lower on concerns that a US shutdown could result in possible delays in jet deliveries including its new 787 Dreamliner.
Tesla fell after a video circulated the web of one of its electric Model S cars on fire.
In other news, the CME has hiked its margin requirements for trading in Dow Jones Industrials, S&P 500 and Nasdaq-100 mini contracts by 9%.
S&P 500 - Risers
Tenet Healthcare Corp. (THC) $46.27 +5.40%
PVH Corp. (PVH) $122.69 +4.37%
Constellation Brands Inc. Class A (STZ) $60.15 +3.24%
CONSOL Energy Inc. (CNX) $35.42 +2.58%
IntercontinentalExchange Inc. (ICE) $188.03 +2.13%
FLIR Systems Inc. (FLIR) $32.36 +2.08%
Micron Technology Inc. (MU) $18.01 +1.98%
Nabors Industries Ltd. (NBR) $17.12 +1.72%
NYSE Euronext Inc. (NYX) $43.09 +1.39%
Mylan Inc. (MYL) $39.99 +1.27%
S&P 500 - Fallers
Biogen Idec Inc. (BIIB) $233.84 -5.03%
HCP Inc. (HCP) $39.82 -4.67%
J.C. Penney Co. Inc. (JCP) $8.41 -3.56%
Eli Lilly and Company (LLY) $48.80 -3.44%
Regeneron Pharmaceuticals Inc. (REGN) $303.57 -3.22%
Netflix Inc. (NFLX) $321.72 -2.72%
Citrix Systems Inc. (CTXS) $68.87 -2.70%
Washington Post Co. (WPO) $616.58 -2.63%
Host Hotels & Resorts Inc. (HST) $17.65 -2.54%
Owens-Illinois Inc. (OI) $29.61 -2.47%
Dow Jones I.A - Risers
Verizon Communications Inc. (VZ) $47.01 +0.47%
Dow Jones I.A - Fallers
Hewlett-Packard Co. (HPQ) $20.92 -2.24%
Boeing Co. (BA) $115.24 -2.21%
Chevron Corp. (CVX) $118.25 -2.14%
E.I. du Pont de Nemours and Co. (DD) $57.76 -2.09%
Alcoa Inc. (AA) $7.86 -2.00%
Cisco Systems Inc. (CSCO) $23.00 -1.35%
Walt Disney Co. (DIS) $64.02 -1.33%
Intel Corp. (INTC) $22.60 -1.25%
United Technologies Corp. (UTX) $103.69 -1.23%
General Electric Co. (GE) $24.10 -0.95%
Nasdaq 100 - Risers
Micron Technology Inc. (MU) $18.01 +1.98%
Mylan Inc. (MYL) $39.99 +1.27%
Vertex Pharmaceuticals Inc. (VRTX) $77.16 +0.55%
Green Mountain Coffee Roasters Inc. (GMCR) $75.85 +0.52%
Sandisk Corp. (SNDK) $61.54 +0.10%
Dell Inc. (DELL) $13.83 +0.00%
Nasdaq 100 - Fallers
Equinix Inc. (EQIX) $166.61 -5.13%
Biogen Idec Inc. (BIIB) $233.84 -5.03%
Tesla Motors Inc (TSLA) $173.31 -4.22%
Regeneron Pharmaceuticals Inc. (REGN) $303.57 -3.22%
Netflix Inc. (NFLX) $321.72 -2.72%
Citrix Systems Inc. (CTXS) $68.87 -2.70%
Expedia Inc. (EXPE) $52.15 -2.45%
Expeditors International Of Washington Inc. (EXPD) $43.02 -2.36%
Intuitive Surgical Inc. (ISRG) $360.94 -2.34%
CH Robinson Worldwide Inc (CHRW) $57.76 -2.30% |
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| | Friday newspaper round-up | | Royal Mail, Technology, Twitter The City is getting behind the flotation of the Royal Mail as latest quotes from bookmakers in the Square Mile suggest shares in the privatising postal network will soar on their debut. Panmure Gordon became the first City stockbroker to come out with an official view on Royal Mail’s prospects. Its prognosis: depending on the float price the shares could be a raging 'buy'. “We believe Royal Mail Group represents an excellent investment opportunity,” Gert Zonneveld, a Panmure research analyst, said. “The official indicative share price range of 260p to 330p per share suggests an exceptionally good entry level for investors,” writes The Times.
The International Monetary Fund (IMF) chief and US Treasury have issued stern warnings over "serious" economic consequences of political brinkmanship over America's debt-ceiling. America risks plunging the global economy into chaos unless Congress stops its political infighting and addresses the “mission-critical” task of raising the debt ceiling, the IMF chief has warned. Washington is due to hit its borrowing limit on October 17th, at which point politicians must raise the limit or face an unprecedented default on US sovereign debt, The Daily Telegraph says.
A simple typographical error boosted Spain's 2014 public debt forecast by €10bn (£8.4bn), the government has admitted. Four days after announcing the national debt figure to the world, the Economy Ministry issued a correction. "It is an erratum," an economy ministry spokeswoman said. It turns out that Spain's public debt in 2014 is expected to be the equivalent of 98.9% of total economic output, not the 99.8% figure that was originally published. The error was not due to a problem in mathematical computations, the spokeswoman said. Rather, the person who typed the number just mixed up the last two digits, according to The Daily Telegraph.
One of Silicon Valley’s most highly-rated venture capital firms has invested an estimated £50m to £100m to acquire a stake in one of Scotland’s fastest-growing technology companies. Edinburgh-based flight-comparison search engine Skyscanner’s deal with Sequoia Capital values the Scottish firm at about £500m and represents a massive return for its original shareholders. It is thought the US company has bought between 10% and 20% of the equity from existing investors, The Scotsman reports.
Britain's aviation regulator has infuriated both Heathrow and the airlines with a proposal to freeze landing charges at the UK's premier airport for the five years to March 2019. Heathrow said the planned regime amounted to the “toughest” the airport had ever faced and would put investment at risk, while its biggest customer, British Airways, hinted that the proposal may leave it with no option but to move some of its planes to cheaper hubs overseas, The Daily Telegraph says.
Twitter set out its plans for a $1bn initial public offering, revealing that revenues tripled in 2012 but that it has never turned a profit during its seven-year history despite transforming global communications. Analysts, existing shareholders and advisers to Twitter have suggested it could be valued at between $12bn and $15bn when it floats, up from $8bn in 2011’s private fundraising. Its revenues, largely derived from advertising, last year totalled $316.9m, the Financial Times reports. | | |
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