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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: Markets finish flat after range-bound session - Markets rangebound ahead of Inflation Report
- UK CPI falls to 13-month low
- Taper speculation ramps up after comments from Fed officials
techMARK 2,647.80 +0.27%
FTSE 100 6,726.79 -0.02%
FTSE 250 15,369.08 -0.33%
Markets finished more or less flat on Tuesday afternoon after a fairly subdued session as investors digested a sharp fall in UK inflation and reacted to ongoing speculation over US stimulus.
The FTSE 100 finished 1.58 points lower at 6,726.79 after having traded within a narrow range of just 15 points or so since mid-morning.
British consumer price inflation fell from 2.7% in September to a 13-month low of 2.2% in October, according to the Office for National Statistics. The data came in well below the consensus forecast of a dip to 2.5% and was far lower than the Bank of England's (BoE) estimate for inflation to be at least 2.8% for the rest of 2013.
Eyes are now turning to the BoE's Inflation Report due out tomorrow morning with price rises now running closer to the Bank's 2% medium-term target.
Markets gave very little reaction to the data with the London index trading slightly lower after a raft of mixed corporate earnings from a number of heavyweights, including Vodafone, Babcock and CRH, along with losses from the mining and financial sectors.
Stocks on Wall Street opened in the red on Tuesday as the Dow paused at a record high. A number of comments from Federal Reserve policymakers were weighing on sentiment as chatter surrounding the impending taper of quantitative easing (QE) continues to ramp up in light of last week's better-than-expected growth and jobs data.
Dallas Fed President Richard Fisher told CNBC today that "markets should bear in mind that this programme [QE] cannot go on forever". Meanwhile, Atlanta Fed President Dennis Lockhart warned that a taper could very well take place next month.
Also in focus were analysts at Morgan Stanley who reportedly said that they see a 40% chance of tapering in December and 60% probability in January.
Financials and miners fall; corporate earnings come in mixed
A decline in risk appetite hit stocks in the financial and mining sectors on Tuesday with Fresnillo, Anglo American and Randgold finishing lower, along with Aberdeen Asset Management, Standard Chartered and RBS.
RBS was also being pressured lower by a downgrade by Goldman Sachs from 'buy' to 'neutral' as analysts said that the stock now offers similar upside to others in the sector. Meanwhile, the UKFI said that it is too early to tell when the government's stake in RBS can be sold, as many issues over capital "absolutely need to be tackled as a precursor to successful reprivatisation".
Heading the other way was building materials giant CRH after reporting a 2% increase in like-for-like sales in the third quarter, a strong turnaround after a 6% decline in the first half owing to difficult weather conditions.
Vodafone gained after the £22bn in revenues reported for the first half came in 1.1% ahead of consensus estimates. Underlying earnings of £6.61bn also beat forecasts by 3.4%.
Life insurance investment vehicle Resolution was lower after a mixed third quarter, as significant growth in UK new business was outweighed by a more subdued performance overseas.
Babcock, the engineering support services company, fell after a broadly in-line first-half report in which it lifted its dividend by 10% following a 32% jump in pre-tax profits.
Oxford Instruments surged after "significant strengthening" in its second-quarter results and revealed it was in talks to acquire AIM-listed Andor Technology.
Shares in TalkTalk leapt after the company upped its dividend for the first half and raised its full-year guidance. The group said it expected annual revenue to be at least 3% higher, compared to a previously expected increase of 2%. |
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| FTSE 100 - Risers
CRH (CRH) 1,609.00p +3.21%
Vodafone Group (VOD) 231.25p +1.72%
Kingfisher (KGF) 392.50p +1.66%
Centrica (CNA) 360.40p +1.44%
British Sky Broadcasting Group (BSY) 840.00p +1.33%
Severn Trent (SVT) 1,821.00p +1.28%
Sainsbury (J) (SBRY) 398.80p +1.22%
RSA Insurance Group (RSA) 109.40p +1.20%
Croda International (CRDA) 2,332.00p +1.17%
Babcock International Group (BAB) 1,306.00p +1.16%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 416.90p -4.51%
Fresnillo (FRES) 915.50p -3.88%
Royal Bank of Scotland Group (RBS) 331.60p -2.41%
Anglo American (AAL) 1,440.50p -2.27%
ARM Holdings (ARM) 933.00p -1.74%
Tullow Oil (TLW) 900.00p -1.69%
Randgold Resources Ltd. (RRS) 4,611.00p -1.64%
Burberry Group (BRBY) 1,488.00p -1.59%
Schroders (SDR) 2,502.00p -1.57%
Standard Chartered (STAN) 1,485.50p -1.52%
FTSE 250 - Risers
Oxford Instruments (OXIG) 1,425.00p +16.14%
TalkTalk Telecom Group (TALK) 275.40p +10.20%
BTG (BTG) 454.90p +7.21%
NMC Health (NMC) 367.60p +3.93%
Bank of Georgia Holdings (BGEO) 2,100.00p +3.60%
Renishaw (RSW) 1,755.00p +3.30%
Computacenter (CCC) 593.50p +3.22%
Premier Farnell (PFL) 234.50p +3.08%
Homeserve (HSV) 245.60p +1.70%
RPS Group (RPS) 291.00p +1.68%
FTSE 250 - Fallers
Menzies(John) (MNZS) 767.00p -6.41%
Polymetal International (POLY) 536.50p -5.46%
Hochschild Mining (HOC) 150.00p -4.88%
Petra Diamonds Ltd.(DI) (PDL) 109.20p -4.38%
esure Group (ESUR) 212.30p -4.15%
Hellermanntyton Group (HTY) 290.50p -4.13%
Evraz (EVR) 119.20p -4.10%
Imagination Technologies Group (IMG) 240.00p -4.00%
Rathbone Brothers (RAT) 1,556.00p -3.95%
Kazakhmys (KAZ) 242.00p -3.85% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets drag as UK inflation declines - UK inflation slows
- German inflation holds steady
- China announces new reforms
- ECB policymakers address interest rates
FTSE 100: -0.02%
DAX: -0.34%
CAC 40: -0.61%
FTSE MIB: 0.54%
IBEX 35: -0.77%
Stoxx 600: -0.58%
European equities dragged as UK inflation eased back its lowest level in a year and as China announced new reforms to boost growth.
Consumer prices in the UK rose 2.2% in October from a year earlier compared with 2.7% the previous month, according to the Office for National Statistics. Economists had forecast a reading of 2.5%.
The decline was driven by the biggest fall in transport prices since July 2009.
"October's inflation figures suggest that the UK economy is hitting a sweet spot of accelerating GDP growth and declining price pressures. And inflation is likely to fall further in the near future," said Capital Economics.
The Bank of England (BoE) is now considerably closer to its inflation target of 2%, which it has exceeded since December 2009.
It fuelled speculation that the BoE might revise its interest rates, currently at a record low of 0.5%. However, the central bank has insisted that it would keep its key interest rate unchanged until unemployment falls below 7%.
The unemployment rate for the third quarter will be released tomorrow but is expected to hold steady at 7.7%.
The BoE will also release its quarterly Inflation Report which is expected to lay out the future path of interest rates and economic forecasts.
China addresses reforms
China's Communist Party has unveiled a series of reforms to boost growth in the world's second-largest economy after wrapping up its Third Plenum talks in Beijing.
The four-day meeting took place amid intense security and secrecy before announcing that "major issues concerning comprehensively deepening reforms" was approved, the official Xinhua News Agency reported.
China's leading party said the market would be allowed to play a "decisive" role in allocating resources.
ECB officials on interest rates
European Central Bank (ECB) Executive Board member Joerg Asmussen said today that the monetary authority has not reached the so-called "lower bound" on interest rates and would not rule out the possibility of negative deposit rates.
In an interview published with the German newspaper Neue Osnabruecker Zeitung, he said that the ECB's actions will depend on incoming inflation data for the Eurozone.
The ECB last week surprised the market by cutting its benchmark interest rate to 0.25% from 0.50%.
ECB Governing Council member Ewald Nowotny, who voted against the rate cut, warned today that stagnation rather than inflation was the danger for the Eurozone. He also noted that while deflation is not imminent, it must be on the minds of central bankers.
Nowotny reportedly downplayed the differences of opinion over the rate cut, saying that it was more of timing than of substance and denying that there was such a thing as a "North-South" division of opinion.
In Germany, consumer prices rose by 1.2% in October, in line with the prior month and the consensus estimate.
Pandora, Norsk Hydro
Pandora plunged following reports that the biggest shareholder of the Danish maker of charm bracelets may seek to reduce its stake.
Norsk Hydro declined after Vale SA sold a stake in the aluminium maker.
GlaxoSmithKline slumped as the UK drugmaker said its darapladib drug for chronic coronary heart disease failed to meet its primary goal in a trial.
Infineon Technologies retreated as the European semiconductor maker forecast a decline in profitability for its first quarter.
TalkTalk Telecom Group advanced as the British broadband provider raised its revenue growth target to at least 3% from a previous goal of 2%.
Swiss Life gained as the country's biggest life insurer said Chief Executive Officer Bruno Pfister will resign.
Other asset classes climb
The euro rose 0.20% to $1.3434.
Brent crude futures increased $0.197 to $106.610 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks fall as investors speculate on Fed tapering US stocks edged lower as investors continued to speculate on when the Federal Reserve will start scaling back stimulus.
With no significant economic data releases out in the US, investors are turning to speeches from Fed officials Dennis Lockhart and Narayana Kocherlakota for any hints regarding the likely start date of tapering.
Last week included a barrage of economic reports including all-important US payrolls figures which showed employers added more jobs than expected. It fuelled concerns that the Fed might begin reducing its monthly $85bn bond buying programme.
Economists at Morgan Stanley reportedly put the odds of a December start to tapering at 40% and at 60% for January.
Fed Vice Chairman Janet Yellen is due to testify before the Senate Banking Committee on Thursday during her confirmation hearing to succeed Ben S. Bernanke as Chairman.
Meanwhile, in its latest World Energy outlook the International Energy Agency (IEA) predicted that the US will be close to energy self-sufficiency in the next two decades.
The rich world’s oil watchdog sees crude prices at $128 a barrel by 2035.
The NFIB’s small business confidence index for October slipped to 91.6 points from 93.9 in the month before (consensus: 93.5).
In China, the Communist Party unveiled a series of reforms to boost growth in the world’s second largest economy after wrapping up its Third Plenum talks in Beijing. The four-day meeting took place amid intense security and secrecy before announcing that "major issues concerning comprehensively deepening reforms" was approved, the official Xinhua News Agency reported.
On the company front, T-Mobile US, the nation’s fourth-largest mobile-phone carrier, declined after announcing that it will raise almost $1.8bn in fresh capital to acquire wireless airwaves, either from other parties or through government auctions.
News Corp. slumped after reporting a fall in first quarter revenue, reflecting weak demand for print advertising.
Liberty Global fell following news the European cable operator is in talks to acquire Intel Corp.’s online pay-TV service under development.
Ten-year yields rise
Ten-year US treasury yields were up by two basis points to the 2.77% mark ahead of the opening bell.
Front month West Texas crude futures were down $0.592 to the $94.580 per barrel on the NYMEX. |
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| | Broker Tips | | Broker tips: RBS, Vodafone, GlaxoSmithKline Analysts at Goldman Sachs have a positive view on the strategy outlined by Royal Bank of Scotland alongside its third-quarter results.
However, the group's new target for common Tier-1 equity, of over 12% versus over 10% before, means that there is now reduced upside potential in RBS shares, "towards the bottom of the range we have previously estimated across various restructuring scenarios (369-449p a share)", Goldman said. That means the stock now offers similar upside to their broader coverage and hence they remove RBS from their 'buy' List and downgrade to 'neutral'.
Nomura has maintained a 'buy' rating for telecoms titan Vodafone after its better-than-expected first-half report, hailing the company's increased investment plan and attraction to possible bidders.
"We sense that Vodafone's accelerated investment plan will appeal to the market's improving sentiment towards investment in telecom infrastructure. In addition, the strategic move will also appeal to potential industrial bidders looking at Vodafone approaching trough earnings. As a result, investors are likely to forgive the indifferent operating results particularly with Vodafone trading at an inexpensive valuation."
Broker Panmure Gordon downgraded GlaxoSmithKline after its heart drug Darapaldib, "the great white hope in the pipeline", failed to reach its primary end-point in a late-stage trial.
Acknowledging that the company has been through the majority of its patent expiries and big liability settlements, boasts a strong balance sheet, has very little M&A risk and a secure dividend, Panmure cut its rating from 'buy' to 'hold'. | | |
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