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Nov 29, 2013

Evening Euro Markets Bulletin

 
ADVFN III Evening Euro Markets Bulletin
Daily world financial news Friday, 29 November 2013 17:39:21
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London Market Report
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London close: FTSE 100 flat despite gains in banking sector

- Markets flat despite banking strength
- Volumes pick up but still on the low-side
- German, US markets continue to set new highs

techMARK 2,673.94 +0.22%
FTSE 100 6,650.57 -0.06%
FTSE 250 15,466.56 +0.23%

UK markets finished broadly flat on Friday despite trading volumes picking up slightly following a quiet day yesterday, as investors turned cautious before the weekend and month-end.

Even though there were some strong gains in the banking sector, the FTSE 100 was 3.9 points lower at 6,650.57 by the close, meaning that index finished down 80.86 (-1.2%) for the month of November.

In contrast, the DAX 30 in Germany continued to set new all-time highs today with sentiment being lifted by an unexpected dip in Eurozone unemployment last month. The jobless rate in the single currency region fell to 12.1% in October from a record high of 12.2%

US stocks also started strongly today as Wall Street re-opened after Thanksgiving with retail stocks lifting benchmarks to new highs on what is set to be a shortened trading session as Black Friday takes place. Retailers are hoping that customers will be enticed with special deals to mark the start to the holiday shopping season. The Dow Jones Industrial Average and S&P 500 look set to close at fresh records when Wall Street closes at 13:00 Eastern time.

“This week could be seen as the calm before the storm, with a huge amount of data being released next week, including the big daddy itself, the non-farm payrolls figure,” said Market Analyst Craig Erlam from Alpari.

“This could potentially be the difference between a Fed taper in December or the first quarter of 2014. We also have a few central bank meetings, making next week a massive one for the markets,” he said.

Banks climb on capital hopes

Banking stocks closed mostly higher today after the Prudential Regulation Authority eased capital rules slightly for lenders. The new regulations will allow banks to count a broader range of capital instruments in calculating their capital buffers than had originally been estimated.

Meanwhile, analysts at Investec said today that Thursday’s changes to the Funding for Lending Scheme by the Bank of England – to focus on business lending rather than mortgages – will lead to an increase in mortgage pricing, “but that’s good news for the banks”.

Barclays was a strong performer today with Investec reportedly saying that concerns over further capital issuance at the bank in 2014 should “all but evaporate”. Lloyds and Standard Chartered also finished higher, while HSBC fell into the red.

Housebuilders were in the red again for the second day after the government announced yesterday that it would be changing its Funding for Lending Scheme to focus on small businesses, rather than mortgage lending. Persimmon, Taylor Wimpey, Bellway and Barratt Developments were all extending losses.

Credit checking group Experian was also trading lower this morning after analysts at Goldman Sachs downgraded their rating on the stock to 'sell' and cut their target from 1,220p to 985p.

Finnish nickel miner Talvivaara Mining's share price rocketed by over 40% after its application for a court-supervised restructuring to avoid bankruptcy was accepted.

Speedy Hire plummeted after its Chief Executive resigned following the revelation of a £5m hole in its books.


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FTSE 100 - Risers
Barclays (BARC) 271.70p +2.30%
Randgold Resources Ltd. (RRS) 4,346.00p +1.99%
Aggreko (AGK) 1,605.00p +1.97%
AstraZeneca (AZN) 3,513.50p +1.78%
Whitbread (WTB) 3,567.00p +1.36%
William Hill (WMH) 385.60p +1.18%
easyJet (EZJ) 1,424.00p +0.92%
Babcock International Group (BAB) 1,310.00p +0.92%
London Stock Exchange Group (LSE) 1,627.00p +0.74%
Travis Perkins (TPK) 1,796.00p +0.73%

FTSE 100 - Fallers
Experian (EXPN) 1,127.00p -2.76%
Anglo American (AAL) 1,349.00p -1.89%
Royal Bank of Scotland Group (RBS) 327.20p -1.71%
SSE (SSE) 1,327.00p -1.63%
BAE Systems (BA.) 427.40p -1.29%
Wolseley (WOS) 3,297.00p -1.20%
Resolution Ltd. (RSL) 342.10p -1.18%
Vedanta Resources (VED) 885.00p -1.17%
Rexam (REX) 499.60p -1.07%
Weir Group (WEIR) 2,142.00p -1.06%

FTSE 250 - Risers
IP Group (IPO) 192.00p +5.49%
Computacenter (CCC) 670.00p +4.20%
Marston's (MARS) 149.70p +4.18%
Euromoney Institutional Investor (ERM) 1,243.00p +4.02%
Crest Nicholson Holdings (CRST) 357.00p +3.48%
Betfair Group (BET) 1,043.00p +3.27%
Carpetright (CPR) 602.00p +3.26%
Rentokil Initial (RTO) 106.10p +3.21%
Michael Page International (MPI) 475.00p +3.10%
UDG Healthcare Public Limited Company (UDG) 313.00p +3.06%

FTSE 250 - Fallers
Cranswick (CWK) 1,141.00p -2.89%
Enterprise Inns (ETI) 138.00p -2.75%
Hochschild Mining (HOC) 142.10p -2.34%
Polymetal International (POLY) 533.50p -1.84%
Perform Group (PER) 439.00p -1.79%
Menzies(John) (MNZS) 777.00p -1.65%
Fidessa Group (FDSA) 2,113.00p -1.54%
Smith (DS) (SMDS) 305.50p -1.52%
NMC Health (NMC) 407.30p -1.50%
Big Yellow Group (BYG) 478.80p -1.48%


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Europe Market Report
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Europe close: Stocks mixed after slate of economic data

- Eurozone inflation and jobs improve
- UK consumer confidence falls, house prices rise
- German retail sales slump
- S&P upgrades Spain, downgrades Netherlands

FTSE 100: 0.01%
DAX: 0.21%
CAC 40: -0.14%
FTSE MIB: -0.41%
IBEX 35: -0.33%
Stoxx 600: 0.01%

European stocks finished the week little changed after a batch of mixed economic data.

Eurozone inflation jumped to 0.9% in November from 0.7% in October to beat the 0.8% forecast, the European Union revealed in a preliminary estimate today. The rise was driven by food and services, offset by falling energy prices.

The European Central Bank, which is targeting inflation of close to 2%, earlier this month cut its interest rate to 0.25% from 0.5% on fears of disinflation.

“Now, it’s probably too early to suggest that the rate cut has had any real impact on the inflation figure, but the release could have been important in showing the disinflationary pressures have eased, or worse, they’re accelerating,” according to Alpari analyst Craig Erlam.

“As it turned out, it was the former, which shouldn’t be too much of a surprise given the size of the drop last month.”

Another report in the euro-area showed the unemployment rate dropped to 12.1% in October from 12.2% the prior month, compared to forecasts for the rate to remain unchanged.

Offsetting the upbeat data was a report on German retail sales which fell 0.8% in October from September’s revised 0.2% decline. Economists had forecast an increase of 0.5%.

In the UK was the release of GfK’s consumer confidence report which registered a surprise decline in October, as British consumers were concerned about their personal finances and felt less confident about making large purchases.

The sentiment index fell to a seasonally adjusted -12, compared to -11 in September. The figure had been expected to rise to -10. There has not been a month-on-month decline since mid-2011.

House prices in Britain climbed 6.5% year-on-year in November, up from the previous month’s 5.8% increase, Nationwide figures showed. Economists had pencilled in a 6.2% rise.

It was the biggest jump since July 2010 and vindicated Bank of England Governor Mark Carney’s view that house prices are continuing to accelerate as he announced a scaling back of the Funding for Lending Scheme yesterday.

S&P raises Spain’s debt outlook and cuts Netherlands debt rating

Standard & Poor’s has raised Spain’s debt outlook to stable from negative but reduced Netherland’s top rating to AA+ from AAA.

The ratings agency said Spain’s economy was recovering as it affirmed the country at BBB, the lowest investment grade, and removed the negative outlook on the debt that was introduced in October 2012.

Spain first lost its top credit rating at S&P in 2009 and has since yet to receive an upgrade from any of the three main rating companies.

The Netherlands was downgraded amid weakening economic growth prospects and mounting government debt.

Mining stocks gain

A gauge of mining stocks rallied, including Randgold Resources, Antofagasta and Fresnillo, as metal prices climbed across the board with increases seen in gold, silver, copper and platinum.

Experian’s shares dropped after Goldman Sachs recommended shifting the stock. The broker reduced its rating on the stock to "sell" from "neutral".

Speedy Hire declined after saying it had found accounting irregularities within its international business, which mostly operates in the Middle East. Steve Corcoran resigned as Chief Executive Officer but will remain with the company until it finds a replacement.

Kesko advanced after the Finish retailer said it plans to sell some of its store sites and shopping malls to a real estate investment trust that it will set up in 2014.

Rentokil Initial gained after Bank of America Corp. upgraded the UK pest-control and hygiene-services company to ‘buy’ from ‘neutral’, citing an expected improvement in cash flow in 2014 and 2015.

TeliaSonera slumped after Sweden’s largest phone company fired Chief Financial Officer Per-Arne Blomquist and three other senior employees amid a fallout from an ethics review.

Euro/dollar and crude oil edge higher

The euro rose 0.02% to $1.3609.

Brent crude futures edged up $0.072 to $110.940 per barrel, ICE data showed.


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US Market Report

US open: Retailers lift markets higher as Black Friday kicks off

- Wal-Mart, Target gain after strong Thanksgiving sales
- Other retailers rise as Black Friday commences
- Markets open for half day
- Investors look ahead to data-heavy week

Dow Jones: 0.43%
Nasdaq: 0.49%
S&P 500: 0.30%

US stocks started strongly on Friday morning in New York with the Dow Jones Industrial Average and S&P 500 likely to extend their record highs in a shortened trading session.

Markets re-opened after the Thanksgiving holiday on Thursday but are due to close at 13:00 (Eastern time), three hours earlier than normal, with retailers closely watched as shoppers hit the stores for Black Friday.

With customers being enticed with special deals to mark the start to the holiday shopping season, many view Black Friday sales as a key gauge of consumer sentiment, which will be closely watched given the slip in confidence in November revealed earlier this week.

Meanwhile, with an absence of any US economic data at the end of this week, investors are awaiting reports due next week on manufacturing, home sales and non-farm payrolls to gauge the health of the US economy.

“This week could … be seen as the calm before the storm, with a huge amount of data being released next week, including the big daddy itself, the non-farm payrolls figure,” said Market Analyst Craig Erlam from Alpari.

“This could potentially be difference between a Fed taper in December or the first quarter of 2014. We also have a few central bank meetings, making next week a massive one for the markets,” he said.

Retailers provide a lift

Wal-Mart and Target were both trading higher after reporting decent Thanksgiving Day traffic numbers in both stores and online. While both groups didn’t given specific sales figures, they did suggest that opening earlier than usual on the holiday had helped footfall.

Other retailers such as Macy’s, Best Buy, GAP, Dollar General, Tiffany and JC Penney were also making gains.

Apple was also higher following reports the company accounted for 76% of smartphone sales in Japan last month.

Agribusiness ADM rose despite Australia rejecting its $2.6bn takeover of GrainCorp. The company’s Chief Executive Patricia Woertz said: “As owner of 19.85% of GrainCorp, we will look to work with them to maximize returns on our investment and create value for both companies.”


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Broker Tips

Credit Suisse has maintained its 'outperform' rating and 440p target for Kingfisher despite the DIY retailer's third-quarter results coming in well below forecasts on Thursday.

"Although 3Q results were £12m below our forecasts, we felt that the overall tone of the conference call was slightly more upbeat than we might have expected, and that the main reasons for the miss would not necessarily recur in 4Q or beyond," Credit Suisse said.

The share prices of London-listed Imperial Tobacco and British American Tobacco rebounded slightly on Friday morning after being hit by concerns over plain packaging the day before, as analysts at Berenberg said that the industry has a "very strong case to fight in the courts".

"We think the tobacco industry has a very strong case to fight in the courts; even if the courts defer to 'public health' concerns and allow the policy to be implemented, we are convinced that the tobacco companies could win hundreds of millions to billions of pounds by arguing that the taking of their property requires 'just compensation'."

"Don't panic" is the message being given to housebuilders by UBS after the Bank of England announced that they are removing the Funding for Lending Scheme to support mortgage lending from 2014.

"While the scheme was an effective catalyst in normalising funding markets in the UK, we believe the market is now functioning more efficiently, and that increased mortgage availability and falling mortgage rates are not solely driven by the FLS," UBS said.

 

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