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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: Financials lead markets lower as RSA sinks - UK services growth accelerated in October
- European Commission downgrades Eurozone growth
- RSA leads financials lower after gloomy update
techMARK 2,647.46 -0.14%
FTSE 100 6,746.84 -0.25%
FTSE 250 15,367.61 -0.65%
UK markets finished slightly lower on Tuesday as upbeat domestic economic data was outweighed by concerns about growth in the euro area.
The financial sectors bore the brunt of the selling today, with RSA Insurance falling heavily after a gloomy third-quarter update and banking stocks registering steep losses. Nevertheless, mining equities were limiting the downside on markets after a continuing improvement in data from top metals consumer China.
The FTSE 100 finished 16.78 points lower at 6,746.84, a fall of 0.25%.
There was little reaction to the UK services purchasing managers' index (PMI) this morning despite the survey showing the fastest pace of expansion in activity since May 1997. The PMI jumped from 60.3 to 62.5 in October, compared with the forecast for a slight fall to 59.8.
However, sentiment was dampened by the European Commission which made its second downward revision of 2014 growth for the Eurozone this year. It now expects to region to expand by just 1.1% next year, compared with its previous forecast of 1.2%. Nevertheless, Commissioner for Economic and Monetary Affairs Olli Rehn insisted that the Eurozone was at a "turning point".
Traders across Europe were acting cautiously today as eyes begin to turn to the European Central Bank meeting on Thursday, at which some are hoping to see a possible rate cut. "It would appear that the rate cut has now been priced in though, with indices today edging lower, as traders lock in profits ahead of Thursday's meeting," said Market Analyst Craig Erlam from Alpari.
Losses in London were pared slightly by the close after the US ISM non-manufacturing index rose from 54.4 to 55.4 in October, surprising analysts who had expected a small decline. Senior US Economist Paul Dales from Capital Economic said the data "supports other evidence suggesting that the wider economy shrugged off the government shutdown".
RSA sinks on worse-than-expected weather losses
RSA fell sharply after saying that recent storms and heavy winds now mean that weather-related losses will be "materially above planning assumptions" in 2013. The company has now said that its full-year return on equity will be below 10%.
A raft of non-life insurance peers were also trading lower with Hiscox, Amlin, Beazley, Admiral and Direct Line all registering losses.
Other financials were also in the red today including domestic lenders Barclays, Lloyds and RBS and Aberdeen Asset Management. Even insurance firm Legal & General was lower despite its third-quarter worldwide sales coming in ahead of forecasts.
AB Foods also underwhelmed despite a better-than-expected set of annual results following a strong performance from Primark and an improvement in its Grocery division.
Security group G4S, which is being investigated by the Serious Fraud Office over a government contract, declined after saying that has identified 35 businesses to grow or restructure.
Leading the upside was M&S after saying that its "transformation" was on track following a 3.6% increase in sales in the first half, as a strong performance in food offset weakness in clothing.
Imperial Tobacco Group gained after an in-line set of annual results with earnings per share up 6% at constant currency. Drug developer Shire also rose after positive results for its Binge Eating Disorder treatment, Vyvanse.
Mining stocks were broadly higher after the HSBC/Markit services PMI for China rose from 52.4 to 52.6 in October. Anglo American, Antofagasta, Glencore Xstrata and Rio Tinto all finished up. |
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| FTSE 100 - Risers
Marks & Spencer Group (MKS) 509.00p +4.50%
Imperial Tobacco Group (IMT) 2,382.00p +3.12%
Antofagasta (ANTO) 889.00p +2.95%
Anglo American (AAL) 1,536.00p +2.78%
Amec (AMEC) 1,207.00p +2.72%
Glencore Xstrata (GLEN) 341.80p +1.91%
Shire Plc (SHP) 2,858.00p +1.35%
Rio Tinto (RIO) 3,330.50p +1.25%
BHP Billiton (BLT) 1,970.00p +1.05%
Aggreko (AGK) 1,566.00p +0.97%
FTSE 100 - Fallers
RSA Insurance Group (RSA) 121.00p -6.27%
Persimmon (PSN) 1,215.00p -4.10%
Lloyds Banking Group (LLOY) 75.16p -2.44%
Barclays (BARC) 249.00p -2.41%
Legal & General Group (LGEN) 213.10p -2.20%
easyJet (EZJ) 1,203.00p -2.20%
Resolution Ltd. (RSL) 351.80p -2.14%
Schroders (SDR) 2,575.00p -2.13%
Associated British Foods (ABF) 2,208.00p -2.08%
Aberdeen Asset Management (ADN) 436.60p -2.04%
FTSE 250 - Risers
Polymetal International (POLY) 595.50p +4.20%
Cranswick (CWK) 1,109.00p +4.03%
Kazakhmys (KAZ) 269.20p +3.78%
Computacenter (CCC) 598.50p +3.55%
PayPoint (PAY) 1,037.00p +3.39%
Supergroup (SGP) 1,202.00p +2.82%
Perform Group (PER) 560.00p +2.66%
RPS Group (RPS) 296.40p +2.60%
IP Group (IPO) 150.80p +2.58%
Menzies(John) (MNZS) 830.00p +2.41%
FTSE 250 - Fallers
Telecity Group (TCY) 688.50p -6.96%
CSR (CSR) 518.00p -5.13%
Barratt Developments (BDEV) 320.80p -4.44%
Bovis Homes Group (BVS) 766.00p -3.89%
Taylor Wimpey (TW.) 106.50p -3.88%
Bellway (BWY) 1,450.00p -3.46%
Essar Energy (ESSR) 114.90p -3.45%
De La Rue (DLAR) 825.50p -3.17%
AZ Electronic Materials SA (DI) (AZEM) 271.80p -3.07%
Intu Properties (INTU) 335.40p -3.01% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets lower as EU cuts economic growth forecast - European Commission cuts growth forecast
- NIESR raises UK economic outlook
- British retail sales increase
- UK services sector expands
- US ISM non-manufacturing PMI rises
FTSE 100: -0.37%
DAX: -0.37%
CAC 40: -0.95%
FTSE MIB: -1.13%
IBEX 35: -0.72%
Stoxx 600: -0.19%
European stocks declined after the European Commission cut its economic growth forecast for the euro-area.
The Commission, the European Union's (EU) executive arm, wrote in a report that sluggish recovery will keep the bloc's unemployment rate near record highs through 2015.
Gross domestic product in the 17-nation currency bloc will rise by 1.1% in 2014, less than the 1.2% forecast in May, according to the report.
The report noted that private-sector debt cuts and continued government austerity have continued to weigh on consumer spending and business investment.
It comes ahead of the European Central Bank's (ECB) meeting on Thursday as investors speculate on an interest rate cut following last week's drop in inflation to 0.7%, well below the 2% target.
Bank of America Corp., UBS and Royal Bank of Scotland (RBS) have forecast the ECB will cut its benchmark interest rate this week.
However, Craig Erlam, Market Analyst at Alpari, said: "Given the ECB's careful approach previously when it comes to interest rates, I don't see them acting impulsively on this occasion just because inflation plummeted on one occasion.
"I think they'll wait until the asset quality review before they decide what the appropriate response will be."
UK economy to grow, says NIESR
The National Institute for Economic and Social Research (NIESR) has said the UK economy will grow faster than previously expected this year and next, underpinned by improved conditions in the Eurozone and housing sector.
The economy is seen growing by 1.4% in 2013 and by 2% in 2014. The previous forecasts were for the economy to grow by 1.2% this year, and by 1.8% in 2014.
Meanwhile, British retail sales increased less than expected in October as lower clothing sales held back overall growth, according to data released Tuesday. The British Retail Consortium said sales rose 0.8% year-on-year last month, compared to an increase of 0.7% in September, falling short of the consensus forecast for a 1% jump.
The Markit/CIPS service sector purchasing managers' index for the month of October has come in at 62.5, versus 60.3 for the month before. The consensus estimate was for a reading of 59.8. A reading above 50 signals expansion. The economic data acts as a backdrop for the Bank of England's meeting on Thursday when it is expected to keep its monetary policy unchanged.
In the US, the Institute for Supply Management non-manufacturing purchasing managers' index (PMI) rose to 55.4 in October from 54.4 in September, above expectations for a reading of 54.
EU to fine six banks
RBS, HSBC, JPMorgan, Deutsche Bank, Credit Agricole and Societe Generale are set to be fined by EU antitrust regulators for allegedly rigging benchmark Eurozone interest rates, a source told Reuters.
BMW declined after the maker of luxury vehicles reported a drop in third quarter earnings as spending on expansion offset strong demand for its 3-Series sedan.
RSA Insurance fell after saying that recent storms and heavy winds now mean that weather-related losses will be "materially above planning assumptions" in 2013.
Beiersdorf advanced as the maker of Nivea hand cream raised its full-year sales forecast.
Marks & Spencer Group gained as the company reported first half earnings that beat expectations.
Imperial Tobacco Group rallied after an in-line set of annual results with earnings per share up 6% at constant currency.
Other asset classes fall
The euro dropped 0.30% to $1.3474.
Brent crude futures slipped $0.473 to $105.730 per barrel on the ICE. |
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| | US Market Report | | US open: Treasury yields rise as ISM services gauge beats - Barclays: US economy held up well during government shutdown
- Goldman Sachs says Fed will lower unemployment rate threshold
- Goldman Sachs says QE taper could start before March
- Rosengren (Fed) dissatisfied with pace of jobs growth
- Gray market puts Twitter at 44 dollars by end first day of trading-MW
Dow Jones Industrials: -0.49%
Nasdaq Composite: -0.35%
S&P500: -0.45%
Wall Street was weaker early on Tuesday despite the release of a better than expected reading on the US services sector, with initial comments from economists rather being upbeat.
Even so, long-term US Treasury yields were rising.
Quite talked about, overnight Goldman Sachs Chief Economist John Hatzius told clients that his “base-case” is now that come March 2014 the US central bank will lower its unemployment rate threshold for a policy rate increase, albeit while at the same time initiating the tapering of its programme of quantitative easing.
However, said change in the unemployment threshold could come sooner. Hence, so too may the start date for QE, Goldman said.
In parallel, for now at least front-month West Texas crude futures continued to grind lower.
Acting as a backdrop, Boston Federal Reserve Bank President Eric Rosengren on Tuesday declared himself dissatisfied with the current pace of jobs growth in the US.
AOL Inc. rocketed higher by 9% as it unveiled better-than-forecast third quarter revenues of $561.3m.
Heading in the other direction was Tenet Healthcare, the health-care services provider released third quarter earnings per share of 32 cents, instead of the 45 cents which had been pencilled in by the Street’s number crunchers.
LeapFrog Enterprises was a heavy faller ahead of the opening bell after the tablet company cut its profit outlook for the year.
Technology group GT Advanced Technologies soared after announcing an equipment deal with gadget giantApple.
Media company AOL gained after third-quarter revenue rose a better-than-expected 14% to $386m. Profits however dropped by 90% due to restructuring costs and write-downs.
ISM services new orders gauge slipped slightly, production jumps
The US ISM non-manufacturing purchasing mangers’ index for the month of October rose to 55.4 points from 54.4 the month before. The consensus estimate had been for a reading of 54.
While the production gauge jumped by 4.6 points to 59.6 the new orders sub-index – which is much more closely watched as a leading indicator - slipped to 56.8 points from 59.6.
Crude futures continue slipping lower
Front month West Texas crude futures are now falling by 0.97% to the 93.69 dollar per barrel mark on the NYMEX.
10-year US Treasury yields were rising by six basis points to the 2.66% mark.
S&P 500 - Risers
Vulcan Materials Co. (VMC) $58.24 +8.52%
Regeneron Pharmaceuticals Inc. (REGN) $297.39 +5.57%
Newmont Mining Corp. (NEM) $27.17 +4.58%
Alcoa Inc. (AA) $9.67 +4.31%
Pioneer Natural Resources Co. (PXD) $213.00 +3.76%
United States Steel Corp. (X) $26.63 +3.30%
Exxon Mobil Corp. (XOM) $92.65 +3.15%
Cliffs Natural Resources Inc. (CLF) $28.14 +2.93%
Unum Group (UNM) $32.38 +2.76%
Sysco Corp. (SYY) $33.43 +2.67%
S&P 500 - Fallers
Tenet Healthcare Corp. (THC) $43.72 -7.35%
Expeditors International Of Washington Inc. (EXPD) $43.02 -7.06%
Fastenal Co. (FAST) $48.99 -5.59%
Avon Products Inc. (AVP) $17.56 -3.89%
Hewlett-Packard Co. (HPQ) $25.18 -2.84%
Western Union Co. (WU) $17.00 -2.75%
Corning Inc. (GLW) $16.66 -2.74%
Alexion Pharmaceuticals Inc. (ALXN) $119.78 -2.56%
Sears Holdings Corp. (SHLD) $59.33 -2.51%
Invesco Ltd. (IVZ) $32.99 -2.51%
Dow Jones I.A - Risers
Exxon Mobil Corp. (XOM) $92.65 +3.15%
Merck & Co. Inc. (MRK) $45.62 +0.87%
Microsoft Corp. (MSFT) $36.25 +0.86%
Cisco Systems Inc. (CSCO) $22.74 +0.69%
Verizon Communications Inc. (VZ) $50.56 +0.14%
McDonald's Corp. (MCD) $97.30 +0.06%
Procter & Gamble Co. (PG) $81.18 +0.04%
Nike Inc. (NKE) $76.06 +0.00%
Dow Jones I.A - Fallers
Visa Inc. (V) $195.30 -1.94%
E.I. du Pont de Nemours and Co. (DD) $60.20 -1.46%
Intel Corp. (INTC) $23.91 -1.44%
Boeing Co. (BA) $131.25 -1.34%
JP Morgan Chase & Co. (JPM) $51.88 -1.20%
American Express Co. (AXP) $81.21 -1.16%
Walt Disney Co. (DIS) $68.26 -1.09%
Home Depot Inc. (HD) $76.22 -1.00%
Johnson & Johnson (JNJ) $92.50 -0.93%
General Electric Co. (GE) $26.30 -0.90%
Nasdaq 100 - Risers
Regeneron Pharmaceuticals Inc. (REGN) $297.39 +5.57%
Sba Communications Corp. (SBAC) $89.69 +2.24%
Cognizant Technology Solutions Corp. (CTSH) $88.34 +1.72%
Facebook Inc. (FB) $48.75 +1.10%
Microsoft Corp. (MSFT) $36.25 +0.86%
Cisco Systems Inc. (CSCO) $22.74 +0.69%
Catamaran Corp (CTRX) $48.30 +0.62%
Starbucks Corp. (SBUX) $80.64 +0.34%
Fossil Group Inc (FOSL) $130.61 +0.32%
Gilead Sciences Inc. (GILD) $69.56 +0.32%
Nasdaq 100 - Fallers
Expeditors International Of Washington Inc. (EXPD) $43.02 -7.06%
Fastenal Co. (FAST) $48.99 -5.59%
Henry Schein Inc. (HSIC) $110.19 -2.56%
Alexion Pharmaceuticals Inc. (ALXN) $119.78 -2.56%
Sears Holdings Corp. (SHLD) $59.33 -2.51%
Activision Blizzard Inc. (ATVI) $16.42 -2.49%
Charter Communications Inc. (CHTR) $132.54 -2.38%
Green Mountain Coffee Roasters Inc. (GMCR) $62.93 -2.34%
Seagate Technology Plc (STX) $48.17 -2.21%
Baidu Inc. (BIDU) $152.70 -2.13% |
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| | Broker Tips | | Broker tips: RSA, M&S, Rio Tinto RSA Insurance's valuation is 'too great', according to Panmure Gordon which reiterated its 'sell' rating on the stock following the firm's gloomy trading update on Tuesday.
The broker said: "We believe that the shares are currently overvalued given that they are trading at c2.6x net tangible asset value (NTAV) which compares to the Lloyds based non-life sector trading at c1.3-1.8x NTAV. Having cut the dividend there is no longer the significant yield premium to the sector."
Investec has labelled Marks & Spencer as a 'hold', saying that the retailer's first-half results "lack sparkle".
Nevertheless, the broker admitted that the stock's valuation isn't that expensive with the shares trading at 14.1 times current-year earnings, compared with the wider sector trading at a multiple of 15.
Credit Suisse has reiterated its 'outperform' rating and 3,900p target for mining giant Rio Tinto, saying that the stock remains a "compelling investment case" despite recent strength.
The Swiss bank said: "With valuation, gearing and the corporate strategy generally heading in the right direction investors need only worry about future iron ore price expectations. If investors can convince themselves that a collapse in the price is not imminent then there need be no reason not to hold Rio Tinto shares into the future." | | |
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