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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: FTSE ends on high note after payrolls beat expectations - FTSE ends day 11 points higher
- US payrolls come in above expectations
- IAG leads gains
techMARK 2,640.30 -0.10%
FTSE 100 6,708.42 +0.17%
FTSE 250 15,342.03 -0.31%
After spending much of the day in the red, the FTSE 100 ultimately ended the final session of the week on a much more positive note, up 11 points.
The lift was provided by an unexpected jump in US payrolls for the month of October, which totalled 204,000, significantly higher than expectations of 120,000. The September figure was revised to 163,000. The unemployment rate rose to 7.3% from 7.2%, as forecast.
The news suggested that the US economy would be able to withstand the shutdown better than expected. However, the figures are likely to also reaffirm views that the Fed will start tapering asset purchases.
“The much bigger than expected 204,000 gain in September's non-farm payrolls, combined with a 60,000 upward revision to the gains in the two preceding months, will mostly definitely shift expectations of when the Fed will begin to taper its asset purchases,” according to Capital Economics.
“Together with the news yesterday of a stronger 2.8% gain in third-quarter GDP growth, the Fed now has the data to justify making its first reduction at December's FOMC meeting, but whether it will or not is still unclear. Frankly, given all the flip-flopping, it's hard to know exactly what evidence would satisfy the majority of Fed officials.”
Events in the UK
Back on this side of the Atlantic, UK construction output fell unexpectedly in September by 0.9% when compared to a month earlier, when it rose 0.1%, according to the Office for National Statistics, missing economists’ estimates for an increase of 1.5%.
The ONS also announced that the UK’s trade deficit in goods and services came in at £3.3bn for September, in line with the previous month. There was a deficit of £9.8bn on goods up from -£9.6bn in September, which was partly offset by an estimated surplus of £6.5bn on services up from £6.3bn in the month before.
The overall trade in goods balance with the EU reached a record of £6bn.
Over on the mainland ...
Limiting gains was Standard and Poor’s downgrade of France’s credit rating to AA from AA+ due to high unemployment hampering the country’s economic growth.
A separate report in France showed industrial production declined by 0.5% month-on-month in September, slightly below consensus for a rise of 0.1%, as an increase in manufacturing offset robust output in the energy sector.
In Germany, the trade surplus widened more than estimated in September to €20.4bn from a revised €13.3bn in August, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase to €15.4bn.
IAG soars strong Q3
International Consolidated Airlines Group charged higher after it delivered a “strong” set of third quarter results which showed British Airways' performance had taken off aided by the bounce back from the Olympics effect last year. The airlines group reported three month pre-tax profit had soared to €609m from €237m last time after revenues rose 6.9% to €5.4bn and costs fell 1.5%. Third quarter passenger unit revenue was up 6.7%.
Rolls-Royce shares also jumped after it said it expects the full year to achieve modest growth in underlying revenue and underlying profit with cash flow around breakeven, according to a trading update out this morning. However, the engine manufacturer has changed its underlying profit guidance in its Defence Aerospace business from broadly flat to modest growth and in Marine from modest growth to broadly flat.
Meanwhile, Schroders extended yesterday's losses as investors continued to cash in on strong gains seen in the share price over the past year around 65% . The group yesterday reported a sharp rise in third quarter profits helped by its recent acquisition of Cazenove Capital. The fund manager said pre-tax profits rose to £106.2m in the three months to the end of September from £88.6m in the same period last year on the back of revenues which rose to £366m from £276.5m.
Aberdeen Asset Management was also in the red on reports it faces competition for its potential purchase of Scottish Widows Investment Partnership. According to the Wall Street Journal, Macquarie Group is planning to put in a £500m bid for SWIP. Aberdeen last month said it was in discussions with Lloyds about a possible purchase. |
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| | FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 376.90p +7.99%
Rolls-Royce Holdings (RR.) 1,210.00p +3.42%
Persimmon (PSN) 1,197.00p +2.13%
easyJet (EZJ) 1,225.00p +2.08%
Lloyds Banking Group (LLOY) 75.16p +1.75%
Meggitt (MGGT) 516.00p +1.67%
Bunzl (BNZL) 1,414.00p +1.65%
Tate & Lyle (TATE) 804.00p +1.64%
Imperial Tobacco Group (IMT) 2,374.00p +1.45%
Standard Chartered (STAN) 1,483.50p +1.37%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 422.20p -4.57%
Randgold Resources Ltd. (RRS) 4,735.00p -3.07%
ARM Holdings (ARM) 941.00p -2.39%
William Hill (WMH) 385.40p -2.28%
Vedanta Resources (VED) 1,036.00p -2.26%
Schroders (SDR) 2,438.00p -2.13%
IMI (IMI) 1,505.00p -2.08%
Croda International (CRDA) 2,275.00p -1.81%
Tullow Oil (TLW) 901.00p -1.80%
Marks & Spencer Group (MKS) 500.00p -1.67%
FTSE 250 - Risers
Dairy Crest Group (DCG) 537.50p +3.56%
Redrow (RDW) 275.40p +3.42%
IP Group (IPO) 155.30p +2.85%
Balfour Beatty (BBY) 282.30p +2.54%
Barratt Developments (BDEV) 321.40p +2.52%
Entertainment One Limited (ETO) 247.00p +2.49%
Thomas Cook Group (TCG) 145.80p +2.39%
Rentokil Initial (RTO) 107.20p +2.39%
Bovis Homes Group (BVS) 780.00p +2.36%
Homeserve (HSV) 238.90p +2.27%
FTSE 250 - Fallers
Dialight (DIA) 950.00p -6.68%
Alent (ALNT) 312.90p -5.18%
ITE Group (ITE) 295.80p -4.46%
African Barrick Gold (ABG) 199.30p -3.91%
CSR (CSR) 499.90p -3.87%
Countrywide (CWD) 534.00p -3.44%
Tullett Prebon (TLPR) 307.40p -3.33%
Polymetal International (POLY) 567.50p -3.32%
Ferrexpo (FXPO) 193.00p -3.02%
Brewin Dolphin Holdings (BRW) 266.40p -2.95%
FTSE TechMARK - Risers
Microgen (MCGN) 126.00p +3.70%
Phoenix IT Group (PNX) 144.75p +3.39%
NCC Group (NCC) 169.75p +2.88%
Vectura Group (VEC) 108.75p +1.64%
Skyepharma (SKP) 109.50p +1.39%
Gresham Computing (GHT) 135.00p +1.12%
E2V Technologies (E2V) 158.00p +0.96%
Innovation Group (TIG) 31.75p +0.79%
FTSE TechMARK - Fallers
Torotrak (TRK) 26.50p -6.19%
Wolfson Microelectronics (WLF) 141.25p -3.25%
Kofax (KFX) 366.00p -2.40%
Optos (OPTS) 155.25p -2.36%
Vislink (VLK) 51.25p -1.68%
Ark Therapeutics Group (AKT) 0.32p -1.56%
Ricardo (RCDO) 606.50p -1.38%
Promethean World (PRW) 19.50p -1.27%
Anite (AIE) 89.00p -1.11%
Oxford Biomedica (OXB) 2.67p -0.93% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall as US payrolls report fuels Fed stimulus cut fears - US payrolls and jobless rate rise
- France receives S&P downgrade
- Chinese exports increase
- German trade trade surplus widens
FTSE 100: -0.91%
DAX: -1.00%
CAC 40: -0.60%
FTSE MIB: -1.09%
IBEX 35: -0.75%
Stoxx 600: -0.78%
European stocks edged lower as an unexpected rise in US payrolls fuelled concerns that the Federal Reserve will cut stimulus earlier than previously anticipated.
Employers added 204,000 workers in October following a revised 163,000 increase in September, according to the Labor Department. Economists had forecast a rise of 120,000.
The unemployment rate, however, rose to 7.3% from 7.2%, as forecast.
The payrolls report prompted fears of a reduction to quantitative easing by the Federal Reserve by the end of this year, compared to earlier predictions for a tapering in 2014.
“The much bigger than expected 204,000 gain in September's non-farm payrolls, combined with a 60,000 upward revision to the gains in the two preceding months will mostly definitely shift expectations of when the Fed will begin to taper its asset purchases,” according to Capital Economics.
“Together with the news yesterday of a stronger 2.8% gain in third-quarter GDP growth, the Fed now has the data to justify making its first reduction at December's FOMC meeting, but whether it will or not is still unclear. Frankly, given all the flip-flopping, it's hard to know exactly what evidence would satisfy the majority of Fed officials.”
Also dragging down stocks today was Standard and Poor’s downgrade of France’s credit rating to AA from AA+ due to high unemployment hampering the country’s economic growth.
A separate report in France showed industrial production declined by 0.5% month-on-month in September, slightly below consensus for a rise of 0.1%, as an increase in manufacturing offset robust output in the energy sector.
China exports, German trade surplus
Chinese exports rose 5.6% in October from a year earlier, according to a report from the General Administration of Customs in Beijing. It beat the forecast for 1.7% growth and September’s unexpected decline of 0.3%. Imports advanced 7.6%, leaving a trade surplus of $31.1bn, the biggest this year.
In Germany, the trade surplus widened more than estimated in September to €20.4bn from a revised €13.3bn in August, the Federal Statistics Office in Wiesbaden said today. Economists predicted an increase to €15.4bn.
Meanwhile, a European Union investigation into credit derivatives trading by 13 of the world’s biggest banks was put on hold after the lenders’ won the right to see confidential information compiled by investigators.
The banks requested to view business secrets about their rivals in EU files to help them fight a formal antitrust complaint sent in July, sources told Bloomberg.
The credit-default swaps probe includes HSBC, JPMorgan Chase & Co. and Royal Bank of Scotland.
Telecom stocks decline
Telecom Italia plunged after the carrier unveiled plans to raise $5.4bn to reduce its debt.
Telefonica tumbled as Spain’s largest phone company reported an unexpected fall in third-quarter income.
Rheinmetall slipped after the company said military-budget cuts by governments led to a loss at its defence division in the nine months ended September.
Total SA slumped after investor Groupe Bruxelles Lambert sold 8.2m shares in Europe’s second-largest oil producer.
Richemont retreated after the owner of the Cartier brand said operating profit dropped to in the six months through September, falling short of forecasts.
International Consolidated Airlines gained after the parent of British Airways said third-quarter earnings more than doubled and raised its full-year outlook.
Rolls-Royce rallied after the engine maker raised the earnings target for its defence aerospace unit following a rise in contracts from the US government.
Euro/dollar declines
The euro fell 0.51% to $1.3350.
Brent crude futures were up $0.891 to $104.390 per barrel on the ICE. |
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| | US Market Report | | US open: Stocks rise following employment data - Non-farm payrolls well ahead of forecasts
- Personal income data stronger than expected
- 10-year Treasury yields sharply higher
Dow Jones Industrials: 0.48%
Nasdaq Composite: 1.13%
SP 500: 0.74%
US stocks were registering moderate gains following the release of what at first glance appeared to be much better than expected non-farm payrolls figures.
“Together with the news yesterday of a stronger 2.8% gain in third-quarter GDP growth, the Fed now has the data to justify making its first reduction at December's FOMC meeting, but whether it will or not is still unclear.
"Frankly, given all the flip-flopping, it's hard to know exactly what evidence would satisfy the majority of Fed officials,” wrote Paul Ashworth, Chief US economist at Capital Economics.
Groupon shares rose after the company reported a narrower-than-estimated loss. The internet outfit also agreed to buy South Korean deals website Ticket Monster.
Walt Disney stock slipped after reporting lower income than forecast. Same-store sales at the firm slipped by 0.2% in October, versus analysts’ estimates for a gain of 0.4%.
Non-farm payrolls figures beat
Federal Reserve President Ben Bernanke himself is scheduled to make a speech at 20:30.
Personal incomes increased at a 0.5% month-on-moth pace in September, ahead of the 0.3% forecast by the consensus.
US non-farm payrolls grew by 204,000 in October, well ahead of the 120,000 expected by the consensus.
As well, the previous two months' estimates were revised higher by a combined 60,000. The relevance of those figures is magnified by the fact that the non-farm payrolls tally was expected to be one of the least distorted areas of the report.
The University of Michigan’s preliminary reading on consumer confidence came in at 72 for the month of November, after a print of 73.2 for the month before. The consensus estimate was for a reading of 74.5.
Treasury yields head sharply higher
Front month West Texas crude futures are gaining 0.18% to the $94.39/barrel.
Ten-year US Treasuries yields are moving higher by 14 basis points to the 2.74% level. |
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| | Broker Tips | | Abcam: Canaccord Genuity moves target from 396p to 386p and keeps a sell recommendation. N+1 Singer shifts target from 450p to 445p downgrading to sell.
Aberdeen Asset Management: Jefferies lowers target from 440p to 430p and reiterates a hold recommendation.
Anglo American: Goldman Sachs ups target from 1100p to 1130p, but still recommends selling.
Associated British Foods: Canaccord Genuity moves target from 1663p to 1680p, but still recommends selling.
BAE Systems: Investec cuts target from 485p to 460p and downgrades from buy to hold.
Betfair Group: HSBC initiates with a target of 1245p and an overweight rating.
Bovis Homes Group: Jefferies raises target from 995p to 1022p and keeps a buy recommendation. Panmure Gordon shifts target from 873p to 875p and maintains a buy recommendation.
Cable & Wireless Communications: Alphavalue shifts target from 55p to 54.8p and downgrades from buy to add. Espirito Santo shifts target from 60p to 62p and keeps a buy recommendation.
Clarkson: JP Morgan increases target from 1670p to 1990p and maintains a neutral rating.
Dairy Crest Group: JP Morgan raises target from 543p to 583p keeping an overweight rating.
easyJet: Investec cuts target from 1550p to 1500p, while leaving its buy recommendation unaltered.
GlaxoSmithKline: Jefferies takes target from 1600p to 1700p and retains a hold recommendation.
Glencore Xstrata: Investec initiates with a target of 307p and a sell recommendation.
Halfords Group: N+1 Singer raises target from 475p to 540p and leaves its buy recommendation unchanged. Citi increases target from 465p to 545p and maintains a buy recommendation. JP Morgan ups target from 405p to 440p reiterating an overweight rating.
Hikma Pharmaceuticals: Panmure Gordon ups target from 1300p to 1350p retaining a buy recommendation.
Inmarsat: JP Morgan cuts target from 800p to 780p and reiterates an overweight rating. HSBC reduces target from 750p to 720p leaving its neutral rating unaltered. Societe Generale cuts target from 670p to 650p and keeps a sell recommendation.
Ladbrokers: HSBC starts with a target of 260p and a neutral rating.
Lancashire Holdings: Deutsche Bank lowers target from 816p to 807p downgrading to hold.
London Mining: JP Morgan reduces target from 215p to 200p keeping its overweight rating.
Lonmin: Investec cuts target from 280p to 266p and downgrades from reduce to sell.
Novae Group: Canaccord Genuity raises target from 520p to 575p and maintains a buy recommendation.
Pennon Group: HSBC moves target from 760p to 740p, while upgrading to overweight.
Randgold Resources: Deutsche Bank raises target from 5050p to 5200p and stays with its buy recommendation. Investec takes target from 5018p to 5095p retaining a hold recommendation.
Record: JP Morgan lowers target from 45p to 40p, while staying with its overweight rating.
Reed Elsevier: Credit Suisse raises target from 620p to 815p, while staying with its neutral rating.
Rightmove: Deutsche Bank increases target from 2450p to 2650p maintaining a hold recommendation.
Schroders: JP Morgan raises target from 2624p to 2791p leaving its overweight rating. Credit Suisse takes target from 2350p to 2550p and keeps a neutral rating.
Shanks Group: Jefferies moves target from 110p to 121p and reiterates a hold recommendation. Credit Suisse downgrades from outperform to neutral with a target of 110p.
Tate & Lyle: Societe Generale revises target from 865p to 900p and stays with its buy recommendation.
Waterlogic: Liberum Capital lowers target from 120p to 110p retaining its hold recommendation. N+1 Singer reduces target from 235p to 136p, while leaving its buy recommendation unchanged.
Weir Group: Berenberg shifts target from 2680p to 2675p keeping a buy recommendation. Espirito Santo initiates with a target of 2600p and a buy recommendation.
William Hill: HSBC initiates with a target of 385p and an underweight rating.
Wincanton: JP Morgan ups target from 91p to 106p, while staying with its underweight rating. | | |
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