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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: Resource-heavy FTSE 100 falls as metals' prices slump - Taper speculation picks up ahead of non-farm payrolls
- Global manufacturing figures beat forecasts
- Miners sold off as metal prices fall
- Supermarkets hit by competition fears
techMARK 2,653.70 -0.76%
FTSE 100 6,595.33 -0.83%
FTSE 250 15,334.75 -0.85%
London's FTSE 100 finished with moderate losses on Monday after some steep falls in the heavyweight mining sector as equities tracked the prices of metals lower.
Precious metals peers Fresnillo and Randgold were among the worst performers by the close, as the price of gold dropped to its lowest since July on fears that the Federal Reserve will soon begin to scale back its stimulus programme.
The concerns were prompted by a report from the Institute for Supply Management (ISM) which showed that US manufacturing activity accelerated in November at its quickest pace in over two years.
"Obviously, the Fed is more focused on the labour market data specifically but, at the margin, this is more evidence in favour of an earlier taper," said Economic Amna Asaf from Capital Economics.
The FTSE 100 closed 55.24 points lower at 6,595.33 this afternoon, down 0.83% on the day.
It's set to be a busy week for financial markets with a barrage of data from across the globe due out as well as policy meetings at the Bank of England and European Central Bank.
Figures from the UK, Eurozone and China today also showed that manufacturing activity was better than expected last month; however there was little reaction on markets as the focus remained firmly on the US with markets preparing for the all-important non-farm payrolls figures on Friday.
"A busy week crammed with economic indicators and events warrants some hesitation," said Market Strategist Ishaq Siddiqi from ETX Capital. He said that the upcoming events have "left investors feeling less risky, waiting for these high profile events to take place before ramping up appetite for risk".
Miners and supermarkets drop
A 2.1% drop the price of gold to $1.224.60 an ounce prompted a sell-off in the gold mining sector today with Fresnillo, Randgold, African Barrick Gold and Polymetal falling sharply. Other miners including Anglo American, Vedanta and Kazakhmys also finished with heavy losses as metal prices across the board declined. Analysts at Citi described Anglo American as their least favoured name among the large-cap miners.
Supermarkets were also under the weather today on fears of rising competition in the sector after discount supermarket Lidl announced plans to more than double the amount of stores it has in the UK. Sainsbury, Morrison and Tesco finished firmly lower with the latter also weighed down by a ratings cut from HSBC.
Credit Suisse downgraded its recommendation for asset management group Aberdeen from 'outperform' to 'neutral' today, causing the stock to fall after the bank said it is now fairly valued. It said that the shares are now largely factoring in the potential earnings accretion from the recently announced deal to buy the Scottish Widows Investment Partnership (SWIP) business from Lloyds.
Barclays Capital pushed High Street retailer Debenhams lower by shifting its rating from 'equal weight' to 'underweight', saying it sees 18% downside to the current share price. The bank raised concerns about "margin-erosive" sales online cannibalising store sales, and said that share buybacks will likely be postponed until 2016.
Utility providers Centrica and SSE fell after the government announced changes to obligations that are paid through energy bills to offset the rising cost of living across the UK. Both companies said that they would pass on savings to customers, with bills set to rise by a smaller rate than initially estimated.
Consumer products giant Unilever was unwanted after its Chief Executive Officer (CEO) Paul Polman was quoted as saying that the slowdown being seen in the emerging markets (EM) could "a few years".
Banking group Lloyds gained after announcing that Lord Blackwell will succeed Sir Winfried Bischoff as Chairman as of April next year. On Friday Investec highlighted how under the proposed changes to FLS Lloyds would now be able to borrow at a 25 basis point spread (previously up to 150 basis points).
Meanwhile, investment and wealth management firm Rathbone Brothers fell after the news that its long-running CEO Andy Pomfret is to retire next year. |
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| FTSE 100 - Risers
TUI Travel (TT.) 375.30p +2.18%
Lloyds Banking Group (LLOY) 78.58p +1.52%
Royal Bank of Scotland Group (RBS) 331.40p +1.28%
Croda International (CRDA) 2,346.00p +0.95%
Sports Direct International (SPD) 743.50p +0.68%
Compass Group (CPG) 926.00p +0.54%
Capita (CPI) 1,001.00p +0.40%
International Consolidated Airlines Group SA (CDI) (IAG) 367.60p +0.35%
InterContinental Hotels Group (IHG) 1,909.00p +0.32%
Associated British Foods (ABF) 2,299.00p +0.26%
FTSE 100 - Fallers
Fresnillo (FRES) 760.00p -8.76%
Randgold Resources Ltd. (RRS) 4,157.00p -4.35%
Anglo American (AAL) 1,293.00p -4.15%
Mondi (MNDI) 973.00p -3.18%
Vedanta Resources (VED) 859.50p -2.88%
Petrofac Ltd. (PFC) 1,233.00p -2.61%
Sainsbury (J) (SBRY) 396.80p -2.60%
Shire Plc (SHP) 2,709.00p -2.27%
Morrison (Wm) Supermarkets (MRW) 259.50p -2.26%
Admiral Group (ADM) 1,215.00p -2.25%
FTSE 250 - Risers
Enterprise Inns (ETI) 141.00p +2.17%
Euromoney Institutional Investor (ERM) 1,265.00p +1.77%
Greencore Group (GNC) 195.40p +1.51%
Cranswick (CWK) 1,156.00p +1.31%
Ted Baker (TED) 2,028.00p +1.30%
Homeserve (HSV) 259.70p +1.21%
Stagecoach Group (SGC) 369.80p +1.15%
Greene King (GNK) 882.00p +1.15%
RPC Group (RPC) 505.00p +1.00%
Menzies(John) (MNZS) 784.50p +0.97%
FTSE 250 - Fallers
IP Group (IPO) 180.10p -6.20%
Kazakhmys (KAZ) 224.00p -5.60%
Rank Group (RNK) 139.00p -5.44%
Carpetright (CPR) 570.50p -5.23%
African Barrick Gold (ABG) 162.30p -5.14%
Polymetal International (POLY) 510.00p -4.40%
ITE Group (ITE) 294.70p -4.32%
Essar Energy (ESSR) 79.35p -4.11%
Halfords Group (HFD) 469.00p -3.97%
Debenhams (DEB) 92.95p -3.93% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall after batch of manufacturing PMI reports - US manufacturing expands
- Spanish manufacturing contracts
- NFR: Thanksgiving weekend sales estimated to have dropped
- UK and Eurozone manufacturing rises
FTSE 100: -0.83%
DAX: - 0.04%
CAC 40: -0.22%
FTSE MIB: -1.52%
IBEX 35: -0.94%
Stoxx 600: -0.33%
European stocks declined as a pickup in US manufacturing activity fuelled concerns that the Federal Reserve will start tapering monetary stimulus at its next meeting.
News out over the weekend regarding a drop in shop sales Stateside over the Thanskgiving weekend and mixed market commentary on Monday´s China manufacturing PMI probably also weighed on stocks. Furthermore, investors were likely positioning themselves ahead of Friday´s monthly US employment numbers.
The Institute for Supply Management (ISM) said its manufacturing sector purchasing manager´s index (PMI) rose to 57.3 in November from 56.4 a month earlier, exceeding the 55.1 forecast and the 50 reading that signals expansion.
Fed policymakers are turning to economic data to gauge the health of the world's biggest economy in deciding when to start scaling back its monthly $85bn bond buying programme.
While most economists don't see a tapering until March 2014, the Fed has indicated that tapering could come as soon as its mid-December meeting.
Meanwhile, and also proving a drag on markets, was disappointing Spanish manufacturing PMI figures which fell to 48.6 in November, the lowest since May, from 50.9 in October. Economists had predicted a reading of 51.1.
The data offset upbeat PMIs in the UK and Europe.
The Eurozone´s manufacturing PMI climbed to 51.6 in November from 51.5 in October, beating the forecast for the reading to remain unchanged.
In the UK, the manufacturing PMI came in at 58.4, above the consensus reading of 56.2 and the previous month's revised 56.5.
Debenhams, Enel
Debenhams was lower after Barclays downgraded the shares to 'underweight' from 'overweight'.
Enel SpA retreated after Deutsche Bank said that its estimates for earnings at the Italian utility show no growth for 2013 or 2014.
Tesco dropped after HSBC downgraded the supermarket chain operator to 'neutral' to 'underweight' and cut the target for the shares from 400p to 340p, saying the company was unlikely to maintain current margin targets.
L'Oreal advanced after the world's largest cosmetics maker said it will repurchase as much as €500m of shares.
Deutsche Boerse AG gained after the exchange signed a deal with the Bank of China to promote Frankfurt as a centre for yuan trading in Europe.
ThyssenKrupp declined after the German steelmaker agreed to sell its US plant to ArcelorMittal and Nippon Steel & Sumitomo Metal Corp. for $1.55bn.
Euro weakens against dollar
The euro fell 0.32% to $1.3548.
Brent crude rose $0.282 to $110.000 per barrel on the ICE. |
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| | US Market Report | | US manufacturing expanded in November at fastest pace this year The rate of expansion in US manufacturing accelerated in November to its fastest this year, according to the Institute for Supply Management (ISM).
The institute's manufacturing sector purchasing manager´s index moved up to the 57-point mark from a reading of 56.4 in the month before.
The consensus estimate had been for a small decline in the pace of growth to 55.5.
The new orders sub-index increased to 63.6 from 60.6 in the month before, while the survey's production gauge rose to 62.8 from 60.8.
The barometre for hiring improved to 56.5 from 53.2.
On the basis of historical relationships, the average headline PMI reading for January through November (53.7%) corresponds to a 3.6% increase in real gross domestic product (GDP) on an annualized basis. |
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| | Broker Tips | | Broker tips: Tesco, Aberdeen, Debenhams, Utilities Tesco's share price was firmly lower on Monday morning after analysts at HSBC downgraded their rating on the stock from 'neutral' to 'underweight'.
"We believe a 5.2% UK operating margin is not sustainable, and that aiming for any margin is the wrong strategy. In our view, a margin fall in inevitable and a margin reset is necessary. We advocate Tesco slashing its margin to 2-3%."
Credit Suisse has cut its recommendation for asset management group Aberdeen from 'outperform' to 'neutral', saying that the stock is now fairly valued.
The bank said that the shares are now largely factoring in the potential 12% earnings accretion from the recently announced deal to buy the Scottish Widows Investment Partnership (SWIP) business from Lloyds. Analysts said they are now "generally less constructive on the underlying flow and margin dynamics".
Barclays Capital has lowered its rating for High Street retailer Debenhams from 'equal weight' to 'underweight', saying it sees 18% downside to the current share price.
The bank expects Debenhams to report a 12% fall in annual pre-tax profit in the year to August 2014 as "margin-erosive" sales online cannibalise store sales. Barclays also said that share buybacks are now likely to be postponed until 2016.
Deutsche Bank has taken Centrica off its 'buy' list and retained a 'hold' recommendation for SSE, despite that the government's efforts over the weekend to address energy affordability.
"Temporary relief on green costs would be welcome but group earnings growth for Centrica and SSE still requires higher prices in our view. We see further political battles over energy prices in the run up to the probable May 2015 UK general election," Deutsche Bank said. | | |
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