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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 100 hits seven-week low on taper fears - FTSE 100 at lowest level since October 14th
- US jobs report in focus as taper speculation picks up
- UK construction activity at six-year high
techMARK 2,640.56 -0.50%
FTSE 100 6,532.43 -0.95%
FTSE 250 15,153.14 -1.18%
The FTSE 100 finished around one per cent lower on Tuesday and at a seven-week low as weakness in the mining and financial sectors weighed heavily on London's benchmark index.
Despite data earlier in the session showing an unexpected surge in UK construction activity last month, investors were beginning to scale back risk appetite ahead of a busy end to the week, full of central bank meetings and economic data from across the globe.
Eyes remain firmly fixed on the US November jobs report due Friday with investors wary that a stronger-than-expected increase in non-farm payrolls could prompt the Federal Reserve to begin scaling back stimulus at its next meeting on December 17-18th. These fears were renewed yesterday after data showed that US manufacturing activity jumped to a two-and-a-half-year high last month.
The FTSE 100 finished down 62.9 points at 6,532.43 this afternoon, its lowest level since October 14th when it closed at 6,507.65.
"If the FTSE is going to maintain its 10-year record of rising over the month of December, it is going to do it the hard way: the index is down over 100 points in the first couple of days' trading," noted Market Analyst Alastair McCaig from IG.
"The significant economic data due over the next few days has given those with a nervous disposition ample reason to flap, resulting in substantial sell-offs in almost all the major markets worldwide."
Markets were relatively unfazed this morning by the UK construction purchasing managers' index (PMI) for November which smashed forecasts. The PMI unexpectedly surged to a six-year high of 62.6 last month, up from 59.4 in October and well ahead of the forecast for a slight fall to 59.
Miners, financials drift lower
It was a calmer day on the commodity markets today, though stocks in the mining sector were still reeling after a sell-off in metal prices on Monday. Randgold, Antofagasta, Vedanta Resources and Glencore Xstrata finished in the red. Rio Tinto pared losses but still finished lower after saying that it will cut capital spending significantly over the next two years.
UBS was also providing some downwards pressure as it slashed target across the sector after making reductions in gold and silver forecasts for 2014 and 2015.
Financial stocks were mostly lower with savings and investment group Old Mutual among the worst performers as JPMorgan Cazenove trimmed its target after adjusting for currency movements.
Meanwhile, HSBC was hit by a downgrade from Nomura to 'neutral' with analyst Chintan Joshi saying that regulation is the "main headwind to the dividend story" at the bank.
Retailers such as Next, Ted Baker and Sports Direct rose after the British Retail Consortium said that despite overall subdued sales growth in November clothing retailers had performed well. Next was being helped higher by Oriel Securities which upped its rating from 'hold' to 'buy'.
Smith & Nephew gained after Morgan Stanley raised its rating to 'overweight', recommending investors to add exposure to the European healthcare equipment sector in 2014.
Bookmaker William Hill was also in demand after UBS lifted the shares to 'buy', saying it is "well placed to benefit from the UK recovery".
Shares in building materials supplier Travis Perkins slid lower as new Chief Executive John Carter made his first strategy presentation to institutional investors and City analysts. Carter said he expects "good growth" in all sectors, including General Merchanting, Plumbing and Heating, Contracts and Consumer, but the stock still finished down, along with sector peer CRH. |
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| FTSE 100 - Risers
Next (NXT) 5,515.00p +2.13%
Smith & Nephew (SN.) 828.50p +1.91%
William Hill (WMH) 387.10p +1.60%
Tate & Lyle (TATE) 786.50p +0.83%
Anglo American (AAL) 1,301.00p +0.62%
SSE (SSE) 1,326.00p +0.45%
Tesco (TSCO) 341.60p +0.21%
United Utilities Group (UU.) 651.50p +0.15%
Morrison (Wm) Supermarkets (MRW) 259.80p +0.12%
Aberdeen Asset Management (ADN) 483.70p +0.10%
FTSE 100 - Fallers
CRH (CRH) 1,471.00p -4.42%
Melrose Industries (MRO) 280.30p -3.58%
Old Mutual (OML) 189.20p -3.57%
Antofagasta (ANTO) 754.00p -3.40%
Randgold Resources Ltd. (RRS) 4,017.00p -3.37%
Travis Perkins (TPK) 1,723.00p -3.26%
Wolseley (WOS) 3,186.00p -3.19%
Mondi (MNDI) 942.50p -3.13%
Burberry Group (BRBY) 1,480.00p -2.95%
Resolution Ltd. (RSL) 330.70p -2.79%
FTSE 250 - Risers
Ted Baker (TED) 2,128.00p +4.93%
Betfair Group (BET) 1,080.00p +4.85%
Brewin Dolphin Holdings (BRW) 280.60p +3.54%
NMC Health (NMC) 410.00p +3.14%
Fisher (James) & Sons (FSJ) 1,162.00p +2.56%
Homeserve (HSV) 264.70p +1.93%
Fidessa Group (FDSA) 2,136.00p +1.91%
Xaar (XAR) 1,025.00p +1.79%
ITE Group (ITE) 299.80p +1.73%
Daejan Holdings (DJAN) 4,389.00p +1.48%
FTSE 250 - Fallers
Hochschild Mining (HOC) 125.10p -8.89%
African Barrick Gold (ABG) 152.60p -5.98%
Essar Energy (ESSR) 74.85p -5.67%
Carpetright (CPR) 540.00p -5.35%
Centamin (DI) (CEY) 39.58p -4.83%
Kazakhmys (KAZ) 213.50p -4.69%
AZ Electronic Materials SA (DI) (AZEM) 263.50p -4.67%
Perform Group (PER) 411.00p -4.64%
Thomas Cook Group (TCG) 168.30p -3.99%
Ladbrokes (LAD) 168.10p -3.61% |
| | Download your free Santa Rally report. | | Have you heard of the stock market phenomenon called the Santa Rally? The FTSE 100 has risen in 18 of the last 20 Decembers*. Download your free report showing a breaking down of what the average rise has been for the stocks within the FTSE over the month of December. Losses can exceed deposits. * Past performance is no guarantee of the future |
| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall as US stimulus cut fears grow - Fed stimulus cut concerns grow
- UK construction picks up
- Spain's unemployment falls
- Italy needs to rein in debt, says EU's Rehn
FTSE 100: -0.95%
DAX: -1.90%
CAC 40: -2.65%
FTSE MIB: -1.95%
IBEX 35: -1.44%
Stoxx 600: -1.53%
European stocks ended Tuesday in the red as markets speculated on the timing of the stimulus tapering by the Federal Reserve.
Better-than-expected economic data releases recently has fuelled speculation that the central bank will begin scaling back its monthly $85bn bond buying programme at its mid-December meeting.
"Until recently, this had looked unlikely due to the unknown impacts of the US government shutdown on the economy and the mixed data seen in the months leading up to it, but now it looks well and truly back on the table," said Alpari analyst Craig Erlam.
"The data we've seen for September recently has been surprisingly strong. If we see similar figures from the rest of the November figures, the FOMC may be tempted to test the water with a small reduction of around $10bn."
A batch of US data out tomorrow and a non-farm payrolls report on Friday will be closely watched to gauge the health of the world's biggest economy that could prompt an earlier tapering than initially anticipated.
UK construction rises more than expected
The UK Markit/CIPS construction sector purchasing managers' index jumped to 62.6 from 59.4 in October, ahead of the consensus estimate for a reading of 59. A reading above 50 signals expansion.
In Spain, the number of people registered as unemployed fell by 2,475 last month, the first decline for the month of November since the current system was introduced in 1997.
Unemployment normally picks up in November as the tourism sector slows down after the summer. The consensus estimate was for an increase of 50,000 people.
EU's Rehn warns Italy on debt reduction
European Commission Vice-President and Commissioner for Monetary and Economic Affairs and the Euro Olli Rehn warned Italy today that the country was not doing enough to reduce debt.
At approximately 134% of gross domestic product (GDP), Italy's public debt is far above the 60% European Union (EU) ceiling and second only to Greece.
"Italy needs to follow a certain rate of debt reduction and it is not following it," he said in the interview. "The structural adjustment was supposed to be 0.5% of GDP and it is only 0.1%. That is why Italy has no room to maneuver," Rehn told Italian paper La Reppublica.
Elsewhere in Europe former European Central Bank (ECB) member Jos Vials said that sluggish growth and low inflation in the Eurozone gives the monetary authority elbow room to take further monetary policy action.
"In my opinion, the ECB could change rates even further in order to accelerate the European economic recovery," the former Eurozone monetary policymaker said in an interview published on Monday in the Polish newspaper Rzeczpospolita.
Vials, who is current Financial Counsellor and Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF), noted that the economic situation gave the central bank leeway to pursue more stimulus.
"Inflation is low, significantly below 2%, and the economy needs cheap money in order to recover. The recovery is very slow and unemployment remains at a dangerously high level," he explained.
After cutting rates to a record low of 0.25% last month, the ECB's next monetary policy decision will be announced on Thursday. The consensus does not expect there to be another rate change after November's surprise cut.
Orange slumps
Orange dropped amid concern a price war in the French mobile market will extend to fourth-generation data services.
Miners including Antofagasta, Fresnillo and Randgold edged lower with commodity prices fluctuating following a sell-off yesterday.
ThyssenKrupp declined after raising 882.3m through a share sale.
Sonova tumbled after Morgan Stanley downgraded the stock to 'equal weight' from 'overweight'.
France's CAC 40 edged lower after Credit Suisse Group AG cut its rating on French stocks to 'underweight' from 'benchmark'.
Euro strengthens against dollar
The euro rose 0.43% to $1.3600.
Brent crude futures increased $0.0571 to $112.090 per barrel, ICE data showed. |
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| | US Market Report | | US open: Dow dips below 16,000 as taper speculation ramps up - Taper speculation ramps up ahead of jobs report
- Dow trading near two-week low
- Apple rises as UBS upgrades to 'buy'
Dow Jones: -0.28%
Nasdaq:-0.03%
S&P 500: -0.13%
Renewed fears about an impending taper of quantitative easing by the Federal Reserve pressured US markets lower on Tuesday morning for the third straight day.
The Dow Jones Industrial Average slipped well below the psychologically important level of 16,000 in early trading in New York; it has not closed below this level since November 20th.
Yesterday global manufacturing figures for November beat forecasts across the board, but a surprise pick-up in US manufacturing activity to a two-and-a-half-year high ramped up speculation regarding a withdrawal of stimulus.
Markets are now turning towards the all-important jobs report on Friday to gauge the outlook on the economic recovery, given that it will be a key factor in the Fed's monetary policy decision at its meeting on December 17-18th.
Consensus forecasts are pointing to a 183,000 increase in non-farm payrolls for November, below the 204,000 gain in October. The unemployment rate is expected to slip to 7.2% from 7.3%.
"Continuing to drive sentiment this morning has been growing fears that the Fed will scale back its asset purchases when it meets in a couple of weeks time," said Market Analyst Craig Erlam from Alpari.
"Until recently, this had looked unlikely due to the unknown impacts of the US government shutdown on the economy and the mixed data seen in the months leading up to it, but now it looks well and truly back on the table."
Apple gains after UBS upgrade
Tech giant Apple was limiting losses on the Nasdaq today with shares rising after an upgrade by UBS from 'neutral' to 'buy'. The bank raised its target for the stock from $540 to $650, saying that it "see[s] institutional money moving back into Apple in 2014".
Cyber Monday sales rose, sending online shopping toward a single-day record as Amazon.com Inc. and EBay Inc. enticed consumers from brick-and-mortar stores.
Krispy Kreme declined after the donut maker reported third-quarter revenue that missed analysts’ estimates.
Yum slumped despite a surprise gain in same-store sales in China last month as promotions lured diners to its fried-chicken chain.
KFC same-store sales in China gained in the first 10 days of the month, driven by a “Half Priced” bucket promotion. However, sales fell were down 8% in the last 20 days of November as the offer ended. |
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| | Broker Tips | | Broker tips: Old Mutual, Banks, Miners JPMorgan Cazenove has trimmed its target for savings and investment group Old Mutual from 228p to 223p. after adjusting for currency movements.
However, the bank maintained its 'overweight' rating on the stock, highlighting attractive and improving returns from its emerging market life business.
Barclays is the top pick in the UK banking sector, according to Nomura, which retained its 'buy' rating for the stock on Tuesday morning.
The broker also kept a positive stance on Standard Chartered, but downgraded its rating for HSBC and reiterated its negative position on RBS. Lloyds, meanwhile, looks fairly valued, it said.
UBS has slashed targets across the mining sector after downgrading its gold and silver price forecasts for 2014 and 2015. The bank said it now sees few positive catalysts for precious metal prices over the medium term, with the Federal Reserve expected to start tapering quantitative easing in January. Gold is losing its safe-haven demand and physical buying has its limits, it added.
UBS cut its targets for the following stocks: Antofagasta, Aquarius Platinum, Fresnillo, Hochschild Mining, Kazakhmys, Lonmin and Rio Tinto. | | |
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