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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: Stocks swing into the red as investors weigh emerging markets, Fed - Stocks swing sharply into red in afternoon trade
- Renewed EM currency volatility follows rate hikes
- Wall Street lower ahead of Fed decision
- Miners rise after strong updates, Sainsbury boss exits
techMARK 2,768.00 -0.48%
FTSE 100 6,544.28 -0.43%
FTSE 250 15,688.31 -0.18%
Market volatility returned in full force on Wednesday as UK stocks swung sharply into the red on the back of renewed concerns surrounding emerging markets and nervousness ahead of a policy decision in the States.
The FTSE 100, which hit a high of 6,645.23 early on, dropped over 160 points to an intraday low of 6,482.74 this afternoon, before paring gains slightly before the close. The index finished 28.05 points lower at 6,544.28, a 0.4% fall on the day.
Developing-nation currencies came under renewed pressure today despite central banks in Turkey, India and South Africa moving to tighten policy in an attempt to stabilise prices after a recent sell-off. After initial strength this morning, the Turkish lira and South African rand both fell against the dollar while the Indian rupee erased an earlier advance.
The currency weakness following an increase in interest rates "opens up a new, and potentially more worrying, phase of the recent turmoil in EM financial markets in which beleaguered policymakers find themselves unable to defend their currencies", according to analysts at Capital Economics.
UK markets were dampened further this afternoon after a weak start on Wall Street as traders awaited the outcome of the Federal Open Market Committee meeting later this evening.
The Fed, which began tapering its stimulus programme last month by cutting monthly asset purchases from $85bn to $75bn, is widely expected to cut another $10bn today. However, the impact that the potential move will have on the emerging markets is still very much up in the air.
Miners gain, Sainsbury slumps
Mining stocks managed to hold on to gains today despite the wider market sell-off after some well-received production updates from blue-chip metal producers Antofagasta, Anglo American and Randgold Resources.
Antofagasta was a high riser after unveiling a record year of copper production for 2013 and giving guidance for 2014 output that impressed; Anglo American also rose as it reported an increase in iron ore, copper, nickel and thermal coal production in the fourth quarter; Randgold Resources gained after saying that its Loulo-Gounkoto gold mine in Mali is likely to beat its revised production target for 2013.
Heading the other way was Sainsbury as the departure of its long-running Chief Executive received a negative reaction from markets.
United Utilities and BSkyB were among the worst performers ahead of their quarterly updates due out tomorrow morning.
Investors at financial services group Old Mutual were underwhelmed by the company's plans for an expansion of its African business, with shares falling sharply this afternoon. Sector peer Prudential also finished lower.
Carphone Warehouse jumped after being signed as the preferred partner of Samsung Electronics to operate more than 60 Samsung stand-alone stores across Europe.
Luxury handbag and fashion group Mulberry plunged following a profit warning after UK Christmas trading fell short of hopes due to rival price-cutting. |
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FTSE 100 - Risers
Antofagasta (ANTO) 872.50p +6.08%
Anglo American (AAL) 1,420.50p +5.73%
Fresnillo (FRES) 781.50p +4.06%
Randgold Resources Ltd. (RRS) 4,235.00p +3.17%
Royal Mail (RMG) 590.00p +1.99%
Weir Group (WEIR) 2,143.00p +1.61%
Vodafone Group (VOD) 226.30p +1.34%
Rio Tinto (RIO) 3,247.50p +1.07%
Next (NXT) 6,230.00p +0.97%
TUI Travel (TT.) 422.00p +0.96%
FTSE 100 - Fallers
William Hill (WMH) 330.50p -3.08%
British Sky Broadcasting Group (BSY) 844.50p -2.60%
United Utilities Group (UU.) 719.00p -2.44%
Prudential (PRU) 1,244.00p -2.35%
Sainsbury (J) (SBRY) 348.50p -2.30%
Old Mutual (OML) 176.10p -2.22%
Meggitt (MGGT) 515.50p -2.00%
BT Group (BT.A) 369.90p -1.94%
British American Tobacco (BATS) 2,929.00p -1.88%
Pearson (PSON) 1,104.00p -1.87%
FTSE 250 - Risers
Carphone Warehouse Group (CPW) 287.20p +6.69%
Laird (LRD) 325.00p +5.21%
COLT Group SA (COLT) 127.10p +4.61%
African Barrick Gold (ABG) 222.00p +4.32%
Lonmin (LMI) 328.40p +4.22%
Petra Diamonds Ltd.(DI) (PDL) 136.40p +4.12%
Homeserve (HSV) 311.20p +4.08%
Howden Joinery Group (HWDN) 333.70p +4.05%
Bank of Georgia Holdings (BGEO) 2,177.00p +3.67%
Perform Group (PER) 244.70p +3.64%
FTSE 250 - Fallers
Cairn Energy (CNE) 213.70p -5.61%
Evraz (EVR) 88.85p -4.62%
BTG (BTG) 583.00p -3.72%
Daejan Holdings (DJAN) 4,737.00p -3.68%
Rank Group (RNK) 128.00p -3.40%
Brewin Dolphin Holdings (BRW) 293.00p -3.08%
Renishaw (RSW) 1,799.00p -2.91%
Investec (INVP) 386.40p -2.87%
Pennon Group (PNN) 678.50p -2.86%
Merchants Trust (MRCH) 489.00p -2.59% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks fall as EM currencies erase early gains - Turkey and India central banks raise interest rates
- Irish central bank revises GDP estimates
- German consumer confidence rises
- Fed to announce possible taper
FTSE 100: -0.43%
DAX: -0.75%
CAC 40: -0.68%
FTSE MIB: -0.57%
IBEX 35: 0.17%
Stoxx 600: 0.57%
European stocks were mostly lower as emerging market currencies erased initial gains after the Turkish central bank's decision to hike interest rates.
At an emergency meeting yesterday the Turkish central bank lifted its overnight lending rate to 12% from 7.75%, its one-week repo rate to 10% from 4.5% and its overnight borrowing rate to 8% from 3.5%.
However, the bank's move failed to soothe concerns that Turkey's economy will be left by a slowdown in China. The lira rose 4% on first reaction to the news of the interest rate increase before depreciating as much as 2.4%.
According to JPMorgan, China remains the biggest risk to emerging markets.
In the bank's latest Global Data Watch, JPMorgan noted the spillover effects from a possible disruption in China's shadow banking system.
"Rising interbank rates, as liquidity is kept tight, continues to push up borrowing costs and, along with the slower growth, risks amplifying financial stress," economists said.
India's central bank has also unexpectedly raised interest rates in an effort to curb high inflation. The Reserve Bank of India (RBI) raised the benchmark repo rate - the amount at which it charges to lend to commercial banks - to 8% from 7.75%.
German consumer confidence, Irish GDP
German consumer confidence rose more than expected. GfK's forward-looking consumer sentiment index jumped to 8.2 in February from 7.7 the prior month, the highest since August 2007. Economists had predicted a drop to 7.6.
In Ireland, the central bank revised its gross domestic product (GDP) estimate higher, driven by expectations of strength in external demand. In its Quarterly Bulletin published on Wednesday, the Irish monetary authority revised GDP growth for last year to 0.4%, from the prior 0.5%, while slightly increasing its forecast for 2014 to 2.1%, from the previous 2.0% estimate.
Federal Reserve policy
Analysts expect the US Federal Reserve will announce a further $10bn stimulus cut when it wraps up its policy meeting after the European close.
In December the central bank began to trim monthly asset purchases by $10bn to $75bn.
Today's meeting marks Ben Bernanke's last as Chairman before handing the baton over to Janet Yellen.
Nordea Bank, Fiat
Nordea Bank dropped after its Chief Executive Christian Clausen said it will need to cut more jobs to adjust to slow growth.
Fiat was down after the car maker posted fourth quarter earnings the missed analysts' estimates.
Mulberry Group declined after the British luxury-handbag maker said full-year pre-tax profit will be substantially below current market estimates.
Antofagasta edged higher after the copper company said output climbed to a record 721,200 metric tonnes in 2013.
Vodafone Group jumped following reports AT&T is still interested in a potential takeover of the mobile-phone operator.
Anglo American rallied after reporting a 25% increase in fourth-quarter platinum production.
The euro fell 0.07% to $1.3662.
Brent crude futures edged up $0.353 to $107.790 per barrel, according to data from the ICE. |
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| | US Market Report | | US open: Stocks sink as investors await Fed decision - Taper in focus ahead of Fed decision
- Analysts show concerns with EM rate hikes
- Boeing and Yahoo! slump after results, Dow Chemicals rises
Dow Jones: -0.73%
Nasdaq: -0.54%
S&P 500: -0.62%
Just as sentiment began to recover following the emerging markets-led sell-off at the end of last week, US markets opened with sharp losses on Wednesday as investors showed caution ahead of the Federal Reserve policy meeting which comes to a close later this evening.
Meanwhile, investors were reacting to a 0.2% decline in US mortgage applications last week, along with a mixed batch of earnings from heavyweights Boeing, Yahoo! and Dow Chemical.
The Fed, which began tapering its stimulus programme last month by cutting monthly asset purchases from $85bn to $75bn, is widely expected to cut another $10bn today.
Positive effects of rate hikes begin to fade
Stocks in Europe had started the day on the front foot earlier on after Turkey hiked interest rates to halt a slide in the lira which sunk to a record low against the dollar on Monday. India and South Africa also followed suit in an effort to ensure price stability.
However, the initial positive effects from the rate increases quickly faded with the lira in particular erasing earlier gains against the greenback, as analysts warned of the negative impact that policy tightening would have on the economy.
"While the rate hike has helped stem lira weakness in the short - term, it increases the chances of slower growth and a domestic credit crunch in the medium term," said analysts at RBS. They said that the decision highlights the "dilemma" being faced by other emerging-market central banks.
European indices were pressured firmly into the red ahead of the US opening bell.
Boeing, Yahoo, Dow Chemical
Aerospace firm Boeing beat forecasts for the fourth quarter with earnings rising 26% to $1.2bn on revenues which were up 7% at $23.8bn, but shares fell sharply after the company's guidance for 2014 disappointed.
Internet giant Yahoo! dropped sharply after the company reported a drop in net sales in the fourth quarter and warned of slowing growth amid competition from Google and Facebook. Other tech stocks such as Apple, Intel and Facebook were also lower this morning.
Dow Chemical surged after beating fourth-quarter earnings forecasts, raising its dividend and increasing its share buyback programme.
Biogen Idec advanced after posting fourth-quarter profit that beat surpassed forecasts.
Medivation edged up after saying its prostate-cancer drug Xtandi slowed cancer in 59% of patients in a study.
T-Mobile US dropped following reports that Sprint Corp. would face resistance from antitrust officials to a potential acquisition of the company. |
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| | Broker Tips | | Broker tips: Antofagasta, Brewin Dolphin, Carpetright Westhouse Securities has maintained its 'buy' rating and 1,000p target for Chilean mining group Antofagasta after production guidance for 2014 came in ahead of forecasts.
"For 2014, guidance for copper is a fraction above our estimate (of 702,000t) and gold guidance at 270,000oz is well above our 248,000oz estimate, so in all likelihood this calls for upgrades to both 2013 and 2014 estimates, but we shall review the detail first. So, well done Antofagasta, good production results," the broker said.
Canaccord Genuity has lowered its recommendation for wealth management firm Brewin Dolphin despite an in-line first quarter.
"Brewin Dolphin shares have performed well: since December 4th they are up 8.1% (10.4% relative to the FTSE All Share); over the past three months there are up 7.4% (8.5% relative) and over the past year up they have risen 43.9% (30.0% relative). As we anticipate only a 4.2% total shareholder return over the next 12 months, we reduce our investment recommendation from 'buy' to 'hold'."
N+1 Singer has kept its 'buy' rating for floorings retailer Carpetright despite another profit warning for the firm this week, saying it still remains upbeat about its turnaround plans.
"The 'buy' case remains dependent upon an operationally geared recovery in the UK as a raft of positive self-help initiatives coincide with recovery in Carpetright's addressable markets." | | |
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