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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 open: Stocks start the day slightly lower, but RBS jumps Stocks started the Tuesday session slightly lower, weighed down by weakness overnight in Asian markets, although Wall Street did manage to finish off its intra-session lows.
That comes as investors keep a close bead on US interest rate expectations and the strength of the US dollar. No less important in guiding markets will be Thursday's European Central bank policy meeting on Thursday and Friday's US non-farm payrolls report.
Protesters in the special administrative region of Hong Kong were reportedly blocking roads for a fifth day, with the crowds now said to have reached the tens of thousands.
As of 08:57 the FTSE 100 was down by 9 points to 6,637.99, while the Hang Seng was lower by 216.58 points to 23,012.63, having pared earlier losses.
"While financial markets in HK do not appear too rattled by the growing political tensions the risks are obviously high. A heavy-handed crackdown by authorities might irreparably damage the city's reputation as a global financial centre," Mark Williams, chief Asia economist at Capital Economics wrote on Tuesday morning.
Economic data out overnight will not offer much succor either. The HSBC Chinese manufacturing sector purchasing managers' index for September was revised lower, revealing a print of 50.2 versus the preliminary estimate of 50.5.
Japan's industrial production dropped by 1.5% month-on-month in August, quite a bit worse than forecast.
Back in the UK, house prices slipped at a 0.2% month-on-month clip in September (9.4% year-on-year) according to the latest data from Halifax, coming in well below the 10.4% pace of increases which economists had pencilled in.
Majority state-owned lender Royal Bank of Scotland (RBS) now expects to "significantly" outperform its previous guidance of approximately £1bn in total impairments for the fiscal year 2014 thanks to a strong operating performance by RBS Capital Resolution and a continued improvement in economic conditions and asset prices, including Ireland.
In company news, clothes retailer Next warned that third quarter sales were lower than its previous expectations and a continuation of the cold weather could reduce full year profits. However, the FTSE 100 group was confident enough to maintain its full year guidance, saying "our experience suggests that some lost sales are regained when the weather turns".
London property group Workspace has sold the first phase of its redeveloped Poplar Business Park site to Telford Homes. The redevelopment comprises 170 apartments and 8,000 square foot of light industrial space.
Product testing group Intertek has appointed André Lacroix as chief executive to replace Wolfhart Hauser, who will retire after a decade at the helm of the product testing group. Lacroix spent close to a decade in charge of automotive dealership company Inchape.
The latest data from Kantar Worldpanel, to which The Times has had access, show that Marks&Spencer, the retailer led by Marc Bolland, is losing market share to Next. |
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| | Market Movers
techMARK 2,816.51 -0.07%
FTSE 100 6,647.35 +0.01%
FTSE 250 15,401.02 +0.07%
FTSE 100 - Risers
Royal Bank of Scotland Group (RBS) 375.30p +3.85%
Intertek Group (ITRK) 2,641.00p +2.88%
Smiths Group (SMIN) 1,279.00p +2.32%
easyJet (EZJ) 1,412.00p +2.24%
Associated British Foods (ABF) 2,609.00p +1.79%
CRH (CRH) 1,412.00p +1.36%
Kingfisher (KGF) 323.80p +0.97%
Glencore (GLEN) 342.70p +0.94%
Sainsbury (J) (SBRY) 249.50p +0.89%
Barclays (BARC) 228.00p +0.89%
FTSE 100 - Fallers
Next (NXT) 6,625.00p -3.50%
Marks & Spencer Group (MKS) 403.10p -2.96%
ARM Holdings (ARM) 910.50p -1.51%
Sports Direct International (SPD) 628.00p -0.95%
GKN (GKN) 323.10p -0.92%
Intu Properties (INTU) 327.10p -0.88%
Old Mutual (OML) 181.00p -0.82%
British American Tobacco (BATS) 3,476.50p -0.73%
Fresnillo (FRES) 755.00p -0.72%
HSBC Holdings (HSBA) 630.60p -0.69%
FTSE 250 - Risers
Melrose Industries (MRO) 246.10p +3.66%
AO World (AO.) 198.70p +3.49%
Evraz (EVR) 130.00p +2.85%
RPC Group (RPC) 540.00p +2.76%
Fisher (James) & Sons (FSJ) 1,368.00p +2.09%
Fidessa Group (FDSA) 2,334.00p +1.92%
Centamin (DI) (CEY) 59.15p +1.89%
PZ Cussons (PZC) 370.20p +1.79%
Hunting (HTG) 897.50p +1.76%
International Personal Finance (IPF) 485.80p +1.65%
FTSE 250 - Fallers
AL Noor Hospitals Group (ANH) 1,018.00p -6.52%
Ferrexpo (FXPO) 109.80p -4.60%
Inchcape (INCH) 641.00p -4.40%
Debenhams (DEB) 58.05p -3.01%
PayPoint (PAY) 975.00p -2.35%
Supergroup (SGP) 1,118.00p -1.76%
Balfour Beatty (BBY) 187.20p -1.73%
Ted Baker (TED) 1,846.00p -1.65%
Domino's Pizza Group (DOM) 570.00p -1.55% |
| | UK Event Calendar | | Tuesday September 30
INTERIMS
African Minerals Ltd., Ergomed , Flowgroup, HarbourVest Global Private Equity Limited A Shs, Harvey Nash Group, InternetQ, Lifeline Scientific Inc. (Reg S), Powerflute Oyj (DI), RapidCloud International , Saga , Snoozebox Holdings, Westminster Group, Xtract Resources
INTERIM DIVIDEND PAYMENT DATE
Aviva 8 3/8% Cumulative Irrd Preference 1, British American Tobacco, Croda International, Custodian Reit , Foresight VCT Infrastructure Shares, Martinco , Rights & Issues Inv Trust Income Shares, Temple Bar Inv Trust, The Renewables Infrastructure Group Limited
QUARTERLY PAYMENT DATE
MedicX Fund Ltd., Premier Energy & Water Trust, TwentyFour Select Monthly Income Fund Limited
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Chicago PMI (US) (14:45)
International Reserves (EU) (11:00)
Retail Sales (GER) (07:00)
Unemployment Rate (EU) (10:00)
Unemployment Rate (GER) (08:55)
FINALS
Eclectic Bar Group, Range Resources Ltd. (DI), Wolseley
ANNUAL REPORT
AIREA, Range Resources Ltd. (DI)
IMSS
Euromoney Institutional Investor
SPECIAL DIVIDEND PAYMENT DATE
Premier Energy & Water Trust
EGMS
OJSC Novolipetsk Steel GDS (Reg S)
AGMS
African Consolidated Resources, Angle, Anglesey Mining, Avengardco Investments Public Ltd GDR, Begbies Traynor Group, Castleton Technology, Empyrean Energy, Galileo Resources, Ludorum, Max Petroleum, MDM Engineering Group Ltd. (DI), Midas Income & Growth Trust, Science In Sport, Surface Transforms, Tanfield Group, Terra Catalyst Fund (DI), United Carpets Group, Zoo Digital Group
TRADING ANNOUNCEMENTS
Compass Group, Daily Mail and General Trust A (Non.V), Homeserve, KCOM Group, RPC Group
UK ECONOMIC ANNOUNCEMENTS
Balance of Payments (09:30)
Current Account (09:30)
GDP (quarterly national accounts) (09:30)
Index of Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Downing Structured Opportunities VCT 1 'B' Shares, Downing Structured Opportunities VCT 1 'D' Shares, PHSC
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks little changed ahead of Eurozone inflation European stocks were little changed as investors weighed an increase in German unemployment and awaited the release of Eurozone inflation figures.
German unemployment rose by 12,000 in September after a 3,000 increase a month earlier, surprising analysts who predicted a 2,000 fall.
Eurozone inflation is forecast to ease back to 0.3% year-on-year in September from 0.4% the previous month, which would add pressure on the European Central Bank (ECB) to boost stimulus measures.
The ECB meets on Thursday when it is expected to keep policy unchanged including interest rates.
"If the macroeconomic picture deteriorates and medium-term inflation expectations move another clear leg down, we would expect the ECB to respond by broadening its purchase program to include assets like senior bank bonds, non-financial debt and potentially also EFSF/ESM bonds, with the main aim of accelerating balance sheet expansion and debasing the currency (forget the transmission mechanism!)," UniCredit said.
"Government bond purchases would remain the ultimate weapon to deploy only in case all other options fail."
A report at 09:30 London time is expected to confirm UK gross domestic product (GDP) rose by 0.8% in the second quarter.
RBS, Next
Royal Bank of Scotland Group advanced after saying total impairment charges for this year will be lower than previously estimated.
Next declined after saying it is likely to cut its annual profit forecast if the warm weather in the UK continues throughout October.
Wolseley advanced after the distributor of building materials and bathroom supplies said full-year earnings rose 9.9% to 196.2p a share.
The euro held at $1.2685. |
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| | US Market Report | | US close: Markets slip back amid geopolitical tensions in Hong Kong US stocks ended the session well off their intra-day lows, but nevertheless in the red, amid rising political tensions in Hong Kong, while a rebound in consumer spending had investors wondering whether the Federal Reserve might not raise interest rates sooner than expected.
As regards the latter the president of the Federal Reserve bank of Dallas - a well-known hawk - was quoted by The Wall Street Journal as saying the central bank should consider raising interest rates by next spring.
The Dow Jones Industrial Average closed 41.93 points down at 17,071.22. The Nasdaq lost 6.34 points to 4,505.85 and the S&P 500 dropped 5.05 points to 1,977.80.
Data released on Monday showed that consumer spending in the US rebounded in August, with purchases increasing 0.5% while incomes rose 0.3%.
In parallel, figures published by the National Association of Realtors (NAR) showed contracts to acquire previously owned homes suffer a decline in August, with limited wage growth and tighter credit proving a stumbling block for potential buyers.
In corporate news, Dreamworks Animation surged 26% after The Hollywood Reporter revealed that Japan-based Softbank was looking to acquire the animation studio.
Athlon Energy rose 24.8% following news that Encana Corporation has agreed a cash takeover worth $5.93bn, while Ambit Biosciences shares leaped 87.07% after Daiichi Sankyo announced it will buy the firm for a fee thought to be in the region of $315m.
Apple shares fell marginally, as reports emerged that European Union (EU) regulators are expected to publish a report on Tuesday showing that the Silicon Valley giant breached EU laws.
On Friday, Pimco founder Bill Gross said it would leave the company to join Janus Capital Group. Shares in the company fell over 7% on Monday following a 43% leap on the last day of the previous week.
Ford dropped 7% after cutting its pre-tax profit forecasts for 2014 to $6bn from a previous estimate of $7-8bn. The automobile giant also said it will lose $1.2bn in Europe this year on a pre-tax basis and will follow that up with a $250m pre-tax loss in 2015.
Ford, however, also stressed it was more confident of the short-term picture in Asia, where it expects to post $700m in pre-tax profit for the financial year.
West Texas intermediate crude rose 1.05% and traded at $94.5 a barrel by the close on NYMEX, while the dollar dropped against the pound and the euro but rose against the yen.
The yield on the 10-year US Treasury note dropped five basis points to 2.49%, while the five-year note lost another four points to 1.77% and the 30-year Treasury bond fell to 3.17% after dropping five points.
S&P 500 - Risers
Iron Mountain Inc. (IRM) $33.90 +6.27%
NiSource Inc. (NI) $40.84 +5.86%
Computer Sciences Corp. (CSC) $59.62 +5.28%
Tyson Foods Inc. (TSN) $38.85 +2.94%
Pioneer Natural Resources Co. (PXD) $201.96 +2.73%
Cabot Oil & Gas Corp. (COG) $33.01 +2.67%
Best Buy Co. Inc. (BBY) $33.65 +2.16%
Frontier Communications Co. (FTR) $6.48 +2.13%
NRG Energy Inc. (NRG) $30.41 +2.05%
Intuit Inc. (INTU) $87.78 +2.01%
S&P 500 - Fallers
Ford Motor Co. (F) $15.11 -7.47%
Borg Warner Inc. (BWA) $54.31 -3.57%
Diamond Offshore Drilling Inc. (DO) $35.17 -3.33%
Discovery Communications Inc. Class A (DISCA) $37.71 -3.32%
Wynn Resorts Ltd. (WYNN) $178.99 -2.99%
Staples Inc. (SPLS) $12.15 -2.61%
Covidien Plc (COV) $87.81 -2.41%
Rowan Companies plc (RDC) $25.49 -2.37%
Noble Corporation plc (NE) $22.54 -2.17%
Harman International Industries Inc. (HAR) $102.03 -2.14%
Dow Jones I.A - Risers
Intel Corp. (INTC) $34.90 +1.87%
McDonald's Corp. (MCD) $96.22 +1.61%
Cisco Systems Inc. (CSCO) $25.13 +0.50%
Pfizer Inc. (PFE) $29.77 +0.17%
Coca-Cola Co. (KO) $42.25 +0.12%
Walt Disney Co. (DIS) $88.83 +0.10%
Microsoft Corp. (MSFT) $46.44 +0.06%
Boeing Co. (BA) $128.77 +0.06%
Home Depot Inc. (HD) $92.88 +0.04%
Merck & Co. Inc. (MRK) $59.41 +0.03%
Dow Jones I.A - Fallers
Exxon Mobil Corp. (XOM) $94.43 -1.05%
General Electric Co. (GE) $25.42 -0.82%
Chevron Corp. (CVX) $120.55 -0.76%
Goldman Sachs Group Inc. (GS) $183.83 -0.70%
Travelers Company Inc. (TRV) $93.77 -0.67%
E.I. du Pont de Nemours and Co. (DD) $72.05 -0.62%
Caterpillar Inc. (CAT) $99.83 -0.55%
Wal-Mart Stores Inc. (WMT) $76.08 -0.54%
Johnson & Johnson (JNJ) $106.54 -0.52%
Visa Inc. (V) $210.93 -0.48%
Nasdaq 100 - Risers
Intuit Inc. (INTU) $87.78 +2.01%
Micron Technology Inc. (MU) $34.50 +1.98%
Intel Corp. (INTC) $34.90 +1.87%
Cerner Corp. (CERN) $59.69 +1.76%
Autodesk Inc. (ADSK) $55.04 +1.40%
Adobe Systems Inc. (ADBE) $69.22 +1.27%
Celgene Corp. (CELG) $95.64 +1.25%
Equinix Inc. (EQIX) $212.07 +1.13%
Intuitive Surgical Inc. (ISRG) $464.94 +1.01%
Monster Beverage Corp (MNST) $91.32 +0.87%
Nasdaq 100 - Fallers
Vimpelcom Ltd Ads (VIP) $7.15 -6.29%
Discovery Communications Inc. Class A (DISCA) $37.71 -3.32%
Wynn Resorts Ltd. (WYNN) $178.99 -2.99%
Staples Inc. (SPLS) $12.15 -2.61%
Activision Blizzard Inc. (ATVI) $20.91 -1.60%
F5 Networks Inc. (FFIV) $119.16 -1.55%
Catamaran Corp (CTRX) $42.68 -1.52%
TripAdvisor Inc. (TRIP) $90.80 -1.47%
Priceline Group Inc (PCLN) $1,161.05 -1.14%
Nxp Semiconductors Nv (NXPI) $70.28 -1.14% |
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| | Broker Tips | | Broker tips: Pearson, Balfour Beatty, Petrofac Publishing group Pearson has its long-term attractions but faces immediate trading and execution risks, with the resulting trade-off more than reflected in its current valuation, Westhouse Securities believes.
Hence, the current share price offers a profit-taking opportunity when compared to these analysts' price target of 1,001p for the stock.
Indeed, the company is an "interesting" play on long-term structural change in the global education market, thanks to its trusted brands, a broad customer base and robust finances, Westhouse deems.
Pearson should also benefit from population growth, increased public/private sector spending and the expansion of the middle class in emerging markets – including strong demand for English and the transition towards digital product and platforms.
Nevertheless, the cultural change being undertaken by the firm "carries further execution risk". Furthermore, print products still account for approximately 40% of revenues. Hence, a significant digital migration remains to be negotiated.
That transition, together with the disruption of several of the firm's core markets, will hold back growth over the broker's three-year forecast horizon. US dollar exposure could also constitute a potentially disruptive factor.
For all of the above reasons Westhouse Securities has initiated coverage of Pearson at 'sell' with a price target of 1,001p.
Balfour Beatty is impossible to value at present.
The problem contracts at the comparatively "tiny" Engineering services unit within the company's UK construction arm are a "potential black hole" which threatens the financial health of the group, analyst Alastair Stewart at Westhouse Securities wrote to clients in a note on Monday.
That is the reason that average net debt has increased at an alarming pace, as contagion begins to extend to other parts of UK construction. So much so in fact that another profit warning may follow, Stewart claimed.
In the company's latest trading update the firm's executives claimed that factors such as "slippage" and "poor delivery" were behind a reported £75m shortfall, £30m of which originated in the problem London contracts.
The resulting KPMG review of the firm's UK contract portfolio, the possibility that management failed to keep pace with the deteriorating outlook and the prospect of a new chief executive arriving, "could potentially result in a further significant write-down".
"Today's £240m Sellafield nuclear contract win displays Balfour at its best, but we are concerned that the problems surrounding the smaller contracts are undermining the group's many strengths," the broker added.
As of 15:55 shares of the constrcution outfit were off by 16.76% to 1,872p.
Shares of oilfield services firm Petrofac have been de-rated too far while the outlook is still robust, even when accommodation is made for some of the company's weaknesses.
The stock is now at a four-year low, near 1,000p, and trading on 8.2 times' the estimated 2015 price-to-earnings multiple. That represents a 20% discount to the wider European sector. Other fundamental ratios tell much the same story, Credit Suisse writes. The company, for example, is on just 5.1 times' next year's EV/EBITDA multiple – for a 30% discount to its historic average.
The latest directors' dealings are also supportive of the investment case, as is the company chief's 18% holding. Together with a solid balance sheet that means that the firm's dividend pay-out is "underpinned".
The key risk to Credit Suisse's positive rating is the trading update due out on 16 December. Petrofac then needs to deliver on 77% of its earnings guidance for fiscal year 2014, "which appears challenging". Yet backlog for execution covers 75% of the revenues forecast for next year, the broker adds.
As a result of all the above Credit Suisse has moved to an 'outperform' recommendation on Petrofac, from 'neutral' beforehand, but stuck with its price target of 1,340p. | | |
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