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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 caught in downdraft from Wall Street The Footsie started the session sharply lower, caught in the downdraft from the sharp falls seen on Wall Street last Friday, alongside big losses for the main Asian equity indices on Monday.
All eyes were expected to be on what the three Fedspeakers scheduled for Monday had to say, especially Fed governor Lael Brainard.
Atlanta Fed president Dennis Lockhart and Minneapolis Fed chief Neel Kashkari would precede her.
Up and until now, Ms. Brainard had been considered a 'dove', so any hint that she might be turning more hawkish might go a long way towards cementing expectations of another rate hike in 2016, some analysts and traders said.
There were also some reports to be seen early on Monday morning that the Bank of Japan was looking at ways to steepen the country´s interest rate curve.
As of 0824 BST the Footsie was 96.97 points or 1.43% lower to 6,679.27, led by falls in miners.
Overseas, the Shanghai Stock Exchange´s composite index retreated 56.88 points or 1.85% to 3,021.98, while Japan´s Topix erased 20.56 points or 1.54% to finish at 1,323.40.
Commenting on Friday´s price action on Wall Street, CMC Markets' Jasper Lawler said: "[...] Friday was the worst day for US stocks since June 24, the results day for Britain's EU referendum. Sticks in the United States might have sold off the most on Friday but the trigger seems to have been European.
"Global bond markets, including US treasuries jolted on Thursday when ECB president Mario Draghi said the governing council did not discuss extending its asset purchase program. Bondholders suddenly didn't like the idea of holding onto a negative-yielding asset which could fall in price if there's no central banking buying alongside them."
Overnight, US Minneapolis Fed president Neel Kashkari reportedly argued in favour of immigration and tax reform as the most useful tools to boost growth in the States, cautioning against raising the central bank´s inflation target or "massive" increases in government spending as alternatives.
For its part, the BCC argued Westminster needed to make up its mind on big infrastructure projects in the UK more quickly in order to buttress the economy against the headwinds from Brexit.
In corporate news, the Financial Conduct Authority hiked the minimum amount of regulatory capital required of Aberdeen Asset Management, in effect raising its total regulatory requirement to roughly £475m.
Following the FCA's periodic review, the regulator decided to eliminate the benefit of insurance mitigation when modeling operational risk for Pillar 2 purposes while adding an allowance, or so-called scalar, to cover any unsighted and unquantifiable risks that might emerge.
However, Aberdeen´s available capital was already comfortably above the new requirement, the fund manager said in a statement.
Indeed, the fund manager had already been applying its own self-imposed scalar, equal to £100m, which it would now deduct from that imposed by the FCA.
Associated British Foods said it expected full year earnings to be slightly ahead of last year's, with revenues from its Primark retail business up 11% and sales from the grocery and sugar arms modestly higher.
Although a previous surplus has morphed into a £200m pension deficit and currency moves had a mixed effect, the 53 weeks to 17 September were mostly rosy for AB Foods, with operating profit ahead of last year and earnings per share marginally ahead.
Property developer John Laing Infrastructure Fund said it expects to see a slowdown in market activity due to the Brexit vote, as the company reported a rise in profit due to international expansion and project divestments.
For the six months ended 30 June, profit before tax rose significantly to £72.3m from £14.5m last year, due to an increase in the company's portfolio, positive exchange rate movements, a reduction in discount rates and profits from disposals of two projects. |
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| Market Movers
FTSE 100 (UKX) 6,677.25 -1.47%
FTSE 250 (MCX) 17,624.22 -1.51%
techMARK (TASX) 3,415.76 -0.97%
FTSE 100 - Risers
SABMiller (SAB) 4,391.00p 0.17%
AstraZeneca (AZN) 4,815.00p -0.08%
Reckitt Benckiser Group (RB.) 7,150.00p -0.43%
Sainsbury (J) (SBRY) 239.30p -0.71%
Imperial Brands (IMB) 3,897.00p -0.71%
Morrison (Wm) Supermarkets (MRW) 191.10p -0.73%
Vodafone Group (VOD) 219.50p -0.81%
GlaxoSmithKline (GSK) 1,586.00p -0.84%
Whitbread (WTB) 3,983.00p -0.92%
Babcock International Group (BAB) 1,071.00p -0.93%
FTSE 100 - Fallers
Mediclinic International (MDC) 937.00p -4.34%
Associated British Foods (ABF) 3,025.00p -4.15%
BHP Billiton (BLT) 975.30p -4.15%
Glencore (GLEN) 177.45p -4.00%
Anglo American (AAL) 816.00p -3.61%
Rio Tinto (RIO) 2,268.00p -3.49%
Antofagasta (ANTO) 484.10p -3.18%
Royal Bank of Scotland Group (RBS) 200.50p -3.00%
Hargreaves Lansdown (HL.) 1,312.00p -2.89%
Standard Life (SL.) 344.40p -2.68%
FTSE 250 - Risers
SVG Capital (SVI) 653.00p 15.27%
Allied Minds (ALM) 331.40p 1.50%
Man Group (EMG) 117.10p 0.95%
F&C Commercial Property Trust Ltd. (FCPT) 126.60p 0.88%
Woodford Patient Capital Trust (WPCT) 93.75p 0.70%
Dechra Pharmaceuticals (DPH) 1,343.00p 0.67%
IP Group (IPO) 183.20p 0.66%
Millennium & Copthorne Hotels (MLC) 427.30p 0.54%
Electra Private Equity (ELTA) 3,961.00p 0.46%
International Public Partnerships Ltd. (INPP) 157.30p 0.32%
FTSE 250 - Fallers
Centamin (DI) (CEY) 143.40p -5.16%
Hochschild Mining (HOC) 251.50p -4.55%
Kaz Minerals (KAZ) 181.80p -3.96%
Ibstock (IBST) 161.40p -3.81%
Ocado Group (OCDO) 303.00p -3.81%
Sports Direct International (SPD) 315.20p -3.73%
Vedanta Resources (VED) 488.50p -3.55%
Henderson Group (HGG) 232.00p -3.45%
Capital & Counties Properties (CAPC) 280.30p -3.38% |
| | UK Event Calendar | | Monday September 12
INTERIMS
Brady, Central Asia Metals, Christie Group, EKF Diagnostics Holdings , Hostelworld Group , John Laing Infrastructure Fund Ltd, M. P. Evans Group, Mytrah Energy Ltd, Restore
INTERIM DIVIDEND PAYMENT DATE
AstraZeneca
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Budget Statement (US) (19:00)
Q2
M. P. Evans Group
FINALS
Abcam, City of London Investment Group, Green Reit
AGMS
AEC Education, Conviviality, Real Good Food , Subex Ltd GDR (Reg S)
TRADING ANNOUNCEMENTS
Associated British Foods
FINAL DIVIDEND PAYMENT DATE
Greene King
|
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: Stocks slide amid US rate hike concerns European stocks fell sharply in early trade amid growing concern the Federal Reserve will raise interest rates at its next policy meeting.
At 0905 BST, the benchmark Stoxx Europe 600 index was down 1.8%, while Germany's DAX and France's CAC 40 were off 1.9%.
At the same time, oil prices were on the back foot. West Texas Intermediate was down 1.5% at $45.19 a barrel and Brent crude was 1.2% weaker at $47.42. The Stoxx 600 oil and gas index was down 2.2%.
Spreadex analyst Connor Campbell said: "Multiple reasons have been given for this sudden shift downwards, including lingering disappointment over last week's ECB inaction (or, more accurately, lack of discussion over extending QE), the perpetual Greek problems and worries over Hilary Clinton's health.
"Chief among the catalysts for this morning's heavy losses, however, is the fear that the Federal Reserve will raise rates during its meeting next week."
Comments by Boston Fed President Eric Rosengren on Friday sparked worries that the US central Bank will raise rates, after he said the economy has been more resilient to exogenous risks and that gradual tightening was likely to be appropriate.
With this in mind, investors will be eyeing more comments from Fed officials, with Fed governors Lockhart and Brainard both due to speak later on Monday.
Meanwhile, the European Central Bank's decision last week not to extend its €80bn-a-month asset purchase programme continued to weigh on investor sentiment.
In corporate news, German industrial gases company Linde was under pressure as it ended talks with US peer Praxair regarding a potential merger.
Linde said: "While the strategic rationale of a merger has been principally confirmed, discussions about details, specifically about governance aspects, did not result in a mutual understanding."
Elsewhere, German utility firm E.ON was also under the cosh as the power and energy trading business it is spinning off, Uniper, was due to start trading. |
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| | US Market Report | | US close: S&P 500 drops below technical support amid heightened volatility Hawkish Fedspeak pushed longer-term US bond yields further up towards their pre-Brexit levels, trigerring a notable spike in a widely-followed gauge of stockmarket volatility as the S&P 500 was left nursing its largest weekly loss since February.
The Dow Jones Industrial Average dropped 394.46 points or 2.13% to 18,085.45 points, the S&P 500 erased 53.49 points or 2.45% to 2,127.81 points - closing beneath its 50-day moving average - and the Nasdaq Composite went into the weekend off by 133.58 points or 2.54% to 5,125.91 points.
Strikingly, the Chicago Board of Options Exchange volatility index, or VIX, surged 39.89% to the 17.50 point mark.
Markets have been given notice
Boston Fed President Eric Rosengren said on Friday that the risks to the economic outlook were incresaingly "two-edged".
Later in the day, his opposite number at the Dallas Fed, Robert Kaplan, added that "long-term economic headwinds meant the Federal Reserve could afford to be "patient and deliberate in its actions".
"The likely path of rates is going to be flatter, much flatter than we've ever experienced historically," Kaplan said.
However, Kaplan did not see signs of overheating in the economy.
"I think the markets have gotten plenty of notice that we are looking for opportunities to remove accommodation.
"I think we are just going to have to debate this out over the next few months as to what the appropriate next steps are," Kaplan concluded.
Earlier in the week, San Francisco Fed President John Williams reiterated that in his opinion the central bank should increase rates sooner rather than later.
The market is now looking ahead to a speech scheduled for Monday by the Fed's Lael Brainard, a leading 'dove', for any signs of a change in her stance.
Fed funds futures were left pricing in 30% odds of a September rate hike after having indicated as much as a 38% probability of such a scenario at one point during Friday´s session.
Chinese factory-gate deflation bottoming out?
On the data front, the Commerce Department said US wholesale inventories remained unchanged in July after increasing 0.3% in June. Wholesale sales fell 0.4% in July, reversing a 1.7% increase in June.
Overseas, Chinese inflation figures were also in focus, as the country's producer price index fell 0.8% in August from a year ago, its smallest decline since 2012.
Apple, 2016 high-flyers knocked lower
On the corporate front, shares in technology giant Apple nudged lower on pre-order day for the new iPhone 7.
From a sector standpoint, the worst performing industrial groups were Coal (-6.02%), Gold mining (-5.45%) and Consumer electronics (-5.37%)
Other areas of the equity markets which took a beating included some of 2016´s best performers, including rate-sensitive issues such as Utilities or Consumer staples.
Restoration Hardware surged after its quarterly sales late on Thursday beat expectations, while Finisar Corp also rose sharply after stronger-than-forecast quarterly results.
Lexicon Pharmaceuticals shares jumped as the company reported positive results from a trial of its treatment for Type 1 diabetes.
CAI International Inc. was on the back foot after the logistics company said it expects a $2.6m impact from its exposure to the bankruptcy of South Korean shipping company Hanjin Shipping Co.
West Texas Intermediate was down $1.48 a barrel to $45.88 by the close of trading on NYMEX, alongside an eight basis point move higher in the yield on the benchmark 10-year US Treasury note to 1.68%. |
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| | Newspaper Round Up | | Monday newspaper round-up: BCC downgrade, Yellen, BP, RBS, Lloyds Weak spending and a slump in investment are likely to bring growth to a near standstill this year with weakness persisting until at least the end of 2018, according to a survey. In its first economic forecast since the EU referendum, the British Chambers of Commerce (BCC) will today cut its forecasts for gross domestic product growth from 2.2 per cent to 1.8 per cent for this year. - The Times
The weaker pound will boost exports, however, meaning the country should avoid a recession. Strong demand from consumers will keep the economy growing, while employment growth will slow but not reverse, the BCC believes. - Telegraph
Chancellor Philip Hammond could go on a major spending spree in his Autumn Statement without fear of spooking the bond markets, economists believe, because the Bank of England's policy of easy money has given him more wiggle room. As well as slashing borrowing costs, the Monetary Policy Committee's decision to fire up the printing presses and snap up more government bonds means the Chancellor has space to splurge, according to Magdalena Polan at Legal & General Investment Management. - Telegraph
Every privately owned home in London built before 2006 has risen in value by more than 50 per cent, while two million homes across the country have fallen in value, a study suggests. As Philip Hammond prepares a fiscal policy that promises to focus on housebuilding, research by Savills has highlighted the difficulty in implementing a nationwide housing policy. - The Times
Janet Yellen will deliver the biggest shock to markets since taking over as chair of the Federal Reserve should the central bank raise interest rates this month, according to a survey of Wall Street economists that shows more than 85 per cent expect it to hold fire. The scepticism among economists may concern the Fed's top officials, who have spent the past month trying to persuade financial markets that an increase at their meeting on September 21 is a possibility given that the US unemployment rate is below 5 per cent and the global fallout from the Brexit vote has been muted. - Financial Times
Oil rigs poised to begin drilling in the Great Australian Bight could use faulty equipment that US regulators say is very likely to cause a "catastrophic incident" like the 2010 Deepwater Horizon spill in the Gulf of Mexico. With no assurances the faulty equipment can be avoided in the Bight drilling, and safety plans that probably rely on faulty equipment already approved, parliamentarians and conservationists are calling for any approvals of BP's pending environmental plans to be halted, and its exploration licences to be suspended, until the problem has been solved. - Guardian
Hundreds of businesses are threatening the City regulator with legal action because of delays to a long-awaited report into the activities of Royal Bank of Scotland's restructuring unit. Lawyers acting for more than 400 companies, which claim they were mistreated by RBS's Global Restructuring Group have written to the Financial Conduct Authority saying that they plan to launch a judicial review into the handling of the issue. - The Times
Large shareholders in Lloyds Banking Group are calling on the high street lender to strengthen its internal succession plan and address a perceived overreliance on chief executive António Horta-Osório. Richard Buxton, chief executive of Old Mutual Global Investors and a fund manager who has long invested in Lloyds, said: "I suspect there is limited internal choice for a successor and planning should be a priority." - Financial Times
The chairman of Tesco has blamed the supermarket industry's near obsession with opening more and more shops for its past errors. John Allan, who took over as chairman in March last year in the wake of the accounting scandal which contributed to the retailer's record £6.4bn loss, said the so-called "space race" "wasn't a very good idea." - Telegraph
Small companies are losing billions of pounds in hidden bank fees for exchanging currencies, according to a study by Capital Economics. Exchange rate mark-ups on international payments charged to small and medium-sized businesses add up to £4.1 billion, equivalent to £755 for every small company, the research found. - The Times
The share price of Samsung Electronics is taking a beating this morning after the South Korean company urged customers worldwide to stop using Galaxy Note 7 smartphones and exchange them as soon as possible. The Note 7 was already the subject of a global recall following a number of incidents involving faulty batteries that have caused the phone to catch fire. - Financial Times
Libya's internationally backed government has urged its forces to act after two oil terminals fell to rival troops, raising fears of further violence in a country already gripped by turmoil. The call came after forces loyal to the unrecognised eastern authority seized two key export facilities on Sunday. - Guardian
A nuclear power station being built in France using the same design earmarked for Hinkley Point in Somerset may have to restrict its output or could be abandoned because of the costs of correcting safety flaws, experts have warned. France's nuclear safety regulator, the ASN, is testing the strength of steel used in the reactor pressure vessel at the plant in Flamanville in Normandy. - The Times
Coal might be all but dead in the UK - but worldwide prices are enjoying a surprise resurgence. Britain's last deep mine - Kellingley colliery in north Yorkshire - closed last December with the loss of around 450 jobs. It followed a slump in prices to near-decade lows because of falling demand. - Mail
Luxury greetings card seller Paperchase is gearing up for a £150m float on the stock market, sources claim. The chain's private equity backer Primary Capital is understood to be looking for an exit after six years of ownership. - Mail
JD Wetherspoon, the pub chain, has become the latest British company to offer staff on zero-hours contracts the opportunity to move to permanent hours. Tim Martin, the founder and chairman of the company, told BuzzFeed on Sunday that a trial of offering staff guaranteed hours earlier in the year had proved so successful that it would be rolled out across the country. - Guardian
Accountancy giant PwC has revealed that more than a quarter of its new recruits this year went to private school, in an experiment with transparency to help open up access to professional jobs. The firm said 73pc of its 1,600 newcomers recruited straight from education went through state school and 9pc were eligible for school meals. - Telegraph
The £13bn British Steel pension scheme could be thrust into a protective lifeboat amid reports that the Government has ruled out controversial changes to its rules. When he was business secretary, Sajid Javid had considered allowing the scheme to use a cheaper measure of inflation when calculating by how much it had to boost payouts for pensioners each year. - Mail
Burberry is the most viewed FTSE 100 company on Twitter for the fourth year running with 6.8 million followers of its checked raincoats and handbags, according to the media agency Battenhall. Its closest rivals are Sky with 4.2 million and ITV with 1.9 million. However, Paddy Power Betfair, with just under 600,000 followers, is considered the FTSE 100's most influential brand on the site. - The Times
Scotland's tidal energy sector needs more clarity from the UK government if it is to maintain its world leading status, according the director of energy and low carbon at Highland and Islands Enterprise. Calum Davidson said that the French and Canadian governments were among those backing the expected growth in electricity from the seas. - The Times | | |
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