Oct 1, 2013

ADVFN III Morning Euro Markets Bulletin October 1, 2013.

ADVFN III Morning Euro Markets Bulletin
Daily world financial news Tuesday, 01 October 2013

London Market Report
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Markets flat as investors digest US shutdown
UK markets opened broadly flat on Tuesday after the failure by US politicians to agree on a budget prompted the first partial government shutdown in Washington in 17 years.

The Senate last night voted down a House of Representatives-passed bill that had called for a one-year delay in President Barack Obama's flagship 'Affordable Care Act', something that the Democrats said they would have never agreed to.

As the start of the new fiscal year begins in the States some 800,000 federal employees will be placed on unpaid leave and sent home as the US government is forced to shut down non-essential agencies. The last time there was a government shutdown was back in the mid-90s.

"Clearly both the Democrats and Republicans are more concerned with gaining political points and pointing the finger than actually doing what they’re elected to do," said Market Analyst Craig Erlam from Alpari.

Economists are now trying to figure out what effect this will have on the US economic outlook after Obama said a shutdown would throw a "wrench" into the recovery and have a "real impact on real people right away". Moody's believes that a three-to-four-week shutdown could shave as much as 1.4 percentage points off of fourth-quarter gross domestic product growth.

Rumours that Friday's all-important US non-farm payrolls report could be released earlier or later than planned due to the shutdown also prompted investors to scale back risk appetite on equity markets this morning.

According to some observers that is exactly what happened back in 1995, as a budget impasse prompted the government to send out consumer price index data early.

Wolseley gains after "solid progress"

FTSE 100 plumbers merchant Wolseley gained after saying it experienced a year of "solid progress in varied markets" as it saw headline profits more than double in the year to July 31st due to lower impairments and exceptional items. The company also raised its dividend by a tenth and revealed a £300m capital return to shareholders via a special dividend and share consolidation.

Consumer products group Unilever was a heavy faller after markets reacted to a trading update released after the close last night which said that the company witnessed a weakening in the market growth of many emerging countries in the third quarter.

Other consumer staples stocks including SABMiller, Diageo, Reckitt Benckiser and British American Tobacco were also lower this morning,

Property investment and development business St. Modwen Properties rose after saying it has continued to perform strongly since the half year, buoyed by a strengthening housing market, and it remains confident of hitting full-year targets.

TSE 100 - Risers
Wolseley (WOS) 3,288.00p +2.85%
Experian (EXPN) 1,204.00p +2.29%
Rolls-Royce Holdings (RR.) 1,134.00p +1.98%
Aviva (AV.) 401.90p +1.29%
easyJet (EZJ) 1,294.00p +1.25%
Intertek Group (ITRK) 3,342.00p +1.12%
Barclays (BARC) 268.35p +1.07%
Mondi (MNDI) 1,054.00p +1.05%
BAE Systems (BA.) 458.70p +0.95%
CRH (CRH) 1,492.00p +0.95%

FTSE 100 - Fallers
Unilever (ULVR) 2,347.00p -3.81%
SABMiller (SAB) 3,070.00p -2.34%
Reckitt Benckiser Group (RB.) 4,448.00p -1.59%
Fresnillo (FRES) 961.00p -1.23%
Diageo (DGE) 1,943.00p -1.12%
Imperial Tobacco Group (IMT) 2,268.00p -0.83%
Aggreko (AGK) 1,593.00p -0.69%
Coca-Cola HBC AG (CDI) (CCH) 1,838.00p -0.65%
Tate & Lyle (TATE) 732.00p -0.61%
Royal Dutch Shell 'A' (RDSA) 2,028.50p -0.56%

FTSE 250 - Risers
Enterprise Inns (ETI) 149.00p +3.11%
Regus (RGU) 186.10p +2.25%
St. Modwen Properties (SMP) 310.00p +1.97%
BH Global Ltd. USD Shares (BHGU) 11.85 +1.89%
Diploma (DPLM) 665.00p +1.84%
BH Macro Ltd. EUR Shares (BHME) € 21.50 +1.61%
Pace (PIC) 257.90p +1.58%
Rank Group (RNK) 156.30p +1.49%
ITE Group (ITE) 275.80p +1.47%
Keller Group (KLR) 1,053.00p +1.35%

FTSE 250 - Fallers
Perform Group (PER) 540.00p -3.57%
Evraz (EVR) 124.90p -2.42%
Daejan Holdings (DJAN) 3,840.00p -1.92%
Dechra Pharmaceuticals (DPH) 705.50p -1.74%
Carpetright (CPR) 638.00p -1.62%
Xaar (XAR) 785.50p -1.57%
Thomas Cook Group (TCG) 151.00p -1.56%
Kenmare Resources (KMR) 28.08p -1.47%
Menzies(John) (MNZS) 789.00p -1.44%
Petra Diamonds Ltd.(DI) (PDL) 117.30p -1.43%

UK Event Calendar
LiDCO Group, Walker Greenbank

Avesco Group, FBD Holdings, Jardine Lloyd Thompson Group, Portmeirion Group, Robinson

Auto Sales (US) (15:00)
Construction Spending (US) (15:00)
ISM Manufacturing (US) (15:00)
ISM Prices Paid (US) (15:00)
PMI Manufacturing (EU) (09:00)
PMI Manufacturing (GER) (08:55)
Unemployment Rate (EU) (10:00)
Unemployment Rate (GER) (08:55)

Ceres Power Holdings, James Halstead, Pure Wafer, St Ives, Wolseley

Begbies Traynor Group

PMI Manufacturing (09:30)

Park Group, PZ Cussons

Europe Market Report
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Stocks open higher despite US government shutdown
European stocks recovered slightly as investors digested news that the US government failed to meet its Monday midnight deadline for passing the budget bill.

The government began a partial shutdown on Tuesday for the first time in 17 years, potentially putting up to one million workers on unpaid leave. Congress was unable to break a political statement as they continued to disagree over President Barack Obama’s signature healthcare reform.

House Republicans floated a late offer to break the impasse but Democrats rejected the area. Senate Majority Leader Harry Reid said Democrats would not enter into formal negotiations on spending "with a gun to our head" in the form of government shutdowns.

On Monday fears over a shutdown sent stocks spiralling downwards. According to IHS Inc., a partial shutdown would cost the US at least $300m a day in lost economic output at the start. However, ETX Capital’s Head of Trading Joe Rundle said the market is betting on a deal to be reached in the coming days. “This morning, the risk tone improves somewhat as investors take the view that a partial shutdown, if resolved quickly, will do little damage to the overall health of the US economy,” he said.

“What’s more is that this shutdown means Federal Reserve Chairman Ben Bernanke will be more inclined to hold back from tapering quantitative easing at the October policy meeting – in fact, as it stands, the US labour department has closed along with other agencies which means payrolls data will not be complied or released.”

In other political messiness, Italy’s government is on the verge of collapse as the European Central Bank pledged to keep the nation from brink. Silvio Berlusconi, leader of centre-right People of Freedom, sent the ruling coalition into disarray after ordering the resignation of his ministers over the weekend.

Prime Minister Enrico Letta is now trying to rally up support ahead of a confidence vote on Wednesday to avoid an election. Letta's survival appears to depend on some 20 senators from Berlusconi's party who are displeased with his shock decision.

However, ECB President Mario Draghi has promised to do whatever it takes to backstop the euro and Italian officials are banking on the fact that no matter what happens, the monetary authority will bail it out in the end.

The Italian 10-year bonds has risen 19 basis points in the past week. It was up 15 basis points to 4.58% on Tuesday morning.

Eurozone unemployment

The Eurozone unemployment rate is expected to hold steady at 12.1% when the report for September is released.

Germany’s jobless rate is also forecast to remain unchanged at 6.9% in September. Also in Germany, the purchasing managers index for manufacturing is expected to show a reading of 51.3 in September, while Eurozone PMI is pegged to come in at 51.1, above the 50 mark that signals expansion.

The data comes a day after ECB member Jozef Makuch said the monetary authority stands ready to pump more liquidity into the market if needed.

Wolseley, Unilever, Experian

Wolseley advanced after the distributor of plumbing and heating products posted full-year earnings that beat analysts’ estimates.

Unilever dropped after the world’s second-largest consumer-goods maker said sales growth slowed in the third quarter.

Experian gained after announcing the acquisition of US fraud detection company The 41st Parameter for $324m.

US Market Report
Stocks fall ahead of government shutdown
Dow Jones: -0.84%
S&P 500: -0.60%
Nasdaq: -0.27%

Wall Street closed with moderate losses on Monday after US politicians failed to agree on a budget to avert a partial government shutdown, the first in 17 years.

In an afternoon vote, the Senate shot down a House of Representatives-passed bill agreed over the weekend that had called for a one-year delay in President Barack Obama's flagship Affordable Care Act, something that the Democrats said they would not agree to. Lawmakers had until midnight on Monday to pass an emergency measure before the start of the 2014 fiscal year.

"Clearly both the Democrats and Republicans are more concerned with gaining political points and pointing the finger than actually doing what they're elected to do," said Market Analyst Craig Erlam from Alpari.

According to reports, some 800,000 federal workers could be out of work from Tuesday as a result of the shutdown. Moody's estimates that a three-to-four-week shutdown could shave as much as 1.4 percentage points off of fourth-quarter gross domestic product growth. The last time there was a government shutdown was in 1995 and 1996.

Meanwhile, without an agreed increase in the debt ceiling, investors are concerned that the US could reach its borrowing limit of $16.7tn by October 17th, by which time the government could run out of cash to fulfil its debt obligations.

A Bloomberg poll on Monday showed Americans narrowly blame Republicans for stalling on a budget deal. A CNN/ORC International poll also revealed that 46% would blame congressional Republicans for a shutdown, while 36% hold President Barack Obama responsible.

Economic news beats forecasts

The Chicago manufacturing sector purchasing managers' index (PMI) rose to a seasonally adjusted 55.7 in September from a reading of 53 in August. Economists had pencilled in a reading of 54. A reading above 50 signals expansion in the industry.

Meanwhile, the index measuring regional manufacturing activity from the Dallas Fed rose from 5 to 12.8 in September, ahead of the 5 mark expected.


Consumer-staples companies were heavy fallers such as Procter & Gamble and Coca-Colar, as well energy stocks Devon Energy and Tesoro as oil prices fell.

Tech giant Apple was pulling back after a strong performance in recent days following record first-weekend sales for its new iPhone models.

Retailer JC Penney was in the red, extending losses after last week's 30% drop after it kicked off a share offering to raised around $932m and cut its full-year liquidity target.

Achillion Pharmaceuticals plummeted after confirming that its experimental drug for hepatitis C has not received necessary approval by the FDA .

Other medical stocks gained includingIntuitive Surgical, St Jude Medical, Regeneron Pharmaceuticals, Boston Scientific and Edwards Lifesciences, which were among the best performers on the S&P 500.

S&P 500 - Risers
Intuitive Surgical Inc. (ISRG) $376.27 +2.40%
St Jude Medical Inc. (STJ) $53.64 +2.39%
Regeneron Pharmaceuticals Inc. (REGN) $312.87 +2.36%
Chipotle Mexican Grill Inc. (CMG) $428.80 +2.34%
Tenet Healthcare Corp. (THC) $41.19 +2.13%
Boston Scientific Corp. (BSX) $11.74 +1.91%
Apollo Group Inc. (APOL) $20.81 +1.76%
Edwards Lifesciences Corp. (EW) $69.63 +1.22%
Jabil Circuit Inc. (JBL) $21.68 +1.21%
H&R Block Inc. (HRB) $26.66 +1.14%

S&P 500 - Fallers
Leidos Holdings Inc (LDOS) $45.52 -29.01%
J.C. Penney Co. Inc. (JCP) $8.81 -2.71%
Frontier Communications Co. (FTR) $4.18 -2.56%
Iron Mountain Inc. (IRM) $27.02 -2.53%
Johnson Controls Inc. (JCI) $41.50 -2.42%
Cliffs Natural Resources Inc. (CLF) $20.50 -2.38%
Nabors Industries Ltd. (NBR) $16.06 -2.19%
Raytheon Co. (RTN) $77.07 -2.12%
Procter & Gamble Co. (PG) $75.59 -2.10%
EMC Corp. (EMC) $25.56 -1.96%

Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $23.43 +0.41%
Microsoft Corp. (MSFT) $33.28 +0.03%

Dow Jones I.A - Fallers
Procter & Gamble Co. (PG) $75.59 -2.10%
United Technologies Corp. (UTX) $107.82 -1.41%
Coca-Cola Co. (KO) $37.88 -1.35%
Walt Disney Co. (DIS) $64.49 -1.07%
JP Morgan Chase & Co. (JPM) $51.69 -1.05%
Boeing Co. (BA) $117.50 -1.04%
Exxon Mobil Corp. (XOM) $86.04 -0.99%
Alcoa Inc. (AA) $8.12 -0.98%
McDonald's Corp. (MCD) $96.21 -0.94%
International Business Machines Corp. (IBM) $185.18 -0.93%

Nasdaq 100 - Risers
Intuitive Surgical Inc. (ISRG) $376.27 +2.40%
Regeneron Pharmaceuticals Inc. (REGN) $312.87 +2.36%
Tesla Motors Inc (TSLA) $193.37 +1.29%
Maxim Integrated Products Inc. (MXIM) $29.82 +1.12%
Charter Communications Inc. (CHTR) $134.76 +0.89%
Avago Technologies Ltd. (AVGO) $43.08 +0.89%
Baidu Inc. (BIDU) $155.18 +0.88%
Comcast Corp. (CMCSA) $45.12 +0.84%
Sba Communications Corp. (SBAC) $80.46 +0.79%
Twenty-First Century Fox Inc Class A (FOXA) $33.51 +0.75%

Nasdaq 100 - Fallers
Catamaran Corp (CTRX) $45.95 -3.28%
Facebook Inc. (FB) $50.23 -1.97%
Biogen Idec Inc. (BIIB) $240.76 -1.66%
Monster Beverage Corp (MNST) $52.25 -1.55%
Autodesk Inc. (ADSK) $41.17 -1.48%
CH Robinson Worldwide Inc (CHRW) $59.59 -1.42%
CA Inc. (CA) $29.67 -1.30%
Liberty Media Corporation - Class A (LMCA) $147.15 -1.25%
Apple Inc. (AAPL) $476.75 -1.24%
Mondelez International Inc. (MDLZ) $31.42 -1.19%

Tuesday Newspaper Round Up
Shutdown, Help to Buy, SSE
The US government will start to shut-down numerous agencies on Tuesday and send tens of thousands of workers home after Republicans and Democrats failed to bridge their differences over the budget. A series of votes in the Republican-controlled House of Representatives and the Democratic Senate left the two sides stuck at the same position at midnight in which they had started the day, with conservatives refusing to pass a short-term budget without a delay in Barack Obama's health law, the Financial Times reports.

A think tank has upgraded its forecasts in figures that will trigger yet more concern about the long-term effects of the Government's Help to Buy cheap credit scheme to kick-start the property market. The Centre for Economics and Business Research (CEBR) said prices across the country will rise 2.9% to an average of £225,000 this year, followed by a 3.9% jump in 2014. Between now and 2018, the average UK price will jump 23.7% to a record of £278,000. In London house prices will leap 43.5% by 2018, pushing average values in the capital up to a staggering £566,000, The Daily Telegraph writes.

The boss of one of Britain's biggest energy companies has threatened to scrap billions of pounds of investment in new power stations and electricity networks if Ed Miliband's plan to freeze utility bills goes ahead. The written warning from Keith Anderson, the Chief Corporate Officer of ScottishPower, to the Labour leader is the industry's most explicit threat yet over the consequences of the Opposition's controversial policy announced last week, The Times says.

Japan's economic recovery will face a major test early next year after Shinzo Abe, the Prime Minister whose expansionary "Abenomics" has underpinned the country's Group of Seven-leading growth, overnight announced he would authorise an increase in the national sales tax. He will raise the combined national and regional consumption tax rate from 5% to 8% on April 1st 2014. Earlier, the quarterly "Tankan" survey from the Bank of Japan, which takes the pulse of about 10,500 companies of all sizes across the country, showed that the headline measure of confidence among large enterprises was at its highest level since the final quarter of 2007, the Financial Times explains.

George Osborne has vowed to establish Britain's first budget surplus in more than a decade in a move praised by business leaders as being "ambitious" and "important". The Chancellor said the "rainy day" measure, requiring Britain to generate more in revenues and tax yields than it spends, would act as "insurance against difficult times ahead". "Provided the recovery is sustained, our goal is to achieve that surplus in the next Parliament," he added, according to The Daily Telegraph.

Scottish Hydro parent company SSE has warned that its ­retail arm has fallen into the red because of rising wholesale gas prices and a dip in energy ­demand during the summer. SSE also suffered a setback in its attempts to persuade the UK government to delay a costly ­energy-efficiency initiative, which critics fear could add more than £100 to bills. The Perth-based utility had been pushing for an 18-month reprieve to meet its targets under the Energy Companies Obligation (Eco) scheme, which is aimed at cutting vulnerable customers' power bills, but the Department of Energy & Climate Change (Decc) said on Monday that it had no plans to grant an extension to the programme, which has so far benefited almost 174,000 properties, according to The Scotsman.

BP made the 2010 Gulf of Mexico oil spill worse by telling "outright lies", a New Orleans court heard at the resumption of a trial that could see the firm slapped with £11bn in environmental fines. The second phase of the trial will examine whether BP's response to the spill was adequate and will also fix the volume of oil deemed to have poured into the Gulf from the stricken Macondo well. And BP came under immediate attack over allegations that it misled federal officials about how much oil was escaping and how successful its efforts to staunch the flow were likely to be, The Daily Mail reports.

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