London open: Eurozone fears weigh on stocks early on
Market Movers
- techMARK 2,102.49 -0.10%
- FTSE 100 5,769.34 -0.31%
- FTSE 250 11,355.62 +0.48%
- Eurozone back in the spotlight - Monti warns about Eurozone break-up - M&S up on bid rumours
The Footsie declined in early trading on Monday as Eurozone concerns
dampened sentiment; stocks were pulling back from a strong surge on
Friday after US jobs data smashed expectations. Analyst Moyeen
Islam said this morning: "After the market was disappointed by the ECB
press conference on Thursday, there was a decent recovery in risk
appetite after the US employment report. Overnight, the Asian exchanges
have picked up the baton and performed well following more positive
statements form Eurozone policymakers over the weekend." Bank of Italy Governor Ignazio Visco told La Repubblica
that if the Eurozone economy continues to contract, "we can expect a
more accommodating monetary policy in the next few months". However, according to Italy's Prime Minister Mario Monti in an interview with German publication Der Spiegel,
the Eurozone tensions "bear the traits of a psychological dissolution
of Europe." Talking about the growing resentment between southern and
northern European nations, he said that "it is very alarming, and we
have to fight against it". In other news, the People's Bank of China
(PBoC) has issued a statement saying that "in the second half, we must
continue to reinforce fine-tuning and pre-emptive adjustment in monetary
policy and improve credit policy to support the development of the real
economy." With those same aims in mind the central bank has
said that it will increase research into the economic situation so as to
better steer policy and help maintain stable growth.
M&S up on M&A speculation
Company news was thin on the ground this morning, with just a few stocks on the FTSE 350 releasing updates. M&S
was a high riser on the FTSE 100 after the Sunday Telegraph reported
that the High Street giant is the subject of takeover talks. The paper
said that bankers at a number of London institutions have assessed the
possibility of providing debt finance for a speculative bid of £6bn. Insurance firm Catlin Group rose after jumping back into the black in the first half of 2012 as premiums rose and its London hub sprang back into life. Data centre operator TeleCity Group
was also up after saying demand for its services remains strong in all
of its markets, as it made good on its promise to declare a maiden
dividend. No frills airline easyJet was flying higher
after it reported a strong rise in both passenger numbers and load
factor in July. The total number of people booking on flights in the
month was 5,860,272, up 8% on July 2011. Upstream exploration and production group Heritage Oil
saw losses widen significantly in the six months to June 30th, though
it is waiting to complete a "transformational" acquisition in Nigeria
before production really ramps up. Airline group IAG
was pressured lower after Credit Suisse downgraded its rating on the
stock to 'neutral' and cut its target from 176p to 160p. Meanwhile, SSE and Centrica were also down after Deutsche Bank cut its recommendations on the shares to 'hold'. AIM-listed E&P group Falkland Oil & Gas
jumped after saying that it will farm-out an interest in its Northern
Area Licences to US firm Noble Energy which should "substantially"
improve its financial position.
FTSE 100 - Risers Marks & Spencer Group (MKS) 349.80p +2.55% Burberry Group (BRBY) 1,323.00p +1.38% CRH (CRH) 1,200.00p +1.27% GKN (GKN) 213.00p +1.14% IMI (IMI) 848.50p +1.13% Glencore International (GLEN) 324.60p +1.12% Eurasian Natural Resources Corp. (ENRC) 391.50p +0.85% Meggitt (MGGT) 393.60p +0.77% Weir Group (WEIR) 1,706.00p +0.71% Whitbread (WTB) 2,149.00p +0.70% FTSE 100 - Fallers Johnson Matthey (JMAT) 2,183.00p -4.59% Centrica (CNA) 318.60p -1.51% HSBC Holdings (HSBA) 553.30p -1.28% AstraZeneca (AZN) 3,061.50p -1.11% Severn Trent (SVT) 1,719.00p -1.09% Standard Chartered (STAN) 1,552.00p -0.96% Xstrata (XTA) 871.00p -0.94% Unilever (ULVR) 2,313.00p -0.90% Reed Elsevier (REL) 560.50p -0.88% Standard Life (SL.) 251.10p -0.87% FTSE 250 - Risers Berkeley Group Holdings (The) (BKG) 1,486.00p +3.92% Berendsen (BRSN) 527.50p +3.43% Talvivaara Mining Company (TALV) 145.30p +3.12% Telecity Group (TCY) 864.50p +3.10% Catlin Group Ltd. (CGL) 445.20p +3.06% CSR (CSR) 331.80p +2.66% Domino's Pizza Group (DOM) 524.00p +2.64% Barr (A.G.) (BAG) 443.00p +2.55% Redrow (RDW) 134.10p +2.52% Sports Direct International (SPD) 297.00p +2.41% FTSE 250 - Fallers QinetiQ Group (QQ.) 169.00p -1.74% Hikma Pharmaceuticals (HIK) 736.00p -1.14% Cranswick (CWK) 849.00p -1.05% Euromoney Institutional Investor (ERM) 718.65p -0.88% F&C Asset Management (FCAM) 87.35p -0.85% Scottish Mortgage Inv Trust (SMT) 671.00p -0.81% Big Yellow Group (BYG) 311.50p -0.80% Genesis Emerging Markets Fund Ltd. (GSS) 501.50p -0.79% African Barrick Gold (ABG) 380.10p -0.76%
UK Event Calendar
Monday August 06
INTERIMS Catlin Group Ltd., Morgan Sindall Group, PostNL NV, Puricore, Share Plc, Telecity Group
INTERIM DIVIDEND PAYMENT DATE CareTech Holding
INTERNATIONAL ECONOMIC ANNOUNCEMENTS Harmonised Competitiveness Indicators (EU) (09:00) PMI Construction (GER) (08:55)
Q2 PostNL NV
ANNUAL REPORT Speymill
SPECIAL EX-DIVIDEND PAYMENT DATE Johnson Matthey
AGMS Geopark Holdings Ltd., Speymill
UK ECONOMIC ANNOUNCEMENTS New Car Registrations (09:30)
FINAL DIVIDEND PAYMENT DATE Bisichi Mining, Investec
Europe Market Report |
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FTSE 100 | Euronext | Dax perf | CAC 40 |
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Europe open: Stark and Issing issue warnings
-Monti warns of psychological dissolution of Eurozone -S&P raises Italy´s economic risk rating -Stark (ex-ECB) says central bank independence threatened -Banks deposit 300bn euros overnight at ECB -Progress in talks over the weekend between Greece and Troika -German BDI warns of incalculable risks if Euro breaks up -Spanish and Italian bonds head higher FTSE-100: -0.17% Dax-30: -0.02% Cac-40:-0.20% FTSE-Mib 30: 0.03% Ibex 35: 0.64% Stoxx 600: -0.16%
European equity benchmarks have begun today´s session on a mixed
footing but have since turned lower. That following the sharp
bounce-back seen in equities on Friday and on a day on which little is
expected in terms of the macroeconomic calendar. Very much
worth noting perhaps, the first criticisms of Draghi´s bond plan have
come out of Germany over the weekend, and from two influential opinion
leaders in that country as well as in the wider Eurozone, Juergen Stark and Otmar Issing.
The former, who left the European Central Bank (ECB) over disagreements
with its President over the central bank´s purchases of sovereign debt,
has warned that the ECB´s independence is coming under threat. Mr.
Issing, an ex-ECB chief economist, sees potentially massive inflationary
threats arising from the ECB´s new plans. The President of
Germany´s BDI industrial association, on the other hand, has warned of
the incalculable risks for Germany should the single currency break up.
Of some interest as well, economists at Barclays have been cited as
saying that the ECB will only buy Eurozone government bills, not 2 year
debt. That as analysts debate just what exactly "short-term" means. In
the economic literature "short-term" usually means up to two years and
sometimes even three, comment analysts at Digital Look.
As far as strategists´ reactions are concerned, these are mixed this
morning. Goldman Sachs, Credit Suisse and Bank of America are being
cited as waxing optimistic, whereas Barclays and JP Morgan are being
cited as more wary. On Sunday, Bank of Italy Governor Ignazio
Visco said that at the moment his country does not need to ask the euro
zone's rescue funds for aid. That came as Italy´s President warned in
the German press that, "the tensions that have accompanied the euro zone
in the past years are already showing signs of a psychological
dissolution of Europe."
GM more pessimistic on the Eurozone?
French luxury goods group Richemont
has said that operating and net profit are likely to increase by
between 20% and 40% in the first half of 2012 as sales surged. General Motors said it may have to write down the value of its 7% stake in French automaker Peugeot SA owing to the deepening fiscal crisis in Europe.
From a sector stand-point the worst performance on the DJ Stoxx 600 is
now to be seen in the following industrial groups: health care (-0.86%),
telecommunications (-0.86%) and utilities (-0.82%).
Investor confidence drops
The Sentix gauge of Eurozone investor confidence fell to -31 points for August from -29.6 in the month before.
Slight fall in crude futures
Front month Brent crude futures are now off by 0.48 dollars, at 108.43 dollars per barrel on the ICE. The euro/dollar is now 0.18% lower, at 1.2370. |
US Market Report |
US close: Markets celebrate jobs data
Dow Jones: 13,096 (+1.69%) Nasdaq: 2,968 (+2.00%) S&P 500: 1,391 (+1.90%)
US benchmarks surged on Friday after some better-than-expected jobs
data provided a lift to sentiment.; in fact, the Dow Jones Industrial
Average registered its best weekly gain of 2012 so far. While
the US jobless rate increased from 8.2% to 8.3% in July, the US economy
increased payrolls by 163,000, much better than the 100,000 gain
expected. "A stronger-than-expected report, despite the small increase
in the unemployment rate, and one that should partially ease
the concerns of policymakers," said analyst Peter Newland from Barclays
Capital. The positive surprise may herald a small trend that
could, at the least, see the Federal Reserve postpone any further round
of quantitative easing past September. Meanwhile, markets were
still reacting to yesterday's comments from ECB President Mario Draghi.
Speaking yesterday after a key interest rate meeting he indicated ECB
bond purchases will be "on the short end of the yield curve."
At the time this was an anti-climax after a week during which the market
had begun to believe on intervention across the full range of
maturities was on the cards. But with 24 hours of reflection, investors
are beginning to see what the Eurozone has up its sleeve. COMPANIES Investors were tracking shares of Facebook,
which today came close to a new record-low to then go and bounce
higher, although its peer Linkedin was moving up on the back of its
latest quarterly figures. Boeing won 94 orders for its
737 aircraft from Singapore Airlines and China Southern Airlines; when
combined those two deals have a list price of $8.3bn. |
Newspaper Round Up |
Monday newspaper round-up: Shell, IAG, Manufacturing
Royal Dutch Shell
is pulling some of its funds out of European banks over fears stirred
by the Eurozone's mounting debt crisis, according to reports. The
company's chief financial officer, Simon Henry, told The Times newspaper
that Shell is cutting back its exposure to European credit risk in the
worst-hit economies and putting a higher price on doing business with
the region's peripheral nations. "There's been a shift in our
willingness to take credit risk in Europe. The crisis has impacted our
willingness to afford credit," Mr Henry is quoted as saying. Asked
whether Shell regarded risk as different in Germany compared with some
of the Eurozone's southern and heavily indebted members, he said: "We
differentiate between different credit risk." Mr Henry is cited as
saying that the Anglo-Dutch oil major would rather deposit $15bn of cash
in non-European assets, such as US Treasuries and US bank accounts, The
Telegraph reports. Amazon will overtake Wal-Mart as
the world's biggest retailer by 2020 amid a fundamental shift in the
world's shopping habits, according to Andy Bond, the former chief
executive of Asda. Highlighting a "period of vast change", Mr Bond said
the online retailer would come to eclipse Wal-Mart, Asda's US owner.
Amazon currently has a market value of $106bn (£68bn), compared to
Wal-Mart's $252bn capitalisation. In an interview with The Daily
Telegraph, Mr Bond also warned of up to a decade of economic pain for UK
consumers, branded pay for some top company directors "gratuitous", and
threatened to inflame the milk industry row by calling for supermarkets
to do more to help farmers. International Airlines Group (IAG),
British Airways' parent company, is considering buying a small stake in
its embattled partner American Airlines to protect their alliance.
Willie Walsh, IAG's chief executive, revealed in an interview that the
tactic could be used to deliver "additional strategic value" for BA and
its Oneworld global airline alliance. A cross investment could also act
as a poison pill for any rival attempt to lure American away from
Oneworld, which would be potentially damaging for IAG. Delta Airlines is
reported to be considering a bid for American, which would almost
certainly result in it joining Delta's SkyTeam alliance leaving a hole
in IAG's lucrative North Atlantic route network. The prospect of IAG's
stake building has arisen due to the financial problems at AMR,
American's parent company. AMR filed for Chapter 11 bankruptcy
protection in November and is currently seeking an agreement with
creditors to reduce its debt burden, The Telegraph writes. Australia's giant liquefied natural gas (LNG)
projects could be delayed or cancelled because of their spiralling
costs, analysts have warned. A pipeline of $200bn worth of LNG projects
has been sanctioned that, if built as planned over the next five years,
would turn Australia into one of the world's biggest gas exporters. But
soaring wages and construction costs, as well as a strong Australian
dollar, have made the hugely complex projects even more challenging.
Chevron said ten days ago that it was reviewing the costs of its Gorgon
LNG scheme, Australia's biggest resource project in which Shell has a
25% stake. When the American energy company gave it the go-ahead almost
three years ago, costs were estimated at $37bn, but a senior executive
told The Times of industry speculation that put the final cost at
$100bn. Chevron will provide details about the revised costs towards the
end of the year. A new pan-European stock exchange for entrepreneurs
is being planned by NYSE Euronext to plug the gap in funding for small
companies and help them raise money from investors more easily. The
exchange dubbed the "Entrepreneurs' Exchange" by NYSE Euronext will
facilitate fundraising via issues of bonds as well as equity. Companies
would carry out both initial public offerings of shares and initial bond
offerings, and even a "Pre-IPO" of convertibles, that is investments
that would in time convert from bonds into equities. The new exchange,
which will be carved out of existing Euronext and Alternext markets, is
the latest attempt by policy makers and exchange operators to boost
corporate growth following the financial crisis, The Financial Times
says. Fears of a protracted recession will intensify today amid signs that Britain's manufacturing
engine room is running out of steam. Publishing its latest SME trends
survey, the CBI said sentiment among small- and medium-sized
manufacturers had deteriorated, while output had fallen for the first
time since autumn 2009. The business lobby group, which polled hundreds
of firms across the UK for the quarterly report, warned of a
"challenging" domestic backdrop, uncertainty over the Eurozone and a
"broader loss of momentum" in the global economy. There were a couple of
brighter spots, though, with firms expecting output to be broadly flat
in the coming quarter. Many respondents are also sticking with their
plans to take on additional staff, The Scotsman says.
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