| | ADVFN III | Morning Euro Markets Bulletin | | | Daily world financial news | Supplied by advfn.com | | | | | | Thursday 26 Jan 2012 09:47:40 | | | | | | | | | | |
| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | Miners jump after Fed pledges low rates
Market Movers
techMARK 1,962.37 +0.25%
FTSE 100 5,746.32 +0.41%
FTSE 250 10,811.89 +0.59% London's blue chip stocks rose in early trading on Thursday, following on from a surge last night on Wall Street after the Federal Reserve pledged to keep the federal funds rate low until late 2014. Meanwhile, Greece is again in focus as talks resume between private creditors and the government. The head of Institute of International Finance, Charles Dallara, is to meet with Greek Prime Minister Lucas Papademos in Athens again today.
The Fed, which had previously said it would maintain the federal funds rate between 0% and 0.25% until mid-2013, announced yesterday that it intends to leave them as they are until late 2014. According to the Federal Open Market Committee (FOMC), "economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
While the move fuelled a strong showing by US stocks last night, some noted that the decision reflected the central bank's concerns over economic growth: one economist from RBC Capital Markets (Tom Porcelli) was quoted as saying that "this drives home one important fact, the Fed is scared."
Meanwhile, the World Economic Forum continues in Davos with German Chancellor Angela Merkel repeating her call for a union of “budgets, competition and solidarity”. "We must ask ourselves what role Europe should play in the world”, she said. “We must show that all of the (member states) are strong, although some stronger than others (…) We can only be successful if we are unified.”
Also helping the mood was Morgan Stanley’s ex-Chief Economist, Stephen Roach, who said that fears of a banking crisis in China are "overblown", adding that he "would not add much downside" to estimates for a slowdown in Chinese economic growth to below 8-8.5%.
MINERS JUMP AS FED PLEDGES LOW RATES
With the Fed pledging to do its best to strengthen the economy, the dollar weakened against the euro, sending metals prices higher. As such, the miners were in demand in early trading in London with Randgold Resources, Evraz, Rio Tinto and Fresnillo among the top performers.
Kazakhstan-based copper miner Kazakhmys wasn't far behind after saying that it met all of its major production targets in 2011 and expects to maintain similar levels of copper output in 2012. The group's sales contracts for the coming year have all been completed. Sector peers Polymetal International, BHP Billiton, Glencore and Vedanta were the next highest risers.
Mining giant Anglo American rose after it said iron ore production in the final quarter of 2011 increased by 5% from a year earlier to 12.4m tonnes, mainly due to initial production from Kolomela mine and a continued improvement in performance at Amapá.
Royal Bank of Scotland was higher on rumours that US investment bank Jefferies is close to buying the bank's corporate broking arm Hoare Govett. Meanwhile, chip designer ARM Holdings led the fallers, pulling back after strong gains made yesterday following Apple's stellar quarterly results, a company whose gadgets include ARM products.
FTSE 250 MOVERS: EASYJET FLYS HIGH, MISYS DROPS
Budget airline easyJet jumped 9% after it reported a 16.7% increase in revenue for the quarter ended 31 December 2011, helped by higher seat prices and the absence of disruptive winter weather.
The worst performer was financial software provider Misys after it swung to a pre-tax loss of £3.6m in the first half, down from a profit of £18.8m the year before. In its interim results statement the company said it was leaving its medium-term financial targets for the two years to May 31st, 2013, unchanged but, in in view of continuing difficult times for its core target market, it has put in place contingency plans to squeeze out another £6m to £8m of operational cost savings over the second half of this financial year.
Joining in with the strong performance seen elsewhere in the sector, Russian gold miner Petropavlovsk rose nearly 6% after it saw production over the whole of 2011 up by almost a quarter from 2010's levels. |
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| | FTSE 100 - Risers
Johnson Matthey (JMAT) 2,071.00p +3.03%
Randgold Resources Ltd. (RRS) 7,000.00p +2.56%
Evraz (EVR) 453.90p +2.53%
Rio Tinto (RIO) 3,802.00p +2.44%
Fresnillo (FRES) 1,785.00p +2.41%
Kazakhmys (KAZ) 1,136.00p +2.07%
Polymetal International (POLY) 1,090.00p +1.96%
BHP Billiton (BLT) 2,169.50p +1.90%
Glencore International (GLEN) 426.25p +1.86%
Vedanta Resources (VED) 1,173.00p +1.82%
FTSE 100 - Fallers
ARM Holdings (ARM) 588.00p -1.59%
British Sky Broadcasting Group (BSY) 662.00p -1.56%
Imperial Tobacco Group (IMT) 2,248.00p -0.66%
HSBC Holdings (HSBA) 533.70p -0.61%
BP (BP.) 472.40p -0.45%
Essar Energy (ESSR) 135.40p -0.44%
Royal Dutch Shell 'A' (RDSA) 2,271.00p -0.31%
G4S (GFS) 269.20p -0.22%
Tate & Lyle (TATE) 674.50p -0.22%
Royal Dutch Shell 'B' (RDSB) 2,351.50p -0.19%
FTSE 250 - Risers
easyJet (EZJ) 440.00p +8.96%
Petropavlovsk (POG) 736.00p +5.67%
Ashtead Group (AHT) 237.40p +3.67%
Aveva Group (AVV) 1,640.00p +3.47%
Daily Mail and General Trust (DMGT) 453.00p +3.35%
Hochschild Mining (HOC) 485.90p +3.23%
Afren (AFR) 129.40p +2.94%
Regus (RGU) 97.00p +2.86%
Informa (INF) 399.30p +2.73%
Centamin (DI) (CEY) 97.25p +2.69%
FTSE 250 - Fallers
Misys (MSY) 301.00p -7.53%
PayPoint (PAY) 570.00p -2.56%
Heritage Oil (HOIL) 198.00p -1.59%
Cable & Wireless Communications (CWC) 40.70p -1.57%
Anglo Pacific Group (APF) 277.00p -1.32%
Morgan Crucible Co (MGCR) 299.70p -1.19%
Bankers Inv Trust (BNKR) 395.10p -0.85%
Euromoney Institutional Investor (ERM) 670.00p -0.74%
WH Smith (SMWH) 550.00p -0.72%
JPMorgan European Smaller Companies Trust (JESC) 686.00p -0.72% |
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| | European Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Fed aggresiveness nudges equities higher
UK FTSE 100: 0.54%
Germany Dax 30: 0.61%
Cac 40: 0.45%
Ibex35: 0.64%
The Federal Reserve stands ready to embark on further asset purchases if necessary. That, in effect, is what some of the headlines in the world’s most influential media outlets was saying last night and this morning. In fact, some analysts are describing the central bank's stance as "blunt" and "aggresive."
Thus, investors seem to be reacting positively to the possibility that the US central bank may keep its benchmark interest rates exceptionally low until 2014, no less. Nonetheless, it may be worth noting that some very well respected observers, like Morgan Stanley’s ex-chief economist Stephen Roach, seem to be warning over complacency about the mid-term effects of the developed world’s recourse to such measures.
Despite the above, the fact remains that the single currency’s future remains very much in focus.
Be that as it may, risk aversion has ticked down this morning and the Euro is up.
Italy’s Treasury will auction up to €4.5bn in 2 year debt later this morning, towards 10am.
EQUITIES
Swedish fashion group Hennes&Mauritz, the world’s second-largest fashion retailer, has posted lower fourth quarter profits, while describing market conditions as challenging.
Swiss computer mouse maker Logitech has cut its full-year forecasts, sending its shares 10% lower.
MACROECONOMY
Germany’s GfK consumer confidence index for the month of February has improved to 5.9 (Consensus: 5.6) from 5.7 the month before.
OTHER MARKETS
Front month Brent crude futures are now rising 0.69% to the $110.57/barrel mark.
The Euro/dollar is now moving up by 0.11% to the 1.3114 dollar mark. UK Event Calendar INTERIMS
Angle
INTERIM DIVIDEND PAYMENT DATE
Cable & Wireless Worldwide, Dairy Crest Group, Tongaat-Hulett Ltd.
QUARTERLY EX-DIVIDEND DATE
Marsh & Mclennan Cos Inc.
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Bloomberg Consumer Confidence (US) (14:45)
Continuing Claims (US) (13:30)
Durable Goods Orders (US) (13:30)
Initial Jobless Claims (US) (13:30)
Leading Indicators (US) (15:00)
New Homes Sales (US) (15:00)
FINALS
Gem Diamonds Ltd. (DI), Safestore Holdings
IMSS
easyJet, Invensys, London Stock Exchange Group
EGMS
NB Distressed Debt Investment Fund Ltd.
AGMS
Euromoney Institutional Investor, Impax Asset Management Group, ITE Group, Lonmin, Mitchells & Butlers, Ultrasis
TRADING ANNOUNCEMENTS
Petropavlovsk
UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trades Surveys (11:00)
FINAL DIVIDEND PAYMENT DATE
Aberdeen Asset Management, Alternative Networks |
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| | US Market Report | | Stocks jump after Fed pledges to keep rates low Dow: +83 at 12,759.
Nasdaq: +83 at 12,759.
S&P 500: +11 at 1,326.
In spite of a poor start, US stocks surged after the Federal Reserve announced that interest rates would stay low for some time yet. Meanwhile, Apple's impressive performance helped lift the Nasdaq Composite index stay in the blue all day, while the other benchmarks opened lower.
The Fed, which had previously said it would maintain the federal funds rate between 0% and 0.25% until mid-2013, announced today that it intends to leave them as they are until late 2014. According to the Federal Open Market Committee (FOMC), "economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
While the move fuelled buying on Wall Street today, some noted that the decision reflected the central bank's concerns over economic growth: one economist from RBC Capital Markets (Tom Porcelli) was quoted as saying that "this drives home one important fact, the Fed is scared."
Barclays Capital analyst Troy Davig said: "In terms of the projection materials to be released prior to the press conference, we expect the majority of participants [in the FOMC] to report their expected date of the first rate hike is 2014, although today's the dovish tone of today's statement suggests that more of the participants' initial rate hike projection may be in 2015 or later than we previously expected."
APPLE IMPRESSES EVERYONE IN Q1
The big news on the Street today - other than the FOMC statement of course - was tech giant Apple whose first quarter earnings smashed expectations on both the revenue and profit levels. Apple was helped higher in mid-morning trade after Goldman Sachs labelled the stock as under-priced.
The US investment bank noted that Apple, normally a company inclined to under-promise and over-deliver, has raised earnings guidance for the second quarter to a level above the consensus view of analysts covering the stock. Goldman reiterated its "buy" recommendation and raised its 12-month target price to $600 from $550. Shares finished the day up 6%.
Elsewhere, Illumina surged nearly 50% after Swiss pharmaceutical giant Roche Holding made a $5.7bn offer for US company, an 18% premium over its closing price on Tuesday. The offer is unsolicited after several failed attempts to negotiate the deal, reports The Wall Street Journal
Shares in oil firm ConocoPhillips fell in spite of its fourth quarter earnings topping analysts’ estimates. Earnings per share came in at $2.02, easily topping the consensus estimate of $1.79.
Investors in industrial technology firm United Technologies also seemed underwhelmed after the group reported a better-than-expected 10.5% earnings growth for the fourth quarter due to greater sales for its Otis elevators and at its airplane unit Hamilton Sundstrand.
Aerospace giant Boeing was one stock not joining in with the party after its full-year earnings guidance fell short of expectations.
Shares in DVD rental firm Netflix rocketed after the closing bell after its fourth quarter revenue jumped 47% to beat expectations.
MACROECONOMY
Pending home sales fell by 3.5% on the month in December. |
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| | Thursday newspaper round-up | | The threat posed to the British economy from the Eurozone crisis was underlined on Wednesday when Portugal saw its borrowing costs soar to a record high amid market fears that the bailed-out country will not be able to break free of its financial crisis in the near future. The yield, or interest rate, on three-year bonds reached 19.4%, while the rate on 10-year bonds was 14.6%, figures that compare with British rates of less than 2%. Portugal needed a €78bn (£65bn) rescue package last year as its high debt load and feeble growth pushed it towards bankruptcy. A three-year programme of austerity measures and economic reforms is aimed at restoring investor confidence in the country, but a deepening recession, with a 3.1% contraction forecast for this year, is undermining the faith of the markets in Portugal, according to The Guardian.
Coalition plans to raise the income tax allowance to £10,000 should be accelerated to tackle the growing economic crisis, Nick Clegg will say today. Ministers must go “further and faster” as the pressure on household finances reaches “boiling point”, the Deputy Prime Minister will urge. “Ordinary, hardworking people” need a “rapid response,” he will say. The proposed tax cuts – which would give back more than £700 to anyone earning under £100,000 a year – would be funded by new levies on the wealthy. The Liberal Democrat leader’s pledge follows official figures released yesterday that show the British economy is shrinking and risks a double-dip recession. Mr Clegg will say in a speech: “In just three years, real household incomes have fallen by some 5% – one of the biggest squeezes since the 1950s, since the records began. Household budgets are approaching a state of emergency and the Government needs a rapid response,” The Telegraph reports.
Facebook has suspended trading of its shares on the private secondary market until the end of the week, raising expectations that it will shortly file for its long-awaited initial public offering (IPO). Shareholders can still place buy and sell orders, but the transactions will not be approved by the social network's lawyers until January 27, according to US reports. The pause in trading is not the first from Facebook – the company has previously put a stop on transactions in order to assess its shareholder profile. However, the company is expected to make its IPO in the third week of May, so the suspension adds to a growing body of evidence, according to The Telegraph.
Pressure is building on John Hourican – Royal Bank of Scotland's best paid banker – to waive £5.6m of long-term bonuses despite contractual obligations. In the last three years Mr Hourican, head of RBS's investment bank has received compensation worth up to £20m. That excludes this year's bonus and comes as the group is planning the closure of large parts of the investment bank. Sources close to UKFI – the body charged with managing the taxpayer's 83% stake in RBS – said it was right to question Mr Hourican's bonus awards, even though the bank was contractually obliged to make them. "Maybe the focus on Stephen Hester is wrong," said the source, defending RBS's chief executive. "It is a valid concern and part of the current issue of pay for top individuals – the question of whether people should be paid in line with contractual agreements at a time when the environment no longer merits it," The Times says.
The Royal Navy may have to buy French fighter jets for Britain’s new aircraft carrier amid growing doubts over the American-designed Joint Strike Fighter (JSF), a senior officer has warned. Admiral Sir Trevor Soar, who retires as Commander-in-Chief Fleet in March, told industrialists that there was mounting concern within the Ministry of Defence about the escalating costs and delays to the JSF programme. In a detailed note of his speech to the ADS Maritime Interest Group, seen by The Times, Admiral Soar warned that US defence spending cuts could jeopardise the deal. He was quoted as saying that Britain might do better to invest in what he called an “interim aircraft capability.” The carrier is due to be ready in 2019 but Britain might not acquire the JSF until a decade later, Admiral Soar suggested.
Britain’s struggling retailers still managed to create more jobs in the run-up to Christmas than the previous year despite the consumer squeeze. Stores hired more than 4,000 staff in the final three months of last year, figures today show, but retail experts warn the positive news “won’t last”. The British Retail Consortium (BRC) said employment in the sector was up 0.5% during the fourth quarter of 2011 compared to the same period a year earlier – the equivalent of 4,074 full-time jobs. This growth, however, was driven by supermarkets and other food retailers and the BRC warned against false optimism. The figures were collated before the recent flurry of administrations on the high street, the trade body said, and numbers were boosted by the fact retailers were taking on seasonal staff to cope with the Christmas rush, The Scotsman writes.
Sanctions on Iran could push oil prices up 30%, taking the price of Brent crude to above $140 a barrel, the IMF has warned. "A halt of Iran's exports to OECD economies without offset from other sources would likely trigger an initial oil price increase of around 20%-30%, with other producers or emergency stock releases likely providing some offset over time," it said. Brent crude was trading at $110.64 a barrel yesterday. Saudi Arabia has said it could "immediately" increase its production to compensate for any shortfall, The Telegraph says. |
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