ADVFN Morning Euro Markets Bulletin - August 1st 2011

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London Market Reports


Only four stocks were in the red on Monday morning as the blue chip index recovered from a week of losses on the back of the back-and-forth debt ceiling debates in the US.

However, the saga is apparently close to its end after President Barack Obama and congressional leaders agreed on a deal to put before Congress that will cut an initial $1trn from federal government deficit expenditure, growing to more than $2trn over 10 years.

In UK economics, fresh concerns over the strength of the UK economic recovery were signaled by the Confederation of British Industry (CBI), which said it now forecasts gross domestic product (GDP) to rise by 1.3% in 2011, down from an initial estimate of 1.7% growth. The comments come after the Office for National Statistics revealed last week that GDP rose by just 0.2% in the second quarter.

The big mover in early trading was on the FTSE 250: Punch Taverns. Shares in the pub operator were over 80% lower after the completion of the demerger of its 'Spirit' business to Spirit Pub Company.

Back on the FTSE 100, HSBC was making gains ahead of its interim results which are due in the next few hours. The bank also announced the sale of 195 New York branches for $1bn.

Testing and inspections firm Intertek was the high riser, after revenue in the first half of 2011 rose 17%. "Our businesses continue to perform well overall, with strength in some areas offsetting slower growth in others," said Wolfhart Hauser, chief executive of Intertek.

The miners were among the best performers, with Kazakhmys, Vedanta Resources, Rio Tinto, BHP Billiton andAntofagasta rising higher.

Outsourcing behemoth Serco was in demand after it signed a new hospital services contract, worth A$1.3bn (£850m), in Australia.

Net rental income at retail-focued real estate group Hammerson came in 2.8% higher, +3.9% on a like-for-like basis, driven by lettings and rent reviews in the UK and indexation in France. Shares were 2% higher in early trading.

Essar Energy climber higher after announcing that it has completed the $350m acquisition of the oil refinery and other associated assets at Stanlow from Shell UK.

BC

FTSE 100 - Risers
Intertek Group (ITRK) 1,980.00p +3.39%
Weir Group (WEIR) 2,184.00p +2.92%
ITV (ITV) 71.70p +2.50%
Hargreaves Lansdown (HL.) 584.00p +2.46%
Kazakhmys (KAZ) 1,381.00p +2.45%
Vedanta Resources (VED) 1,813.00p +2.43%
Rio Tinto (RIO) 4,400.00p +2.33%
BHP Billiton (BLT) 2,326.00p +2.33%
Antofagasta (ANTO) 1,442.00p +2.27%
GKN (GKN) 229.40p +2.09%

FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 290.30p -0.21%
GlaxoSmithKline (GSK) 1,361.50p -0.18%
Inmarsat (ISAT) 539.50p -0.09%
National Grid (NG.) 596.50p -0.08%

FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 1,632.00p +3.75%
Genesis Emerging Markets Fund Ltd. (GSS) 521.50p +3.37%
Bovis Homes Group (BVS) 426.20p +3.35%
Supergroup (SGP) 1,100.00p +3.29%
Yule Catto & Co (YULC) 219.70p +3.15%
Talvivaara Mining Company (TALV) 443.00p +3.12%
WH Smith (SMWH) 522.50p +2.96%
Soco International (SIA) 374.70p +2.94%
Rotork (ROR) 1,631.00p +2.84%
Barratt Developments (BDEV) 101.20p +2.74%

FTSE 250 - Fallers
Punch Taverns (PUB) 12.22p -80.77%
Laird (LRD) 171.30p -8.74%
Lamprell (LAM) 371.10p -3.33%
Rathbone Brothers (RAT) 1,126.00p -1.92%
Brown (N.) Group (BWNG) 280.60p -1.54%
TalkTalk Telecom Group (TALK) 141.00p -1.05%
COLT Group SA (COLT) 120.60p -0.99%
Telecom Plus (TEP) 684.50p -0.80%
Fidelity China Special Situations (FCSS) 94.50p -0.53%
Dignity (DTY) 796.00p -0.50%


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UK Event Calendar for Today
INTERIMS
Arena Leisure, Fidessa Group, Hammerson, HSBC Holdings, Hutchison China Meditech Ltd., Intertek Group, Keller Group, Management Consulting Group, Netplay TV, Senior, Ultra Electronics Holdings, Xchanging, XP Power Ltd. (DI)

INTERIM DIVIDEND PAYMENT DATE
BBA Aviation, Compass Group, Electronic Data Processing

QUARTERLY PAYMENT DATE
Mercantile Inv Trust, Torchmark Corp., Verizon Communications

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
PMI Manufacturing (FRA) (08:50)
PMI Manufacturing (GER) (08:55)
PMI Manufacturing (EU) (09:00)
Unemployment Rate (EU) (10:00)
Construction Spending (US) (15:00)
ISM Manufacturing (US) (15:00)
ISM Prices Paid (US) (15:00)

GMS
Pendragon, Restore

IMSS
Diploma, Pennon Group

AGMS
Cranswick, Establishment Inv Trust, Schroder UK Growth Fund, Tanzanite One Ltd., Woodburne Square Ag

UK ECONOMIC ANNOUNCEMENTS
Halifax House Prices
PMI Manufacturing (09:30)

FINAL DIVIDEND PAYMENT DATE
Hogg Robinson Group, IBIS Media VCT, JD Sports Fashion, Trinity Capital, United Utilities Group


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European Market Report
News that politicians in Washington have hammered out a deal on the US debt ceiling issue has lifted spirits in European markets.

President Barack Obama and US congressional leaders have agreed on a deal to put before Congress that will cut an initial $1trn from federal government deficit expenditure, growing to more than $2trn over 10 years.

As the bears have pointed out, there is still the prospect that the bill will not be passed by both houses of Congress, one of which is controlled by the Republicans and the other by the Democrats. For now, however, the bulls are driving the direction of markets.

The Paris CAC is 30 points firmer at 3,703 while the Frankfurt DAX is up 48 at 7,206.

Industrial metal prices have taken off after news of the US debt ceiling deal, prompting demand for steel makers such as ThyssenKrupp and Salzgitter.

Parcel delivery firm TNT Express unwrapped well-received second-quarter results that underlying revenue rise to €1.84bn from €1.78bn the year before.

Airbus owner EADS is to buy satellite communications firm Vizada from private equity group Apax Partners for $900m.

Networking equipment firm Alcatel-Lucent is wanted after winning a $70m patent infringement dispute with Microsoft.

CAC 40 - Risers
Alcatel-Lucent (ALU) € 2.83 +2.87%
AXA (CS) € 13.45 +2.59%
Natixis SA (KN) € 3.25 +2.39%
LVMH (MC) € 130.95 +2.34%
Renault (RNO) € 38.12 +2.29%
PPR (PP) € 131.90 +2.25%
Technip (TEC) € 77.83 +1.93%
Air Liquide (AI) € 97.65 +1.77%
Alstom (ALO) € 37.40 +1.75%
ArcelorMittal SA (MT) € 22.18 +1.72%

CAC 40 - Fallers
Veolia Environnement (VIE) € 15.62 -1.17%
Peugeot (UG) € 26.40 -0.55%
Accor (AC) € 30.70 -0.23%
Lafarge (LG) € 37.35 -0.07%


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As retail investors are aware the markets are very volatile at the moment, so in light of this we would like to find out where you think the markets are headed.

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US Market Reports

Dow Jones NASDAQ NYSE AMEX

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US markets completed a miserable week in which the benchmark indices fell every day, as politicians continued to bicker over the need to raise the US debt ceiling.

The S&P 500 fell 8 points to 1,2929, and endured its worst week since July of last year. The Dow Jones industrial average tumbled 97 to 12,143 while the tech-heavy NASDAQ had a slightly less bad time of its, sliding almost 10 points to 2,756.

Few people doubt that the Republicans and Democrats will strike some deal that will enable the US debt ceiling to be raised so the government can go on paying its bills, but the politicians seem to think they are involved in a Hollywood script in which financial Armageddon is only averted with seconds to spare; by common consensus, the US has until 2 August (Tuesday of next week) before the coffers become need of a top-up.

Sentiment was further soured on Friday by dismal gross domestic product (GDP) data. US second quarter GDP grew 1.3% (Consensus: 1.6%), but the first quarter estimate was slashed to just 0.4% from 1.95% previously.

Elsewhere on the economic front, the University of Michigan consumer confidence index for the month of July came in at 63.7, after June´s reading of 71.5 (Consensus: 64.1).

The Chicago NAPM´s July regional manufacturing sector purchasing managers´ index retreated slightly in July, to 58.8 points, from 61.1 the month before (Consensus: 60.2).

Company results were a mixed bag, with those from Merck, Newmont Mining and Weyerhauser below expectations while Coventry Healthcare, Newell Rubbermaid, Starbucks and ITT surprised on the upside.

Pharmaceutical giant Merck was under the weather after it said it plans to lay off an additional 12% to 13% of its workers between now and 2015, raising its previous guidance on headcount reduction. The market usually applauds companies turfing their workers on to the dole queue, but in this instance, the shares were punished.

In what may have come as a surprise to those who assumed that Apple was already king of the mobile market, it was revealed that Apple´s share of the market rose to 18.5% in the second quarter, from 13.5% previously, overtaking Nokia.

Chevron, the second largest US oil firm, reported earnings per share of $3.85, well above the consensus estimate of $3.55. Net income rose to $7.7bn, from $5.4bn in the same period of last year. Although revenue rose by 30% to $69bn, it was less than the consensus estimate of $71.6bn.

From a sector standpoint the best performers on Friday were: real estate service (+3.52%), travel & tourism (+3.51%), airlines (+3.20%) and real estate investment (+1.29%).

The laggards were gold mining (-2.98%), forestry & paper (-2.69%), paper (+2.69%) and mortgage real estate investment trusts (REITs) (-2.10%).

The gold mining sector was dragged lower by Newmont Mining, which announced lower than expected second-quarter earnings, while the REITs retreated on fears that the US debt ceiling would not be raised.

Online travel site Expedia was the best performing blue-chip, after reporting adjusted earnings per share for the second-quarter of 55 cents, ahead of the consensus of around 50 cents.

Sharpie pen maker Newell Rubbermaid was also in the blue, after its earnings per share in the second quarter came in around 9% above consensus forecasts, at 46 cents.

S&P 500 - Risers
Expedia Inc. (EXPE) $31.69 +9.31%
Newell Rubbermaid Inc. (NWL) $15.52 +8.00%
Cerner Corp. (CERN) $66.49 +7.21%
Genworth Financial Inc. (GNW) $8.32 +6.39%

S&P 500 - Fallers
Coventry Health Care Inc. (CVH) $32.00 -7.70%
Southwestern Energy Co. (SWN) $44.56 -6.13%
QLogic Corp. (QLGC) $15.17 -5.36%

Dow Jones I.A - Risers
International Business Machines Corp. (IBM) $181.85 +0.03%

Dow Jones I.A - Fallers
Hewlett-Packard Co. (HPQ) $35.17 -2.93%
Merck & Co. Inc. (MRK) $34.13 -2.29%
Exxon Mobil Corp. (XOM) $79.79 -2.05%

Nasdaq 100 - Risers
Expedia Inc. (EXPE) $31.69 +9.31%
Vertex Pharmaceuticals Inc. (VRTX) $51.86 +8.09%
Cerner Corp. (CERN) $66.49 +7.21%

Nasdaq 100 - Fallers
Dish Network Corp. (DISH) $29.63 -4.76%
KLA-Tencor Corp. (KLAC) $39.82 -4.53%
Lam Research Corp. (LRCX) $40.88 -4.11%


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Press round-up: US debt, HSBC, UK growth
President Barack Obama announced on Sunday night that US Congressional leaders had reached an agreement on a tentative deal that would raise the US government’s borrowing limit and avoid a US default, prompting a positive response from Asian financial markets.

As Republican and Democratic leaders coalesced around a deal that would involve $2,800bn in deficit cuts over the next decade, the president said a framework was in place to “end the crisis that Washington imposed on America” and would “begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy”, reports the Financial Times.

HSBC has sold its branch network in upstate New York for $1bn (£609m) as it prepares to update the market on Monday on restructuring plans that are expected to see the bank cut 10,000 jobs.

The disposal of 195 branches to First Niagara Bank was announced less than 12 hours before the bank publishes its financial results for the first half of the year, which are forecast to show a pre-tax profit of $10.9bnm, according to the Telegraph.

American Airlines has raised the prospect of a full merger with British Airways and Iberia in a move that would create the world’s largest carrier. International Airlines Group, which owns the BA and Iberia brands, was given regulatory permission to form a transatlantic alliance with AA last year. The $7 billion-a-year joint venture allows them to co-operate on schedules, sell each other’s flights and share revenues from transatlantic operations, writes the Times.

The Confederation of British Industry (CBI) warns today that there is a "darkening mood" among British business people as they face up to years of lacklustre, disappointing and fragile economic growth.

The squeeze on household incomes and consumer spending has hit UK business confidence hard in recent weeks, as has talk about the Government's planned spending cuts and sovereign debt crises in the eurozone and in the US, according to the Independent.

Thousands of job cuts in the banking sector could cost the British economy £1.3billion a year in lost tax revenue alone, it was claimed last night. Investment banks in London, including Credit Suisse, Goldman Sachs and UBS, are believed to be drawing up plans to axe thousands of staff by the year’s end with many others following suit, says the Daily Express.

All of the major music companies have made offers for EMI, along with the bidders that failed to acquire Warner Music earlier this year. EMI was put up for sale by the U.S. investment bank Citigroup. First-round bids were due in last Friday. Access Industries, run by Len Blavatnik, which acquired Warner Music earlier this year for $3.3billion (£2billion), is believed to be a bidder, the Daily Mail writes.

The new owners of Aquascutum, whose trenchcoats were once the uniform of Hollywood stars and British politicians, have secured a financial lifeline for the heavily loss-making fashion label. The brand, which was acquired by Jaeger owner Harold Tillman nearly two years ago, is in the final negotiations for a new £8m bank loan, the Guardian reports.