ADVFN Morning Euro Markets Bulletin - Nov. 16th 2010

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London Market Reports
Market Movers
FTSE 100 5,767.87 -0.90%
techMARK 1,747.93 -0.05%
FTSE 250 10,891.66 -0.29%
Footsie has posted substantial losses following the reversal on Wall Street last night, with miners and financial groups bearing the brunt of the selling.

Kazakhymys, Fresnillo, Man and Antofagasta are the worst of the fallers so far, with chip maker Arm the best of the risers.

It's another hefty day for company results. Profits soared at luxury fashion label Burberry in the six months to 30 September as sales of non-clothing items such as handbags jumped and the company extended its reach in emerging markets such as China and Brazil.

Adjusted revenues (stripping out Burberry’s discontinued Spanish business) were up by 21% from the same period the previous year to £641m. Adjusted pre-tax profits soared by 49% to £129m.

Taylor Wimpey has been busy. The housebuilder is fully sold for 2010 and expects full-year profit to be at the top end of expectations, it’s got a news finance director and has agreed a revised £950m credit facility with its banks. The group has performed well in the UK and trading is stable despite the economic uncertainty, in line with forecasts since the interim results at the beginning of August.

The squeeze on public sector spending has already affected telecoms group Cable & Wireless Worldwide, with revenues down by 1.6% in the last six months. Turnover came in at £1.12bn, against £1.14bn, in the half-year to September, though the largely-UK focused telecoms group, which demerged from Cable & Wireless Communications in March, lifted pre-tax profits from £22m to £53m. Underlying operating profits rose by 4.4% to £214m.

Internet services group TalkTalk reported a 12.4% increase in half year revenue as it reiterated its full year guidance of 6-8% revenue growth. The UK's second biggest broadband company said pre-tax profit increased to £70m for the 6 months to 30 September 2010 compared to £68m the same time a year before.

A strong recovery in advertising helped bring about a sharp rise in revenues at broadcaster ITV in the third quarter, though growth in ad sales are seen slowing in the fourth quarter. Group revenues climbed by 11% from the same period last year to £1.456bn, with advertising revenues climbing by 16%. Ad revenues are currently forecast to be up by 10% in the fourth quarter.

No-frills airline easyJet said full year profit surged nearly threefold on rising consumer demand and cheaper fuel. The group also announced it would pay its first dividend in 2012.


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UK Event Calendar
INTERIMS
Advanced Computer Software Group, Burberry Group, Byotrol, Cropper (James), HSBC Infrastructure Company Ltd., Record, TalkTalk Telecom Group , Trifast, Victoria

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Machine Tool Orders (JPN)
RBA Interest Rate Minutes (AUS) (00:00)
Non-Farm Payroll (FRA) (07:45)
Consumer Price Index (EU) (10:00)
New Car Registrations (EU) (10:00)
ZEW Survey (EU) (10:00)
ZEW Survey (GER) (10:00)
Producer Price Index (US) (13:30)
Capacity Utilisation (US) (14:15)
Industrial Production (US) (14:15)
NAHB Housing Index (US) (15:00)
ABC Consumer Confidence (US) (22:00)

Q3
Frutarom Indstries Ltd.GDR (Reg S), MHP SA GDR (Reg S)

FINALS
easyJet, Enterprise Inns

ANNUAL REPORT
World Careers Network

IMSS
Informa, John Menzies, Premier Oil

AGMS
Antisoma, BHP Billiton, Dunelm Group, IRP Property Investments Ltd., MeDaVinci, Smiths Group

UK ECONOMIC ANNOUNCEMENTS
Consumer Price Index (09:30)
Retail Price Index (09:30)
DCLG House Prices (09:30)

FINAL DIVIDEND PAYMENT DATE
Strategic Equity Capital


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Currencies Market Reports
Euro remains under pressure with Irish banks at centre of concerns

The single currency continues to remain under pressure on the back of concerns about the Irish debt situation with Portugal’s finance minister already admitting that deteriorating bond market yields could force his country to ask for assistance.

EU officials have continued to pressure Ireland into accepting a bail-out with the inevitable loss of fiscal sovereignty that could bring, however the Irish government have remained steadfast in their insistence that they do not need one. This attitude could well change however if bond markets continue to sell-off Irish bonds and the fiscal positions of Irish banks deteriorate even further, and it is this that promises to be the Irish governments Achilles heel, something Irish Prime Minister Brian Cowen acknowledged late last night.

As such today’s meeting of EU finance ministers will be focussing on this very issue as bond markets continue to remain nervous, especially in light of further downgrades to Greece GDP figures yesterday by Eurostat. For now Irish bond yields have stabilised, but this is only because the markets perceive that a bail-out is pretty much inevitable, despite Irish protestations. If there has been no change in the next couple of days, then markets can expect the sell-off in bonds to continue and to spread.

Rising US 10 year treasury yields have in turn underpinned the US dollar, hitting 2.95%, a three month high, with the yen breaking above 83.00 for the first time in 5 weeks, while the US dollar index touched its highest level since 1st October just above 78.60, and its 50 day moving average.

The release of minutes from the recent RBA rate meeting suggested that the recent Australian rate hike was a finely balanced decision, which suggests that there will probably be no further rate hikes until Q1 2011. This could well limit Aussie gains in the short-term, and prompt a move towards 0.9660.

With UK inflation figures for October due to be released today, the expectation is for CPI to remain at an annualised 3.1%, with a figure in excess of that likely to be even more positive for sterling, while RPI is also expected to be unchanged at 4.6%. However it would be no surprise if the figures came in above expectations on both measures, which makes the comments yesterday from MPC member Martin Weale that the Bank of England should not hesitate to restart its QE program if economic conditions deteriorated a little surprising, and somewhat premature.

EURUSD – the move to 1.3500 looks to be unfolding as planned as the single currency continues to remain under pressure. Longer term we still expect to see the euro test the 1.3360 level, which would be 38.2% retracement of the up move from the June lows at 1.1880 to the highs at 1.4280.
The 1.3800 level pullback line resistance should contain any rallies in the single currency, with interim resistance around the 1.3700 level.

GBPUSD – the pound continues to remain a little sidelined with the resistance around 1.6180 continuing to frustrate, while just above that we have the added trend line resistance around the 1.6300 level.
On the downside there is rising trend line support around 1.6020, from the 22nd October lows at 1.5650, while just below that the monthly lows of 1.5960 remain a key level.
To minimise the likelihood of a downward correction we need to see a move back above 1.6180 to target 1.6300, while a break of 1.5960 would re-target 1.5880 and then 1.5820 trend line support from the 17th June lows at 1.4645.

EURGBP – the euro continues to fall against the pound in line with expectations and a break below 0.8450 trend line support from the August lows around 0.8140 should target 0.8400. The next major support however can be found around the 0.8400 level which is 61.8% retracement of the same move, as the single currency looks set to line up a re-test of the August lows at 0.8140. Intraday resistance can be found around 0.8520 while the larger resistance remains around the 200 day moving average around 0.8580.

USDJPY – yesterdays break above 83.00 and daily close above the 50 day moving average at 82.70, now opens up a larger move towards the 84.20 level. Rising 10 year US bond yields, closing around 2.95%, should continue to underpin the dollar here and a break above trend line resistance from the 28th July highs of 88.12 at 83.40, should target a move to 84.20, while above the 82.70 area.


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US Market Reports
Shares slide in last hour

Wall Street tumbled in the last hour sending Nasdaq and the S&P500 into the red though the Dow still closed ahead, but only just.

Having been almost 100 points ahead at one point, the Dow finished the day up nine points at 11,201. The S&P 500 shed 1 at 1,197 while Nasdaq gave up 4 at 2,513.

Construction equipment goliath Caterpillar is to buy Bucyrus International for $7.6bn, a third more than its value Friday evening. That boosted mining equipment companies, including Joy Global and Manitowoc.

EMC Corp is buying the smaller data storage equipment maker Isilon Systems for $2.25bn. US retail sales rose by 1.2% in October as Americans stepped up purchases of cars and building materials.

US investors also had their eye on Europe, where the problems currently centred on Ireland may have abated. Irish bonds advanced amid optimism the former Celtic tiger will resolve its huge debt problems.

In other company news, DIY retailer Lowe’s earnings of 29c a share just missed expectations on sales up to $11.6bn.

Clothing retailer Nordstrom reported third-quarter earnings of 53c per share, slightly better than expected. Analysts were looking for quarterly earnings of 52c a share. Ford Motor rose on the back of the proposed GM float.

S&P 500 - Risers
Ford Motor Co. (F) $17.00 +4.29%
Eastman Kodak Co. (EK) $4.79 +3.46%
Colgate-Palmolive Co. (CL) $78.37 +2.34%
Constellation Brands Inc. Class A (STZ) $20.31 +2.32%

S&P 500 - Fallers
PulteGroup Inc. (PHM) $7.07 -5.61%
Akamai Technologies Inc. (AKAM) $47.03 -5.51%
Sprint Nxtel Corp. (S) $3.83 -4.96%
D. R. Horton Inc. (DHI) $10.97 -4.69%

Dow Jones I.A - Risers
JP Morgan Chase & Co. (JPM) $40.12 +1.29%
Caterpillar Inc. (CAT) $81.84 +0.99%
Travelers Company Inc. (TRV) $56.78 +0.83%
Boeing Co. (BA) $63.61 +0.82%

Dow Jones I.A - Fallers
Walt Disney Co. (DIS) $37.25 -1.32%
Intel Corp. (INTC) $21.30 -1.07%
Cisco Systems Inc. (CSCO) $19.94 -1.04%
Exxon Mobil Corp. (XOM) $70.48 -0.72%


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Tuesday newspaper round-up
Financial markets reacted positively yesterday to the prospect of a potential rescue package for Ireland or its banking sector from the European Central Bank.

Irish bonds were the best performers on European sovereign debt markets, with the premium demanded by investors to hold 10-year Irish bonds instead of benchmark 10-year German bonds last night falling to 5.38 percentage points, compared with 6.52 percentage points last Thursday. At the same time, the cost to investors of insuring against a possible debt default by Ireland fell dramatically, with the price of insuring €10m worth of Irish debt falling to €495,000 from €540,000 on Friday, the Times reports.

The EU authorities have begun to vent their fury against Ireland over its refusal to accept a financial rescue, fearing that the crisis will engulf Portugal and Spain unless confidence is restored immediately to eurozone bond markets. Spain's central bank governor, Miguel Angel Ordonez, lashed out at Dublin on Monday, calling on the Irish government to halt the panic and take the "proper decision" of activating the EU-IMF bail-out mechanism, the Telegraph adds.

Britain's economy will grow just 1.2% next year, according to the Institute of Directors – well below official forecasts. Cutting its growth expectations for 2011 from 1.8pc, the influential trade body said that while "too much doom and gloom" surrounds the austerity measures in the Spending Review, there needs to be "greater realism" about weaknesses in the economy, the Telegraph reports.

Apple is set to announce that it has finally agreed a deal to bring the Beatles to its iTunes online music store, ending a long-running dispute between the band and the technology powerhouse. The deal comes after weeks of talks between representatives of the band, its record label, EMI, and Apple executives, the Telegraph reports.

Jaguar Land Rover has warned some of its most talented UK managers to consider relocating to China or risk being passed over for a promotion to the board. Des Thurlby, human resources (HR) director at the international car maker, said he had held "pointed" discussions with up to five of the company's best employees urging them to consider moving "out of leafy Warwickshire" to China to help the company capitalise on emerging markets, the Telegraph reports.

The chairman of the Federal Reserve yesterday came under attack from fellow Republican economists over the latest $600 billion programme of quantitative easing (QE2). A group of 23 economists and finance executives plan to run an open letter in full-page advertisements in the Wall Street Journal and New York Times this week, calling for Ben Bernanke to rethink his plan to buy huge amounts of Treasury bonds in order to inject cash into the US economy, the Times reports.

Mortgage lenders begged ministers to intervene to prevent the financial watchdog pushing ahead with its crackdown on irresponsible lending, as Persimmon became the latest housebuilder to warn that the property market was in a fragile state. In its response to the Financial Services Authority's consultation paper, the Council of Mortgage Lenders condemned the "flawed" approach of the watchdog, the Independent reports.

General Motors is aiming to price its initial public offering as high as $33 a share, exceeding expectations and tempting the US Treasury to sell a bigger proportion of its stake in the largest US carmaker, people familiar with the deal said. The price range has been raised to $32-$33 a share, from the initial $26-$29, valuing GM at about $60bn. The final price is due to be announced on Wednesday, the FT reports.

Google has called on the US and other western governments to challenge internet censorship as a restraint on global trade, opening another front in its campaign to gain more open access to countries, such as China, that restrict online information. Its case, spelled out in a detailed paper released on Monday, comes in the wake of concern at the search company in recent months that its tense relationship with China would lead to increasing restrictions, making it harder to compete in the world’s most populous internet market, the FT reports.

Up to 1,000 jobs could be at risk if EON presses ahead with the £3.5bn sale of its Central Networks electricity distribution business, Britain’s largest union warned yesterday. The claim from Unite came one week after EON, the German company that is the world’s largest utility by revenues, confirmed that it was considering a range of “strategic options” for the unit, which operates more than 80,000 miles of power lines across the Midlands, the Times reports.

John Cridland was yesterday named the £310,000-a-year voice of British business, when he was appointed to replace Richard Lambert as director-general of the Confederation of British Industry (CBI) from January. Mr Cridland, the current deputy director-general, has been with the organisation since 1982, when he joined as a policy adviser, the Independent reports.