ADVFN Morning Euro Markets Bulletin - February 1st 2012

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London Market Report


ICAP leads strong rise for Foosie

Market Movers
techMARK 1,950.31 +0.21%
FTSE 100 5,734.64 +0.93%
FTSE 250 10,820.77 +0.48%

The Footsie opened in positive territory, rising well above the 5,700 level, after better-than-expected Chinese data and rumours of progress in Greece lifting the mood early on. European markets have opened strongly as investors await Eurozone manufacturing data later this morning.

The HSBC China manufacturing purchasing managers’ index (PMI) for the month of January has come in at 48.8, in line with preliminary estimates. However, the official PMI data also published today has come in a tad ahead of expectations, with the headline index at 50.5, up from 50.3 in December and above expectations of 49.6.

Meanwhile in Greece, there are rumours of a so-called gross domestic product warrant, which would pay private creditors more if Greece's economy begins to expand, easing the loss that they are taking on the country's debt. According to Bloomberg, the government and bondholders are near a "tentative accord" that would include the warrants.

ICAP SURGES AFTER RAISING GUIDANCE

Inter-dealer broker ICAP rose strongly early on after saying profits for the current fiscal year will be towards the top end of expectations. The current range of analyst pre-tax profit forecasts for the year to March 31st runs from £336m to £358m, with a median figure of £347.4m.

Johnson Matthey, the chemicals company, was also in demand after seeing sales (excluding precious metal sales) rise by 22% between October and December last year.

With oil prices on the rise, explorers and producers were providing a lift in London, with BP and BG in demand. Banks were also on the up, with Barclays, RBS and Lloyds in the blue. Lloyds has announced this morning a mass shake-up to its board of directors and management team to "ensure we have the right organisational structure to deliver on our strategy and move to the next phase of the group's transformation," said the group's Chief Executive, António Horta-Osório.

Imperial Tobacco was performing well despite seeing reported stick equivalent volumes fall 7% in the three months to December 31st, due to the trading difficulties in Syria, Spain, USA and Ukraine.

Water utility company United Utilities is on track to deliver full year results in line with expectations on the back of a steadily rising revenue. Shares nudged higher.

Miners giant Rio Tinto and BHP Billiton were higher after doing a spot of trading that will see Rio gain majority control of South African miner Richards Bay Minerals.

Antofagasta, however, underwhelmed investors after seeing full-year production rise 22.9% to surpass its earlier guidance after a strong end to the year. Shares dipped into the red.


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FTSE 100 - Risers
ICAP (IAP) 360.10p +7.17%
Johnson Matthey (JMAT) 2,116.00p +3.17%
BP (BP.) 484.95p +2.99%
Man Group (EMG) 118.80p +2.68%
Barclays (BARC) 217.55p +2.35%
Weir Group (WEIR) 2,000.00p +2.30%
Rolls-Royce Holdings (RR.) 752.00p +2.24%
Royal Bank of Scotland Group (RBS) 27.16p +2.03%
Essar Energy (ESSR) 131.70p +1.93%
Schroders (SDR) 1,477.00p +1.86%

FTSE 100 - Fallers
ARM Holdings (ARM) 600.00p -1.56%
GKN (GKN) 208.30p -0.62%
Shire Plc (SHP) 2,096.00p -0.47%
Aggreko (AGK) 2,087.00p -0.38%
British Sky Broadcasting Group (BSY) 687.50p -0.36%
Petrofac Ltd. (PFC) 1,450.00p -0.34%
Antofagasta (ANTO) 1,289.00p -0.31%
Kazakhmys (KAZ) 1,133.00p -0.26%
Smith & Nephew (SN.) 613.50p -0.24%
AstraZeneca (AZN) 3,050.00p -0.15%

FTSE 250 - Risers
Tullett Prebon (TLPR) 309.50p +3.93%
Allied Gold Mining (ALD) 137.00p +3.32%
Regus (RGU) 94.95p +3.21%
RPS Group (RPS) 215.00p +3.12%
Big Yellow Group (BYG) 287.70p +2.82%
Scottish Inv Trust (SCIN) 467.00p +2.61%
Kesa Electricals (KESA) 69.10p +2.52%
Spirent Communications (SPT) 121.60p +2.36%
ITE Group (ITE) 208.90p +2.05%
Halfords Group (HFD) 325.50p +2.04%

FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 163.00p -4.40%
Aberforth Smaller Companies Trust (ASL) 569.50p -2.15%
Northgate (NTG) 222.00p -2.07%
Carpetright (CPR) 539.50p -1.91%
COLT Group SA (COLT) 90.25p -1.90%
Galliford Try (GFRD) 467.50p -1.89%
Brewin Dolphin Holdings (BRW) 148.40p -1.72%
Fidelity China Special Situations (FCSS) 79.55p -1.36%
Hansteen Holdings (HSTN) 72.45p -1.29%
Perform Group (PER) 242.00p -1.22%


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Europe Market Report

FTSE 100 Euronext Dax perf CAC 40


Strong rise in stocks, Greece deal close


FTSE-100: 0.84%
Dax-30: 0.87%
Cac-40: 1.01%
Ibex 35: 1.34%
Mibtel-30: 1.41%

European equity markets have begun the session with ‘gusto’, oblivious to the sharp fall last night in Amazon.com’s share price.

The most likely factor behind the gains seem to be the remarks attributed to the Greek Finance Minister to the effect that the country is just “one step away (a formality he added)” from reaching an agreement with its private sector creditors. Better than expected Chinese data out this morning is also being cited by some as the main reason for the advance, although the numbers did not convince all observers.

European Central Bank purchases of Portuguese debt yesterday may also still be helping to soothe some frayed nerves, although the single currency has begun the day on its back foot.

Some traders and market commentary are also pointing to favourable technical developments on charts for the S&P 500, the world’s equity benchmark to an extent.

To be had in account perhaps, both Germany and Portugal will hold debt auctions today. Furthermore, the US ADP employment report, scheduled for release in the early afternoon, may move markets.

EQUITIES

German chipmaker Infineon is seeing some early signs of stabilization in certain markets.

Roche Holding AG gave an upbeat sales outlook for 2012, but missed full-year earnings estimates from analysts.

Italian utility group Enel will not pay an interim dividend on 2012 results.

MACROECONOMY

Eurozone manufacturing sector purchasing managers’ index expected out at 08:58am (Consensus: 49..

Spanish manufacturing sector purchasing managers’ index for January comes in at 45.1 (Consensus: 44.5).

The European Central Bank’s loan survey will be released today.

Eurozone January consumer price index scheduled for release at 10am (Consensus: 2.7% on the year).

OTHER MARKETS

Front month Brent crude futures are rising by 0.3% to $111.31 per barrel at 8:34am in London. The euro is down 0.17% against the dollar to $1.3070, below support seen by some at 1.3075.

UK Event Calendar

INTERIM DIVIDEND PAYMENT DATE
Brulines Group, FirstGroup, KCOM Group, United Utilities Group

INTERIM EX-DIVIDEND DATE
Amati VCT , Daejan Holdings, Latchways, Pennon Group, Tricorn Group

QUARTERLY PAYMENT DATE
Mercantile Inv Trust, Torchmark Corp.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Auto Sales (US) (15:00)
Construction Spending (US) (15:00)
Crude Oil Inventories (US) (15:30)
ISM Manufacturing (US) (15:00)
ISM Prices Paid (US) (15:00)
MBA Mortgage Applications (US) (12:00)
PMI Manufacturing (EU) (09:00)
PMI Manufacturing (GER) (08:55)

FINALS
Piaggio & C Spa, Piaggio & C Spa

IMSS
United Utilities Group

AGMS
Imperial Tobacco Group

UK ECONOMIC ANNOUNCEMENTS
PMI Manufacturing (09:30)

FINAL DIVIDEND PAYMENT DATE
Marston's, SVM Global Fund

FINAL EX-DIVIDEND DATE
Fenner


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US Market Report
The venerable Dow Jones industrial average fell for the fourth day in succession to notch up its longest losing streak since August of last year, but the picture in the broader market was more mixed, as optimism over the European Union’s ‘fiscal compact’ offset some of the gloom engendered by some slightly worse than expected economic data releases and company earnings reports.

Shares of RadioShack fell after the electronics retailer cancelled its share buyback programme and provided fourth quarter projections that were much lower than expected.

The company expects earnings per share (EPS) to come in at between $0.11 and $0.13 instead of the consensus estimate of $0.38. The company explained that it was affected by Sprint Nextel's weak wireless business.

The company also stated that the big discounts offered during the Christmas campaign lowered its earnings margins. As such, the gross margin is expected to fall to 35% from 41% in the year-ago period.

Integrated oil giant Exxon was another to disappoint with its earnings, as its fourth quarter EPS of $1.90, while it was up from the previous year's fourth quarter figure of $1.85, was below the $1.98 expected by the market.

The company reported total earnings of $9.4bn as opposed to $9.25bn in the last quarter of 2010, while revenue rose 35% in the year to $41.1bn as a result of higher crude oil prices.

Capital spending for the latest quarter remained flat at $10bn and production fell 9% from a year ago on an oil-equivalent basis.

The company indicated that it bought back shares for $5bn in the fourth quarter.

Internet retail leviathan Amazon's share price headed down the river in after-hours trading as its net income in the final quarter of 2011 slumped to $177m from $416m in the corresponding period of 2010. This was despite revenues rising 35% year-on-year to $17.43bn.

The company warned it may even slide into the red in the first quarter of 2012, as it continues its policy of growing the top line at the expense of margin. The company reckoned its operating profit/loss in the first quarter could be anywhere between a loss of $200m to a profit of $100m.

Results from steel maker US Steel and toys firm Mattel were more pleasing to the market.


MACRO-ECONOMY

The Chicago NAPM manufacturing sector purchasing managers' index for the month of January has come in at 60.2, versus 62.5 the month before (Consensus: 63.3).

The S&P Case Shiller home price index for the month of January fell by 3.7% on the year (Consensus: -3.2%).

The Conference Board's consumer confidence index for the month of January has come in at 61.1, versus the 64.5 seen the month before (Consensus: 68.0).

The employment cost index rose by 0.4% on the quarter in the last three months of 2011, as expected.

OTHER MARKETS

West Texas intermediate crude for March delivery was 30 cents cheaper by the end of the day at $98.48 a barrel mark on the NYMEX.

10-year US Treasuries rose by 27/64 dollars, with yieldsdown half a percentage point at 1.80%.

S&P 500 - Risers
CBRE Group Inc (CBG) $19.30 +5.70%
Edwards Lifesciences Corp. (EW) $82.67 +5.62%
United States Steel Corp. (X) $30.19 +5.08%
Mattel Inc. (MAT) $31.00 +4.98%
Harris Corp. (HRS) $41.00 +4.57%

S&P 500 - Fallers
Tellabs Inc. (TLAB) $3.80 -9.31%
Best Buy Co. Inc. (BBY) $23.95 -5.63%
Avery Dennison Corp. (AVY) $27.15 -5.40%
MEMC Electronic Materials (WFR) $4.57 -4.99%
Alpha Natural Res (ANR) $20.12 -4.69%
Sears Holdings Corp. (SHLD) $42.15 -4.27%
Netflix Inc. (NFLX) $120.20 -4.17%


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Wednesday newspaper round-up
The Ministry of Defence will no longer give UK companies priority over their foreign competitors when buying equipment and weapons for the armed forces.
The only exceptions will be cases where buying British is essential to maintaining national security, Peter Luff, the defence procurement minister, said in an interview. He made clear the MoD would not consider wider employment or industrial economic factors when it assessed whether a piece of equipment offered value for money, The Financial Times reports.

Influential shareholder group PIRC has urged investors not to back a controversial £100m property transaction planned by transport group Stobart. The company has announced it is to buy a portfolio of properties from directors and shareholders Andrew Tinkler and William Stobart. Under the terms of the deal released in a shareholder circular, Stobart will pay a total of £103.8m to buy a portfolio of properties valued at £93.5m. A second valuation carried out under "special assumptions of no purchaser's costs" produced a higher figure of £98.9m. The company used the second valuation in its stock market announcement on the acquisition. PIRC claimed there were "inherent conflicts of interest in the transaction" and raised concerns that the "independent directors had provided no basis to their conclusion that the acquisition had a fair price," The Telegraph writes.

He is hardly a big name even among retailers, but an American who got his big break selling groceries online will try to lead a revival at Argos. The appointment of John Walden as chief executive is set to be announced today. His task will be to invigorate a company that has suffered falling sales since 2008 and is under pressure from the City to cut the number of its stores. Argos’s plight is central to the prospects of its parent company Home Retail. With sales of £4bn, it dwarfs its sister chain Homebase and generates more than 70% of group turnover. Last year it contributed more than 6½ times the operating profit of Homebase. Mr Walden, 52, is understood to have impressed executives with his extensive online experience, The Times explains.

EasyJet chairman Sir Mike Rake has delivered his strongest rebuttal yet to what he termed the "numerous inaccuracies and attacks on individuals" from the airline's founder Sir Stelios Haji-Ioannou. Sir Mike used a speech at the carrier's investor day in London to hit back at various allegations from Sir Stelios, whose family owns 37% of the shares, over aircraft deals, pay and accounting policies. It followed Sir Stelios' comments about the directors over the weekend when he said: "These guys are welcome to resign anytime." Sir Mike said the management team under chief executive Carolyn McCall had made "enormous and significant progress in the last 20 months". However, Sir Stelios had "chosen to continuously attack the company in various ways and increasingly personalise those attacks on individuals," according to The Telegraph.

BP suffered another setback in its attempts to share the costs of the Gulf of Mexico disaster, as a US court ruled it must shield its contractor Halliburton from some damage claims. The decision by District Judge Carl Barbier echoed the terms of his ruling last week that BP must indemnify rig-owner Transocean over some claims. However, as in that ruling, BP will not have to cover Halliburton for civil penalties or punitive damages under the Clean Water Act. The rulings mean it is likely BP will have to shoulder about $15bn (£9.5bn) of costs related to the $20bn compensation trust fund itself. BP had budgeted for the full $20bn but has effectively recouped $5bn through settlements with other companies and has been attempting to make Halliburton and Transocean pick up a share of the costs, The Telegraph says.

Water and sewerage bills are to rise by an average of £20 a year from April to £376, the regulator Ofwat has said. The top-line figure hides variations across the country, with customers at Southern seeing the biggest rise of £31 taking the average bill to £416. At the other end of the scale, Severn Trent will increase bills by an average £16 to £325. Of those handling water only, the biggest increase will be in Bristol where bills are set to rise 8.8% or £15 to an average £181. Veolia Central customers face a rise of just 1.8%, or £3 per year, taking the average bill to £174. The average rise will be made up of November’s retail prices index of 5.2%, plus 0.5%. Ofwat said it will allow some companies to increase prices by more than 5.7% because they need funding for continuing investment. The regulator announced a five-year plan of annual rises in 2009 to help fund £22bn of investments, The Times reports.

BP expects its Foinaven oilfield off northern Scotland, which accounts for 15% of its UK production, to remain shut for weeks while it investigates a "small" oil leak. The company stopped production at the 43,000 barrels per day (bpd) field, 120 miles west of Shetland, on Sunday after finding an oil and water mixture leaking from a fitting on a seabed pipe. BP said it stopped the leak within 50 minutes, but did not know when the leak began or the volume spilled, as the last check had taken place 12 days previously. It is thought tens of barrels a day could have leaked, The Telegraph says.


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