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 |  Subject: ADVFN Morning Euro Markets Bulletin - August 3rd 2010  Tue Aug 03, 2010 10:01 am | |
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Profit taking clips Footsie
London’s top stocks have run into some profit taking after yesterday's large gains both here and on Wall Street.
Banks are mixed after confusing figures from state-owned Northern Rock. Now split into its "good half" and "bad half", the "bad half" bounced back into profit while the supposedly "good" retail bank lost money. The quoted banks have drifted lower with the exception of Royal Bank of Scotland, which is said to be near to a sale of 300 branches to Santander.
Specialist banking group Investec is to increase its issued ordinary share capital by around 4.3% through a placing of up to 22m shares. The money raised will allow the company to take advantage of opportunities in credit and other markets while improving Investec’s tier 1 capital without reducing the total capital adequacy ratio.
Anglo-Swiss mining leviathan Xstrata saw profits soar in the first half as the company remained on track to hit its production volumes and cost cutting targets. Revenue in the first half of 2010 rose 43% to $13,608m from $9,541m in the first half of 2009. Attributable profit soared 153% to $2,299m from $909m, as demand from China grew rapidly and the US economy continued its recovery.
New ITV chief executive Adam Crozier has unveiled a five-year transformation plan for the embattled TV broadcaster involving a move in to Pay-TV to halve its dependence on advertising. Crozier also revealed a sharp upturn in ITV’s financial fortunes over the past six months.
Engineering firm Rotork notched up record half year sales and profits in the first six months of 2010 as market conditions improved. “We remain cautious with regard to currency movements, commodity price increases and the resulting impact these may have on the competitive landscape. However, our lean business model, strong balance sheet and existing order book provide us with confidence in achieving further progress in the full year," said chief executive Peter France.
GKN, the engineer that serves the automotive, aerospace and off-highway markets, moved up another gear in the first half of 2010. Sales in the six months ended 30 June 2010 improved to £2.54bn from £2.06bn in the first half of 2009.
Coal-fired plant operator Drax announced a 23% increase in earnings but said it remains cautious in its outlook for the commodity markets in which it trades. Drax also said that development work to convert one of its units to burn biomass-only will now continue into 2011 before an investment case can be proven, citing regulatory uncertainty. The group was originally targeting the end of 2010 to prove the investment case for the plant.
Engineering group Weir said it expects profit for the second half to be "significantly ahead" as it reported a 24% jump in order input in the first half.
Order input, in constant currency, rose to £863m in the 26 weeks ended 2 July from £694m last time.
Housebuilder Taylor Wimpey crept back into profit in the first half of 2010, but is concerned over the possible impact of government spending cuts going forward. The Anglo-US group posted a pre-tax profit of £19.6m in the six months to June against a loss of £673m last time. Underlying profits rose to £79m from £2.8m, while sales rose to £1.23bn from £1.13bn.
EnQuest, the North Sea oil group spun out of Petrofac, has made its first acquisition with an agreed all share deal for Aim-listed Canadian group Stratic Energy. |
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| | UK Event Calendar for today |
INTERIMS
888 Holdings, Capital & Counties Properties , Devro, Drax Group, GKN, ITV, Meggitt, SDL International, Taylor Wimpey, Weir Group, Xstrata, Zotefoams
INTERIM DIVIDEND PAYMENT DATE
Sinclair (William) Holdings
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ABC Consumer Confidence (US) (22:00)
Business Inventories (US) (15:00)
Factory Orders (US) (15:00)
Pending Homes Sales (US) (15:00)
Personal Consumption Expenditures (US) (13:30)
Personal Income (US) (13:30)
Personal Spending (US) (13:30)
PMI Construction (EU) (09:00)
PMI Construction (GER) (08:55)
Retail Sales (GER) (07:00)
GMS
KleenAir Systems International
ANNUAL REPORT
Cohort
AGMS
Blue Planet Financials Growth & Income Inv Trust Unit, Blue Planet Financials Growth & Income Inv Trust Units, Gulf Keystone Petroleum, Hansa Trust, Monks Inv Trust
UK ECONOMIC ANNOUNCEMENTS
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
Johnson Matthey |
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| | European Markets Reports |
US dollar continues its slide on US economy concerns
The story over the last 24 hours remains one of US dollar weakness and increasing risk appetite, as a result of continuing lacklustre US economic data.
The US ISM reported its manufacturing gauge fell to 55.5 in July from 56.2 in June; however some comfort was taken from the fact that the number came in better than the figure of 54 that economists had expected.
With Europe and the UK showing PMI improvements sentiment is shifting away from the US dollar, and into currencies like the Australian dollar, the pound and the Scandinavian currencies.
Meanwhile in a speech in South Carolina Federal Reserve Chairman Bernanke reiterated his concerns over the US economy, and his desire to keep fiscal policy fairly loose in the near term, saying that the US had some way to go to achieve a full recovery.
As a result the US dollar index is now heading towards its 200 day moving average at 80.74, and possibly its 9th straight weekly decline.
If today’s US economic data continues to disappoint then we could well see further US dollar declines.
June personal consumption data is expected to increase by 0.1%, with personal spending at 0.1%, and personal income data at 0.3%, all due at 1:30pm.
At 3pm factory orders for June are expected to come in at -0.5%, while pending home sales are expected to rise by 4% in June, after May’s 30% shock decline.
The pound by contrast, has continued its meteoric rise higher on the back of manufacturing PMI for July yesterday, which came in at 57.3 instead of the 57 expected, sending sterling close to 11 month highs on its trade weighted index at 82.50.
Today’s UK PMI construction data for July should also continue to be supportive with expectations of 58, a slight fall from June’s 58.4.
In Australia today the Reserve Bank of Australia kept rates on hold at 4.5% as building approvals for June fell sharply by 3.3%, against expectations of an increase of 2%, while retail sales increased also less than expected at 0.2% against an expectation of 0.4%, prompting a fall in the Australian dollar as traders speculated that rates would not be rising again for the remainder of 2010.
EURUSD - the single currency finally reached the 1.3125 38.2% Fibonacci level. The subsequent break above this key area now opens up the possibility of a larger rise towards the 1.3510 area which is the 50% retracement level of the 1.5145/1.1880 down move.
Interim trend line support now comes in around 1.3030 from the 1st July lows at 1.2190/00. Below this we also have support around the 1.2950 level a break of which would open a test towards the 1.2840/50 level.
GBPUSD – the pound continues to push on breaking above the 1.5870 the 61.8% retracement level of the down move from 1.6880 to the May lows at 1.4230, and spilling over to 1.5908. The pound looks capable of extending these gains towards the February 3rd highs of 1.6070, however with momentum continuing to remain a touch stretched it could dip back towards the 1.5520/50 support area and 50% level in the near term. Long term trend line support levels, remain around the 1.5320/30 area, from the June lows at 1.4350.
EURGBP – the break below the head and shoulders neckline at 0.8315, and the 50% retracement level at 0.8300 of the up move from 0.8065 to the 0.8520 double top, opens up a test of 0.8245, the 61.8% retracement level, and back towards the lows at 0.8070, while 0.8410 caps. Resistance should also be found around the old neckline support around the 0.8315/20 level.
USDJPY – despite the new spike low last week at 85.95, progress towards last years yen highs at 84.80 remains remarkably slow. The support level around 86.25 seems to holding on a daily close but rallies seem restricted to the 87.00 area for now.
While the dollar is unable to overcome the bigger 88.00/10 level the focus remains solidly on further yen gains in the short-term.
Pressure on the Bank of Japan with respect to monetary policy will only intensify if we break below the 84.80 area, which would then look to target the 1995 lows below 80.00. |
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| | US Markets Report |
Dow up over 200 points
Positive manufacturing data sent the Dow sharply higher boosted by HSBC's bumper first half figures. Across the markets, the Dow has jumped 208 points to 10,674, while Nasdaq added 40 points to 2,295. The S&P 500 was 24 points higher at 1,1253.
The Institute for Supply Management’s manufacturing index dropped from 56.2 to 55.5 in July. That was still better than expected. The ISM new orders index fell sharply from 58.5 to 53.5. There are also indications that stocks are increasing.
Construction spending rose slightly in June, although this was after a revised 1% drop in May. Federal Reserve chairman Ben Bernanke said rising wages will help household spending to recover even though consumer confidence remains low. He admits the recovery still has a long way to go.
HSBC and BNP Paribas both reported strong figures and on the other side of the pond Bank of America is sharply higher, while JPMorgan and American Express are also among the risers.
Share buying by a director has pushed Office Depot to the top of the S&P risers.
BlackBerry maker Research in Motion is lower after the United Arab Emirates said it will block key features on the smartphones starting in October.
AT&T and Verizon are planning a venture to replace the use of credit and debit cards on smartphones. That would be bad news for Visa and Mastercard which are both lower.
BP is gearing up to begin sealing the broken Maconda well in the Gulf of Mexico either tonight or tomorrow, more than three months after an explosion sparked the biggest environmental disaster in American history.
Mud will be injected into the well to overpower the pressure from huge oil and gas reserves beneath the sea, allowing engineers to plug the well. BP’s partner in the field Anadarko Petroleum rose today.
US oil titans Chevron and ExxonMobil picked up as oil prices surged past $80 a barrel on improved hopes for global economic growth.
S&P 500 - Risers
Office Depot Inc. (ODP) $4.77 +10.42%
Anadarko Petroleum Corp. (APC) $53.27 +8.36%
Goodyear Tire & Rubber Co. (GT) $11.45 +7.31%
Peabody Energy Corp. (BTU) $48.39 +7.18%
S&P 500 - Fallers
Mastercard Inc. (MA) $202.52 -3.58%
Akamai Technologies Inc. (AKAM) $37.20 -3.02%
J. M. Smucker Co. (SJM) $59.71 -2.80%
Visa Inc. (V) $72.23 -1.53%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $11.70 +4.74%
Exxon Mobil Corp. (XOM) $61.94 +3.79%
JP Morgan Chase & Co. (JPM) $41.64 +3.38%
Hewlett-Packard Co. (HPQ) $47.56 +3.30% |
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| | Tuesday newspaper round-up: HSBC, Santander, Wheat prices |
HSBC, Britain’s biggest bank, emphatically rejected suggestions yesterday that it was needlessly denying credit to small companies and claimed that most business customers were paying a lower rate of interest than before the credit crisis hit three years ago.
Douglas Flint, its finance director, insisted the bank had not tightened lending criteria and that customers were in no mood to borrow: “We’re not shying away from lending. Our customers are shying away from borrowing,” the Times reports.
Britain's mortgage lenders are continuing to apply the brakes to the housing market, with new data revealing that mortgages remain far harder to get than before the credit crisis. Moneyfacts, the personal finance analyst, said that while the number of new mortgages being offered has risen by two-thirds since the beginning of the year, they are only available to borrowers with large deposits, the Independent reports.
Santander is assured to make two more bold acquisitions – in the UK and US – as the Spanish bank continues to scoop up the assets of troubled rivals. In the US, Santander has agreed a preliminary deal to buy $4.3bn of car loans from HSBC, part of the UK bank’s wind-down of its troubled American consumer finance arm, according to people close to the transaction. Meanwhile, the bank is set to announce the acquisition of 318 branches from the Royal Bank of Scotland, mainly in north-west England, the FT reports.
Wheat prices have seen the biggest one-month jump in more than three decades on the back of a severe drought in Russia, prompting warnings by the food industry of rising prices for flour-related products such as bread and biscuits. Food executives are also warning about surging prices for feeding and malting barley, which could push higher the retail cost of products from poultry to beer. European wheat prices jumped 8 per cent on Monday to €211 a tonne, the highest in two years. Wheat prices have risen nearly 50% since late June, the FT reports.
A campaign of national strikes over cuts to spending, pay and pensions involving millions of public sector workers is being drawn up by trade union leaders for the autumn. The plan will begin with a national day of action on October 20, the same day as the spending review when George Osborne will disclose plans to cut £83bn off public spending, the Times reports.
BP is removing thousands of yards of protective boom and preparing to lay off clean-up workers despite evidence that fresh waves of oil are blighting sensitive wetlands along the US coast of the Gulf of Mexico. The Times found miles of thickly coated marshlands on the day that BP and the US Coast Guard declared that their response to the oil spill had been so successful that they could start winding it down. Today, BP will begin the delicate process of permanently sealing the well a mile beneath the surface by pumping in mud and cement.
The Federal Reserve is set to kick-start a new phase of monetary easing, a leading Wall Street economist claims. Paul Sheard, Nomura's chief global economist, argues that the current conditions are ripe for the American central bank to take affirmative action to put the US recovery back on track. In the first call of its kind from a Wall Street economist, Mr Sheard says that given subdued growth and concern about inflation, the Federal Open Markets Committee will act when it meets a week today, the Telegraph reports.
Virgin Media has called on Ofcom to investigate Project Canvas, a joint venture that is preparing to bring internet television into living rooms next spring, saying it will "significantly and irreparably harm competition".
Virgin yesterday submitted an official complaint to the media watchdog over the joint venture developed by the BBC, ITV, Channel 4, Talk Talk and broadcast transmission group Arqiva. It fears that Canvas could create a monopoly in the UK's internet television market, the Independent reports.
HgCapital, the UK-based private equity group, is on Tuesday expected to announce the acquisition of TeamSystem, the Italian accounting software maker, from Bain Capital in a deal worth about €565m (£468m, $741.3m). The deal would underline how a growing trend for private equity groups to sell their best-performing assets to each other has fuelled a rally in buy-out activity this year, the FT reports. |
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