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 |  Subject: ADVFN Morning Euro Markets Bulletin - August 4th 2010  Wed Aug 04, 2010 9:10 am | |
| By ADVFN.comADVFN offer FREE streaming stocks and shares data form around the world. SEE | London Markets Report |
Blue chips lower on mixed results
London has made a quiet start after a decline on Wall Street overnight and mixed trading statements this morning.
Lloyds is very much back in the black after posting a profit of £1.6bn for the first half of 2010, twice as much as some analysts had forecast. The bank, which lost almost £4bn this time last year and is still 41%-owned by the government, added that total impairments more than halved to £6.55bn from £13.4bn a year ago.
Insurance giant Legal & General (L&G) topped market expectations with its interim figures and has rewarded shareholders with a 20% hike in the dividend. European Embedded Value (EEV) operating profit in the first half of 2010 was £589m, down from £656m the year before but ahead of most broker forecasts.
Impairment provisions were sharply lower at Asia-focused bank Standard Chartered in the first half of 2010 as pre-tax profit improved 10% year on year. Profit before taxation of $3,116m was up 10% from $2,838m in the corresponding period of 2009.
Santander’s UK arm has confirmed the acquisition of more than 300 branches from Royal Bank of Scotland for £1.65bn, slightly less than expected. The deal will catapult Santander UK into the number two slot in UK retail banking. It already owns Abbey, Alliance & Leicester and Bradford & Bingley. Today’s acquisition will see it take over 311 RBS branches in England and Wales and seven NatWest branches in Scotland.
It’s looking like BP may have sealed the leaking Maconda well in the Gulf of Mexico by pumping it full of mud from vessels on the surface – a process known as “static kill”. The procedure started at 9pm UK time on Tuesday and continued for the next eight hours. The well now “appears to have reached a static condition”, BP said this morning.
Next has noticed a ‘cooling’ in consumers' demand in recent months, but still expects profits this year to rise by between 6-11%, in line with its previous forecasts. “There has been a noticeable cooling in retail demand in recent months, the mood amongst consumers is best characterised as cautious. We believe that consumer spending will be more restrained in the second half than in the first, as spending cuts and tax rises begin to take effect," the high street giant said.
Sales fell at Carpetright during the first quarter, forcing the carpet and flooring retailer to take another close look at costs and spending. Like for like sales in the UK and Ireland dropped 3.4% in the 13 weeks ended 31 July compared with a 1.4% increase this time last year. The decline accelerated to 4.2% in the rest of Europe from 3.1% last time.
Engineer and ceramics group Cookson moved back into the black in the first half of the year and said it expects second half profit to exceed the first half.
For the half year ended June 30 Cookson posted a pre-tax profit of £92.5m compared to a loss of £89.7m the year before. Revenue increased to £1.23bn from £929m previously. |
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INTERIMS
4imprint Group, Allied Irish Banks, Arbuthnot Banking Group, Bank Pekao GDS (Reg S), Cookson Group, GlobeOp Financial Services, Legal & General Group, Lloyds Banking Group, LSL Property Services, Premier Foods, Shire Plc, Standard Chartered, StatPro Group, Wolfson Microelectronics, Yamana Gold Inc
INTERIM EX-DIVIDEND DATE
BG Group, Bluehone AIM VCT 2, Dialight, Edinburgh UK Tracker Trust, Independent Inv Trust, Invesco English & International Trust, Maven Income and Growth VCT 3, Porvair, RAB Capital, Rank Group, Reckitt Benckiser Group, Reed Elsevier, St James's Place
QUARTERLY EX-DIVIDEND DATE
Quorum Oil and Gas Technology Fund Ltd., Royal Dutch Shell 'A', Royal Dutch Shell 'B'
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
MBA Mortgage Applications (US) (12:00)
PMI Composite (EU) (09:00)
PMI Services (EU) (09:00)
PMI Services (GER) (08:55)
Retail Sales (EU) (10:00)
Q2
Shire Plc, Wolfson Microelectronics, Yamana Gold Inc
GMS
Equity Partnership Income Shares, Octopus Phoenix VCT, Octopus Second AIM VCT
FINALS
Maxima Holdings
IMSS
Carpetright, Marston's
EGMS
Epic Securities ZDP Shares, Equity Partnership Income Shares, Octopus AIM VCT
AGMS
Gas Turbine Efficiency, Petro Matad, Strategic Natural Resources, Workplace Systems
TRADING ANNOUNCEMENTS
Next
UK ECONOMIC ANNOUNCEMENTS
BRC Shop Price Index (00:01)
Official Reserves (09:30)
PMI Composite (09:30)
PMI Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Ashley (Laura) Holding, Bond International Software, Homeserve, Octopus Protected VCT 1, Record, Vedanta Resources
FINAL EX-DIVIDEND DATE
Aberdeen New Dawn Inv Trust, Carclo, Clyde Process Solutions, Cohort, Creston, Latham (James), RPC Group, SABMiller, SSL International, Sutton Harbour
Q1
British Land Co |
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| | Forex Markets Reports |
US dollar slips further on Fed stimulus speculation
The US dollar gained little support from yesterday’s economic data as it broke below its 200 day moving average against a basket of currencies, and also hit six month lows against the yen after Japanese Finance Minister Noda appeared to appear remarkably relaxed about the yen’s recent rise.
Continued speculation about further Fed easing measures continues to dominate the market as economic data remains stubbornly weak and US treasury yields continue to fall.
Yesterday’s data was uninspiring to say the least with unexpected flat consumer spending and incomes in June; weak factory orders, down 1.2 per cent compared with forecasts for a fall of 0.5 per cent, and a further 2.6% drop in pending home sales all contributed to unease over the US economic outlook.
The dollar is unlikely to get much respite today either with economic data coming thick and fast, with a host of German PMI and euro zone economic data out today likely to be good, and further boost the euro.
In the UK more PMI data for July, this time from the services sector, is expected to come in relatively unchanged from June’s figure of 54.4, increasing to 54.5. The hope is that this data will live up to forecasts unlike yesterday’s data which disappointed slightly.
In the US the usual pre-cursor to Friday’s employment data is the ADP employment report for July which could well give early indications with respect to Friday’s number. Expectations are for a figure of 33k, up from June’s 13k number. This data is followed soon after by the ISM non-manufacturing composite data for July which is expected to show a small decline to 53.
All this data serves to make tomorrow’s European Central Bank and Bank of England rate meetings little more than a sideshow with both expected to leave monetary policy unchanged.
EURUSD – having overcome the 1.3125 38.2% Fibonacci level the single currency has pushed higher touching 1.3265 in the last 24 hours. This old resistance level should now act as a launch pad for a rise towards the 1.3510 area which is the 50% retracement level of the 1.5145/1.1880 down move.
There is also interim trend line support around 1.3055 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 – having broken successfully above 1.5865/70, the 61.8% retracement level of the down move from 1.6880 to the May lows at 1.4230, the pound should now be able to use this as support for a move towards the 3rd February highs at 1.6070 and even higher towards 1.6280.
The highs around 1.5970 should only be a temporary stop on the way to much higher levels as long as the 1.5520/50 support area and 50% level hold firm in the near term. Long term trend line support levels, remain around the 1.5360/70 area, from the June lows at 1.4350.
EURGBP – having broken below the 0.8315 neckline the euro stopped short of the 0.8245 61.8% retracement level of the up move from 0.8065 to the 0.8520 double top, bouncing from 0.8255. It is currently attempting to get back above the old neckline support around the 0.8315/20 level which has so far rebuffed the rebound. While this level caps the euro should head towards the 0.8245 level, and back towards the lows at 0.8070.
A break and close above 0.8315/20 re-targets 0.8410
USDJPY – another day and another new low at 85.33 for the US dollar as it slowly edges towards last years lows at 84.80. The support level around 86.25 is now behind us and should act as some resistance, while behind that there also selling interest around 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.
Current indifference by Japanese officials to current yen strength could be a precursor of some form of intervention, if words don’t succeed in weakening the yen. These intervention fears 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 edges lower
Stocks closed lower after economic data gave a mixed view of US economic activity. Across the markets, the Dow dropped 38 points to 10,636. Nasdaq fell 11 points to 2,283. The S&P 500 ended down 5 points at 1,120.
Factory orders dropped 1.2% in June, which was a much greater fall than expected. The May figure was revised to a 1.8% decline.
Personal income was unchanged in June, while consumer spending rose 0.1%, according to the Commerce Department. Pending-home sales for June decreased by 2.6%, which was better than the expected 5% decline.
The Fed appears unlikely to provide further stimulus this month while it waits to see if the economy continues to weaken.
On the corporate front, the car makers reported better US sales in July, which should help the seasonally adjusted annual sales rate rise close to 12m in the month.
General Motors reported that overall sales gained 5% from a year ago, a period that saw it emerge from insolvency Ford's sales also rose 5% as a 27% jump in light trucks was balanced by lower sales of both cars and SUVs.
Procter & Gamble posted a lower-than-expected quarterly profit of $2.19bn from $2.47bn last time, after the Pampers-maker spent more on innovation and marketing. Dow Chemical’s results were also disappointing.
Meanwhile, drugmaker Pfizer’s second quarter profit and revenue beat estimates, helped by products from its acquisition of Wyeth.
Cognizant Technology Solutions Corp is the biggest riser on Nasdaq and the S&P. The consultancy increased its full year earnings forecast after better than expected second quarter figures.
Kidney dialysis centres operator DaVita said it expects to earn at least $970m in operating income this year. Oil services provider Baker-Hughes is well down after reporting lower than expected second quarter earnings.
After hours, BP started trying to plug permanently the leaking Macondo well in the Gulf of Mexico with a static kill operation. |
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| | Wednesday newspaper round-up: Interest rates, Egg, BP |
Interest rates may have to rise far more sharply than households and markets expect as the Bank of England moves to head off inflation risks, the former deputy governor said yesterday, the Times reports.
Sir John Gieve told a City of London audience that solid economic growth could prompt the Bank to raise rates to between 2.5% and 3% in 2011 — above market expectations. Attending the same conference, Brian Coulton, an analyst at the credit rating agency Fitch, said that the risk of inflation now trumps that of deflation and that the Bank must make sure it does not get “behind the curve” in tackling rising prices.
Citigroup is preparing to sell Egg, its UK online banking business, as part of its plans to dispose of peripheral operations. The American banking group is thought to be planning to launch an auction for the business in the autumn with a view to selling Egg this year. Citi has made clear its intention to sell off non-core assets. The bank is under political pressure to repay the US government after it received tens of billions of dollars in taxpayer support during the financial crisis, the Telegraph reports.
Yields on short-term US Treasury debt have fallen to the lowest in history on mounting expectations of extra stimulus from the Federal Reserve. Two-year rates fell to 0.52% after a further batch of grim data hinted at a sharp slowdown in the second half of the year. Factory orders fell 1.2pc in June, while consumer spending fell flat, the Telegraph reports.
Supermarket giants face being named, shamed and fined if they bully their suppliers, under plans unveiled by the Government yesterday. The Groceries Code Adjudicator (GCA) will monitor the 10 UK grocers with turnover above £1bn – Tesco, Asda, Sainsbury's, Morrisons, Waitrose, Marks & Spencer, Aldi, Lidl, Iceland and the Co-operative Group – and will take action against any which, for example, exert unwarranted financial pressure on suppliers, make retrospective changes to contracts, or impose prohibitive payments on suppliers to have their products sold in stores, the Independent reports.
Lenders to Connaught have started selling their loans to the company, in a sign of their concern about the state of the embattled social housing maintenance group. Barclays, one of Connaught’s syndicate of banks, which is led by Royal Bank of Scotland, on Monday night sold its entire exposure of £19m ($30m) for about 37 per cent of face value, people with knowledge of the transaction said, the FT reports.
Controversial plans to build a string of huge wood-fired power stations to generate “green” electricity were dealt a blow yesterday after one of Britain’s biggest energy companies shelved a £2bn project to construct three plants, blaming continued uncertainty over government subsidies. Drax, operator of the coal-fired station near Selby in North Yorkshire that produces 7% of the country’s electricity, had been planning to construct the biomass stations at the nearby port of Immingham and on land adjacent to its existing station, the Times reports.
QinetiQ has announced a further 325 redundancies only a month after the defence research company shed 391 staff. The latest redundancies principally will affect the company’s test and evaluation centre at Boscombe Down, Wiltshire, which researches military aircraft capabilities for the Ministry of Defence. The remaining jobs will go at weapons evaluation ranges operated by the company for the MoD. The former state-owned Defence Evaluation and Research Agency has said that it needs to cut costs by about 10 per cent after issuing two profit warnings at the start of the year, the Times reports.
Lloyds Banking Group is set to spark fresh public anger today when it unveils profits of about £1 bn for the first half of the year.
Analysts believe that Britain’s biggest retail bank, which is 41% owned by taxpayers, has had a stronger-than-expected six months, benefiting from rapidly falling bad debts and the ability to charge much higher prices to customers, the Times reports.
BP faces penalties of more than $20bn (£12.5bn) for the Gulf of Mexico oil spill under the US Clean Water Act if the UK group is found liable for gross negligence, according to the latest estimates of the leak’s size. The new estimates of the spill’s impact came as BP started its “static kill” plan to plug the well earlier than had been expected because of positive results from tests, the FT reports.
BP’s new chief executive will arrive in Moscow today for the first time since a bitter row with the oil giant’s Russian joint venture partners forced him to flee the country in 2008. In an overnight visit aimed at repairing BP’s delicate relations in Russia — the source of 25 per cent of the company’s global oil and gas production — Bob Dudley is travelling with Tony Hayward, his predecessor, for talks with Igor Sechin, the Russian Deputy Prime Minister, as well as other business partners, the Times reports.
BP has been unexpectedly hit with a $10bn (£6.2bn) lawsuit related to an alleged leak of toxic chemicals at its Texas City refinery earlier this year, adding to its woes over the Gulf of Mexico oil spill. Tony Buzbee, a Texas lawyer also representing Gulf residents affected by the spill, on Tuesday filed the class action lawsuit on behalf of 2,000 claimants linked to an incident in April and May, the Telegraph reports. |
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