UK/Euro Financial Market Daily Morning Briefing 04-12-2013

London open: FTSE creeps higher, driven by Sage Group

- FTSE edges higher
- Focus on Friday's US jobs report
- Sage races ahead

techMARK 2,652.09 +0.44%
FTSE 100 6,528.83 -0.06%
FTSE 250 15,158.24 +0.03%

The FTSE inched higher in early trading, as expected, ignoring declines in both the US and Asia as Sage Group drove the top tier index higher with a 7.5 per cent rise in its share price on the back of a divi raise and predicted revenue growth of six per cent for 2015.

However, gains were limited by a raft of stocks going ex-dividend, including the London Stock Exchange, National Grid, Severn Trent and Tate&Lyle, and the fact eyes remain firmly fixed on the US November jobs report due Friday, with investors wary that a stronger-than-expected increase in non-farm payrolls could prompt the Federal Reserve to begin scaling back stimulus at its next meeting on December 17-18th. These fears were renewed Monday after data showed that US manufacturing activity jumped to a two-and-a-half-year high last month.

Data wise, figures will today be released on the UK's official reserves, along with both the services and composite PMIs.

In other macro news, the government is set to later today unveil its two-year infrastructure spending plan, which is expected to include £375bn-worth of investment in energy, transport, communications, and water projects. The insurance sector is also widely predicted to be planning an investment of £25bn.

The government is also due to significantly alter its policy of renewable energy subsidising, according to the BBC, with plans to scale back its contributions to both onshire wind and solar energy, while increasing its support to offshore wind power. Overall spending is not expected to differ.

Sage Group races to the top of the leaderboard

Although Sage Group's annual pre-tax profit was broadly flat at £164.1m, this was a reflection of the cost of non-core disposals, with revenue for the period rising 4% to £1.26bn, driven by growth in premium support contract upselling and renewals, software subscriptions and payment services. The firm proposed a final ordinary dividend of 7.44p per share, bringing the total ordinary dividend to 11.32p per share, up 6% on the prior year.

Tesco shares were also higher despite the company posting a disappointing result for the third quarter. The supermarket chain said like-for-like sales in the period had fallen 1.5% due to a grocery market that had become more difficult since the summer due to pressure on consumer finances. The company's total UK sales lifted 0.9%. Group sales for the thirteen weeks ending November 23rd increased 0.6% at actual exchange rates and 0.2% at constant rates, excluding petrol. Including petrol, group sales decreased 0.8% at actual exchange rates and 1.2% at constant rates.

Randgold Resources ignored a declining gold price to rise strongly after Investec upgraded the stocks to 'buy' with a 5,095p target.

Meanwhile, Standard Chartered fell heavily after saying a "challenging year" has resulted in a "significant impact" on its performance in the second half and as such income for the full year is expected to be broadly flat on 2012.

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Wednesday December 04

INTERIMS
Greenko Group, International Greetings, MDM Engineering Group Ltd. (DI), Micro Focus International, Polar Capital Holdings, Science In Sport

INTERIM EX-DIVIDEND DATE
Alliance Pharma, Alpha Real Trust Ltd., Atkins (WS), Aukett Fitzroy Robinson Group, Brown (N.) Group, Cello Group, Cranswick, Creston, De La Rue, Dee Valley Group, Dee Valley Group (Non-Voting), Edge Performance VCT 'D' Shares, Electrocomponents, Establishment Inv Trust, European Residual Income Investments Cell, Fuller Smith & Turner, Headlam Group, Helical Bar, Hogg Robinson Group, Homeserve, Intermediate Capital Group, JD Sports Fashion, London Stock Exchange Group, LondonMetric Property, Majestic Wine, Management Consulting Group, National Grid, Norcros, PayPoint, Phoenix IT Group, Rensburg AIM VCT, SABMiller, Severn Trent, Shanks Group, Slingsby H.C, Tarsus Group, TR Property Inv Trust, UK Mail Group , Value and Income Trust, VP, Worldwide Healthcare Trust

QUARTERLY PAYMENT DATE
Blackrock North American Income Trust

QUARTERLY EX-DIVIDEND DATE
Bank of America Corp., F&C Commercial Property Trust Ltd., Land Securities Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (US) (13:30)
Beige Book Fed Survey (US) (19:00)
Crude Oil Inventories (US) (15:30)
GDP (1st release) (EU) (10:00)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
MBA Mortgage Applications (US) (12:00)
New Homes Sales (US) (15:00)
PMI Composite (EU) (09:00)
PMI Composite (GER) (08:55)
PMI Services (EU) (09:00)
PMI Services (GER) (08:55)
Retail Sales (EU) (10:00)

Q3
Tesco

GMS
Beacon Hill Resources, Bumi, Hibu, ViaLogy

FINALS
Brewin Dolphin Holdings, Numis Corporation

IMSS
Tesco

SPECIAL EX-DIVIDEND PAYMENT DATE
British Empire Securities & General Trust, Direct Line Insurance Group, Rights & Issues Inv Trust Capital Shares

EGMS
New World Resources A Shares

AGMS
AB Dynamics, ASOS, BlackRock Greater Europe Inv Trust, Churchill Mining, Conexion Media Group, Frontier IP Group, International Mining & Infrastructure Corporation, Renewable Energy Generation Ltd., Schroder Oriental Income Fund Ltd.

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
Jupiter Primadona Growth Trust, Regenersis

FINAL EX-DIVIDEND DATE
Aberdeen Asset Management, Associated British Foods, British Empire Securities & General Trust, Britvic, Clean Energy Brazil, CVS Group, Debenhams, Greencore Group, Inland Homes, Northamber, Pan African Resources, Town Centre Securities, YouGov

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Europe open: Stocks little changed before economic data

- Eurozone GDP released
- Euro-area and UK PMI services out
- Investors eye US data ahead of FOMC meeting

FTSE 100: 0.05%
DAX: 0.09%
CAC 40: 0.29%
FTSE MIB: 0.29%
IBEX 35: 0.15%
Stoxx 600: -0.01%

European stocks were little changed ahead of the release of a batch of economic data including Eurozone GDP figures.

Eurozone GDP is forecast to rise by 0.1% in the third quarter when the report is released today. It comes a day before the European Central Bank's (ECB) policy meeting.

The ECB is tomorrow expected to keep interest rates unchanged at 0.25% following last month's surprise cut due to deflation risks.

While the central bank is likely to hold off on any fresh policy action, new staff forecasts will be in focus for signs of extended price weakness.

ECB President Mario Draghi said the Eurozone "may experience a prolonged period of low inflation" and that the central bank was ready to consider using all available policy tools.

Inflation is running at 0.9%, far below the ECB's target of just under, but close to, 2%.

Also acting as a backdrop to tomorrow's policy meeting is the release of PMI services data today in the euro-area.

Eurozone PMI services will remain unchanged at 50.9 in November, according to economists' estimates. The UK services PMI is anticipated to fall slightly to 62 last month from 62.5 in October.

Later in the US, the attention will turn to US data including MBA mortgage applications, the ADP payrolls numbers, trade balance figures and new home sales.

Investors are watching economic data closely to gauge the health of the world's biggest economy ahead of the Federal Reserve's next policy meeting on December 17th to 18th when the US central bank may announce a scaling back of monetary stimulus.

The Fed has suggested it could start tapering its monthly $85bn bond buying programme as soon as this month's meeting, prompting some economists to reconsider their initial forecasts of a March 2014 start.

Tesco rises after Q3 results

Tesco's shares climbed after the supermarket reported third quarter sales that matched analysts' expectations.

Elekta declined after the maker of radiation-surgery equipment reported second-quarter operating profit that missed forecasts.

Sage Group topped the FTSE 100 in early morning trading after saying it expects to see revenue growth of 6% by 2015.

The euro fell 0.07% to $1.3578.

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US close: Markets drop on tapering concerns

- Dow Jones drops below 16,000
- Risk appetite weakens on tapering concerns
- Investors look ahead to Friday's jobs report

Dow Jones: -0.59%
Nasdaq: -0.20%
S&P 500: -0.33%

US markets slipped on Tuesday with the Dow Jones Industrial Average finishing below 16,000 for the first time in two weeks on the back of uncertainty regarding the US Federal Reserve´s monetary policy.

Stocks were falling for the third straight day, starting December on a weak note despite it being the start of seasonally strong month for equities.

Widespread reports about a decision by a judge in Michigan on a bankruptcy case was also said to be weighing on markets. The judge ruled that Detroit is eligible to continue with the case, which had been held up when several union and retiree groups opposed the bankruptcy on the basis that negotiations were not held in good faith over plans to make reductions to pension plans.

Analysts were quoted as saying the decision sparked fears the ruling may set a new precedent for other towns and cities to do the same.

Despite such distractions, eyes remained firmly fixed on the US November jobs report due Friday, with investors wary that a stronger-than-expected increase in non-farm payrolls could prompt the Fed to begin scaling back stimulus at its next meeting on December 17-18th. These fears were renewed on Monday after data showed that US manufacturing activity jumped to a two-and-a-half-year high last month.

Consensus forecasts are pointing to a 183,000 increase in non-farm payrolls for November, below the 204,000 gain in October. The unemployment rate is expected to slip to 7.2% from 7.3%.

Getting back to yesterday, in what was otherwise a light day for macro data, November auto sales revealed a strong increase for the four-week period, although this failed to help push car manufacturers much higher.

Investors will now be looking ahead to Wednesday's session, when data will be released on the balance of trade, the Beige Book Fed survey, crude oil inventories, non-manufacturing ISM, services ISM, MBA mortgage applications and new home sales.

Apple gains after UBS upgrade

Tech giant Apple was limiting losses on the Nasdaq today with shares rising after an upgrade by UBS from 'neutral' to 'buy'. The bank raised its target for the stock from $540 to $650, saying that it "see[s] institutional money moving back into Apple in 2014".

Cyber Monday sales rose, sending online shopping toward a single-day record as Amazon.com Inc. and EBay Inc. enticed consumers from brick-and-mortar stores.

Auto giant Ford declined after saying that North American production would fall 1.8% in the first quarter of 2014 due to rising inventories. GM also declined despite data showing that nationwide vehicle sales recorded their best sales month in six and a half years in November.

Krispy Kreme declined after the doughnut maker reported third-quarter revenue that missed analysts' estimates.

Yum slumped despite a surprise gain in same-store sales in China last month as promotions lured diners to its fried-chicken chain.

KFC same-store sales in China gained in the first 10 days of the month, driven by a "Half Priced" bucket promotion. However, sales fell were down 8% in the last 20 days of November as the offer ended.


S&P 500 - Risers
Abercrombie & Fitch Co. (ANF) $35.99 +5.79%
ONEOK Inc. (OKE) $59.51 +3.91%
Akamai Technologies Inc. (AKAM) $45.65 +3.49%
AbbVie Inc (ABBV) $49.97 +3.27%
Williams Companies Inc. (WMB) $36.27 +3.10%
Monster Beverage Corp (MNST) $61.27 +2.96%
AES Corp. (AES) $14.88 +2.83%
Tyson Foods Inc. (TSN) $32.84 +2.75%
Apple Inc. (AAPL) $566.32 +2.74%
Micron Technology Inc. (MU) $21.83 +2.63%

S&P 500 - Fallers
Sears Holdings Corp. (SHLD) $55.55 -7.72%
Pitney Bowes Inc. (PBI) $22.38 -4.28%
Cablevision Systems Corp. (CVC) $16.16 -3.81%
Delta Airlines Inc. (DAL) $28.05 -3.28%
Dow Chemical Co. (DOW) $38.72 -3.15%
Regeneron Pharmaceuticals Inc. (REGN) $287.50 -3.10%
Goodyear Tire & Rubber Co. (GT) $21.43 -2.99%
Ford Motor Co. (F) $16.56 -2.93%
Gilead Sciences Inc. (GILD) $72.42 -2.82%
Yum! Brands Inc. (YUM) $75.61 -2.70%

Dow Jones I.A - Risers
Exxon Mobil Corp. (XOM) $94.39 +0.93%
Cisco Systems Inc. (CSCO) $21.26 +0.81%
Verizon Communications Inc. (VZ) $49.60 +0.69%
Coca-Cola Co. (KO) $40.35 +0.67%
Procter & Gamble Co. (PG) $83.83 +0.59%
Chevron Corp. (CVX) $122.52 +0.15%
Wal-Mart Stores Inc. (WMT) $81.21 +0.12%
Nike Inc. (NKE) $79.13 +0.05%
Travelers Company Inc. (TRV) $89.03 +0.03%

Dow Jones I.A - Fallers
E.I. du Pont de Nemours and Co. (DD) $60.50 -2.01%
Pfizer Inc. (PFE) $31.22 -1.92%
Visa Inc. (V) $201.75 -1.65%
Boeing Co. (BA) $132.00 -1.61%
Walt Disney Co. (DIS) $69.90 -1.42%
Home Depot Inc. (HD) $78.71 -1.33%
Goldman Sachs Group Inc. (GS) $168.05 -0.98%
3M Co. (MMM) $126.60 -0.85%
Merck & Co. Inc. (MRK) $49.76 -0.84%
American Express Co. (AXP) $84.61 -0.80%

Nasdaq 100 - Risers
Tesla Motors Inc (TSLA) $144.70 +16.53%
Akamai Technologies Inc. (AKAM) $45.65 +3.49%
Monster Beverage Corp (MNST) $61.27 +2.96%
Apple Inc. (AAPL) $566.32 +2.74%
Micron Technology Inc. (MU) $21.83 +2.63%
Analog Devices Inc. (ADI) $49.56 +2.40%
Linear Technology Corp. (LLTC) $43.20 +1.74%
Mondelez International Inc. (MDLZ) $33.90 +1.38%
eBay Inc. (EBAY) $51.93 +1.13%
Vimpelcom Ltd Ads (VIP) $12.36 +0.98%

Nasdaq 100 - Fallers
Sears Holdings Corp. (SHLD) $55.55 -7.72%
Regeneron Pharmaceuticals Inc. (REGN) $287.50 -3.10%
Gilead Sciences Inc. (GILD) $72.42 -2.82%
Mylan Inc. (MYL) $43.22 -2.55%
Randgold Resources Ltd. Ads (GOLD) $65.59 -2.53%
Charter Communications Inc. (CHTR) $129.31 -2.52%
Biogen Idec Inc. (BIIB) $287.76 -2.40%
Vertex Pharmaceuticals Inc. (VRTX) $67.66 -2.30%
Stericycle Inc. (SRCL) $115.95 -1.95%
Celgene Corp. (CELG) $159.93 -1.95%

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Wednesday newspaper round-up: Brussels, BP, GlaxoSmithKline

Brussels will unveil hefty fines as soon as Wednesday on global banks that allegedly formed cartels to rig two global interest rate benchmarks, in a settlement that is set to break European antitrust enforcement records. The latest crackdown on benchmark manipulation is expected to target up to 10 financial institutions. Some will admit wrongdoing while others will face formal charges alleging they colluded to fix Euribor, Yen Libor or both. The exact level of fines remains confidential, but the commission has warned some banks it is seeking combined fines of hundreds of millions of euros for those groups involved in both cartels. - Financial Times

The British government has defied Washington by backing BP's legal battle to overturn a ban on winning new federal contracts in America after the oil spill on Gulf of Mexico.The unexpected move — the first time that the UK government has directly intervened to support the British oil major since the Deepwater Horizon disaster in April 2010 — is a significant boost in the company's row with the US Environmental Protection Agency. BP is suing the EPA for debarring it from new government contracts, such as supplying fuel to the US military and new exploration licences, with the federal agency accusing the company of a "lack of business integrity". - The Times

David Cameron has risked angering the Chinese government by launching a robust defence of GlaxoSmithKline as the UK drug company steps up its battle to save its reputation in the country. GSK is facing prosecution from Chinese authorities over allegations of bribery, while dozens of its local employees and a UK man it used as a corporate investigator remain in detention. - Financial Times

Global Energy Group (GEG), the Inverness-based oil and gas services heavyweight, has made its fourth acquisition in Australia, cementing the country as its biggest market outside the UK. The firm is buying the Australian arm of Cunningham Construction from its New Zealand parent company, in a deal that eases GEG's entry into the mining sector, which it sees as a key growth market. - The Scotsman

The pay of workers in their 20s has tumbled by almost 12% since the peak of the recession, according to a leading thinktank. The Resolution Foundation said younger workers faced an almost unprecedented squeeze on both the wages and employment chances four years after the financial crash. The thinktank said analysis of official data showed younger workers had been "pummelled" more than any other age group. - The Guardian

Britain's world-leading technical expertise was highlighted yesterday as FTSE 100 engineer GKN sealed a deal with aircraft giant Boeing. GKN was selected by the US company to make advanced technology winglets, located at the tip of an aeroplane wing, for its new single-aisle 737 MAX aircraft – a revamped version of its iconic 737. The value of the deal was not disclosed. - Daily Express

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