UK/Euro Financial Market Daily Morning Briefing 06-01-2014

London open: Markets flat ahead of busy week, PMIs in focus

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Europe open: Stocks mixed before batch of PMIs

- Investors watching Eurozone and US PMIs
- Analysts expect pick up in trading this week
- Chinese services PMI falls

FTSE 100: -0.02%
DAX: 0.01%
CAC 40: -0.06%
FTSE MIB: 0.53%
IBEX 35: 0.44%
Stoxx 600: -0.13%

European stocks were little changed as investors awaited a slate of data in the Eurozone and the US following a quiet week.

Analysts said this week could see a return to normal trading volumes with the majority of traders coming back from their Christmas vacations.

Kicking off the week is the release of the Eurozone purchasing managers' index (PMI) figures. The PMI Composite, which gauges manufacturing and services activity, is expected to come in at a reading of 52.1 in December, in line with the previous month. A reading above 50 signals expansion.

Also out this morning in the Eurozone is a report on investor confidence which is forecast to show the index increased to 9.3 in January from 8 last month.

German inflation data will be unveiled this afternoon with economists anticipating the consumer price index to rise 1.4% in December from 1.3% the prior month.

In the US later on, the Institute for Supply Management will report its manufacturing PMI Composite for December which is estimated to jump to 54.5 from 53.9 in November.

Separately, data may show factory orders in the US rose 1.7% in November compared to a 0.9% fall in October, according to the consensus forecast.

Any sign pointing to continued recovery in the world's biggest economy is likely to fuel speculation that the Federal Reserve may introduce a further scaling back of monetary stimulus at its meeting this month.

Last month the Federal Open Market Committee (FOMC) said it would start reducing monthly bond purchases to $75bn from $85bn.

"It really is going to be quite a chaotic week in the financial markets, particularly the latter half of the week, which will include the first batch of company earnings, the FOMC minutes from last month's meeting, Bank of England and European Central Bank rate decisions and the December US jobs report," Craig Erlam, Market Analyst at Alpari, pointed out this morning.

"There's still plenty to focus on in the first half of the week though, especially compared to the last couple of weeks, which were severely lacking in data, earnings and trading volumes."

In a disappointing start to the week, however, the Chinese HSBC services PMI for December dropped to 50.9 from 52.5 in November. While it was still above the 50 level that indicates expansion, analysts fear it could be an early warning sign that the world's second largest economy may struggle to maintain growth.

Sanofi, Centamin

Sanofi slumped after JPMorgan Chase & Co. lowered its recommendation on the drugmaker to 'neutral' from 'overweight', citing a possible weak earnings outlook in 2014.

Centamin advanced after its full-year production exceeded its forecast.

Marks and Spencer declined as investors predicted a poor earnings report for the retailer this week.

The euro rose 0.04% to $1.3594.

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US close: Stocks end mixed after Bernanke comments

- Bernanke delivers upbeat message on recovery
- Snow storm, vacations affect trading volumes
- New York ISM eases, vehicle sales fall

Dow Jones: 0.17%
Nasdaq: -0.27%
S&P 500: -0.03%

US stocks ended mixed on Friday on a low-volume day as investors digested comments from out-going Federal Reserve Chairman Ben Bernanke.

It was a choppy session on Wall Street, with the Dow Jones Industrial Average making slight gains and the Nasdaq and S&P 500 registering small losses by the close.

Volumes were said to be significantly lower than usual due to a severe snow storm that swept through the Northeast, with a state of emergency declared in New York and New Jersey. Analysts also pointed out that many market participants were still away on their Christmas holidays.

Nevertheless, those who were still trading were mostly focused on Bernanke during the session, as he delivered a prepared speech at the American Economic Association. Bernanke said that the US economy was poised for stronger growth in the short - term, as he defended the central bank's move to scale back stimulus last month.

Bernanke, who is due to end his eight-stint as Fed Chairman later this month, said: "The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation, bodes well for US economic growth in coming quarters."

In economic data on Friday, the Institute for Supply Management's index on business conditions in New York declined to 63.8 in December from 69.5 the month before.

Meanwhile, US vehicle sales totalled 15.3m last month, down from 16.3m in November and below the 16m expected by analysts.

Delta jumps after December traffic numbers

Airline stocks performed well despite a storm that grounded hundreds of flights across New York. Investors at Delta Air Lines shrugged off the weather to celebrate the company's announcement that passenger unit revenue grew by 10% year-on-year in December. Southwest Airlines also gained.

Tech giant Apple was providing a drag on the Nasdaq, extending losses after Wells Fargo downgraded the stock to 'market perform' form 'outperform' the day before.

A number of other broker ratings changes were also moving stocks on Friday, including Exelon Corp. which retreated as Bank of America downgraded the energy firm to 'underperform' from 'neutral'.

Sprint Corp. slid after Stifel Nicolaus & Co. downgraded the mobile phone operator to 'sell' from 'hold', while fibre-optics group Finisar Corp. rallied after Raymond James Financial raised its rating to 'strong buy' from 'outperform'.

FireEye jumped after buying Mandiant Corp. in a $1.05bn deal that consolidates the cyber security peers.


S&P 500 - Risers
Delta Airlines Inc. (DAL) $29.23 +5.52%
Garmin Ltd. (GRMN) $46.58 +3.58%
Southwest Airlines Co. (LUV) $19.42 +2.86%
Seagate Technology Plc (STX) $56.82 +2.54%
Tenet Healthcare Corp. (THC) $44.20 +2.50%
E*TRADE Financial Corp. (ETFC) $20.30 +2.47%
Hewlett-Packard Co. (HPQ) $28.34 +2.46%
Abercrombie & Fitch Co. (ANF) $32.79 +2.44%
Fossil Group Inc (FOSL) $121.22 +2.41%
Citigroup Inc. (C) $53.40 +2.16%

S&P 500 - Fallers
Peabody Energy Corp. (BTU) $18.78 -3.89%
Micron Technology Inc. (MU) $20.97 -3.19%
Cliffs Natural Resources Inc. (CLF) $25.05 -3.02%
Apple Inc. (AAPL) $540.98 -2.20%
Exelon Corp. (EXC) $26.62 -2.02%
Sears Holdings Corp. (SHLD) $46.13 -2.02%
Owens-Illinois Inc. (OI) $34.86 -1.89%
Intuitive Surgical Inc. (ISRG) $373.46 -1.65%
MeadWestvaco Corp. (MWV) $36.11 -1.58%
J.C. Penney Co. Inc. (JCP) $8.74 -1.58%

Dow Jones I.A - Risers
Johnson & Johnson (JNJ) $91.85 +0.90%
JP Morgan Chase & Co. (JPM) $58.66 +0.77%
Goldman Sachs Group Inc. (GS) $178.15 +0.71%
Unitedhealth Group Inc. (UNH) $75.10 +0.71%
Boeing Co. (BA) $137.62 +0.70%
International Business Machines Corp. (IBM) $186.64 +0.60%
Merck & Co. Inc. (MRK) $49.73 +0.48%
United Technologies Corp. (UTX) $112.90 +0.36%
American Express Co. (AXP) $89.74 +0.32%
3M Co. (MMM) $138.45 +0.23%

Dow Jones I.A - Fallers
Verizon Communications Inc. (VZ) $48.42 -1.18%
Microsoft Corp. (MSFT) $36.91 -0.67%
Coca-Cola Co. (KO) $40.46 -0.49%
AT&T Inc. (T) $34.80 -0.43%
Wal-Mart Stores Inc. (WMT) $78.65 -0.33%
Nike Inc. (NKE) $78.03 -0.27%
Exxon Mobil Corp. (XOM) $99.51 -0.24%
Walt Disney Co. (DIS) $76.11 -0.21%
Travelers Company Inc. (TRV) $89.16 -0.19%
Home Depot Inc. (HD) $81.89 -0.16%

Nasdaq 100 - Risers
Garmin Ltd. (GRMN) $46.58 +3.58%
Maxim Integrated Products Inc. (MXIM) $28.73 +3.12%
Seagate Technology Plc (STX) $56.82 +2.54%
Sirius XM Holdings Inc (SIRI) $3.57 +2.00%
Green Mountain Coffee Roasters Inc. (GMCR) $75.75 +1.50%
Yahoo! Inc. (YHOO) $40.12 +1.34%
Staples Inc. (SPLS) $15.79 +1.28%
Activision Blizzard Inc. (ATVI) $18.29 +1.22%
Monster Beverage Corp (MNST) $67.52 +1.11%
Automatic Data Processing Inc. (ADP) $80.73 +1.09%

Nasdaq 100 - Fallers
Micron Technology Inc. (MU) $20.97 -3.19%
Vimpelcom Ltd Ads (VIP) $12.40 -3.13%
Randgold Resources Ltd. Ads (GOLD) $63.41 -2.81%
Baidu Inc. (BIDU) $175.28 -2.62%
Apple Inc. (AAPL) $540.98 -2.20%
Intuitive Surgical Inc. (ISRG) $373.46 -1.65%
Illumina Inc. (ILMN) $108.61 -1.53%
Symantec Corp. (SYMC) $23.11 -1.49%
Whole Foods Market Inc. (WFM) $56.29 -1.37%
Alexion Pharmaceuticals Inc. (ALXN) $131.72 -1.29%

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Monday newspaper round-up: Retail sales, Land Securities, George Osborne...

Christmas failed to light up the high street, with figures today pointing to an "underwhelming" December for many retailers. Releasing its latest sales tracker, accountancy firm BDO said overall like-for-like sales among UK "mid-market" retailers were down 2.2 per cent year-on-year. Last minute present hunting saw non-fashion sales pick up in the final week of December, offsetting a weak start to the month, the report noted. - The Scotsman

Britain's largest property company is in talks to open a designer outlet centre at the O2 Arena in Greenwich in an attempt to rival the upmarket Bicester Village in Oxfordshire. Land Securities has signed a six-month exclusivity agreement with AEG Europe, one of the world's largest concert promoters and owner of the venue in southeast London, to negotiate options for jointly developing a luxury retail centre in an unused part of the former Millennium Dome. - The Times

George Osborne will on Monday warn that years of spending cuts lie ahead even as the Prime Minister seeks to reassure the grey vote that their pensions are safe in Conservative hands. The Chancellor will strike a sombre tone as he tries to persuade the electorate that Britain's recent economic recovery is not enough to overcome the woes of the past five years. This will be a "year of hard truths", the chancellor will say on a visit to the Midlands. - Financial Times

George Soros is worried about China, and we should take note. The hedge fund boss, who built his fortune betting on the world's money markets, is concerned that 20 years of rapid growth is about to run out of steam. Soros […] will be a prominent figure at the World Economic Forum in Davos later this month, when policymakers and business people debate how to foster global growth. - The Guardian

Brussels is set to ease financial reforms so that big European banks are not forced automatically to split lending operations from risky trading. In a draft European Commission proposal, seen by the Financial Times, the separation is no longer mandatory, would be less costly and restrictive than first envisaged and national supervisors are given wide discretion in applying the reforms. - Financial Times

Britain's manufacturers will enjoy faster growth than those in Germany or any other western European economy this year from rising demand at home and abroad, according to a report. In its annual survey of companies, manufacturers' organisation EEF found 70% of firms forecast an improvement in the economy in 2014, while just 5% thought conditions would deteriorate. The balance of 65% compares with the sombre outlook at the same time last year when the reading was just 7%. - The Guardian

The Chairman of Albemarle & Bond, brought back full time to rescue the debt-plagued pawnbroker in April last year, has been given a £100,000 bonus, despite a failed rights issue and the departure before Christmas of a potential buyer. Greville Nicholls was made Chief Executive of Albemarle in 1995 and oversaw its admission to the Alternative Investment Market, as well as rapid expansion. - The Times

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