UK/Euro Financial Market Daily Morning Briefing 06-12-2013

Housing, oil stocks help markets rebound from eight-week low

- Housing and oil stocks provide a lift
- Focus on Fed ahead of non-farm payrolls
- Berkeley jumps as strong housing demand boosts H1 results

techMARK 2,650.07 +0.07%
FTSE 100 6,518.46 +0.31%
FTSE 250 15,166.21 +0.06%

The FTSE 100 rebounded slightly on Friday from an eight-week low, as bargain hunters stepped in ahead to some key economic data out from the States this afternoon.

Strong gains in the housing and oil sectors were providing a lift in the UK this morning.

London's benchmark index closed Thursday's session at 6,498.33, its lowest level since October 11th. Stocks have fallen for five straight days on the back of heightened speculation that the Federal Reserve will soon begin to pare its asset purchase programme amid signs of a stronger economic recovery.

In particular, data released during yesterday's session showed a sharp drop in jobless claims, an upwards revision to third-quarter US economic growth and a less-than-expected decline in factory orders.

"In recent weeks we have seen a string of good economic data from the US which could suggest we are edging closer to Fed tapering," said Lee Mumford, Financial Sales Trader at Spreadex.

Meanwhile, comments from regional Fed bank presidents continue to be closely watched ahead of the central bank's policy meeting on December 17-18th. Dennis Lockhart of the Atlanta Fed said on Thursday that "consideration" of tapering should be "on the table" at the Fed's meeting later this month.

The remarks come ahead of the official jobs report this afternoon, which will likely be a key factor in the Fed's decision. The data is expected to reveal a 183,000 increase in non-farm payrolls for November, below the 204,000 gain in October, though the unemployment rate is forecast to fall from 7.3% to 7.2%.

Berkeley jumps after first-half results

Berkeley Group’s shares surged after reporting a 19.2% rise in first-half profits of £169.2m in the first half, driven by strong demand in the housing sector.

Others in the housing sector were also making gains this morning, including Persimmon, Bovis Homes, Redrow and Taylor Wimpey.

Oil stocks were also providing a lift today after HSBC reportedly raised its forecast for Brent oil prices for next year. Tullow, BP, BG and Shell were among the best performers. Shell was making headlines this morning after ditching plans to build a $20bn gas-to-liquids plant in the US, saying it was “not a viable option".

Telecoms group Vodafone rose after analysts at Berenberg upgraded their rating on the stock to 'buy' and lifted their target from 233p to 265p.

Pizza delivery group Domino’s fell sharply after announcing its Chief Executive Officer (CEO) Lance Batchelor is stepping down. Batchelor, who has been CEO since December 2011, is leaving to join an undisclosed private equity backed company in a non-competing sector.

Shire slumped after the Dublin-based drugmaker’s Lifitegrast, a treatment for dry eye disease, met one goal in a study for eye dryness and missed another for inferior corneal staining.

Sector peer AstraZeneca also fell despite saying that the European Commission has granted marketing authorisation to its nasally administered four-strain flu vaccine Fluenz Tetra.

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FTSE 100 - Risers
London Stock Exchange Group (LSE) 1,621.00p +2.47%
Persimmon (PSN) 1,180.00p +2.25%
Royal Dutch Shell 'B' (RDSB) 2,138.50p +2.03%
Petrofac Ltd. (PFC) 1,173.00p +1.82%
Morrison (Wm) Supermarkets (MRW) 262.00p +1.63%
Royal Dutch Shell 'A' (RDSA) 2,045.00p +1.56%
BG Group (BG.) 1,228.50p +1.36%
BT Group (BT.A) 368.50p +1.07%
Vodafone Group (VOD) 228.25p +0.97%
Tullow Oil (TLW) 893.50p +0.85%

FTSE 100 - Fallers
RSA Insurance Group (RSA) 101.40p -1.65%
Reckitt Benckiser Group (RB.) 4,773.00p -1.28%
Burberry Group (BRBY) 1,483.00p -1.20%
Shire Plc (SHP) 2,680.00p -1.00%
Standard Chartered (STAN) 1,313.00p -0.87%
Whitbread (WTB) 3,515.00p -0.87%
Glencore Xstrata (GLEN) 303.45p -0.70%
BAE Systems (BA.) 414.90p -0.67%
Aberdeen Asset Management (ADN) 459.30p -0.58%
International Consolidated Airlines Group SA (CDI) (IAG) 361.20p -0.50%

FTSE 250 - Risers
Berkeley Group Holdings (The) (BKG) 2,490.00p +9.11%
Rank Group (RNK) 139.90p +5.19%
Supergroup (SGP) 1,223.00p +3.47%
AL Noor Hospitals Group (ANH) 829.50p +2.79%
Taylor Wimpey (TW.) 108.70p +2.55%
Perform Group (PER) 408.70p +2.17%
Bellway (BWY) 1,423.00p +1.93%
Bovis Homes Group (BVS) 768.00p +1.86%
Crest Nicholson Holdings (CRST) 346.50p +1.79%
Pennon Group (PNN) 643.50p +1.50%

FTSE 250 - Fallers
Domino's Pizza Group (DOM) 481.20p -9.04%
Diploma (DPLM) 678.00p -2.16%
Computacenter (CCC) 632.50p -2.01%
Millennium & Copthorne Hotels (MLC) 561.00p -1.92%
Premier Farnell (PFL) 211.50p -1.77%
Alent (ALNT) 344.00p -1.71%
Carpetright (CPR) 521.50p -1.60%
Rathbone Brothers (RAT) 1,507.00p -1.57%
esure Group (ESUR) 243.70p -1.54%
Enterprise Inns (ETI) 139.70p -1.48%

INTERIMS
Berkeley Group Holdings

INTERIM DIVIDEND PAYMENT DATE
Amati VCT , Balfour Beatty, Elderstreet VCT, Grafenia , Journey Group, Laird, Marshalls, Maven Income & Growth VCT, Mission Marketing Group, Pace, SThree, Stobart Group Ltd., William Hill

QUARTERLY PAYMENT DATE
Boeing Co

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Credit (US) (20:00)
Factory Orders (GER) (11:00)
Non-Farm Payrolls (US) (13:30)
U. of Michigan Confidence (Prelim) (US) (15:00)
Unemployment Rate (US) (13:30)

SPECIAL DIVIDEND PAYMENT DATE
Aberdeen Asian Smaller Companies Inv Trust, Ludgate Environmental Fund Ltd.

EGMS
Datang International Power Generation Co Ltd., Investors In Global Real Estate Ltd

AGMS
Associated British Foods, Bezant Resources, Capital Lease Aviation, ISG, LP Hill, Northamber, Waterman Group

TRADING ANNOUNCEMENTS
SThree

FINAL DIVIDEND PAYMENT DATE
Aberdeen Asian Smaller Companies Inv Trust, Ashmore Group, British Sky Broadcasting Group, Centaur Media, Downing Absolute Income VCT 1, Downing Absolute Income VCT 1 'C' Shares , Fidelity Asian Values, Genus, James Halstead, JPMorgan Smaller Companies Inv Trust, Manchester & London Investment Trust, Matchtech Group

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Stocks mixed as traders wait on key US jobs report

- US non-farm payrolls report in focus
- UK inflation expectations released
- German factory orders out

FTSE 100: 0.26%
DAX: 0.59%
CAC 40: 0.33%
FTSE MIB: 0.03%
IBEX 35: -0.17%
Stoxx 600: 0.35%

European stocks were mixed before the release of a key US jobs report which may give some indication on the timing of the Federal Reserve’s stimulus reduction.

A report on US non-farm payrolls is expected to fall to 183,000 in November from 204,000 in October, according to consensus. The unemployment rate is tipped to fall to 7.2% from 7.3%.

“The markets are sure to go mental at 13:30, UK time, an hour before the opening bell in the US, with the release of the jobs report in the US,” said Alpari analyst Craig Erlam.

The Federal Reserve is turning to economic data, in particular on the labour market, in determining whether the US has recovered enough to start scaling back quantitative easing.

The central bank has indicated that a reduction of its monthly $85bn bond buying programme could come as soon as its next meeting on December 17th and 18th.

Also providing a measure for the health of the US economy, will be the release of the University of Michigan’s confidence figures. A flash reading of the consumer sentiment index is expected to rise to 76 in December from 75.1 in November.

On the other side of the Pond, UK consumer inflation expectations will be released along with German factory orders.

Berkeley gains after half-way results

Berkeley Group’s shares surged after reporting a 19.2% rise in first-half profits of £169.2m in the first half, driven by strong demand in the housing sector.

Total SA rallied after Europe’s third-biggest oil firm agreed to buy a stake in InterOil Corp.’s assets in Papua New Guinea.

Shire slumped after the Dublin-based drugmaker’s Lifitegrast, a treatment for dry eye disease, met one goal in a study for eye dryness and missed another for inferior corneal staining.

Givaudan SA declined as Nestle SA said it will sell shares worth $1.27bn of the world’s largest flavourings maker.

The euro fell 0.11% to $1.3652.

Brent crude futures advanced $0.252 to $111.260 per barrel, according to ICE data.

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Stocks fall as taper speculation ramps up

- Economic data comes in better than expected
- Jobless claims fall, US GDP revised up
- Lockhart says taper consideration should be 'on the table'

Dow Jones: -0.43%
Nasdaq: -0.12%
S&P 500: -0.44%

US stocks declined on Thursday with the Dow Jones Industrial Average falling for the fifth consecutive day on heightened speculation that the Federal Reserve will soon begin to pare its asset purchase programme amid signs of a stronger economic recovery.

This comes as data released during the session showed a sharp drop in jobless claims, an upwards revision to third-quarter US economic growth and a less-than-expected decline in factory orders.

Meanwhile, comments from two regional Fed bank presidents were in focus ahead of the central bank's policy meeting on December 17-18th.

Dennis Lockhart of the Atlanta Fed said that "consideration" of tapering should be "on the table" at the Fed's meeting later this month. He also called for "as much certainty as possible" about how a taper would be done.

Similarly, Dallas Fed's Richard Fisher called for a timetable for the tapering of quantitative easing, saying that the central bank should provide "a definite path as to when we reach zero" after it begins to wind down stimulus.

The remarks come ahead of the official jobs report on Friday afternoon, which will be a key factor in the Fed's decision. The data is expected to reveal a 183,000 increase in non-farm payrolls for November, below the 204,000 gain in October, though the unemployment rate is forecast to fall from 7.3% to 7.2%.

Economic data in focus ahead of Fed decision

Initial weekly jobless claims fell to 298,000 in the week ended November 30th, compared with a total of 321,000 the previous week and well below the consensus forecast for a reading 320,000.

However, the Labor Department did note that seasonal factors could have affected the data, such as the timing of the Thanksgiving holidays.

US gross domestic product growth expanded at an annual pace of 3.6% in the third quarter, the strongest growth registered in a year and a half. This was revised up from the initial 2.8% estimate and well ahead of the 2.5% expansion in the second quarter.

However, analysts were divided over the data given that the upwards revision was directly as a result of inventory accumulation during the period, which is now likely to be a drag on growth in the fourth quarter.

"This balance of growth – with very strong inventory accumulation but mediocre domestic demand growth - is unlikely to persuade policymakers that the economy is on a significantly firmer footing," said analyst Peter Newland from Barclays Research.

Meanwhile, factory orders declined by 0.9% in October, pulling back after a 1.8% gain in September, but better than the 1% fall expected by analysts.

Apple up on China Mobile hopes

Tech giant Apple was making gains today on reports that China Mobile could be offering the company's popular iPhones on its network.

Teen clothing retailer Aeropostale slumped after losses widened in the third quarter and the firm forecast a worse-than-expected loss for the all-important fourth quarter.

Discount chain Dollar General rose after lifting its earnings guidance for the full year, while grocer Safeway fell after Jana Partners trimmed its stake in the firm.

Sector peer JC Penney meanwhile dropped after reports that hedge fund management J Kyle Bass had reduced his stake in the firm.

Shopping mall operator General Growth Properties rose on the news that it will join the S&P 500 next week.


S&P 500 - Risers
Dollar General Corp (DG) $59.81 +6.10%
Cabot Oil & Gas Corp. (COG) $35.87 +4.21%
Range Resources Corp. (RRC) $79.40 +3.66%
Peabody Energy Corp. (BTU) $18.97 +3.60%
Goodyear Tire & Rubber Co. (GT) $21.99 +3.29%
EQT Corp. (EQT) $86.02 +2.99%
Jabil Circuit Inc. (JBL) $20.50 +2.86%
Celgene Corp. (CELG) $164.51 +2.77%
Juniper Networks Inc. (JNPR) $21.35 +2.45%
Intel Corp. (INTC) $24.26 +2.19%

S&P 500 - Fallers
J.C. Penney Co. Inc. (JCP) $8.85 -8.39%
Electronic Arts Inc. (EA) $21.01 -5.95%
Safeway Inc. (SWY) $32.64 -4.59%
Frontier Communications Co. (FTR) $4.43 -4.53%
Pitney Bowes Inc. (PBI) $21.55 -4.31%
Nabors Industries Ltd. (NBR) $16.13 -4.10%
AES Corp. (AES) $14.74 -3.72%
Kroger Co. (KR) $40.06 -3.52%
Hewlett-Packard Co. (HPQ) $27.25 -3.13%
Morgan Stanley (MS) $30.21 -2.96%

Dow Jones I.A - Risers
Intel Corp. (INTC) $24.26 +2.19%
Boeing Co. (BA) $132.73 +0.94%
Caterpillar Inc. (CAT) $84.41 +0.52%
Walt Disney Co. (DIS) $70.23 +0.37%
3M Co. (MMM) $126.83 +0.29%
International Business Machines Corp. (IBM) $176.08 +0.19%
Home Depot Inc. (HD) $78.54 +0.18%
Nike Inc. (NKE) $78.95 +0.16%
United Technologies Corp. (UTX) $109.05 +0.10%
American Express Co. (AXP) $84.54 +0.05%

Dow Jones I.A - Fallers
Microsoft Corp. (MSFT) $38.00 -2.41%
JP Morgan Chase & Co. (JPM) $55.82 -2.40%
Goldman Sachs Group Inc. (GS) $165.56 -1.86%
Cisco Systems Inc. (CSCO) $20.91 -1.60%
Coca-Cola Co. (KO) $39.83 -1.34%
Merck & Co. Inc. (MRK) $48.81 -1.01%
AT&T Inc. (T) $34.25 -1.01%
Wal-Mart Stores Inc. (WMT) $79.44 -0.97%
Verizon Communications Inc. (VZ) $48.91 -0.93%
Procter & Gamble Co. (PG) $82.69 -0.79%

Nasdaq 100 - Risers
Avago Technologies Ltd. (AVGO) $47.59 +6.94%
Equinix Inc. (EQIX) $167.43 +3.49%
Celgene Corp. (CELG) $164.51 +2.77%
Intel Corp. (INTC) $24.26 +2.19%
Wynn Resorts Ltd. (WYNN) $171.41 +2.16%
Yahoo! Inc. (YHOO) $38.87 +1.94%
NetApp Inc. (NTAP) $41.45 +1.92%
Staples Inc. (SPLS) $15.67 +1.75%
Broadcom Corp. (BRCM) $27.30 +1.60%
Garmin Ltd. (GRMN) $47.88 +1.53%

Nasdaq 100 - Fallers
Activision Blizzard Inc. (ATVI) $16.78 -2.72%
Vimpelcom Ltd Ads (VIP) $11.75 -2.57%
Randgold Resources Ltd. Ads (GOLD) $65.65 -2.55%
Microsoft Corp. (MSFT) $38.00 -2.41%
Citrix Systems Inc. (CTXS) $58.81 -1.98%
Sears Holdings Corp. (SHLD) $49.98 -1.85%
Paychex Inc. (PAYX) $42.68 -1.84%
Adobe Systems Inc. (ADBE) $55.04 -1.80%
Charter Communications Inc. (CHTR) $127.27 -1.67%
Costco Wholesale Corp. (COST) $120.95 -1.64%

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Mandela, Shell, M&S

Nelson Mandela, who led his country to democracy after serving 27 years in prison, has died aged 95. President Zuma of South Africa said in a televised address: “The founding father of our nation has departed. May his soul rest in peace. God bless Africa.” Mr Mandela, the anti-apartheid icon who became his country’s first black president, died peacefully in his home with his family at his bedside. - The Times

Royal Dutch Shell has dropped plans for a multibillion-dollar flagship plant in the US that would have converted natural gas into diesel and jet fuel, amid concerns over the costs of the $20bn-plus project. It said the gas-to-liquids plant was “not a viable option for Shell in North America”, citing the likely cost, “uncertainties on long-term oil and gas prices and differentials”, and the company’s strict capital discipline. - Financial Times

Marks & Spencer has dropped PwC as its book-keeper after a relationship spanning nearly 90 years as lawmakers in Europe continue to deliberate over a radical shake-up of the market for auditing elite companies. In a surprise move, Deloitte will become the first new auditor of the high street retailer since 1926. - The Times

House prices will rise by almost a fifth in the next four years, Treasury forecasters have said, adding to fears of a new housing bubble. The estimates from the Office for Budget Responsibility led to warnings that Britain is at risk of repeating the boom and bust that preceeded the last financial crisis. - The Telegraph

Lance Batchelor, the Chief Executive of pizza delivery chain Domino’s, is to leave the listed business next year after deciding to join a private-equity backed firm. The former head of Tesco Mobile joined the board of Domino’s as a non-executive director in July 2010 and took the helm two years ago. - The Scotsman

Qantas has had its credit rating downgraded to junk status, following the beleaguered airline’s decision to sack 1,000 workers amid heavy financial losses. Leading credit agency Standard & Poor’s has revised Qantas’s rating from BBB - outlook stable to BB + outlook negative, which is below the lowest investment grade. - The Guardian

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