UK/Euro Financial Market Daily Morning Briefing 09-12-2013

London open: Markets flat as investors digest mixed data from Asia

- Markets still digesting non-farm payrolls
- Chinese export growth picks up
- Japan Q3 GDP revised lower

techMARK 2,678.36 +0.29%
FTSE 100 6,553.51 +0.02%
FTSE 250 15,359.05 +0.27%

Markets opened more or less flat on Monday morning as investors continued to digest last week's strong US data, as well as mixed economic figures from Asia overnight.
 
Global indices gained strongly on Friday after the US jobs report on hopes that the economic recovery my be solid enough to warrant a reduction in stimulus by the Federal Reserve. The Fed's next policy meeting is on December 17-18th.

US non-farm payrolls increased by 203,000 in November, compared with a revised 200,000 gain the month before and well ahead of the consensus forecast for 185,000. Meanwhile, the unemployment rate fell to 7% from 7.3%, below the 7.2% rate estimated by analysts.

"In our view, this [positive] market reaction indicates that either the market still feels confident that these numbers are not strong enough to trigger an action from the Fed this month or market is already priced in for the taper and ready to fully buy in to 'tapering is not tightening'," said Barclays analyst Cagdas Aksu.

Nevertheless, he said that Barclays economists are "still sticks with their call of first tapering in March 2014".

Asian markets performed well overnight after the news that export growth in China accelerated strongly in November. The year-on-year increase in exports accelerated to 12.7% last month, from 5.6% in October and well ahead of the 7% growth expected by analysts.

As import growth slowed down to 5.3% from 7.6%, the country's trade surplus widened to a five-year high of $33.8bn, from $31.1bn previously and ahead of forecasts.

Figures also showed that Chinese consumer price inflation slowed to 3% in November, from 3.2% the month before and under the 3.1% rate forecast.

However, data from Japan showed that estimates for third-quarter gross domestic product (GDP) growth had been revised down sharply to an annualised rate of 1.1%.

This compares with the initial estimate of 1.9% in November and well below the 3.6% growth registered in the second quarter. The revision was mainly due to lower estimates of investment and higher inventories by companies.

Tullow drops after abandoning well

Oil group Tullow was among the worst performers this morning after saying it has plugged and abandoned its Tultule-1 wildcat well onshore Ethiopia as it failed to encounter oil.

Mining stocks were under the weather with Fresnillo, Randgold, Antofagasta, Rio Tinto, Anglo American and Glencore Xstrata all registering losses early on.

Meanwhile, financials were in demand with Aviva, Aberdeen, RBS, Standard Life and HSBC heading higher in the opening hour. HSBC was making headlines this morning on rumours that it is thinking about a flotation of its UK arm.

Even Lloyds was higher despite a downgrade by Beaufort Securities to 'hold'. The bank announced this morning that has sold a portfolio of UK corporate real estate loans as part of its continued non-core asset reduction programme.

Kentz gained strongly after offering $435m for the oilfield solutions business of US-based Valerus as it looks to expand its offering and increase its footprint in the Americas regions.

WPP rose after saying that it has acquired semantic advertising solutions group Crystal Semantics, strengthening its digital media and mobile advertising business.

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FTSE 100 - Risers
Petrofac Ltd. (PFC) 1,194.00p +3.65%
Royal Dutch Shell 'B' (RDSB) 2,157.00p +2.91%
London Stock Exchange Group (LSE) 1,626.00p +2.78%
Royal Dutch Shell 'A' (RDSA) 2,065.50p +2.58%
Persimmon (PSN) 1,183.00p +2.51%
Schroders (SDR) 2,444.00p +2.39%
Fresnillo (FRES) 757.00p +2.23%
Vodafone Group (VOD) 230.85p +2.12%
Smiths Group (SMIN) 1,371.00p +2.08%
Mondi (MNDI) 956.50p +1.86%

FTSE 100 - Fallers
Whitbread (WTB) 3,492.00p -1.52%
International Consolidated Airlines Group SA (CDI) (IAG) 357.60p -1.49%
Reckitt Benckiser Group (RB.) 4,772.00p -1.30%
Burberry Group (BRBY) 1,482.00p -1.27%
RSA Insurance Group (RSA) 101.80p -1.26%
Wolseley (WOS) 3,125.00p -0.95%
Centrica (CNA) 329.40p -0.90%
Marks & Spencer Group (MKS) 470.70p -0.76%
Kingfisher (KGF) 363.60p -0.66%
Next (NXT) 5,445.00p -0.46%

FTSE 250 - Risers
Berkeley Group Holdings (The) (BKG) 2,537.00p +11.17%
Centamin (DI) (CEY) 45.96p +7.89%
AL Noor Hospitals Group (ANH) 860.00p +6.57%
Perform Group (PER) 422.00p +5.50%
FirstGroup (FGP) 116.60p +4.95%
Murray International Trust (MYI) 1,040.00p +4.63%
Petra Diamonds Ltd.(DI) (PDL) 113.90p +4.50%
Polymetal International (POLY) 498.20p +4.38%
Atkins (WS) (ATK) 1,354.00p +4.31%
Xaar (XAR) 1,065.00p +4.21%

FTSE 250 - Fallers
Domino's Pizza Group (DOM) 480.00p -9.26%
Spirent Communications (SPT) 102.60p -3.30%
Debenhams (DEB) 87.70p -2.99%
Chemring Group (CHG) 200.60p -2.15%
Cairn Energy (CNE) 269.00p -1.75%
Halfords Group (HFD) 481.00p -1.58%
Carpetright (CPR) 522.00p -1.51%
Partnership Assurance Group (PA.) 303.00p -1.46%
Restaurant Group (RTN) 549.50p -1.35%
Oxford Instruments (OXIG) 1,500.00p -1.32%

INTERIMS
Anite

INTERIM DIVIDEND PAYMENT DATE
Nippon Telegraph & Telephone Corp., Rotala

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Current Account (GER) (07:00)
Harmonised Competitiveness Indicators (EU) (09:00)
Industrial Production (GER) (11:00)
Retail Price Index (GER) (07:00)

FINALS
Alternative Networks, APC Technology Group, Jelf Group, RWS Holdings, Treatt

ANNUAL REPORT
Smiths News

AGMS
Conroy Gold & Natural Resources, Gaming Realms, Karelian Diamond Resources

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Europe open: Sentiment amongst French manufacturers improves

- French manufacturing sentiment moves up a notch in November
- French central bank sees GDP at 0.5 per cent in quarter four
- Markets react well to Chinese trade numbers
- Singled currency edges higher

FTSE 100: 0.03%
DAX: 0.41%
CAC 40: -0.03%
FTSE MIB: 0.61%
IBEX 35: 0.73%
Stoxx 600: 0.13%

European stocks started the week on the front foot for the most part, as traders reacted positively to the latest Chinese trade numbers, out overnight.

Chinese exports increased at a 12.5% year-on-year clip last month, sending the country´s trade surplus to $33.8bn, its largest since January 2009.

Germany´s trade surplus, on the other hand, decreased in October to stand at €17.9bn, down from €20.3bn in the month before (consensus: €18.5bn).

The French central bank´s business sentiment indicator for the country´s manufacturing industry during the month of Novermber came in at 101, after a reading of 100 in October (consensus: 99.4).

From a sector stand point the best performance on the Stoxx 600 is to be seen in the following industrial groups: utilities (0.61%), technology (0.51%) and automobiles (0.48%).

Euro keeps strengthening against the dollar

The euro has risen overnight, and is now changing hands at 1.3730.

Brent crude futures slipped by $0.108 to $111.65 per barrel on the ICE.

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US close: Stocks surge as non-farm payrolls jump

- NFPs increase by 203k, jobless rate falls to 7.0 per cent
- Jobs report brings forward taper expectations
- Uni of Michigan confidence index jumps in December
- Intel shines after upgrade from Citigroup

Dow Jones: 1.25%
Nasdaq: 0.74%
S&P 500: 1.12%

After some steady declines earlier in the week, US markets surged on Friday after a better-than-expected November employment report.

The Dow Jones Industrial Average managed to rise 1.25% to finish back above 16,000 - a level not seen since Monday - snapping a five-day losing streak, on hopes that the economic recovery my be solid enough to warrant a reduction in stimulus by the Federal Reserve.

Non-farm payrolls increased by 203,000 in November, compared with a revised 200,000 gain the month before and well ahead of the consensus forecast for 185,000. Meanwhile, the unemployment rate fell to 7% from 7.3%, below the 7.2% rate estimated by analysts.

This follows data earlier in the week which showed a strong upwards revision to third-quarter economic growth and a sharp drop in jobless claims.

"I suppose a small beat was the perfect result for equities, indicating an improving jobs picture but not straying so high as to add excessive weight to the case for a December taper, a fine balance for bulls to push us higher into the weekend," said Toby Morris, Senior Sales Trader at CMC Markets.

However, PIMCO Co-Chief Executive Bill Gross has reportedly said he sees a 50% chance that the Fed will begin to taper it asset purchase programme at its next meeting on December 17-18th.

Whether the Fed decides to act this month or not, this week's strong data has unarguably brought forward expectations of a taper, with fewer analysts now expecting the central bank to wait until March to begin withdrawing stimulus.

In other economic news, personal spending increased at an 0.3% month-on-month clip during November, ahead of the 0.2% expected by economists. Personal incomes, on the other hand, dropped by 0.1% over the month, coming in well below the 0.3% expected.

The University of Michigan´s preliminary confidence index for the month of December rose to 82.5 from 75.1 the month before (consensus: 76).

Intel jumps after broker upgrade

Software giant Intel was on the up today after analyst Glen Young from Citigroup upgraded the stock from 'neutral 'to 'buy', saying that he's encouraged by stabilising corporate PC demand and that the company's current forecasts for PC sales next year are "sufficiently conservative".

Ulta Salon Cosmetics & Fragrance plummeted after saying that earnings totalled 70 cents in the third quarter, below the 74 cents consensus forecast. Meanwhile the beauty products retailer also predicted fourth-quarter profit of $1.07-1.10 a share, compared with the current estimate of $1.24.

Big Lots slumped after missing quarterly expectations and cutting its full-year guidance, while fellow retailer JC Penney fell sharply after confirming that the Securities and Exchange Commission has launched an inquiry into the company's finances.

Sears Holding gained after reporting that it is to spin off its clothing business, Lands' End.

Drugstore group Rite Aid jumped after saying that same-store sales gained more than expected last month.

From a sector standpoint, the largest gains seen in insurance (+2.6%) and recruitment (+2.5%), while stocks fell in the precious metals sector (-3%) and coal (-2%).

S&P 500 - Risers
Electronic Arts Inc. (EA) $22.24 +5.85%
Campbell Soup Co. (CPB) $42.43 +5.81%
Janus Capital Group Inc. (JNS) $11.09 +4.82%
Boston Scientific Corp. (BSX) $11.85 +4.50%
Marathon Petroleum Corporation (MPC) $87.20 +4.00%
Parker-Hannifin Corp. (PH) $121.10 +3.94%
Tesoro Corp. (TSO) $57.70 +3.76%
Legg Mason Inc. (LM) $39.90 +3.66%
Sealed Air Corp. (SEE) $32.52 +3.37%
O'Reilly Automotive Inc. (ORLY) $125.00 +3.34%

S&P 500 - Fallers
J.C. Penney Co. Inc. (JCP) $8.08 -8.70%
Newfield Exploration Co (NFX) $26.43 -4.45%
Pioneer Natural Resources Co. (PXD) $177.21 -3.92%
Sears Holdings Corp. (SHLD) $48.09 -3.78%
Eog Resources Inc. (EOG) $160.04 -3.23%
First Solar Inc. (FSLR) $58.01 -2.96%
Family Dollar Stores Inc. (FDO) $65.98 -2.40%
Nabors Industries Ltd. (NBR) $15.75 -2.36%
United States Steel Corp. (X) $26.33 -2.30%
Chesapeake Energy Corp. (CHK) $26.48 -2.11%

Dow Jones I.A - Risers
Intel Corp. (INTC) $24.82 +2.31%
Procter & Gamble Co. (PG) $84.52 +2.21%
E.I. du Pont de Nemours and Co. (DD) $61.34 +2.05%
United Technologies Corp. (UTX) $111.12 +1.90%
General Electric Co. (GE) $26.94 +1.85%
Boeing Co. (BA) $135.18 +1.85%
Cisco Systems Inc. (CSCO) $21.28 +1.77%
Walt Disney Co. (DIS) $71.46 +1.75%
Home Depot Inc. (HD) $79.84 +1.66%
American Express Co. (AXP) $85.93 +1.64%

Dow Jones I.A - Fallers

Nasdaq 100 - Risers
Verisk Analytics Inc. (VRSK) $67.33 +3.43%
O'Reilly Automotive Inc. (ORLY) $125.00 +3.34%
Seagate Technology Plc (STX) $51.42 +3.17%
Micron Technology Inc. (MU) $22.31 +3.05%
Microchip Technology Inc. (MCHP) $43.56 +2.91%
Green Mountain Coffee Roasters Inc. (GMCR) $71.30 +2.84%
Western Digital Corp. (WDC) $78.91 +2.77%
Alexion Pharmaceuticals Inc. (ALXN) $125.45 +2.68%
Fiserv Inc. (FISV) $111.16 +2.66%
Vimpelcom Ltd Ads (VIP) $12.06 +2.64%

Nasdaq 100 - Fallers
Sears Holdings Corp. (SHLD) $48.09 -3.78%
Tesla Motors Inc (TSLA) $137.36 -2.22%
Nvidia Corp. (NVDA) $15.47 -1.46%
Apple Inc. (AAPL) $560.02 -1.39%
Avago Technologies Ltd. (AVGO) $46.96 -1.32%
Equinix Inc. (EQIX) $165.48 -1.16%
Netflix Inc. (NFLX) $354.44 -1.01%
Facebook Inc. (FB) $47.94 -0.83%
CH Robinson Worldwide Inc (CHRW) $57.89 -0.65%
Fossil Group Inc (FOSL) $123.38 -0.55%

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Monday newspaper round-up: HSBC, Lloyds, Royal Mail...

HSBC has sounded out investors about a flotation of its UK arm, in a move that would realise value from its high street banking business and address regulatory pressures. The bank has in recent weeks asked investors whether they would support the sale of a sizeable stake in the UK business. It has also discussed the issue informally at board level, according to three people familiar with the project. If Stuart Gulliver, HSBC's chief executive, presses ahead with the plan, it will partially reverse the group's landmark acquisition of the UK's Midland Bank more than 20 years ago. - Financial Times

Lloyds Banking Group is preparing to kick-start the sell-off of De Vere Group in a move that could push total write-offs on the taxpayer-supported bank's backing of the hotel and leisure operator to almost £900 million. De Vere, which is close to agreeing a £230 million sale of its conference venues, is understood to be preparing to hire JP Morgan to advise it on options for selling off its hotels, which are worth an estimated £600 million. - The Times

Royal Mail is on course to join London's benchmark share index at this week's FTSE reshuffle after a controversial privatisation that has seen its shares soar by about 80 per cent. The group is favourite to enter the premier share league after Wednesday's review by the FTSE Group, which will mean its chief executive Moya Greene ­becomes part of a shrinking elite of women heading blue-chip companies. - The Scotsman

Formula E, the world's first electric single-seater motor racing series, is in talks with BT Sport and BSkyB about a UK television rights deal. Formula E is due to launch in September next year and its cars have a top speed of 150mph which is nearly as fast as those in Formula One. It has attracted ten teams including outfits run by Audi, former F1 champion Alain Prost and Richard Branson's Virgin Group which announced its entry on Thursday. - The Telegraph

Japan's economy slowed more sharply in the third quarter than official estimates had previously suggested, revised government data showed on Monday. The updated calculation of gross domestic product in the three months to September showed that economic output increased at an annualised rate of 1.1 per cent, compared with an initial estimate of 1.9 per cent announced in November. - Financial Times

Britain's unilateral carbon tax should be scrapped before it causes blackouts, pushes up household bills and makes the UK uncompetitive, ScottishPower argues. Keith Anderson, chief corporate officer, warns that the "carbon price floor" (CPF), which taxes companies for burning fossil fuels, will make Britain's remaining coal plants "largely uneconomic by around the middle of the decade". - The Telegraph

Bob Diamond, one of the most controversial bankers to emerge from the financial crisis and the man ousted as boss of Barclays after a direct intervention by the Bank of England, is making a dramatic return to the City with the launch of a new Africa banking business. The financier once dubbed the "unacceptable face of banking", is attempting to raise $250m (£153m) by floating a fund on the London Stock Exchange within the next two weeks – he plans to use the proceeds to buy a stake in an African bank with a presence in several countries across the continent. - The Guardian

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