UK/Euro Financial Market Daily Morning Briefing 10-01-2014

London open: Tullow leads gains ahead of US jobs report

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Europe open: Stocks rise ahead of US non-farm payrolls

- US non-farm payrolls in focus
- Fed meeting looms
- UK manufacturing and construction data out

FTSE 100: 0.50%
DAX: 0.60%
CAC 40: 0.69%
FTSE MIB: 0.62%
IBEX 35: 0.77%
Stoxx 600: 0.54%

European stocks advanced as investors awaited a report on US non-farm payrolls and the jobless rate on Friday ahead of this month's Federal Reserve policy meeting.

The US is expected to have added 195,000 jobs in December, compared to 203,000 in November, according to the consensus forecast. The unemployment rate is expected to hold at 7% in December.

The data comes as the Fed weighs whether to announce a further scaling back of monetary stimulus after last month announcing it would reduce bond purchases by $10bn to $75bn.

The central bank also said it would gradually introduce further tapering provided economic data pointed to ongoing improvement in the economy and labour market.

Today's jobs data will help the Fed decide if the US has continued to improve enough to cut back on quantitative easing when it meets next on January 29th to 30th.

"We need to see a figure above 200,000 for markets to feel comfortable that the Fed made the right call," said Ishaq Siddiqi, Market Strategist at ETX Capital.

"If however, the reading is disappointingly poor, many will start to scrutinise the Fed's actions and would look to Yellen to beef up forward guidance if the Fed still wants to maintain its credibility."

Yesterday's data showed initial jobless claims fell to 330,000 in the week to January 4th from 345,000 a week earlier, smashing expectations for 335,000.

On Wednesday, APD jobs data also beat forecasts with employers adding 238,000 jobs in December, compared to 229,000 in November and the consensus estimate of 200,000.

Turning to the UK's agenda this morning is the release of industrial and manufacturing data. Industrial output may have risen by 2.8% year-on-year in November from an increase of 3.2% in October, economists predict. Manufacturing output is tipped to jump by 3.2% in November, up from a 2.7% climb the month before.

Metro, Norsk

Metro rallied following reports Franz Haniel & Cie. which owns 30% of the German retailer, may ask Metro to sell its Real, Kaufhof or Media-Saturn units.

Oslo-based supplier of aluminium Norsk Hydro slumped after peer Alcoa posted earnings that missed analysts' estimates.

Swatch advanced after the biggest maker of Swiss watches reported 2013 gross sales that beat expectations.

The euro was unchanged at $1.3608.

Brent crude futures climbed $0.644 to $107.080 per barrel, according to the ICE.

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US close: Stocks flat as investors await jobs report

- Focus on Fed ahead of jobs report
- Jobless claims fall more than expected
- Retailers in focus: Macy's, Bed Bath & Beyond, JC Penney, Costco

Dow Jones: -0.11%
Nasdaq: -0.23%
S&P 500: 0.03%

It was a choppy session for US markets on Thursday with stocks swinging between gains and losses to finish broadly flat as investors showed caution ahead of the all-important December jobs report due out the following session.

Figures from ADP released Wednesday showed that the American economy added significantly more jobs than expected in December, suggesting that there could be some upside risk to the official jobs figures due out on Friday.

The consensus of analysts expect the Bureau of Labor Statistics data to reveal a 195,000 increase in non-farm payrolls in December, down slightly from the 203,000 gain the month before. The unemployment rate is estimated to remain at 7%.

However, Market Strategist Ishaq Siddiqi from ETX Capital said: "We need to see a figure above 200k for markets to feel comfortable that the Fed made the right call. If however, the reading is disappointingly poor, many will start to scrutinise the Fed's actions and would look to [incoming Chair Janet] Yellen to beef up forward guidance if the Fed still wants to maintain its credibility."

The US Labour Department revealed on Thursday that initial weekly jobless claims dropped by 15,000 to 330,000 from an upwardly revised 345,000 in the month before.

Claims declined by more than expected with economists having pencilled in a figure of around 335,000. However, analysts warned that data could have been distorted by the holidays, which should be kept in mind ahead of Friday's monthly labour-market figures.

"Claims have been volatile in the past few months, averaging 327k in November and then 360k in December, but we expect them to continue to grind lower in the coming months as the labour market continues to improve," said analyst Cooper Howes from Barclays.

Retailers in focus

The share price of department store Macy's after the company announced jobs cuts and store closures that aim to save $100m per annum. The retailer also forecast a profit for the full year that smashed analysts' expectations.

In contrast, houseware chain Bed Bath & Beyond plummeted after weaker-than-expected third-quarter earnings and guidance for the full year.

JC Penney was bouncing back after heavy falls the day before. Broker Piper Jaffray upped its view on the shares to 'overweight'.

Wholesale retailer Costco finished with decent gains after same-store sales rose by 3% in December, helped by 5% growth domestically. Analysts had expected growth of just 1.8%.

Other retailers such as Dollar General and Wal-Mart also finished higher.

Ford performed well after raising its quarterly dividend by 25% as it attempted to reassure investors following its warning of weaker profits in 2014.

Drug distributor McKesson gained strongly on reports that it has increased its offer to acquire European peer Celesio.


S&P 500 - Risers
Macy's Inc. (M) $55.80 +7.64%
Delta Airlines Inc. (DAL) $31.06 +4.23%
Costco Wholesale Corp. (COST) $118.51 +3.91%
Aetna Inc. (AET) $71.72 +3.73%
J.C. Penney Co. Inc. (JCP) $7.64 +3.66%
McKesson Corp. (MCK) $175.33 +3.25%
Dollar General Corp (DG) $61.54 +3.08%
Bristol-Myers Squibb (BMY) $55.03 +3.01%
Walgreen Co. (WAG) $61.14 +3.00%
Harman International Industries Inc. (HAR) $85.87 +2.95%

S&P 500 - Fallers
Bed Bath & Beyond Inc. (BBBY) $69.75 -12.46%
Cliffs Natural Resources Inc. (CLF) $22.96 -6.51%
JDS Uniphase Corp. (JDSU) $12.41 -5.70%
United States Steel Corp. (X) $28.30 -4.39%
L Brands Inc (LB) $57.75 -4.05%
Nvidia Corp. (NVDA) $15.75 -3.73%
Cabot Oil & Gas Corp. (COG) $37.44 -3.38%
Sears Holdings Corp. (SHLD) $42.57 -3.18%
Staples Inc. (SPLS) $15.14 -3.01%
Monsanto Co. (MON) $111.89 -2.90%

Dow Jones I.A - Risers
E.I. du Pont de Nemours and Co. (DD) $63.94 +1.28%
Boeing Co. (BA) $142.13 +0.93%
Caterpillar Inc. (CAT) $89.71 +0.64%
Unitedhealth Group Inc. (UNH) $76.08 +0.61%
Johnson & Johnson (JNJ) $94.73 +0.61%
Wal-Mart Stores Inc. (WMT) $78.09 +0.33%
Procter & Gamble Co. (PG) $80.42 +0.22%
Travelers Company Inc. (TRV) $87.68 +0.11%
United Technologies Corp. (UTX) $113.71 +0.05%
McDonald's Corp. (MCD) $95.46 +0.05%

Dow Jones I.A - Fallers
Verizon Communications Inc. (VZ) $47.50 -2.06%
AT&T Inc. (T) $33.54 -2.04%
Exxon Mobil Corp. (XOM) $99.76 -0.97%
Cisco Systems Inc. (CSCO) $22.09 -0.91%
Microsoft Corp. (MSFT) $35.53 -0.64%
American Express Co. (AXP) $88.88 -0.59%
Goldman Sachs Group Inc. (GS) $177.40 -0.58%
Merck & Co. Inc. (MRK) $49.52 -0.54%
Coca-Cola Co. (KO) $39.73 -0.53%
Intel Corp. (INTC) $25.31 -0.47%

Nasdaq 100 - Risers
Costco Wholesale Corp. (COST) $118.51 +3.91%
Amgen Inc. (AMGN) $118.89 +2.60%
Akamai Technologies Inc. (AKAM) $47.62 +2.01%
Catamaran Corp (CTRX) $49.63 +1.99%
Express Scripts Holding Co (ESRX) $72.38 +1.90%
DIRECTV (DTV) $70.51 +1.78%
Autodesk Inc. (ADSK) $51.08 +1.67%
Intuitive Surgical Inc. (ISRG) $386.82 +1.67%
Mondelez International Inc. (MDLZ) $35.36 +1.55%
Fastenal Co. (FAST) $46.59 +1.55%

Nasdaq 100 - Fallers
Bed Bath & Beyond Inc. (BBBY) $69.75 -12.46%
Nvidia Corp. (NVDA) $15.75 -3.73%
Baidu Inc. (BIDU) $175.52 -3.45%
Randgold Resources Ltd. Ads (GOLD) $59.29 -3.20%
Staples Inc. (SPLS) $15.14 -3.01%
Seagate Technology Plc (STX) $58.01 -2.72%
Micron Technology Inc. (MU) $23.24 -2.64%
Twenty-First Century Fox Inc Class A (FOXA) $33.50 -2.59%
Dish Network Corp. (DISH) $56.48 -2.55%
Tesla Motors Inc (TSLA) $147.53 -2.48%

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Friday newspaper round-up: China, Apple, CPP...

China became the world's biggest trader in goods for the first time last year, overtaking the US for all of 2013 and finishing the year with record trade figures in December. Coming fast on the heels of China taking over as the world's largest oil importer, the shift is another milestone as the country takes its place among the world's most powerful nations. Trade with the rest of Asia and increasing flows with the Middle East represent a shift in power away from the US, still the world's largest economy. - Financial Times

Customers of Apple spent more than $10bn in the technology empire's App Store last year as they stocked up on games, maps and tools for their smartphones and tablets. The Silicon Valley corporation revealed that $1bn was spent in the store last month alone. Last year, Apple said, developers of applications that were not made in-house received $7bn, which accounts for nearly half of the $15bn paid to app makers since the App Store opened in 2008. - The Times

Seven million people who were mis-sold identity theft insurance will receive compensation following a successful vote on whether the payouts were fair. An average of £200 will be paid to customers of CPP, who were sold useless insurance that protected their credit and debit card. - The Telegraph

Kate Swann could soon be back at the helm of a public company after it emerged that SSP is considering a £2bn stock market flotation alongside a possible trade sale. An exit by EQT Partners, the catering group's private equity owner, would be expected to crystallise a big windfall for the former WH Smith chief executive, who took the helm in September. - The Times

Soaring regional tensions around the East China Sea are taking their toll on trade, with as many as 60% of China's corporate leaders unwilling to do business with Japanese firms, according to a new poll. Only 13% of Chinese businessmen said that they were able to separate their work from the current political tensions, while 60% of corporate leaders in South Korea also voiced concern at conducting business with Japanese companies. - The Telegraph

Chinese imports of crude oil grew by the least in almost a decade in 2013, new government data show, posing a challenge to exporters from the Middle East to Africa who are competing to sell more oil into the world's second-largest economy. - Financial Times

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