UK/Euro Financial Market Daily Morning Briefing 13-03-2014

London open: Markets hold at one-month low as WM Morrison sinks

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Europe open: Stocks little changed after Chinese data

- Weak Chinese data fuels slowdown concerns
- Ukraine PM meets with White House
- ECB Monthly Report to be released
- US retail sales and jobless claims out

FTSE 100: -0.11%
DAX: 0.04%
CAC 40: -0.06%
FTSE MIB: 0.16%
IBEX 35: -0.20%
Stoxx 600: -0.04%

European stocks were little changed following the release of Chinese data which showed industrial output, investment and retail sales weakened in February.

Industrial output rose by 8.6% year-on-year last month, down from 9.7% in January, missing the forecast of 9.5%.

Fixed-asset investment climbed 17.9% in February, compared to 19.6% a month earlier and far short of analyst's expectations of 19.4%.

Retail sales gained 11.8% last month, slipping from the 13.1% increase in January. Economists had predicted a rise of 13.5%.

The reports add to poor data at the beginning of the week, fuelling concerns about a slowdown in the world's second largest economy.

"China's policymakers are unlikely to intervene just yet – comfortable with faltering growth as to them, it's a symptomatic of an evolving economy but it doesn't spell good news for China's neighbours in Asia who are all exposed heavily to the country's growth prospects," said Ishaq Siddiqi, Market Strategist at ETX Capital.

Meanwhile, the situation in Ukraine continued to escalate. Ukrainian Prime Minister Arseniy Yatsenyuk will meet with US leaders today in a last ditch effort to prevent Russian annexation of Crimea.

The US administration stepped up its criticism of Crimea's plans this weekend for a referendum on whether to leave the Ukraine and join Russia, saying it was not legal and would not be recognised by the international community.

"Given the lack of adequate preparation and the intimidating presence of Russian troops, it would also be a deeply flawed process which would have no moral force," the US said in a joint statement with the Group of Seven leaders today.

German Chancellor Angela Merkel has accused Russian President Vladimir Putin of stealing Crimea and said his actions are against "European values".

In a speech to members of her parliamentary party, she said a "certain amount of toughness" was needed in Europe's dealings with Russia, according to Der Spiegel magazine.

Turning back to today, the agenda will include the release of the European Central Bank's Monthly Report, US retail sales and US initial jobless claims.

Morrison, Deutsche Lufthansa

Morrison Supermarkets declined after the UK grocer reported a drop in annual profits and said it would sell £1bn in property over the next three years.

Deutsche Lufthansa gained as Europe's second-largest airline said it will pay a dividend of €0.45 a share.

Adecco dropped after its largest investor said it will sell about 16% in the provider of temporary workers.

The euro rose 0.35% to $1.3952.

Brent crude fell $0.065 to $107.950 per barrel, according to the ICE.

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US close: Stocks mixed but pull off lows

- Dow down, Nasdaq and S&P 500 gain
- Chinese growth concerns limit upside
- G7 warns Russia ahead of Crimea vote
- EPL Oil & Gas jumps on takeover offer

Dow Jones: -0.07%
Nasdaq: 0.38%
S&P 500: 0.03%

US stock markets finished in a mixed fashion on Wednesday after a choppy session as investors digested developments in the Ukraine crisis and concerns about economic growth in China.

Equities dropped sharply after the opening bell following losses on Asian and European indices – the STOXX Europe 600 Index fell 1.1% to close at its lowest level in a month.

However, after pulling off their lows by the end of trade, the Dow Jones Industrial Average finished down just 0.07%, while the S&P 500 edged 0.03% higher and the Nasdaq rose 0.38%.

Following figures earlier this week from China which revealed a surprise trade deficit in February as exports slumped, worries over credit conditions were ignited by reports of a possible second onshore debt default by another solar power firm in the country.

Investors were also caution ahead of data due Thursday which is likely to show that Chinese industrial output growth eased slightly last month.

Ukraine also continued to be a focal point for markets today as Prime Minister Arseniy Yatsenyuk met with US President Barack Obama in Washington. The meeting comes ahead of the looming Crimea referendum on March 16th on whether or not to split from Ukraine and join Russia.

G7 leaders released a statement today, calling on Russia to "immediately halt" efforts to annex Crimea given that it is a violation of the UN Charter. They threatened to "take further action, individually and collectively" if Russia supports the referendum vote.

In other news, US crude oil stockpiles rose by much more than expected in the week ended March 7th with inventories expanding by 6.18m barrels, according to the Energy Information Administration (EIA). The data, which marked the eighth consecutive weekly increase, surprised the consensus of analysts who were expecting inventories to rise by just 2m barrels.

The news caused West Texas Intermediate crude prices to fall as much as $1.82 to $98.21 a barrel, its lowest in over a month.

Oil, gold stocks gain

EPL Oil & Gas was a high riser after Energy XXI offer $1.53bn for the US focused offshore exploration and production outfit.

Other energy stocks performed well on Wednesday, with Tesoro, Marathon Petroleum and Valero Energy among the top risers on the S&P 500 by the close despite the fall in crude prices. Chevron and Exxon Mobil were also higher.

Meanwhile, Newmont Mining and Barrick Gold both finished with decent gains after the price of gold surged on the back of its safe-haven attractions as copper prices slumped.

Fashion retailer Express dropped sharply after the company admitted it has had an "extremely difficult" start to 2014 with falling in-store traffic leading to a decline in sales. The firm, which missed expectations with its fourth-quarter results, said that earnings would be between $1.03-1.23 a share this year, compared with the $1.59-a-share consensus forecast.

Fannie Mae and Freddie Mac were extending losses made yesterday after the government revealed plans to wind down the federally-controlled mortgage firms.


S&P 500 - Risers
Tesoro Corp. (TSO) $54.50 +4.07%
Marathon Petroleum (MPC) $94.50 +3.52%
Regeneron Pharmaceuticals Inc. (REGN) $339.75 +3.34%
Graham Holdings Co. (GHC) $730.79 +3.05%
Valero Energy Corp. (VLO) $55.29 +3.02%
Newmont Mining Corp. (NEM) $25.01 +2.71%
Cliffs Natural Resources Inc. (CLF) $18.41 +2.39%
Invesco Ltd. (IVZ) $35.58 +2.39%
Expedia Inc. (EXPE) $76.50 +2.35%
Whole Foods Market Inc. (WFM) $55.48 +2.23%

S&P 500 - Fallers
Progressive Corp. (PGR) $23.58 -3.83%
Adt Corp (ADT) $28.75 -3.30%
Diamond Offshore Drilling Inc. (DO) $46.38 -2.42%
Boston Scientific Corp. (BSX) $12.88 -2.28%
Transocean Ltd. (RIG) $40.79 -2.14%
Lorillard Inc. (LO) $51.13 -1.99%
Noble Corporation plc (NE) $30.36 -1.97%
Zoetis Inc (ZTS) $29.70 -1.92%
Tenet Healthcare Corp. (THC) $41.31 -1.90%
Frontier Communications Co. (FTR) $4.81 -1.84%

Dow Jones I.A - Risers
Chevron Corp. (CVX) $115.65 +1.00%
Cisco Inc. (CSCO) $21.82 +0.97%
Wal-Mart Stores Inc. (WMT) $75.52 +0.80%
E.I. du Pont de Nemours and Co. (DD) $66.43 +0.64%
Microsoft Corp. (MSFT) $38.26 +0.63%
AT&T Inc. (T) $32.38 +0.47%
Walt Disney Co. (DIS) $81.38 +0.41%
Procter & Gamble Co. (PG) $79.24 +0.37%
Nike Inc. (NKE) $78.97 +0.22%
Exxon Mobil Corp. (XOM) $94.21 +0.21%

Dow Jones I.A - Fallers
Pfizer Inc. (PFE) $31.98 -1.36%
Boeing Co. (BA) $124.43 -0.99%
Home Depot Inc. (HD) $80.56 -0.90%
Coca-Cola Co. (KO) $38.47 -0.85%
Verizon Communications Inc. (VZ) $46.36 -0.73%
General Electric Co. (GE) $25.76 -0.54%
Visa Inc. (V) $226.10 -0.48%
JP Morgan Chase & Co. (JPM) $57.92 -0.46%
American Express Co. (AXP) $92.90 -0.32%
International Machines Corp. (IBM) $186.22 -0.29%

Nasdaq 100 - Risers
Regeneron Pharmaceuticals Inc. (REGN) $339.75 +3.34%
Tesla Motors Inc (TSLA) $241.49 +3.02%
Activision Blizzard Inc. (ATVI) $20.60 +2.64%
Expedia Inc. (EXPE) $76.50 +2.35%
Keurig Green Mountain Inc (GMCR) $108.60 +2.23%
Whole Foods Market Inc. (WFM) $55.48 +2.23%
Applied Materials Inc. (AMAT) $19.51 +1.99%
KLA-Tencor Corp. (KLAC) $67.63 +1.90%
TripAdvisor Inc. (TRIP) $106.69 +1.87%
Avago Technologies Ltd. (AVGO) $63.18 +1.87%

Nasdaq 100 - Fallers
Mylan Inc. (MYL) $53.06 -1.72%
Cognizant Technology Solutions Corp. (CTSH) $51.59 -1.41%
Sirius XM Holdings Inc (SIRI) $3.39 -1.17%
Staples Inc. (SPLS) $11.50 -1.03%
Liberty Media Corporation - Class A (LMCA) $128.21 -1.00%
Autodesk Inc. (ADSK) $52.34 -0.89%
Dentsply International Inc. (XRAY) $45.79 -0.89%
Twenty-First Century Fox Inc Class A (FOXA) $32.69 -0.88%
CA Inc. (CA) $32.40 -0.77%
Verisk Analytics Inc. (VRSK) $63.29 -0.69%

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Thursday newspaper round-up: Tax rises, E.On, Copper

Britain and its governments face "crippling" tax rises and spending cuts in order to meet the needs of an ageing population. For too long people have in essence voted to give themselves benefits at the expense of future generations, said the Institute of Economic Affairs in a report. The IEA's Programme Director added there is a real danger of mass social breakdown or mass emigration of the country's most productive, The Daily Telegraph writes.

A 6.6% increase in consumer prices, cost reductions and a colder than average winter at the start of 2013 led to a 26% rise in profits at E.On's UK supply business last year. While the firm was one of the last to raise its prices the above improvement in profitability has led to some calls for it to now lower what it charges, The Times says.

Following the recent sharp slump in the price of copper there is talk in some quarters that China may be undergoing its own 'Lehman Brothers moment'. Making matters worse is the speed of recent events and, above all, a lack of reliable information regarding the size of copper inventories in Shanghai or the quantities of iron ore sitting at the country's ports. Nonetheless, economists seem sanguine regarding the economy's prospects, The Times writes.

The developer of the Candy Crush Saga may be valued at as much as £4.6bn when it floats on the New York Stock Exchange, far above the £3bn initially mooted by some. The company is looking to raise £319m and its Chief Executive Officer stands to make as much as £448m. Nonetheless, there are some worries that the mobile app maker – which is backed by UK private equity firms Index Ventures and Apax - could end up flopping, much as Zynga did, The Daily Express reports.

Spending in the UK on R&D spending dropped by 3% to £27bn in 2012, the equivalent of 1.72% of the country's gross domestic product (GDP) but below the 2.06% average for the whole of the European Union. It was also considerably less than the target of 2.5% of GDP set by the government for this year, The Guardian reports.

At the Retail Week Live conference on Wednesday Tesco's boss was adamant that he is not under pressure from his shareholders regarding his company's market share having dropped to a decade low. In that same vein, he insisted that the firm's performance is indeed improving although there is a lag between it being better and people talking about it, according to The Daily Telegraph.

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