UK/Euro Financial Market Daily Morning Briefing 16-12-2013

London open: FTSE 100 holds at two-month low ahead of Fed

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Have you heard of the stock market phenomenon called the Santa Rally? The FTSE 100 has risen in 18 of the last 20 Decembers*. Download your free report showing a breaking down of what the average rise has been for the stocks within the FTSE over the month of December.  Losses can exceed deposits. * Past performance is no guarantee of the future

Europe open: Stocks mixed ahead of Eurozone PMI, Fed meeting

- Eurozone PMI to be released
- Chinese manufacturing eases
- Investors eye Fed policy meeting

FTSE 100: -0.02%
DAX: 0.17%
CAC 40: 0.07%
FTSE MIB: 0.38%
IBEX 35: 0.57%
Stoxx 600: 0.13%

European stocks were mixed ahead of the release of Eurozone purchasing managers' index (PMI) data and the US Federal Reserve's policy meeting this week.

Eurozone PMI reports for manufacturing and services for December will be released this morning. Services PMI is expected to rise to 51.5 from 51.2 in November while manufacturing is tipped to increase to 51.9 from 51.6. A reading above 50 signals expansion.

Last night PMI for Chinese manufacturing was also unveiled, falling to 50.5 from 50.8 in November, missing the 50.9 estimate.

Later on in the US will be figures on industrial and manufacturing production and US existing home sales.

Any indication of a further pick-up in the US economy may fuel speculation that the Fed will announce a scaling back of its monthly $85bn bond buying programme at its December 17th to 18th policy meeting.

Also increasing the likelihood of a tapering was news last week that a bipartisan US budget was passed by the House of Representatives at a wide margin (332 to 94). The deal eases the fiscal uncertainty that has weighed on markets in recent months and is expected to sail through the Senate next week.

It would end three years of spending battles that brought the government to near-collapse.

"This week's Fed meeting is likely to seriously weigh on risk appetite in the early stages of the week, as investors become increasingly concerned about a reduction in asset purchases, that could bring to an abrupt end the daily record highs being recorded in US indices," said Alpari analyst Craig Erlam.

"The data over the last couple of months has certainly justified a small taper, it's just a case now of whether Chairman Ben Bernanke will want to risk rocking the boat at his final meeting in charge or wait to see another month of positive economic readings and leave the decision to his successor Janet Yellen."

Sprint Corp, Carrefour

Sprint Corp. gained following reports the telecom company would take over rival T-Mobile US.

Carrefour rallied after agreeing to buy a portfolio of 127 shopping malls in France, Spain and Italy from real estate group Klepierre for €2bn.

Aggreko edged higher after saying it expects full-year results to be slightly higher than previous expectations.

The euro rose 0.09% to $1.3754.

Brent crude increased $0.485 to $109.360 per barrel on the ICE.

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US close: Taper fears keep markets flat despite budget deal

- Taper fears ramp up ahead of Fed meeting
- House passes budget deal at wide margin
- US markets register worst week since August
- Adobe surges after subscription figures

Dow Jones: 0.10%
Nasdaq: 0.06%
S&P 500: -0.01%

US stocks finished Friday more or less flat after a poor showing over the past few days as investors chose to sit on their hands ahead of a busy week for financial markets next week.

The Dow Jones Industrial Average ended just 0.10% higher at 15,755.36, the Nasdaq rose 0.06% to 4,000.98, while the S&P 500 slipped 0.01% to 1,775.32.

This ended the biggest weekly decline for the Dow and S&P 500 since August, with the latter index continuing to pull back from its all-time closing high of 1,808.37 reached on December 9th.

This comes ahead of the highly-anticipated Federal Open Market Committee (FOMC) policy meeting on December 17-18th as speculation continues to ramp up surrounding an impending tapering of stimulus by the central bank.

This tentative mood comes after a bipartisan US budget was passed by the House of Representatives the previous night at a wide margin (332 to 94), easing the fiscal uncertainty that has weighed on markets in recent months. The deal is expected to sail through the Senate next week, putting an end to three years of spending battles that brought the government to near-collapse.

While some believe that the new budget deal will prompt the Fed to begin scaling back its quantitative easing programme at this month's meeting, analysts at Barclays said their "base case view remains a Q1 14 taper (most likely in March)".

They said: "Although there has been cumulative progress made in labour markets since fall 2013, we believe many on the FOMC require more evidence that the rate of growth is accelerating and inflation is firming before slowing the pace of purchases.

"That said, we see the decision as a relatively close call. It will have become even harder to argue that significant downside risks exist for the US economy, especially after this week's budget deal."

There will be a barrage of economic data out next week for investors to digest, though the schedule for Friday was a little light. Nevertheless, figures released during the session showed that US producer prices fell by 0.1% month-on-month in November, as expected by the consensus, due to a 0.7% decline in gasoline prices.

Tech stocks in focus: Adobe, Qualcomm, Google

Adobe Systems jumped after it added more subscribers in the fourth quarter than analysts had estimated. Markets were shrugging off the guidance for estimated adjusted earnings per share 22-28 cents this quarter, below the current consensus forecast of 34 cents.

Steve Mollenkopf has been named as the new Chief Executive Officer (CEO) at wireless technology group Qualcomm, though the stock ended flat after erasing earlier gains. Software firm Microsoft was lower on the news given that Mollenkopf had been rumoured to take over from Steven Ballmer as its Chief Executive when he steps down.

Google swung into the red after a small rise after the opening bell as investors digested speculation that is considering designing its own server processors. The news pushed Intel lower on competition fears.

Shares in oil explorer Anadarko Petroleum tumbled following a negative legal sentence related to its 2005 spin-off of Tronox.

Other oil stocks were also trading in the red as West Texas Intermediate futures fell as much as 1.3% as data showed that stockpiles rose strongly last week.

Texas Industries surged after Bloomberg reported that the building materials company is thinking about a sale.


S&P 500 - Risers
Adobe Systems Inc. (ADBE) $60.89 +12.78%
Electronic Arts Inc. (EA) $22.22 +5.96%
Autodesk Inc. (ADSK) $47.74 +4.90%
Akamai Technologies Inc. (AKAM) $45.72 +4.48%
Teradata Corp. (TDC) $40.99 +3.72%
GameStop Corp. (GME) $47.29 +3.68%
International Paper Co. (IP) $47.83 +3.57%
QEP Resources Inc (QEP) $30.69 +3.51%
Vulcan Materials Co. (VMC) $56.13 +3.16%
United States Steel Corp. (X) $27.31 +3.02%

S&P 500 - Fallers
Anadarko Petroleum Corp. (APC) $78.30 -6.42%
Sears Holdings Corp. (SHLD) $45.36 -2.68%
Western Union Co. (WU) $16.37 -2.33%
Abercrombie & Fitch Co. (ANF) $31.92 -1.94%
Kohls Corp. (KSS) $54.08 -1.62%
Eastman Chemical Co. (EMN) $72.67 -1.61%
Regeneron Pharmaceuticals Inc. (REGN) $269.59 -1.61%
ConAgra Foods Inc. (CAG) $31.67 -1.49%
FirstEnergy Corp. (FE) $31.71 -1.49%
Intuitive Surgical Inc. (ISRG) $362.94 -1.46%

Dow Jones I.A - Risers
Visa Inc. (V) $207.36 +1.93%
General Electric Co. (GE) $26.84 +1.13%
Boeing Co. (BA) $133.83 +0.65%
Home Depot Inc. (HD) $79.01 +0.61%
Caterpillar Inc. (CAT) $86.05 +0.56%
E.I. du Pont de Nemours and Co. (DD) $60.24 +0.48%
American Express Co. (AXP) $83.68 +0.46%
McDonald's Corp. (MCD) $94.44 +0.36%
Nike Inc. (NKE) $76.40 +0.22%
Johnson & Johnson (JNJ) $91.35 +0.21%

Dow Jones I.A - Fallers
Microsoft Corp. (MSFT) $36.69 -1.42%
Cisco Systems Inc. (CSCO) $20.24 -1.32%
Chevron Corp. (CVX) $119.90 -0.90%
Intel Corp. (INTC) $24.29 -0.74%
United Technologies Corp. (UTX) $107.35 -0.68%
Verizon Communications Inc. (VZ) $47.84 -0.60%
Wal-Mart Stores Inc. (WMT) $78.08 -0.54%
International Business Machines Corp. (IBM) $172.80 -0.33%
JP Morgan Chase & Co. (JPM) $56.17 -0.25%
Travelers Company Inc. (TRV) $86.49 -0.16%

Nasdaq 100 - Risers
Adobe Systems Inc. (ADBE) $60.89 +12.78%
Autodesk Inc. (ADSK) $47.74 +4.90%
Akamai Technologies Inc. (AKAM) $45.72 +4.48%
Catamaran Corp (CTRX) $45.48 +3.36%
Facebook Inc. (FB) $53.32 +2.87%
Micron Technology Inc. (MU) $23.08 +2.40%
Green Mountain Coffee Roasters Inc. (GMCR) $72.66 +1.94%
Sirius XM Holdings Inc (SIRI) $3.53 +1.73%
Gilead Sciences Inc. (GILD) $71.40 +1.61%
Ross Stores Inc. (ROST) $71.74 +1.59%

Nasdaq 100 - Fallers
Sears Holdings Corp. (SHLD) $45.36 -2.68%
Vodafone Group Plc ADS (VOD) $36.80 -1.74%
Regeneron Pharmaceuticals Inc. (REGN) $269.59 -1.61%
Intuitive Surgical Inc. (ISRG) $362.94 -1.46%
Microsoft Corp. (MSFT) $36.69 -1.42%
Cisco Systems Inc. (CSCO) $20.24 -1.32%
CH Robinson Worldwide Inc (CHRW) $56.40 -1.28%
Netflix Inc. (NFLX) $368.97 -1.17%
Garmin Ltd. (GRMN) $46.58 -1.15%
Texas Instruments Inc (TXN) $41.95 -1.11%

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Monday newspaper round-up: RSA, Borrowing limit, Small businesses

The chairman of RSA is to hold urgent talks with rating agencies this week in a bid to avert a downgrade that could further erode the scandal-hit insurer's financial stability. Martin Scicluna is fighting to preserve RSA's crucial A credit rating after the group, one of Britain's largest insurers and owner of the More Than brand in the UK, revealed last week that losses in its Irish business were greater than previously thought. The accounting scandal has prompted some investors to call on the board to consider a possible sale of the entire group. - Financial Times

Republicans are gearing up for a new fight with President Barack Obama over the need to lift America's borrowing limit early next year, raising concerns that the fiscal truce established in last week's bipartisan budget deal may be shortlived. Paul Ryan, Republican chairman of the House budget committee, said his party planned to demand concessions from the White House in exchange for raising the country's debt ceiling. Republicans would meet in January to discuss the options. - Financial Times

Small businesses are growing increasingly optimistic about their prospects for new year as they seek to expand and develop, according to a new study. Confidence among small firms is growing across every region of the country, research by the Federation of Small Businesses (FSB) found. A third are already running at full capacity, while one in four expect to invest in 2014, the survey of more than 2,000 firms showed. - The Daily Mail

The parent company of the Press Association will sell its weather forecasting business for €190m to a private equity group. MeteoGroup, Europe's largest private sector weather business, provides bespoke services to corporate, industrial and media clients as well as consumers. It also has a portfolio of weather apps including WeatherPro, MeteoEarth and Magical Weather. - The Times

Homeowners thinking about a move should get going in the new year, according to an estate agent's website. Rightmove forecasts that average asking prices will rise by up to 8% in 2014 unless more properties come on to the market. According to Rightmove, first-time buyers should act in the first half of next year before prices rise significantly. Those looking to trade up should also consider a move before the trading-up price gap widens farther, it said. - The Times

Britain's high streets have suffered their biggest drop in shopper numbers for more than a year, according to a report that indicates a slow start to the festive retail season. The British Retail Consortium's latest numbers also showed a drop in footfall for out-of-town shops and for shopping centres, echoing sales data that has pointed to a tentative mood among Christmas shoppers. The BRC's figures, supplied by Springboard, revealed a 3.4% annual drop in footfall for high streets from September to November, the sharpest fall since August 2012. - The Guardian

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