UK/Euro Financial Market Daily Morning Briefing 18-12-2013

London open: Markets edge higher despite taper uncertainty

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Wednesday December 18

INTERIMS
Darty

INTERIM EX-DIVIDEND DATE
Berkeley Group Holdings (The), First Property Group, Greene King, Halfords Group, JPMorgan Euro Small Co. Trust, Mitie Group, Octopus AIM VCT, Sweett Group, United Utilities Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
FOMC Interest Rate (US) (17:15)
Building Permits (US) (13:30)
Crude Oil Inventories (US) (15:30)
GFK Consumer Confidence (GER) (07:00)
Housing Starts (US) (13:30)
IFO Business Climate (GER) (09:00)
IFO Current Assessment (GER) (09:00)
IFO Expectations (GER) (09:00)
MBA Mortgage Applications (US) (12:00)

EGMS
One Delta

AGMS
Baronsmead VCT, Baronsmead VCT 2, City Natural Resources High Yield Trust, EpiStem Holdings, Henderson Far East Income Ltd., Henderson International Income Trust, Hunter Resources, Nanoco Group, One Delta, Standard Life Equity Income Trust, Starvest, Stellar Diamonds

TRADING ANNOUNCEMENTS
Bwin . party Digital Entertainment

UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Minutes (09:30)
CBI Distributive Trades Surveys (11:00)
Claimant Count Rate (09:30)
Unemployment Rate (09:30)

FINAL DIVIDEND PAYMENT DATE
Renewable Energy Generation Ltd.

FINAL EX-DIVIDEND DATE
Alternative Networks, Artemis VCT, Baring Emerging Europe, Carr's Milling Industries, Grainger, Marston's, OMG

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 rise before Fed's policy decision

- Fed unveils policy decision
- BoE releases minute
- UK employment figures out

FTSE 100: 0.37%
DAX: 0.57%
CAC 40: 0.36%
FTSE MIB: 0.41%
IBEX 35: 0.66%
Stoxx 600: 0.50%

European stocks advanced as investors prepared for the Federal Reserve to release its latest policy decision.

The US central bank may announce a reduction to its monthly $85bn bond-buying programme today when it wraps up its two-day meeting.

Economists remained mixed on the possibility, with some saying that below-par inflation will prevent the Fed from making a move this month.

Consumer price index (CPI) figures yesterday showed that the rate of core inflation held steady during November as it continues to undershoot the Fed's target.

Nevertheless, speaking to Bloomberg PIMCO Co-Chief Executive Mohammed El-Erian put the odds of a start to tapering at 60%. El-Erian also indicated that should the Fed decide to move tapering would be a part of a package of measures – including forward guidance – aimed at avoiding possibly undue ructions in markets.

Ahead of the Fed's announcement, the Bank of England releases the minutes of its own policy meeting earlier this month. The minutes should shed further light behind the central bank's decision to maintain interest rates at 0.5% and to leave its bond-buying programme unchanged at £375bn.

Also in the UK will be the release of the labour-market figures which are expected to show employers added 165,000 jobs in October, compared to 177,000 in September. The ILO unemployment rate is expected to remain unchanged at 7.6%.

Technip falls on margin warning

Technip shares tumbled after the French oilfield services company warned that it expects margins will fall next year.

TUI AG gained after the tour operator unexpectedly posted a full-year profit.

Elektrobit surged after the Finnish maker of software products for the automotive industry forecast operating profit of about €8m in 2013.

The euro climbed 0.03% to $1.3772.

Brent crude futures gained $0.074 to $108.520 per barrel, according to the ICE.

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US close: Stocks edge lower as investors await Fed

- Markets await outcome of Fed meeting
- US CPI unchanged in November
- Current account deficit narrowed in Q3
- PIMCO puts odds of Fed surprise at 60 per cent

Dow Jones: -0.06%
Nasdaq: -0.15%
S&P 500: -0.31%

US markets closed with small losses on Tuesday after a choppy session as traders waited nervously for the outcome of the Federal Reserve's policy meeting.

The meeting, which concludes on Wednesday afternoon, has been highly anticipated over recent months given heightened speculation that the Fed will begin to scale back its asset purchase programme in the face of an improving economy.

Expectations, however, remain finely balanced with some saying that below-par inflation will prevent the Fed from making a move this month. Consumer price index (CPI) figures released during the session showed that the rate of core inflation held steady during November as it continues to undershoot the Fed's target.

Nevertheless, speaking to Bloomberg PIMCO Co-Chief Executive Mohammed El-Erian put the odds of a start to tapering at 60%. El-Erian also indicated that should the Fed decide to move tapering would be a part of a package of measures – including forward guidance – aimed at avoiding possibly undue ructions in markets.

CPI holds steady

The consumer price index (CPI) held steady in November compared with the month before, according to the Department of Labour, surprising analysts who had expected a 0.1% rise. The core measure, which excludes volatile food and fuel prices, rose by 0.2%.

The annual rate of core inflation was unchanged at 1.7%. This was as expected and only just below the Fed's target of 2%. However, with the closely watched alternative personal consumption expenditure (PCE) measure continuing to run at around 1.1% (in October), core inflation is much lower than the Fed would like.

Nevertheless, Paul Dales, Senior US Economist at Capital Economics, said: "We're not convinced that the low rate of inflation in November will prevent the Fed from starting the taper at tomorrow's policy meeting, although the decision remains finely balanced."

In other economic data, the US current account deficit came in at $94.8bn in the third quarter, below the consensus estimate of $100.2bn. Meanwhile, the second-quarter deficit was revised down to $96.6bn from $98.9bn.

The National Association of Home Builders index of house-builder sentiment rose from 54 to 58 in December, ahead of the 55 reading expected.

Boeing flying high after share buyback

Boeing advanced after the plane-maker raised its quarterly dividend by 51% and authorised a $10bn share-repurchase plan.

Facebook rallied after The Wall Street Journal reported that the social-networking site will run its first video ads on December 19th.

Hewlett-Packard was making decent gains after analysts at JPMorgan Cazenove raised their rating on the stock to 'outperform'. The bank said that the challenges facing the tech group are "easing".

Despite the performance of Facebook and H-P, the tech-heavy Nasdaq was still being weighed down by losses from Microsoft and IBM.


S&P 500 - Risers
Frontier Communications Co. (FTR) $4.78 +8.64%
Campbell Soup Co. (CPB) $42.74 +4.32%
Williams Companies Inc. (WMB) $36.84 +4.27%
Seagate Technology Plc (STX) $52.95 +3.15%
Electronic Arts Inc. (EA) $22.75 +3.13%
Harman International Industries Inc. (HAR) $83.04 +2.93%
3M Co. (MMM) $131.39 +2.92%
Visa Inc. (V) $213.25 +2.65%
Netflix Inc. (NFLX) $374.87 +2.34%
Whole Foods Market Inc. (WFM) $57.31 +2.18%

S&P 500 - Fallers
Borg Warner Inc. (BWA) $55.39 -49.36%
Delta Airlines Inc. (DAL) $26.94 -3.51%
J.C. Penney Co. Inc. (JCP) $8.20 -3.30%
Noble Energy Inc. (NBL) $67.61 -2.58%
CareFusion Corp. (CFN) $38.49 -2.53%
Regeneron Pharmaceuticals Inc. (REGN) $261.88 -2.45%
Tesoro Corp. (TSO) $56.98 -2.38%
News Corp Class A (NWSA) $17.35 -2.36%
Iron Mountain Inc. (IRM) $28.87 -2.20%
Southwest Airlines Co. (LUV) $18.32 -2.19%

Dow Jones I.A - Risers
3M Co. (MMM) $131.39 +2.92%
Visa Inc. (V) $213.25 +2.65%
Cisco Systems Inc. (CSCO) $20.92 +1.16%
Boeing Co. (BA) $135.88 +0.86%
Intel Corp. (INTC) $24.66 +0.84%
E.I. du Pont de Nemours and Co. (DD) $61.18 +0.56%
Nike Inc. (NKE) $76.76 +0.42%
Walt Disney Co. (DIS) $70.66 +0.21%
General Electric Co. (GE) $27.03 +0.19%

Dow Jones I.A - Fallers
Verizon Communications Inc. (VZ) $47.56 -1.45%
JP Morgan Chase & Co. (JPM) $55.72 -1.29%
Chevron Corp. (CVX) $118.74 -1.23%
International Business Machines Corp. (IBM) $175.76 -1.18%
McDonald's Corp. (MCD) $94.38 -1.12%
Microsoft Corp. (MSFT) $36.52 -0.99%
Procter & Gamble Co. (PG) $80.91 -0.95%
AT&T Inc. (T) $33.85 -0.88%
United Technologies Corp. (UTX) $107.62 -0.84%
Johnson & Johnson (JNJ) $90.66 -0.78%

Nasdaq 100 - Risers
Avago Technologies Ltd. (AVGO) $53.58 +6.95%
Seagate Technology Plc (STX) $52.95 +3.15%
Tesla Motors Inc (TSLA) $152.46 +3.06%
Nuance Communications Inc. (NUAN) $14.58 +2.75%
Netflix Inc. (NFLX) $374.87 +2.34%
Whole Foods Market Inc. (WFM) $57.31 +2.18%
Western Digital Corp. (WDC) $83.40 +2.13%
Symantec Corp. (SYMC) $23.00 +2.00%
Activision Blizzard Inc. (ATVI) $17.07 +1.97%
Facebook Inc. (FB) $54.86 +1.95%

Nasdaq 100 - Fallers
Sirius XM Holdings Inc (SIRI) $3.41 -2.84%
Regeneron Pharmaceuticals Inc. (REGN) $261.88 -2.45%
Gilead Sciences Inc. (GILD) $70.08 -1.88%
Intuitive Surgical Inc. (ISRG) $355.93 -1.75%
Celgene Corp. (CELG) $160.79 -1.58%
Adobe Systems Inc. (ADBE) $57.67 -1.42%
Liberty Global plc Series A (LBTYA) $83.81 -1.34%
Citrix Systems Inc. (CTXS) $57.93 -1.33%
Staples Inc. (SPLS) $15.22 -1.23%
Priceline.Com Inc. (PCLN) $1,160.90 -1.14%

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Wednesday newspaper round-up: Lloyds, BP, Debenhams...

George Osborne will today receive a veiled rebuke from the National Audit Office for claiming that he sold a substantial stake in Lloyds Banking Group at a profit for taxpayers when the transaction crystallised a loss of at least 230m pounds. The September sale of a 3.2bn-pound stake was managed effectively and provided value for money, the NAO says in a report published today, but it nevertheless came at a loss for taxpayers — not the "profit" hailed by the Chancellor at the time. – The Times

Oil major BP has pulled off its second mega-deal in as many days after its consortium partners yesterday gave the green light to a $45bn (£28bn) plan to pump gas from the Caspian Sea into Europe. The European Union said that the deal to go ahead with stage two of the Shah Deniz project could provide up to 20% of the continent's energy needs. Commentators suggested that the project would help to wean Europe off its dependence on Russian gas. - Scotsman

Debenhams has imposed a 2.5% discount on goods from many of its suppliers, giving companies who produce own-label brands for the department store one day's notice of the changes. In a letter dated December 16th, Simon Herrick, the Chief Financial Officer, said that the company would pay 2.5% less than agreed into the accounts of suppliers on all outstanding payments. He said that the group would also appropriate a 2.5% contribution on orders that were placed but not yet delivered.- The Times

You win some, you lose some in the oil exploration business. BP said today its 2010 acquisition of Devon Energy's interests in the Gulf of Mexico, Brazil and Azerbaijan has led to both a significant find and a billion-dollar write-off. The write-off relates to the Pitanga exploration well in the Camamu-Almada basin of offshore Brazil, where no commercial quantities of oil or gas have been found. BP is writing off $230m for the cost of drilling the well and $850m - as a non-operating item - associated with the value allocated to the block it acquired from Devon and is now relinquishing. – Financial Times

House of Fraser, one of Britain's oldest retail chains, is in late-stage talks with a view to being bought by the family owned French department store Galeries Lafayette, it emerged last night. The retailer's board is understood to be keeping its options open. It may still proceed with a planned flotation on the London stock market early next year, with an expected value of £350m, if the French talks fail. – The Times

For the second time in three months, world markets are braced for the beginning of the end of history's greatest monetary experiment. The Federal Reserve's open market committee meets on Wednesday to decide whether to start to taper the $85bn it is spending each month on buying US bonds. The Fed sparked a day of global volatility in September when it decided against much expectation not to taper – billed in advance as "Septaper". Now, share prices are falling amid speculation the Fed will launch a "Dectaper" instead. - Financial Times

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