UK/Euro Financial Market Daily Morning Briefing 23-01-2014

London open: Markets flat after mixed data from China, Europe

- Chinese manufacturing unexpectedly contracts
- PMI figures from Eurozone beat forecasts
- Raft of US data due out later on
- Pearson drops after gloomy update

techMARK 2,854.33 +0.22%
FTSE 100 6,830.94 +0.07%
FTSE 250 16,142.38 -0.03%

The FTSE 100 opened more or less flat on Thursday as investors showed caution after some mixed economic data from China and Europe this morning.

The Footsie, which has traded broadly sideways since for the past three days, was up just 0.1% at 6,831 early on.

The unofficial HSBC/Markit flash purchasing managers index (PMI) for Chinese manufacturing showed that the sector unexpectedly contracted in January. The PMI fell from 50.5 to 49.6 this month, disappointing analysts who had expected a smaller decline to 50.4.

"Chinese manufacturing has in-fact dropped to a six-month low, which represents a pretty poor start to 2014, adding weight to the theory that Chinese growth will continue to slow throughout the year," said Max Cohen, Financial Sales Trader from Spreadex.

In contrast, PMI figures from the Eurozone came in ahead of expectations with the manufacturing PMI for January rising from 52.7 to 53.9 and the services PMI rising from 51 to 51.9. This pushed the composite PMI up from 52.1 to 53.2, ahead of the 52.5 forecast.

After a reasonably quiet start to the week, Thursday's session looks to be relatively 'data-heavy' with a barrage of economic indicators due out in the US later on.

This include the release of American manufacturing figures, existing-home sales, jobless claims and the leading indicators index, with data being closely watched amid speculation that the Federal Reserve will continue to scale back its quantitative easing programme at its policy meeting next week.

Pearson drops after weaker-than-expected 2013

Publishing and education company Pearson sunk sharply this morning after admitting that its trading and financial performance for 2013 was "weaker than expected", particularly in North America. The Financial Times owner also gave a cautious outlook for 2014, saying that trading conditions were "still challenging" in the current quarter.

Budget airline easyJet also fell despite seeing a 3.4% jump in revenue per seat during the first quarter, as passengers carried rose 4.2%.

Supermarket stocks were under the weather this morning with Tesco, Sainsbury and Morrison all trading in the red early on.

Leading the upside was High Street giant M&S, banking group RBS and utility peers United Utilities and National Grid.

Pharmaceuticals group Shire gained after announcing the retirement of Non-Executive Chairman Matthew Emmens, who joined the company in 2003. Investors at insurance firm Aviva also welcomed the announcement of the resignation of its Chief Financial Officer Pat Regan.

Petra Diamonds was a heavy faller on the FTSE 250 despite a strong first-half trading update, as the share price pulled back sharply after a strong run in recent days. The company said it remains on track to hit its production guidance for the full year after a 31% jump in output during the first six months.

Intellectual property firm IP Group fell after saying that it would buy up the remaining 80% of Fusion IP that it does not already own for around £70m. The offer values Fusion IP shares at 80.2p, a 27% premium to yesterday's closing price, causing the AIM-listed stock to surge this morning.

A minimum volume is required. Terms and conditions apply. Find out more, click here.

FINALS

Chemring Group

TRADING ANNOUNCEMENTS

Barr (A.G.), Petra Diamonds Ltd. (DI)

IMSs

easyJet

AGMs

Keystone Investment Trust, Smiths News, Troy Income & Growth Trust

UK ECONOMIC ANNOUNCEMENTS

CBI Distributives trades survey (11:00)
Speech Paul Fisher (09:00)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

"Flash" HSBC manufacturing PMI (CH) (09:45)
“Flash” manufacturing PMI (EZ) (08:58)
Balance of Payments (EU) (09:00)
Bloomberg Consumer Confidence (US) (14:45)
Business Climate Indicator (EU) (10:00)
Continuing Claims (US) (13:30)
Crude Oil Inventories (US) (15:30)
Current account (EU) (09:00)
Existing home sales (US) (15:00)
FHFA House price index (US) (1500)
Initial weekly jobless claims (US) (13:30)
Leading indicators (US) (15:00)
Business confidence (BE) (14:00)

Cheaper fund investing has arrived at The Share Centre.
We don't believe it's fair to charge you extra just for holding funds.
So we don't. Find out more.
Capital at risk.

Click Here

Europe open: Stocks little changed after China and France PMIs

- Chinese factory PMI contracts
- French manufacturing rises
- Eurozone PMI and confidence figures out
- Slate of US data to be released

FTSE 100: 0.10%
DAX: -0.06%
CAC 40: 0.21%
FTSE MIB: 0.43%
IBEX 35: 0.46%
Stoxx 600: 0.06%

European stocks were mixed as investors weighed manufacturing data in France and China.

French manufacturing activity rose more than forecast in January. The purchasing managers' index (PMI) for the sector climbed to 48.8 from 47 in December, surprising analysts who had pencilled in a reading of 47.5. However, the figure remained under the 50 level that signals expansion.

In China, manufacturing unexpectedly contracted with the preliminary reading of HSBC's PMI for January falling for the first time since July to 49.5 from 50.5 a month earlier. Economists had estimated a reading of 50.5.

The report is likely to fuel fears of a deteriorating growth in the world's second largest economy as the government tries to curb high debt.

"Today's Markit/HSBC manufacturing PMIs suggest that the Chinese economy has again started to lose momentum," according to Danske Bank.

"In our view, the slowdown is largely a response to the de facto monetary tightening the People's Bank of China (PBoC) has been doing since mid-2013 and is largely driven by weaker investment demand.

"The decline is overall consistent with our view that China's growth was poised to slow in the first half of 2014 on the back of tighter monetary conditions but the larger-than-expected decline in January nonetheless suggests increasing downside risk."

Manufacturing PMIs for Germany and the Eurozone will also be released this morning. In the afternoon consumer confidence figures the Eurozone will be unveiled.

US data released as Fed meeting looms

Following a slow start to the week, the US will see a barrage of economic data later today including weekly jobless claims, PMIs and housing.

Markit's PMI preliminary reading for January is expected to rise to 55 from 54.4 in December.

Analysts predict another report on existing home sales will show a rise of 0.5% in December, compared to a fall of 4.3% a month earlier.

The reports come a week ahead of the Federal Reserve's next policy meeting.

Policymakers are closely watching economic data to gauge the health of the US economy in determining whether to announce a second round of monetary stimulus tapering.

The central bank last month started winding back monthly asset purchases by $10bn to $75bn.

Asos, easyJet

Asos declined after Goldman Sachs cut its rating of the online fashion retailer to 'neutral' from 'buy'.

easyJet's shares slumped after the European carrier reported a lacklustre first quarter, hit by winter storms and power outages at Gatwick airport.

Royal Bank of Scotland gained after the author of a report into the state-backed firm's lending to small businesses said he found no evidence into claims of putting struggling companies into default to boost profits.

Logitech advanced after the maker of computer accessories swung to a third quarter profit that beat analysts' estimates and raised its full-year guidance.

The euro rose 0.58% to $1.3626.

Brent crude futures fell $0.259 to $107.990 per barrel, according to the ICE.

Earn a tax free income trading, from just 20 minutes a day – no experience needed.  Our powerful trading software will help you decide when to enter trades and how to maximise profits.

Register for a FREE brochure and trading guide, Click Here. 

US close: Markets finish mixed as investors digest earnings

- IBM, AMD, Coach fall after earnings disappoint
- Markets await data-heavy session on Thursday
- Fed meeting comes into focus

Dow Jones: -0.25%
Nasdaq: 0.41%
S&P 500: 0.07%

US markets finished mixed on Wednesday after trading within a narrow range for most of the session, with investors digesting a barrage of earnings and showing caution ahead of economic data due out the following day.

The S&P 500 ended flat; the Nasdaq closed at levels not seen in over 10 years; while the Dow Jones Industrial Average slipped to finish firmly in the red.

With very little economic data due out, the focus was on a raft of quarterly results from a number of blue-chip companies, including International Business Machines (IBM) and Advanced Micro Devices (AMD) which both took a tumble after disappointing with earnings and outlooks.

Whilst also awaiting results from heavyweights eBay and Netflix due out after the close, US investors were looking ahead to a busy day macro-wise on Thursday with the release of American manufacturing figures, existing-home sales, jobless claims and the leading indicators index.

Data is being closely watched amid speculation that the Federal Reserve will continue to scale back its quantitative easing programme at its policy meeting next week.

The only major piece of economic data to be released during Wednesday's session showed that mortgage applications had risen by 4.7% in the week ended January 17th, compared with an 11.9% gain the week before.

IBM, AMD and Coach fall sharply

Tech giant IBM slumped over 3% after the computer-services provider posted a 5% drop in revenue in the fourth quarter to $27.7bn, missing the $28.25bn expected by the market. While earnings per share beat expectations by rising 14% to $6.13, the firm gave a cautious outlook for current-quarter profits.

IBM's senior executives including Chief Executive Ginni Rometty chose to give up their bonuses.

AMD saw its share price sink by 12% despite beating fourth-quarter profit estimates after it predicted that revenues in the first quarter of 2014 would fall by around 16%.

Luxury fashion group Coach Inc. sank 6% after reporting fiscal second-quarter earnings and revenues declined, missing analysts' forecasts, as weakness in US women's bag and accessories sales offset growth elsewhere.

Nuance Communications jumped after the provider of voice applications to corporate customers forecast first-quarter earnings that exceeded market expectations.

BlackBerry rallied as the struggling smartphone maker said it plans to sell most of its Canadian real estate to raise cash for its turnaround plan.



S&P 500 - Risers
TE Connectivity Ltd (TEL) $60.00 +6.57%
Best Buy Co. Inc. (BBY) $26.01 +6.29%
Textron Inc. (TXT) $38.00 +5.26%
Norfolk Southern Corp. (NSC) $92.94 +4.77%
Gen Dynamics Corp. (GD) $99.65 +4.56%
Amgen Inc. (AMGN) $124.37 +4.29%
Southwestern Energy Co. (SWN) $42.04 +4.24%
Rowan Companies plc (RDC) $33.66 +3.47%
Northern Trust Corp. (NTRS) $62.61 +3.30%
Anadarko Petroleum Corp. (APC) $83.72 +3.12%

S&P 500 - Fallers
Allegheny Technologies Inc. (ATI) $32.01 -6.35%
Coach Inc. (COH) $49.38 -6.03%
Motorola Solutions Inc (MSI) $64.51 -3.87%
Parker-Hannifin Corp. (PH) $122.42 -3.47%
International Business Machines Corp. (IBM) $182.25 -3.28%
FirstEnergy Corp. (FE) $31.13 -3.17%
Bemis Co. Inc. (BMS) $38.75 -3.00%
Abbott Laboratories (ABT) $38.07 -2.68%
Monsanto Co. (MON) $110.81 -2.37%

Dow Jones I.A - Risers
Boeing Co. (BA) $144.37 +1.91%
Walt Disney Co. (DIS) $75.31 +1.50%
United Technologies Corp. (UTX) $116.12 +0.98%
American Express Co. (AXP) $91.13 +0.60%
Visa Inc. (V) $232.99 +0.46%
Unitedhealth Group Inc. (UNH) $73.40 +0.33%
Johnson & Johnson (JNJ) $94.32 +0.31%
Goldman Sachs Group Inc. (GS) $173.68 +0.28%
Pfizer Inc. (PFE) $31.27 +0.13%
Chevron Corp. (CVX) $120.43 +0.06%

Dow Jones I.A - Fallers
International Business Machines Corp. (IBM) $182.25 -3.28%
Procter & Gamble Co. (PG) $79.23 -1.18%
General Electric Co. (GE) $25.99 -1.14%
E.I. du Pont de Nemours and Co. (DD) $63.02 -1.11%
Intel Corp. (INTC) $25.31 -1.09%
Caterpillar Inc. (CAT) $89.64 -1.06%
JP Morgan Chase & Co. (JPM) $57.59 -1.00%
Merck & Co. Inc. (MRK) $51.35 -0.93%
Verizon Communications Inc. (VZ) $47.33 -0.78%
AT&T Inc. (T) $33.34 -0.69%

Nasdaq 100 - Risers
Dish Network Corp. (DISH) $56.63 +4.62%
Amgen Inc. (AMGN) $124.37 +4.29%
Nxp Semiconductors Nv (NXPI) $47.85 +2.55%
Illumina Inc. (ILMN) $144.73 +2.50%
Micron Technology Inc. (MU) $23.65 +2.29%
Xilinx Inc. (XLNX) $48.62 +2.27%
Fiserv Inc. (FISV) $58.39 +2.24%
Viacom Inc. Class B (VIAB) $84.32 +2.14%
Cerner Corp. (CERN) $57.02 +1.97%
Broadcom Corp. (BRCM) $30.08 +1.97%

Nasdaq 100 - Fallers
Autodesk Inc. (ADSK) $52.37 -1.74%
Facebook Inc. (FB) $57.51 -1.69%
Ross Stores Inc. (ROST) $69.26 -1.65%
Wynn Resorts Ltd. (WYNN) $208.79 -1.64%
Vertex Pharmaceuticals Inc. (VRTX) $84.12 -1.59%
Bed Bath & Beyond Inc. (BBBY) $65.13 -1.38%
Alexion Pharmaceuticals Inc. (ALXN) $140.75 -1.28%
Mylan Inc. (MYL) $45.91 -1.16%
Intel Corp. (INTC) $25.31 -1.09%
Costco Wholesale Corp. (COST) $113.75 -1.02%

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

Thursday newspaper round-up: Short-selling, RBS, South Korea

Britain has lost a landmark court case against the European Union, cementing a power grab by regulators and delivering a setback for David Cameron's campaign to reclaim powers from Brussels. The European Court of Justice threw out Britain's case "in its entirety" and closed off any avenues for appeal, ignoring advice from its top legal adviser Niilo Jääskinen, who had backed Britain's case. The UK was protesting against the European Securities and Markets Authority's decision to ban short-selling of shares — when shares are sold that are not owned and then bought back in the hope of making a profit — during the financial crisis, which London argued was a serious over-reach of its powers. - The Times

The former Bank of England official charged with identifying problems in small business lending at Royal Bank of Scotland says the lender needs to rethink the way its controversial turnaround group operates. Sir Andrew Large, a former Deputy Governor of the Bank of England, said the taxpayer-backed lender's profit-making model in its restructuring business was "flawed" and that allegations it intentionally put companies out of business for the bank's gain were "plausible". - Daily Telegraph

Robust domestic demand helped South Korea record its fastest annual growth for nearly three years in the last quarter, as an improving global outlook prompted the export-reliant nation's manufacturers to invest in new capacity. The economy grew by 3.9% in the last three months of 2013 from the same period of 2012, broadly in line with economists' forecasts. In a break from the trend of recent years, domestic demand's contribution to growth outstripped that of exports, the Bank of Korea said on Thursday. - Financial Times

A politically toxic battle over the £1.5m pay of Royal Mail boss Moya Greene looks likely to intensify as the government suggested it might block any large increases in executive remuneration. The move by Vince Cable's Department for Business comes after he previously objected to £250,000 in relocation payments awarded to the recently privatised company's boss when the mail service was wholly owned by the state. Greene, who moved from Canada to take up the post, voluntarily agreed to repay the money after she heard of Cable's concerns. - The Guardian

A report which claimed that Royal Bank of Scotland had deliberately driven small firms out of business to make money was questioned in the Commons yesterday. Sir Andrew Large, the author of another report into state-backed RBS's lending to smaller businesses, said he found no evidence of the bank engineering companies into default. - The Scotsman

Europe should be reclassified as an emerging market that needs major economic reform if it is not to fall behind the world's fast-growing developing nations, the chief executive of the French oil company Total has said. Christophe de Margerie claimed that workers needed to upgrade their skills if the Continent were to compete with Asia and Latin America, as business leaders and economists warned that Europe was not out of the woods yet. – The Times

Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.

New ADVFN Service - FREE Reports

Get your free report on Isa's, Investment Trusts, Funds,
Sipps Travel and Cars - FREE and Easy service CLICK HERE

To advertise in the Euro Markets Bulletin please contact patrick@advfn.co.uk