UK/Euro Financial Market Daily Morning Briefing 29-01-2014

London open: Turkish rate hike boosts markets, miners jump

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Wednesday January 29

INTERIM EX-DIVIDEND DATE
Anite, Conviviality Retail , CVC Credit Partners European Opportunities Ltd EURO, CVC Credit Partners European Opportunities Ltd GBP, NB Private Equity Partners Ltd., Pennon Group, Puma High Income VCT , Puma Vct 8, Puma Vct VII

QUARTERLY EX-DIVIDEND DATE
Merchants Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
FOMC Interest Rate announcement (US) (19:00)
GFK Consumer Confidence (GER) (07:00)
M3 Money Supply (EU) (09:00)
MBA Mortgage Applications (US) (12:00)

GMS
Minoan Group

FINALS
Staffline Group

IMSS
Britvic, BTG, Antofagasta (production report), Liontrust Asset Management, Anglo American (production report)

SPECIAL EX-DIVIDEND PAYMENT DATE
Ashley (Laura) Holding

EGMS
Investors In Global Real Estate Ltd

AGMS
Artemis VCT, Britvic, Finsbury Growth & Income Trust, Octopus VCT 3, Octopus VCT 4, Renew Holdings

FINAL EX-DIVIDEND DATE
Fenner, Renew Holdings

UK ECONOMIC ANNOUNCEMENTS

Nationwide House Price Index
Speech by Governor Mark Carney (13:15)

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Europe open: Stocks rise after Turkish central bank hikes interest rates

- German consumer confidence improves
- Turkish central bank raises interest rates
- Fed to announce policy decision

FTSE 100: 0.94%
DAX: 1.20%
CAC 40: 1.14%
FTSE MIB: 1.21%
IBEX 35: 1.27%
Stoxx 600: 0.93%

European stocks advanced as German consumer confidence rose more than expected and as the Turkish central bank hiked interest rates to fight the falling lira currency.

GfK's forward-looking consumer sentiment index jumped to 8.2 in February from 7.7 the prior month, the highest since August 2007 and ahead of the consensus forecast of 7.6.

In Tukey, the central bank raised all of its key interest rates at an emergency midnight policy meeting in an effort to tackle price instability.

The bank lifted its overnight lending rate to 12% from 7.75%, its one-week repo rate to 10% from 4.5% and its overnight borrowing rate to 8% from 3.5%.

The move sent the lira sharply higher against the dollar and surpassed analysts' estimates.

Fed announces latest policy

The US Federal Reserve will announce another possible round of stimulus tapering when it wraps up its policy meeting later today.

In December the central bank began to trim monthly asset purchases by $10bn to $75bn and most analysts expect it introduce a further $10bn.

Fears that tapering would hamper global economic recovery amid the recent turbulence in developing countries have fuelled speculation that the Federal Open Market Committee will hold back on trimming asset purchases.

"However, the action taken by the Turkish central bank should significantly reduce the capital outflows and even draw some money back into the country," Craig Erlam, Analyst at Alpari said.

"If other countries follow suit, this should re-stabilise the markets at a time when further Fed tapering is widely expected."

Anglo American gains on Q4 production report

Anglo American rallied after reporting a 25% increase in fourth-quarter platinum production.

Lloyds Banking Group rose following a report that the lending will go ahead with an initial public offering of TSB.

Mulberry Group declined after the British luxury-handbag maker said full-year pre-tax profit will be substantially below current market estimates.

The euro increased 0.07% to $1.3680.

Brent crude futures edged up $0.065 to $1.07.480 per barrel, according to data from the ICE.

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US close: Stocks gain after earnings, confidence data

- Ford, Pfizer and DR Horton rise after results
- Apple plunges, limits gains on Nasdaq
- Consumer confidence rises; durable goods fall
- Taper speculation ramps up ahead of FOMC

Dow Jones: 0.57%
Nasdaq: 0.35%
S&P 500: 0.61%

US markets advanced on Tuesday with the Dow Jones Industrial Average snapping a five-day losing streak as investors reacted to upbeat earnings from Ford, Pfizer and DR Horton, as well as a rise in consumer confidence.

Upside on the Nasdaq was capped though by a sharp fall from tech giant Apple, which fell by 8% after fewer-than-expected iPhone sales in its fiscal first quarter and disappointing revenue guidance for the current quarter.

Equities on the whole were tracking gains in Europe as the recent volatility on currency markets - sparked by concerns over a slowdown in China - eased, with the MSCI Emerging Market Index bouncing off its worst level since August.

However, gains were only modest on Wall Street on Tuesday as investors looked ahead to the Federal Open Market Committee meeting which concludes on Wednesday. The Fed, which began scaling back its monthly asset purchases in December from $85bn to $75bn, will make another $10bn cut this month, according to the consensus forecast.

"Markets are factoring in further tapering, which partially explains the market jitters we have seen in the last few trading days," said Market Analyst Alastair McCaig from IG.

Consumer confidence rises, durable goods fall

The Conference Board's closely-watched gauge of consumer confidence rose to 80.7 in January from a revised 77.5 in December, coming in ahead of the consensus forecast of 78.

Orders for US durable goods unexpectedly dropped by 4.3% in December to reach $229.3bn, according to the latest figures released by the Department of Commerce, mainly as a result of a fall in orders from volatile sectors such as defence and aircraft. While headline orders were 4.9% higher than December 2012, markets had been looking for a 1.8% increase month-on-month.

The S&P/Case-Shiller Home Price Index was 13.7% higher in November from a year earlier, up slightly from the 13.6% growth in October and more or less in line with forecasts.

Apple plunges; Ford, Pfizer and DR Horton rise

Apple reported that 51m of its smartphones were sold in the quarter ended December 28th 2013, 7% higher than the previous year but below analysts' forecast of 55m units. Meanwhile, the company expects to generate $42-44bn in revenue in its second quarter, far short of the $46.2bn current consensus estimate.

Ford Motor Co finished higher after saying it made record pre-tax profits in North America and Asia last year with "one of the company's best years ever". Full-year profits rose 7.6% to $8.6bn in 2013 on revenues that increased 10% to $146.9bn.

Drugmaker Pfizer rose strongly after profits in the fourth quarter excluding one-offs came to 56 cents per share, compared with forecasts for 52 cents.

DR Horton surged after the homebuilder reported a 86% jump in fiscal first-quarter earnings following a rise in home prices.

Chemicals group DuPont edged lower after a strong start despite beating Street forecasts with fourth-quarter adjusted earnings of 59 cents per share, up from just 20 cents the year before. The company also announced a $5bn share buyback.

Comcast Corp advanced following reports the cable company is close to a deal to buy assets from Charter Communications.


S&P 500 - Risers
D. R. Horton Inc. (DHI) $23.00 +9.84%
Waters Corp. (WAT) $110.41 +7.30%
Netflix Inc. (NFLX) $406.77 +6.70%
Vulcan Materials Co. (VMC) $61.58 +6.10%
T. Rowe Price Group Inc. (TROW) $80.70 +5.48%
Lennar Corp. Class A (LEN) $38.52 +4.36%
Yahoo! Inc. (YHOO) $38.22 +4.28%
PerkinElmer Inc. (PKI) $42.71 +4.02%
Salesforce.Com Inc. (CRM) $59.37 +4.01%
PulteGroup Inc. (PHM) $19.45 +3.96%

S&P 500 - Fallers
Seagate Technology Plc (STX) $51.52 -11.25%
Apple Inc. (AAPL) $506.50 -7.99%
Corning Inc. (GLW) $17.10 -6.15%
GameStop Corp. (GME) $36.05 -3.40%
Lowe's Companies Inc. (LOW) $46.96 -2.17%
QUALCOMM Inc. (QCOM) $71.99 -1.65%
Diamond Offshore Drilling Inc. (DO) $50.69 -1.55%
Juniper Networks Inc. (JNPR) $27.51 -1.47%
Western Digital Corp. (WDC) $83.37 -1.44%
CIGNA Corp. (CI) $85.94 -1.22%

Dow Jones I.A - Risers
Pfizer Inc. (PFE) $30.42 +2.56%
Visa Inc. (V) $220.96 +2.19%
General Electric Co. (GE) $25.46 +1.56%
Caterpillar Inc. (CAT) $92.47 +1.29%
JP Morgan Chase & Co. (JPM) $55.74 +1.18%
Nike Inc. (NKE) $72.71 +1.13%
American Express Co. (AXP) $86.64 +1.07%
Travelers Company Inc. (TRV) $83.10 +0.98%
Goldman Sachs Group Inc. (GS) $166.25 +0.95%
Walt Disney Co. (DIS) $72.88 +0.87%

Dow Jones I.A - Fallers
Cisco Systems Inc. (CSCO) $21.75 -1.14%
E.I. du Pont de Nemours and Co. (DD) $59.57 -1.11%
Verizon Communications Inc. (VZ) $47.36 -0.69%
International Business Machines Corp. (IBM) $176.85 -0.59%
Home Depot Inc. (HD) $78.54 -0.51%
Boeing Co. (BA) $137.09 -0.20%

Nasdaq 100 - Risers
Netflix Inc. (NFLX) $406.77 +6.70%
Tesla Motors Inc (TSLA) $178.38 +5.16%
Maxim Integrated Products Inc. (MXIM) $29.92 +4.65%
Yahoo! Inc. (YHOO) $38.22 +4.28%
Check Point Software Technologies Ltd. (CHKP) $65.93 +3.76%
Baidu Inc. (BIDU) $164.24 +3.50%
Illumina Inc. (ILMN) $144.53 +3.05%
F5 Networks Inc. (FFIV) $109.74 +3.04%
Facebook Inc. (FB) $55.14 +2.97%
Regeneron Pharmaceuticals Inc. (REGN) $278.67 +2.93%

Nasdaq 100 - Fallers
Vimpelcom Ltd Ads (VIP) $10.14 -12.81%
Seagate Technology Plc (STX) $51.52 -11.25%
Apple Inc. (AAPL) $506.50 -7.99%
QUALCOMM Inc. (QCOM) $71.99 -1.65%
Western Digital Corp. (WDC) $83.37 -1.44%
Cisco Systems Inc. (CSCO) $21.75 -1.14%
Broadcom Corp. (BRCM) $28.96 -1.09%
Sirius XM Holdings Inc (SIRI) $3.63 -0.82%
O'Reilly Automotive Inc. (ORLY) $132.06 -0.75%
Ross Stores Inc. (ROST) $67.77 -0.75%

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Wednesday newspaper round-up: Lloyds, Bid battle, House prices

Lloyds Banking Group has pushed the button on its 1.5bn pound-plus float of TSB after rejecting an 11th-hour approach from a group of institutional investors. TSB's management, led by Chief Executive Paul Pester, has begun meeting potential investors to ask them to back the pending flotation of the 631-branch business. The meetings, which began on Monday, are the first step in a pre-roadshow process which will culminate in the new challenger bank floating on the London Stock Exchange in May. – Daily Telegraph

The prospect of a bid battle for one of the City's oldest fund managers was thrown wide open yesterday after F&C Asset Management's second-largest shareholder said it was holding out for a better deal than the takeover agreed with a Canadian bank. Only hours after F&C had laid out the terms of a £708m recommended sale to Bank of Montreal, Standard Life Investments claimed that the price tag under-valued the 145-year-old business. – The Times

House prices rose by 0.7% in January as the market continued to gain momentum, fuelled by the return of first-time buyers, the UK's largest building society said on Wednesday. The strong start to the year will dismay would-be buyers who may have been hoping the market would slow down after a busy autumn, and could strengthen calls for the Bank of England to take action to prevent a bubble. - The Guardian

AO.com, the online electricals retailer, is aiming for a £1bn valuation when it floats on the London Stock Exchange later this year – more than treble the market capitalisation it was hoping to achieve just four months ago. The retailer, formerly known as Appliances Online, is now aiming to achieve a valuation of £1bn-£1.2bn, compared with the £300m estimated when it appointed banking advisers in September. – Financial Times

The floods that hit large parts of southern England over Christmas and the new year will cost insurers hundreds of millions of pounds, according to the first estimates from the industry. As large parts of South West and the South East brace themselves for more severe winds and heavy rain, the Association of British Insurers (ABI) said that its members were expecting a bill running to at least £426m from the bad weather. – The Times

The tax on commercial property in the UK could be scrapped after David Cameron paved the way for an overhaul of business rates and retailers called for "fundamental reform". A £415m package of business rates cuts and infrastructure investment designed to boost high streets and local economies will be unveiled on Wednesday by Eric Pickles, the Communities Secretary. – Daily Telegraph

Oil industry experts have called for tax incentives on exploration activity after the number of wells drilled in the North Sea dropped by more than a quarter last year. A report by accountancy firm Deloitte, published today, shows that operators chose to focus on development activity in 2013 at the expense of exploration. - Scotsman

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