UK/Euro Financial Market Daily Morning Briefing 31-01-2014

London open: Markets lower ahead of Eurozone CPI, BT gains

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INTERIMS
Rank Group, Rank

INTERIM DIVIDEND PAYMENT DATE
Aberdeen New Dawn Investment Trust, Bisichi Mining, F&C Global Smaller Companies, Jupiter Second Split Trust Geared Gwth Shares, Latham (James), Monks Inv Trust, NewRiver Retail Ltd. (Reg S), Solid State, Speedy Hire, Vianet Group

QUARTERLY PAYMENT DATE
British Assets Trust, F&C Commercial Property Trust Ltd., JP Morgan Chase & Co, Mercantile Investment Trust (The), Middlefield Canadian Income PCC, Schroder Income Growth Fund, Torchmark Corp.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Chicago PMI (US) (13:45)
International Reserves (EU) (11:00)
Personal Consumption Expenditures (US) (13:30)
Personal Income (US) (13:30)
Personal Spending (US) (13:30)
Retail Sales (GER) (07:00)
U. of Michigan Confidence (Final) (US) (15:00)
Unemployment Rate (EU) (10:00)

Q3
BT Group

GMS
Caledonian Trust

ANNUAL REPORT
Aberforth Smaller Companies Trust

SPECIAL DIVIDEND PAYMENT DATE
European Investment Trust

EGMS
Public Power GDR SA (Reg S)

AGMS
APC Technology Group, Caledonian Trust, JPMorgan Asian Inv Trust, Schroder UK Mid Cap Fund, Scottish Inv Trust

TRADING ANNOUNCEMENTS
Air Partner, Vedanta Resources (production report)

IMSs

Kcom, F&C Asset Management

UK ECONOMIC ANNOUNCEMENTS
Consumer Confidence (09:30)
GFK Consumer Confidence (00:01)

FINAL DIVIDEND PAYMENT DATE
Alternative Networks, Catco Reinsurance Opportunities Fund Ltd (DI), Character Group, DotDigital Group, European Investment Trust, Lowland Investment Co, Qatar Investment Fund, Scottish Oriental Smaller Companies Trust, Topps Tiles, Tracsis, Unicorn AIM VCT

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Europe open: Stocks fall before Eurozone inflation and jobs data

- Eurozone CPI to be released
- Euro-area jobless rate out
- UK consumer confidence unveiled

FTSE 100: -0.34%
DAX: -0.85%
CAC 40: -0.33%
FTSE MIB: -0.47%
IBEX 35: -0.24%
Stoxx 600: -0.42%

European stocks declined ahead of the release of Eurozone inflation and euro-area unemployment figures.

Analysts expect Eurozone consumer prices to have risen slightly to 0.9% year-on-year in January from 0.8% in December.

The report comes as the European Central Bank (ECB) faces mounting pressure to tackle deflationary risks. The ECB is targeting inflation of close to, but under, 2%.

Earlier this month, ECB President Mario Draghi blamed December's drop in inflation on an adjustment by the German statistics office, saying he expects it to pick up in January.

On Monday he signalled a move towards monetary stimulus to ward off deflation, saying the ECB would be prepared to buy packages of bank loans to households and companies.

Policymakers and investors will today also be watching the release of the Eurozone's unemployment rate for December which is expected to hold at 12.1%.

GfK revealed this morning that UK consumer confidence rose more than expected in January. Its sentiment index increased to -7 from -13 in December, surprising economists who had predicted -12.

Later today in the US, will be the release of reports on personal income and spending along with the Chicago purchasing managers' index and the University of Michigan's confidence data.

BT, Banco Bilbao

BT Group advanced after the UK phone company reported third-quarter earnings that beat analysts' estimates.

Banco Bilbao Vizcaya Argentaria rallied after the Spanish lender posted a smaller quarterly loss than analysts had forecast.

Diageo declined after Goldman Sachs cut its recommendation on the world's biggest distiller to 'neutral' from 'buy', citing continued challenges to growth in emerging markets.

LVMH Moet Hennessy Louis Vuitton led European luxury-goods stocks higher after saying growth in fashion and leather-goods sales rebounded in the fourth quarter.

The euro was flat at $1.3555.

Brent crude futures fell $0.307 to $107.602 per barrel, according to the ICE.

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US close: Markets rise as Facebook gives Nasdaq a boost

- Facebook, Visa impress with results
- US GDP up 3.2 per cent in Q4, as expected
- Jobless claims, pending home sales miss forecasts

Dow Jones: 0.70%
Nasdaq: 1.77%
S&P 500: 1.13%

US markets put in a decent performance on Thursday with the Nasdaq registering its best one-day gain since mid-October 2013 after upbeat quarterly results from Facebook.

Markets were bouncing back after a slump on Wednesday which saw the S&P 500 drop to its lowest level in over two months after the Federal Reserve decided to scale its monthly asset purchases by a further $10bn to $65bn after finding that economic growth had "picked up in recent quarters".

While the ongoing turmoil in emerging markets weighed on European markets again throughout Thursday's session, US stocks were boosted by in-line growth data from closer to home.

The Commerce Department revealed that US gross domestic product growth was 3.2% in the fourth quarter of 2013, which was "pretty impressive" when considering that the three-week government shutdown occurred at the start of the period, according to Paul Ashworth, Chief US Economist at Capital Economics.

While this represented a slowdown from the 4.1% expansion in the third quarter, the two periods combined showed the best back-to-back increase in growth in nearly two years.

US benchmark 10-year Treasury yields were trading broadly flat at around 2.69% during the session, compared with levels over 3% at the start of the year.

"The slow fall in US bond yields appears to be as a result of money flowing out of emerging markets and back into US treasuries, which is likely to continue to act as an internal boost to the US economy, particularly if rates continue to fall," said Chief Market Analyst Michael Hewson from CMC Markets

However, not all economic data today met forecasts, as the Labor Department released a market report which revealed 19,000 more jobless claims in the week ended January 25th. Weekly initial jobless claims reached 348,000, higher than the consensus forecast of 330,000 and the previous week's 329,000.

Meanwhile, pending home sales fell by a worse-than-expected 8.7% in December as housing-market activity was dampened by the poor weather last month. Analysts were expecting a fall of just 0.3% month-on-month, in line with the 0.3% decline in November.

Facebook, Visa

Facebook rallied after the social network reported a 63% rise in fourth-quarter revenue to $2.59bn, surpassing analysts' estimates of $2.35bn.

Visa gained as the debt and credit card network reported profit for the first quarter that beat forecasts.

Google was higher after Lenovo Group agreed to buy the Motorola Mobility mobile-phone business from the search engine for $2.91bn.

Potash Corp. declined after it forecast 2014 profit that fell short of market expectations.

Alexion Pharmaceuticals surged after a lower-than-anticipated tax rate helped fourth-quarter earnings and 2014 guidance beat forecasts.


S&P 500 - Risers
Alexion Pharmaceuticals Inc. (ALXN) $162.00 +21.14%
Pitney Bowes Inc. (PBI) $25.85 +18.96%
Harman International Industries Inc. (HAR) $102.34 +17.39%
Facebook Inc. (FB) $61.08 +14.23%
Cameron International Corp. (CAM) $60.33 +6.35%
AutoNation Inc. (AN) $49.89 +6.13%
Salesforce.Com Inc. (CRM) $60.97 +5.19%
Ball Corp (BLL) $51.60 +5.16%
Amazon.Com Inc. (AMZN) $403.01 +4.90%
ProLogis (PLD) $38.81 +4.86%

S&P 500 - Fallers
Adt Corp (ADT) $31.40 -16.95%
Citrix Systems Inc. (CTXS) $53.29 -7.48%
Symantec Corp. (SYMC) $22.38 -7.33%
Whirlpool Corp. (WHR) $132.22 -6.64%
Best Buy Co. Inc. (BBY) $22.72 -5.21%
Murphy Oil Corp. (MUR) $57.44 -5.01%
Cliffs Natural Resources Inc. (CLF) $19.26 -4.04%
Newmont Mining Corp. (NEM) $24.10 -3.10%
Altria Group Inc. (MO) $35.35 -2.96%
Airgas Inc. (ARG) $105.44 -2.88%

Dow Jones I.A - Risers
Nike Inc. (NKE) $73.94 +3.02%
Caterpillar Inc. (CAT) $93.20 +2.85%
Walt Disney Co. (DIS) $73.22 +2.65%
Merck & Co. Inc. (MRK) $53.51 +2.49%
Pfizer Inc. (PFE) $30.82 +2.36%
Unitedhealth Group Inc. (UNH) $72.80 +2.16%
Visa Inc. (V) $220.88 +1.73%
Cisco Systems Inc. (CSCO) $21.98 +1.51%
E.I. du Pont de Nemours and Co. (DD) $61.54 +1.37%
American Express Co. (AXP) $86.62 +1.25%

Dow Jones I.A - Fallers
Boeing Co. (BA) $126.53 -2.50%
3M Co. (MMM) $128.05 -1.69%
Exxon Mobil Corp. (XOM) $93.99 -1.18%
Procter & Gamble Co. (PG) $76.87 -0.99%
Verizon Communications Inc. (VZ) $47.63 -0.13%

Nasdaq 100 - Risers
Alexion Pharmaceuticals Inc. (ALXN) $162.00 +21.14%
Facebook Inc. (FB) $61.08 +14.23%
Amazon.Com Inc. (AMZN) $403.01 +4.90%
Tesla Motors Inc (TSLA) $182.84 +4.34%
Vertex Pharmaceuticals Inc. (VRTX) $82.15 +4.22%
Twenty-First Century Fox Inc Class A (FOXA) $32.02 +4.20%
Biogen Idec Inc. (BIIB) $318.28 +4.16%
Cerner Corp. (CERN) $56.27 +4.11%
Regeneron Pharmaceuticals Inc. (REGN) $292.97 +4.06%
Wynn Resorts Ltd. (WYNN) $201.51 +3.94%

Nasdaq 100 - Fallers
Citrix Systems Inc. (CTXS) $53.29 -7.48%
Symantec Corp. (SYMC) $22.38 -7.33%
Celgene Corp. (CELG) $153.98 -2.81%
Tractor Supply Company (TSCO) $67.46 -2.22%
Seagate Technology Plc (STX) $53.10 -1.03%
Liberty Media Corporation - Class A (LMCA) $132.15 -0.65%
Bed Bath & Beyond Inc. (BBBY) $64.10 -0.42%
Vodafone Group Plc ADS (VOD) $37.23 -0.21%
Apple Inc. (AAPL) $499.78 -0.19%
Mondelez International Inc. (MDLZ) $32.93 -0.18%

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Friday newspaper round-up: Russia, Manufacturing, Nuclear power

The simmering crisis in emerging markets has spread to Eastern Europe, forcing Russia and Romania to defend their currencies against capital flight and triggering a sharp rise in Hungary's borrowing costs.The Russian central bank vowed "unlimited" intervention to defend the rouble after it fell to a record low against a basket of currencies. Moscow has already burned through 7bn dollars of reserves since early January. Yields on Russia's two-year "cross-currency swaps" – closely watched by traders for signs of a liquidity crunch – rocketed by 60 basis on Thursday to 7.6 per cent. - Daily Telegraph

AstraZeneca has abandoned any scientific effort to search for new medicines to tackle many of the world's deadliest diseases by shutting down its drug discovery work into neglected tropical diseases, tuberculosis and malaria. The company is closing a laboratory in Bangalore that was set up with investment of $40m in 2003 and focuses on the often slow, costly fight against contagious illnesses. - The Times

British car manufacturing has boomed in the last two years. As a result, the number of jobs for skilled workers, both old and young, is increasing and has been at the forefront of the economic recovery, according to a report by motor dealer Evans Halshaw. Currently, 30m people over the age of 16 in work in Britain. Statistics show that more than two per cent of this figure work in a role within the umbrella of the motor industry. Job boosts in motor manufacturing have been seen as vital cog in the recovery of the British economy. Earlier in the week, the Office for National Statistics said the economy grew by 0.7% in the final quarter of last year – with manufacturing up 0.9%. - Daily Mail

The UK should consider building more nuclear power plants and should not expect cheap energy prices to come from a US-style "revolution" in shale oil and gas, the world's top energy forecaster has warned."The UK has significant shale gas resources but people shouldn't expect a US scale energy revolution in the UK," Fatih Birol, chief economist and director of global energy economics at the International Energy Agency told The Telegraph in an interview on Thursday. - Daily Telegraph

Santander will await clarification on new rules relating to capital levels and the "ringfencing" of banking business before it goes ahead with a flotation of its UK arm. The long-awaited listing of the UK business – first mooted in 2010 – has been deemed a medium-term prospect by the Spanish-based bank and is not expected to take place this year. - The Guardian

Libya's sovereign wealth fund is suing Goldman Sachs for more than $1bn (£600m) over allegations that the investment bank exploited a lack of financial expertise at Colonel Gaddafi's investment fund. In papers filed in London's high court, the Libyan Investment Authority (LIA) said Goldman charged it $1.1bn for a series of complex derivative trades in the run-up to the financial crisis of 2008, which it claimed eventually proved worthless. Even so, the bank is estimated to have reaped profits on the transactions of around $350m, the legal papers alleged. - The Guardian

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