UK/Euro Financial Market Daily Morning Briefing 31-03-2014

London open: Stocks at three-week high ahead of data-heavy week

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Monday March 31

INTERIMS
Inland Homes, YouGov, Bowleven

INTERIM DIVIDEND PAYMENT DATE
Mountview Estate, The Renewables Infrastructure Group Limited

QUARTERLY PAYMENT DATE
MedicX Fund Ltd., Premier Energy & Water Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Chicago PMI (US) (14:45)
International Reserves (EU) (11:00)
Preliminary CPI (EZ) (09:00)
Retail Sales (GER) (07:00)
Speech Fed Chair Janet Yellen
Industrial production (JP) (08:50)
Q4
Caledonia Mining Corporation

FINALS
Burford Capital , Caledonia Mining Corporation, Christie Group, Globaltrans Investment GDR (Reg S), Hibernia Reit , Ithaca Energy Inc. (DI), Martinco , Minera IRL, Ocean Wilsons Holdings Ltd., Polymetal International, Quindell , Safestyle UK , Skyepharma, Starcom, TEG Group (The), Toumaz Limited

ANNUAL REPORT
New Europe Property Investments, Talvivaara Mining Company (CDI)

SPECIAL DIVIDEND PAYMENT DATE
Avanti Capital, Premier Energy & Water Trust, Rights & Issues Inv Trust Capital Shares, Rights & Issues Inv Trust Income Shares

AGMS
Arria NLG, IRF European Finance Investments Ltd (DI), Lecico Egypt SAE GDR (Reg S), Manroy, Pentagon Protection, Sula Iron & Gold, Talent Group, Turkiye Petrol Rafinerileri AS GDR (Reg S), UK Oil & Gas Investments 'A'

TRADING ANNOUNCEMENTS
KCOM Group

UK ECONOMIC ANNOUNCEMENTS
Consumer Credit (09:30)
M4 Money Supply (09:30)
M4 Sterling Lending (09:30)
Mortgage Approvals (09:30)
Speech BoE Deputy Governor Andrew Bailey (14:10)
Speech Katharine Braddick, BoE Director of Prudential Policy (12:10)
Speech Governor Mark Carney (18:15)

FINAL DIVIDEND PAYMENT DATE
Polar Capital Global Financials Trust, Rights & Issues Inv Trust Capital Shares, Rights & Issues Inv Trust Income Shares, Temple Bar Inv Trust

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Europe open: Stocks rise ahead of Eurozone inflation data

- Eurozone inflation to be released
- German retail sales rise
- French GDP grows
- US and Russia hold talks on Crimea

FTSE 100: 0.41%
DAX: 1.44%
CAC 40: 0.74%
FTSE MIB: 1.53%
IBEX 35: 1.27%
Stoxx 600: 0.45%

European stocks gained ahead of a report which may show Eurozone inflation declined in March.

A preliminary reading on Eurozone consumer prices is expected to drop to 0.6% last month from 0.8% in February, adding pressure on the European Central Bank (ECB) to take greater measures to tackle falling prices.

The ECB holds its next policy meeting on Thursday.

Meanwhile, a report released this morning showed German retail sales rose 2% in February compared to a year ago following a 0.9% increase a month earlier. Analysts had predicted a 0.8% gain.

Another release revealed French gross domestic product grew 0.3% in the fourth quarter, as expected.

In the US this afternoon, attention will turn to the Chicago purchasing managers' index for manufacturing, which economists forecast will come in at 59.5 in March, down from 59.8 a month earlier.

A separate report on US manufacturing activity from the Dallas Federal Reserve is anticipated to rise to 2.5 in March from 0.3 in February.

Federal Reserve Chair Janet Yellen will also speak at the Development Conference in Chicago.

Crimea talks

US Secretary of State John Kerry has wrapped up talks in Paris with Russian counterpart Sergei Lavrov over the turmoil surrounding Crimea with no sign of whether progress was made.

Kerry said he told Lavrov that the US still considered Russia's annexation of Crimea from Ukraine to be "illegal and illegitimate".

The meeting was arranged after President Vladimir Putin phoned President Barack Obama on Friday.

Kerry told a news conference in Paris: "We will not accept a path forward where the legitimate government of Ukraine is not at the table."

Novartis, Drillisch

Novartis rallied after the Swiss drugmaker said the final phase of a clinical trial showed a treatment for chronic heart failure helped patients live longer.

Drillisch jumped following reports that the provider of phone services may pay a special dividend or buy back shares.

The euro rose 0.03% to $1.3756.

Brent crude futures fell $0.148 to $107.910 per barrel, according to the ICE.

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US close: Stocks rise but pare gains after mixed data

- Dow finishes higher on the week, Nasdaq falls sharply
- Personal spending and incomes rise as expected
- Consumer sentiment revised lower
- BlackBerry drops as sales slump

Dow Jones: 0.36%
Nasdaq: 0.11%
S&P 500: 0.46%

US stocks finished higher on Friday but erased most of their early gains after mixed economic data, with the Dow Jones Industrial Average the only major index to close the week in positive territory.

Personal spending and incomes increased in line with analysts' estimates, but estimates for consumer sentiment were revised lower.

The Dow finished 0.36% higher at 16,323.06, the S&P 500 ended up 0.46% at 1,857.62, while the Nasdaq gained 0.11% to 4,155.76.

The Dow managed to finish the week in positive territory, 0.1% higher than last Friday, but the S&P 500 fell 0.5%. Meanwhile, the Nasdaq dropped 2.8%, the worst weekly performance for the tech-heavy index since October 2012.

Economic data comes in mixed

Markets rose strongly after the opening bell after figures from the Commerce Department showed that personal spending increased at a month-on-month rate of 0.3% in February, up from a revised 0.2% rise the month before and in line with analysts' forecasts. Personal incomes also rose by 0.3%, as expected.

Senior US Economist Paul Dales from Capital Economics pointed out that the rise in expenditure was due to another large increase in medical spending: "This is because those people who are now covered by Medicaid for the first time or who have recently signed up for a private policy have started to consume medical services. With more people having enrolled this month, the effects of the Affordable Care Act will boost spending in March too."

Dales estimated that annualised real consumption growth over the first quarter as a whole rose by just 1.5-2%, down from 3.3% in the fourth quarter of 2013. However, "a strengthening in jobs growth should allow it to accelerate in the second", he said.

Meanwhile, the final reading for the Thomson Reuters/University of Michigan index of consumer sentiment was revised to 80 in March, up from the initial estimate of 79.9 but under the previous month's reading of 81.6. This was the lowest level since November.

BlackBerry falls as sales drop

Struggling smartphone maker BlackBerry rose initially after its adjusted loss per share of eight cents in its fourth quarter came in much better than the 55 cents loss expected by analysts. Revenues, however, slumped from $2.68bn to $976m, worse than the Street's predictions, causing the stock to sink into the red by the close.

Zynga declined despite billionaire Steven Cohen's investment firm SAC Capital raising its stake in the video game publisher to 5.3% from 2.2%.

Restoration Hardware rose after the home-furnishings retailer forecast quarterly earnings that surpassed analysts' forecasts.

Netflix ended firmly in the red following news that Amazon may begin advertising-supported streaming services.

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Monday newspaper round-up: Yuan, cap on lending, energy bosses

As the Yuan weakens and the US Federal Reserve raises rates sooner than expected the risk exists that the flood of 'hot money' going into China suddenly reverses, according to research from three of the largest global brokerages. Citigroup, for one, has told clients to brace for another round of 'taper tantrum' such as the one which rocked emerging markets in 2012. This time, however, it is China which will be in the eye of the storm, The Daily Telegraph writes.

Tory peer and business guru Lord Heseltine believes the Bank of England should weigh up measures such as imposing a cap on lending. Setting a limit on how big a mortgage homeowners can take out, as a percentage of their salaries, might help to prevent a housing bubble, he told BBC Radio 4's The World This Weekend. Thus, homeowners who take out loans equivalent to 5.5 times their salary could constitute a major risk when interest rates increase, the former Deputy Prime Minister added, The Daily Mail reports.

Turkish Prime Minister Recep Tayyip Erdogan's ruling Justice and Development Party, or AKP, won a majority of votes in local elections held nationally over the weekend, according to exit polls. Nevertheless, the margin of victory is as yet unclear as is his party's control of major cities, in what some see as a referendum on his rule in an increasingly divided country, The Wall Street Journal Europe says.

Energy bosses will admit that their customer service has been poor, their bills confusing and complaints about them being poorly handled. Those are the main conclusions of what amounts to an extraordinary indictment of industry practices as per a frank assessment of their failures seen by The Times.

Royal Mail faces a daunting week. Just as the company prepares to raise its prices for stamps and parcels government auditors are set to issue their verdict on the recent privatisation of the firm. They are expected to say that taxpayers lost in excess of £1bn. As well, the aforementioned price increases will leave the company open to criticism that it is taking advantage of the market dominance afforded by its monopoly position, The Times says.

Ex-Tesco Chief Terry Leahy has signed up to the board of Blackcircles.com, a digital service which allows customers to choose a fitting centre and then order online. The company has 1,200 tyre fitting centres, including 400 franchised sites. Revenues were up by 20% last year and the outfit is gearing up for a possible initial public offering later this year, according to The Daily Mail.

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