Date: Thursday 12 Jul 2012
- Ashmore drops eight per cent; miners tank
- Aegis rockets after Dentsu offer
- Markets focus on FOMC minutes and global growth concerns
European markets were firmly in negative territory on Thursday morning on the back of concerns over the global economy, with miners about the worst hit in London.
The Fed released the minutes of the latest Federal Open Market Committee (FOMC) meeting on Wednesday evening at which is decided to expand its 'Operation Twist' programme.
Analysts at Morgan Stanley said: "The FOMC minutes reveal that there appears to be little appetite by the Fed to enter another round of full balance sheet-expanding QE at this point, despite the recent loss of momentum in the pace of the US recovery." However they said that they still expect 'QE3' to come, especially ahead of the election. "Hence, we would expect little in the way of support for struggling risk appetite."
Wall Street stocks are expected to open lower this afternoon as markets react to the minutes, while eyes will also be on jobless claims data due out in the coming hours. Investors will also be digesting the news that both South Korea and Brazil cut interest rates and the unemployment rate in Australia edged higher.
In other news, the European Central Bank's (ECB's) overnight deposits dropped to a seven-month low of €324.9bn dow from €808.5bn previously after policy makers slashed the despite rate to zero.
China will reveal its second-quarter gross domestic product (GDP) growth rate tomorrow, with government think-tank Development Research Centre (DRC) expecting the Chinese economy to have grown 7.5% in the three-month period, down from 8.1% growth in the first quarter. While the government is targeting 7.5% GDP growth for 2012, DRC thinks that the economy could actually expand by 8% over the year.
Mining heavyweights Rio Tinto, BHP Billiton, Anglo American, Antofagasta and ENRC were registering steep losses after Credit Suisse slashed target prices across the sector after lowering commodity price estimates. Rio Tinto announced this morning that its Chief Financial Officer is to retire at the end of next year.
While the miners were being weighed down by broker comments and global growth concerns, fund manager Ashmore was by far the worst performer on the Footsie, dropping over 8% after saying assets under management fell 3.3%to $63.7bn in the quarter ended June 30th as worries about the Eurozone crisis and global growth rattled investor confidence.
Security giant G4S was a heavy faller on reports that it had encountered delays in training security staff for the Olympics. "We have encountered some delays in progressing applicants through the final stages but we are working extremely hard to process these as swiftly as possible," the firm said. Defence Secretary Philip Hammond is expected to announce details of an extra 3,500 troops to help with security for the Games today.
Primark-owner Associated British Foods edged lower despite reporting that revenues rose 11% in the 40 weeks to June 23rd, in line with the rate reported in the interim results.
The relatively brief stock market history of Aegis is set to come to an end with the the media and digital communications group agreeing to a takeover by Japanese advertising agency Dentsu. Dentsu is offering 240p in cash for each Aegis share, almost half as much again as the shares were trading at in London on the day before the agreed bid announced. The offer terms value the whole of Aegis at around £3.16bn.
Oil and gas development and production company RusPetro jumped after saying it was confident of hitting an exit rate of 10,400 barrels of oil per day for 2012.
Shares of oil and gas firm Premier Oil rose after it announced that it will pay $231m for a 60% stake in Rockhopper Exploration’s licence in the Falkland Islands.
FTSE 100 - Risers
ITV (ITV) 72.80p +1.32%
Admiral Group (ADM) 1,179.00p +0.94%
Resolution Ltd. (RSL) 210.10p +0.57%
Capita (CPI) 683.50p +0.37%
Evraz (EVR) 250.90p +0.36%
British Sky Broadcasting Group (BSY) 685.50p +0.22%
FTSE 100 - Fallers
Ashmore Group (ASHM) 302.20p -8.42%
Rio Tinto (RIO) 2,926.50p -3.51%
Eurasian Natural Resources Corp. (ENRC) 398.00p -3.14%
Antofagasta (ANTO) 1,051.00p -2.95%
Anglo American (AAL) 1,998.00p -2.80%
G4S (GFS) 282.40p -2.75%
Schroders (SDR) 1,288.00p -2.72%
BHP Billiton (BLT) 1,762.00p -2.71%
IMI (IMI) 787.00p -2.66%
InterContinental Hotels Group (IHG) 1,511.00p -2.52%
FTSE 250 - Risers
Aegis Group (AGS) 236.20p +45.62%
Melrose (MRO) 379.70p +7.05%
Cable & Wireless Communications (CWC) 31.46p +3.59%
Premier Oil (PMO) 370.00p +3.12%
Go-Ahead Group (GOG) 1,259.00p +2.61%
Bwin.party Digital Entertainment (BPTY) 108.60p +2.16%
Computacenter (CCC) 311.30p +2.07%
Ruspetro (RPO) 135.80p +1.88%
Barratt Developments (BDEV) 135.20p +1.65%
Informa (INF) 377.10p +1.56%
FTSE 250 - Fallers
Aquarius Platinum Ltd. (AQP) 40.01p -4.83%
Hays (HAS) 67.25p -4.68%
Bodycote (BOY) 311.60p -4.24%
Dixons Retail (DXNS) 17.00p -3.41%
BlackRock World Mining Trust (BRWM) 555.00p -3.31%
Petropavlovsk (POG) 423.90p -3.24%
Kenmare Resources (KMR) 33.50p -3.18%
International Personal Finance (IPF) 237.20p -3.10%
Gem Diamonds Ltd. (DI) (GEMD) 217.10p -3.08%
Henderson Group (HGG) 94.65p -3.07%
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