Date: Wednesday 09 May 2012
- Greek politics weighs on sentiment
- Merkel tells Greece to stick to austerity
- Sage, Weir fall heavily after updates
London’s blue chips rallied in afternoon trade after steep losses early on, but still finished well in the red on the back of concerns over the political situation in Greece. Comments from Angela Merkel helped ease the pain late on.
US stock markets opened firmly lower on Wall Street, which saw the Dow Jones Industrial Average extend its recent losing streak to six days, its longest consecutive daily decline since August of last year.
Turning to Greece, Antonis Samaras from the Conservative New Democracy failed to form a new government after elections at the weekend, meaning that Alexis Tsipras from the left-wing Syriza party has now been given the task of crafting a coalition. He is expected to reject the tough austerity measures agreed as part of the country's €240bn bailout by the EU and IMF. Tsipras will meet with Samaras and Pasok party leader Evangelos Venizelos later this evening but they are not expected to agree on much. If Tsipras gets his way, the rejection of the austerity package would mean that the nation will default on its debt as early as next month and be forced out of the Eurozone.
"The effect this could have on Spain is the most concerning given their struggling banking system following the bursting of the housing bubble," said analyst Craig Erlam from Alpari this morning. Spanish yields jumped today on the back of concerns over its financial sector. By the close in London, the borrowing rate on a Spanish 10-year bond was up 23.6 basis points (bp) at 6.079%. Meanwhile, Italian 10-year bond yields were 14.4bp up at 5.598%.
However, UK equities pared losses late on after German Chancellor Angela Merkel pleaded for Greece to stick to the conditions of its bailout. "It is still the case that the agreements with the troika and the reform targets must be adhered to. That's the only way we can imagine the path for Greece back to stability and economic strength," she is reported to have said this afternoon.
Additionally, there were rumours flying around the market late on speculating that Greece could have enough funds to see it through to July, not June, meaning that it would have enough time to hold another round of elections.
Business software group Sage was a heavy faller after saying that a strategic switch to subscription revenues, plus difficulties in Europe, have constrained growth in the six months to the end of March.
Engineering giant Weir Group said that strong first quarter trading in its minerals and industrial businesses made up for a plunge in orders in its oil and gas division. Order input fell 26% on a like-for-like basis in the company's oil and gas division, which the firm put down to rapid changes in the pressure pumping market.
Ex-dividend stocks were also dragging on the Footsie today. Aberdeen Asset Management, G4S and Rexam were among the stocks trading without the right to their latest dividends.
Terrestrial broadcaster ITV was performing well after saying that its first-half net advertising revenues will be ahead of the market, thanks to an expected boost from the Euro 2012 football tournament.
Underlying profit before tax from supermarket titan Sainsbury came in bang in line with expectations, while the full-year dividend is a little more generous than anticipated. Shares jumped early on.
Commodities producer and marketer Glencore International rose after it said that all of its major growth projects remained on schedule and within budget in the first quarter of 2012. The company also said it expects its merger with Xstrata to be completed by the third quarter.
First quarter earnings at satellite communications firm Inmarsat were up a touch after strong demand at its maritime unit. For the three months ended 31 March 2012 total EBITDA rose 1% to $205m while total revenue increased 6% to $237m. Maritime revenue was up 7.2% at $95.4m.
Airline easyJet's interim losses were lower than expected, helped by a increased revenues and tight control of costs. Loss before tax for the six months to the end of March narrowed year-on-year from £153m to £112m, while revenues rose 15.7% from £1,266m to £1,465m. Shares rose early on.
FTSE 100 - Risers
Vedanta Resources (VED) 1,089.00p +2.83%
Burberry Group (BRBY) 1,462.00p +2.45%
Man Group (EMG) 84.40p +2.37%
ITV (ITV) 82.50p +2.17%
Eurasian Natural Resources Corp. (ENRC) 523.50p +1.85%
Antofagasta (ANTO) 1,049.00p +1.84%
Kazakhmys (KAZ) 759.00p +1.81%
Kingfisher (KGF) 285.40p +1.53%
Glencore International (GLEN) 397.95p +1.52%
ARM Holdings (ARM) 487.50p +1.46%
FTSE 100 - Fallers
Sage Group (SGE) 263.00p -5.46%
Weir Group (WEIR) 1,514.00p -5.14%
Polymetal International (POLY) 767.50p -4.84%
Tullow Oil (TLW) 1,444.00p -4.81%
Aberdeen Asset Management (ADN) 259.20p -3.82%
Lloyds Banking Group (LLOY) 29.91p -3.75%
Royal Bank of Scotland Group (RBS) 22.63p -3.54%
IMI (IMI) 906.50p -2.68%
BP (BP.) 404.00p -2.65%
G4S (GFS) 262.80p -2.56%
FTSE 250 - Risers
Kenmare Resources (KMR) 45.08p +5.70%
New World Resources A Shares (NWR) 353.10p +4.34%
easyJet (EZJ) 527.50p +3.63%
Beazley (BEZ) 138.30p +3.60%
Debenhams (DEB) 77.85p +3.18%
Inmarsat (ISAT) 468.50p +3.08%
Rathbone Brothers (RAT) 1,255.00p +3.04%
Cable & Wireless Worldwide (CW.) 34.38p +2.54%
Jupiter Fund Management (JUP) 209.70p +2.54%
Berkeley Group Holdings (The) (BKG) 1,206.00p +2.46%
FTSE 250 - Fallers
Exillon Energy (EXI) 114.40p -8.48%
Ruspetro (RPO) 158.40p -8.44%
Cape (CIU) 335.00p -7.02%
Hiscox Ltd. (HSX) 371.30p -6.31%
Invensys (ISYS) 200.00p -6.19%
Afren (AFR) 116.30p -6.06%
Ophir Energy (OPHR) 518.00p -5.99%
Supergroup (SGP) 307.00p -5.54%
Bwin.party Digital Entertainment (BPTY) 144.10p -5.45%
Kesa Electricals (KESA) 52.10p -5.19%
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