Date: Monday 18 Jun 2012
1630: Today marked the start of the G20 summit which is being held in Los Cabos, Mexico, where leaders will discuss the European debt crisis as a top priority. Elsewhere, it was revealed that the average asking price for new home sellers in the UK has risen for a third consecutive month in June, although in the longer-term they have actually 'fallen considerably', according to property firm Rightmove. When compared to RPI over the same period, Rightmove says prices are actually 13% lower in real terms than they were in August 2007, immediately prior to the run on Northern Rock. Acting as a backdrop to all of the above, Spanish long-term bond yields rose on low volumes; possibly on reports that Spanish banks´ capital needs may be higher than had been thought up until recently. Also worth keeping tabs on, the Reserve Bank of India (RBI) decided to leave its key interest rates unchanged on Monday on the back of rising inflation despite calls for the central bank to ease policy as economic growth slows (a common malady in many an emerging market these days). The FTSE 100 closed up 12 points at 5,491.
1533: "Euro area countries agree to take all necessary measures to safeguard region’s integrity and stability." Thus reads the G-20 draft communique leaked by Reuters. The G-20 has apparently also asked Eurozone leaders for additional measures to fight against the crisis. For their part, over at ratings agency Fitch analysts are saying that, " (...) downward pressure on the sovereign credit profile and ratings of Eurozone sovereign governments will intensify so long as a credible path to closer union and a more coherent and united policy response are absent. This includes further boosting the financial backstops against contagion." FTSE 100 up 17 to 5,495.
1333: Footsie is unchanged, with losses on banks and miners holding the top share index back. Plumbers' merchant Wolseley is wanted after broker Jefferies said that a cash return to shareholders is increasingly likely over the next 18 months. The broker thinks up to one and a half billion pounds could be returned, either as a lump sum or in installments, creating up to seven per cent of additional shareholder value. 'On current forecasts Wolseley will be near debt free by the end of 2012 and will have a significant cash balance by the end of 2013. Management has repeatedly stated the group will not hold excess cash on the balance sheet and, in the absence of a large scale step up in M and A [mergers and acquisitions], will return excess cash to shareholders,' the broker said. Footsie is unchanged at 5,479.
1210: Commenting on the Greek elections this past weekend economists at Morgan Stanley are of the opinion that, “the ramification of an exit, for the Eurozone as a whole, would be way more far-reaching than the market anticipates. The words of former US Treasury Secretary John Connally, who about 40 years ago famously told European finance ministers in Rome that the dollar is “our currency, but your problem”, seem to resonate quite loudly – in a different context – in today’s European policy circles. (…) But not much is resolved from a medium-term perspective. Solvency is far from assured and, when Greece approaches a balanced primary budget a year from now, the incentive to attempt to renegotiate the programme even further, threaten default, or even an exit from the currency union, might rise again.” FTSE 100 up 20 to 5,499.
1011: Spanish long-term bond yields are surging, with those on 10 year bonds rising by no less than 26 basis points, to 7.13%. True enough perhaps, as Barclays point out, the low levels of liquidity are probably exacerbating volatility. Be that as it may however, negative research on Spain from the likes of Fidelity and Bank of America this morning are taking their toll, Bloomberg TV reports. Even so, so-called real-money flows are largely absent. FTSE 100 down 6 to 5,473.
0939: Despite a positive start, gains on the Footsie have been erased with the blue chip index now trading 14 points lower at 5,465 as optimism surrounding the Greek elections quickly fades. Analyst Craig Erlam from Alpari said in an email this morning: 'If New Democracy and Pasok fail to form a coalition government, this could still open the door for Syriza to form an anti-bailout coalition, or lead to a third round of elections next month. Greece has a bond payment due before that time which could still threaten Greece's position in the Eurozone before a government is formed.' Banks and miners are now providing a drag on markets with Glencore, Xstrata, Lloyds and RBS among the worst performers.
0837: Footsie has got the bounce that was expected after what seems like a victory for the pro-bailout parties in Greece in Sunday's general election. Energy stocks are going well with oilfield services firm AMEC and Petrofac rubbing shoulders with the likes of oil producers BG Group and Tullow Oil at the top end of the Footsie leader-board. Research house AlphaValue has been busy, downgrading banking behemoth Barclays to 'add' and upgrading Cillit Bang maker Reckitt Benckiser to 'buy'. In the mid-cap space, Cable and Wireless Worldwide (CWW) is sharply higher after major shareholder Orbis threw in the towel in its fight against the Vodafone takeover. Orbis, which owns around 19% of CWW, has done its sums and reckons that there are not enough shareholders out there prepare to vote down the Vodafone deal, and so in the interests of speeding things along it has decided not to vote against the bid. FTSE 100 is up 49 at 5,528.
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