Portfolio

Market overview: FTSE closes down 31 at 5,493

Date: Thursday 28 Jun 2012

Market overview: FTSE closes down 31 at 5,493

1630: Nationally, the big news of the day was that the UK's GDP decreased at a 0.3 per cent pace in the first quarter of 2012, in line with the most recent estimate, according to data published by the ONS. In addition, the previous quarter's rate of expansion was revised down slightly to show a drop of 0.4% quarter-on-quarter, versus the 0.3% seen in the first print. Also putting a dampener on spirits was the news that UK house prices fell by 0.6% month on month in June, to £165,738, according to mortgage lender Nationwide, so that prices are now 1.5% below where they were a year ago and at their lowest level since August 2009. Looking abroad, the two-day EU summit kicked off this afternoon as the region's leaders try to find a solution to the worsening debt crisis in Europe. The FTSE closed down 31 points at 5,493.

1533: Asked to comment on the Schaeuble remarks cited by The Wall Street Journal, ministry spokesman Martin Kotthaus said: "This is not true (...) we've always said that we can talk about shared debt management only at the end of a process toward a genuine fiscal union," Reuters reports. Meanwhile, and in the United States, the Supreme Court has upheld President Obama´s landmark health-care reform plan. Back home, Barclays is plummeting after reaching a settlement with regulators regarding accusations of having participated in manipulating the London interbank offered rate (LIBOR). Hundreds of trillions of pounds in contracts are tied to LIBOR. For some analysts the costs of lawsuits tied to litigation over alleged LIBOR manipulaton may run into the billions of pounds. FTSE 100 down 70 to 5,454.

1425: In an interview with the Wall Street Journal German Finance Minister Wolfgang Schauble has indicated that his country may be willing to move sooner than expected to accept shared liability of Eurozone debt and would support short-term measures to deal with the acute financing problems facing some of the region´s governments. The key for Berlin is that the path toward establishing centralized European controls over national fiscal policy is irreversible. That could happen before full implementation of treaty changes. FTSE 100 is down 62 to 5,461.

1400: The FTSE 100 is down 57 points at 5,467 as US stock futures are pointing to a sharp drop after the opening bell in New York. In particular, healthcare stocks are likely to be in focus in the States as the US Supreme Court ruling about Obama's Affordable Care Act is due for release. News Corp futures are on the rise after Rupert Murdoch's media giant confirmed that it would split into two separate publicly listed entities. Shareholders will get a stake in each company. Shares of British Sky Broadcasting are advancing in London after Deutsche Bank said that would benefit from the split

1156: Over on the other side of the Channel, the results of Italy´s 10 year debt auction have come in roughly like the last time around, although yields did rise to 6.19 per cent from 6.02 per cent in May. The European Union's economics commissioner, Olli Rehn, is stated to give a press conference at 12:15. FTSE 100 is down 51

1040: The FTSE 100 is down 47 points at 5,477, its lowest levels of the day, as banking stocks extend losses. Barclays is unsurprisingly the worst performer after yesterday's news that it was being fined by UK and US regulators of the attempted manipulation of interbank lending rates, or Libor. According to reports, big players across the entire industry are being investigated, which is probably why shares of sector peers RBS, HSBC and Lloyds are also in the red. On the FTSE 250, betting firm Ladbrokes is leading the fallers after warning over profits in its Digital division. The stock was also being pressured by a downgrade by Peel Hunt from 'buy' to 'hold'.

0933: The drop in UK´s gross domestic product in the first quarter, at an 0.3 per cent quarter-on-quarter clip, has just been confirmed by the Office for National Statistics. The previous quarter´s contraction on the other hand has been revised to show an 0.4 per cent drop, versus the previous estimate showing an 0.3 per cent fall. The current account deficit meantime reached 11.2 billion pounds in quarter one after -9 billion pounds in quarter four of 2011. FTSE 100 down 47 to 5,477.

0912: Evraz is one of the biggest percentage decliners on the top share index at the moment. That after Goldman Sachs lowered its target on the steel-maker to 410p from 700p before. Reckitt Benckiser has also taken a hit from a broker downgrade this morning. Credit Suisse has lowered the company to neutral from outperform and their price target to 3500p from 3800p previously. Nevertheless, the biggest loser at this time is Barclays, due in part no doubt to the recent negative news flow around the lender. On the positive side of the ledger, defensives such as United Utilities, Severn Trent or AstraZeneca are the clear winners now. FTSE 100 down 43 to 5,481.

0853: Barclays also seems to be a bit cautious this morning regarding the possible outcome of the European summit, with its analysts commenting that, "we expect these discussions to draw a road map for fiscal, financial and political union, but we do not anticipate any major decisions on concrete short-term measures to reduce market stress beyond what has already been agreed.” Ruspetro was an early gainer on the back of news that Goldman Sachs has initiated coverage with a buy recommendation, although the move higher has since faded. DS Smith is leading gainers on the FTSE 350 after unveiling a 44% increase in full-year pre-tax profit. Singer Capital Markets has initiated Premier Oil at buy. UK home prices fell 0.6% month-on-month in June, according to Natiowide. FTSE 100 down 30 to 5,494.

0841: UK stocks have started the day down sharply, as investors pull in their horns before the European summit which begins today. Of interest, some reports cite German government officials as saying that the summit must focus on precise and quick help for Spain. However, at least some observers are wary that not too much can be expected from European leaders with a view to the short term. In this regard, Bloomberg cites Niall Ferguson, a professor of economic history at Harvard University, as having said that, “the timeframe for financial crises is days. The timeframe for structural reforms is years.” Also worth noting, Spanish bond yields are again at 7%, ahead of this morning´s auction of Italian long-term debt, which may be pressuring shares of the major banks. In the equity space, bookmaker Ladbrokes is leading losses on the FTSE 350 has said profits from its digital division will fall more than expected in the first half. Debenhams is also seeing selling pressure after announcing reduced gross margins for this year. FTSE 100 down 3 to 5,521.

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