Date: Friday 06 Jul 2012
- Markets look ahead to US jobs report
- Investors shrug off central bank action
- Aviva jumps on Delta Lloyds disposal
The Footsie was trading within a narrow range on Friday morning as investors showed caution ahead of a pivotal employment report due out in the US in the coming hours.
Stocks on Thursday seemed to shrug off the news that the Bank of England (BoE) ramped up its asset purchase programme and the European Central Bank (ECB) and the People's Bank of China (PBoC) both slashed their benchmark interest rates.
Critics to the BoE move said that the £50bn increase in quantitative easing will only have a marginal effect on the real economy. ECB governing council member Erkki Liikanen said that the European rate cut should not be expected to save the day. Meanwhile, some say that the Chinese decision reflects policymakers' concerns about a 'hard-landing'.
"Risky assets failed to rally yesterday despite policy easing measures in China, the euro area and the UK. With the data calendar otherwise light today, the market's full attention therefore turns to the US employment report," said Barclays Capital analyst Khrishnamoorthy Sooben.
The monthly jobs data from the Labor Department is expected to see over 100,000 non-farm payrolls added in June. The jobless rate is expected to remain at 8.2%.
In other news, the International Monetary Fund (IMF) has warned that it is planning to lower its global growth forecast of 3.5% this year in light of the economic situation becoming "more worrisome".
UK producer prices fell at an 0.4% month-on-month rate in June (2.3% year-on-year), according to the latest data from the Office for National Statistics. This is the largest monthly fall since November 2008, when the index fell 0.7%. The consensus estimate was for a decrease of 0.2% (2.4% year-on-year).
Having promised on Thursday that it would raise money from disposals, insurance giant Aviva moved quickly to act on that pledge by saying it will sell more of its stake in Delta Lloyd than originally intended, prompting a sharp rise in its share price this morning. Providing a lift was Societe Generale which upgraded the stock from 'sell' to 'hold'.
Food, ingredients and retail firm Associated British Foods rose after saying that it is to buy ethnic flour brand Elephant Atta from Premier Foods for £34m. Analysts at Panmure Gordon said this morning that the acquisition is a "perfect fit" for AB Foods.
Miners were firmly out of favour today despite the Chinese rate cut as worries about a steep slowdown in the world's second-largest economy weighed on sentiment. Polymetal, Evraz, Kazakhmys, Glencore and Rio Tinto were registering losses. Luxury brand Burberry, a business heavily exposed and heavily dependent on growth in China, also slumped.
Plumbing and heating group Wolseley was being pressured lower after Morgan Stanley downgraded its rating on the stock to 'equal weight'. Meanwhile, Barclays was lower after after Bernstein cut its rating to 'market perform'.
Pharmaceuticals giant AstraZeneca was in the red after Jefferies downgraded its rating on the stock from 'buy' to 'hold', following the recent strong performance in the shares. Jefferies says that it sees "major fundamental challenges" for the group, including its clinical and business development capabilities/decision making.
Engineering software firm AVEVA was a high riser after Berenberg upgraded the stock to 'buy' and lifted its target price from 1,660p to 1,927p.
Support services firm Carillion was a heavy faller after UBS downgraded the stock from 'neutral' to 'sell' and cut its target price from 285p to 230p. UBS said that the firm's first-half trading update showed a "deterioration in growth prospects" and that UK construction margins are "clearly not sustainable".
FTSE 100 - Risers
Aviva (AV.) 293.90p +3.27%
International Consolidated Airlines Group SA (CDI) (IAG) 158.40p +1.73%
G4S (GFS) 291.20p +1.64%
BT Group (BT.A) 215.60p +1.17%
InterContinental Hotels Group (IHG) 1,559.00p +1.17%
Shire Plc (SHP) 1,821.00p +1.05%
Imperial Tobacco Group (IMT) 2,565.00p +1.02%
SSE (SSE) 1,404.00p +0.72%
HSBC Holdings (HSBA) 570.40p +0.71%
Reckitt Benckiser Group (RB.) 3,523.00p +0.71%
FTSE 100 - Fallers
Polymetal International (POLY) 867.00p -3.02%
ICAP (IAP) 316.30p -2.95%
Evraz (EVR) 250.90p -2.68%
Marks & Spencer Group (MKS) 320.90p -2.52%
CRH (CRH) 1,185.00p -2.39%
Wolseley (WOS) 2,365.00p -2.11%
Burberry Group (BRBY) 1,314.00p -1.87%
Kingfisher (KGF) 271.00p -1.67%
Kazakhmys (KAZ) 746.50p -1.52%
Experian (EXPN) 940.50p -1.42%
FTSE 250 - Risers
Aveva Group (AVV) 1,750.00p +3.12%
Soco International (SIA) 332.70p +2.02%
Beazley (BEZ) 144.00p +1.84%
Yule Catto & Co (YULC) 141.00p +1.66%
Ferrexpo (FXPO) 224.40p +1.54%
Spirent Communications (SPT) 168.90p +1.44%
BH Macro Ltd. GBP Shares (BHMG) 1,928.00p +1.21%
ITE Group (ITE) 200.00p +1.21%
Cable & Wireless Communications (CWC) 29.80p +1.19%
Shaftesbury (SHB) 532.50p +1.14%
FTSE 250 - Fallers
Carillion (CLLN) 254.00p -5.19%
Avocet Mining (AVM) 62.40p -3.26%
Petropavlovsk (POG) 464.90p -2.66%
Spirit Pub Company (SPRT) 46.50p -2.62%
Carpetright (CPR) 642.00p -2.58%
SIG (SHI) 98.70p -2.57%
Imagination Technologies Group (IMG) 470.90p -2.53%
Jupiter Fund Management (JUP) 213.70p -2.38%
Atkins (WS) (ATK) 711.50p -2.33%
Barratt Developments (BDEV) 138.40p -2.26%
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