Date: Friday 28 Sep 2012
Early gains dissipated in London and by the time Wall Street opened lower investors were in the mood to bank some of this quarter's handsome gains; despite today's fall, the top share index still put on close to 250 points in the third quarter.
Sentiment was boosted early on by consumer confidence data that was not as bad as feared. Consultancy GfK´s consumer confidence gauge for the month of September rose by 1 point in September, to -28. The consensus estimate was for a retreat to -30.
The increase in the index comes after it was unchanged for four consecutive months and could mark the start of an improvement in consumer confidence after an extended period of weakness, commented analysts at Barclays Research.
The UK´s index of services came in at a 1.1% month-on-month rate of change for July (Consensus: 1.5%). On a three month basis the gauge rose by 0.1%, ONS says, as expected.
Data such as the above confidence numbers seems to have led quite a few UK economists to wax increasingly optimistic as regards the outlook for the economy. That as the squeeze on consumers is now expected to recede and given the recent strong employment and labour force participation numbers.
Yet not all observers are of an equally positive bent -as regards the outlook for stocks, admittedly- although they do tend to be strongly correlated with expectations for the economy. Thus, Charles Stanley was today telling clients the following: "(…) central bankers have attempted bold policy initiatives to try and breathe life into moribund developed industrial economies. We remain hugely sceptical regarding the ability of quantitative easing to deliver this goal given pronounced supplyside pressures, but what is not in doubt is the Pavlovian performance of risk assets generally to liquidity infusions. (…) We have been in contact with our colleagues on the options desk and believe that now might be a very good time to start taking out some portfolio protection against a sharp set-back in global equity markets over the final quarter of the year, regardless of the view that Dr Draghi and Dr Bernanke might have “backstopped” risk which, frankly, we doubt.”
Car insurer Admiral was lower after the Office of Fair Trading (OFT) referred the private motor insurance market to the Competition Commission, as it is concerned that the market is not working well for motorists.
Bearing in mind the OFT's move it was not, perhaps, the best day for state-owned lender Royal Bank of Scotland (RBS) to release more details of its proposed flotation of its insurance arm, the Direct Line Group.
The flotation will be priced somewhere between 160p and 195p per share. The maximum number of shares to be floated will be 575m shares, but the actual number is expected to be somewhere between 375m and 500m, which represent between one-quarter and one-third of the existing share capital of Direct Line.
Final pricing is currently expected to be announced on or around October 11th, 2012, with conditional dealings in the shares on the London Stock Exchange beginning the same day.
Bourses operator London Stock Exchange (LSE) has had a bad week. On Wednesday it revealed the extent to which equity trading volumes have been hit by worries over the Eurozone crisis. Today, it was bashed after it warned that proposed European regulatory changes will cut net treasury income over next financial year.
Recommendations published by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) look set to change the rules of the game, and differ considerably from the initial proposals published in March 2012.
"If adopted in their current form, the recommendations will have some implications for LSE's existing wholly owned subsidiary CCP, CC&G," it added.
The move could significantly reduce net interest income from its Italian clearing house, which currently accounts for over 15% of total group revenue.
Nick Buckles, Group Chief Executive Officer (CEO) of security firm G4S, is to keep his job after dodging the blame in the group's internal report into the Olympics staffing fiasco.
David Taylor-Smith, Chief Operating Officer and Regional Chief Executive Officer of UK and Africa, and Ian Horseman Sewell, Managing Director, G4S Global Events, have been thrown under the bus, however, leading to a shake-up in the management structure of G4S.
Electronics components distributor Electrocomponents blew a fuse after it issued a profit warning. First half performance is now expected to be lower than anticipated, although the group expect profits in the second half to benefit from a combination of a return to sales growth and actions to improve operating margins.
Pubs owner Mitchells and Butlers said like-for-like (LFL) sales increased 3% in the nine weeks to September 15th as the Olympic and Paralympic Games had little impact on overall sales. Total LFL sales for the 51 weeks to September rose 2.1% with food sales up 2.9% and drink sales up 1.4%.
Multi-national design and engineering consultancy Hyder said it now expects first half pre-tax profit to be well ahead of previous forecasts, buoyed by the timing of performance bonuses earned in Australia.
Package tour operator Thomas Cook issued the comforting news that it continues to expect full year results will be in line with market expectations, which were set by the group's interim management statement in August. The group has enjoyed a late surge in bookings from Brits anxious to escape the soggy summer.
Vodafone has seen its price target slashed at Goldman Sachs, to 227p from 233p. Analysts at HSBC have upgraded their view on shares of Tesco to "overweight" but Seymour Pierce has gone the other way, downgrading their recommendation to "reduce" from "hold". Plumbers' merchant Wolseley was upgraded by Deutsche Bank to "buy" from "hold".
Equities were not the only investments relinquishing the morning's gains; the price of gold for December delivery declined in the afternoon session, sliding to $1,775.60 an ounce, down $4.90 on the day.
Brent crude also headed south, with the November contract 16 cents cheaper at $111.85.
Gilts also gave up most of the morning's gains, with the benchmark 10-year gilt closing little changed.
FTSE 100 - Risers
Fresnillo (FRES) 1,853.00p +4.22%
Polymetal International (POLY) 1,085.00p +2.36%
Randgold Resources Ltd. (RRS) 7,615.00p +1.87%
Antofagasta (ANTO) 1,262.00p +1.28%
Vedanta Resources (VED) 1,029.00p +0.98%
Babcock International Group (BAB) 927.00p +0.98%
Evraz (EVR) 246.60p +0.86%
Aberdeen Asset Management (ADN) 311.10p +0.84%
Croda International (CRDA) 2,425.00p +0.83%
G4S (GFS) 265.70p +0.76%
FTSE 100 - Fallers
Compass Group (CPG) 683.50p -2.98%
Admiral Group (ADM) 1,053.00p -2.95%
International Consolidated Airlines Group SA (CDI) (IAG) 149.00p -1.65%
Anglo American (AAL) 1,817.00p -1.65%
Standard Chartered (STAN) 1,400.00p -1.48%
National Grid (NG.) 683.00p -1.44%
Melrose (MRO) 242.20p -1.42%
WPP (WPP) 841.50p -1.35%
RSA Insurance Group (RSA) 110.50p -1.34%
Johnson Matthey (JMAT) 2,413.00p -1.31%
FTSE 250 - Risers
Stobart Group Ltd. (STOB) 117.70p +4.53%
Centamin (DI) (CEY) 92.50p +3.18%
Kentz Corporation Ltd. (KENZ) 430.90p +3.06%
Oxford Instruments (OXIG) 1,375.00p +3.00%
Ophir Energy (OPHR) 608.00p +2.96%
Afren (AFR) 140.10p +2.79%
Unite Group (UTG) 263.60p +2.69%
Mondi (MNDI) 630.00p +2.61%
Genus (GNS) 1,512.00p +2.44%
Telecity Group (TCY) 895.50p +2.28%
FTSE 250 - Fallers
Electrocomponents (ECM) 200.30p -8.83%
London Stock Exchange Group (LSE) 943.00p -8.00%
FirstGroup (FGP) 240.00p -4.46%
NMC Health (NMC) 181.00p -3.72%
Homeserve (HSV) 210.00p -3.63%
National Express Group (NEX) 209.70p -3.36%
New World Resources A Shares (NWR) 265.00p -2.79%
Go-Ahead Group (GOG) 1,312.00p -2.74%
ICAP (IAP) 321.10p -2.70%
Imagination Technologies Group (IMG) 475.00p -2.64%
FTSE TechMARK - Risers
Sepura (SEPU) 86.75p +3.89%
Ark Therapeutics Group (AKT) 3.48p +3.73%
Innovation Group (TIG) 22.00p +3.53%
Psion (PON) 88.00p +2.92%
RM (RM.) 82.62p +2.64%
Kofax (KFX) 306.25p +2.42%
Vectura Group (VEC) 86.50p +2.37%
FTSE TechMARK - Fallers
AEA Technology Group (AAT) 0.055p -8.33%
Skyepharma (SKP) 92.00p -1.60%
Phoenix IT Group (PNX) 152.50p -1.29%
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