By Benjamin Chiou
Date: Monday 23 Jul 2012
- Footsie near one-month low
- Spanish regions ask for aid; bond yields surge
- Evraz leads the Footsie lower
Indices across Europe and the US tanked on Monday, with the FTSE 100 finishing near a one-month low, as Eurozone debt concerns spread fear across equity markets.
The Footsie dropped 2.09% today with every constituent finishing flat or in the red; the last time the Footsie closed lower was June 28th when it finished at 5,493.
The German Bundestag voted on Thursday to support Spain's application for EFSF aid for its banks, while the Eurogroup approved the terms of the 'up to €100bn' loan for Spain on Friday. However, the focus has now shifted to Spain's regions, after Valencia (and Murcia, according to some media outlets) asked the government for financial help from the newly established support fund. Catalonia may also be close to asking for aid, according to reports.
Bond yields have soared as of late prompting concerns that the Spanish government may have to ask for a full-scale bailout. The yield on a 10-year Spanish Treasury was up 21.1 basis points at 7.478% by the close, well above the 'unsustainable' level of 7.0%.
"With borrowing costs now rising on shorter term debt, something Spain have been reliant on recently, the country is on borrowed time to bring yields down," said analyst Craig Erlam from Alpari.
Meanwhile, the International Monetary Fund (IMF) has told the European Union (EU) that it will not provide any additional funds for Greece, prompting concerns that the country will default on its debt. German Vice Chancellor Philipp Roesler said he is "very skeptical" that the Troika can rescue Greece.
Steel giant Evraz was pressured lower by comments from Morgan Stanley. The US investment bank said today that the group's plans to generate $5bn in EBITDA in 2016 is "ambitious" compared with its own base-case forecast of $3.1bn. "EVRAZ assumes higher steel and raw material prices than we do, as well as additional improvements in EBITDA from projects where we think it too soon to put in our base case."
The share prices of companies closely linked to stock markets such as Aviva and Hargeaves Lansdown were also under pressure, naturally enough. Furthermore, Sanford Bernstein shaved its price target on Aviva to 385p, from 390p before.
Also worth noting, JP Morgan Cazenove called attention today to a 60% spike in PPI claims at the UK´s four biggest banks during the month of May.
Fund manager Aberdeen Asset Management saw assets under management slip 1% in the third quarter, but says that this result was resilient amidst an uncertain environment. Shares edged lower.
Property giant Hammerson edged higher after seeing net rental income fall 1.6% in the six months to the end of June, though it was up 2.4% on a like-for-like basis.
Water group Pennon was lower despite saying it has signed a 25-year waste services contract with Glasgow City Council, a key part of its growth strategy in Scotland.
African Barrick Gold (ABG) tumbled today after announced that attributable gold production dropped 14% in the first half, while revenue fell 8% and EBITDA fell 30%. ABG also announced that it is proposing to buy up the outstanding share capital of Aviva Mining (Kenya), its first expansion outside Tanzania.
Sector peer Aquarius Platinum was also among the fallers after it said that the likelihood of industrial action over the South African winter is high. "Aquarius is by no means immune to this threat, and intermittent unlawful industrial action has occurred at one of Kroondal's four shafts in July."
LED lighting group Dialight was a rare high riser after seeing revenues climb 18.2% and operating profits rise 21% in the half year ended June 30th.
FTSE 100 - Risers
FTSE 100 - Fallers
Evraz (EVR) 218.10p -6.95%
Aviva (AV.) 275.20p -6.62%
Vedanta Resources (VED) 835.00p -5.17%
Hargreaves Lansdown (HL.) 548.00p -4.61%
Schroders (SDR) 1,280.00p -4.41%
Petrofac Ltd. (PFC) 1,409.00p -4.41%
ITV (ITV) 72.00p -4.38%
Barclays (BARC) 152.55p -4.21%
Johnson Matthey (JMAT) 2,108.00p -4.14%
Kazakhmys (KAZ) 674.50p -4.12%
FTSE 250 - Risers
Dialight (DIA) 1,049.00p +5.22%
Computacenter (CCC) 344.00p +2.29%
Dechra Pharmaceuticals (DPH) 495.00p +2.19%
Perform Group (PER) 370.00p +1.93%
NMC Health (NMC) 199.50p +1.42%
Daejan Holdings (DJAN) 2,874.00p +1.30%
Big Yellow Group (BYG) 298.70p +1.25%
CSR (CSR) 301.70p +0.90%
KCOM Group (KCOM) 74.50p +0.54%
International Public Partnerships Ltd. (INPP) 122.20p +0.25%
FTSE 250 - Fallers
African Barrick Gold (ABG) 317.00p -16.00%
COLT Group SA (COLT) 111.20p -8.10%
Aquarius Platinum Ltd. (AQP) 39.07p -8.01%
Dixons Retail (DXNS) 15.30p -7.38%
Afren (AFR) 119.40p -7.23%
Morgan Crucible Co (MGCR) 252.20p -6.59%
Lonmin (LMI) 663.00p -6.29%
Taylor Wimpey (TW.) 43.90p -6.24%
Yule Catto & Co (YULC) 137.20p -6.22%
International Personal Finance (IPF) 236.20p -5.82%
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