Date: Monday 10 Sep 2012
- Markets await German ruling on ESM and FOMC meeting
- Trade data in China disappoints
- Miners gain on hopes for QE
The FTSE 100 was trading within a narrow range on Monday morning, with just 20 points between the intraday high and low, as investors continued to show caution ahead of what's likely to be another busy week on the markets.
"European financial markets are little changed heading into the lunch today, with investors cutting exposure to risk ahead of key events this week including the German court ruling on the ESM and the Fed’s monthly policy meeting," said market strategist Ishaq Siddiqi from ETX Capital.
"Both events present plenty of risk as traders feel increasingly uncertain over the outcomes, unlike last week’s ECB meeting in which it looked almost certain the certain the central bank was on course to deliver stimulus."
Stocks were given a boost towards the end of last week after European Central Bank (ECB) President Mario Draghi unveiled details of the bank's bond-buying programme, which included unlimited and sterilised purchases of sovereign debt with maturities of between one and three years.
The plan has received the backing of the International Monetary Fund (IMF) with Managing Director Christine Lagarde throwing her support behind its this weekend: "Our sense is that now the euro partners know exactly what they have to do," she said.
However, markets are likely to be under pressure today by some gloomy economic data from China. The world's second-largest economy reported significantly worse-than-expected import figures for August, falling for the first time in a non-holiday period since 2009. This after industrial production data released on Sunday came in slightly below forecasts for August, revealing an 8.9% year-on-year pace of expansion.
Mining stocks were performing well this morning, with Xstrata among the risers following Friday's eleventh-hour adjustment to the offer by Glencore. Glencore released its proposal to Xstrata this morning, saying that "it is content with Xstrata's request for Xstrata management and senior employees to receive appropriate retention and incentive packages."
UBS said that the outlook for the UK mining sector is improving with quantitative easing (QE) measures now expected. The broker said: "QE triggers a return of capital flows to emerging markets, incentivising companies to stop running for cash and embark on a commodity bullish restocking phase. As in the past, QE is likely to drive up commodity prices and in turn mining equities." Fresnillo, Vedanta, Rio Tinto and Kazakhmys were high risers early on.
Banking group Barclays was making gains after UBS raised its target price for the stock from 205p to 235p and reiterated its 'buy' recommendation. The broker said that there is "potentially significant upside if new CEO changes strategy".
Oil major BP rose on rumours that it is in advanced talks to sell a group of oilfields in the Gulf of Mexico to US outfit Plains Exploration & Production.
Primark and sugar group AB Foods was out of favour despite saying that adjusted operating profits in the second half will be well ahead of last year and in line with expectations. Investec said this morning it expects to lower its full-year EPS estimate due to the weaker-than-expected profits in the Ingredients division.
Spirax-Sarco was performing well after Goldman Sachs upgraded the stock to 'buy' and raised its target price from 2,100p to 2,510p. Meanwhile, Laird headed the other way after the US broker cut its recommendation to 'sell'.
Pubs group Mitchells & Butlers advanced after appointing Alistair Darby, the former Chief Operating Officer at Marston's, as its new Chief Executive.
Reinforced polymer technology firm Fenner edged higher after saying that current trading remains in line with expectations in spite of the continuing macroeconomic uncertainty.
FTSE 100 - Risers
Fresnillo (FRES) 1,794.00p +4.06%
Vedanta Resources (VED) 1,014.00p +3.95%
Kazakhmys (KAZ) 682.50p +3.80%
Marks & Spencer Group (MKS) 373.20p +3.32%
Antofagasta (ANTO) 1,266.00p +3.26%
Rio Tinto (RIO) 3,110.50p +2.96%
Xstrata (XTA) 1,038.50p +2.42%
Royal Bank of Scotland Group (RBS) 250.30p +2.37%
Anglo American (AAL) 2,013.00p +2.05%
Eurasian Natural Resources Corp. (ENRC) 345.30p +1.95%
FTSE 100 - Fallers
SABMiller (SAB) 2,701.50p -2.21%
Associated British Foods (ABF) 1,281.00p -1.91%
British American Tobacco (BATS) 3,116.00p -1.81%
Unilever (ULVR) 2,239.00p -1.58%
National Grid (NG.) 683.50p -1.30%
Hammerson (HMSO) 462.60p -1.26%
United Utilities Group (UU.) 692.50p -1.21%
Reckitt Benckiser Group (RB.) 3,596.00p -1.21%
Glencore International (GLEN) 373.60p -1.18%
Tesco (TSCO) 343.10p -1.14%
FTSE 250 - Risers
Spirax-Sarco Engineering (SPX) 2,133.00p +4.82%
Bwin.party Digital Entertainment (BPTY) 100.60p +4.57%
Bank of Georgia Holdings (BGEO) 1,300.00p +4.25%
Petropavlovsk (POG) 391.80p +3.65%
Dunelm Group (DNLM) 600.00p +3.54%
Dixons Retail (DXNS) 19.90p +3.22%
Hays (HAS) 79.20p +3.12%
Ferrexpo (FXPO) 188.50p +3.12%
Centamin (DI) (CEY) 84.75p +2.73%
Lonmin (LMI) 611.00p +2.52%
FTSE 250 - Fallers
Laird (LRD) 232.30p -3.45%
Wetherspoon (J.D.) (JDW) 453.20p -2.52%
Dairy Crest Group (DCG) 350.00p -2.02%
BH Global Ltd. USD Shares (BHGU) 11.34 -1.73%
Premier Oil (PMO) 380.80p -1.70%
Salamander Energy (SMDR) 198.00p -1.64%
Millennium & Copthorne Hotels (MLC) 494.10p -1.48%
BTG (BTG) 305.80p -1.45%
Premier Farnell (PFL) 188.00p -1.42%
Derwent London (DLN) 1,908.00p -1.24%
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