Date: Tuesday 23 Oct 2012
- Corporate earnings in the spotlight
- Spain weighs on sentiment as Moody's downgrades five regions
- Whitbread disappoints, ARM in demand
The FTSE 100 index fell in early trading on Tuesday with growth-sensitive stocks out of favour as investors remain cautious about the Eurozone and ahead of some corporate earnings results due out in the US.
"With the corporate reporting season getting underway, Asian shares have failed to inspire as investors stayed cautious after global shares faltered overnight on weak earnings report and outlook. While excessive risk aversion has softened there is little to be positive about the global growth slowdown, any dip in the markets will however be a buying opportunity," said trade Max Cohen from Spreadex.
Meanwhile, concerns about Spain have increased over the last few days after a decent outcome at the regional elections for Prime Minister Mariano Rajoy is thought to have reduced the pressure on him to request a bailout.
Ratings agency Moody's downgraded five Spanish regions to 'junk' today due to the "deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs."
Markus Huber, head of German HNW Trading at ETX Capital, said this morning: "While so far the downgrade of the five regions had a fairly limited impact on the markets, traders are still expected to keep a close eye on periphery yields today with any spike to the upside most likely to hit stock markets too."
Nevertheless, with few economic data on the agenda today, US corporate earnings will continue to take centre stage with many constituents of the Dow Jones scheduled to report.
"Range trading will most likely continue with further losses possible as stocks are struggling to find any positive news that would give them a new push to the upside, however downside potential should be limited as similar as seen yesterday in the US bargain hunting is likely to set in as traders take advantage of cheaper prices," Huber said.
Luxury brand Burberry was among the worst performers along with mining giants ENRC, Kazakhmys, Vedanta, Rio Tinto and Randgold.
Whitbread disappointed despite first-half revenues topping the one-billion-pound mark after strong performances from Premier Inn and Costa Coffee.
Heading the other way was information services firm Experian after increasing its holding in Serasa, Brazil's leading personal credit checker.
Chip designed ARM Holdings jumped after sales and profits beat forecasts in the third quarter. The firm's outlook for the final three months was also upbeat as it boosted a record order backlog and robust opportunity pipeline.
Building materials group CRH was a heavy faller after HSBC downgraded its rating on the stock to 'neutral'. Consumer products firm Unilever was also lower after Oriel Securities cut its recommendation to 'hold'.
Banking group Lloyds was lower this morning. Credit Suisse reiterated its 'neutral' rating for the lender ahead of its third-quarter results on November 1st. The broker said that "given recent strength the stock should give back some of the gains".
Shares in defence group Chemring dropped after its CEO David Price resigned with immediate effect. He will be replaced by Mark Papworth, a former Wood Group executive.
Wireless technology firm CSR jumped after revenues were up in the third quarter as it said it had successfully completed a deal with Samsung, paving the way for a big investor pay out.
Morgan Crucible, the British maker of ceramics used in wind-turbine blades, was in demand on speculation that it has become a potential takeover target.
Technology group Laird gained after expressing confidence that it will meet its expectations for the full year on the back of a solid third quarter.
Meanwhile, AIM-listed upmarket handbags and leather accessories group Mulberry plunged after its said that full-year revenues would be below expectations.
FTSE 100 - Risers
Experian (EXPN) 1,088.00p +3.92%
ARM Holdings (ARM) 609.50p +2.52%
Tesco (TSCO) 317.60p +0.81%
Babcock International Group (BAB) 963.00p +0.52%
Wolseley (WOS) 2,670.00p +0.34%
Centrica (CNA) 326.90p +0.28%
National Grid (NG.) 707.00p +0.21%
British Sky Broadcasting Group (BSY) 725.00p +0.14%
United Utilities Group (UU.) 722.50p -0.07%
Pearson (PSON) 1,211.00p -0.08%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,118.00p -4.61%
Whitbread (WTB) 2,248.00p -3.23%
Kazakhmys (KAZ) 734.00p -2.97%
Eurasian Natural Resources Corp. (ENRC) 336.60p -2.66%
Vedanta Resources (VED) 1,113.00p -2.54%
Rio Tinto (RIO) 3,120.50p -2.30%
Glencore International (GLEN) 342.30p -2.27%
Xstrata (XTA) 971.20p -2.17%
Lloyds Banking Group (LLOY) 39.94p -2.16%
Antofagasta (ANTO) 1,281.00p -2.14%
FTSE 250 - Risers
CSR (CSR) 368.00p +8.65%
Savills (SVS) 410.70p +1.99%
COLT Group SA (COLT) 120.30p +1.35%
F&C Asset Management (FCAM) 96.35p +1.31%
Computacenter (CCC) 372.20p +1.22%
Grainger (GRI) 108.30p +1.22%
JD Sports Fashion (JD.) 765.00p +1.19%
JPMorgan American Inv Trust (JAM) 941.00p +1.18%
Dialight (DIA) 1,161.00p +1.13%
Perpetual Income & Growth Inv Trust (PLI) 283.80p +1.10%
FTSE 250 - Fallers
Chemring Group (CHG) 319.00p -7.88%
Man Group (EMG) 78.45p -3.09%
Bumi (BUMI) 252.20p -2.89%
Kenmare Resources (KMR) 41.68p -2.57%
Lonmin (LMI) 495.40p -2.29%
Homeserve (HSV) 234.00p -2.13%
Bwin.party Digital Entertainment (BPTY) 119.20p -2.13%
Talvivaara Mining Company (TALV) 133.40p -2.06%
Centamin (DI) (CEY) 102.30p -1.63%
Pace (PIC) 160.70p -1.53%
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