| | Monday 30 July 2012 QUOTE OF THE DAY A study of economics usually reveals that the best time to buy anything is last year
- Marty Allen
THIS MORNING IN LONDON FTSE 100 5,660.06 
32.85 0.58% FTSE 250 11,211.40
32.39 0.29% FTSE 350 3,006.52
16.31 0.55% FTSE All Share 2,940.53
15.83 0.54% AIM 100 3,011.15 
-1.21 -0.04% AIM All Share 669.60
0.69 0.10% 11:49 am
Stimulus hopes drive risk appetite
- Juncker says leaders have 'no time to lose'
- Markets await policy decisions by ECB and Fed
- Yields fall at Italian bond auction
European stock markets were making moderate gains on Monday morning as risk appetite increased on the back of hopes of central bank action this week in Europe and the US.
Eurogroup head Jean-Claude Juncker said in newspaper interviews this weekend that policy-makers have "no time to lose" to decide on measures to deal with escalated bond yields in peripheral Eurozone nations like Spain. "The euro countries have reached a point where we have to use all means possible to show that we are determined to protect the stability of the euro zone... nobody should doubt the will of those involved, to prove our determination," Juncker said.
Equity markets surged late last week after European Central Bank (ECB) President Mario Draghi said on Thursday that the ECB would do "whatever it takes to preserve the euro...and believe me, it will be big enough".
"The ECB president has been reluctant to intervene in the bond markets until now, regularly pointing out that ECB intervention would not solve the fundamental problems. However, with the debt crisis spiralling out of control, it looks like Draghi has finally been persuaded to buy the leaders some more time," said analyst Craig Erlam from Alpari.
Helping sentiment today was an Italian bond auction in which the country managed to sell EURO5.479bn of debt, the top-end of its EURO3-5.5bn target. The average yield on 10-year notes edged lower from 6.19% in the prior auction to 5.96%, while demand remained steady. Five-year bond yields fell from 5.84% to 5.29%.
Meanwhile, markets are also hoping that the Federal Reserve will implement more quantitative easing (QE) at its two-day policy meeting which starts tomorrow. Poor labour, manufacturing and GDP data as of late have added to expectations that the Fed will act.
FTSE 100: Financials and miners make gains
The banking and resources sectors were among the best performers on Monday as risk appetite increased on the back of stimulus hopes. Barclays, RBS, ENRC and Xstrata were high risers by lunchtime. Global banking group HSBC was among them after seeing an 11% rise in reported pre-tax profit in the first half to $12.7bn.
Publishing group Pearson was firmly out of favour following Friday's first-half results. Nomura maintained its 'reduce' rating on the stock this morning, saying that organic growth of just 0.6% is "unfeasibly lower" for a 14.4x P/E multiple.
Consumer products group Reckitt Benckiser fell after 3.8% organic growth in the first half came short of consensus estimates of 4.2%. Jefferies maintained its 'hold' rating on the stock this morning, saying that there has been "some evidence of margin decline".
Electricity and gas provider National Grid edged higher after saying it achieved a "solid operational and financial performance" in its first quarter and is keeping its positive outlook for the full year unchanged.
Diversified miner Anglo American was out of favour after a number of brokers reduced their target prices on the stock. Credit Suisse slashed its own target from 2,500p to 2,200p this morning, after cutting its EPS estimates on the back of lower volumes within copper and iron ore.
FTSE 250: Fidessa leads the fallers after disappointing first half
Trading systems developer Fidessa was a heavy faller after top line growth was below forecasts in the first half, as falling sales in Europe dampened revenues at the group level. Revenues rose 3% during the six months to June 30th from GBP137m to GBP141.3m, short of Peel Hunt's GBP144m estimate.
Specialised technical products and services provider Diploma followed suit was out of favour after saying that underlying revenue growth was just 5% against a strong prior-year comparative.
Defence-focused technology firm Ultra Electronics also fell despite saying that sales to UK and US nuclear submarine programmes helped boost profits in the first half. Underlying pre-tax profit rose 5% to GBP54.5m, pushing earnings per share up 6% to 58.1p.
FTSE 100 - Risers
Evraz (EVR) 237.20p +3.81%
Weir Group (WEIR) 1,715.00p +3.38%
Barclays (BARC) 171.50p +2.69%
International Consolidated Airlines Group SA (CDI) (IAG) 154.90p +2.51%
Xstrata (XTA) 842.50p +2.37%
Petrofac Ltd. (PFC) 1,490.00p +1.98%
Aviva (AV.) 292.00p +1.96%
Eurasian Natural Resources Corp. (ENRC) 392.00p +1.92%
Royal Bank of Scotland Group (RBS) 218.50p +1.86%
Ashmore Group (ASHM) 330.00p +1.82%
FTSE 100 - Fallers
Pearson (PSON) 1,195.00p -2.85%
Tesco (TSCO) 317.55p -1.07%
Aberdeen Asset Management (ADN) 262.00p -0.83%
Reckitt Benckiser Group (RB.) 3,516.00p -0.73%
Imperial Tobacco Group (IMT) 2,451.00p -0.69%
SABMiller (SAB) 2,761.00p -0.68%
Sainsbury (J) (SBRY) 321.10p -0.65%
Reed Elsevier (REL) 545.00p -0.64%
RSA Insurance Group (RSA) 110.90p -0.63%
Anglo American (AAL) 1,883.50p -0.55%
FTSE 250 - Risers
Devro (DVO) 293.50p +5.58%
Avocet Mining (AVM) 75.45p +4.50%
Dixons Retail (DXNS) 16.60p +3.62%
Cairn Energy (CNE) 284.50p +3.45%
Stobart Group Ltd. (STOB) 120.80p +3.25%
Home Retail Group (HOME) 76.50p +3.17%
EnQuest (ENQ) 111.40p +2.86%
Michael Page International (MPI) 358.40p +2.84%
International Personal Finance (IPF) 280.50p +2.75%
Bank of Georgia Holdings (BGEO) 1,173.00p +2.54%
FTSE 250 - Fallers
Fidessa Group (FDSA) 1,411.00p -5.93%
Diploma (DPLM) 419.80p -5.87%
Redrow (RDW) 124.20p -4.31%
Computacenter (CCC) 350.60p -4.23%
Senior (SNR) 193.50p -2.37%
Drax Group (DRX) 465.70p -2.06%
Sports Direct International (SPD) 283.70p -2.00%
Barratt Developments (BDEV) 136.10p -1.87%
Ladbrokes (LAD) 159.90p -1.60%
Amlin (AML) 379.10p -1.53%
WHAT THE BROKERS SAY Fidessa: Jefferies keeps hold recommendation and 1,510p target; Merchant Securities maintains buy rating; Investec puts target under review, sell rating kept.
Reckitt Benckiser: Investec keeps hold rating and 3,600p target; Nomura keeps buy rating and 3,900p target.
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THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: Falkland Oil & Gas Lansdowne Oil & Gas Where have all the retail gone? Falkland Oil & Gas Running trading thread
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BOOK OF THE WEEK  By Peter Lynch and John Rothchild
A book review by Ross Jones From when Lynch took over the management of Fidelity's Magellan Fund in 1977, until his departure in 1990 he delivered his investors an annualised return of 29.2%, outperforming the benchmark US markets by 13.4%, growing funds under management from $18 million to circa $14 billion. This is pretty spectacular and warrants investigation into how this was achieved.
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