Friday 14 September 2012
QUOTE OF THE DAY
The successful man is the one who finds out what is the matter with his business before his competitors do
- Roy L. Smith
THIS MORNING IN LONDON
FTSE 100
5,906.97
87.05 1.50%
FTSE 250
12,096.57
250.04 2.11%
FTSE 350
3,151.50
48.95 1.58%
FTSE All Share
3,083.90
47.41 1.56%
AIM 100
3,231.73
64.37 2.03%
AIM All Share
708.98
10.64 1.52%
11:46 am
Mining stocks celebrate QE3
- Footsie at six-month high after Fed decision
- Mining stocks rocket on stimulus plans
- Markets' upside momentum to remain in the weeks ahead, says analyst
London's stock market continued to extend gains on Friday morning after last night's announcement of more stimulus in the US, pushed the FTSE 100 to a six-month high; the index has not closed above 5,900 since March 26th.
"European financial markets are jumping higher in response to fresh liquidity measures from the US Federal Reserve who essentially provided QE3 yesterday, pushing US markets to multi-year highs as a result," said market strategist Ishaq Siddiqi from ETX Capital.
The Fed announced that, in order to bolster the economy and make sure that inflation stays close to its target, it would engage in a third round of quantitative easing (QE3) by buying more mortgage-backed securities at a pace of $40bn per month. It is also sticking with Operation Twist, the programme where it swaps short-dated securities for longer term securities.
"When you add this with the ECB's bond buying plans announced last week, markets have been given another liquidity fix and we are now seeing fresh optimism which could continue into the end of the year. Moreover, promises by Chinese authorities to intervene with easing measures are likely to see the upside momentum remain in the weeks ahead." Siddiqi said.
In other news, Japan has cut its assessment for its economy, with the Cabinet Officer saying that the "recovery appears to be pausing due to deceleration of the world economy".
Meanwhile, Wolfgang Schaeuble, Germany's Finance Minister, has cautioned Spain against asking for further aid on top the EURO100bn for its financial sector: "I'm not in the camp that says 'take the money'," he said.
"I don't share the view of those who say Spain is so much a focus of speculation in the financial markets that we should advise the Spaniards to do anything different from what they're doing...I'm one of those who says we should do everything possible to convince the markets that this speculation against Spain is without any basis in reality, he said.
FTSE 100: Miners dominate the risers in London
Mining stocks were putting in an impressive performance as metals prices gained on a weaker dollar after the Fed announcement. Investors are hoping that an improved US economy will boost the demand for commodities. Kazakhmys, Vedanta, Evraz, Fresnillo, ENRC, Antofagasta and Anglo American all gaining over 7% by lunchtime.
Analyst Patrick Jones from Nomura said this morning: "The US Federal Reserve's announcement of further quantitative easing could provide support for commodity prices and the mining sector. During the 2010 QE2 rally, the copper spot price rose by ~50%, while copper equities doubled on average." The broker said it continues to favour higher quality copper miners over their higher beta peers.
Rio Tinto this morning welcomed Australia's decision to re-examine allowing third parties on a rail network in the Pilbara region which the miner believes could seriously affect its operations.
Royal Bank of Scotland (RBS), Barclays and Lloyds were also making decent gains. RBS announced this morning that it is to launch an initial public offering (IPO) of its Direct Line Insurance Group, completing one of the conditions of its GBP45.5bn bailout from the government in late 2008.
InterContinental Hotels shareholders celebrated the news of the hotel group's special division, which will be 108.4p per share. The Holiday Inns group announced on August 7th that it planned to return $0.5bn of funds to shareholders via a special dividend tied to a share consolidation, plus another $0.5bn through a share buy-back programme, and it has now made good on that pledge.
FTSE 250: Chemring, Wetherspoons gains after updates
Defence contractor Chemring jumped after pushing back the deadline for The Carlyle Group to make an offer, after not receiving word the US asset management group.
Pubs group JD Wetherspoon was in demand after its new financial year has got off to a flying start, helped by a strong performance during the Olympic and Paralympic Games.
Second-tier miners were following their blue-chip peers higher, with Aquarius Platinum, Ferrexpo, Talvivaara, Lonmin and Centamin on the up.
FTSE 100 - Risers
Kazakhmys (KAZ) 769.00p +13.09%
Vedanta Resources (VED) 1,084.00p +12.74%
Evraz (EVR) 291.50p +12.37%
Fresnillo (FRES) 1,887.00p +10.80%
Eurasian Natural Resources Corp. (ENRC) 361.20p +10.29%
Antofagasta (ANTO) 1,339.00p +8.25%
Anglo American (AAL) 2,052.00p +7.49%
Xstrata (XTA) 1,060.00p +6.75%
Glencore International (GLEN) 377.05p +6.72%
Smiths Group (SMIN) 1,077.00p +6.53%
FTSE 100 - Fallers
British Sky Broadcasting Group (BSY) 733.00p -1.48%
GlaxoSmithKline (GSK) 1,418.50p -1.46%
Diageo (DGE) 1,671.50p -1.07%
Reckitt Benckiser Group (RB.) 3,597.00p -1.02%
Intertek Group (ITRK) 2,702.00p -0.99%
AstraZeneca (AZN) 2,887.00p -0.88%
BT Group (BT.A) 235.00p -0.76%
Vodafone Group (VOD) 176.15p -0.68%
British American Tobacco (BATS) 3,163.00p -0.60%
Unilever (ULVR) 2,226.00p -0.58%
FTSE 250 - Risers
Aquarius Platinum Ltd. (AQP) 49.33p +20.02%
Ferrexpo (FXPO) 233.50p +19.13%
Petropavlovsk (POG) 425.10p +12.31%
Kenmare Resources (KMR) 43.39p +8.18%
Centamin (DI) (CEY) 90.25p +8.08%
Essar Energy (ESSR) 123.70p +7.85%
Hunting (HTG) 926.50p +7.48%
Chemring Group (CHG) 351.30p +7.27%
Hochschild Mining (HOC) 481.30p +6.96%
Michael Page International (MPI) 407.80p +6.89%
FTSE 250 - Fallers
Dunelm Group (DNLM) 645.50p -2.05%
Fidessa Group (FDSA) 1,459.00p -1.42%
Ruspetro (RPO) 112.90p -1.31%
RPS Group (RPS) 252.60p -0.86%
TalkTalk Telecom Group (TALK) 187.10p -0.74%
Dialight (DIA) 1,206.00p -0.74%
TR Property Inv Trust Sigma Shares (TRYS) 71.55p -0.62%
Stagecoach Group (SGC) 289.50p -0.52%
Rathbone Brothers (RAT) 1,327.00p -0.52%
HICL Infrastructure Company Ltd (HICL) 122.30p -0.41%
FREE SHARE TIP OF THE DAY
A report by Growth Equities & Company Research
- Summit Corporation has entered a technology license agreement with Bristol-Myers Squibb (NYSE: BMY), that will see the global biopharmaceutical company use Summit's proprietary SeglinTM Technology to identify and develop drug candidates for up to ten targets across multiple therapeutic areas.
- This is in-line with the Group's strategy of placing greater emphasis on clinical development by focusing on the development of its drug programmes targeting Duchenne Muscular Dystrophy (SMT C1100) and C. difficile infection (SMT 19969) - and curtailing internal discovery-stage research.
- With the shares currently trading at just 3.25p, our stance remains speculative buy.
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WHAT THE BROKERS SAY
THE LATEST ON THE CRAZY BOARD
The top 5 hot company threads on the Bulletin Board:
IQE
Agriterra
Eckoh
Ferrex
Running trading thread
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BOOK OF THE WEEK
By Nicolas Sarkis
A book review by James Faulkner of watshot.com
"While less sophisticated players may well prefer to kneel and pray that the poor returns on stocks since 2000 will soon somehow be miraculously transformed into a new bull market, serious investors should instead delve into the history books." These are the words of warning Nicolas Sarkis conveys to his readers as he heralds a "lost era" for equities in the opening chapter of his refreshing appraisal of the investment landscape, Fear and Greed. Sarkis, the founder of investment firm AlphaOne Partners and notable for being the youngest ever Goldman Sachs Associate, sets out to equip readers with the insight necessary to avoid the pitfalls of investing in a "lost era"; indeed, he is well placed to do so, having preserved and increased his clients' wealth throughout the turbulent years of the financial crisis.
The book can broadly be divided into two parts; the first six chapters deal with specific investments and market themes - equities, deleveraging, gold, emerging markets, government defaults, and the euro - while the last four address some of the broad sweeping issues that will colour the investment environment for years to come - fearfulness among investors, regulation, fraudsters, and central bankers (perhaps he should have put the last two in the same chapter?). Sarkis is particularly bullish on gold due to the fact that it has a low correlation to equities, making it "a great asset for balancing out risks on equity investments and vice versa". However, for those looking to diversify into emerging markets he cautions that a renewed downturn would probably see them among the worst performing asset classes, particularly in Asia, where China shows many symptoms of a bubble.
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