Tuesday 13 November 2012
QUOTE OF THE DAY
It is pretty hard to tell what does bring happiness; poverty and wealth have both failed
- Kin Hubbard
THIS MORNING IN LONDON
FTSE 100
5,735.40
-31.87 -0.55%
FTSE 250
11,753.98
-49.32 -0.42%
FTSE 350
3,060.26
-16.45 -0.53%
FTSE All Share
2,996.61
-15.98 -0.53%
AIM 100
3,071.43
-10.85 -0.35%
AIM All Share
689.34
-2.83 -0.41%
12:00 pm
Stocks drop after 'inconclusive' Eurogroup meeting
- Greece granted two more years to hit targets
- German ZEW surprises to the downside
- UK inflation picks up in October
The Footsie was stuck firmly in negative territory on Tuesday morning as worries about Greece's finances continue to weigh on sentiment, following the Eurogroup meeting yesterday at which finance ministers granted the country two more years to meet its deficit targets.
Eurogroup Chairman Jean-Claude Juncker boldly stated that Athens's deadline to bring debt down to 120% of gross domestic product by 2020 would be extended to 2022. However, the decision to give the go-ahead on the next €31.5bn of aid was postponed until another meeting next week, just as a €5bn bond repayment is due this Friday.
International Monetary Fund (IMF) Managing Director Christine Lagarde openly showed her disapproval and said that the two organisations obviously had "different views" on the timetable that the Hellenic Republic needs to complete.
Analyst Philippe Gudin from Barclays Research labelled yesterday's meeting as "inconclusive", but said he believes that an agreement to pave the way for a continuation of the Greek programme will eventually be made.
He said: "The alternative (programme stopped and Greek default) would probably not be manageable and would lead to renewed tensions in other peripheral countries. A second best would be a continuation of the programme, but without the participation of the IMF. Euro area finance ministers would certainly like to avoid this solution since it would imply the EFSF taking over remaining IMF loans, and the departure of the IMF would be costly for the credibility of the programme."
Economic data from Germany dampened the mood further this morning, after the Germany ZEW economic sentiment index worsened to -15.7 in November, from -11.5 the month before. Analysts were expected a slight improvement to -10.0.
ZEW President Wolfgang Franz said: "Prevailing recessionary developments in the Eurozone impact the German economy via foreign trade and a lack of confidence. This is likely to be a burden for economic growth in Germany during the next six months".
In domestic news, the UK consumer prices index (CPI) measure of annual inflation came in at 2.7% in October, up from 2.2% in September, according to the Office for National Statistics. This rise was considerably stronger than anticipated by analysts, who had pencilled in 2.4%. The ONS also said that producer price index (PPI) was flat in October at an annualised 2.5%, in line with expectations.
There was also news that China is "actively studying" the expansion of the property tax programme on concerns that transaction volumes and home prices could increase "substantially", according to the Minister of Housing and Urban-Rural Development, Jiang Weixin.
FTSE 100: ITV jumps; Vodafone and Capita tank
Shares in terrestrial broadcaster ITV surged this morning after a well-received third-quarter statement. Group revenues of £1,573m were broadly in line with expectations despite weaker-than-expected ad revenues, but analysts were impressed with better-than-forecast Studios profitability and cost savings. Credit Suisse this morning raised its target price for the stock from 100p to 110p and reiterated its 'outperform' rating.
Telecoms giant Vodafone fell after plunging into the red after being hit by a huge £5.9bn impairment charge during the half year ended September 30th, related to its operations in Spain and Italy.
Outsourcing giant Capita was also a heavy faller despite saying it is confident it will deliver 3% organic growth for the year and an improved cash conversion rate for 2012 as compared to 2011. Panmure Gordon said this morning that the stock's premium valuation (compared with the sector) is "too rich".
Continuing delays on Anglo American's Minas-Rio iron ore project in Brazil are likely to push up the cost of the project more than the market had been expecting, causing shares to drop heavily this morning. Sector peers EVRAZ, Kazakhmys and ENRC were also registering steep losses.
Building materials giant CRH rose despite scaling back its earnings forecast this year on the back of ongoing weakness in Europe and Hurricane Sandy disrupting its operations in eastern America.
FTSE 250: Leakage issues continue to hamper Talvivaara
Nickel miner Talvivaara was down a further 15% this morning, as speculation about last week's gypsum pond leakage at its project in Finland continues to pressure the stock. Speaking overnight to Finnish broadcaster Yle's current affairs programme A-studio, Talvivaara Chief Executive Harri Natunen said that taxpayers will not have to shoulder the clean-up cost at the mine.
Shares, at just over the 80p mark this morning, are well off the 130p level seen before the leak was first reported at the start of the month.
Telecoms operator TalkTalk surged after saying it is on track to return to revenue growth in the full year even as half-year revenue fell by 2% to £828m.
Bank note printer De La Rue fell sharply after saying that while banknote print volumes were up 4.0% to 2.9bn notes in the six months ended September 29th, banknote paper volumes declined 15% to 4,500 tonnes.
Salamander Energy tanked after announcing it has abandoned a well off the coast of Thailand after concluding it wasn't good enough to be commercialised.
House builder Persimmon fell after saying that the UK housing market continues to be challenging and mortgage availability remains the key constraint; however it is still confident about future growth.
Afren, the energy firm focused on Africa and the Middle East, has seen revenue smash through the billion dollar in the first nine months of the year, but shares fell.
FTSE 100 - Risers
ITV (ITV) 93.50p +7.72%
CRH (CRH) 1,151.00p +1.41%
Associated British Foods (ABF) 1,402.00p +1.23%
Bunzl (BNZL) 1,027.00p +1.18%
InterContinental Hotels Group (IHG) 1,595.00p +1.01%
Diageo (DGE) 1,812.50p +0.69%
Reckitt Benckiser Group (RB.) 3,801.00p +0.64%
ARM Holdings (ARM) 719.50p +0.56%
Reed Elsevier (REL) 613.50p +0.49%
Sage Group (SGE) 306.00p +0.46%
FTSE 100 - Fallers
Vodafone Group (VOD) 159.10p -4.50%
Anglo American (AAL) 1,771.00p -3.09%
Centrica (CNA) 311.40p -2.57%
Randgold Resources Ltd. (RRS) 6,795.00p -2.23%
Eurasian Natural Resources Corp. (ENRC) 283.20p -2.04%
Capita (CPI) 713.00p -1.93%
Antofagasta (ANTO) 1,234.00p -1.83%
Burberry Group (BRBY) 1,225.00p -1.76%
Evraz (EVR) 232.50p -1.69%
Polymetal International (POLY) 1,130.00p -1.65%
FTSE 250 - Risers
TalkTalk Telecom Group (TALK) 204.90p +9.81%
Oxford Instruments (OXIG) 1,289.00p +2.46%
Menzies(John) (MNZS) 591.50p +2.25%
Perform Group (PER) 405.00p +2.09%
TUI Travel (TT.) 253.30p +1.89%
Yule Catto & Co (YULC) 163.50p +1.87%
Domino's Pizza Group (DOM) 531.00p +1.82%
Petra Diamonds Ltd.(DI) (PDL) 101.10p +1.76%
St. Modwen Properties (SMP) 204.40p +1.69%
Pace (PIC) 194.40p +1.62%
FTSE 250 - Fallers
Talvivaara Mining Company (TALV) 81.20p -15.20%
De La Rue (DLAR) 980.50p -7.85%
New World Resources A Shares (NWR) 246.10p -4.54%
Salamander Energy (SMDR) 183.70p -4.32%
Ultra Electronics Holdings (ULE) 1,538.00p -4.29%
FirstGroup (FGP) 182.50p -3.18%
Mondi (MNDI) 635.00p -3.13%
SDL (SDL) 516.50p -2.91%
Redrow (RDW) 152.20p -2.81%
Homeserve (HSV) 224.70p -2.47%
WHAT THE BROKERS SAY
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BOOK OF THE WEEK
By Nassim Taleb
A book review by Ross Jones
The majority of us want to push for more in our lives and it is my belief that without the drive and ambition to succeed in your job, and your everyday life, things would be pretty boring. But that then sparks the question; what makes some people more successful than others? The typical answer would be skill, talent, effort and dedication, but Nassim Taleb suggests it is something altogether more unpredictable. The author of the fantastic The Black Swan argues that success, and even life, is all about luck. Taleb proposes that it is only because we fail to truly grasp the role of probability in our lives that we continue to put our respective successes down to skill and talent, as opposed to chance.
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