ADVFN III Morning Euro Markets Bulletin
Daily world financial news from Thomson Financial News Supplied by advfn.com
22 May 2008 09:52:14
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London
London shares flat in early deals after New York drop; UK retail sales key
At 9.11 a.m., the FTSE 100 index was 3.0 points firmer at 6,201.1, after closing 6.5 points firmer on Wednesday 6,198.1. The FTSE 250 index, however, was down 43.7 points at 10,122.1.
Overnight on Wall Street, the DJIA ended 227.49 points lower at 12,601.19, after falling nearly 200 points on Tuesday, while the S&P 500 index closed 22.69 points weaker at 1,390.71, and the Nasdaq composite index shed 43.99 points to finish at 2,456.09.
Wall Street dropped sharply for the second straight session as oil prices set new record highs and a bleak economic assessment from the Federal Reserve deepened investors' worry about rising costs and a shaky employment picture.
Minutes from last month's FOMC meeting revealed that while policymakers expected sharply lower economic growth and higher unemployment later this year, inflationary risks are likely to keep the central bank from cutting rates again.
Oil prices smashed past the $135 a barrel level for the first time in Asian trade Thursday, continuing its astonishing rise following unexpected drops in U.S. crude and gasoline stocks yesterday.
But in Asian stock markets, the Nikkei 225 index ended 52.16 points higher 13,978.46, recovering earlier sharp falls, thanks to a late bargain-hunting rally. Hong Kong's Hang Seng Index, however, ended 417.17 points lower at 25,043.12, with property issues among the biggest fallers.
In London, weakness in financials was the main early drag on sentiment, reflecting the fresh drop on Wall Street following indications from the Fed that further interest rate cuts are unlikely, and that a hike might even be possible in the fall.
Barclays was the biggest banking faller, losing 10 pence at 388, while Royal Bank of Scotland shed 4-3/4 pence at 236-3/4, and Lloyds TSB fell 5-3/4 pence to 389.
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Insurers and fund managers suffered as well, with Standard Life down 5-1/2 pence at 237 and Legal & General off 2.2 pence at 118, while Schroders dropped 22 pence to 1,006 and Old Mutual shed 2.1 pence at 111.3.
London Stock Exchange was, however, the biggest FTSE 100 casualty, losing 65 pence at 1,023 with its fairly in-line full year results failing to impress and its outlook statement cautious. LSE reported a 56 percent rise in full-year profit, buoyed by high levels of trading activity, and said it was confident of further growth this year.
The LSE said its operating profit for the year to March 31 came in at 289 million pounds, up from 186 million pounds the previous year, and marginally ahead of the 279 million pounds penciled in by analysts.
Away from financials, British Airways was also a big faller, down 4.85 pence at 197.9, knocked again by spiraling oil prices as well as a profit warning from peer Air France-KLM.
And the record crude prices continued to weigh on cruises operator Carnival, down 25 pence at 1,828. But, once again, the strong crude prices gave a boost to heavyweight oil majors, with BP adding 4-3/4 pence at 654-1/2, while Royal Dutch Shell gained 12 pence at 2,254, helped by an upgrade to 'buy' from 'hold' by ING in a review of the sector, which raised target across the board following a hike in its long term oil price forecast.
Meanwhile, solid commodity prices and positive broker comment lent support to heavyweight mining issues as well, with both Goldman Sachs and Sanford Bernstein raising target in sector reviews today.
Xstrata gained 61 pence at 4.198, while Anglo American added 45 pence at 3,560, and Rio Tinto gained 68 pence at 6.790. Vedanta Resources missed out though, losing 52 pence at 2,660 after Goldman Sachs downgraded its rating to 'neutral' from 'buy' on valuation grounds, while raising its target to 3,000 pence from 2,660.
Telecom carrier Cable & Wireless was, however, the top blue chip riser, taking on 2.9 pence at 155.4 after forecast beating full year results.
C&W saw its full year EBITDA rise to 605 million pounds, up from 492 million pounds last year, beating consensus figures provided by the international telecommunications operator of 601 million pounds.
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Repeating its 'outperform' rating, Cazenove said C&W delivered a solid set of results supported by very strong cash flow. Telecom incumbent BT Group benefited in C&W's wake, adding 1-1/2 pence at 227-1/4.
On the second line, newspaper publisher Daily Mail & General was the worst performer, shedding 16-1/4 pence at 389-3/4 after its interims disappointed.
DMGT reported an 83 percent fall in first-half pretax profit to 22.6 million pounds, down from 132.8 million pounds a year earlier, while revenue rose to 1.17 billion pounds from 1.11 billion pounds a year ago.
Mid cap peer Johnston Press suffered in sympathy, losing 3 pence at 113-3/4. Among the mid cap gainers, Lloyd's underwriter Catlin stood out, taking on 8-3/4 pence at 398-1/4 after Goldman Sachs upped its rating to 'buy' from 'neutral' on valuation grounds, while leaving its 520 pence price target unchanged.
The broker noted that the property and casualty insurance underwriter has underperformed the sector by around 15 percent amid concerns of its exposure to catastrophe losses and the fall in 2009 consensus as a result of falling yields.
On the macro front, UK April retail sales figures, which are expected to back up recent survey and anecdotal evidence showing the high street is feeling the pinch of the credit crunch. Analysts polled by Thomson Financial News forecast sales to have fallen 0.5 percent in April from March following a 0.4 percent drop the previous month.
On a year-on-year basis, sales are expected to be up 4.1 percent in April compared to up 4.6 percent in March. Aside from the April retail sales numbers, UK Q1 business investment figures are also due out this morning. Analysts are expecting Q1 growth to drop to 0.3 percent, from 1.9 percent in the final quarter of 2007, though the annual rate is seen edging up to 5.4 percent from 5.3.
And the latest CBI monthly industrial trends survey is set to show the manufacturing sector is still struggling, although the falling pound is providing some support by making exports cheaper. Across the Atlantic, the latest US weekly jobless claims numbers are the only pointers of note due today.
UK Diary of Events:
For a diary of key financial and corporate events in the UK today, Click here
US Summary:
For a summary of US stocks at yesterday's close of trade, Click here
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Milan
Milan shares TFN market data at 9:21 a.m.; Financial stocks, Fiat leads losers
Main indices:
Mibtel at 25,411 points, down 0.38 percent
S&P/Mib at 32,889 points, down 0.52 percent
Main S&P/Mib losers
Banca Monte dei Paschi di Siena down 2.76 percent at 1.937 euros. According to the Finanza & Mercati daily, FRM-Clessidra and Credit Suisse-Investitori Associati are the two consortia that remain in the race to buy some 66 percent of the bank's asset management operations.
Fiat down 2.24 percent at 14.47 euros, continuing Wednesday's decline Mediolanum down 1.92 percent at 3.5425 eurosFondiaria-SAI down 1.80 percent at 23.55 euros Mediobanca down 1.60 percent at 12.09 euros
Main S&P/Mib gainers
Telecom Italia up 1.53 percent at 1.392 euros
Impregilo up 1.42 percent at 4.28 euros. Wednesday, Italian prime minister Silvio Berlusconi said work on the waste-to-energy (WTE) plant at Acerra, near Naples, will re-start immediately with the plant operative by year-end. In 2000 Impregilo won the tender to manage waste disposal in the Campania Region, where Naples is located, which envisaged the construction of the Acerra WTE plant. In 2005 the tender contract was dissolved but no new operator was identified to manage waste disposal in the area.
Eni up 1.23 percent at 27.20 euros
Saipem up 1.15 percent at 30.83 euros
A2A up 0.94 percent at 2.47 euros. According to the Finanza & Mercati daily, the Northern Italian utility is seen as the favourite to obtain the waste management contract in the Campania region
Other stocks in the news
Banco Popolare down 1.02 percent at 12.95 euros. According to the Finanza & Mercati daily, the bank is ready to sell its 13.29 percent stake in consumer credit group Delta, in a bid to strengthen its capital position
Mediaset down 0.40 percent at 5.205 euros. According to the Corriere della Sera daily the Italian parliament will propose a bill to allow the broadcaster, owned by the family of prime minister Silvio Berlusconi, to keep analogue frequencies for its Rete4 channel
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Frankfurt
German shares TFN market data at 9.15 a.m.
DAX - down 33.73 points, or 0.48 percent, at 7,007.10
MDAX - down 86.47 points, or 0.89 percent, at 9,612.98
TecDAX - down 7.60 points, or 0.88 percent, at 859.22
DAX futures - up 29.50 points, or 0.42 percent, at 7,032.00
MAJOR GAINERS:
EON up 0.91 euros or 0.68 percent at 135.25
Bayerische Motoren Werke up 0.11 or 0.32 percent at 34.86 as Morgan Stanley upgraded it to Overweight.
RWE, up 0.34 or 0.43 percent at 79.82
Deutsche Telekom, up 0.01 or 0.09 percent at 10.73
Merck KgaA, up 0.17 or 0.19 percent at 90.08
MAJOR DECLINERS:
Allianz, down 5.74 euros or 4.62 percent at 118.63 as it went ex-dividend with payment of 5.50 euros per share dividend.
Deutsche Boerse, down 3.88 or 3.90 percent at 95.51 as it went ex-dividend at 2.10 euros per share
Lufthansa, down 0.53 or 3.29 percent at 15.60
Volkswagen, down 3.65 or 1.95 percent at 183.53. Bild newspaper said Germany will let Lower Saxony keep its 20 percent blocking minority vote at AGMs of Volkswagen.
Continental, down 1.17 or 1.48 percent at 78.03
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Amsterdam
Amsterdam shares TFN market data at 10.09 a.m. - AEX off, financials down
MAJOR INDICES
AEX 484.93 points, down 2.69 points or 0.55 percent
AMX 675.28 points, down 0.81 point or 0.12 percent
Government bonds mainly flat
MAJOR DECLINERS
ING was off 1.97 percent to 24.37.
Aegon was down 1.83 percent to 9.65 following a downgrade to 'hold' from 'buy' at Theodoor Gilissen.
Philips shed 1.47 percent to 24.43 after the company agreed to sell Medquist stake to CBay Systems for $287 million. SNS Securities said the sale is positive, as Medquist mostly represented a risk factor. SNS Securities rates Philips at 'buy' with a 32.50 euro price target.
Fortis lost 1.22 percent to 16.18 after the bank said it sees the divestment of ABN's Dutch commercial banking operations by year end, with the general merger on track.
Corio slid 0.34 percent to 58.55 after the company came out with first quarter results late Wednesday. Rabo Securites said the indirect result of 10.2 million euro at first seemed weak but the broker added it had not accounted for the 14.9 million euro negative revaluation result on discontinued activities. Including the one-off, the indirect result met the broker's expectations. Rabo has Corio at 'hold'.
Heineken edged 0.24 percent lower to 37.60 after the brewer said it will acquire Rechitsa brewery in Belarus for an undisclosed amount.
MAJOR GAINERS
Corporate Express was up 2.0 percent to 8.15 after Staples Wednesday said it was'considering all options' after Corporate Express' bid for France's Lyreco.
SBM Offshore rose 1.15 percent to 26.50 after the company sold its FPSO unit to Agip Energy and Natural Resources.
Royal Dutch Shell added 0.91 percent to 28.25 after an upgrade to 'buy' from 'hold' from ING and following news it, Petrobras and Galp have struck oil in Brazil's Santos Basin.
KPN lifted 0.88 percent to 11.49 after the telecom company said it was changing its sale process for its real estate portfolio, selling individual buildings instead of the portfolio in one deal. "Apart from a minor delay in concluding the sale this year, the change in the selling process of real estate does not have an impact in our view," SNS Securities said, rating KPN at 'buy'.
Unibail-Rodamco lifted 0.45 percent to 173.02 after the company said its Vienna shopping center acquisition cost 607 mln euros.
Imtech was up 0.44 percent to 18.14 after the company won build, maintenance contracts in Spain worth a total of 46 mln euros.
Forex
London 0815 GMT Hong Kong 0500 GMT
U.S. dollar
yen 103.34 up from yen 103.09
Swiss franc 1.0279 up from Swiss franc 1.0272
Euro
U.S. dollar 1.5756 down from U.S. dollar 1.5763
yen 162.83 up from yen 162.59
Swiss franc 1.6195 down from Swiss franc 1.6197
pound 0.7991 down from pound 0.7996
Pound
U.S. dollar 1.9717 up from U.S. dollar 1.9708
yen 203.84 up from yen 203.30
Swiss franc 2.0267 up from Swiss franc 2.0238
Australian dollar
U.S. dollar 0.9606 down from U.S. dollar 0.9626
pound 0.4872 down from pound 0.4882
yen 99.22 down from yen 99.29
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