LONDON (SHARECAST) - 1630:Close UK stocks have closed ever so slightly in the red today, as Burberrys cratered after delivering a “profit warning” which weighed on the entire top share index. Fund manager Ashmore also took a hit after unveiling a decrease in assets under management for the full year and on the back of speculation that it will be selected, tomorrow, to leave the Footsie. Writing in the Evening Standard, MPC member David Miles said today that there was no compelling case for the MPC to consider alternatives to “conventional QE.” For his part, in his appointment hearing with the House of Commons Treasury Committee Ian McCafferty indicated that for him recent low readings on labour productivity are cyclical rather than structural. For economists at Barclays that implies that low productivity should not be an impediment to further monetary loosening as the inflationary consequences of stronger demand should be minimal. FTSE 100 down 1 to 5,792.
1625: Shares of Royal Bank of Scotland are on track to finish as the day's best on the top share index, following positive comments from analysts at J.P.Morgan who say they prefer the lender to rival Lloyds.
1540: As market chatter would have it specialized emerging market fund manager Ashmore may be at risk of being demoted to the mid-cap index. Even more so now following the poor reaction to the company's weak full-year results this morning. Another company at risk of the same is inter-broker dealer Icap. Wood Group and Melrose seem best placed to take their stead in the top share index. FTSE 100 down 10 to 5,784.
1332: During his appointment hearing before the House of Commons, new Bank of England Monetary Policy Committee MPC) member Ian Mr McCafferty sounded a dovish tone [as far as the possible implications of his speech for further QE3 are concerned], according to analysts at Barclays Research. More specifically, he said he thought low productivity was likely to be cyclical rather than structural. The implication is that productivity will improve alongside aggregate demand, in which case low productivity should not be an impediment to further monetary loosening as the inflationary consequences of stronger demand should be minimal (it should perhaps be noted that some observers seem somewhat more wary).
1313: ARM Holdings has moved into the leader board after analysts at UBS raised their price target on its shares this morning, to 750p from 645p. They seem to echo an article in last Friday's edition of The Wall Street Journal (WSJ) touting the company's dominant position in the market for micro-controllers. The WSJ also highlighted what appear to be the excellent long-term growth prospects
for the same. FTSE 100 down 19 to 5,773.
1139: The Footsie is down 28 points at 5,765 at its lowest levels of the day as lower appetite for risk takes down the miners. G4S is trading in the red this morning ahead of a key week for the firm next week. 'The award of some UK prison outsourcing contracts next week will be G4S’s first litmus test of post-Olympics reputational damage,' Jefferies said this morning. The broker reckons that the market will be disappointed with none or just one win, two would be more in line with expectations, while three to four would be 'encouraging evidence that Olympics-related reputational issues have not impaired its growth potential.'
0949: In the 'things we would not have predicted' department, high-flying Burberry is getting hammered while accident-prone Supergroup continues to restore its battered reputation, after two very different trading updates this morning. Burberry has issued a profits warning which has sent a shiver through the luxury personal goods sector in Europe. Expensive handbag maker Mulberry falls sharply in sympathy. In contrast, down-market faux Americana apparel purveyor Supergroup is wanted after it saw sales rise by one-tenth in its first quarter. FTSE 100 is down 17 at 5,776.
0930: UK visible trade balance for July comes in at -7.419bn pounds (Consensus: -9.0bn pounds), versus last month´s revised reading of -10.028bn pounds.
0922: Goa's Director of Mines issued orders yesterday for the temporary suspension of mining operations of all the mining leases in the state until further notice. Consequently, Sesa Goa, a subsidiary of Vedanta Resources, has stopped ore extraction from all its mines in the state of Goa, although it is still at liberty to sell iron ore already mined. The stock leads the falls in a weak mining sector. Equities are generally in retreat, although defensive favourites such as tobaccos (BATs, IMPs), pharmas (Glaxo, Astra) and utilities (UU, Severn Trent) are seeing some support. FTSE 100 is down 19 at 5,774.
0901: Nomura and Seymour Pierce have both reacted to the profit-warning out from Burberry by downgrading their view on its shares to neutral.
0811: Mining stocks are dragging Footsie down this morning amid a general air of nervousness over the Eurozone. Germany's Constitutional Court is to decide tomorrow on the legality of Germany contributing to the European Stability Mechanism (ESM), a necessary condition for the European Central Bank to be able to even contemplate wading into debt markets. A last minute interjection from a senior law-maker however had threatened to delay the Court´s decision, but the Constitutional Court has announced this morning that it will go ahead with its verdict as planned. Worth noting as well perhaps, the mixed macroeconomic data out last night in China: the latest bank lending figures -the most important of the two- have beat expectations (700bn Yuan in August versus expectations for 600bn), although the latest auto sales data have come in slightly lower than forecast. On the corporate front, the era of Burberry being able to do no wrong could be drawing to a close, as the fashion chain has issued a profit warning, prompting the shares to tank by around one-sixth in early trading. FTSE 100 is down 12 at 5,781.