LONDON (SHARECAST) - - Ex-div stocks and miners weigh on Footsie
techMARK 2,128.21 +0.92%
FTSE 100 5,782.08 -0.17%
FTSE 250 11,811.05 +0.26%
- Germany approves ESM
- All eyes turn to the Fed
- Dutch elections tonight
Following a stint in the blue after Germany’s decision to approve the Eurozone rescue fund, the Footsie had sunk firmly into the red by the close with ex-dividend stocks and mining companies providing a drag.
Stocks were lifted higher after the German Constitutional Court approved the European Stability Mechanism (ESM) this morning, the last major challenge before the ESM can replace the temporary European Financial Stability Facility (EFSF).
However, as senior market analyst Michael Hewson, from CMC Markets explains: “Momentum soon started to wane as equity markets, led by the FTSE, started to drift off with the UK index struggling to make any ground at all as investors scrutinised the small print.”
First, Germany's contribution must be limited to €190bn unless there is parliamentary approval; and second, both chambers of Congress - the Bundestag and Bundesrat - must be informed of the ESM's decisions.
“The ruling clears the way for the German President to sign the agreement into law, but having overcome this particular hurdle it doesn't change the fact that economic data in Europe remains pretty woeful and the European leaders don't have anything resembling a growth plan,” Hewson said.
With one key ‘event-risk’ out of the way, the focus will undoubtedly turn to the upcoming Federal Open Market Committee (FOMC) two-day meeting in the US which kicks off today. Sluggish labour figures on Friday have increased hopes that the Fed may move to ease monetary policy further when the meeting concludes. However, figures for wholesale inventories were solid today “which causes uncertainties over tomorrow’s Fed outcome”, according to market strategist Ishaq Siddiqi from ETX Capital.
Asian stocks jumped overnight after China's Premier Wen Jiabao reassured that his country would hit its gross domestic product (GDP) growth target of 7.5% this year.
A mixed employment report. Are you sure?
In domestic news, the number of people claiming jobless benefits in the UK fell by 15,000 in August, better than the consensus forecasts for a stable reading. The unemployment rate was 8.1% of the economically active population, down 0.1 percentage points on the quarter.
Speaking to the British Broadcasting Corporation Employment Minister Mark Hoban spoke of a mixed report. Economists at Deutsche Bank however were quite upbeat describing it as "a very exceptionally strong report."
The reaction from economists at Barclays, on the other hand, was a tad more muted. As regards the drop in the claimant count they indicated: "Although the monthly claimant count data might suggest an improvement in the ILO measure is likely, we do not think economic fundamentals and low output per worker levels support this view."
As for wages, they added: "The broader picture on earnings remains unchanged, with growth subdued as high unemployment and low productivity limit scope for a more rapid increase in pay. With inflation still expected to be stronger-than-nominal earnings growth, we think the extended period if negative earnings growth is likely to continue this year."
Also worth mentioning, there was some market-chatter today regarding the lack of any dovish talk so far out of any Bank of England policy-makers.
FTSE 100: BAE surges on potential EADS tie-up
Defence group BAE Systems jumped this afternoon after confirming that it is in discussions with aerospace giant EADS regarding a “possible combination” of the businesses in which BAE would own 40% and EADS would own 60% of the enlarged group.
“The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA,” BAE said in a statement.
UK banking stocks advanced after the ESM was approved by Germany: Lloyds, Royal Bank of Scotland, Barclays, Standard Chartered and HSBC were making gains by midday. RBS was benefiting after Liberum Capital lifted its target price for the stock from 260p to 270p and reiterated its 'buy' rating.
However, it was the ex-div stocks and mining companies that were weighing heavily on the blue-chip index today. Insurance group Admiral and financial services firm Hargreaves Lansdown were heavy fallers this morning after going ex-dividend. Other FTSE 350 stocks going ex-div today include: 888, Antofagasta, bwin.party, Capita, Cookson, Ladbrokes and Rentokil.
Miners were hit as metals prices tanked and concerns over the South African mining industry weighed on sentiment. Anglo American’s 80%-owned platinum subsidiary, Amplats, has been forced to suspend its operations in South Africa as a wave of labour unrest continues to hit the country’s mining industry.
British telecoms giant BT advanced after sealing a “ground-breaking” £152m deal on afternoon for a range of exclusive live rights for Premiership Rugby, dealing a massive blow to current broadcaster BSkyB.
Shares in Petrofac crept higher this after the oilfield services firm signed a new $1.2bn five-year revolving credit facility for more than it had first expected ($1bn). Meanwhile, oil giant Shell was in the red after acquiring $1.935bn-worth of assets in Texas from US peer Chesapeake Energy.
FTSE 250: Barratt drops after first-half results
House-builder Barratt Developments sank despite revealing a 159.3% rise in pre-tax profit in the year to June 30th. The group signalled its intention to pay a final dividend in respect of the current financial year, but there was no pay-out for the financial year just gone.
Oil and gas group Afren edged higher after saying that it has started drilling at its Simrit-3 well on the East Simrit prospect in the Kurdistan region of Iraq, just 10km east of the successful Simrit-2 well which was drilled a few months back.
FTSE 100 - Risers
BAE Systems (BA.) 363.60p +10.62%
Lloyds Banking Group (LLOY) 38.51p +3.89%
BT Group (BT.A) 235.20p +3.84%
Royal Bank of Scotland Group (RBS) 274.70p +3.78%
Sage Group (SGE) 315.30p +3.11%
Evraz (EVR) 269.00p +3.03%
Weir Group (WEIR) 1,725.00p +2.74%
GKN (GKN) 229.10p +2.60%
Petrofac Ltd. (PFC) 1,638.00p +2.57%
Aberdeen Asset Management (ADN) 294.30p +2.19%
FTSE 100 - Fallers
Hargreaves Lansdown (HL.) 630.00p -3.67%
Anglo American (AAL) 1,901.50p -2.74%
Admiral Group (ADM) 1,091.00p -2.50%
BG Group (BG.) 1,239.50p -2.44%
Xstrata (XTA) 993.60p -1.77%
Randgold Resources Ltd. (RRS) 6,830.00p -1.73%
British American Tobacco (BATS) 3,127.50p -1.71%
Whitbread (WTB) 2,236.00p -1.71%
Eurasian Natural Resources Corp. (ENRC) 334.50p -1.59%
Diageo (DGE) 1,672.50p -1.56%
FTSE 250 - Risers
Aquarius Platinum Ltd. (AQP) 40.70p +6.77%
Talvivaara Mining Company (TALV) 156.40p +4.90%
Ruspetro (RPO) 104.00p +4.00%
RPS Group (RPS) 254.70p +3.96%
Cable & Wireless Communications (CWC) 35.53p +3.83%
EnQuest (ENQ) 123.70p +3.78%
JD Sports Fashion (JD.) 724.00p +3.50%
Computacenter (CCC) 408.90p +3.31%
Essar Energy (ESSR) 108.10p +3.15%
Ferrexpo (FXPO) 198.50p +3.06%
FTSE 250 - Fallers
Premier Farnell (PFL) 171.80p -6.58%
Barratt Developments (BDEV) 158.80p -6.42%
Lonmin (LMI) 575.00p -5.89%
Dixons Retail (DXNS) 19.20p -4.00%
Centamin (DI) (CEY) 82.20p -3.35%
African Barrick Gold (ABG) 452.00p -3.11%
International Public Partnerships Ltd. (INPP) 120.00p -2.60%
Bellway (BWY) 913.00p -2.20%
Stobart Group Ltd. (STOB) 112.80p -2.08%
Taylor Wimpey (TW.) 54.65p -1.97%