Market overview: Stocks close down, Lonmin strikers accept latest offer
Tue 18 Sep 2012
LONDON (SHARECAST) - 1630:Close Lonmin workers have finally accepted the platinum miner's offer of increased wages. In other news, it was announced today that inflation continued its downward trend in August, to 2.5%, as expected. Nevertheless, most economists seem worried that -at least for a time- prices may prove to be "stickier" than expected. Meanwhile, European car registrations fell by 8.5% to 722,483 vehicles in August, from 789,458 a year earlier. The latter of the two data points took their toll on the likes of GKN and IMI. In Spain, the Treasury has been able to issue 12 and 18-month bills for €4.6bn, which is more than the top end of the €3.5bn - €4.5bn targetted. Also helping stocks were supportive comments from Chicago Fed President Charles Evans regarding the central bank´s policies and the availability of other measures should they be needed. Defensive issues such as United Utilities and BATs led on the upside. The FTSE 100 closed down 25 points at 5,868.
1452: Stafford Group, the owner of Ireland's biggest sports retailer, has emerged as a contender to buy all or part of ailing JJB Sports.
1420: Broker commentary is behind many of the major movements today. Egyptian gold miner Centamin moves up after Westhouse Securities reiterated its recommendation to buy the shares, and upped its price target to 105p from 99p. 'Despite the on-going issues in Egypt, and two labour stoppages this year, Centamin has had a positive year overall. The company continues to operate the Sukari mine successfully and is starting to branch out of Egypt with increasing levels of exploration activity underway in Ethiopia. We also recognise the growth potential at sites around Sukari where the company is exploring multiple targets,' the broker said. Centamin may also yet be successful in recovering its lost fuel subsidy from the Egyptian government, which would hack around 150 dollars an ounce from the cost of mining its gold deposits. FTSE 100 is down 34 at 5,860.
1315: Spread betting quotes suggest the S&P 500 index will open some three points lower in the US. In the UK, Footsie is 20 points above its low for the day, having recovered steadily since just past 11:00. Energy firms are off the pace, despite the White House quashing reports that it is preparing to release some supplies from the Strategic Petroleum Reserve. FTSE 100 is down 36 at 5,857.
1252: Bank of America believes that gold could rise to 2,400 dollars an ounce by 2014 thanks to the Fed´s purchases of debt. Shares of FedEx are 2 per cent lower in pre-market trading on Wall Street after having provided lower than forecast guidance. The shipping company is considered by many to be a 'bell-wether' for the global economy. FTSE 100 down 35 to 5,856.
1224: Lonmin workers are said to have rejected the company´s offer of a one-time payment in exchange for them returning to work. As as "aside", Chinese vessels reportedly entered Japanese territorial waters earlier in the day.
1118: GKN is one of the worst performers on the Footsie at the moment. This following news that European car registrations fell 8.5 per cent, to 722,483 vehicles, in August, from 789,458 a year earlier. In the year to date sales have decreased by 6.6% to 8.59m cars, the Brussels-based European Automobile Manufacturers’ Association said. FTSE 100 down 50 to 5,843.
1028: Shares of Diageo are gaining after Morgan Stanley named the stock as one of the four “European staples” to own over the next six months. FTSE 100 down 37 to 5,857.
0955:The Spanish Treasury has placed 4.6bn euros in notes on the market, with yields coming down moderately versus what was seen the last time around. Spanish 10 year bond yields are reacting with a downwards move, falling by 4 basis points to 5.94 per cent.
0930:The UK´s consumer price index (CPI) for the month of August has come in at a 2.5% year-on-year clip, as expected. Core consumer prices increased at a 2.1% year-on-year pace in August, also as forecast. The retail price index, on the other hand, rose by 2.9%, below expectations for a decline to 3.1%. Analysts at Santander have just downgraded shares of Royal Dutch Shell to underperform from hold.
0858: For those committed to staying long of equities, defensive favourites such as Unilever (Berenberg has initiated coverage at buy), Diageo and Imperial Tobacco (Nomura has lifted its price target) are the stocks to hold this morning. The market is still fretting over Spain's seeming reluctance to take advantage of the Eurozone bailout facility. The cost of insuring against a default on its debt by Spain continues to rise, with the rate up to 3.74 per cent from 3.67 per cent overnight. Meanwhile, ahead of this morning's Spanish auction of 12-month and 18-month bills, the yield on two-year Spanish bonds has climbed to 3.45 per cent from 3.40 per cent overnight. Spanish banks´ bad loans ratio rose further, to 9.86% in July, versus 9.65% in June, to a total of €169.3bn, according to data just out from the Bank of Spain. FTSE 100 is down 41 at 5,853.
0809: FTSE 100 is down 31 at 5,863, with resource stocks and banks leading the retreat. Talk of a release of strategic petroleum reserves has hit the oil price, dragging down the likes of BP. Miners are mostly off the pace but the recovery of Aquarius Platinum continues, as its Kroondal mine grinds back into action after mining was suspended over the week-end. Broker downgrades have put insurance titan Aviva on the skids, pushing the stock's dividend yield beyond seven per cent; BofA Merrill Lynch has downgraded Aviva to 'underperform', although the target price has been raised to 360p from 330p, while Deutsche bank has moved to a 'hold' recommendation and edged up the target price from 360p to 375p.
