Market overview: FTSE closes down 34 points at 5,855
Thu 20 Sep 2012
LONDON (SHARECAST) - 1630:Close Today saw UK retail sales fell by 0.2% month-on-month in August (Consensus: -0.3%), according to the latest data out from the ONS. In underlying terms however they were much as expected. Meanwhile, the CBI's total orders index for September came in at -8, well ahead of the reading of -15 expected by the consensus and the previous month´s level of -21. Looking abroad, Spain´s Treasury auctioned 859m Euros in 10-year debt, with a bid-to-cover ratio of 2.8, versus 2.4 the last time around. The yield fell to 5.666% from 6.647% at the last sale. Markets however continue to be quite cautious on this front. Miners were dragging the FTSE 100 lower following disappointing data from Asia overnight. The index closed down 34 points at 5,855.
1508: The Federal Reserve Bank of Philadelphia´s manufacturing index for the month of September has printed at -1.9 points, slightly ahead of the reading of -4.5 expected and last month´s -7.1. Significantly, perhaps, the new orders sub-index rose to 1 from -5.5, its highest in four months.
1458: Vodafone is being cited as saying that the size of the much awaited dividend pay-out from Verizon is still uncertain. FTSE 100 down 50 to 5,839.
1446: Shares are near their worst levels of the day following a weaker than expected reading on initial weekly unemployment claims Stateside (Data: 382,000, Consensus: 375,000). That as the chairman of Spanish lender BBVA says the Spanish financial system has huge problems, although he believes that the ECB´s new programme will mark the beginning of the end of the crisis. S&P, for its part, has said that Finland´s sovereign debt rating could come under pressure should the country end fiscal consolidation.
1158: Shares of Lonmin are down despite announcing that 77 per cent of its staff have reported for work today at Marikana. Some market commentary holds that in spite of this relatively good news the company´s financials will take a hit as a result of the latest wage agreement. Precisely in this regard, the FT´s Lex Column highlights how labour makes up 40% of operating costs at Marikana. As well, the newspaper says that: "the miner could do with raising at least 600m dollars of equity." Ocado has cut its losses and is now falling less than 2 per cent after earlier having been at the bottom of the pile on the FTSE 350.
1127: The Confederation of British Industry´s (CBI) total orders index for the month of September has come in at -8, well ahead of the reading of -15 expected by the consensus and the previous month´s level of -21. This is what Barclays has to say on the matter: "While we would caution that the CBI survey is rather volatile, the recent improvement brings the series more in line with our expectations that after deteriorating sharply in Q2, industrial sector activity will rebound in Q3." FTSE 100 down 34 to 5,855.
0953: Yields on Irish 9 year bond yields have dropped below 5% for the first time since August 2010. They are now down by 7 basis points to 5.99%. That despite second quarter gross domestic product growth having come in flat, in terms of quarterly rates of change, well below the 0.7% rise expected by the consensus.
0947: Spain´s Treasury has auctioned 859m euros in 10 year debt, with a bid-to-cover ratio of 2.8, versus 2.4 the last time around. The yield fell to 5.666% from 6.647% at the last sale. 3,940m euros of 3 year debt were also sold, but here the cover fell to 1.6 times the amount on offer, from 2.01. Yields at 3.845%, up from 2.798% The total amount which had been targeted by Spain´s Treasury was 4.5bn euros, below the 4.8bn which were finally sold.
0931: UK retail sales fell by 0.2% month-on-month in August (Consensus: -0.3%), according to the latest data out from the Office for National Statistics (ONS). However, in year-on-year terms total retail sales grew by 2.7% (Consensus: 2.9%). Furthermore, the previous month´s reading has been revised down to show a rise of only 2.3%, instead of the preliminary estimate of 2.8%. Core sales, which exclude oil, dropped 0.3% month-on-month, as expected, and increased at a 3.1% year-on-year pace (Consensus: 3.2%). Here, again, the previous month´s reading was also been revised down, to growth of 2.8% versus 3.3% initially thought.
0926: Analysts at Panmure Gordon are reacting rather sceptically to Ocado´s results, indicating that the company may breach its net debt to EBITDA covenant this year. This after third quarter sales growth decelerated, rather than accelerated. They add that: "although we now believe that Ocado's days as a public company are limited, we don't think that the equity is worth very much." Not surprisingly, they have reiterated their sell recommendation on the shares this morning, with a 50p target.
0900: Eurozone manufacturing PMI has come in at 46 points (Consensus: 45.5).
0830: UK Stocks have begun today´s session with moderate falls, following weak economic data overnight in China and Japan. Japanese exports, for their part, fell for a third month running in August, while Chinese manufacturing contracted for an eleventh consecutive month in September. Investors will also be watching the results of today´s Spanish Treasury debt auction, towards 10:00. Back in London, utility company United Utilities remains confident of delivering its 2010-15 regulatory out-performance targets after a solid start to the current financial year. Imperial Tobacco Group has said that the overall financial position and operational performance of the group in the year ended September 30th has been in line with its expectations. Analysts at Liberum capital have downgraded both Anglo American and Ro Tinto this morning. Negative commentary by the Telegraph´s Questor team may also weigh on the shares of the former. Retail sales data for August are published at 9:30. Consensus expects both total sales and core sales to have fallen by 0.3% month-on-month, as the Olympics distracted households from their normal shopping pursuits, economists at Barclays Research are saying.