- Stocks react to mixed economic data
- FOMC conclusion eyed
- ARM extends gains after Q3 results and SAP statement
The FTSE 100 was swinging between gains and loss on Wednesday morning as contrasting economic data from China and the Eurozone painted a mixed picture of the global economy.
Markets will also be keeping an eye on the two-day Federal Open Market Committee (FOMC) meeting in the US which comes to a close this evening. However, with no change neither in rates nor in the wording of the FOMC statement expected, "most are expecting it to be a non-event", according to ETX Capital's Huber.
HSBC's China manufacturing purchasing managers' index (PMI) for October ticked higher to 49.1 points from 47.9 in September, the best reading for three months. "October's flash PMI reading continues to recover for the second month, thanks in part to a gradual improvement in the new orders index, which picked up to a six-month high," said Qu Hongbin, chief economist for HSBC Holdings PLC's China arm.
While the Chinese data sparked a rise for mining stocks in London, the wider market was weighed down after economic data from the Eurozone data came in below expectations.
Markit's Eurozone composite PMI, which measures the combined output of the manufacturing and service sectors, fell for a third consecutive month to 45.8 in October, from 46.1 the month before. This was the worst reading in 40 months. The consensus forecast was for an improvement to 46.5.
"The bulls hoped that core euro zone growth was perhaps enough to help the region keep its head above water amidst the deterioration facing the likes of Greece, Spain and Italy, but today's data challenges that view drastically, bringing the focus back to macro fundamentals from Spain's daily 'will they or won't they request financial help' drama," said market strategist Ishaq Siddiqi from ETX Capital.
Meanwhile, the IFO Business Climate Index, a measure of corporate confidence in Germany, declined unexpectedly in October, the sixth consecutive monthly fall. The index fell to 100.0 this month, from 101.4 in September, under consensus expectations of a rise to 101.6.
In other news, Greece's coalition government met again yesterday to try and agree on the €13.5bn of austerity measures that must be agreed in order to comply with bailout agreement and receive theTroika's approval for the release of the next €31.5bn tranche of aid. Yet once again, its members Prime Minister Antonis Samaris, PASOK leader Evangelos Venizelos and Democratic Left head Fotis Kouvelis were unable to bridge the gaps.
FTSE 100: ARM and miners give a lift; WPP and Experian hit by downgrades
Chip designer ARM Holdings continued to make gains after its impressive third-quarter results yesterday. Shares rose as European software giant SAP gained in Frankfurt after it hiked its full-year revenue target.
Meanwhile, the miners were also performing well on the back of the decent Chinese data:Kazakhmys, ENRC, Antofagasta and Vedanta were among the best performers.
Heading the other way was media giant WPP after UBS cut its recommendation on the shares
to 'neutral', saying that a "macro slowdown poses a risk to expectations".
Information services provider Experian was pulling back following yesterday's strong rise after it said it was increasing its stake in Brazilian credit bureau Serasa from 70% to 99.6% for $1.5bn in cash. Jefferies labelled the stock as a "core support services holding" but downgraded its rating on the shares from 'buy' to 'hold' on valuation grounds.
Cigarette and tobacco giant British American Tobacco (BATS) was under pressure after organic revenue growth and volumes were worse than expected in the third quarter. On a reported basis, sales fell 1% on the back of adverse exchange rate
movements. Sector peer Imperial was in demand after Goldman Sachs upgraded the shares to 'neutral'.
Holiday Inn and Crown Plaza owner InterContinental Hotels Group (IHG) was subdued after seeing growth in US revenue per available room (RevPAR) moderate in the third quarter as a result of a seasonal impacts.
Shares in power systems company Rolls-Royce briefly popped their head into positive territory but were down 0.8% by midday after the company announced a massive $2.6bn oder from Singapore Airlines for Trent engines.
Pharma giant AstraZeneca was in the red ahead of its third-quarter results tomorrow, in which investors will look for reassurance after the company cancelled its share repurchase programme a few weeks ago.
FTSE 250: Home Retail gains on Argos plans
Argos and Homebase owner Home Retail jumped after announcing its decision to close 75 Argos stores over the next five years. "We have concluded a comprehensive business review of Argos which highlighted a clear opportunity to transform the business through increased investment in digital technologies," the group said.
Sportswear and accessories retailer Sports Direct slipped after saying that revenue growth had slowed from 25.3% in the first quarter to 18.0% in the second.
Bus and train group National Express dropped despite saying that third-quarter trading remained resilient in the face of increasing austerity measures, with profit on target for the year.
FTSE 100 - Risers
ARM Holdings (ARM) 669.50p +4.61%
Kazakhmys (KAZ) 740.50p +2.63%
International Consolidated Airlines Group SA (CDI) (IAG) 158.40p +2.33%
BAE Systems (BA.) 312.00p +2.06%
Eurasian Natural Resources Corp. (ENRC) 337.80p +1.53%
Compass Group (CPG) 681.50p +1.49%
Antofagasta (ANTO) 1,283.00p +1.42%
Shire Plc (SHP) 1,786.00p +1.13%
Vedanta Resources (VED) 1,135.00p +1.07%
Serco Group (SRP) 572.00p +1.06%
FTSE 100 - Fallers
Amec (AMEC) 1,057.00p -2.13%
Smiths Group (SMIN) 1,038.00p -1.80%
Old Mutual (OML) 169.70p -1.79%
Weir Group (WEIR) 1,681.00p -1.41%
Experian (EXPN) 1,072.00p -1.38%
Johnson Matthey (JMAT) 2,203.00p -1.08%
Barclays (BARC) 230.15p -1.07%
Resolution Ltd. (RSL) 214.10p -1.02%
Babcock International Group (BAB) 941.50p -1.00%
Aggreko (AGK) 2,009.00p -0.94%
FTSE 250 - Risers
Home Retail Group (HOME) 108.10p +3.84%
Lonmin (LMI) 501.50p +3.17%
Grainger (GRI) 107.90p +2.66%
Interserve (IRV) 372.00p +2.65%
Supergroup (SGP) 670.00p +2.45%
Daejan Holdings (DJAN) 2,893.00p +2.37%
COLT Group SA (COLT) 121.30p +2.10%
Ferrexpo (FXPO) 196.10p +2.08%
Perform Group (PER) 446.00p +1.94%
Stobart Group Ltd. (STOB) 115.70p +1.94%
FTSE 250 - Fallers
Ophir Energy (OPHR) 548.00p -5.68%
National Express Group (NEX) 194.80p -5.67%
Salamander Energy (SMDR) 193.20p -4.78%
Carpetright (CPR) 671.00p -3.31%
Ruspetro (RPO) 104.50p -2.79%
Tullett Prebon (TLPR) 282.80p -2.78%
Homeserve (HSV) 224.80p -2.52%
Kenmare Resources (KMR) 38.55p -2.41%
Wetherspoon (J.D.) (JDW) 491.60p -2.27%
Man Group (EMG) 76.25p -2.18%