- Markets await German ruling on ESM, FOMC meeting
- Burberry sinks after full-year guidance
- Miners provide a drag
The FTSE 100 opened slightly lower on Tuesday morning as markets gear up for some big 'risk events' later this week; falls in the heavyweight mining sector and a sharp drop from Burberry were weighing on the blue-chip index early on.
A last minute interjection by Peter Gauweiler, a member of Angela Merkel's own coalition, threatened to derail what seemed to be the likely approval by Germany's Constitutional Court of the European Stability Mechanism (the new Eurozone rescue fund) tomorrow. Gauweiler called on the court this past weekend to first assess the impact of the European Central Bank's 'outright monetary transactions', which it announced last week. Half an hour before today´s open however the Constitutional Court has confirmed that it will go-ahead with its sentence, tomorrow, as scheduled.
Meanwhile, the Federal Reserve is starting its two-day monetary policy meeting tomorrow. "Despite the much improved data in many areas, there remains a strong belief that the Fed will announce some form of monetary easing on Thursday, although those expecting QE3 are likely to be disappointed," said analyst Craig Erlam from Alpari.
In other news, Spanish Prime Minister Mariano Rajoy has yet to decide if he will request assistance from the European Central Bank (ECB) in what would effectively be considered a 'bailout' of the southern European country. "I haven't decided yet if I'm going to request the ECB's help. I have to think about it," he said.
Worth noting as well, 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.
FTSE 100: Burberry sinks 18% after warning about full-year profits
British fashion house Burberry plummeted in the opening hour after warning that trading conditions were becoming more challenging with like-for-like sales flat in the second quarter. The firm said that ahead of the key retail trading period in the second half, it expected pre-tax profits for the year to March 31st 2013 to be at the lower end of market expectations.
Nomura and Seymour Pierce both downgraded their ratings on the stock this morning. "This news will obviously hit sentiment towards Burberry and the luxury sector and the shares
are likely to underperform until there is better news on demand," said Seymour analyst Kate Calvert.
Mining stocks were firmly out of favour with Vedanta, Anglo American, Kazakhmys and Antofagasta among the worst performers. Xstrata and Glencore were slightly lower after Qatar Holding (which owns 12% of the former) said it hasn't yet made up its mind on whether or not to vote in favour of amended new terms of Glencore's offer.
Fund manager Ashmore fell after full-year pre-tax profits and assets under management took a small dip in the year to June 30th.
FTSE 250: IG Group gains after first-quarter update
Spread betting firm IG Group rose strongly after first-quarter revenues came in line with expectations, though they were still 18% down year-on-year due to a tough comparative.
Internet gambling group Betfair was in the red in spite of revenues gaining 13% in the three months to the end of July, helped by betting on Euro
2012 and Wimbledon.
FTSE 100 - Risers
British American Tobacco (BATS) 3,159.50p +1.12%
ARM Holdings (ARM) 554.50p +1.00%
Imperial Tobacco Group (IMT) 2,272.00p +0.98%
United Utilities Group (UU.) 692.00p +0.73%
GlaxoSmithKline (GSK) 1,425.50p +0.71%
Hargreaves Lansdown (HL.) 657.00p +0.54%
Severn Trent (SVT) 1,699.00p +0.53%
AstraZeneca (AZN) 2,923.00p +0.50%
Unilever (ULVR) 2,256.00p +0.49%
Vodafone Group (VOD) 177.45p +0.48%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,132.00p -17.67%
Vedanta Resources (VED) 951.50p -5.13%
Anglo American (AAL) 1,942.50p -2.95%
Antofagasta (ANTO) 1,217.00p -2.56%
Kazakhmys (KAZ) 669.00p -2.55%
Evraz (EVR) 255.00p -2.00%
Eurasian Natural Resources Corp. (ENRC) 335.80p -1.93%
Rio Tinto (RIO) 3,012.50p -1.84%
Fresnillo (FRES) 1,726.00p -1.71%
Randgold Resources Ltd. (RRS) 6,910.00p -1.64%
FTSE 250 - Risers
IG Group Holdings (IGG) 455.90p +5.19%
Ruspetro (RPO) 119.70p +4.36%
Ocado Group (OCDO) 71.45p +2.14%
Stobart Group Ltd. (STOB) 116.70p +1.48%
Diploma (DPLM) 454.90p +1.45%
Bumi (BUMI) 285.70p +1.35%
Go-Ahead Group (GOG) 1,338.00p +1.13%
Dairy Crest Group (DCG) 347.60p +1.05%
Grainger (GRI) 101.00p +1.00%
TR Property Inv Trust (TRY) 160.80p +1.00%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,285.00p -5.86%
Lonmin (LMI) 599.50p -3.15%
Computacenter (CCC) 382.00p -3.12%
COLT Group SA (COLT) 118.80p -2.94%
St James's Place (STJ) 354.90p -2.77%
Bwin.party Digital Entertainment (BPTY) 101.00p -2.60%
Petropavlovsk (POG) 383.80p -2.59%
Betfair Group (BET) 730.00p -2.41%
Shanks Group (SKS) 90.60p -2.37%
Essar Energy (ESSR) 104.20p -2.34%