LONDON (ShareCast) - 1630:Close New UK car registrations rose for the fifth month in a row in July, up 9.3% to 143,884 units, with the total so far this year up 3.5% on the same period in 2011. Also reported today, output has fallen among the UKs small and medium-sized manufacturers, with 28% of the 359 firms that responded to the latest quarterly SME Trends Survey saying output volumes were down, while 23% of manufacturers reported output volumes increasing in the three months to July. Meanwhile, Halifax has added to a number of recent reports that the UK housing market weakened in July by reporting that average prices fell 0.6% month-on-month in July, following on from increases of 0.8% in June and 0.4% in May. Banks led on the upside, on another day of falling yields in Europe´s periphery. Furthermore, according to The Sunday Times Banco Itau could bid for RBS´s US operations. Meanwhile, speculation is that Barclays could announce a revamp of its bonus share scheme. Miners also did well, while defensive issues were under pressure. StanChart took a hit from news of allegations from the New York State Dept. of Finance that it schemed with Iran and hid 60,000 secret transactions from regulators. The FTSE 100 closed up 21 points at 5,809.
1518: BAE Systems is still trading lower on the day despite reports just out that the aeronautics giant has won a contract to upgrade South Korea's fleet of over a hundred F-16 fighter jets. The contract is thought to be worth 1bn dollars. Out amongst the small-caps, Trinity Mirror is snapping higher by another 10 per cent today. There does not seem to be any specific news behind the move.
1457: Shares are tracking Wall Street higher and are now at the day´s highs. More specifically, Glencore has been trading strongly. Several reports out over the weekend highlighted that it is expected to publish a smaller drop in its half year profits, tomorrow, than its take-over target Xstrata. That may give it additional ammunition with which to resist pressure from Xstrata shareholder Qatar Holdings for a higher offer price. Xstrata will report that profits for the half dropped 50 per cent to 1.4bn dollars (900m pounds), according to the Citys consensus estimates. In contrast Glencore, whose trading activities mean it can profit from commodity price swings, is expected to report later in the month that its own earnings suffered a less steep fall of 37 per cent, to 1.5bn dollars, according to analysts at Liberum Capital. As well, there are widespread reports that Barclays is planning an overhaul of its bonus system, that could see payouts withheld until bankers leave the company. This may be contributing to gains in its shares. FTSE 100 is rising 33 to 5,826.
1302: Much commented today in some of the main media outlets, the positive research note issued this morning by Credit Suisse strategist Andrew Garthwaite. He is of the following opinion:
"Too much pessimism on policy: a) Draghi has outlined a clear path to an open-ended SMP programme that is unlikely to subordinate private bond holders. Markets can be too sceptical (the Eurostoxx sold off 8% after the LTRO1 announcement and then rallied strongly); b) a key condition for ECB help is that governments sign an MoU committing to ongoing fiscal and structural reform - Spain is already de facto in a programme and others in the periphery (ex Greece) are implementing most of the troika/EU demands; c) Merkel's popularity has risen to a 3-year high despite perceived concessions at the 28June summit; d) we think the probability of a Greek exit is 20% by year-end, lower than apparently projected by consensus."
For all of the above reasons -amongst others- he adds that, "we think the defensive-led market rally will continue for now (overweight telecoms and pharma)."
Some commentators however are also highlighting equally negative remarks out from JP Morgan. Furthermore, it must be kept in mind that the DJ Stoxx has now risen for 9 consecutive weeks.
1251: London equities are now at their best level of the day. That following remarks from Angela Merkel´s deputy spokesperson backing Mario Draghi´s plans announced last Thursday. Also supporting markets is news of progress over the weekend in talks between Greece and the Troika. Marks & Spencer and GKN are still high up on the leaderboard, although the top spots have been taken over by Evraz, Barclays and IMI. Evraz for its part has been removed from UBS´s least preferred list. Centrica however has been downgraded by analysts at Deutsche Bank. FTSE 100 up 20 to 5,806.
1006: Shares of RBS have slipped into the top spot on the Footsie, possibly on the back of reports in The Sunday Times that Brazil´s Banco Itau could be sizing up the lender´s US operations. Those assets could fetch a price of 10bn pounds the paper reported.
0931: Marks&Spencer is now leading gains on the top share index on further news of possible buy-out interest. That builds on earlier reports last week, to that same effect, from Bloomberg. GKN is also performing strongly after analysts at Credit Suisse reiterated their outperform rating on the shares. They indicate that: "our target price increases to 245p (from 240p) representing 20% upside potential and valuing GKN 12-month forward earnings on a multiple of 8.8x. The full report illustrates this is in line with the 12-month forward earnings multiple of the peer group weighted according to GKN's divisional exposure." Acting as a backdrop, Eurozone periphery bond yields are again heading lower. Spanish 2 year bond yields are now down by another 37 basis points, to 3.59%. FTSE 100 now flat at 5,787.
0912: Footsie is treading water, with very little news-flow to stir things up. China's central bank has issued a statement indicating it will continue to fine tune its efforts to support the People's Republic's economy in the second half of the year, which is lending a bit of support to minerals-related stocks such as Evraz, Glencore, Vedanta, Polymetal and ENRC. Platinum refiner Johnson Matthey is sharply lower in early trading while defensive favourites such as utilities Centrica, Severn Trent and United Utilities are friendless. FTSE 100 is down 12 at 5,776.
0818: Equities have opened slightly lower after Friday's banner day. Airlines group IAG, which last week announced plans to restructure its Iberia airline, is lower after Credit Suisse lowered its target price on the stock from 176p to 160p. The Swiss bank is neutral on the shares. Utility firm SSE is barely changed despite Deutsche Bank chopping its price target for the electricity provider to 1400p from 1550p. The CBI´s small company confidence gauge fell to -13 in July from 22 in April due to challenging domestic conditions and uncertainty in the Eurozone. House prices dropped by 0.6% month-on-month in July (Consensus: 0.5%) according to the latest data out of Halifax. FTSE 100 is down 10 at 5,777.