FTSE CLOSE: Markets steady as Facebook and Boeing put end to gloomy U.S. results

| October 24, 2012 | 0 Comments

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This Is Money Reporters

02:34 EST, 24 October 2012


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11:35 EST, 24 October 2012

17.15 (close): London’s leading shares index steadied today as social media giant Facebook and aviation firm Boeing put an end to a disappointing run of gloomy results in the US.

The FTSE 100 Index closed 6.9 points higher at 5804.8, ending four consecutive days of losses, while Wall Street’s Dow Jones Industrial Average was 0.2 per cent higher at the time of the London close.

Facebook was poised for its best day since its stock market debut in May after it reported that 14 per cent of advertising revenues came from mobile devices, allaying some investor concerns. Meanwhile, Boeing raised its profit expectations for the year.

Economy watch: Signs of a recovery in China's factory sector has boosted mining stocks in London

The pound was higher against the US
dollar and euro at 1.60 and 1.23 respectively, ahead of UK gross
domestic product (GDP) figures which are expected to reveal a return to
growth in the third quarter.

The single currency was also knocked
as figures showed an unexpected decline in the latest purchasing
managers’ survey for Germany’s manufacturing sector.

In London, the focus was on Home
Retail Group, which received a shares boost after investors cheered
plans for a digital revamp at Argos.

The stock rose more than two per cent as it
unveiled a turnaround plan for Argos that will see it close at least 75
store and aims to reverse falling annual sales, while it also delivered
interim results at the top end of expectations.

Shares rose 2.5p to 106.6p as Home
Retail also posted group-wide underlying profits of £18million, down by
a less-than-feared 37 per cent year-on-year.

In the top flight, miners rose on hopes over the demand outlook, with Kazakhmys leading the sector higher – up 28.5p to 750p.

Chip designer ARM Holdings topped the
FTSE 100 risers board for a second successive session after strong third
quarter results on Tuesday. Shares were up another six per cent or 35.5p to
675.5p after rising eight per cent yesterday.

In other corporate updates, transport
firm National Express plunged 13 per cent, down 26.1p to 180.4p, after it failed
to reassure investors despite a recent return to passenger growth at
its coach business.

Sports Direct International shares
were 5.1p lower at 398.9p despite the company announcing a 21.7 per cent jump in
underlying profits to £167.4million for the nine weeks to September
30. Sales were boosted by the Olympics and back-to-school purchases, the
company said.

Elsewhere, pubs group Punch Taverns
lifted two per cent or 0.1p to 6.6p after recent sharp falls as it said it was in
to start talks to restructure its debts after posting a 16 per cent fall in
underlying pre-tax profits to £64million.

The biggest Footsie risers were ARM
Holdings up 35.5p at 675.5p, Kazakhmys ahead 28.5p at 750p, Reckitt
Benckiser up 135p at 3768p and Evraz ahead 7.3p at 250.3p.

The biggest Footsie fallers were Amec
down 31p at 1049p, Smiths Group off 17p at 1040p, Resolution down 3.3p
at 213p and WPP off 12.5p at 808p.

15.45: The Dow Jones has made a modest gain after yesterday’s dismal session – it’s up 38.7 points at 13,141.3.

It was lifted by encouraging manufacturing data from China and upbeat earnings reports from firms such as Boeing and Facebook.

New home sales in the US grew strongly in September, further improving investors’ mood.

In London, the FTSE 100 was up 10.1 points at 5,808.

14.15:

The FTSE 100 has edged up 14.5 points at 5,812.4 after recovering from downbeat morning trading.

Encouraging manufacturing data from China lifted miners on hopes over the demand outlook, with Kazakhmys leading the sector higher – up 17p to 738.5p.

But there was more bad news from the eurozone as figures showed an unexpected decline in the latest purchasing managers’ survey for Germany’s manufacturing sector.

The euro fell as a result, with the pound up at 1.24 euros while sterling also rose to 1.60 US dollars.

In corporate news, transport firm National Express failed to reassure investors despite a recent return to passenger growth at its coach business. The shares were 6 per cent lower, down 12.1p to 194.5p.

Elsewhere, pubs group Punch Taverns lifted 4 per cent or 0.25p to 6.66p after it said it was in talks to restructure its debts. It posted a 16 per cent fall in underlying pre-tax profits to £64million.

11.40:

The London market is flat as investors absorb disappointing economic news from the eurozone – including the normally resilient Germany.

Manufacturing and services surveys for October ‘worryingly indicate that the eurozone downturn is, if anything, deepening rather than easing’, said economist Howard Archer of IHS Global Insight.

‘Consequently, it already looks highly likely that the eurozone is headed for further economic contraction in the fourth quarter.’

He added: ‘The weakness in activity in October appears to have been widespread. Germany saw a modestly deeper overall dip in manufacturing and services output in October while France appeared to suffer further sharp contraction despite improving modestly from September’s dire readings.’

The FTSE 100 was up 2.1 points at 5,800 in late morning trading.

‘The rush of selling appears to have subsided for now, but this may just be a pause in the current bout of risk aversion,’ said Chris Beauchamp, market analyst at IG.

‘European data dominates this morning, as German IFO [businesses confidence] and PMI [purchasing managers index] comes in below expectations for October. Markets can live with poor figures from most of the eurozone, but disappointment from the union’s strongest pillar is perhaps more than investors can bear.

‘Even better data from China, where the HSBC PMI indicated signs of recovery, was not enough to put markets on the front foot.’

Angus Campbell of Capital Spreads said: ‘It seems as though the markets are really finding it tough to head higher with gains feeling like they’ve been hard won whereas moves to the downside can be abrupt, fast and without warning.

‘Yesterday’s sell-off was one of those that make you wonder is all the hard work of stock picking and investing worth the effort when you’re faced with a 2 per cent gain after ten days of nerve jangling gains only for it to be snuffed out and more in just a few hours.

‘On reflection the recent strength has been down to increased expectations of a Spanish bailout rather than sound corporate fundamentals and belief that stocks are undervalued so once the realisation set in that a Spanish bailout request may not be coming anytime soon many investors ran for the hills.’

Stock futures are pointing to a lower open on the Dow Jones after nearly 2 per cent was wiped off its value yesterday.

U.S. corporate giants ATT, Boeing and Lockheed release third quarter updates today.

9.25:

The FTSE 100 has dipped into the red to trade down 15 points at 5,782.9 as uncertainty caused by recent poor corporate results continued.

The mood was not helped by an unexpected decline in a survey of Germany’s manufacturing sector.

Home Retail Group’s vision of a digital future for catalogue retailer Argos got the support of investors, who sent the shares up 5 per cent.

The group, which also owns Homebase, believes it can reverse the chain’s recent decline in sales by generating revenues of £4.5 billion in 2018, driven by a focus on more business through mobile devices. The FTSE 250 company lifted 5.45p to 109.55p.

Chip designer ARM Holdings rosed after strong third quarter results yesteday. Shares were up another 2 per cent or 14.25p to 654.25p after rising 8 per cent yesterday.

In other corporate updates, Sports Direct International shares were 1.5p lower at 402.5p after the company announced a 21.7 per cent jump in underlying profits to £167.4million for the nine weeks to September 30.

Sales were boosted by the Olympics and back-to-school purchases, the company said.

8.30:

The FTSE 100 has opened 7.6 points higher at 5,805.6, as miners got a boost from China data signalling a recovery in the world’s second-biggest economy was gathering pace.

A closely watched HSBC manufacturing index for China climbed to a three-month high of 49.1 in October and new orders and output rose, pointing to a turnaround in the economy.

But the recovery is likely to be slow as the index stayed below the 50-point level – a figure above indicates expansion and one below contraction.

Shares are expected to remain choppy
as the third-quarter earnings season gets going in Europe, following a
slew of disappointing earnings releases from major US companies.

Across
the Atlantic, all eyes will be on the outcome of the latest Federal
Reserve rate-setting meeting, for further clues to its stimulus plans
and its view of the US economy. The result is due after the London
close.

The FTSE 100 closed 1.4 per cent or 85 points lower at 5,797.91 yesterday, its biggest one-day drop in nearly a month.

On the economic front, October’s Confederation of British Industry report on trends and orders will be released later.

Stocks going ex-dividend – after which investors no longer qualify for the latest dividend payout – will knock 5.75 points off the FTSE 100 today.

BSkyB, HSBC, Old Mutual, and Smiths Group  will all trade without their dividend entitlements.

Stocks to watch today include:

BHP Billiton: The global miner is working with advisers to consider the sale of its Pinto Valley copper mine in Arizona, which could fetch up to $1billion, the Financial Times said.

RBS: The part-state-owned lender has agreed to pay $42.5million in a settlement with the Nevada attorney general after an investigation into the bank’s mortgage funding practices, the New York Times reported.

BAT The world’s number two cigarette maker posted a drop-off in nine-month volumes due to less demand in markets including Brazil, Japan, Italy, Turkey and Egypt.

Home Retail Group: The Argos stores owner posted a 37 per cent drop in first-half profit before tax to £18million and slashed its interim dividend to 1p from 4.7p.

The group plans to reposition Argos for a digital future leading to a total group capital investment of around £175million pounds a year over the next three financial years.

Sports Direct: The sporting goods retailer said group total sales for the nine weeks ending September 30 were up 18 per cent to £402.7million, with gross profit up 21.7 per cent to £167.4million. Since the end of September, trading has remained equally strong.

National Express: The firm said it remains on track to deliver its profit expectations for 2012 after seeing a strong performance in its UK bus arm in the third-quarter and an excellent operational performance in rail.

Dart Group: The transport firm said it now expects its results to exceed current market expectations for the year ending March  31 2013, after its Jet2.com airline had a strong summer with volumes underpinned by the continued successful growth of jet2holidays.

Punch Taverns: The pubs operator said its full-year revenue fell 6 per cent to £492million, with its profit before tax falling to £64million. Trading in the first eight weeks of new financial year has been in line with management expectations.

Rathbone Brothers: The investment firm said its total funds under management rose 9.5 per cent to £17.35billion at September 30 2012.

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