FTSE LIVE: Investors get jitters over company earnings

| October 10, 2012 | 0 Comments

By
This Is Money Reporters

02:39 EST, 10 October 2012


|

09:04 EST, 10 October 2012

15.00: The Dow Jones has dropped 56.3 points to 13,417.2 as U.S. investors react to Alcoa’s lacklustre quarterly results.

The FTSE 100 is off 19.5 points at 5,790.7.

13.20:

Global growth fears continued to dictate the market’s performance after aluminium company Alcoa last night warned that demand was lower than anticipated because of a slowdown in China.

The cautious outlook, which was revealed by Alcoa at the start of the third quarter earnings season, follows the IMF’s downgrade to growth forecasts.

Silver miner Fresnillo was the biggest faller in the Footsie, declining by 67p to 1906p, while building supplies firm Wolseley dipped 50p to 2637p.

Earnings worry: Economic bellwether Alcoa reported better than expected profits but cut its 2012 global aluminium consumption forecast

Earnings worry: Economic bellwether Alcoa reported better than expected profits but cut its 2012 global aluminium consumption forecast

ASOS shares have jumped 86 per cent over the last year and were up another 14.5p to 2300.5p today after the fashion retailer announced the appointment of former Marks Spencer executive Kate Bostock to the company’s board.

Ms Bostock, who is the former head of general merchandise at MS, said: ‘ASOS is a phenomenon and I’m in awe of the story.’

The FTSE 100 was down 17.5 points at 5,792.8 in lunchtime trading.

Brent crude is at $114.39 a barrel today while gold is at $1,765.50 an ounce.

11.30:

The FTSE 100 is 29.9 points in the red at 5,780.3 despite gains by banking stocks.

The sector got a boost from a media report that capital and liquidity rules have been relaxed in an effort to stimulate lending.

The Financial Services Authority has told banks that they would not be required to hold extra capital against loans used in the ‘funding for lending’ scheme, according to the Financial Times.

Lloyds Banking Group was 3.5 per cent higher, up 1.3p at 38.3p, and Royal Bank of Scotland rose 5.25p to 262.6p. Barclays, which unveiled a deal yesterday to buy the UK savings and mortgage business of ING Direct, was 2.1p higher at 223.65p.

BAE Systems’ shares were lower amid speculation that its £28billion proposed tie-up with EADS was in danger of collapse.

The parties have until 5pm today to announce the terms of the merger or ask for an extension to finalise their plans, but it is thought European governments remain deadlocked over the level of state ownership of the combined firm. Shares were 2.35p lower at 323.05p.

Shares in chocolate retailer Thorntons were half a penny higher at 30p, despite a 1.7 per cent drop in store like-for-like sales in the 14 weeks to October 6.

Chris Beauchamp, market analyst at IG, said unease about global growth prospects were affecting stocks today.

‘U.S. earnings season started in a reasonable fashion last night, as Alcoa managed to beat expectations and record a small profit per share,’ he said.

‘However, the company’s somewhat cautious outlook for the coming months chimes with the IMF’s downgrade to global growth, issued yesterday.

‘This goes some way to explaining why we are seeing further weakness in markets this morning. Expectations for earnings season are for a general slowdown in revenues, a reflection of the stagnation seen around the world. ‘

Fawad Razaqzada, market strategist at GFT Markets, said Alcoa’s numbers were disappointing.

‘Pundits have been suggesting this would be a rocky round and so far they’re not wrong although many will now be eyeing JP Morgan’s numbers ahead of Friday’s opening bell to see how the [U.S.] banking sector is likely to fare.’

The U.S. ‘Beige Book’, which gives a snapshot of current economic conditions across the Atlantic, will be released later.

Stock futures for U.S. markets today are flat, after a triple-digit fall on the Dow Jones yesterday.

8.30: The FTSE 100 has opened down 11.1 points at 5,799.1 as investors worry that the upcoming third quarter earnings season will fall short of expectations.

U.S. aluminium giant Alcoa – regarded as a bellwether for global industrial demand – kicked off the latest round of results last night by reporting a quarterly profit that beat analyst expectations despite weak aluminum prices.

But the company said it had noticed a ‘slight slowdown’ in some regions and end markets. It lowered its global aluminum consumption outlook to 6 per cent growth from 7 per cent previously for 2012, mainly due to a slowdown of demand in China.

The Footsie closed down 31.49 points
at 5,810.25 yesterday, dented by concerns over Europe’s debt troubles
and gloomy global economic data that bode ill for corporate earnings.

Stocks
trading ex-dividend, after which investors will no longer qualify for
the latest dividend payout, will chop 2.87 points off the FTSE 100 today
after the resulting adjustment to prices by market-makers.

Kingfisher, Smith Nephew, Tesco, Wolseley and WPP Group will all trade without their dividend entitlements.

Stocks to watch today include:

BAE Systems: BAE and EADS are making one last effort to breathe life into a troubled $45billion aerospace merger, as doubts grow over German backing for the deal.

They have until this afternoon to declare their intentions and either scrap the merger or ask UK regulators for more time to finalise their plans to create the world’s largest aerospace and arms group.

BP: Russian president Vladimir Putin backs BP’s plan to sell its 50 per cent stake in TNK-BP to the state oil group Rosneft, the Financial Times reported, citing an interview with Rosneft’s chief executive Igor Sechin.

RBS: The bank plans to price the stock market listing of its Direct Line insurance business at between 170 pence and 177.5p, in the lower half of its initial range, sources close to the transaction told Reuters.

Market watch: Traders are worried latest corporate earnings will disappoint

Market watch: Traders are worried latest corporate earnings will disappoint

Man Group: Revived whispers that a U.S. bidder will soon come calling lifted shares in the hedge fund manager yesterday, the Daily Mail’s Market Report said. There is talk 9.35 per cent shareholder Blackrock and others could be lining up a 140 pence a share cash bid.

ASOS: The British online fashion retailer said Kate Bostock, the former head of general merchandise at Marks Spencer, is to join the company as an executive director, product and trading in January 2013.

SABMiller: The brewer said in a trading update that it has expanded its African beer brand, Chibuku, into ten countries across the continent.

Thorntons: The chocolate group said it was cautious on the outlook for its upcoming peak trading season as it posted a 1 per cent decline in first-quarter total sales to £46million, with trading in line with management expectations.

Ferrexpo: The iron pellet group said production from its own ore rose 2.8 per cent  in the third-quarter 2012 compared to second-quarter 2012, although there was a reduction in total output due to lower purchases of third party concentrate.

The comments below have not been moderated.

Going ex-dividend has a much wider impact on the market than in previous years, but then good dividends are being paid. It used to be just individual companies that lost share value, going ex-dividend. With a dividend season upon the market and points lost across the wider market, it looks like a buying opportunity for investors. Effectively a discount opportunity purchase in growing sectors. October is the difficult month for in, particular, retailers. But retailing is not the dynamo of growth it used to be.
The fact that mergers and acquisitions are in the financial news, suggests there are bargains to be had in specific sectors. Deals are in the offing for the banks again, but as we learn from the BAE situation investors need to be wary about being sold down the river by politicians.

Talkabouttoday
,

Somerset, United Kingdom,
10/10/2012 09:04

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