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The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3540 level and was capped around the $1.3640 level. Technically, today’s intraday low was below the $1.3576 level, representing the 50.0% retracement of the $1.2587 - $1.4281 range. The common currency moved to intraday lows after it was reported that U.S. January non-farm payrolls came in at +36,000, far below estimates between +140,000 and +150,000 and down from the revised 121,000 December figure. Also, the January unemployment rate fell to 9.0% from 9.4% in December, far below the 9.5% estimate. January private payrolls were up 50,000, down from the revised +139,000 December figure, and January manufacturing payrolls grew to 49,000 from the revised December reading of 14,000. Other data saw January average weekly hours worked tick lower to 34.2 while January average hourly earnings were up 0.4% m/m and 1.9% y/y. The euro reacted negatively as traders cited less demand for riskier assets like equities. Bad weather was partially accountable for the large distortion in January’s number. Economists note there are typically about 417,000 persons who cannot work due to weather conditions during the month of January and last month there were 886,000 workers impacted by seasonal effects. This difference suggests there could be some sizable employment gains and/ or upward revisions in the coming months. The labour force participation rate declined to a 26-year low of 64.2% and is the primary reason why the unemployment rate fell to 9.0%. U.S. persons not in the labour force have increased from 83.9 million to 86.2 million in one year while the number of unemployed persons has fallen from 15.0 million to 13.9 million in two months. These data evidence the fact that huge numbers of persons have given up looking for paid employment and while this will continue to keep the unemployment rate artificially low, it is not a result from positive economic growth. In contrast to the weak U.S. economic data, Canada’s January net change in employment grew from +22,000 to +69,200. Fed Chairman Bernanke spoke yesterday and said a failure to raise the U.S. debt limit would have “catastrophic” consequences. He also said the Fed expects U.S. economic growth will expand above the 2.5% level required to reduce the unemployment rate. Bernanke also said the Fed is considering an enhancement to transparency by increasing the number of press conferences. Many Fed-watchers continue to forecast the Fed will not raise official interest rates in 2011 and believe the Fed will exhaust its US$ 600 billion asset-purchase program as expected by mid-year. In eurozone news, EMU-17 finance ministers are convening today to discuss the eurozone sovereign debt crisis and the European Financial Stability Facility. European Central Bank member Nowotny was quoted as saying he believes inflation will remain above 2% for some months but will decline later this year and average 1.8% in 2012. Traders are also reacting to news that Egyptian President Mubarak may be stepping down from office as early as today. Euro bids are cited around the US$ 1.3505 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥82.25 level and was supported around the ¥81.10 level. Technically, today’s intraday low was below the ¥81.25 level, representing the 76.4% retracement of the ¥80.24 – 84.50 range. Former Bank of Japan Executive Director Masayuki Matsushima warned Japan is in a “bond bubble” that may burst in a few years if its debt burden is not offset by higher taxes. Last week, Standard & Poor’s downgraded Japan’s sovereign debt rating to AA-, warning the Kan government “lacks a coherent strategy” to address the country’s debt. Domestic Japanese investors hold 90% of Japanese government debt and they will be encouraged to purchase more Japanese government bonds. At the same time, however, bank lending decreased 1.8% last year, the first decline in five years. Bank of Japan today reported “A somewhat sensitive bias is likely to continue in financial markets for the time being, as market participants are expected to react nervously to economic indicators and changes to macroeconomic policies in each country. Caution in the markets is high because it’s difficult to foresee economic and financial structural problems in Europe being solved in the short term, and a massive amount of eurozone government bonds are scheduled to mature in the spring.” Earlier this week, BoJ Board member Kamezaki this week reported “There’s a high chance Japan’s economic slump will end quickly and the nation will return to a moderate growth path (around spring).” Kamezaki also added “The pause in the yen’s advance is also contributing” to the market’s perception of an economic recovery. Data released in Japan this week saw the January monetary base up 5.5% y/y, down from the prior reading of +7.0% y/y. Bank of Japan Governor Shirakawa was this week quoted as saying the central bank’s commitment to keeping rates near zero per cent will keep bond yields stabile as the economy strengthens. The Nikkei 225 stock index gained 1.08% to close at ¥10,543.52. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥111.40 level and was supported around the ¥111.05 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥131.25 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.85 level. In Chinese news, the U.S. dollar was unchanged vis-à-vis the Chinese yuan today the greenback closed at CNY 6.5850 in the over-the-counter market. Liquidity was light on account of the Chinese New Year holiday. Data released in China this week saw January PMI manufacturing decline to 52.9 while January non-manufacturing PMI ticked lower to 56.4. January HSBC services PMI and January trade balance data will be released next week. People’s Bank of China is largely expected to raise official interest rates over the next several weeks. PBoC adviser Li this week reported the Chinese economy will continue to expand at a clip of at least 9.5% and said the inflation rate may exceed 5% in the first quarter.
£
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6035 level and was capped around the US$ 1.6170 level. Technically, today’s intraday low was below the $1.6058 level, representing the 23.6% retracement of the $1.5344 – 1.6277 range. Data released in the U.K. today saw January Halifax house prices up 0.8% m/m and data released earlier this week included an improvement in January PMI services. Data to be released next week include the BRC retail sales monitor, January RICS house prices, December trade balance, December industrial production, December manufacturing production, and January producer prices inflation. Bank of England’s Monetary Policy Committee is expected to keep its benchmark Bank Rate unchanged at 0.50% next week and its asset purchase program unchanged at £200 billion. Two MPC members voted for a rate hike in January and given the elevated rate of inflation, other MPC members could join the call for higher rates next week. Former MPC member Barker said the BoE has suffered a “modest loss of credibility” on account of the central bank’s response to higher inflation. The more hawkish members of Bank of England’s Monetary Policy Committee made news this week when Deputy Governor Bean reported “We may well have to respond to (higher commodities prices) by keeping domestically-generated inflation lower. Whether it dents confidence depends on why it happens: if we raise rates because the economy is growing quite strongly and the recovery is entrenched then that’s a ‘nice’ rise in interest rates and unemployment will be coming down. On the other hand if it is in response to a spike in oil prices that we think is likely to persist and inflation is becoming embedded that is not a nice reason to raise interest rates, but we would have to do it.” MPC member Sentance was also hawkish in saying once the inflation “genie is out of the bottle,” the U.K. will face a “hard and painful” job of achieving price stability. NIESR earlier this week reported the central bank is likely to raise rates three times this year to 1.25% by the end of 2011. Cable bids are cited around the US$ 1.5965 level. The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8475 level and was supported around the £0.8420 level.
CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 0.9595 level and was supported around the CHF 0.9450 level. Technically, today’s intraday high was right around the CHF 0.9592 level, representing the 38.2% retracement of the CHF 1.0065 – 0.9299 range. Data released in Switzerland today saw January foreign currency reserves increase to CHF 207.9 billion and it is not believed Swiss National Bank conducted franc-selling intervention last month. Data to be released next week include the January unemployment rate, January SECO consumer confidence, and January consumer price inflation. Data released in Switzerland this week saw the December trade balance expand to CHF 1.93 billion from the revised prior reading of CHF 1.79 billion. Swiss banking giant UBS reported it expects Swiss National Bank will begin raising its benchmark rate in June by 25bps to 0.5%, three months later than previously expected. Former Swiss National Bank Chairman Roth this week was quoted as saying “The problem is less in the advance of the franc but with the speed of the movement in 2010. But wouldn’t the situation have been even worse if the SNB hadn’t intervened? Those who now criticize its actions should look at the facts and measure the associated risks.” Earlier this week, SNB member Jordan verbally intervened against the franc’s strength saying “For Switzerland’s export industry, such a strong franc is a big and barely tolerable burden. Given the importance of the export sector for the overall economy, its problems are also showing a negative impact on overall economic growth.” U.S. dollar offers are cited around the CHF 0.9775 level. The euro appreciated vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.2960 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.5320 level.
Technical Outlook at 1330 GMT (EST + 0500)
EUR/ USD 1.3630 1.3642, 1.3616
USD/ JPY 81.63 81.69, 81.49
GBP/ USD 1.6092 1.6171, 1.6080
USD/ CHF 0.9492 0.9496, 0.9448
AUD/USD 1.0171 1.0195, 1.0138
USD/CAD 0.9860 0.9920, 0.9845
NZD/USD 0.7715 0.7747, 0.7714
EUR/ JPY 111.28 111.38, 111.06
EUR/ GBP 0.8467 0.8472, 0.8422
GBP/ JPY 131.41 131.93, 131.25
CHF/ JPY 85.96 86.38, 85.92
USD/ JPY 81.63 81.69, 81.49
GBP/ USD 1.6092 1.6171, 1.6080
USD/ CHF 0.9492 0.9496, 0.9448
AUD/USD 1.0171 1.0195, 1.0138
USD/CAD 0.9860 0.9920, 0.9845
NZD/USD 0.7715 0.7747, 0.7714
EUR/ JPY 111.28 111.38, 111.06
EUR/ GBP 0.8467 0.8472, 0.8422
GBP/ JPY 131.41 131.93, 131.25
CHF/ JPY 85.96 86.38, 85.92
All times GMT (last release in parentheses)
0500 Germany December import price index (1.2% m/m)
0500 Germany December import price index (10.0% y/y)
0500 UK January Halifax house prices (-1.3% m/m)
1000 Italy January consumer price index
1200 Canada January employment, net change (22,000)
1200 Canada January unemployment rate (7.6%)
1330 US January non-farm payrolls, net change (103,000)
1330 US January unemployment rate (9.4%)
1330 US January average weekly hours worked (34.3)
London Market Reports
No US jobs lift for FTSE 100
Market Movers
techMARK 1,908.94 +0.72%
FTSE 100 5,997.38 +0.23%
FTSE 250 11,666.53 +0.78%
The top share index finished the week just below 6,000 points after a sluggish day’s trading. Market Movers
techMARK 1,908.94 +0.72%
FTSE 100 5,997.38 +0.23%
FTSE 250 11,666.53 +0.78%
Traders were unsure how to react to US jobs data. Nonfarm payrolls rose just 36,000 last month, the Labor Department said Friday, well below forecasts of at least 140,000. On the bright side, December’s number was revised up to 121,000 from 103,000.
Utilities pushed the blue-chip index higher on the back of a positive broker note on the sector from BofA Merrill Lynch. The US bank has upgraded United Utilities and Severn Trent from “neutral” to “buy” and upgraded Pennon and Northumbrian Water from “underperform” to “neutral”.
In other broker action Wm Morrison was boosted by an upgrade to 'buy' from 'neutral' at UBS, which suggests the supermarket chain has at least £1bn to hand out either in a one-off distribution or through higher dividends.
"In our view, Morrison's balance sheet strength and ongoing cash generative capabilities could support both, although we think the latter is marginally more likely," UBS said.
Felix Vulis is stepping down as chief executive of Kazakhstan-focused miner Eurasian Natural Resources Corporation. Earlier today, Vulis told the ENRC chairman Dr Johannes Sittard that he wants to leave the miner due to personal reasons. He has agreed to stay on until a successor has been appointed.
Sales continue to surge ahead at component distributor Electrocomponents with an improvement of nearly a fifth over the past four months. Overall, sales grew by 19% in the period to January, as the International business grew by around 23% and the UK by around 11%.
The US Food and Drug Administration has accepted the AstraZeneca’s resubmission of a new drug application for its blood-thinning drug BRILINTA, and set a review date of 20 July.
Dairy Crest, the company responsible for Cathedral cheese and Country Life butter, reckons full-year profits will be in line with expectations following a “strong” third quarter. In a statement for the nine months to 31 December, it said sales were “broadly unchanged” from last year when the contribution from the offloaded stake in Wexford Creamery is taken out. The shares have fallen back a little.
Power systems developer Rolls-Royce has signed a £20m contract to supply engines and propulsion equipment for four gas-fuelled ferries to be built for the Norwegian operator Torghatten Nord.
Budget airline easyJet flew 19.1% more passengers on its orange liveried planes this January than a year ago. More than 3.74m people took to the skies with the carrier last month, up from 3.14m in January 2010. The load factor, which measures how well planes are filled, slipped from 79.3% to 78.9%.
SuperGroup, owner of the rapidly growing Superdry clothes chain, led the FTSE 250 higher after saying it has splashed out €40m in cash and shares to buy out its Benelux and France franchisee CNC Collections from its owner Luc Clément. CNC is the leading franchisee globally for the Superdry brand.
Elsewhere in fashion, French Connection's ongoing businesses staged a strong profit recovery over the past six months and the fashion chain now expects to post at least £6.8m, up from £1m, for the year to January just ended.
Shares in Accsys Technologies took a battering on Friday morning after the company announced a deeply discounted placing of shares. The wood products company is to raise €30m by way of an underwritten firm placing and open offer of 200m shares. The shares are being offered at €0.15 each, representing a discount of 58.9% to the closing mid-market share price on the day before the announcement.
AIM-quoted Offshore Hydrocarbon Mapping continues to lose money but it is focusing on its core data processing and interpretation operations. Stripping out impairment provisions and other one-off, non-cash charges, the underlying loss fell from £8.71m to £8.37m in the year to August 2010.
FTSE 100 - Risers
Old Mutual (OML) 133.00p +4.97%
United Utilities Group (UU.) 579.00p +4.32%
Severn Trent (SVT) 1,440.00p +3.60%
International Power (IPR) 427.00p +3.36%
Anglo American (AAL) 3,335.00p +2.93%
Aviva (AV.) 456.20p +2.91%
Morrison (Wm) Supermarkets (MRW) 278.90p +2.84%
Barclays (BARC) 308.10p +2.39%
Prudential (PRU) 713.00p +2.30%
ARM Holdings (ARM) 588.00p +2.26%
Old Mutual (OML) 133.00p +4.97%
United Utilities Group (UU.) 579.00p +4.32%
Severn Trent (SVT) 1,440.00p +3.60%
International Power (IPR) 427.00p +3.36%
Anglo American (AAL) 3,335.00p +2.93%
Aviva (AV.) 456.20p +2.91%
Morrison (Wm) Supermarkets (MRW) 278.90p +2.84%
Barclays (BARC) 308.10p +2.39%
Prudential (PRU) 713.00p +2.30%
ARM Holdings (ARM) 588.00p +2.26%
FTSE 100 - Fallers
Cairn Energy (CNE) 426.30p -2.67%
Antofagasta (ANTO) 1,491.00p -2.17%
Royal Dutch Shell 'A' (RDSA) 2,155.00p -2.05%
Royal Dutch Shell 'B' (RDSB) 2,145.00p -1.49%
Essar Energy (ESSR) 520.50p -1.42%
Smith & Nephew (SN.) 702.00p -1.40%
Capital Shopping Centres Group (CSCG) 375.10p -1.37%
Xstrata (XTA) 1,417.00p -1.15%
Compass Group (CPG) 556.50p -1.15%
Eurasian Natural Resources Corp. (ENRC) 1,051.00p -1.13%
FTSE 250 - Risers
Supergroup (SGP) 1,710.00p +11.76%
Taylor Wimpey (TW.) 37.41p +6.86%
Kenmare Resources (KMR) 39.66p +6.30%
Bellway (BWY) 639.50p +6.23%
ITV (ITV) 84.05p +5.86%
Persimmon (PSN) 420.50p +5.39%
Bovis Homes Group (BVS) 459.40p +5.01%
Cable & Wireless Worldwide (CW.) 76.35p +4.59%
Tate & Lyle (TATE) 573.50p +4.37%
Spirent Communications (SPT) 152.40p +3.53%
FTSE 250 - Fallers
Exillon Energy (EXI) 372.80p -5.07%
Regus (RGU) 101.00p -2.70%
Electrocomponents (ECM) 260.50p -2.51%
JD Sports Fashion (JD.) 842.00p -2.43%
Punch Taverns (PUB) 66.20p -2.43%
Sports Direct International (SPD) 165.70p -2.24%
Go-Ahead Group (GOG) 1,251.00p -2.19%
Avis Europe (AVE) 222.40p -2.11%
Hikma Pharmaceuticals (HIK) 822.50p -2.08%
JPMorgan Indian Inv Trust (JII) 408.00p -2.06%
European Market Reports
US jobs disappoint, banks mixed
Bourses failed to find a direction on Friday after US employment figures didn’t provide the boost that investors were hoping for. Nonfarm payrolls rose by just 36,000 in January, the Labor Department said, well below forecasts of at least 140,000. Meanwhile, financial stocks were mixed after comments by analyst at French lender Societe Generale divided opinions.
In Paris, the CAC was 11 points higher at 4,047, the Dax was 23 higher at 7,216 in Frankfurt, while the Ibex was down just 6 points in Madrid at 10,855.
According to analysts at Societe Generale, banks in Europe could face a capital gap of €300bn once the Basel 3 regulations come into place in some nations.
Analysts Philip Richards and Gert van Rooyen, Banca Monte dei Paschi de Siena, Commerzbank, Credit Agricole, Credit Suisse, Banco Popolare and Allied Irish Banks have the worst capital positions; while UBS, Standard Chartered, HSBC Holdings, Lloyds Banking Group, Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA) are the best positioned.
“We expect dividend contributions to be curtailed until capital bases are restored to required levels, in 2015 for the sector,” the said. “Banks are already adapting business models to offset this expected impact, and extra pricing power should enhance sector profitability.”
Swedish bank SEB posted fourth quarter results ahead of expectations and saying the corporate lending business is seeing an improvement. Big banks such as Switzerland’s Credit Suisse and Germany’s Deutsche Bank were wanted.
Meanwhile, Deutsche Bank downgraded BBVA and Banco Santander to ‘hold’ as its results for their final quarters “failed to provide the comfort we needed.”
Swiss biotech company Actelion surged 4% ahead after Elliot Advisors, a 6% shareholder of the company, urged the group to change its “current strategic direction and corporate governance.”
Luxury goods firm LVMH disappointed with its 2010 results. Profit from continuing businesses rose 29% to €4.32bn in 2010, but that fell a shade short of expectations of €4.33bn. Full year net income jumped 73% to €3.03bn, ahead of market expectations. Sales rose 19% to €20.3bn, driven by increasing popularity of the Louis Vuitton brand.
Swedish lorry maker Volvo said fourth quarter net income totalled SKr.3.23bn, a sharp turnaround from a loss of SKr.2bn in the corresponding period of 2009, though lower than the SKr.2.9bn the market had been expecting. The company said profitability had been hit by currency headwinds, production bottlenecks and the costs associated with a profit sharing deal. The company raised guidance on 2011 deliveries by 10%, saying it now expects to ship 220,000 vehicles in each of the European and North American markets.
German luxury car maker BMW’s chief financial officer, Friedrich Eichiner, predicted strong sales growth this year, driven by burgeoning demand in emerging markets. Speaking in Cape Town yesterday Eichiner said the company is expecting “double digit growth in China” as well as strong demand from “countries like Brazil, Korea and … Russia”. Even so, shares were down 1% in afternoon trading. As were shares in sector peer Daimler.
In Paris, the CAC was 11 points higher at 4,047, the Dax was 23 higher at 7,216 in Frankfurt, while the Ibex was down just 6 points in Madrid at 10,855.
According to analysts at Societe Generale, banks in Europe could face a capital gap of €300bn once the Basel 3 regulations come into place in some nations.
Analysts Philip Richards and Gert van Rooyen, Banca Monte dei Paschi de Siena, Commerzbank, Credit Agricole, Credit Suisse, Banco Popolare and Allied Irish Banks have the worst capital positions; while UBS, Standard Chartered, HSBC Holdings, Lloyds Banking Group, Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA) are the best positioned.
“We expect dividend contributions to be curtailed until capital bases are restored to required levels, in 2015 for the sector,” the said. “Banks are already adapting business models to offset this expected impact, and extra pricing power should enhance sector profitability.”
Swedish bank SEB posted fourth quarter results ahead of expectations and saying the corporate lending business is seeing an improvement. Big banks such as Switzerland’s Credit Suisse and Germany’s Deutsche Bank were wanted.
Meanwhile, Deutsche Bank downgraded BBVA and Banco Santander to ‘hold’ as its results for their final quarters “failed to provide the comfort we needed.”
Swiss biotech company Actelion surged 4% ahead after Elliot Advisors, a 6% shareholder of the company, urged the group to change its “current strategic direction and corporate governance.”
Luxury goods firm LVMH disappointed with its 2010 results. Profit from continuing businesses rose 29% to €4.32bn in 2010, but that fell a shade short of expectations of €4.33bn. Full year net income jumped 73% to €3.03bn, ahead of market expectations. Sales rose 19% to €20.3bn, driven by increasing popularity of the Louis Vuitton brand.
Swedish lorry maker Volvo said fourth quarter net income totalled SKr.3.23bn, a sharp turnaround from a loss of SKr.2bn in the corresponding period of 2009, though lower than the SKr.2.9bn the market had been expecting. The company said profitability had been hit by currency headwinds, production bottlenecks and the costs associated with a profit sharing deal. The company raised guidance on 2011 deliveries by 10%, saying it now expects to ship 220,000 vehicles in each of the European and North American markets.
German luxury car maker BMW’s chief financial officer, Friedrich Eichiner, predicted strong sales growth this year, driven by burgeoning demand in emerging markets. Speaking in Cape Town yesterday Eichiner said the company is expecting “double digit growth in China” as well as strong demand from “countries like Brazil, Korea and … Russia”. Even so, shares were down 1% in afternoon trading. As were shares in sector peer Daimler.
US Market Reports
Negative reaction to jobs data
There was a mixed reaction to the latest employment figures even though there was a sharp decline in the unemployment rate but Wall Street is recovering from its lows.
After taking some time to make up its mind, the market headed lower in the morning and then started clawing back its losses as lunch approached.
Nonfarm payrolls rose just 36,000 last month, according to the Labor Department, well below forecasts of at least 140,000. December’s number was revised up to 121,000 from 103,000.
A big drop in the unemployment rate took everyone by surprise, tumbling from 9.4% in December to 9% last month. The market had predicted an increase to 9.5%.
The Dow Jones is down 8 at 12,055, while the broader S&P 500 has dipped by 1 point to 1,306. The tech-loaded Nasdaq Composite is up 3 at 2,757.
In company news, allegations that JP Morgan Chase was warned of Bernard Madoff’s ponzi scheme years before it blew up is hitting the investment bank in pre-market trade.
Appaloosa Management LP has bought a 6.1% stake in Goodyear Tire & Rubber.
Meat processor Tyson Foods reported much better than expected first quarter earnings.
Health insurer Aetna is looking good after fourth quarter earnings beat estimates, while communications equipment firm JDS Uniphase smashed earnings forecasts late Thursday.
Email marketing services provider Constant Contact disappointed the market by saying that its first quarter earnings will be no more than 4 cents a share.
S&P 500 - Risers
JDS Uniphase Corp. (JDSU) $22.00 +22.70%
Aetna Inc. (AET) $36.42 +9.47%
Tyson Foods Inc. (TSN) $18.80 +7.06%
Tesoro Corp. (TSO) $21.43 +6.46%
Stericycle Inc. (SRCL) $83.25 +5.28%
Goodyear Tire & Rubber Co. (GT) $12.84 +4.82%
Big Lots Inc. (BIG) $33.79 +4.71%
Weyerhaeuser Co. (WY) $24.58 +4.24%
Tellabs Inc. (TLAB) $5.48 +3.59%
Davita Inc. (DVA) $77.48 +3.50%
S&P 500 - Fallers
Apartment Investment & Management Co. (AIV) $24.45 -4.73%
Life Technologies Corp. (LIFE) $52.31 -4.54%
United States Steel Corp. (X) $58.21 -4.01%
Supervalu Inc. (SVU) $7.74 -3.67%
AK Steel Holding Corp. (AKS) $15.78 -3.34%
AutoNation Inc. (AN) $30.47 -3.12%
Fiserv Inc. (FISV) $60.63 -2.69%
First Solar Inc. (FSLR) $157.92 -2.62%
NRG Energy Inc. (NRG) $20.74 -2.54%
Sunoco Inc. (SUN) $42.57 -2.41%
Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $22.12 +0.96%
Kraft Foods Inc. (KFT) $30.98 +0.78%
Procter & Gamble Co. (PG) $63.32 +0.66%
E.I. du Pont de Nemours and Co. (DD) $52.24 +0.59%
Boeing Co. (BA) $71.32 +0.48%
Microsoft Corp. (MSFT) $27.72 +0.24%
McDonald's Corp. (MCD) $74.00 +0.22%
Walt Disney Co. (DIS) $40.54 +0.10%
Travelers Company Inc. (TRV) $57.28 +0.05%
Caterpillar Inc. (CAT) $98.97 +0.04%
Dow Jones I.A - Fallers
JP Morgan Chase & Co. (JPM) $44.60 -1.89%
Bank of America Corp. (BAC) $14.20 -1.59%
General Electric Co. (GE) $20.44 -1.49%
Alcoa Inc. (AA) $17.08 -0.78%
Pfizer Inc. (PFE) $19.05 -0.63%
American Express Co. (AXP) $43.32 -0.48%
Intel Corp. (INTC) $21.49 -0.37%
Verizon Communications Inc. (VZ) $36.27 -0.30%
AT&T Inc. (T) $27.92 -0.23%
Exxon Mobil Corp. (XOM) $83.26 -0.22%
Nasdaq 100 - Risers
Stericycle Inc. (SRCL) $83.25 +5.28%
Garmin Ltd. (GRMN) $32.00 +4.30%
Research in Motion Ltd. (RIMM) $64.21 +2.46%
Altera Corp. (ALTR) $40.26 +2.10%
Broadcom Corp. (BRCM) $44.72 +1.87%
Marvell Technology Group Ltd. (MRVL) $19.84 +1.86%
Vertex Pharmaceuticals Inc. (VRTX) $39.49 +1.78%
Xilinx Inc. (XLNX) $33.34 +1.62%
Urban Outfitters Inc. (URBN) $34.37 +1.51%
Nvidia Corp. (NVDA) $25.47 +1.49%
Nasdaq 100 - Fallers
Life Technologies Corp. (LIFE) $52.31 -4.54%
Fiserv Inc. (FISV) $60.63 -2.69%
First Solar Inc. (FSLR) $157.92 -2.62%
Mylan Inc. (MYL) $23.06 -2.10%
Check Point Software Technologies Ltd. (CHKP) $45.20 -1.76%
Wynn Resorts Ltd. (WYNN) $117.50 -1.59%
Infosys Technologies Ltd. (INFY) $67.35 -1.46%
News Corp. Class A (NWSA) $16.75 -1.24%
Foster Wheeler AG (FWLT) $37.20 -1.22%
Sandisk Corp. (SNDK) $47.04 -1.17%
After taking some time to make up its mind, the market headed lower in the morning and then started clawing back its losses as lunch approached.
Nonfarm payrolls rose just 36,000 last month, according to the Labor Department, well below forecasts of at least 140,000. December’s number was revised up to 121,000 from 103,000.
A big drop in the unemployment rate took everyone by surprise, tumbling from 9.4% in December to 9% last month. The market had predicted an increase to 9.5%.
The Dow Jones is down 8 at 12,055, while the broader S&P 500 has dipped by 1 point to 1,306. The tech-loaded Nasdaq Composite is up 3 at 2,757.
In company news, allegations that JP Morgan Chase was warned of Bernard Madoff’s ponzi scheme years before it blew up is hitting the investment bank in pre-market trade.
Appaloosa Management LP has bought a 6.1% stake in Goodyear Tire & Rubber.
Meat processor Tyson Foods reported much better than expected first quarter earnings.
Health insurer Aetna is looking good after fourth quarter earnings beat estimates, while communications equipment firm JDS Uniphase smashed earnings forecasts late Thursday.
Email marketing services provider Constant Contact disappointed the market by saying that its first quarter earnings will be no more than 4 cents a share.
S&P 500 - Risers
JDS Uniphase Corp. (JDSU) $22.00 +22.70%
Aetna Inc. (AET) $36.42 +9.47%
Tyson Foods Inc. (TSN) $18.80 +7.06%
Tesoro Corp. (TSO) $21.43 +6.46%
Stericycle Inc. (SRCL) $83.25 +5.28%
Goodyear Tire & Rubber Co. (GT) $12.84 +4.82%
Big Lots Inc. (BIG) $33.79 +4.71%
Weyerhaeuser Co. (WY) $24.58 +4.24%
Tellabs Inc. (TLAB) $5.48 +3.59%
Davita Inc. (DVA) $77.48 +3.50%
S&P 500 - Fallers
Apartment Investment & Management Co. (AIV) $24.45 -4.73%
Life Technologies Corp. (LIFE) $52.31 -4.54%
United States Steel Corp. (X) $58.21 -4.01%
Supervalu Inc. (SVU) $7.74 -3.67%
AK Steel Holding Corp. (AKS) $15.78 -3.34%
AutoNation Inc. (AN) $30.47 -3.12%
Fiserv Inc. (FISV) $60.63 -2.69%
First Solar Inc. (FSLR) $157.92 -2.62%
NRG Energy Inc. (NRG) $20.74 -2.54%
Sunoco Inc. (SUN) $42.57 -2.41%
Dow Jones I.A - Risers
Cisco Systems Inc. (CSCO) $22.12 +0.96%
Kraft Foods Inc. (KFT) $30.98 +0.78%
Procter & Gamble Co. (PG) $63.32 +0.66%
E.I. du Pont de Nemours and Co. (DD) $52.24 +0.59%
Boeing Co. (BA) $71.32 +0.48%
Microsoft Corp. (MSFT) $27.72 +0.24%
McDonald's Corp. (MCD) $74.00 +0.22%
Walt Disney Co. (DIS) $40.54 +0.10%
Travelers Company Inc. (TRV) $57.28 +0.05%
Caterpillar Inc. (CAT) $98.97 +0.04%
Dow Jones I.A - Fallers
JP Morgan Chase & Co. (JPM) $44.60 -1.89%
Bank of America Corp. (BAC) $14.20 -1.59%
General Electric Co. (GE) $20.44 -1.49%
Alcoa Inc. (AA) $17.08 -0.78%
Pfizer Inc. (PFE) $19.05 -0.63%
American Express Co. (AXP) $43.32 -0.48%
Intel Corp. (INTC) $21.49 -0.37%
Verizon Communications Inc. (VZ) $36.27 -0.30%
AT&T Inc. (T) $27.92 -0.23%
Exxon Mobil Corp. (XOM) $83.26 -0.22%
Nasdaq 100 - Risers
Stericycle Inc. (SRCL) $83.25 +5.28%
Garmin Ltd. (GRMN) $32.00 +4.30%
Research in Motion Ltd. (RIMM) $64.21 +2.46%
Altera Corp. (ALTR) $40.26 +2.10%
Broadcom Corp. (BRCM) $44.72 +1.87%
Marvell Technology Group Ltd. (MRVL) $19.84 +1.86%
Vertex Pharmaceuticals Inc. (VRTX) $39.49 +1.78%
Xilinx Inc. (XLNX) $33.34 +1.62%
Urban Outfitters Inc. (URBN) $34.37 +1.51%
Nvidia Corp. (NVDA) $25.47 +1.49%
Nasdaq 100 - Fallers
Life Technologies Corp. (LIFE) $52.31 -4.54%
Fiserv Inc. (FISV) $60.63 -2.69%
First Solar Inc. (FSLR) $157.92 -2.62%
Mylan Inc. (MYL) $23.06 -2.10%
Check Point Software Technologies Ltd. (CHKP) $45.20 -1.76%
Wynn Resorts Ltd. (WYNN) $117.50 -1.59%
Infosys Technologies Ltd. (INFY) $67.35 -1.46%
News Corp. Class A (NWSA) $16.75 -1.24%
Foster Wheeler AG (FWLT) $37.20 -1.22%
Sandisk Corp. (SNDK) $47.04 -1.17%
Broker Tips
Vodafone, Schroders, UnileverMobile phone titan Vodafone’s upbeat trading statement on Thursday should improve sentiment and encourage a premium rating for the stock, Nomura Research believes.
“Vodafone’s US exposure should also command a premium given the more co-operative atmosphere at Verizon Wireless,” where Vodafone holds a 45% stake. The US mobile phone network is widely expected to resume paying dividends soon, which would provide Vodafone with a welcome additional revenue stream.
Nomura said the trading update provided evidence of improving relative performance to its peers, with the UK being the main highlight this time round. “Areas of weakness are localised to uncontrolled macro issues,” the broker suggested.
“Data growth picked up to 27% at group level and was stable at 23% in Europe. Rates of smartphone adoption continue to increase rapidly, notably in Italy and Germany this quarter. Overall smartphone penetration of the base is 17% but data attach rates are only 46%. While the attach rates might be seen as disappointing, it also serves to highlight that the smartphone story remains in its infancy,” Nomura said.
The broker has made some minor tweaks to its earnings forecasts. “We are forecasting group organic growth to fall from 2.1% for fiscal 2011 (FY11) to 0.5% for FY12 before recovering to 2.1% in FY13. We forecast group margin decline by 110bp [basis points] for FY11 and by 10bp for FY12,” Nomura said.
The broker keeps its “buy” recommendation and price target of 220p.
RBS expects Schroders to report another strong result for 2010, and given its undemanding valuation and strong balance sheet, the broker says that the fund manager remains a key ‘buy’.
For the year ended 31 December, RBS forecasts a revenue of £1.15bn compared with £0.75bn in 2009, and an operating profit of £391m, up 106% year-on-year. Funds under management are expected to be up 6.2% since September.
Due to modest earnings per share upgrades, the broker increases its price target from 1,836p to 2,100p, implying a 2011 “cash-adjusted price-to-earnings multiple of 15, which is what we regard as the mid-cycle margin for the asset management sector.”
RBS highlights three key reasons for its positive stance on the stock: 1) its organic annualised fund flows “vastly superior to the sector average”; 2) its strong balance sheet “with free cash of £718m”; and 3) an undemanding valuation “of 12.8 times 2011 forecasted earnings below the mid-cycle sector average of 15 times”.
Despite revising Unilever’s near-term estimates down, Charles Stanley has maintained its medium-term forecasts because it has faith in the company’s ability to weather very challenging operating conditions over the next two years.
The Anglo-Dutch food and households goods giant reported an organic sales growth over 2010 of 4.1% with group sales of €44.2bn being exactly in line with expectations.
However, the broker says that the operating environment remains extremely tough in 2011 and its performance “is likely to be out of the company’s hands in the context of rising input costs, intense competition and severe pressure on consumers’ available spending power.”
“Nonetheless, we are increasingly convinced that the Unilever turn-around is in place and that continued careful stewardship will prove rewarding for shareholders over the medium term.” The broker maintains its ‘accumulate’ position on the shares.
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