TV

Angus Walker
Investors liked Facebook’s Q1 results, which beat analyst’s predictions. Shares duly rose, but are they fundamentally overvalued? Yes, says Rick Summer, equity strategist at Morningstar research.
Article / 21 January 2014 at 17:35 GMT

Market Review: Equity markets mixed amid valuation concerns

SaxoBankUK SaxoBankUK
Saxo Capital Markets UK
United Kingdom

Forex: GBP trading higher
Currencies Intraday
Source: Bloomberg

The GBP has strengthened against its major peers after the International Monetary Fund raised its 2014 economic growth forecast for the UK. Investors keenly await the release of the latest Bank of England meeting minutes and monthly jobs data, scheduled tomorrow, especially amid growing speculation about an earlier than expected interest rate hike in the UK. The EUR is trading lower against the GBP after data indicated that the German ZEW economic sentiment index dropped unexpectedly in January. The EUR is trading 0.1 percent higher against the USD, flat against the JPY and 0.2 percent lower against the GBP.

The AUD is trading 0.1 percent lower against the USD ahead of the release of the fourth quarter Australian consumer price inflation data, due tomorrow.

UK Stocks: Close lower
FTSE 100 Intraday
Source: Bloomberg

UK stocks ended mostly in the red, reversing earlier gains.

The FTSE 100 lost 2.5 points to close at 6834.3 and the FTSE 250 shed 0.5 percent to settle at 16144.2.

SABMiller (SAB) dropped 0.3 percent after posting downbeat third quarter beer volume growth.

Commodity sector stocks, Rio Tinto (RIO), Antofagasta (ANTO) and Anglo American (AAL) shed between 2.7 percent and 3.1 percent.

Ladbrokes (LAD), William Hill (WMH) and Legal & General Group (LGEN) declined between 0.7 percent and 4.9 percent following broker downgrades.

On the upside, Hargreaves Lansdown (HL/), EasyJet (EZJ) and International Consolidated Airlines Group SA (IAG) surged between 1.3 percent and 2.7 percent after brokers raised their price targets on the stocks.

Better than expected fourth quarter underlying sales sent Unilever (ULVR) 1.8 percent higher.

SDL (SDL) soared 10.3 percent after the company forecast full year revenue and adjusted pre-tax profit above market expectations.

US Stocks: Trading mostly in the red
Dow Jones Intraday
Source: Bloomberg

US stocks are trading mostly lower as investors digested corporate earnings reports.

The Dow Jones has dropped 0.1 percent to trade at 16343.5 and the S&P 500 has shed 0.1 percent to trade at 1837.3.

Cliffs Natural Resources (CLF) has slumped 6.3 percent after a broker lowered its fourth quarter earnings estimate.

Expedia (EXPE) has declined 5.2 percent amid reports that the online travel company’s site visibility on Google has dropped 25 percent due to an unnatural link penalty.

Allegheny Technologies (ATI) has shed 4 percent after a broker labelled the stock with an underweight rating.

On the flipside, Alcoa (AA) has rallied 6.6 percent after a broker raised its price target on the stock and upgraded its rating to overweight from neutral.

Better than expected fourth quarter adjusted earnings has led Delta Air Lines (DAL) to rise 3.5 percent.

European Stocks: Close mixed
EU Stoxx50 Intraday
Source: Bloomberg

European markets ended mixed, paring earlier gains resulting from upbeat Eurozone economic sentiment data for January and after the Chinese central bank injected short term liquidity into the country’s financial system.

The DAX rose 0.1 percent to end at 9730.1 and the CAC advanced 1 point to close at 4323.9.

SGS SA (SGSN) soared 4.2 percent following a jump in its full year net profit. Additionally, the company forecast a top line growth for each of the next three years.

Wirecard AG (WDI) climbed 5.2 percent after the company posted a jump in its preliminary fourth quarter revenue and EBITDA and forecast a growth in all its core markets for 2014.

Norsk Hydro ASA (NHY), Finmeccanica SpA (FNC) and Getinge AB (GETIB) rallied between 3.3 percent and 3.6 percent following broker upgrades.

On the downside, Kemira Oyj (KRA1V) slumped 7.4 percent after the company cut its fourth quarter core operating profit forecast.

Alstom SA (ALO) lost 13.8 after the company reported worse than expected third quarter sales and lowered its annual profit and cash flow targets.

Koninklijke DSM NV (DSM) tumbled 10.3 percent after the company warned about challenging business conditions in 2014, citing slowing economy and a stronger euro.

Asia: Indices close higher
Nikkei 225 Intraday
Source: Bloomberg

Asian markets ended in the green after the Chinese central bank injected funds into the financial system to ease the liquidity crunch.

In Japan, Alps Electric Company (6770) and Mitsui O.S.K. Lines (9104) soared 7.7 percent and 2.8 percent, respectively, after brokers upgraded their ratings on both stocks to buy from neutral. NEC Corporation (6701) rose 1.5 percent amid reports that the company is in advance talks to sell its internet service provider, Biglobe, for about JPY 70 billion to an investment fund, Japan Industrial Partners. However, ANA Holdings (9202) retreated 2.6 percent following a broker downgrade. The Nikkei 225 advanced 1 percent to close at 15796.

In China, ZTE Corporation (000063) climbed 4.3 percent after the company swung to a full year profit. In Hong Kong, GOME Electrical Appliances Holding (493) jumped 6.4 percent after the company indicated that it expects to post an increase in its 2013 gross profit. In South Korea, LG Display (034220) added 2.3 percent following a broker upgrade.

Commodities: Trading mixed

The Gold futures contract is trading 0.9 percent lower at USD 1241.1 per ounce amid profit booking following the recent rally in bullion prices.

The Brent crude one-month futures contract is trading 0.9 percent higher at USD 107.3 per barrel after the International Energy Agency (IEA) raised its 2014 global oil demand forecast, citing accelerating economic growth.

MacroUpdate

  • Eurozone economic sentiment improves more than expected in January, indicates ZEW
  • German ZEW economic sentiment index falls unexpectedly in January
  • Swiss M3 money supply rises at a slower pace in December

 

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/
*Actual

Previous/
**Previous Est.

Frequency

Germany

-

German Constitutional Court Ruling

High

-

-

-

Spain

-

House Price Index (QoQ) (Q4)

Low

-

-0.40%

Quarterly

Spain

-

Trade Balance (Nov)

Low

-

-EUR 1.40bn

Monthly

Japan

-

BoJ Monetary Policy Statement and Press Conference

High

-

-

-

Japan

-

BoJ Press Conference

High

-

-

-

China

1:45

MNI Business Sentiment Survey (Jan)

Low

-

58.40

Monthly

Japan

3:00

Bank of Japan Interest Rate Decision

High

-

0.10%

-

Japan

4:30

All Industry Activity Index (MoM) (Nov)

Medium

0.40%

-0.20%

Monthly

Japan

5:00

Coincident Index Final (Nov)

Low

-

110.50**

Monthly

Japan

5:00

Leading Economic Index Final (Nov)

Medium

-

110.80**

Monthly

UK

9:30

Bank of England Minutes

High

-

-

-

UK

9:30

ILO Unemployment Rate (3M) (Nov)

Medium

7.30%

7.40%

Monthly

UK

9:30

Claimant Count Rate (Dec)

Medium

3.70%

3.80%

Monthly

UK

9:30

Claimant Count Change (Dec)

Medium

-35.00K

-36.70K

Monthly

UK

9:30

Employment Change (3M/3M) (Nov)

Medium

-

250.00K

Monthly

UK

9:30

Public Finances (PSNCR) (Dec)

Medium

-

GBP 0.40bn

Monthly

UK

9:30

Public Sector Net Borrowing (Dec)

Medium

GBP 12.30bn

GBP 14.80bn

Monthly

UK

9:30

PSNB ex Interventions (Dec)

Low

GBP 13.80bn

GBP 16.50bn

Monthly

UK

9:30

Average Earnings including Bonus (3Mo/Yr) (Nov)

Medium

1.00%

0.90%

Monthly

UK

9:30

Average Earnings excluding Bonus (3Mo/Yr) (Nov)

Low

1.00%

0.80%

Monthly

Eurozone

10:00

Euro Area Third Quarter Government Debt

Low

-

-

-

US

12:00

MBA Mortgage Applications (17-Jan)

Low

-

11.90%

Weekly

Portugal

12:00

Current Account Balance (Nov)

Low

-

EUR 0.01bn

Monthly

Canada

15:00

Bank of Canada Interest Rate Decision

High

1.00%

1.00%

-

Canada

15:30

Bank of Canada Monetary Policy Report

High

-

-

Quarterly

Canada

16:15

BoC Press Conference

High

-

-

-

For more events see TradingFloor.com's real-time financial calendar.

 

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