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FTSE 100 falls, Dow Jones and S&P 500 rise on housing data - UPDATE

Published: 00:17 17 May 2012 AEST

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The FTSE 100 fell sharply in the morning but recouped part of its losses later in the day thanks to better than expected UK jobs data released by the Office for national Statistics. The UK’s blue chip index stood at 5,426 at midday, down 11 points (0.2 percent) from Tuesday’s close.

The figures revealed a surprise drop of 45,000 in unemployment to 2.63 million for the first quarter and a 13,700 decline in jobless claims to 1.59 million. The unemployment rate dipped to 8.2 percent from 8.4 percent in the previous three months.

The positive impact of the jobs data was offset by continuing uncertainty in Greece, which will hold another election on June 17, and bearish comments from the Bank of England.

The BoE has reduced its growth forecasts to 0.8 percent from 1.2 percent previously with government Mervyn King saying Britain is facing a slow and uncertain recovery and warning of a “storm heading out way from the continent”.

King said the euro zone is “tearing itself apart without any obvious solution”.

“On top of all the European woes there’s the concern that China is slowing down quicker than was previously thought and indeed hoped for, and this is compounding the fears that both will have an even greater negative effect on global growth,” said chief executive of London Spreads Simon Denham.

Hedge fund manager Man Group (LON:EMG, up 4.1pct at 83.1p) and speciality chemicals group Croda (LON:CRDA, up 4pct at 2,203p) topped the leaderboard this afternoon.

Shares in Man Group got a boost from demand from bargain hunters, which bought the stock after it fell sharply over the past couple of days.

Investors also bought banking groups including Barclays (LON:BARC, up 3.5pct at 192.7p)Royal Bank of Scotland (LON:RBS, up 2.3pct at 21.84p) and Standard Chartered (LON:STAN, up 1.5pct at 1,375p).

Demand for banking stocks was lifted by a bullish note on Barclays from UBS, which upgraded the banking group to ‘buy’ from ‘neutral’.

Other notable risers included engineering firms IMI (LON:IMI, up 3pct at 907.5p) and GKN (LON:GKN, up 2.3pct at 194.6p) and Russian steelmaker Evraz (LON:EVR, up 2.4pct at 336.2p).

Meanwhile, traders dumped shares in retailers Sainsbury’s (LON:SBRY, down 3.4pct at 300.7p)Morrison (LON:MRW, down 1.6pct at 272.8p) and Kingfisher (LON:KGF, down 1.3pct at 281.5p).

Likewise, precious metals miners fell out of favour with Fresnillo (LON:FRES, down 3.3pct at 1,334p) andPolymetal (LON:POLY, down 2.4pct at 789.5p) showing up among the heaviest fallers in the top flight along with base metals miner Xstrata (LON:XTA, down 1.3pct at 986.5p).

US markets

 

 

US stocks were off to a positive start this morning on the back of better than expected US housing data.

the Dow Jones Industrial Average (DJIA) advanced 56 points (0.45 percent) to 12,688 and the broader S&P 500 index rose eight points (0.6 percent) to 1,339.

The Commerce Department that housing start climbed 2.6 percent to an annualised pace of 717,000 units in April, while the estimate for March was revised up to 699,000 units from 654,000.

A Bloomberg News poll predicted a 4.7 percent increase in housing starts to an annualised rate of 685,000.

However, building permits fell more than expected, dropping seven percent to 715,000 units in April from the previous month.

Later today, the Department of Energy will report oil inventories data and the Federal Reserve will release minutes from its latest policy meeting.

UK corporate news

Back in the UK, other news in the top flight included BG Group’s (LON:BG., up 0.5pct at 1,282p) fifth consecutive Tanzania gas discovery with the Mzia-1 exploration well located in Block 1, offshore southern Tanzania.

Preliminary evaluation of the results indicates 55 metres of natural gas pay in good quality sands.

Significantly, the well has de-risked a number of adjacent Cretaceous prospects, which could form part of a future Mzia hub, said BG.

These prospects are expected to be tested in a future appraisal programme to be defined following incorporation of data from this new well and 3D seismic.

The group operates and holds a 60 percent interest in blocks 1, 3 and 4 offshore Tanzania, with Ophir Energy (LON:OPHR, up 11.5pct at 574.5p) holding 40 percent.

Fellow oil and gas group Tullow Oil (LON:TLW, flat at 1,392p) this morning confirmed that a drill ship has been contracted to begin work next month on further exploration of the Zaedyus discovery in French Guiana.

It follows the drill success late last year. The plan initially is to appraise the Zaedyus-1 well and explore for deeper objectives. This will be followed by an exploration wildcat well.

“Planning is also ongoing to acquire two large 3D seismic surveys,” Tullow added in a statement this morning. 

Shell (LON:RDSB, up 0.5pct at 2,088.5p) with a 45 per cent stake in Zaedyus is taking operatorship of the breakthrough discovery, which is a facsimile of the producing Jubilee field off the coast of Ghana.

Elsewhere in the FTSE 100, interdealer broker ICAP (LON:IAP, flat at 335p) reported that its revenues reached £1.68 billion in the year to end March, down three percent from the previous year and pre-tax profits tumbled 16 percent to £217 million.

Earnings per share were down 26 percent at 22 pence.

The group noted that its electronic business posted a record full year operating profit of £127 million, up four percent from the previous year, while revenues declined one percent to £301 million.

Electronic and post trade risk and information contributed 59 percent of operating profit.

“ICAP delivered a solid performance in 2011/12 against a difficult economic environment,” said chief executive of ICAP Michael Spencer.

“Our strong balance sheet and diversified business give us options when we look at where best to invest for the future. This will ensure ICAP is extremely well placed when markets normalise.”

 

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