Daily Market Report 28th November 2012

Daily Market Report 28th November 2012

UK stocks slipped in early trading on Wednesday, tracking US markets lower, as focus turned to the impending US ‘fiscal cliff’. “European equities are trading lower this morning being pressured by a late sell-off in the US yesterday evening on fears that so far there has been too little progress between Democrats and Republican in order to be able to avoid the fiscal cliff,” said Markus Huber, the head of German HNW trading at ETX Capital.

The main US equity benchmarks ended yesterday lower after remarks from the US Senate majority leader, Nevada Democrat Harry Reid, to the effect that “little progress” has been made so far on avoiding the fiscal cliff by year-end. Reid added that an increase in the US debt ceiling is necessary.

In his own words, the Republicans “talked some happy talk about doing revenues, but we only have a couple weeks to get something done. So we have to get away from the happy talk and start talking about specific things”.

Stock markets across Europe yesterday were given an initial boost by Monday’s news that Eurozone finance ministers had agreed to release the next tranche of the bailout to Greece. However, bourses pared gains as markets digested the deal with analysts saying that the agreement just kicks the can down the road for the heavily indebted nation.

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Water and sewage services group United Utilities gained after reporting that revenue in the first half rose from £793m to £823m as regulated prices increases offset reduced commercial volumes and lower property sales associated with the water business.

Chip designer ARM Holdings moved higher after the Daily Mail reported about a possible 1,200p bid from US tech giant Intel.

Medical technology group Smith & Nephew fell early on after announcing that it is to buy the assets of US-based Healthpoint Biotherapeutics for $782m in an attempt to bolster its position in advanced wound care.

Security firm G4S was in demand after Jefferies upgraded its rating on the shares from ‘hold’ to ‘buy’, saying that the stock’s valuation is now sitting close to the bottom of its 10-year average.

Contract caterer Compass was also given a lift by Jefferies, which raised its recommendation from ‘underperform’ to ‘hold’, saying that the company’s announced buy-back, dividend increase and reiterated guidance “exudes confidence”.

In contrast, insurance firm Resolution fell after UBS cut its rating from ‘buy’ to ‘neutral’, citing disappointing nine-month trading, EV write-downs, UK restricting charges and the recent share price performance. Telecoms group Vodafone was suffering from a downgrade by Berenberg to ‘hold’.

Nickel miner Talvivaara disappointed after re-assessing its production targets following the gypsum pond leakage which stopped operations earlier this month. The company now expects full-year output to reach 13,000t of nickel, well below the previous 17,000t estimate.

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Kenmare Resources, the titanium feedstock miner, was also down after warning that as a result of production issues, it expects its full-year production to be lower than previous guidance of 630,000 tonnes of ilmenite and 50,000 tonnes of zircon.

Investment trust RIT Capital Partners was lower after saying net asset value fell in the half year to September 30th as some of its defensive hedges under performed in a rising market.

Support services and construction firm Interserve is to transfer its remaining interest in a portfolio of 19 PFI assets to the trustee of its pension scheme at a valuation of £55m to address the current pension scheme funding shortfall.

Document is issued by Beaufort International Associates Limited and is produced for information purposes only and using sources that we believe to be reliable and does not constitute an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or be taken as investment advice. Potential investors are recommended to take advice before dealing from an authorised professional investment adviser or stockbroker. Beaufort International Associates Ltd is Authorised and Regulated by the Financial Services Authority. The registered office of Beaufort International Associates Limited is at 49, Whitehall, London SW1A 2BX, United Kingdom. Beaufort International Associates Limited is registered in England with number 03604683.

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