Follow
Follow
Only registred members can create thier own customized alerts.
HB Markets
HB Markets provide Proactive Investors with a comprehensive daily research publication with opinions and views that Investors will be interested in. This report is a key tool for investors keeping a close eye on the markets. 
HB Markets Breakfast Today including: Imperial Tobacco, ICAP, Antofagasta, Brewin Dolphin plus others
The markets
Market opening: Receding fears about global growth could see markets extend yesterday's rally. FTSE futures were trading 14 points higher at 7.00 am UK time.
New York: Investors were upbeat on jobs and manufacturing data in the US. Positive momentum across sectors saw the S&P 500 close 0.9% higher yesterday.
Asia: Positive manufacturing data from US and China eased concerns about a global slowdown, while softening European debt yields also shored up sentiments. The Nikkei closed 0.8% higher, while the Hang Seng was trading at +1.5% at 7.00 am UK time.
Continental Europe: The German DAX (+2.4%) and French CAC 40 (+2.1%) finished sharply higher on strong manufacturing data from China, Germany and the UK. The second round of ultra cheap loans from ECB lifted banking stocks.
UK small caps: The FTSE AIM All-Share index closed 0.8% up yesterday. Today's small cap reseach includes Blue Star Capital.
Today's news
£50bn extension to QE program likely in Feb: Reuters poll
Forty-nine of the 56 economists polled by Reuters thought that the Bank of England (BoE) could expand its asset purchase program by another £50bn in February (taking total fresh money injection since March 2009 to £325bn) despite signs of an uptick in the economy. The economists felt support from the central bank was essential to combat the 'profound economic weaknesses.'
To clinch bailout, Greece must implement reforms first: IMF
Greek Prime Minister Lucas Papademos will talk to the country's political leaders to gather support for more austerity measures and legislative reforms after the International Monetary Fund (IMF) mounted pressure saying reforms are the next prerequisite if Greece is to draw the €130bn bailout even as the bond swap deal nears completion.
Company News:
ICAP, the interdealer broker, released an interim statement for the four months ended 31st January 2012 including a trading update for Q3 2011 ended 31st December 2011, yesterday. Lower trading volumes caused revenues to dip 9% y-o-y in Q3 2012 and 2% y-o-y in the nine months to 31st December. The management noted that uncertainty due to the Euro crisis; reduced market liquidity and the risk aversion before the year end were the primary reasons for the decline in volumes. Market interventions by Japanese and Swiss central banks to curb volatility led to 19% lower volumes at the company's electronic trading platform. The company said that cost cutting initiatives saved about £20m and will enable pre-tax earnings to top the range of £336m to £358m expected by analyst.
Our view: Stricter solvency norms enforced on banks and the global slowdown are expected to lower trading volumes. Uncertainty, illiquidity and risk aversion was seen pressuring volumes across markets in Q3 2011. With no visible end to these three growth inhibitors for brokers, we remain sellers of the stock.
Imperial Tobacco issued an interim statement ahead of its Annual General Meeting held yesterday. Trading has been in line with expectations in Q1 2012 ended 31st December 2011, the management noted. On an underlying basis, volumes declined about 1%; however a better product mix ensured underlying revenues increased 3%. On an equivalent basis, volumes declined 7%, as sanctions against Syria and double digit decline in volumes in Spain; destocking in Ukraine and declines in stock levels in US in response to price increase also contributed.
Our view: The decline in volumes was largely attributed to one-off factors, and is not expected to affect the full year performance. Also, the addictive nature of its products ensures high revenue visibility and a strong cash generation capacity. We like to stock for these reasons and remain buyers.
Johnson Matthey issued a trading update for Q3 2011 ended 31st December 2011 yesterday. Sales excluding precious metals increased 22% to £649m. Underlying pre-tax profit rose 34% to £104.3m. Sales at the Environmental Technologies Division increased 20% to £461m while that at the Fine Chemicals Division increased 15% to £62m. Precious Metal Products Division sales increased 1% to £138m. The management expects the H2 2012 results be ahead of that in H1 2012 on the back of robust demand in North America and China; and continued growth in Europe despite the economic environment.
Our view: The company's products are mostly used in the automobile industry. Recently, the company won a contract to provide pollution-curbing converters to a local producer in China. The company is seeing a recovery in demand from Japan and truck sales in North America have also picked up. We expect the company to benefit from the growth in these markets and we believe today's trading update will trigger brokers' upward earnings revisions and upgrade to buy.
Antofagasta (LON:ANTO)
Miner Antofagasta released a production update for Q4 2011 and FY2011 ended 31st December 2011 yesterday. Copper production in Q4 2011 increased 13.3% q-o-q to 187,000 tonnes while annual production increased 22.9% y-o-y to 640,500 tonnes from 521,100 tonnes in 2010 as output from the Los Pelambres and Esperanza mines in Chile improved. Gold production increased to 71,800 ounces in Q4 2011 compared to 54,300 ounces in Q3 2011. Annual production of gold increased to 196,800 ounces from 35,100 ounces following the start of operations at the Esperanza mine. Production of Molybdenum, an alloy used in making steel, increased by 8.3% q-o-q to 2,600 tonnes in Q4 2011 and by 12.5% y-o-y to 9,900 tonnes in FY2011 following plant expansions in 2010. In FY 2012, the company expects copper production to increase 9.3% to 700,000 tonnes, gold production to increase 4.2% to 280,000 ounces and production of molybdenum to be 11,000 tonnes, 11.1% higher than FY2011.
Brewin Dolphin, the stockbroker and fund manager, reported a 24.4% fall in commission income to £17.6m in Q1 2012 ended 31st December 2011. However, like-for-like revenues, which reflect the disposal of the Corporate and Advisory Broking division, increased 0.8% to £59.7m. Total funds under management swelled 3.8% while discretionary funds increased 5.1%.
United Utilities (LON:UU/)
United Utilities released a trading statement covering the period from 1st October 2011 yesterday. The management said trading conditions are in line with expectations. Revenues in H1 2012 increase about 4% y-o-y and management expects the trend to continue in H2 2012. The company expects higher capital investment in the H2 2012. H1 2012 profits were affected by an increase in capital spending. The number of consumer complaints declined in Q3 2011. The management was confident of delivering a good underlying financial performance for FY2012 ending 31st March 2012.
Economic News:
UK PMI
The manufacturing purchasing managers' index (PMI) unexpectedly rose to 52.1 in January following a reading of 49.6 in December, Markit reported yesterday. The employment in the sector increased for the first time in four months as the sub-index crossed the neutral 50 mark to 50.1 from 49.6 in December. Increase in new orders supported expansion in production activity. However, new export orders fell to 51.0 from 53.4 in December.
Our view: The increase in new orders is a positive lead indicator for manufacturing activity, whilst the fall in export orders highlights the challenges the manufacturing sector is facing due to slower global economic growth. However, whether the economy escapes a technical recession, after contracting 0.2% in Q4 2011, will largely depend on the growth in the services sector, the largest contributor to GDP.
Eurozone and German Inflation
Inflation as measured by the consumer price index was stable at 2.7% in the Eurozone, Eurostat reported yesterday. Inflation in Germany was also steady at 2.3% in January.
Our view: The relatively high inflation has deterred the European Central Bank (ECB) from lowering interest rates, but the new president Mario Draghi has shown that he is more likely to lower rates than his predecessor, as he believes the weakening growth outlook will keep inflation inline with ECB's 'below-but-near-2%' target, without the help of relatively high interest rates. We believe this standpoint could be a bit premature. Nevertheless, Mr Draghi is likely to lower rates during the first half of 2012, and yesterday's inflation reading lends him support.
US ISM
The Institute for Supply Management (ISM) index improved to 54.1 in January from 53.1 in December. With this, the third consecutive increase, the index is now at a seven-month high. The new orders sub-index rose 2.8 points to 57.6; however, the employment index dipped slightly to 54.3 from 54.8.
Our view: The index has stayed above the 50-mark, indicating expansion of manufacturing activity in the US following similar increases in China, the UK and Germany. This bodes well for global manufacturing activity. However, the decline in the employment sub-index indicates that the US job market may not see significant contribution from the manufacturing sector.
UK Nationwide house prices
Nationwide house price index decreased by 0.2% in January in line with economists' expectations. Average selling price of houses declined to £162,228 in January from £163,822 in December. The decline in house prices is not surprising given the challenging economic environment, with unemployment at historic highs and a tight credit conditions.
Eurozone and Germany PMI
The manufacturing purchasing managers' index for the Eurozone improved to 48.8 in January from 46.9 in December, but stayed in contraction territory (below 50). The new orders sub-index also improved to 46.5 in January from 43.5 in December. However, manufacturing activity in Germany returned to growth, as indicated by the improvement in the manufacturing PMI to 51.0 in January from 48.4 in the previous month.
US ADP employment change
The private sector added 170,000 jobs on a seasonally-adjusted basis in January, according to the ADP National Employment Report released yesterday. The figure for December was revised downwards to 292,000 from 325,000.
