Market Snapshot
European shares trade on an upbeat note this morning, boosted by better-than-expected corporate results and dollar weakness.
In Tokyo, the Bank of Japan today provided further details of its plan to inject JPY 5 trillion into capital markets by the end of 2011 as it maintained its base interest rate and brought forward next month’s central bank meeting in order to be able to react to the Federal Reserve’s expected QE announcement next week. The BOJ said it will purchase corporate debt with lower credit ratings than it has previously purchased as part of its easing strategy, and will also buy up Japanese government bonds, ETFs and REITs.
The Nikkei spiked shortly after the BOJ announcement, but failed to sustain investors’ enthusiasm and the Japanese index closed on a six-week low on the back of an appreciating yen and profit taking.
Quantitative easing remains on investors’ radars ahead of the Federal Reserve’s meeting next week. In the UK, the Nationwide House Price Index showed prices fell 0.7% month-on-month in October, compared to no change last month, and the three month rate of decline accelerated to 1.5%. While the effect of QE on property prices is difficult to measure, “it is reasonable to expect that a resumption of quantitative easing would provide some offsetting support to the housing market,” says Nationwide’s chief economist Martin Gahbauer.
Shortly after midday, the FTSE 100 index had gained 0.5% or 27.5 points and stood at 5,674 points, and the FTSE 250 index was up 0.2% or 20 points to 10,846 points. A weaker dollar and stronger commodities prices pushed miners up in the morning. By midday, top gainers were technology companies, buoyed by a series of outlook upgrades.
Wall Street futures point to a stronger start, ahead of US weekly jobless claims data and ExxonMobil’s earnings announcement.
Market Riser
ARM Holdings (ARM), up 2.9%: Shares recuperate recent losses, having been hit by profit taking following its third quarter results, while major client Nokia (NOK1V) benefits from broker upgrades.
Vodafone Group (VOD), up 3.2%: In addition to telecommunications sector strength, the company announces it has bought back another 13,000,000 shares, bringing the total repurchased since mid-September to just under 284 million.
Inmarsat (ISAT), up 1.7%: Goldman Sachs raised the shares to “buy” from “neutral.”
3i Group (III), up 2.3%: Moody's upgraded its outlook to stable from negative.
Royal Dutch Shell (RDSB), up 0.2%: Reported third quarter adjusted profit of $4.9 billion, up 88% year-on-year and ahead of market expectations.
Market Fallers
AstraZeneca (AZN), down 3.5%: Reported a 27% annual fall in net profit in the third quarter, below analyst expectations.
Aggreko (AGK), down 4.7%: Lifted full-year profit guidance after reporting a strong performance in the third quarter, but analysts say this is largely priced in and investors take profits following a 23% share price rise in the last month.
