LONDON (ShareCast) - - Footsie (FTSE: ^FTSE - news) retreats from eight-month high after EC forecast
- Fiscal cliff, Germany and Greece weigh on sentiment
- Randgold loses 6.4 per cent after Q3 statement
The 'Obama-rally' proved only temporary on Wednesday as concerns about the Eurozone crisis offset any optimism regarding the re-election of the incumbent US President.
The UK stock market started strongly this morning after Barack Obama comfortably beat challenger Mitt Romney in the US presidential elections, sparking speculation that an easy-money policy would continue under his leadership. The news pressured the dollar lower and, in turn, resulted in firmer prices in greenback-denominated commodities, pushing mining equities higher before noon.
The FTSE 100 reached an eight-month high of 5,921 in mid-morning trade, its highest level since March 19th when it hit 5,961.
However, stocks swung dramatically into the red at midday after the European Commission cut its forecasts for gross domestic product (GDP) growth in the Eurozone this year to 0.1% from 1% before.
To make matters worse, German industrial production contracted at a faster rate than predicted in September, according to figures released today. Output was down 1.8% month-on-month, instead of 0.7% fall expected.
Caution ahead of tonight's parliamentary vote on austerity in Greece was also weighing on sentiment today, as the government decides whether to go ahead with another harsh round of spending cuts and tax hikes worth €13.5bn.
Meanwhile, US stock opened with heavy losses on Wall Street as worries about the impending 'fiscal cliff' - when over $600bn in spending cuts and tax increases are scheduled to come into effect in January - shattered sentiment.
Market strategist Ishaq Siddiqi from ETX Capital said this afternoon: "with the elections out of the way, pressing issues such as the unresolved fiscal cliff are unnerving markets with fears that Obama will unable to forge strong partisan ties with lawmakers against his policies in order to come to an agreement over the fiscal cliff.
"As we know, neglecting the fiscal cliff issue could shave a considerable amount of US GDP, sending the country back into a recession and force credit agencies to strip the US off its prized 'triple-A' rating," he said.
FTSE 100 (FTSE Index: EO100.FGI - news) : Randgold, Burberry and CRH (Xetra: 558474.DE - news) provide a drag
Randgold Resources (Other OTC: RGORF.PK - news) was the worst Footsie performer after a disappointing third-quarter result. The gold miner reported the production fell back from the preceding quarter's record levels as the company suffered grid power supply problems at its Tongon mine and processed lower grades at Gounkoto.
After a strong rise early on, luxury brand Burberry fell despite reporting a higher-than-expected profit in the first half and said it is looking optimistic about its new fragrance and beauty division which is to start operating next year.
Building products group CRH was under the weather this afternoon, possibly on concerns about stalling growth in the Eurozone eating into demand for its services.
International services giant Serco (Other OTC: SECCF.PK - news) fell after a downgrade by Investec (EUREX: INVF.EX - news) to 'sell'. The firm announced today that it is buying out its 15-year joint venture partner in Australian defence and marine services business DMS Maritime Pty Ltd for £68m.
Mining (Euronext: SMI.NX - news) giant Vedanta was dropped despite all of its key numbers heading in the right direction in the first half. Profit before tax in the six months to the end of September rose to $1,059.4m from $916.2m the year before, on revenue that rose 14% to $7,451.9m from $6,552.6m.
Insurer Old Mutual (Stockholm: OLDM.ST - news) was unwanted despite reporting a slight rise in funds under management in the third quarter.
FTSE 250 (FTSE: ^FTMC - news) : Chemring sinks as Carlyle walks away
US asset management firm, The Carlyle Group, has called off its long, drawn-out discussions with Chemring about a potential takeover of the defence contractor, causing shares to sink. The offer deadline had been pushed back on two separate occasions; the company said it would give a further update in its pre-close trading update on November (Xetra: A0Z24E - news) 27th.
Engineering (Milan: ENG.MI - news) group Spirax Sarco jumped after saying that organic sales increased 6% in the four months to the end of October, ahead of the rate of growth reported in the first half.
Online gaming software company Playtech (Other OTC: PYTCF.PK - news) was in demand after delivering impressive revenue growth in the third quarter while saying that this trend has continued into the fourth quarter.
Industrial (Mexico: ST2000.MX - news) conveyor belt maker Fenner (Xetra: 864296 - news) was higher after reporting a stellar increase in profit and revenue for the year and lifted its dividend payment by 31%.
Kenmare Resources (Xetra: 877923 - news) shares fell after Canaccord Genuity downgraded the stock from 'buy' to 'hold', and cut its target price from 54p to 44p.
Natural resources, land and property consultancy RPS dropped despite saying it was on track to hit full-year targets. The firm noted that trading conditions in its Built and Natural Environment division were mixed, causing Panmure Gordon to pare it price target for the shares this morning.
Transport (Euronext: IXSTP.NX - news) company FirstGroup (Other OTC: FGROF.PK - news) took a hit after it said that underlying pre-tax profit declined 42.4% to £48.7m in the six months to September 30th.
FTSE 100 - Risers
Associated British Foods (Dusseldorf: 719064.DU - news) (ABF) 1,374.00p +0.66%
Polymetal International (POLY) 1,115.00p +0.36%
RSA Insurance Group (RSA) 113.10p +0.35%
InterContinental Hotels Group (IHG) 1,550.00p +0.32%
Hargreaves Lansdown (HL (Shenzhen: 002105.SZ - news) .) 768.50p +0.26%
Imperial Tobacco Group (Dusseldorf: 517719.DU - news) (IMT) 2,431.00p +0.25%
Morrison (Wm) Supermarkets (MRW) 267.50p +0.07%
Babcock International Group (BAB (OTC BB: BABB.OB - news) ) 955.00p +0.05%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 6,950.00p -6.40%
Burberry Group (Xetra: 691197 - news) (BRBY) 1,199.00p -4.23%
CRH (CRH) 1,157.00p -3.90%
BG Group (LSE: BG.L - news) (BG.) 1,054.50p -3.87%
Eurasian Natural Resources Corp. (ENRC) 305.00p -3.76%
Marks & Spencer Group (MKS (Berlin: 10389081.BE - news) ) 384.50p -3.56%
Evraz (EVR) 247.00p -3.44%
Aviva (EUREX: AVF.EX - news) (AV.) 328.50p -3.27%
International Consolidated Airlines Group SA (CDI (Berlin: CDD.BE - news) ) (IAG) 169.50p -3.14%
Old Mutual (OML) 168.80p -2.99%
FTSE 250 - Risers
Spirax-Sarco Engineering (SPX (NYSE: SPW - news) ) 2,140.00p +8.03%
Moneysupermarket (Berlin: 39M.BE - news) .com Group (MONY) 148.80p +4.79%
NMC Health (NMC (Other OTC: NMCX.PK - news) ) 190.00p +3.49%
Rank Group (Other OTC: RANKF.PK - news) (RNK) 154.30p +3.42%
Playtech Ltd. (PTEC) 425.00p +3.41%
New World Resources A Shares (NWR) 272.30p +2.95%
Menzies(John) (MNZS) 617.00p +2.83%
Fenner (FENR) 359.50p +2.71%
Phoenix Group Holdings (DI) (PHNX) 509.00p +2.21%
Salamander Energy (Other OTC: SALDF.PK - news) (SMDR) 197.90p +2.12%
FTSE 250 - Fallers
RPS Group (Xetra: 874849 - news) (RPS) 222.70p -6.51%
Kenmare Resources (KMR) 36.71p -5.92%
FirstGroup (LSE: FGP.L - news) (FGP) 194.90p -5.07%
Chemring Group (CHG) 258.00p -4.76%
Anite (Berlin: A1SN.BE - news) (AIE (SNP: ^AIEY - news) ) 142.80p -4.74%
Lonmin (LSE: LMI.L - news) (LMI) 470.00p -4.72%
JD Sports Fashion (Xetra: 903386 - news) (JD.) 738.00p -4.71%
Inmarsat (EUREX: ISAF.EX - news) (ISAT) 546.00p -4.63%
Ocado Group (Berlin: 0OC.BE - news) (OCDO) 59.80p -4.55%
Cable & Wireless Communications (CWC) 35.93p -4.06%