Market overview: Investec still negative on food retailers



LONDON (ShareCast) - 1623: "Judging by the technicals the market has not only decided that Tesco (Other OTC: TSCDY - news) is going to offer good news, but an event/up-date so positive that traders are taking the equivalent of a running jump - leap of faith if you are a cynic -" Zak Mir tells us Digital Look this evening. He believes a test of resistance at 360p is possible and perhaps even 380p.

1608: Tesco approaching near-term technical resistance at 350p. Aquarius Platinum is up strongly for a second day today. Some market commentary is abscribing the move to 'bottom-fishing´in miners by speculators, who are looking to pick up last year´s worst performers on-the-cheap. For other, however, it has to do with the likelihood that some global platinum production may be pulled off-stream this year.

1533: Investec (LSE: INVP.L - news) has just issued a research note reiterating its negative stance on the food retail sector. Here is a snippet: "Tesco and Sainsbury (LSE: SBRY.L - news) are likely to report strong internet and convenience growth, but the more these grow, the more sales from large stores fall. We estimate that Tesco and Sainsbury have underlying 3-5 per cent, volume declines in core stores (closer to Morrisons than first appears). The market may take solace from fewer openings, but the problem of blurred channels and excess capacity growth (including virtual capacity) is growing." FTSE 100 (FTSE: ^FTSE - news) up 13 to 6,041.

1455: Nouriel Roubini writes in today´s Financial Times that the United States has yet to wake up to the true dimensions of its fiscal crisis.

1330: US initial unemployment claims rose to 372,000 last week, up from 362,000 (upwardly revised from an initial reading of 350,000 for the week before) and versus a consensus forecast of 362,000. Although the seasonal adjustment factors should have corrected for it the data showed a "strong holiday effect" the Department of Labour said.

1330: Economic optimism is on the up, a report by the Institute of Directors (IoD) has found, with business leaders feeling more upbeat about the year ahead than they did this time last year. In a survey of 1,369 IoD members, the findings showed that the proportion of business leaders who believe this year will be an improvement on 2012 is higher than the number who believe it will be worse by a margin of +31%. This compares to last December, when the balance was -31%. The FTSE is up five points at 6,032.

1315: Private sector payrolls in the US gained by 215,000 last month according to data from private consultant ADP (Consensus: 140,000), after an upwardly revised gain of 148,000 for November (from 118,000). Lay-off announcements at large US corporations came in at 32,556 for that same month, after a rise of 57,100 in the previous month, according to the so-called Challenger (SES: E1:573.SI - news) survey. All of the above figures come ahead of the release of tomorrow´s monthly employment report in the US.

1231: More on Aberdeen from Jefferies. "Our short-term tactical call is Aberdeen. We have raised our target price in line with our forecast increases but if markets start 2013 in buoyant mood we believe there is more potential. The key here is momentum: funds continue to flow into high margin pooled products in the global, Asian and emerging markets. Our forecasts assume continued flows but at 80% of their previous rate - this might prove too conservative and with our underlying assumption of 1.5% equity returns per quarter there is room for more optimism here." FTSE 100 down 3 to 6,025.

1230: Chemring is now pacing gains on the FTSE 350. The defence contractor has appointed Steve Bowers as Group Finance Director, the company reported Thursday. Bowers worked as Finance Director for Umeco, a provider of composite materials to aerospace and defence industries until its acquisition by Cytec UK Holdings in July 2012. He was with the company for 13 years in a number of finance roles.

1211: Economists at BNP (Paris: FR0000131104 - news) cut their view on US GDP growth in 2013 by half to 1 per cent.

1210: Analysts at Jefferies have today issued a note in which they update their earnings forecasts for European brokers, asset managers and exchanges. The chief forecast changes for fiscal year 2013 were at Aberdeen and Jupiter where fiscal year 2013 earnings per share (EPS) estimates were increased by +8 per cent and +12 per cent, respectively. They have also adjusted their price targets accordingly as they are driven directly off the cash flows.

1136: After nearly doubling over the previous month the share price of Igas Energy is today enduring a 17 per cent correction.

1135: Market darling Next (Other OTC: NXGPF - news) strong run in the stock market last year seems to be extending into the New Year after the retailer announced that full-year profits will be at least at the higher end of its previous forecasts. Serco is also near the top of the leader board after analysts at Banco Espirito Santo (Other OTC: BKESY - news) upgraded their view on the shares to buy from neutral. The stock prices of several issues whose performance is itself closely correlated to the health of capital markets in general are also doing well today; this is the case of Standard Life (LSE: SL.L - news) , Legal&General and Aberdeen Asset Management (Other OTC: ABDNF - news) . FTSE 100 down 6 to 6,022.

0930: Markit UK construction sector purchasing managers´ index for the month of December falls to 48.7 after 49.3 in the previous month (Consensus: 49.5).

0858: UK Gilt yields rise above 2 per cent for first time since May 2012. Vodafone (LSE: VOD.L - news) is fighting to hold on to technical support.

0820: Markets have edged lower in opening trade, as investors rebalance yesterday's huge gains which saw the FTSE close at 6,027, having gained 130 points throughout the session. Following the relief of averting the raft of tax hikes and spending cuts that the 'fiscal cliff' threatened to bring, investors are now likely to look at the deal more closely and turn their attentions to the US debt ceiling and upcoming spending cuts, to which the country's lawmakers now have around two months to come up with a solution. President Obama has said he would not let the US increase its debt ceiling again in return for a deal on spending cuts. In company news, retailer Next said its full year results would come in towards the top of expectations. Looking to 2013, the group expects consumer spending to remain "subdued but steady" as employment levels continue to stave off a significant downturn. The FTSE is down five points at 6,022.