Share Spread Betting: Carrefour Cuts Profit Forecast on Sales Decline
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For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 13 October 2011: 10.45am Update
The FTSE 100 fell this morning as risk aversion increased over concerns on the health of the global economy.
Chinese trade slowed down and the US Fed cut the forecast of its economy for the year once again.
By 10am (London time) the FTSE 100 was down 0.5% at 5414.47, while the broader FTSE 250 was 0.22% lower at 10,297.36.
Chinese trade slows
The world’s second-largest economy is beginning to feel the effects of the current economic turmoil as its most important trading partners in Europe and the US suffer.
Economic data released early this morning revealed that growth in Chinese trade slowed significantly last month, as exports increased at an annual rate of 17.1% in September, down from a 24.5% increase in August, coming in well below forecasts.
Imports also slowed down after showing an increase by 20.9% from a year earlier, compared with a 30.2% rise in August.
The slowdown was particularly noticeable in Chinese trade with Europe, China’s biggest trade partner, with exports rising at an annual rate of only 9.8% in September, compared with a 22.3% rise in August.
Imports from Europe, on the other hand, were up 25.7% in September from a year earlier, compared with a 31.4% increase in August. Additional data showed that China’s trade surplus came in lower than expected at $14.5 billion in September, compared with $17.8 billion in August and $31.5 billion in July.
Mining stocks were the biggest casualties, with Anglo American and Antofagasta both making losses of over 3% at 2332.50p and 1112.00p respectively. Fresnillo and Xstrata, on the other hand, were both down almost 3% at 1615.00p and 952.10p respectively.
US Federal Reserve policy minutes
The anticipated US Federal Reserve minutes from its two-day policy meeting in September, released last night, revealed that the US Fed considered a new round of quantitative easing as an option if economic recovery continued to slow.
Instead, in September the Fed launched ‘Operation Twist’ in an effort to drive down long-term interest rates.
However, the minutes showed that a number of members thought that large-scale asset purchases should be retained as an option to support a stronger economic recovery. The minutes further revealed that two other members thought that the outlook supported stronger action.
The document also showed that the Fed further cut their economic forecast for the second half of 2011. The minutes tentatively improved spread betting market sentiment as they suggested that the US central bank remains likely to provide additional support should the economy weaken further.
Carrefour announces profit warning
Carrefour, the world’s second- largest retailer, cut its 2011 profit forecast saying that it expects an earnings decline of as much as 20% amid a slump in Europe. The revision comes after Carrefour forecast in August that earnings in 2011 would drop 15%. Today’s revision marks the fifth time in the past year that the grocer has predicted lower profit.
Third-quarter sales declined, in contrast to a 21% jump reported yesterday by rival Casino Guichard-Perrachon. Third-quarter sales amounted to €22.8 billion, a drop from the €25.6 billion reported a year earlier. The decline in sales adds to signs that cash-strapped shoppers are cutting back. Shares in Carrefour fell over 3% to €17.20 in trading early this morning.
US pre-market
US December futures pointed to a lower open on Wall Street this afternoon, with S&P 500 futures 0.3% down at 1194.60 and Dow futures 0.26% lower at 11,386.00.
After a fairly quiet week on the economic data front, this afternoon the US will release weekly initial jobless claims figures at 1.30pm (London time). But before that, banks will be in focus when JPMorgan posts its third quarter earnings.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
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Spread Betting 13 October 2011: 6.00am Update
Overnight, US stocks finished significantly stronger but well off their session highs, falling in the last hour on reports that European banks may need to shrink to meet new capital rules.
The late slippage came despite optimism that the Slovakian parliament had reached an agreement to ensure its approval of an expanded EFSF.
Among the major averages the Dow Jones Industrial Average added 0.9 % to end at 11518, the S&P surged 1% to 1207, while the NASDAQ jumped 0.8% to 2604. Among the major S&P sectors the financial, industrials and materials sectors were the biggest percentage gainers.
Heading into the last hour we had been looking at far healthier gains than what we ended up with.
Late in the day, reports surfaced that leading European banks would rather sell assets than raise expensive capital to meet EU demands for higher capital ratios. This was shortly followed by speculation that underlying Chinese copper demand may have been lower than previously thought, after the Chinese released details of their inventory holdings.
These two reports from The Financial Times, while not to be disregarded, are further evidence of how global equity markets remain beholden to ‘headline risk.’ Remember, just because you read it, doesn’t necessarily mean it’s true.
Asia and Australia
Across Asia, regional spread betting markets are mostly higher taking its lead from Wall Street. The Hang Seng is the region’s best performer, up by 1.3%, while the Nikkei 225 and the Kospi are seeing advances of 1.1% and 1% respectively. The Shanghai Composite is firmer by a more modest 0.3%.
In Australia, the ASX 200 is currently 0.9% stronger at 4240, but off its earlier session highs of 4256. With US markets enjoying another night of solid gains it is not surprising to see that strength playing out across the local market.
Gains for the day are relatively broad based and once again being led by the cyclical materials, industrial and energy sectors. The financial sector is also enjoying a modest advance, with losses limited to the consumer staples, utilities and information technology sectors.
Europe
Turning to the European session, plans tabled by EC President Barroso yesterday as to how banks would shore up their capital requirements, combined with pressure for decisive action on Greece all helped add to yesterday’s gains even if some have criticised the proposals for a lack of detail.
Needless to say, this was sufficient to see the FTSE break out of its recent range and back into territory not seen since the early August sell-off.
Perhaps it's little surprise then that another phase of consolidation seems likely to be on the cards at the open although assuming the fundamentals continue to be at least in line with expectations, and there's always that distraction of the EFSF vote in Slovakia. Then again there's little reason to believe this will be anything more than a pause for breath.
German CPI, the ECB's monthly report plus UK and US trade balance figures will all be high on the agenda in the coming hours, whilst there's another ripple of earnings news too.
Pepsico lifted the tone of US Q3 numbers yesterday, so JP Morgan and Google will both be in the spotlight as their numbers bookend the day ahead.
Elsewhere, Carrefour, Roche and Rio Tinto are amongst the other heavyweights which have numbers due so there's certainly the scope for further meaningful direction.
Ahead of the open we're calling the FTSE down 27 at 5415, the DAX down 18 at 5976 and the CAC down 5 at 3225.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above comments do not constitute investment advice and neither IG Index nor SpreadBets.org.uk accept any responsibility for any use that may be made of them.
Advert:
IG Index Spread Betting - No Fees, No Commissions, Free Charts and Live Prices.
Spread Bet on Indices, Forex, Commodities, Shares and more. For details see IG Index.
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"Share Spread Betting: Carrefour Cuts Profit Forecast on Sales Decline" last update by AG, 13-Oct-2011
Warning: Financial spread betting carries a high level of risk. You can lose more than your initial investment or stake. Financial spread betting may not be suitable for all investors. Only trade with money that you can afford to lose. Make sure you fully understand the risk involved. If necessary, seek independent financial advice.
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