Thomas Cook Share Spreads Plummet as Firm Renegotiates Debt
|
|
|
For today's update see Spread Betting Daily.
The Daily Update from Anthony Grech, Research Analyst, IG Index.
Spread Betting 22 November 2011: 11.00am Update
European equities rose in early trade this morning, bouncing from a steep sell-off in the previous session, though gains are likely to be capped by worries over high Eurozone and US debt levels and after the US super committee failed to reach an agreement over the deficit reduction deal.
By 10.30am (London time) the FTSE 100 was up 0.52% at 5249.61, while the broader FTSE 250 was 0.34% higher at 9801.30.
US 'super committee' at an impasse
The US congressional committee, responsible for striking a deficit reduction deal, ended its work without an agreement last night, delaying any solution to America's debt problems.
The committee's failure to agree on $1.2 trillion in deficit reduction sets up a year of uncertainty on taxes and spending that could further rattle financial spread betting investors already shaken over Eurozone debt woes.
During the talks however, Republicans did show a new willingness to move from their opposition to tax increases. The panel waited until after US markets closed at 9pm (London time) to declare the effort dead, after shares on Wall Street had already hit a one-month low due to fears of out-of-control government debt in Europe and the US.
Ratings agencies Standard & Poor's and Moody's announced yesterday there will be no immediate downgrade to their credit ratings on the US due to the failure of a congressional 'super committee' to reach an agreement on debt reduction.
However Fitch, which currently rates the US as triple-A, said it could cut that outlook, with the possibility of a downgrade. Fitch said it would finish its assessment of the US by the end of the month.
UK public sector borrowing broadly on track
While the Eurozone and the US struggle with their debt loads, UK economic data released this morning showed that public sector borrowing was slightly lower than expected in October, as growth in tax revenue outpaced spending.
The figures, which come a week before the chancellor George Osborne presents his autumn budget statement to parliament, suggest the government remains on track to meet its deficit reduction goal this fiscal year.
Public sector net borrowing (excluding financial sector interventions) fell to £6.498 billion last month from £7.717 billion in October 2010, slightly below economists' forecasts for £6.8 billion.
September's figure was revised down to £12.964 billion. For the fiscal year to date, the figure totalled £68.314 billion, remaining broadly on target with the government's target of £122 billion.
Thomas Cook shares plunge
Europe's second biggest tour operator, Thomas Cook, announced this morning it had entered fresh talks with its banks as a result of a deterioration in trading in some areas of the business in the current quarter, and because of its cash and liquidity position.
Thomas Cook, which has issued a string of profit warnings, had struck a deal with its banks in October to relax the terms of its lending but has asked them to consider a further amendment after trading continued to decline. Discussions today with its debt holders will try to renegotiate the terms of it £1.59 billion debt burden for the second time in a month.
Thomas Cook said it would delay publication of its full-year results, originally due on Thursday, until the discussions are concluded. However the company said it still expects its full-year operating profit to be in line with previous guidance. Shares in the company fell over 70% this morning down to 10.90p.
US pre-market
US futures are after pointing to a mixed open on Wall Street this afternoon, with Dow contracts down 0.05% and S&P 500 futures up 0.21%.
Looking ahead to this afternoon, third-quarter US GDP and personal consumption data is due at 1.30pm, while the November Richmond Fed manufacturing reading is due at 3pm (both London time). These readings will be followed by the Federal Reserve's minutes from their latest policy meeting at 7pm (London time).
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.
|
Spread Betting 22 November 2011: 5.00am Update
Global markets declined overnight after US lawmakers failed to reach a deficit-cutting agreement.
This failure to act is magnifying the European debt issues that investors are currently trying to deal with. Moody’s came out to say that rising French government borrowing costs and an uncertain economic position continue to pose a threat to the outlook for France’s AAA credit rating. This confirms what most spread betting investors have feared for a while.
Among the major averages, the Dow Jones Industrial Average lost 2.1% to end at 11,547. The S&P dropped 1.9% to 1193 and the Nasdaq shed 1.9% to close at 2523. The charts are looking increasingly dire after last night’s move sent some of the major market averages below their key 50-day moving average.
Asia & Australia
Across Asia, regional markets are weaker as risk assets declined overnight after US lawmakers failed to reach a deficit-cutting agreement. A warning on France's credit rating by Moody's added to investor fear of contagion, but markets have now come off their lows, with notable recoveries in the resource and financial space.
Around the region, the Shanghai Composite is down 1%, the Hang Seng is 0.6% lower and the Nikkei is flat. Japanese exporters have enjoyed some relief after USD/JPY spreads spiked higher this morning.
Australia's S&P/ASX 200 is down 0.7% at 4133 after hitting a six-and-a-half week low of 4093.9 on European and US debt problems. Despite the recovery, it is now facing key near-term resistance in the 4140 region, which was previous support.
Given the relatively low volume we have been seeing, it does not take a lot to move this market up or down. Materials names are leading broad-based declines, with Rio Tinto down 2.4% and Iluka weaker 1.6%.
OneSteel has plunged 10% after BlueScope announced a $600 million capital raising to pay down debt. The capital raising is at a 35% discount to BSL’s previous trading price.
Energy and industrial stocks are underperforming, with Santos losing 2.5% and Leighton Holdings down 1.3%. The strong recovery in the Aussie market today has been led by the high-yielding bank stocks. After poor performances this morning, the big banks are now significantly off their lows.
Defensives are outperforming, with the likes of AGL Energy, Telstra and Woolworths holding up well. Further weakness will throw up bargains in yield plays such as Woolworths, Telstra and banks.
Europe
Today brings UK public sector net borrowing and Europe consumer confidence. However, we doubt these will be significant events given the prevailing debt crisis facing the Eurozone. Traders will also be turning to the European Commission which is set to publish a report on Wednesday outlining three proposals for a debt crisis resolution.
There is also increasing speculation that China will ease monetary policy in the coming months after data showing lower inflation and increased bank lending in October.
Ahead of the European open we're calling the FTSE up 35 at 5258, the DAX up 39 at 5645 and the CAC up 27 at 2922.
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.
|
"Thomas Cook Share Spreads Plummet as Firm Renegotiates Debt" last update by AG, 22-Nov-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.
Similar articles:
Spread Betting Daily - last update: 23-May-2012
Your daily spread betting update from the insiders. A look at the FTSE 100 and a range of other spread betting markets from Crude Oil to Shares to Gold to . . . read more Spread Betting Daily.
Spread Bets Daily Markets - last update: 22-May-2012
Spread Betting Daily News - A daily trading update from IG Index. Every weekday the experts offer their view of the markets . . . read more Spread Bets Daily Markets.
FTSE 100 Spread Betting Index Falls amid Poor Eurozone PMI Data - last update: 04-May-2012
Markets were back in risk-averse mode this morning following a string of weaker-than-expected PMI services figures from the Eurozone. By 10.45am (London time) the FTSE 100 spread betting index was 0.75% lower . . . read more FTSE 100 Spread Betting Index Falls amid Poor Eurozone PMI Data.
Spread Betting: Successful Spanish Bond Auction Sees UK Banks Rally - last update: 03-May-2012
Elsewhere in spread betting, news of the well covered Spanish bond sale seemed to bode well for UK banks, with Barclays up 1.4% to 216.6p. Lloyds and HSBC were both 1.6% higher at 32.58p and 570.2p . . . read more Spread Betting: Successful Spanish Bond Auction Sees UK Banks Rally.
Improved Chinese Manufacturing Figures See FTSE 100 Spreads Open Higher - last update: 02-May-2012
Also in spread betting, China's manufacturing sector appeared to be easing out of its downturn after figures showed that output declined at its slowest pace in the last six months. The HSBC manufacturing . . . read more Improved Chinese Manufacturing Figures See FTSE 100 Spreads Open Higher.
Substantial Q1 Profits Prompt Rally in Lloyds Spread Betting Market - last update: 01-May-2012
Lloyds spread betting market led gains in the banking sector, rallying 2.4% to 31.76p after reporting first-quarter profits that were substantially ahead of consensus forecast following a sharp decline in . . . read more Substantial Q1 Profits Prompt Rally in Lloyds Spread Betting Market.
RBS Spreads Fall as S&P Downgrade Spanish Banks - last update: 30-Apr-2012
Elsewhere in financial spread betting, the UK 100 fell 0.48% to 5749.41 this morning, breaking a four-day winning streak, as S&P's decision to downgrade 11 of Spain's largest banks revived contagion concerns. Back home, . . . read more RBS Spreads Fall as S&P Downgrade Spanish Banks.
Online Spread Betting: FTSE Edges Higher Despite Spanish Credit Downgrade - last update: 27-Apr-2012
The FTSE 100 online spread betting market seemed to shrug off renewed Eurozone concerns, gaining 0.35% to 5768 by 10.30am (London time). The blue-chip index initially fell on the open after Spain was dealt another blow to . . . read more Online Spread Betting: FTSE Edges Higher Despite Spanish Credit Downgrade.
Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits - last update: 26-Apr-2012
Drug maker GlaxoSmithKline dropped 0.4% after it reported a 13% decline in first-quarter profits, while AstraZeneca declined 5.6% after it reported a 40% drop in pre-tax profits. Unilever shares climbed 3% to 2635p after sales rose . . . read more Shares Trading: AstraZeneca Declines on Plummeting Pre-Tax Profits.
ARM Holdings Spreads Rally amid Stellar Apple Results - last update: 25-Apr-2012
In equities spread trading, ARM Holdings was the top FTSE 100 gainer, up 4.3%, bouncing after a lukewarm reception to in-line results from the British chip designer on Tuesday. The price gain was on the back of forecast-beating . . . read more ARM Holdings Spreads Rally amid Stellar Apple Results.
Spread Betting Daily Index - An index of Mid-Morning Daily Spread Betting Reports covering the key Index, Forex, Shares and Commodities markets.
|
|
|
Free Financial Email: Latest Spread Betting Offers and where to find narrow spreads.
Click here to sign up.
|
|
