Europe plays catch-up on big Dow turnaround
Glencore (LONDON:GLEN) up on asset sales
ITV (LONDON:ITV), Sports Direct (LONDON:SPD) near bottom of FTSE after rugby failure
Lloyds (LONDON:LLOY) shares higher on government share sale
Rolls Royce (LONDON:RR) job cuts well received
US stocks to open higher
UK and European markets were higher across the board on Monday, playing catch-up from the biggest turnaround on the Dow Jones Industrial Average in four years on Friday.
The French CAC was higher by over 2.5% supported by positive French service sector data. Missed expectations for Germany’s service sector took the edge off gains on the DAX, which was still higher by over 1.5%.
PMI data showing UK services expanded at the slowest pace in more than two years in September was a modest restraint on the FTSE 100, still up close to 2%.
Higher Chinese stocks and commodities helped mining companies lead gains. Glencore was best performer with another volatile day, this time to the topside; on reports the company is looking to offload a stake in its agricultural business. Belief in Glencore’s solvency is at stake so raising cash through asset sales is the best thing management can do to stabilise the share price.
Shares of Lloyds were up by over 1.5% in early trade on the announcement of a £2bn government share sale. The rise in Lloyds shares was generally in line with the rest of the banking sector. Its been a bit of a topsy turvy few days for UK banks which face the prospect of an end to PPI fines but also a longer period of margin-eroding low interest rates after last week’s disappointing US jobs report.
Rolls Royce was a top riser after the company announced it will shed 400 managerial jobs including some in the UK. The job losses are an effort to make cost savings in its marine division which has seen a drop in orders thanks to the fall in oil prices.
Shares of Sports Direct and ITV have England rugby to thank for their place near the bottom of the UK’s benchmark stock index on Monday. The companies face the prospect of lower kit sales and TV advertising revenue respectively after England’s national team embarrassingly crashed out of the Rugby World Cup tournament in the group stage. Estimations are for ITV to lose as much as £1m in ad revenue per match with many fans likely to tune out now that the England team is no longer involved.
Index futures suggest a higher open for US stocks on Monday. The prospect of a longer period of low interest rates and perhaps a lower dollar would be a boon for US multinationals who have seen revenues drop thanks to a strengthening of the dollar in the past year.
USA pre-opening levels
S&P 500: 6 points higher at 1,957
Dow Jones: 60 points higher at 16,532
Nasdaq 100: 22 point higher at 4,289
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