London markets have sold off by some 40 points or more this morning with the FTSE testing back to and below 5850. The weakness can be attributed to the ongoing crisis in Spain and the perception in the markets that for all the rhetoric over recent weeks from European leaders - they have done little to change the situation on the ground or to halt what some see as the inevitability of Spain having to be bailed out.

 

Figures this morning which showed a continued and worsening rise in bad debts at Spanish banks have done nothing to ease those fears. The Euro has eased against the US$ this morning whilst yields on Spanish bonds have risen once more.

 

As far as individual stock are concerned the biggest faller in London's top flight today is Aviva which have fallen  by some 4.8% sector peer prudential are also lower by 2.8%.

 

There are few gainers in what can genuinely be called a broad based sell off  and only 5 stocks led by the defensive favourite Imperial Tobacco are up by more than one percent the day at the time of writing. Volumes remain on the low side with just over 300 million shares traded in London's topflight as we approach 13.00 hours.

 

Ahead of the US open futures markets suggest a weaker start for  New York equities and both Gold and Crude oil will go into the North American session weaker on the day.

FTSE has traded lower this morning giving back around 17 points on the day so far the biggest faller in the top flight is luxury fashion group Burberry down by more than 18% as I type. Burberry spooked the market this morning with the release of what amounted to a profits warning  for its full year prospects. The company highlighted falling sales growth on a global basis and said that profits for the full year to March will be at the lower end of market estimates. Luxury brands such as Burberry have enjoyed  high ratings and earnings multiples over the last two to three years as sales boomed in Asia and other emerging markets.  But with sales in China falling off dramatically it seems that sector could come back down to earth with a bang.

 

Mining stocks have also taken a knock this morning despite a buy recommendation for the sector from strategist at a leading Swiss bank  names like Vedanta, Anglo American and Kazakhmys are down by at least 3% and given the influential sectors weakness its a wonder that London is not down much more sharply.

 

Modest gains in defensive names are offsetting the cyclical miners but  the  diggers and drillers are much more volatile as a group  and a betting man would think that the miners will win  out in this tug of war.

London's FTSE 100  index has moved up once more this morning to stand at 5790  these gains of some 13 points follow the sharp bounce that occurred on Thursday after the ECB said it would be buying the bonds of Euro zone members in effort to bring down borrowing costs for sovereign sates and provide the markets with the clearest possible signals that  the single currency is not  a "dead duck".

 

M&A was also centre stage this morning as Glencore launched and 11th hour improvement to the terms of its all share offer for  Xstrata.  The increased terms will give major share holders such a Qatar something to think about over the weekend and could swing the balance into Glencore's favour once more.  Though some analysts and commentators continue to ask what genuine additional synergies a full blown merger will bring? Given the existing cross holding and close business relationship that already exists  between the two groups.

As you would expect  many of the Mining stocks are better in London this morning as a result but they are being given a run for their money by Barclays Bank which are up by 5.36% to 203p, whilst RBS add 4.3% to stand at 243.1p. If cyclical stocks such as Miners and Banks are up on the day then you would expect defensive names to be weaker and indeed they are with the like of Imperial Tobacco down by 1.9%, Glaxo are easier by 1.6%  and drinks giant Diageo are down by 1.56%.

 

All eyes today though will be focused on the key Non Farm Payrolls number due out at 13.30 pm, this important measure of US employment will provide markets with clues to the health of the underlying US economy and therefore the likelihood or otherwise of further QE  from the Federal reserve.  Estimates range from 70,000 to 185,000 with the average forecast coming at a headcount of  130,000, versus last month figure of 163,000.

 

Of course markets will also be  closely watching the rate of unemployment though perversely a higher unemployment rate may be  seen as positive for the markets as it may hasten the Fed to introduce additional stimulus measures.

FTSE remains virtually unchanged on the day  as we approach the half way stage in today's session. Though notably we remain well below the key 5700 level which was broken  earlier this week. Oil majors BP and BG are the days biggest losers down 3% a piece.

 

Wolsey, Xstrata and Smith and nephew are the top gainer up by at least 1.9% each. Outside of Vodafone, BP and Lloyds volumes are thin.  Those three names account for over 85 million shares  out of a total turnover of 202 million shares which is a low turnover  by anyone standards 

 

A poor German bond auction has given the market pause for thought the auction was effectively under subscribed this is first time in recent months that German paper has not flown of the shelf.  Whether this marks a turning point in investor attitudes in regards to yields that they are willing to to safely park their cash remains to be seen. But with the  Alice in wonderland world of negative interest rates a genuine possibility in the Eurozone going forward it marks and interesting turning point if nothing else.

FTSE has sold off once more this morning giving back some 38 points to trade at 5718 as I type.

London's blue chip index is outperforming its European peers on the downside this morning no doubt helped in part by the sharp fall in one of its most active stocks Vodafone. The mobile phone operator is weaker by 1.75% following a note from a leading US broker, other notable fallers include RBS, Bats and Land Securities.

The days largest gainer is Oil Service group Petrofac which are up by 1.45%.

US Futures suggest Wall Street will return from the long weekend modestly better but ongoing developments in Europe could change that call before we get to the open.

FTSE is up by some 25 points this morning at 5736  in a quiet European session that comes on the US Labor Day holiday, which officially marks the end of Summer as far as the markets are concerned. With  Wall Street closed this afternoon we have probably seen the best of London market for today already, though the end of the week will see the release of the August Non Farm Payrolls data ( US Unemployment) which will be keenly scrutinised  for clues about the health or other wise of the US economy and what that means in regard to the likelihood of a third round of QE in the USA.

London has been led higher by Mining stocks once more ( they are better on hopes of  further stimulus measures  for the Chinese economy ) indeed all but 2 of the top 10 gainers are from that sector. 

Vedanta  and Fresnillo are the best performers up by 3.5% and 4.2% respectively. The days principal fallers are  Admiral Group and ARM  Holdings which have given back 3.46% and 2.44% respectively.

Volumes are on light side as we would expect on a Monday, though Glencore has traded 16 million shares in the session  so far, as the company decides not to improve its offer for Xstrata. The bid, which has not received the backing of key shareholders,  may now fall at the last hurdle.

London's blue chip equity index has made gains of around 15 points this morning and for now at  least the 5700 level remains intact, London's blue chip equity index has made gains of around 15 points this morning and for now at  least the 5700 level remains intact, though we have printed as low 5708 this morning. 

 

Mining stocks have helped the index into positive territory  with Kazakhmys up by 2.8% and Glencore better by 2.35%. The  move looks more sustainable however as it is supported by trade in around 4 million shares.

 

Vodafone is the most active security in the top flight today with turnover above 15 million shares though it is being run a close second by Lloyd's bank.

 

WPP are the days biggest  faller weaker by 1.41% as I type and I note that ITV, which we mentioned earlier in the week, have slipped back to 83.6p  down by just under 1% this morning.

 

Futures markets suggest  that US markets may open modestly better this afternoon.

FTSE has weakened further  this morning as concerns about Europe come to the fore once again. The semi autonomous state of Catalonia has asked the Madrid government for €5 billion to help it make ends meet . The economy of Catalonia is bigger than that of Portugal and the regional government has more than €40  billion of outstanding debt, so these are not insignificant developments.

FTSE has tested back to as low as 5739 this morning but should selling momentum pick up  then tests of 5700 and recent lows around 5685 are likely to be on the cards.

Miners and banks are  the days principal fallers whilst Utilities are the notable gainers presumably finding favour  for the defensive qualities.  Mobile phone operator Vodafone regains its spot as the most active blue chip with turnover on the day at more than 20 million shares, comfortably outstripping Lloyds and Barclays which have traded around 14 million shares each on the days so far.

Overall  however volumes  are very much on the light side and it feels  very much as though  many participants have extended their bank holiday break. US markets are seen as opening fractionally lower this afternoon and the malaise  in European markets  may spread across  the pond as well.

FTSE resumes trading today in a similar fashion to Fridays uninspiring session.

The index of blue chip equities is down by 10 points in a thin morning with few standout features . One stock that does standout however is DIY retailer Kingfisher, owner of the B&Q chain here in the UK which have fallen by 3.78% this morning, following a downgrade by respected US broker BOA Merrill Lynch, who cite the poor French retail market and who have sharply reduced their 2014 forecast for the home improvements group.

Gong in the opposite direction are broadcaster ITV which have added 2.2% this morning, having been written up at both Deutsche Bank and Citi Group today. The stock has printed as high as 85.4p in the session and though that's still well below the 52 week high of 91.25p be aware that the stock has historically struggled to break cleanly above 87/88p.

On the Macro front the meeting of the world’s Central Bankers at Jackson hole Wyoming is occupying traders’ minds.

The possible contents of Federal Reserve chief Ben Bernanke’s speech from the mountain retreat and ECB chief Mario Draghis non attendance are just two of the variables on their mind. However last year’s event was also highly anticipated and turned out to be an major anti climax so we could be in for more of the same.

London markets look set to head into the bank holiday weekend below the 5800 level despite an upward revision in UK GDP figures for the first half of 2012 which, was released  this morning.  

 

EU Premiers are meeting today and the finances of both Greece and Spain will be top of their agenda Greece will likely ask for concessions in its enforced austerity measures whilst Spain could use the meeting to explore what help may be available to Madrid from the ESM/ESFS though may stop short on this occasion at least of a formal request for aide. 

 

US futures markets suggest a weaker open for Wall Street this afternoon is on the cards.

London's Index of top 100 shares had its biggest move for some this morning falling by more than 50 points to 5800 having tested below the round number earlier in the session.

The mark down is broad based as can is testified by the fact that 94 of the index constituents are down on the day with just half a dozen stocks in the black at the time of writing.

The day’s top faller is Kingfisher down by 3.5% following a downgrade for the retailer at Deutsche Bank who moved from buy to hold and cut their price target to 315p from 340p previously though that remains well above the current 284p price for the stock.

With the long week ahead in the Bulls of the FTSE will be keen to keep the index above 5800 but the market is weakening once more as type and posting new lows on the day so this prove to be easier said than done. Currently futures markets are indicating a flat open for US markets which sold off into the close last night. The S&P 500 had made new 52 week highs in the session but failed to hold on to that higher ground.

London’s FTSE is marking time once more this morning up by 14 points or just 0.25% in another session characterised by low volumes.

Mining stocks are the best performers this morning with 7 out of the top 10 gainers hailing from the mineral resource sector.

Fund manager Ashmore is the day’s biggest faller after the emerging markets fund manager was mentioned in a note from HSBC this morning though in truth the fall is a modest 1% on just over 220,000 shares traded, so nothing to shout about in the grand scheme of things.

Europe remains in focus with next week’s EU summit foremost in peoples’ minds. Although many participants will also be thinking about the long bank holiday weekend here in the UK and the run up to Labor Day in the USA, thereafter, which traditionally signals the end of the summer , as far as markets are concerned. Whether or not that will mean a return to higher volumes and more day today interest in equity markets however remains a moot point . US markets are called to open modestly better this afternoon with index futures suggesting single digit gains for Wall Street from the off.

Once again markets start a new trading week with whimper not a bang, Spanish bond yields have fallen back to around 6.3% this morning on hopes that EU action will prevent the need for a full scale bail out however the equity markets are rather more sanguine about that prospect.

The index of London's top 100 shares is down around 6 points in woefully thin session with no real volume outside of That in Lloyds Banking which are also the days only significant gainer up by nearly 3%.

Lonmin on the other hand slip back once ore following a broker downgrade and it’s hard to see how production / normal labour relations at their Marikana mine will be resumed any time in the near future, after the terrible loss of life seen during last week’s clashes between miners and the police. Many other mining names are weaker in sympathy this morning.

At this early juncture US futures suggest that Wall Street will open up by around 10 to 15 points but with Q2 earnings season over markets over the pond are also in need of additional stimulus.

London Markets remain becalmed today with the index of top 100 shares barely changed on the day, after a lacklustre US session last night.

Where stocks have moved this morning they have done so on light volumes, for instance there is less than one million shares of combined turnover between the top 5 FTSE gainers, which comprise Russian and Kazak miners and UK engineers.

Europe remains in the headlines with Spain hoping to receive the first tranche of bailout funds imminently, although there is already talk that the money may not go directly to the countries banks.

There are also reports in the German press that Politicians there wish to reweight voting rights amongst EU member states - a hot potato if ever there was one.

Once again US markets are called open marginally better ahead of their 14.30 start and I doubt we will see any fireworks stateside this afternoon. Perhaps it’s just as well that (weather permitting) the test match against South Africa is starting today as that will be the only event on a screen today that is likely to hold our attention.

The start of any new month brings with it the first slug of major economic data in the US and this week Friday 1st April will contain the major data announcement of the month with the Non Farm Payroll data for March as well as the ISM Manufacturing Index for March. The employment data always takes the lion’s share of the news headlines and this month will be particularly important with the market desperate to see a continuation or even improvement on the trends reported last month. What it won’t want to see is another weak gain suggesting that whilst employment is improving it is not improving anywhere near enough to make a material difference to the recovery. The headline number for February increased by +192,000 and within that private payrolls increased by a strong +222,000. This month the consensus is expecting a headline number of +200,000, but the range of estimates varies considerably with some expecting a number close to +300,000 and the worst published number is around +160,000. The ISM manufacturing index is at its highest level since May 2004 with the last reported number of 61.4 for February and estimates for March are expecting a modest dip with the consensus expecting 61.2. The US manufacturing sector remains a bright spot within the US economy and the recent regional reports suggest on balance that the momentum is being maintained and we could even see a slight improvement on the last month, although it does seem likely that the ISM is now close to its peak.


In the UK this week all eyes will be on the final estimate for 2010 Q4 GDP growth which is expected to remain at the previous estimate of -0.6% when it is published tomorrow. The preliminary reading for this was -0.5% and the downgrade did come as something of a shock last time given that most were expecting a modest revision upwards after the shock contraction during Q4. It remains to be seen if the final estimate will change but the market focus will now be on what Q1 brings especially given the ongoing debate over where monetary policy is headed over the coming months.

Today in the US we have had pending home sales data for February which was a little better than expected at +2.1% month on month although this does follow on from a -2.8% decline over the previous month. Overall there is no sign yet of any real improvement in the US housing market.

There has been no major data today in the UK and Europe.

Tomorrow in the US brings the Conference Board’s latest consumer confidence reading for March. This is likely to reflect the worries over Japan and developments in the Middle East and North Africa as well as the ensuing dip in world equity markets. The consensus is expecting a decline to 64.0 from the last reported reading of 70.4. In Germany tomorrow the CPI for March is due for publication and we also get the latest German Gfk Consumer Confidence survey.