Morning Market Brief

by Alison Sammes

Overnight Headlines

  • The final Eurozone PMI for Sep’12 rose to 46.1 from 45.1, revised up from a preliminary reading of 46. The most notable single nation PMI cake from France where the index fell to 42.7, from 46 the previous month.
  • The number of unemployed in the Eurozone rose to 18.196m in Aug’12, up 34,000 from the previous month and to the highest level on record. The unemployment rate remained unchanged at 11.4%. Notably, Spanish unemployment hit 25.1%.
  • Late on Friday, the Spanish banking system showed it required £59.3b for recapitalization plans, which was in line with expectations.
  • Moody’s stated that Spain’s bank recapitalization plan is “credit positive”, but ultimately may be “insufficient”.
  • Bernanke gave a speech to Economic Club of Indiana overnight in an attempt to shed some light on QE3, stating the basic monetary policy strategy is “the same as its always been”.

Resources Snapshot

  • Xstrata recommended Glencore’s revised £20.5b takeover to its shareholders.
  • Indonesia’s new mining laws that came into effect in May’12 and relate to exports have had a profound effect on cutting exports, particularly to China. For example, Chinese imports of nickel from Indonesia in Aug’12 fell 39% to 1.48mt.


International Equity Markets

  • DOW JONES: Up 0.58% (or 77.98 points) to 13,515.11. Markets across the U.S. gained overnight on upbeat manufacturing data, but pulled back from session highs as Bernanke spoke about the Fed’s decision to launch QE3. In economic data, the U.S. ISM manufacturing index rose 51.5 last month from 49.6 in Aug’12, the highest reading since May’12 and an unexpected return to expansion. Additionally, the Commerce Department reported that construction spending fell 0.6% in Aug’12, well below the 0.5% gain expected. 26 companies gained with 7 topping 1%. The financials had a strong run with American Express and Bank of America gaining 1.5% each. The notable fallers included Caterpillar and Microsoft.
  • FTSE 100: Up 1.37% (or 78.38 points) to 5,820.45. European markets noted their strongest one night gain in recent weeks overnight as better than expected U.S. data boosted investor sentiment. The banking sector was notably higher with RBS, Lloyds, HSBC and Barclays gaining between 2.5% and 3.7% respectively. Additionally, heavyweight mining companies rose with BHP and Rio gaining 2.6% and 1.8% respectively. Fresnillo, Kazakhmys and Randgold Resources followed higher. Xstrata gained 2.4% after the Board recommended the revised Glencore offer. Lastly, energy companies BG Group and Shell gained 2.3% and 0.9% respectively.


Overnight Summary

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