The FTSE 100 is trading around the 5100 level, while US markets have opened higher following positive employment statistics.
Retail and mining sectors continue to hold onto the mornings gains. Miners Fresnillo and Kazakhmys continue to be up on the day, up 61p (+8.12%) and 75p (+6.70%) respectively.
While retailers Next and Marks and Spencer continue to hold onto their gains, up 124p (+6.85%) and 20.50p (+6.01%) respectively.
In banking, Lloyds Banking Group experienced a dip in its share price after having its safety rating downgraded by Moody’s. The ratings agency downgraded Lloyds following Monday’s announcement that the bank would not take part in the Government’s Asset Protection Scheme, Lloyd’s plans to raise £13.7 billion from its investors in the largest cash call in UK corporate history.
Elisabeth Rudman, senior credit officer at Moody’s, noted that while the capital being raised should provide a sufficient buffer against further losses, Lloyds is now ‘more exposed towards the tail-risk of a potentially worse-than-expected asset quality deterioration.’ Lloyds has so far fallen 2.62% to 85.04p.
Other losers include energy giant Royal Dutch Shell, down 0.97% at 1744.00p and pharmaceutical company GlaxoSmithKline, down 1.02% to 1216.00p.
Before the opening bell US stock-index futures indicated that the US markets would open positively, and they did not disappoint. By 3.00pm (London time), the Dow Jones Industrial Average was trading up 67.94 points (+0.70%) at 9839.85, while the broader S&P 500 was also up 11.92 points (+0.82%) to 1058.36. The Nasdaq was also in positive territory, up 7.78 points (+0.38%) to 2065.10.
Today’s Challenger job cuts survey provided further evidence that the US economy is emerging from the recession. Planned job cuts fell 51% in October to 55,679 from 112,884 the same time last year.
John A. Challenger noted in a statement that ‘the continued decline in job-cutting … is a positive sign that the economy is slowly improving,’ adding the caveat that it ‘is important to realize that, as deep and widespread as this recession was, it is going to be a long and sometimes painful recovery.’ [2] While the survey shows that employers are more willing to keep on employees; businesses are still not hiring, with analysts’ expecting unemployment figures to continue to rise.
On the Dow Jones, major banks JP Morgan and Bank of America were among the early winners, gaining 1.80% to $43.47 and 2.84% to $15.22 respectively. While entertainment giant Walt Disney saw its share price grow as it announced that it won approval to build a theme park in Shanghai. Disney’s share price now currently stands at $28.37, up 2.72%.
Later today analysts are widely expecting the FOMC to keep interest rates at ultra-low levels when the decision comes through at 7.15pm London time.
Source: [1] This is money (4 November 2009)
Source: [2] Bloomberg News (4 November 2009)
By Anthony Grech, Research Analyst, IG Index.
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