Kingfisher disappoints in a market high on US optimism
Fiona Cincotta November 29, 2012 5:00 PM
<p>European shares again took the lead from the US with optimism that US lawmakers will agree to a deal in order to solve the “fiscal […]</p>
European shares again took the lead from the US with optimism that US lawmakers will agree to a deal in order to solve the “fiscal cliff” before Christmas. Investors feel that real and credible progress is being made.
Despite attention switching swiftly from Europe to the US since the Greek deal was confirmed, easing near term risk in the eurozone, the markets were still pleased to see the Italian 10-year bond yield come down to its lowest level for two years. This was the last Italian auction settled this year for 10-year bonds and the yield paid was 4.45%, almost 50 basis points off the yield at the end of October.
Riding high off the optimism resource stocks pushed the FTSE higher. Rio Tinto topping the FTSE gainer board after the world’s number two iron ore producer announced plans to make $7 billion worth of cuts to operating costs, including a $2 billion cut in exploration operations. The share price has risen over 4% this morning on the back of this.
News that BP has been blocked from seeking new contracts with the US government has done little to affect the company’s overall share price. The ban comes following the oil company’s lack of integrity during the Gulf of Mexico disaster and temporarily prevents them from competing for new oil leases in the Gulf of Mexico or from bidding on new contracts. Although the ban does not affect existing business is does raise questions about the future for the company. On release of the news yesterday the share price dropped 2.3%, however, the price has now stabilised today back up at the pre release level, demonstrating that investors are not overly concerned with news of the block.
Disappointing results from Kingfisher saw them shed 2% in early trading. The DIY group said it saw revenue and profit increase slightly but like for like sales declined over 3.8% in the third quarter, despite a boost from its new international territories such as Russia. The share price has had a turbulent months following a phenomenal rise in August 2011 low of 204 to 314 high in March 2012. Kingfisher is currently trading 276.
A relatively quiet day with regards to economic data means investors will look to the US GDP and US jobless claims due this afternoon.