The FTSE 100 continued to inch higher this afternoon on the back of a strong mining sector, while shares in the US were pushed higher by strong earnings reports, despite dovish comments from the Fed’s William Dudley.
By 3.30pm (London time) the FTSE 100 was 0.82% higher at 5533.15, while the FTSE 250 surged 1.6% to 10,429.56. US equities were also higher, with the S&P 500 edging up 0.83% to 1248.58 and the Dow Jones 0.72% higher at 11,892.13.
FTSE 100 held up by miners
Strong data from China continue to hold up the mining sector this afternoon. Chinese manufacturing showed expansion for the first time in three months, which eased fears of an abrupt slowdown in the world's second-largest economy.
Further reports that European Union leaders were nearing an agreement on bank recapitalisation, and on how to leverage their rescue fund to try to stop further bond market contagion, help to alleviate fears that demand for commodities would decline.
Top risers in the mining sector were Kazakhmys, which was up 8% to 928.5p, while Antofagasta rose over 7% to 1182p. Copper futures for December delivery rose over 5% to $3.39 per pound, while silver was 1.9% higher at $31.79 per ounce.
TomTom takes the right turning
Dutch personal navigation device and digital mapmaker TomTom beat profit expectations in the third quarter, raising hopes among spread betting investors for the company, which has seen earnings fall in the face of competition from smartphones and Google.
Better-than-expected profits were largely due to better sales in pre-installed navigation devices in cars and higher subscriptions to its premium Live service, which sends real-time traffic information directly to drivers.
The company’s EBITDA value rose to €67 million, well above analysts’ consensus of €40 million, while net profits came in at €29 million, up from €19 million in the third quarter last year.
But the long-term threat to the company was clear as total sales fell to €336 million, down 10% year-on-year. Despite this, TomTom expects full-year earnings for 2011 to come in close to its top forecast of €1.275 billion. Shares were up over 20% to €3.78 in afternoon trading.
TomTom recently announced a restructuring programme that aims to restore growth and profits. The programme includes €50 million in cuts, as well as switching its focus from personal navigation devices (PND) to its auto and mapping services. The company expects the PND market to contract in the US and Europe.
Caterpillar earnings continue to make the earth move
Caterpillar, the world’s largest heavy machinery manufacturer, exceeded analyst expectations this afternoon after it reported a 44% rise in quarterly earnings and record revenue, while signalling a bullish outlook on 2012 sales.
It expects economic recovery in the US and Japanese economies to gain pace next year and anticipates full-year profit for 2011 to be at the top end of its previous outlook range, increasing 10-20% above the $58 billion in sales it forecast for this year.
Caterpillar reported third-quarter net income at $1.14 billion, or $1.71 per share, compared with $792 million or $1.22 per share, a year earlier. Sales also rose 41% to $15.7 billion, which is a record, according to the company. This afternoon, shares in Caterpillar rose 4.57% to $91.35.
William Dudley adds to QE3 speculation
New York Federal Reserve president William Dudley provided a dovish outlook on the US economy, saying it still faces serious headwinds, which could include ‘spill over’ effects from Europe. He added that the central bank will continue to do everything within its power to help, stirring more speculation for a further round of quantitative easing.
The comments come after Federal Reserve vice chairman Janet Yellen announced on Friday that the Fed is looking at ways to offer more monetary stimulus.
He also said that problems in the housing market are a main stumbling block for the US economy, with it being the major hurdle to stronger economic recovery. He continued his negative outlook by saying that the economy is more vulnerable to negative shocks. However, on the upside, he expects the inflation rate to fall late this year.
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'Kazakhmys Share Spreads Higher as Copper Prices Rise', Article by IG Index, last update: 24-Oct-11
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