Global Equities rallied this afternoon as hopes for further economic stimulus and support for debt-stricken Greece boosted appetite for riskier banking and commodity stocks, with better-than-expected US economic data adding to the buoyant sentiment.
By 4pm (London time), the S&P 500 was up 0.82% to 1133.21, while the Dow was marginally higher at 10,883.22. In London the FTSE 100 surged over 3% to 5113.18, with the FTSE 250 advancing almost 2% to 9590.40.
IMF to the rescue
Banks and miners climbed this afternoon after the International Monetary Fund's Antonio Borges confirmed the IMF would participate in a second bailout package for Greece. However this would only happen as long at the IMF were happy about the country's determination and actions to solve its debt problem.
Mr Borges said the IMF could intervene in secondary bond markets alongside the Eurozone’s EFSF emergency bailout fund, and expects the size of Greece's second rescue package to be modified as it is now outdated. He went on to say the IMF would create a special vehicle to buy bonds that are under stress, which would aim to aid countries such as Spain and Italy.
Mr Borges also spoke about negotiations over the disbursement of the next tranche of aid to Greece. He stated that despite initial statements from Athens that it would run out of money by mid-October, there was no real rush as Eurozone finance ministers believe it had enough cash to last it through to mid-November.
He ended by announcing he is confident that a solution will be reached. The announcement from the IMF, which lifted market sentiment, came just after economic data from the Eurozone released today showed that the economy is edging closer to a renewed bout of recession.
US economic data better than expected
Data released this afternoon revealed that US private-sector employers added more jobs than expected in September, while another report showed a jump in planned layoffs in the month. Private payrolls rose by 91,000, above expectations for a gain of 75,000. August private payrolls were revised down to an increase of 89,000 from the previously reported 91,000.
However, in a separate report, the number of planned job losses at US firms in September jumped to its highest in more than two years due to heavy cutbacks by the US military and Bank of America, which accounted for nearly 70% of redundancies.
Employers announced 115,730 planned job cuts last month, more than double the August total of 51,114. Today's jobs data comes ahead of Friday's monthly report on total US non-farm payrolls, which are expected to see a gain of 60,000 payrolls last month after stagnating in August.
Profit warnings from SuperGroup and Flybe
Today saw SuperGroup's colour come out in the wash while Flybe made a hard landing after the two companies cut their profit forecasts for the year.
SuperGroup shares dropped over 30% this afternoon after the international fashion chain warned that stock management problems would erase up to £9m from its profit this year.
SuperGroup announced today that its problems with a new IT stock management system had led to delays in getting stock to UK stores, forcing it to rent temporary warehouse space at a total cost of between £6m and £9m. Though the problems were isolated to its UK retail business, the news sent SuperGroup's share down 30% to 699p.
Elsewhere in shares spread betting news, Flybe also plummeted today, tail-spinning by almost 40% after the UK regional airline lowered its full-year profit forecast due to a recent slowdown in demand for domestic flights.
Flybe announced that revenues for the six months to October were 1% below management expectations, with most of the revenue shortfall appearing to have come from September's lack of demand.
Jim French, Flybe chairman and chief executive, reduced full-year forecasts to £8m in profit before tax, after announcing an expected £20 million in pre-tax profit for the year, in August.
The company has already lost 80% of their value since the company debuted on the stock exchange and were almost 38% lower at 63.25p this afternoon.
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'Shares Spread Betting: Flybe Shares Plunge on Lower Profit Forecast', Article by IG Index, last update: 5-Oct-11
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