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Good morning,
Markets are called higher this morning. This is what's happening today:
A positive start to the day after the weakness we have been seening in the last couple of days. If you look at the spread between the yield on the 10-year Italian debt and the 10-year Bund, you will realise that the spread keeps on widening. The 10-year Italian debt is yielding 4.875% up from its low of 4.125% at the beginning of 2013. The uncertainty of the election results in Italy, the problem of unemployment in Spain and the downgrade of the UK are all weighing on the markets after the rally we have seen in the markets in the last quarter of 2012 and the beginning of 2013.
In China the Shanghai is trading in postive territory, close to a 1% gain after China maintained its economic-growth target at 7.5 percent for 2013 while setting a lower inflation goal of 3.5 percent, setting up a challenge for new leaders to keep prices in check without harming the expansion.
Today is another interesting day for companies that are reporting results. Standard Chartered is expected to report a record profit figure. Barclays are bullish on the shares. The following are the salient points for the BUY recommendation by Barclays – 'Although the company has become more confident on credit quality and the earnings outlook in recent weeks we see both as vulnerable to uncertain global economic conditions. However, we also identify a significant cost saving opportunity, particularly in Consumer where Standard Chartered’s cost efficiency is notably weaker than local peers. Although this would mark a significant cultural change at Standard Chartered and management tends to talk about cost control rather than cost cutting, it would support earnings momentum and could add 1%-2% to our Group RoTE estimates. We maintain an Overweight rating and 1600p price target but see further potential upside if cost savings are targeted or the company moves closer to its
historical sum of the parts premium to peers.
Deutsche Post just reported results which met expectations. For 2013, the Group expects the world's economy to generate moderate growth. The pace of this growth should accelerate as the year progresses. As a result, the company forecasts a corresponding trend of increasing revenues, particularly in the DHL divisions. At the same time, the Group's EBIT is projected to increase to between EUR 2.7 billion and EUR 2.95 billion. While the MAIL division is expected to contribute between EUR 1.1 billion and EUR 1.2 billion to this figure, DHL should generate operating earnings between EUR 2.0 billion and EUR 2.15 billion. Corporate Center/Other expenditures are forecast to again total about EUR 400 million. The Group's consolidated net profit is projected to grow in line with the operating business in 2013. In addition, the company expects to further increase cash generation and, as a result, to generate sufficient free cash flow to at least cover this year's dividend payment for 2012.
For more information on Standard Chartered or Deutsche Post, or other stocks and bonds we follow, contact our offices at 25688688.
Good day and happy trading!
Kristian Camenzuli
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