FTSE 100	4234.27, -106.44	Dow	8280.74, -223.32
FTSE 250	7374.01, -132.70	Nasdaq	1796.52, -49.20
FTSE All Share	2164.23, -51.55	S&P 500	896.42, -26.91
Nikkei	9876.15, -63.78	Hang Seng	18094.66, -83.39
Oil (Crude)	$66.94	Gold	$930.70
Base Rate	0.5%	10 Yr Gilt	3.765%
£/$	1.636	£/€	1.168
1 month LIBOR	0.655	3 month LIBOR	1.2

 

Markets

London - The FTSE 100 is currently 11.88 points higher at 4,246.15. Reed Elsevier tops the risers board, up 1.53%, with Wolseley following with a gain of 1.4%. Friends Provident drops 7.6% after handing its stake of F&C Asset Management to shareholders as a result of a demerger. Balfour Beatty slips 1.2% after its half yearly update. Royal Dutch Shell causes the biggest drag on the blue chip index after crude prices dropped overnight.

New York - US stocks slumped yesterday following a disappointing jobs report. The Labour Department said employers cut 467,000 jobs from their payrolls in June, following a 322,000 cut in May. Analysts had a predicted a figure of 365,000, leading to stocks being pummelled across the board. Furthermore, the NYSE extended trading by 15 minutes to 4:15pm after connectivity glitches affected orders originating from the trading floor. This enabled traders to execute customer orders affected by system irregularities.

The Dow Jones tumbled 223.32 points to close at 8,280.74 while the S&P 500 dropped 26.91 points to end at 896.42. The Nasdaq slumped 49.20 points to finish at 1,796.52.

All 30 stocks on the Dow were lower, headed up by IBM, which lost 3% and knocked 23.5 points off the blue chip index. Energy companies Exxon Mobil and Chevron Corp followed as the price of crude sank 3.7%. Chevron lost 3.2% while Exxon fell 2.9%.

Deal news did little to lift stocks. Reports that Exelon has improved its offer for rival power generator NRG Energy to $8 billion in stock from $7 billion still left both stocks in negative territory. Exelon slid 4.25% while NRG dropped 4.8%. Elsewhere, Johnson & Johnson said it will buy an 18% equity stake in biotech Elan, for $1 billion. Johnson & Johnson slipped 1.9% as a result.

US light crude oil for August delivery plunged $2.37 to $66.94 a barrel. COMEX gold for August delivery fell $10.60 to $930.70 an ounce. Treasury prices went higher, lowering the yield on the 10 year note to 3.5% from 3.53%.

Tokyo - The Nikkei fell 60.08 points to close at 9,816.07 this morning. Seven & I Holdings led retailers lower after posting a record quarterly decline in profit. Mitsui OSK Lines dropped 3% after commodity cargo fees fell to the lowest level in three weeks.

Hong Kong - The Hang Seng is currently 83.39 points lower at 18,094.66. Cnooc falls 1.2% after crude prices tumbled in the US. Aluminium Corp of China, the country’s largest producer of the material, loses 1.5% after metal prices retreated. 
  
Economics

UK PMI services (Jun) 09:30 BST

The service sector PMI is the most reliable indicator of UK GDP. In May this rose above the crucial 50 level indicating that service sector output is again expanding. Analysts expect a further improvement this month to 52.5.

Corporate

Friends Provident PLC finally unloaded its majority stake in F&C Asset Management PLC Friday, cutting it free of losses at the troubled asset management firm and letting it focus on reviving its core businesses. The insurer handed over the bulk of the 52% holding - worth about GBP170 million based on F&C’s closing share price Thursday - to its own shareholders after a fruitless attempt to sell it to a rival asset manager. Shareholders with at least 2,500 Friends Provident shares were offered one F&C share for every 10 Friends Provident shares they owned, while smaller shareholders were given the option to instead receive cash for their entitlement. The plan had first been announced in October and was approved by shareholders last month. It became effective Friday after a court sanction Thursday. For Friends Provident, the demerger puts a line under an acquisition that analysts say was beset with challenges from the start. The company paid GBP383 million in a 2004 transaction to merge F&C, then owned by Dutch insurance company Eureko BV, with its own ISIS Asset Management arm. Integrating the two investment firms - which by the end of 2005 managed GBP125 billion - proved time-consuming and costly, while shifts in the ways institutions and pension funds allocate their investment money resulted in a steady drain of assets out of the combined company. By January 2008, Friends decided the business "no longer fit" with a new strategy to focus on its U.K. protection and group pensions products. Those markets have recently been shrinking, though, as a weakened economy means fewer new workers joining pension schemes and a reduction in purchases of home insurance and other personal protection. In April, Friends Provident reported a 40% drop in first-quarter new business sales. As Friends Provident sought a buyer for the F&C stake, the asset manager’s share price plummeted 70% amid the global credit crisis, cutting the value of the holding to GBP149 million at Dec. 31, from GBP499 million at the start of 2008. In October, the insurer abandoned the proposed sale and said it would instead pursue a demerger. Jason Hollands, a spokesman for F&C, said the demerger would give it more flexibility to manage its capital base and to pursue potential acquisitions. Resolving the uncertainty about its ownership means investment consultants who recommend asset management firms and funds to clients are putting F&C back on their lists, Hollands added. At March 31, F&C’s funds under management were GBP92.7 billion; including GBP22.2 billion it will continue to manage for Friends Provident until at least 2014. F&C reported a GBP50.5 million net loss in 2008, as investors pulled money out of declining stock and bond markets. Friends Provident held back about 5% of the F&C shares to sell and cover costs related to the demerger. Its shares closed flat Thursday at 68 pence, giving it a market value of about GBP1.6 billion.

Engineering and construction group Balfour Beatty PLC said Friday that trading at the half-year continues to be in line with internal expectations and it anticipates making progress in 2009. The company said trading was boosted by customer infrastructure expenditure, acquisitions and tight cost control. Its order book is in line with the GBP12.8 billion target set at the start of the year, and it has generated net cash of GBP200 million in the first half. Balfour’s building sector performed stronger than last year with particular strength in the U.S. driven by new contracts in North Carolina, Texas and California. Following a sector-wide trend, rail volume has been weak in the U.K., although the company recently secured GBP210 million worth of contracts extensions for London Underground and Network Rail. The U.K. engineering sector continues to be driven by government projects including construction on major road links. In the investment sector, Balfour has reached financial close for three of the company’s four Public Private Partnership projects. The group also reached financial close for the GBP6.2 billion design, build, finance and operate contract to provide additional capacity and to maintain the M25 London circular road.

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Posted: July 3rd, 2009 under Asset Management.
Comments: none

 

FTSE 100	4340.71, +91.50	Dow	8504.06, +57.06
FTSE 250	7506.71, +92.15	Nasdaq	1845.72, +10.68
FTSE All Share	2215.78, +43.70	S&P 500	923.33, +4.01
Nikkei	9876.15, -63.78	Hang Seng	18498.13, +119.40
Oil (Crude)	$69.31	Gold	$942
Base Rate	0.5%	10 Yr Gilt	3.765%
£/$	1.634	£/€	1.160
1 month LIBOR	0.655	3 month LIBOR	1.2

 

Markets

London - The FTSE 100 is currently 37.32 points lower at 4,303.39 as traders look towards the closely watched US jobs data, due this afternoon. Mining stocks hand back some of the previous session’s strong gains in cautious trade, although nerves about a major capital raising in the sector were eased. Rio Tinto said its $15.2bn rights issue was heavily subscribed, and was supported by Chinalco, which took up its full entitlement under the terms of the offer. Tullow Oil falls 2.7% after vague dealing room talks of bid interest in the company from China faded, after helping its stock higher over the previous session. Lower down the market, mid-cap retailer Game Group loses 10.1% after it reported a 15.4% fall in underlying sales in the first half.

New York - US stocks started the new quarter brightly yesterday with all three major indices making gains. Investors were buoyed by reports from the manufacturing and housing sectors. The Institute for Supply Management’s manufacturing index showed a small improvement in June, from 42.8 to 44.8. This still shows that the sector is contracting, but at a slower pace than in May. The National Association of Realtors said pending home sales rose 0.1% in May, against expectations for the level to hold steady from the previous month.

The Dow Jones added 57.06 points to close at 8,504.06 while the S&P 500 gained 4.01 points to end at 923.33. The Nasdaq advanced 10.68 points to finish at 1,845.72.

General Mills helped push Kraft Foods to the top of the Dow leader board. General Mills forecast a stronger than expected annual profit, sending shares 3.9% higher. Kraft Foods jumped more than 5% as a result. Coca-Cola followed, with a gain of 2.5%, as investors bet a decline in the dollar might boost overseas earnings.

AIG was in focus following its annual meeting on Tuesday. Shareholders approved a proposal for a 1 for 20 reverse stock split. The shareholders also ousted the majority of the company’s board, sending shares 22% lower in Wednesday’s trade.

US light crude oil for August delivery fell $0.58 to $69.31 a barrel. COMEX gold for August delivery gained $13.90 to $942 an ounce. Treasury prices were steady, leaving the yield on the 10 year note at 3.53%.

Tokyo - The Nikkei dropped 63.78 points to close at 9,876.15 this morning. Banks went lower on concerns that a merger between Aozora Bank and Shinsei Bank won’t produce a stronger lender. AOC Holdings, which has stakes in South China Sea and North Sea oil fields, slid 1.9% in line with oil prices.

Hong Kong - The Hang Seng is currently 119.40 points higher at 18,498.13. Stocks gained as an expansion in Chinese manufacturing spurred optimism the economy is recovering. Angang Steel, China’s second largest steelmaker, gained 2.3% after the country’s manufacturing expanded for the fourth month.

  
Economics

US Non-farm payrolls (Jun) 13:30 BST/08:30 EDT

Analysts look for non-farm payrolls to fall by 350,000. Payroll employment has shown successively smaller monthly declines since January, including the 345,000 drop in May. The sum of the state-bystate payrolls showed a similar fall of 359,000. Although ADP employment (-532,000) and household employment (-437,000) recorded bigger declines, the trend appears to be improving. The payroll diffusion index rose to 32.7 in May (from 25.8 in April), indicating that a third of industries are now adding workers. So far in June, weekly initial jobless claims have averaged around 615,000, while continuing claims recently recorded its first weekly decline since January. Analysts look for the unemployment rate to rise to 9.6% from 9.4%. Average hourly earnings could rise just 0.1% for the third month in a row, with the year-on-year rate falling to 2.9% from 3.1%.

US Initial jobless claims (week 27 Jun) 13:30 BST/08:30 EDT

Last week’s initial claims rose to 627,000, up from 612,000. The four-week average rose slightly to 617,250. The Labor Department said some states that typically don’t report school year-related layoffs had larger-than-expected job losses in education services. Analysts look for this week’s claims to drop back down to 605,000. Continuing claims for the previous week could decline to 6.73m, down from 6.74m.

US Factory orders (May) 15:00 BST/10:00 EDT

Durable goods orders were stronger than expected in May, rising 1.8%. Nondurable orders could rise by at least 2%, getting a boost from higher oil prices. Analysts see total factory orders rising 1.9%.

Corporate

Game Group reported a fall in underlying sales but an increase in profit margins in its latest trading period. The group forecast first half profit before one off items of between £13m and £16m, down from £36.4m in the previous year. Game said that in the 21 weeks to June 27 group like for like sales fell 15.4 percent. It said the fall was in line with expectations given very strong sales in the comparative period. It said it had seen "good gross margin growth" due to higher margin software and accessory sales being a larger part of the sales mix.

Intermediate Capital Group said today it will turn to shareholders to raise £351m to take advantage of investment opportunities. The rights issue is being offered at a price of 121 pence per share, a 39 percent discount to the ex-rights price based on last nights close. The company said it expects to show a decrease in the number of portfolio companies performing ahead of last year, as the economic environment remains difficult.

WellStream Holdings said today it traded broadly in line with its expectations in the six months to end-June. The group said it was performing strongly operationally, with good progress on BHP Billiton’s Pyrenees project and Seastream’s offshore installation work expected to be completed before year end. Wellstream reports results for the first half on August 20.

Greene King posted a smaller than expected fall in full year profit and said it had benefited from an upturn in trading in recent weeks, driven by a sharp increase in sales of food. Greene King said pre-tax profit for the year to May 3 fell 15 percent to £139.4m on revenues 1.3 percent higher at £942.3m. Analysts expected Greene King to post a profit of £116m for the year. The company held the final dividend at 15.1 pence per share. CE Rooney Anand said "The funds raised by our recent rights issue will further strengthen our position through selective acquisitions. Although the outlook remains uncertain, current trading is encouraging and we look forward with cautious optimism".

---

 

Posted: July 2nd, 2009 under Asset Management.
Comments: none

 

FTSE 100	4249.21, -44.82	Dow	8447, -82.38
FTSE 250	7414.56, -62.65	Nasdaq	1835.04, -9.02
FTSE All Share	2172.08, -22.03	S&P 500	919.32, -7.91
Nikkei	9939.93, -18.51	Hang Seng	18378.73, -149.78
Oil (Crude)	$69.89	Gold	$927.40
Base Rate	0.5%	10 Yr Gilt	3.7%
£/$	1.645	£/€	1.169
1 month LIBOR	0.655	3 month LIBOR	1.2

 

Markets

London - The FTSE 100 is currently 67.16 points higher at 4,316.37. International Power is one of the top performers, up 3.7%, after agreeing to sell its entire Czech business to J&T Group for £738.3 million. Schroders adds 2.7% after Credit Suisse upgraded the stock to Neutral from Under perform. Marks & Spencer gains 3.6% after there trading statement was released. Man Group tops the faller’s board, off 4.5%, after beginning to trade ex-dividend. Compass Group is down 0.4% for the same reason.

New York - Wall Street dropped yesterday but still managed to complete its best quarter in more than a decade yesterday. A weaker than expected consumer confidence report and a slump in oil prices sparked the sell off. The Conference Board said its June Consumer Confidence index fell to 49.3, against expectations of a rise to 55.3.

The Dow Jones dropped 82.38 points to close at 8,447.00 while the S&P 500 fell 7.91 points to end at 919.32. The Nasdaq lost 9.02 points to finish at 1,835.04.

Losses were broad based following the release of the Conference Boards data. Caterpillar caused the biggest weight on the Dow, falling 4.9% and knocking 12.85 points off the blue chip index. International Business Machines followed, knocking 10.66 points off. Financials including Citigroup and JPMorgan Chase dropped as government data showed prime mortgages 60 days or more past due climbed to 2.9% in the first quarter from 1.1% the same time last year.

US light crude oil for August delivery fell $1.60 to $69.89 a barrel. COMEX gold for August delivery slid $13.60 to $927.40 an ounce. Treasury prices went lower, raising the yield on the 10 year note to 3.51% from 3.47%.

Tokyo - The Nikkei slipped 18.51 points to close at 9,939.93 this morning. Consumer lenders and airlines were among the biggest losers following a media report that Orix Corp and All Nippon Airways will sell shares. Orix, the nation’s largest non bank financial company sank 4.8%, while All Nippon dropped 5.9%.

Hong Kong - The Hang Seng fell 149.78 points to 18,378.73 this morning, although the index still managed its best quarterly gain in almost 10 years. Property stocks led the drop on the day as investors locked in profits from one of the best performing sectors over the quarter.
  
Economics

UK PMI manufacturing (Jun) 09:30 GMT

Analysts expect the PMI survey to improve further in June as weaker sterling and signs of an improvement in global activity start to stimulate UK manufacturing activity.

US ADP employment change (Jun) 13:15 BST/ 08:15 EDT

Analysts expect June ADP private employment to fall by 370,000. Temporary hiring related to next year’s census rose 62,000 in April and fell 18,000 in May, but the bulk of the hiring will not occur until 2010. The forecast of -350,000 for non-farm payrolls assumes a 20,000 increase in government jobs.

US ISM manufacturing (Jun) 15:00 BST/10:00 EDT

ISM manufacturing has surpassed expectations each month this year, by an average of 1.5pts. In four out of the past five months, the upside surprise was accompanied by higher new orders, which climbed by an additional 3.9pts to 51.1 in May. So far in June, the Empire index (-9.4 from - 4.6) was underwhelming, with shipments declining and new orders holding about steady. However, the Philadelphia Fed (-2.2 from - 22.6) rose strongly and is nearly at breakeven. Shipments and new orders each rose by 21pts in the Philadelphia-area survey, while employment climbed 5pts but remains deeply negative at -21.8. Analysts expect June ISM manufacturing to rise to 47.5, from 42.8 in May. The price paid index could climb to 48, up from 43.5.

US Construction spending (May) 15:00 BST/10:00 EDT

Non-residential construction has risen for three straight months, boosted by increases in areas such as lodging, transportation, communications, and power. Office and commercial construction are still trending lower, as vacancy rates continue to rise. Meanwhile, residential construction rose 0.6% in April, only the third monthly increase since March 2006. Analysts look for total construction spending in May to be unchanged. US Pending home sales (May) 15:00 BST/10:00 EDT

Pending home sales rose by 6.7% in April and have risen by a combined 12% over the past three months. Sales have started to creep higher in the Northeast, Midwest, and South, while pending sales in the West are down 18% since last September, possibly reflecting slower sales of foreclosed homes. Analysts look for overall pending homes sales to rise by 1% in May.

Corporate

British Airways and trade unions representing cabin crew and ground staff will continue talks today over changes to working conditions despite an end-June deadline for a resolution set by the airline. The company said "Talks have been adjourned and will restart tomorrow". CE Willie Walsh has been trying to drive through cost cuts at the airline in what he has described to staff as a fight for survival. Measures have included voluntary redundancy and staff, including Walsh, agreeing to work for free during July. Pilot’s union BALPA has already urged pilots to accept a deal under which they will receive shares in the company in return for a pay cut.

Standard Chartered is in talks to purchase assets in China and India owned by RBS, a source with direct knowledge of the matter said today. Standard Chartered’s pursuit of the units comes as RBS tries to wrap up the sale of its retail and commercial banking divisions in Asia. The initial plan was to sell the entire group to one buyer for at least $2bn. But that effort failed, and the process is now focused on selling various parts to separate buyers, sources involved with the process say. ANZ said in May that it had submitted a non binding bid for the RBS assets and had raised A$2.5bn in a share sales to both fund the acquisition and strengthen its balance sheet. ANZ is in talks to buy RBS units in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia. The report said Standard Chartered was eyeing the RBS Malaysian assets too.

RBS is refocusing on its core businesses and plan to exit or shrink in up to 36 of the countries where it operates. The bank is selling its commercial and retail banking units in Asia, and keeping its investment banking business. An RBS spokeswoman said "We are well advanced with the sale process, however, due to regulatory constraints and the confidentiality of the process we will not be commenting on any individual bidders or elements of the transaction process until its completion". The Asian assets for sales include 28 branches in India, where RBS has more than 1.3m customers, 20 in Indonesia, where it has the largest foreign owned bank network, and 17 in Taiwan, serving over 1 million customers. RBS has 13 branches in China. RBS is likely to fetch close to $1bn from the sales of its Asian assets than the $2bn that had earlier been expected.

The three main contenders for the Asia assets have been ANZ, HSBC Holdings and Standard Chartered. It was not clear today where HSBC stood in the process. The bank could not be reached immediately for comment. An ANZ spokesman Kevin Foley said "We have already earlier this year said publicly that we were involved in that process, but the outcome at this stage is unknown".

WSP said today trading for the first half of 2009 was in line with its expectations as its business from the public sector remained stable. The company said the private sector continue to be difficult across all territories with a marked slowdown in its businesses in the UK, United States and particularly in the Middle East. They added "The ongoing lack of liquidity in Dubai is affecting both the resolution of existing contracts, which remains extremely slow, and conversion of the pipeline of the future projects". The group said its public sector activities remained stable with its businesses in the UK, Northern Europe and the US were trading well. WSP Group said it was well financed with a £150m committed credit line to 2013, and that while net bank debt was higher than last year end, it was comfortably within its banking covenants.

British Polythene Industries said today first half profit would be comfortably ahead of its prior view, mainly due to more stable input costs, lower expenses and slightly better than expected demand from some sectors. Profit for the six months ended June 30 will be ahead of its earlier forecast even after accounting for the £2m charge from plant closures and restructuring, the company said. The company said demand from the horticultural sector for packaging for garden composts was better than it has been in many years, but construction demand remained depressed. British Polythene also said its polymer suppliers were pressing for increases in polymer prices.

Anite Plc posted a higher full year pre-tax profit on favourable currency movements, but forecast lower profit for the current year due to additional investment in a mobile technology and customer changes in its travel business. The company said it expected lower profit for the current financial year, especially in the first half. CE Christopher Humphrey said "I expect the current trading year to be challenging, particularly in the first half, given the impact of our additional investment in LTE (Long term Evolution) and the effect of customer changes in Travel". LTE helps network operators to support more subscribers on their spectrum allocations at a reduced cost. Anite plans to spend £4m more on its LTE solutions, it said. Anite raised its final dividend to 0.65 pence per share from last year’s 0.6 pence per share. Pre-tax profit was £18.1m for the year ended April 30, compared with £16.7m in the previous year. Revenue fell 3 percent to £90.1m.

John Wood Group said today its performance in the year to date remains in line with expectations. The company said "Although the oil price has strengthened over recent weeks, market conditions remain broadly similar to those outlined in our Interim Management Statement issued on May 13". Wood Group added that it believes the longer term market fundamentals for its services and products remain strong.

The above details are provided for information only and are not intended to be construed a solicitation for the sale or purchase of any particular investment nor as specific investment advice.

 

 

 

Posted: July 1st, 2009 under Asset Management.
Comments: none

 

FTSE 100	4294.03, +53.02	Dow	8529.38, +90.99
FTSE 250	7477.21, +90.95	Nasdaq	1844.06, +5.84
FTSE All Share	2194.11, +26.82	S&P 500	927.23, +8.33
Nikkei	9958.44, +174.97	Hang Seng	18578.85, +50.34
Oil (Crude)	$71.49	Gold	$940.70
Base Rate	0.5%	10 Yr Gilt	3.62%
£/$	1.669	£/€	1.1848
1 month LIBOR	0.655	3 month LIBOR	1.2

 

Markets

London - The FTSE 100 is currently 5.99 points lower at 4,288.04. United Utilities leads the faller, down 2.8%, after JPMorgan downgraded the stock to Neutral fro Overweight and cut its price target from 850p to 580p. Wolseley tops the risers board, adding 5.8%, after saying that Ian Meakins was replacing its chief executive Chip Hornsby. Meakins was recently Chief Executive of foreign exchange and payments business Travelex Holdings and ran Alliance UniChem. Mining stocks are also prominent following rising metal prices. BHP Billiton adds 1.8%, Vedanta Resources gains 1.5% and Kazakhmys advances 1.1%.

New York - US markets finished higher yesterday as a rise in the price of oil bolstered energy shares. The approaching quarter end also helped stocks as fund managers picked up the quarters big winners in a process known as "window dressing". Investors also had one eye on the trial of Bernie Madoff, who was sentenced to the maximum 150 years in prison for orchestrating the biggest Ponzi scheme in modern history. It is thought that Wall Street will be pleased with the verdict; however, it may lead to increased government regulation of money management.

The Dow Jones rose 90.99 points to close at 8,529.38 while the S&P 500 added 8.33 points to end at 927.23. The Nasdaq gained 5.84 points to finish at 1,844.06.

US light crude oil for August delivery jumped $2.33 to $71.49 a barrel. Exxon Mobil gave the Dow its biggest lift, rising 2.2% followed by Chevron Corp, which rose 7%. Elsewhere, Microsoft managed a 2.2% gain after Deutsche Bank raised its price target on the stock, saying the software manufacturer’s Windows operating system is "poised for rapid production". The only loser on the Dow was Alcoa, falling 3%, after FBR Capital downgraded the stock to Under perform from Market Perform.

COMEX gold for August delivery slipped $0.30 to $940.70 an ounce. Treasury prices went higher, lowering the yield on the 10 year note to 3.48% from 3.54%.

Tokyo - The Nikkei jumped 174.97 points to close at 9,958.44 this morning after commodity prices climbed and the outlook for steel improved. Japan Petroleum Exploration, the nation’s second biggest oil explorer, climbed 7.2%. Nippon Steel, Japan’s largest maker of the alloy, added 3.6% after a government report said declines in steel output are expected to slow.

Hong Kong - The Hang Seng is currently 50.34 points higher at 18,578.85. Energy shares go higher after crude oil prices rose and China increased rates for gasoline and diesel fuel. While banking stocks improve on speculation that lending continued to grow in June.

 

Economics

UK GDP (Q1, third release) 09:30 BST

While the most likely outcome is that GDP growth is unrevised at -1.9% on the quarter, there is a chance it may be revised up. In this final estimate of GDP we are given the full national accounts, which include the income breakdown of GDP. The focus will be on the household sector savings rate. This leapt up to 4.8% in the final quarter of last year (from just 1.7% in Q3 2008) with little discernible impact on consumer spending, as falling interest rates and oil prices increased disposable income. Interest rates fell further in the first quarter, but this will, to some extent, be offset by a rise in unemployment over the quarter, so analysts expect the saving rate to dip slightly to 4.4%. The Bank of England noted in last week’s Treasury Select Committee hearings that consumer spending has proved more resilient than anticipated. The GDP forecast contained in the May Inflation Report had incorporated a steeper rise in the saving rate.

US S&P/Case-Shiller home prices (Apr) 14:00 BST/09:00 EDT

The Case-Shiller home price index for 20 metropolitan areas has fallen for 32 months in a row, including declines of 2% or more for the past six months. However, other measures such as the FHFA house price index and Radar Logic home price data are suggesting the declines may be starting to slow. Analysts look for the Case-Shiller index to fall 1.0% in April, with the year-on-year rate of change rising slightly to -18.5%.

US Chicago PMI (Jun) 14:45 BST/09:45 EDT

In contrast to the other main manufacturing surveys, the Chicago PMI took a step backwards in May, falling to 34.9 from 40.1. Chicago-area comments in the June Beige Book noted weak demand from abroad (apart from Asia) and negative comments from metals and autos-related industries. Still, analysts expect the Chicago index to make up some of the gap to the other surveys over the next few months, and look for the June reading to rise to 40.

US Consumer confidence (Jun) 15:00 BST/10:00 EDT

Analysts look for June consumer confidence to fall slightly to 54.5, from 54.9 in May. The present situation index appears to have bottomed out in March and should begin to trend higher, assuming labour market declines continue to moderate. Analysts look for this series to rise to 31.5 from 28.9. However, the outlook for the expectations index could be choppy after climbing 45pts over the past three months, and analysts expect a 2pt drop to around 70. Gasoline prices have been rising since the beginning of the year. The weekly ABC News consumer index has fallen 11pts since the middle of May, and the latest Michigan consumer expectations reading for June fell by 4pts.

 

Corporate

HMV posted an 11.5 percent rise in annual profit as it benefited from the demise of smaller rivals, and said it was upbeat about its new financial year despite a weak economy. The firm said it made profit before tax and one off items of £63m in the year ended April 25. Analyst’s forecasts were £62m. Sales from continuing operations rose 4.4 percent to £1.96bn and the dividend was kept at 7.4 pence a share. CE Simon Fox said "Whilst we are cautious about the economic environment, at this very early stage in the year we are confident of our plans for the current financial year". HMV has responded to the competitive threat by widening its focus. It has entered the live music and ticketing markets, is trialling digital cinemas in partnership with Curzon and selling mobile phones in a deal with Orange.

Petrofac said today it expects to start production from the Don Southwest field in the UK North Sea in the next few days. The company said its total backlog is expected to be about $8bn at end of June and that it anticipates its gross cash balances to be around $850m. Petrofac reiterated that it has had a good start to the year and is increasingly confident that 2009 will be another year of strong growth.

Arriva said slower revenue growth at its key UK rail franchise Cross-Country would weigh on first half results, although the rest of the group had performed as expected. The company said in a statement CrossCountry revenues grew 2.4 percent in the six months to end June, but would need full year growth of 10 percent to maintain 2008 profit levels. The company said "The group results for the six months will reflect the lower revenue growth rates in CrossCountry, and are otherwise expected to be broadly in line with management’s overall expectations".

Carpetright posted a 72 percent slump in full year profit and slashed its dividend, reflecting the impact of recession on sales of discretionary items. The company said "We remain cautious about short term prospects, but are confident that the investment we have made in our stores, ranges, services, cutting and distribution centre and IT systems will support future growth". Carpetright made an underlying pre-tax profit of £17.2m in the year to May 2. This compares with analysts consensus forecast of £18m, and £62.1m in the previous year. Total revenue fell 7.4 percent to £482.8m. The group cut its final dividend to 4 pence from 30 pence last time, making 8 pence for the year, down from 52 pence.

Scott Wilson posted an 8 percent fall in full year adjusted pre-tax profit, and said full year dividend increased 11 percent to 4 pence, a share. Adjusted operating profit remained unchanged at £22.6m. Chairman Geoff French said "We do not expect growth in our UK business over the next year but we do see significant opportunities for further growth in our international markets". He added the group is already established in both China and India, two major markets that continue to grow despite the recent economic difficulties. The company said adjusted pre-tax profit for the year ended May 3 was £22m compared with £23.9m a year ago. Revenue, including share of joint ventures, rose 11 percent to £260m. The year also included an exceptional charge of £7m due to redundancy costs and losses incurred as a project in the Middle East was indefinitely postponed.

Yell said it had started a refinancing process, involving extending the maturity and terms of its debt facility. The company said it would also talk with its main shareholders, with the process expected to complete in the autumn. Yell said advertising spend had fallen markedly since January 1, but it believed it had outperformed the market and trading for the first quarter was in line with its expectations. The company said second quarter revenue was expected to be about 17 percent down year on year and earnings before interest, tax, depreciation and amortisation would be about 30 percent lower.

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Posted: June 30th, 2009 under Asset Management.
Comments: none

 

FTSE 100	4241.01, -11.56	Dow	8438.39, -34.01
FTSE 250	7386.26, +42.95	Nasdaq	1838.22, -8.68
FTSE All Share	2167.29, -3.11	S&P 500	918.9, -1.36
Nikkei	9783.47, -93.92	Hang Seng	18510.12, -90.14
Oil (Crude)	$69.16	Gold	$941
Base Rate	0.5%	10 Yr Gilt	3.66%
£/$	1.653	£/€	1.1793
1 month LIBOR	0.655	3 month LIBOR	1.2

 

Markets

London - The FTSE 100 is currently 8.76 points higher at 4,249.77. Lloyds gains 3.2% after Goldman Sachs upgraded the stock to its Conviction Buy list. Insurance broker, Admiral, advances 3.2% after Credit Suisse upgraded the stock to Outperform from Neutral. Serco rises 2.2% after reporting good first half figures and saying it was on track to meet its 2009 forecast.

New York - The Dow Jones and S&P 500 finished lower on Friday to end their second consecutive week in negative territory. Stocks have stumbled recently, following three months of strong gains, as investors wondered whether the market has got ahead of itself after some mixed economic reports. On Friday this was apparent from data on personal income and saving. The Commerce Department said that personal income rose 1.4% in May, topping expectations. However, rather than spend, consumers have opted to save. Personal saving as a percentage of income rose to 6.9% in May from 5.6% in April.

The Dow Jones fell 34.01 points to close at 8,438.39 while the S&P 500 edged 1.36 points lower to 918.90. The Nasdaq added 8.68 points to finish at 1,838.22.

In corporate news, KB Home tumbled 9% following its latest figures. The homebuilder reported a second quarter loss that was bigger than expected. Also in the sector, Lennar said its second quarter sales and earnings dropped from a year ago. However, new home sales and orders have picked up since the first quarter, resulting in shares slipping just 0.1%.

Elsewhere, Palm impressed investors with a narrower than expected fourth quarter loss, due partly to strong demand for its new Pre Smartphone. Shares in the company surged 16% higher.

US light crude oil for August delivery fell $1.07 to $69.16 a barrel. COMEX gold for August delivery added $1.50 to $941 an ounce. Treasury prices were almost unchanged, leaving the yield on the 10 year note at 3.54%.

Tokyo - The Nikkei dropped 93.92 points to close at 9,783.47 this morning after two brokerages announced plans for public share offerings. Daiwa Securities Group tumbled 12% while Mizuho lost 3.4% after announcing their intentions to raise cash, with the latter potentially starting the process as early as this week.

Hong Kong - The Hang Seng is currently 90.14 points lower at 18,510.12. Commodity related shares lead the decline after oil and metal prices fell. Cnooc, China’s biggest offshore oil producer, loses 1.9% while Jiangxi Copper, the nation’s biggest producer of the metal, slid 2.5%.

 

Economics

UK Mortgage approvals (May) 09:30 GMT

As discussed in the latest UK Housing Market Chartbook, analysts think the level of housing market activity will continue to improve over the course of the year as credit conditions slowly loosen. The British Bankers Association (BBA), which represents more than 60% of the total market, reported a further rise in mortgage approvals in May which would be consistent with this particular measure rising to 47,000. Unsecured lending, however, is likely to remain weak.

Corporate

Serco said today it remained on track to meet expectations for 2009 thanks to a sustained high level of activity in the first half. Serco said it had won a five year contract with the Australian government, worth £180m, to manage and operate seven adult immigration detention centres. Serco was the preferred bidder for the project. The company said it expects a "modest increase" in working capital investment in the first half compared to last year.

Informa is trading in line with its expectations for the full year despite very challenging business conditions, it said today. The company said it expected to be able to maintain full year adjusted operating profit margins at 2008 levels thanks to cost cutting. Informa said restructuring costs relating to savings measures incurred this year to date were expected to be about £10m, with annualised savings estimated at about £20m. Informa said it was reducing volume in its events and training business to protect profitability in the face of weak demand. Informa said last month it planned a two for five rights issue to raise about £242m to cut debt, and said first quarter revenues rose, mainly due to positive currency translation effects. Informa also proposed last month a new corporate structure, under which it would remain listed in London but would be incorporated in Jersey and tax resident in Switzerland, to protect its historic tax rate of about 26-27 percent.

ASOS Plc posted an expected 93 percent rise in full year profit and sad it was confident of another year of strong growth. The group made a pre-tax profit of £14.1m for the year to March 31. This compares with analysts forecasts of £14.2m, and £7.3m in the previous year. Sales increased 104 percent to £165.4m but growth has slowed to 52 percent for the 13 weeks to June 26.

Hargreaves Lansdowne expects full year pre-tax profit to be slightly ahead of the top end of market expectations of £69.1m, it said today. The firm said revenues for the 11 months to end May are around 10 percent ahead of revenues a year ago, it said. The value of assets held within Vantage, the group’s service offering funds and tax advantaged products, rose 15 percent to £10.6bn at the end of May from the end of March. Hargreaves Lansdowne also said that it saw "nothing overtly damaging to our business model" in last week’s FSA consultation paper of the future of the retail investment industry.

Titan Europe warned of a first half loss, and said it expected revenue for the period to be 35 percent lower than a year ago due to further weakening in its markets during the second quarter. The company also said it had cut 35 percent of jobs since the beginning of the year to the end of May. Titan Europe said trading conditions remained difficult, with the construction market continuing to be severely hit by the global recession. It expects construction market volumes to be down by about 50 percent and agricultural and mining markets to be down by 25 percent to 30 percent. However, Titan Europe said there are signs of small improvements in order books in the later months of the current year. Trading performance for the year ending December 31 remains in line with market forecasts, the company said.

Vodafone is considering buying T-Mobile in a move that would make the firm the biggest mobile phone operator in the UK, the FT reported today. Vodafone is interested in acquiring T-Mobile, even though the deal may be blocked by regulators, the paper said. Vodafone has a 25 percent share of the UK market, behind 02. T-Mobile (owned by Deutsche Telekom) has a 15 percent share. Deutsche Telekom has appointed JPMorgan to advise on "strategic options", the newspaper said. Vodafone has previously announced a £1bn cost cutting plan. It was forced to write off £5.9bn in the 12 months to the end of March - mostly related to its Spanish business, as its pre-tax profits fell 53.5 percent to £4.2bn from £9bn a year earlier.

Senior said today it continued to trade satisfactorily with profitability in line with its expectations for the first half of 2009. Strong cash generation and currency benefits have helped the company to reduce its net debt significantly more than anticipated in the six months to June 30, Senior, which makes aerospace and automotive components, said. The company said its customers Boeing and Airbus had seven year order books but for the first five months of the year they reported a combined net order in take of only 21 aircraft, as there were 76 cancellations. However, Senior said it was strongly cash generative and financed for the longer term. The company said "Whilst the group’s end markets are expected to remain challenging for the foreseeable future, Senior is gaining market share, and can look forward to significant future organic growth from new aircraft programmes such as Boeing 787 and Joint Strike Fighter". The company saw a modest improvement in production of land vehicles outside of North America and a further weakening of the business jet market in the second quarter.

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The above details are provided for information only and are not intended to be construed a solicitation for the sale or purchase of any particular investment nor as specific investment advice.

Posted: June 29th, 2009 under Asset Management.
Comments: none