FTSE 100	6089.4, -1	Dow	12831.9, -39.8
FTSE 250	10007.4, -110.1	Nasdaq	2426.1, +1.7
FTSE All Share	3095.68, -5.18	S&P 500	1390.95, -5.4
Nikkei	13883.49, -10.88	Hang Seng	25807.91, -106.24
Oil (Brent)	$113.14	Gold	$876.70
Base Rate	5%	10 Yr Gilt	4.661%
£/$	1.965	£/€	1.261

Markets

London - Bumper profits from BP and Shell gave the energy sector a boost yesterday, but failed to provide direction for the wider London market. The blue-chip oil giants dominated the riser’s board on the FTSE 100 Index as they announced combined profits of more than £7bn in the first three months of the year alone. A downbeat opening on Wall Street offset much of the cheer in London, leaving the Footsie down one point to close at 6089.4.

Losses for other big-hitting sectors such as mining and banking also pared back gains seen earlier in the session on London’s leading share index. Oil and gas companies saw their share prices soar regardless, with BP setting the pace, adding 6% to 613p after it unveiled a 48% hike in profits for the period. Rival Shell, which posted a 12% rise in profits to $7.7bn (£3.92bn), followed also with a 6% gain, ahead 112p to 2035p. Gas exploration firm BG Group was also high up the leaders’ board, gaining 10p to 1308p, while Cairn Energy added 1p to 3000p.

Shares in Britain’s biggest mortgage lender Halifax Bank of Scotland dropped nearly 2% as investors digested the news of a £4bn rights issue from the group. Broker Collins Stewart told clients to sell the stock, and the shares dropped 9p to 486.75p. Barclays, another said to be in line for a capital raising move, was also on the back foot, off 10.5p to 460p. HSBC stayed in the black as the City noted good results from Spanish-owned Abbey, strengthening through the session to gain 6p to 871p. Another mover was Friends Provident after the insurer said first quarter sales lifted 11% and it said it had faith in its new strategy. The fading of takeover interest has put shares under pressure recently, but the stock rose 1p to 118.2p.

Falling metals prices saw shares in the big mining companies dominate the fallers’ board. Kazakhmys lost 77p to 1648p, with Rio Tinto down 216p at 6010p and Anglo American 92p worse off at 3249p.

New York - US markets finished mixed again yesterday, with just the Nasdaq making a small gain while the Dow and S&P 500 finished lower. Investors were cautious ahead of the Federal Reserve’s rate decision due this evening and a poor read on consumer confidence kept many stocks lower. The Conference Board said consumer confidence dropped from 65.9 in March to 62.3 in April - a five year low. Elsewhere, the S&P Case/Shiller Home Price Index showed home prices posted record declines in February.

The Dow Jones lost 39.8 points to close at 12,831.9, the S&P 500 fell 5.4 points to end at 1,390.95. The Nasdaq edged 1.7 points higher to finish at 2,426.1.

In the financial sector, Deutsche Bank AG said it would write down $4.2 billion in its first quarter. The company’s CEO said financial market conditions during the quarter were "the most difficult in recent memory". Shares in Germany’s largest bank fell 1.1%. After the bell, Citigroup declined 3.1% after the bank said it plans to sell $3 billion of common stock to boost capital levels.

US light crude for June delivery dropped $3.12 to $115.63 a barrel as workers resumed operations at a Scottish refinery following a dispute. As a result airline shares soared higher, Northwest rallied 22.8% while Delta surged 14.6%. However, oil stocks also improved after Goldman Sachs upgraded the integrated oil sector to "attractive" from "neutral". Chevron finished 2.4% higher, while Conoco Philips gained 1.2%.

COMEX gold for June delivery ended $18.70 lower at $876.70 an ounce.

Treasury prices were almost unchanged, leaving the yield on the 10 year note at 3.82%.

Tokyo - The Nikkei fell 10.88 points to finish at 13,883.49 this morning. Car makers fell after factory output dropped more than expected and the consumer confidence report from the US fell to a five year low. Matsushita soared the most in eight years after forecasting profit that beat analyst’s estimates.

Hong Kong - The Hang Seng is currently 106.24 points lower at 25,807.91. Cnooc Ltd, China’s biggest offshore oil producer, dropped for the first time in three days after the price of crude retreated. On the upside, Ping An Insurance (Group) Co was set for its biggest close in more than three months after it reported higher first quarter profit.

Economics

Bank of Japan rate announcement (April)

The Bank of Japan is expected to maintain the current guidelines for money market operations by a unanimous vote. The April Outlook Report will be released after the meeting, detailing the real GDP year on year growth outlook for FY 2009 (around 1.8 percent). But at the same time, the B0J is likely to stress the uncertainty of this scenario amid strong downside risks stemming from a stagnant US economy and high oil and commodity prices. And its new monetary policy stance will be neutral, thereby allowing it (in a forward looking manner) to assess the likelihood of the projected future paths of the economy and prices, as well as both upside and downside risks, and make policy decisions based on this assessment.

UK GfK Consumer confidence (Apr) 1.30 bst

Consumer confidence has deteriorated sharply in recent months and this trend is expected to continue as credit availability is harder and more expensive to come by. People may feel less optimistic about employment prospects and the cost of living is rising sharply with rapid increases in food and energy bills.

US ADP employment change (Apr)

A 65,000 drop for private payrolls is expected. HSBC’s non farm payroll estimate of -50k assumes a 15k increase in government employment.

US GDP (Q1, advance) 13.30 bst

Q1 GDP is expected to rise 1 percent. HSBC suspect some upside surprise potential may come from inventories, which they think might rise a bit (+3 USD6bn), which would add 0.7ppts to growth. Final sales (GDP ex inventories) will therefore be weaker at 0.3 percent. Consumption appears to be on track to rise a fairly weak 0.8 percent, while residential construction should collapse again, dropping 24 percent. Business inventories are seen rising to 1.4 percent, but there is some downside risk here if IT capex declines outright (a modest 5 percent IT rise is expected). Government spending may be on the weak side (+1.4 percent) as state/local public investment looks to have fallen. Exports are expected to have boomed by 10 percent while imports rose about 6 percent, allowing a small net export contribution of 0.3ppts. This means domestic final sales (GDP less inventories and net expects) was probably flat in Q1.

US FOMC rate announcement (Apr) 19.15bst

HSBC think a 25bp cut is the most likely scenario, although there is a serious change (30-40 percent) that the Fed keeps rates unchanged. A larger 50bp cut is now virtually out of the question. In dissenting at the March meeting ( in favour of a smaller cut), Fisher felt that unconventional measures targeting liquidity strains would be more effective than further reductions in Fed Funds, and given some subsequent success in these measures, this may well be a view that is now more widely shared across the Committee.

If it cuts 25bp, the FOMC is likely to hint that this is the last rate cut for a while, on the grounds that inflation risks have risen and that the tax rebated due to be mailed out from early May might soon boost growth. "Elevated" inflation risks are likely to be linked directly to higher food and energy costs, while Fed speakers have been increasingly vocal about the need to keep inflation expectations contained.

Corporate

Engineering and construction company Balfour Beatty today said its part of a consortium that has been awarded a contract for rail systems work on the Gotthard Base Tunnel in Switzerland, likely to be worth £250m to Balfour Beatty. Transtec Gotthard, a consortium comprising Atel Installationstechnik, Alcatel-Lucent and Alpine-Bau Mayreder and Balfour Beatty Rail, was awarded a contract estimated to be worth EUR1bn by AlpTransit Gotthard for the design, installation and commissioning of rail infrastructure equipment for the tunnel. The longest railway tunnel in the world, it will bypass winding mountain routes to cut a direct route between the north and south for high-speed passenger and heavy freight traffic. On completion, it is expected that the current three hours 40 minutes travel time from Zurich to Milan in Italy will be reduced by about an hour. Work on the project is expected to start at the end of 2009.

Insurer Standard Life today reported an 8% year-on-year rise in total life and pensions new business sales in the first quarter to £4.48bn, helped by a continuing good UK performance. The results beat average forecasts from 11 analysts who expected total new business sales of £4.078bn. Chief executive Sandy Crombie said that that company has delivered "a solid performance in the first quarter against a backdrop of economic uncertainty and volatile markets." Total life and pensions new business sales from the UK, where Standard Life derives most of its business, were £3.52bn, compared with £3.30bn in the same period last year. UK sales were driven higher due in part to an increase in savings and investment sales. Net pension flows also rose due to reduced claims. The company said the outlook for the UK market "is challenging due to market volatility" and the impact of changes of capital-gains tax rules on bonds. It expects to grow sales in Canada on the rebuilding of its retail sales and distribution network. It also expects strong growth in its joint ventures in Asia Pacific.

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: April 30th, 2008 under Asset Management.
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