FTSE 100	6069.6, +11.1	Dow	12594, +45.7
FTSE 250	10057.3, +23.1	Nasdaq	2486.7, +5.46
FTSE All Share	3089.84, +5.21	S&P 500	1390.85, +5.5
Nikkei	14124.47, +415.03	Hang Seng	24313.37, +63.86
Oil (Brent)	$129.81	Gold	$905
Base Rate	5%	10 Yr Gilt	5.004%
£/$	1.973	£/€	1.264

Markets

London - The London market managed to keep its head above water yesterday as oil prices coloured the session’s trading. With oil hovering at around $129 a barrel - compared to last week’s peak above $135 - the likes of British Airways and cruise ship firm Carnival were among the FTSE 100 Index’s winners. But the dip saw oil majors like BP and Cairn Energy lose ground, although the Footsie clung on to an 11.1 point gain to 6069.6 thanks partly to a rush for insurers.

BA was among the notable gainers, firming almost 2%, or 3.5p at 218.25p, as investors cheered prospects of potential relief from mounting fuel bills for the airline. FTSE 250 counterpart Easyjet also benefited, nearly topping the second tier risers’ board with a 6% hike, up 17.25p at 291.75p. Back in the top flight Carnival was among the best performers, 52p better off at 1894p. But oil giant BP was down 11p at 605.5p, and in a poor session for the prospectors, Tullow Oil fell 12.5p to 897.5p and Cairn Energy slipped 56p to 3315p.

Insurers were among the chief beneficiaries as traders moved their money out of the oil and gas sector. Admiral was the leading Footsie riser, up more than 4%, or 35p to 884.5p, with further strong showings from RSA Insurance and Aviva, which gained 2.9p to 134.8p and 12.5p to 620p respectively.

Elsewhere, house builders and property companies - which suffered during a selling blitz on Tuesday - were in better shape. Persimmon was up 4.5p at 513.5p, while property developer Hammerson clawed back some losses to stand 23p ahead at 924p.

Banks were on the back foot in the wake of a flurry of downgrades from Credit Suisse. Lloyds TSB was a notable casualty, down 8.75p at 384.75p, with Royal Bank of Scotland losing 3.25p to 238p. Up-for-sale nuclear power generator British Energy was another company in the red after reporting a sharp fall in annual earnings. Shares were down 12p to 725p.

Elsewhere telecoms group Thus soared 28.5p or 26% to 138.5p after giant Cable & Wireless revealed it had made a preliminary takeover approach for the company.

New York - US markets gained yesterday as investors were lifted by a government report that showed a smaller than expected decline in new orders for durable goods. The US Census Bureau said that new orders for durable goods fell 0.5%, against expectations of a 1.5% decline. Excluding transportation, orders rose 2.5 percent - the sharpest increase in nine months, while orders for electrical equipment and appliances jumped 27.8 percent, the largest-ever increase. However, rising oil prices in the afternoon renewed worries that high energy prices will hurt businesses and their customers, limiting stocks gains.

The Dow Jones climbed 45.7 points to close at 12,594, the S&P 500 added 5.5 points to end at 1,390.85. The Nasdaq rose 5.46 points to finish at 2,486.70.

Shares in technology companies were one of the main beneficiaries of the positive economic data. IBM was at the top of the Dow’s riser’s board, up 1.7%, Hewlett-Packard was lifted 1.8% and Research in Motion advanced 2%. Companies that make expensive machinery also rose. Caterpillar finished 1.5% higher, while Deere’s rose 3.4%.

Financial shares suffered following Citigroup’s decision to cut the price target of insurer AIG from $47 to $41. Citi said the company may need to raise more capital, having just closed a $20 billion capital raising last week. Shares in AIG dropped 4.7% as a result. Regional bank, KeyCorp, tumbled 10.4% after warning that the amount of loans to be written off as not having been repaid will be higher than previously anticipated.

US light crude oil for July delivery climbed $2.18 to $131.03 a barrel. COMEX gold for August delivery slipped $7.80 to $905 an ounce.

Treasury prices sank, raising the yield on the 10 year note to 4% from 3.92% late Monday.

Tokyo - The Nikkei rallied 415.03 points to close at 14,124.47 this morning. Stocks jumped the most in almost two months after orders for durable goods in the US unexpectedly rose in April, easing concern an economic slowdown will subdue spending in Japan’s biggest export market. Sony Corp, which gets a quarter of its sales from the US, sent electronics makers higher, while Canon Inc jumped the most in a month.

Hong Kong - The Hang Seng is currently 63.86 points higher at 24,313.37, also benefiting from the positive economic data from the US. China Mobile Ltd, the No 1 wireless operators by users, advanced for the first time in six days on speculation recent losses were excessive.

Economics

UK CBI Distributive Trades (May) 1100 BST

The retail sector will likely absorb most of the cost of higher oil prices as real discretionary spending power is eroded. However, the slight improvement in the weather in May may offset this factor, leaving the overall index unchanged.

US Initial Jobless Claims (Week 24 May) 1330 BST/0830 EDT

Last week’s initial claims were 365,000, while the 4 week average moved higher to 372,250. Analysts look for 370,000 this week. Continuing claims are still on an upward trajectory, and we look for an increase up to 3.09mn.

US GDP (Q1, prelim) 1330 BST/0830 EDT

Q1 GDP should be revised up to 1.1%, from the advance estimate of 0.6%. Mostly this reflects a bigger contribution from net exports, as the March trade data showed a 5.4% drop in real goods imports. Net exports should now add about 0.7ppt to GDP, versus 0.2ppt in the initial report. The GDP deflator may remain at 2.6%.

Corporate

Multi-utility Scottish and Southern Energy today posted a 14% rise in full-year profit before taxes and exceptional items due to increased generation and supply. The Perth-based power producer posted profit before taxes and exceptional items of £1.23bn for the full year ending March 31, up from £1.08bn during the same year ago period. The figure slightly exceeded analysts’ expectations of £1.2bn, according to a Dow Jones Newswires poll of three analysts. Revenue increased 30% to £15.27bn from £11.87bn a year ago while net profit rose 5% to £872.9m from £830.5m. Scottish and Southern, is now the UK’s second-largest energy supplier with 8.45m customers, a net gain of 700,000 energy supply related customers in a year. Scottish and Southern was the last company to raise its retail gas prices following an increase in wholesale energy prices earlier in the year. Scottish and Southern’s shares have fallen about 11% since the beginning of the year and are down around 4% over the past 12 months.

Outdoor retailer Blacks Leisure Group today unveiled a 1.3% decline in full-year revenue due to "difficult" trading in its Boardwear division and announced the resignation of its Finance Director and Deputy Chief Executive. "The Group has experienced a second difficult year with results ahead of last year but below our earlier expectations," the company said in a statement. Revenue for the full-year ending March 31 fell 1.3% to £294.4m compared to £298.3m last year.

UK house builder Barratt Developments said today it has appointed Bob Lawson as its new Non-executive Chairman, succeeding Charles Toner who will be stepping down as Chairman after almost six years. Lawson will join Barratt’s board from June 1 and will be Chairman at the start of the company’s new financial year on July 1, Barratt said in a statement. Lawson is currently Chairman of the board of Hays, a specialist recruitment company. He was previously managing director for Vitec Group for three years and more recently was chief executive of Electrocomponents for 10 years.

Anglo-Australian diversified miner Rio Tinto today said it expects world demand for minerals to double by 2022 as it detailed its own expansion plans across a range of commodities. "Demand growth remains strong and, combined with supply side constraints, this means there has never been a time at which our options for expansion have been so valuable," CEO Tom Albanese said in a statement ahead of an investor presentation. "With world demand for our products set to double by 2022, we have the reserves and resources in place to keep pace with the market," he said. Rio Tinto’s seminar comes as the company plays defence against a hostile bid from rival BHP Billiton. Rio Tinto in February rejected BHP Billiton’s all equity offer of 3.4 of its shares for every one Rio Tinto share, or about $178 billion at Wednesday’s closing price. The two sides have worked to contrast their prospects for growth and profits, with BHP Billiton earlier this month saying it has outperformed Rio Tinto and has more immediate plans to boost output. Rio Tinto’s share price has slipped relative to BHP Billiton’s, and its London-listed shares on Wednesday closed at an 8.5% discount to BHP’s offer. Rio Tinto today said it would outline new projects, including nickel in Minnesota, coking coal in Mongolia and western Canada, diamonds in India, potash in Saskatchewan and lithium in Serbia.

Origin Energy is poised to reveal it has agreed to an improved takeover offer from the BG Group worth at least A$13.2bn, the ‘Sydney Morning Herald’ reported today. Without citing its sources, the newspaper said it is understood the parties were on Wednesday busy working out the final details, with hopes of announcing the deal as early as Thursday morning. The agreed price was believed to be between A$15 and A$16 a share - valuing Origin as high as A$14bn - up from BG’s initial offer of A$14.70 a share, it said.

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: May 29th, 2008 under Asset Management.
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