FTSE 100	6068.1, -1.5	Dow	12646.2, +52.2
FTSE 250	10098.2, -40.94	Nasdaq	2508.32, +21.62
FTSE All Share	3090.56, -0.72	S&P 500	1398.25, +7.4
Nikkei	14338.5, +214.1	Hang Seng	24494.5, +110.5
Oil (Brent)	$126.09	Gold	$881.70
Base Rate	5%	10 Yr Gilt	4.983%
£/$	1.974	£/€	1.275

Markets

London - House price gloom outweighed gains for energy stocks as the London market dipped into the red yesterday. Retailers, house builders and banks were all well into negative territory as investors fretted over the latest survey from Nationwide that showed a record 2.5% fall in house prices during May. Crude rising back up above $130 a barrel mark buoyed oil firms, but the downbeat sentiment elsewhere saw the FTSE 100 Index close 1.5 points down at 6068.1.

Persimmon was the biggest loser of the day, falling 5%, or 26p to 487.5p. Second tier rivals Taylor Wimpey and Bovis Homes were also down, falling 8p to 85.5p and 19p to 429p respectively. In the fall-out from the house price misery, building supplies firm Wolseley was another casualty, shedding 19.5p to 537.5p, a drop of more than 3%. Kingfisher was also on the back foot, falling 4.2p to 135.7p, with Argos and Homebase parent Home Retail Group slipping 7.25p to 228.75p.

Banks also suffered amid fears that several looming rights issues in the sector may not be fully taken up by shareholders. Royal Bank of Scotland, which has asked investors for £12bn, slipped 6.25p to 231.75p, and Halifax Bank of Scotland, which is calling for £4bn, fell 16.75p to 414.25p.

Oil firms dominated the risers’ board, with Cairn Energy and Tullow Oil near the top with rises of more than 3%. Cairn was 104p better off at 3419p, with Tullow 24.5p up at 922p. BP and Shell - two of the market’s biggest stocks - also rose, adding 7p to 612.5p and 31p to 2188p respectively. Domestic power generator and supplier Scottish & Southern Energy added 14p to 1466p after saying it was targeting nine million customers this year. The group added 700,000 during the year to March after delaying bill hikes to the end of the month.

Top of the risers’ board was Man Group after the investment house posted pre-tax profits of more than $2bn for the year to March 31, as well as a 21% rise in assets under management to $75bn (£37.9bn). Shares in the company were up 5%, or 30.5p to 615p. It was closely followed by miner Eurasian Natural Resources which rose 71p to 1481p after being picked out a sector star by Credit Suisse analysts.

New York - US markets finished higher yesterday as a sharp drop in oil eased investors inflation fears and an upward revision of first quarter GDP growth suggested a recession may be avoided. The government reported that US gross domestic product grew at an annual rate of 0.9%, against an initial reading of 0.6%.

The Dow Jones added 52.2 points to close at 12,646.2, the S&P 500 gained 7.4 points to finish at 1,398.25. The Nasdaq rose 21.26 points to end at 2,508.32.

MasterCard contributed further optimism to investor’s moods after raising its long term profit outlook. The company have benefited from more consumers turning to plastic instead of using cash. Shares in the credit card processor rallied nearly 8%.

Also in the financial sector, JPMorgan Chase & Co climbed 1.7% after a majority of Bear Stearns shareholders, as expected, endorsed JPM’s proposed takeover of the brokerage. A bank spokesman said its $1.5 billion deal to acquire Bear Stearns would be completed today, well ahead of forecasts. Bank of America added 2.2% as expectations built that they would acquire mortgage lender Countrywide Financial. Countrywide surged over 8% as a result.

Retailers were stronger following a number of positive results from the sector. Budget stores Big Lots and Fred’s Inc topped expectations as struggling consumers sought bargains. Big Lot’s jumped 7.5%, while Fred’s finished 5.6% higher.
After the bell, Dell Inc announced quarterly sales and earnings that topped estimates. Shares in the No 2 personal computer maker surged 10% in after hours trading.

US light crude oil for July delivery dropped $4.41 to settle at $126.62 a barrel COMEX gold for August delivery sank $23.30 to end at $881.70 an ounce.

Treasury prices slumped, raising the yield on the 1 year note to 4.08% from 4% late Monday.

Tokyo - The Nikkei jumped 214.1 points to close at 14,338.5 this morning, its highest level in almost five months. Banks led the advance on speculation that higher interest rates will help boost their lending income. Mitsubishi UFJ Financial GroupInc, Japan’s biggest publicly traded bank, surged the most in a month, while Sony Corp gained after the US economy grew more than estimated.

Hong Kong - The Hang Seng is currently 136.7 points higher at 24,520.7. Refiners and airliners lead gains after a drop in crude oil prices eased concern higher fuel costs will erode earnings. China Petroleum and Chemical Corp, the nation’s largest refiner, rose the most in four weeks, and Cathay Pacific Airways Ltd climbed the most in two weeks.

Economics

UK GfK Consumer Confidence (May) 0001 BST

Consumer confidence is expected to deteriorate further on the back of higher oil prices, falling house prices, and a signal from the BoE that further rate cuts are not on the horizon.

US Personal Income & Spending (Apr) 1330 BST/0830 EDT

Muted wage growth and a 0.4% decline in hours worked should keep personal income growth low at 0.2%. Nominal PCE may be boosted by higher gasoline prices and could rise 0.3%, but analysts expect real PCE to be flat, dragged lower by a decline in auto sales. The core PCE deflator should match the core CPI at +0.1%, with the year on year rate staying at 2.1%.

US Chicago PMI (May) 1445 BST/0945 EDT

The American Axle strike has curtailed auto output since the end of February, but the recent agreement at the end of May should mean that employees will soon return to work. Comments in the latest Beige Book noted an adverse impact on business due to the strike, although Chicago District manufacturers in areas like steel, aircraft, energy extraction and mining equipments continued to report strength. Given mixed readings so far from Empire manufacturing and the Philadelphia Fed, analysts look for the Chicago PMI to rise slightly to 49, from 48.3 last month.

US University of Michigan Confidence (May, final) 1500 BST/1000 EDT

The preliminary reading fell 3.1pts to 59.5, reflecting the continued sting from gasoline and food prices along with labour market concerns. Since then, confidence readings have been mixed, as the IBD/TIPP index excluding federal policies rose to 41.8 from 39.4, but the weekly ABC/Washington Post survey fell 2pts to a new low of -49. Overall, analysts think the final reading should be about unchanged. Meanwhile, both 1-year (5.2%) and 5-year (3.3%) median inflation expectations reached new multi year highs in the preliminary reading and remain a key focus, especially since gasoline prices have continued to rise through the middle of the month.

Corporate

Integrated Australian energy company Origin today rejected a revised A$13.62bn takeover approach from BG Group after more than doubling its reserves of coal seam gas or CSG in Queensland. Origin said the 121% increase in its CSG reserves and a A$2.51bn investment unveiled yesterday by Malaysia’s Petroliam Nasional in Santos’ A$7.7bn liquefied natural gas project in Gladstone, had encouraged it to reject BG’s offer. Origin chief executive Grant King said that the price paid by Petronas for a stake in Santos’ coal seam gas reserves indicates that Origin’s proven, probable and possible, or 3P, gas reserves would be worth about A$16bn. Origin talked up the prospect of a bidding war, saying in a statement that it has had "many approaches…from third parties", including approaches from undisclosed parties since the BG bid was announced.

Royal Bank of Scotland has extended the deadline for indicative bids for its insurance businesses amid concern about the level of competitive interest in the £7bn ($13.8bn) auction, the ‘Financial Times’ reported on its website. Citing people familiar with the matter, the ‘FT’ said the deadline for indicative proposals to be submitted has been extended into next week, after two prospective bidders asked for more time to consider whether to bid. The development comes amid fears that China’s Ping An Insurance will not be among those bidding for RBS’s insurance unit, which includes Direct Line and Churchill.

Stockbroker and fund manager Brewin Dolphin today reported a 4.9% rise in first-half pre-tax profit, but cautioned that that the next few months will be affected by global market volatility. "As always our principal risk in the short term is the threat of adverse market movement. Clearly, the next few months will continue to be affected by unsettled financial markets across the globe," executive chairman Jamie Matheson said. Despite difficult conditions, Brewin Dolphin expects a "reasonably stable outcome" from its investment management business in the second-half of fiscal 2008. Pre-tax profit rose 4.9%to £21.8m in the six months ended March 30 from £20.8m in the same period a year earlier. The performance was driven primarily by the group’s discretionary fund management operations. Total funds under management dropped 8.4% to £23.0m in the first-half of 2008 from £25.1m. First-half revenue from continuing operations rose 2.5% to £95.1m from £92.8m a year earlier. Brewin Dolphin declared a final dividend of 3.55p a share, up 5.2% from 3.375p a year earlier. Brewin Dolphin shares closed at 122p yesterday, valuing the group at £256.7m. The stock has fallen 26% since January and 43% over the past 12 months on mounting concerns about trading following the fallout from the credit crunch.

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 30th, 2008 under Asset Management.
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