FTSE 100	5625.9, +96	Dow	11350.01, +3.5
FTSE 250	9145.8, +41	Nasdaq	1280, +1.62
FTSE All Share	2855.69, -43.1	S&P 500	2292.98, +22.65
Nikkei	13463.20, -18.18	Hang Seng	22102.01, +59.66
Oil (Brent)	$134.6	Gold	$928.53
Base Rate	5%	10 Yr Gilt	5.13%
£/$		£/€	1.268

 

Markets

London - UK stocks ended higher on Monday with oil stocks gaining on a record high crude price and miners, led by Anglo American advancing on firmer metals. The FTSE100 closed 96 points higher at 5625.9, but finished the first half of the year nearly 13 percent lower after five years of gains in a row.

Taylor Wimpey ended flat after losing around 5 percent after the company said it was in talks with shareholders and other institutions about raising additional financing, which would most likely be via a placing and open offer. Barratt Developments lost more than 9 percent and Bellway fell 3.8 percent. Fears of a property market crash in Britain mounted after new figures showed approvals for home loans plummeting to a record low and the consumer mood at its bleakest since the onset of the recession in 1990. The Bank of England said mortgage approvals fell 28 percent in May, to just 42,000, around a third of their level a year ago. A survey by Hometrack showed house prices in England Wales fell for a ninth month running in June, leaving them 3.2 percent lower than a year ago.

Energy stocks jumped, tracking strong oil prices. BP, Royal Dutch Shell, BG Group and Cairn Energy added between 0.9 and 4.5 percent.

Miners gained on firmer metals prices. BHP Billiton, Anglo American, Vedanta Resources, Xstrata and Antofagasta rose between 0.5 and 3.8 percent. Rio Tinto rose 2.8 percent after the FT, citing people familiar with the situation, said Lakshmi Mittal, the main shareholder in ArcelorMittal, was looking at entering the takeover battle for the miner. An ArcelorMittal spokesman declined to comment on the report.

Banks continued to suffer, with RBS, HBOS, Barclays, HSBC, Lloyds TSB, Alliance and Leicester and Standard Chartered down between 0.3 and 2.2 percent.

New York - US stocks struggled on Monday at the end of the worst June for the S&P500 and the Dow industrials since the Great Depression, amid rising oil prices and ongoing financial market woes. The DJIA closed just 3.5 points higher at 11350.01, the S&P500 added 1.62 points to close at 1280 and the Nasdaq lost 22.65 points to close at 2292.98. Year to date, the Dow is down 14.4 percent, the S&P500 is 12.8 percent lower and the Nasdaq is off 13.5 percent. Oil stocks Chevron, Exxon Mobil, BP and Sunoco were among the big gainers. Beyond commodities other gainers included biotech and select telecom stocks. But any advance was limited by continued weakness in auto and financial stocks and some selling in technology.

Citigroup, Lehman Brothers and JPMorgan Chase were among the big bank stocks falling. Brokerage Robert W Baird cut earnings and price targets on a number of banks, including Comerica and Wachovia, according to associated press.

H&R Block reported improved quarter sales and earnings that topped estimates, thanks to a strong tax season and the sale of its mortgage unit. The stock gained 3.7 percent.

In economic news, The Chicago PMI rose to 49.6 from 49.1 in the previous months, versus forecasts for a dip to 48. However, any reading below 50 indicates continued weakness in the sector.

In currency trading, the dollar was little changed versus the euro and fell versus the yen.

Treasury prices were barely higher, with the yield on the 10 year note at 3.96 percent.

US light crude for August delivery reached a record high of $143.67 a barrel on NYMEX before pulling back to settle at $140 a barrel, down 21 cents. The national average price for a gallon of regular unleaded gas rose to a record $4.086 from $4.079, the previous day.

COMEX gold for August delivery fell $3 to settle at $928.30 an ounce.  

Tokyo - The Nikkei average closed lower today to set its longest losing streak in nearly four years as exporters fell on a firmer yen, while worries about the economic outlook dampened investors appetite for risk. The Nikkei average fell 18.18 points to close at 13463.20. Bucking the trend, Mitsubishi Corp and other energy linked shares gained after oil hit a new record high above $143 a barrel. The market initially got a boost from the Bank of Japan’s tankan survey that showed business sentiment has worsened less than expected in the past three months.

Exporters fell as a stronger yen curbs their overseas profits when they are brought back home. Canon Inc shed 2.2 percent to Y5,340 and Fanuc lost 4.5 percent to Y9,900.

Major Banks slid after renewed credit worries hit their US peers following analyst reports that predict Merrill Lynch will be forced to raise equity in the third quarter. Mitsubishi UFJ shed 1.3 percent to Y929, while Mizuho Financial Group fell 2.2 percent to Y485,000. Sumitomo Mitsui Financial Group declined 2.1 percent to Y782,000.

Energy related stocks rose after oil prices hit an all time high of over $143 a barrel, boosting the oil and coal sub index by 2.6 percent. Nippon Oil climbed 2.8 percent to Y733 and oil explorer Inpex Holdings added 2.2 percent to Y1.37m.

Economics

UK Nationwide house prices (Jun)

All the housing market indicators continue to point to falling prices. Monthly declines have gained momentum recently and the Nationwide house price index to have posted a further 1 percent decline in June.

UK PMI manufacturing (Jun) 09.30 bst

UK manufacturers are benefiting from a weaker pound, giving them more scope to raise prices in reaction to higher input costs. The CBI industrial trends survey ticked up in June and a small improvement is expected in this index.

US ISM manufacturing (Jun) 15.00 bst

Last months ISM manufacturing survey rose 1 point to 49.6, while respondent comments were muted on sales and concerned on material prices. Both the Empire manufacturing (-8.7, from -3.2) and Philadelphia Fed surveys (-17.1 from 15.6) have been soft this month. New orders and shipments declined on both surveys, suggesting a pullback in activity. Headline ISM manufacturing is expected to fall to 47.

US Construction spending (May) 15.00 bst

Residential construction continues to drop, but a smaller decline is expected in May, with private residential spending falling by 1 percent. Assuming increases for non residential and public construction, total construction spending is seen falling by 0.1 percent.

Corporate

Tanfield warned today that growth would be at significantly lower levels than previously forecasted, after the global credit crunch hurt demand at its main business. Customer demand at its main powered access division, which makes platforms used on construction sites and oil rigs and which accounts for up to 80 percent of projected revenues, has been hurt by worsening economic conditions. The company said the despite the worsening outlook, it would still report year on year growth. A year ago, it reported pre-tax profits of £5.4m on sales of £36.8m for its six months to end June.

Tanfield said its distributors and customers were suffering from a fall off in demand, as access to credit dried up, resulting in capital freezes and postponement of replacement plans. In its electric vehicles division, Tanfield said that while demand has held up, production has slowed, due to supply chain problems. Tanfield said it will now postpone a planned move to a dedicated electric vehicle site and would revise plans to expand to the US. The expansion is now likely to be executed through a joint venture with a business that already has facilities and infrastructure, it said, adding that is already in talks with a number of parties. Tanfield said turnover for the first six months, amounted to £91m, a 36 percent increase from a year ago.

Northgate said its profit for the 12 months to next April would be at similar levels to last year, due to weaker conditions in the used vehicle market. The company said pre-tax profit for last year rose 5 percent to £79.5m, slightly below analyst’s expectations. Revenues were up 10 percent at £578.5m, ahead of estimates, while the dividend was hiked 10 percent to 28 pence. Chairman Philip Rogerson said the firm would be able to adjust if economic conditions were to worsen. He added "If economic conditions were to deteriorate, we believe our business model has the proven flexibility to enable us to defleet rapidly in order to leave us in a strong financial position when markets improve". ABN AMRO analysts said in a results preview note that both economies were under "significant pressure", putting a "sell" recommendation on the company.

London Scottish Bank said late last night that it was in talks with interested parties about a takeover of the company. London Scottish also said it was trying to raise at least £45m in equity capital. The company added "The group’s future will depend of the outcome of the process to raise additional equity capital and the discussions with interested parties in relation to a possible outcome for the group". London Scottish shares closed 3.7 percent lower at 6.52 pence to value to company at £9.3m. The company also posted first half results showing its continuing operations made a pre-tax loss of £7.4m in the six months to end April, wider than the £6m loss made a year earlier. Chairman Peter Cordrey said "The group continued to trade at a loss due to poor performance of its unsecured consumer credit business, and we expect the poor performance to continue until the restructuring and exit from that business has been affected".

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, 2008 under Asset Management.
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