FTSE 100	5479.90, -146	Dow	11382.26, -32.25
FTSE 250	8920.80, -225	Nasdaq	2304.97, +11.99
FTSE All Share	2782.81, -72.88	S&P 500	1284.91, +4.91
Nikkei	13286.37, -176.83	Hang Seng	21823.56, -278.45
Oil (Brent)	$134.6	Gold	$941.45
Base Rate	5%	10 Yr Gilt	5.16%
£/$	1.9930	£/€	1.2579

Markets

London - UK stocks closed sharply lower on Tuesday, with banks, led by RBS, falling on worries about further losses in the sector, while oils and miners slipped after recent gains. The FTSE100 closed 146 points lower at 5479.9 after touching its lowest level in more than three months. Banks suffered heavily after new figures showed Britain’s manufacturing sector contracted in June at its sharpest pace since 2001, while house prices fell for an eight straight month, darkening an already bleak economic outlook. Barclays, RBS, HBOS, HSBC, Lloyds TSB and Standard Chartered were down between 2 and 5.1 percent. Shares in UBS fell to a 10 year low amid speculation it may announce more write downs for the second quarter, potentially of around $5bn. Deutsche Bank fell on worries of more write downs and the threat that revenue will remain under pressure for many months due to the credit crunch, dealers said.

The mining sector was the poorest performing sector, with Anglo American, BHP Billiton, Rio Tinto, Xstrata and Vedanta Resources falling between 3.6 and 4.8 percent after a recent rally. Eurasian Natural Resources closed nearly 12 percent lower after a rival said that Q3 ferrochrome prices settled 6.8 percent higher, less than expected.

Energy stocks slipped after strong gains in recent session on record high crude above $143 a barrel. BP lost 2.4 percent, Royal Dutch Shell lost 2.3 percent BG Group slid 3.5 percent and Tullow Oil lost 5.1 percent.

The UK property price data also weighed on housebuilders, with Taylor Wimpey, Persimmon, Redrow, Bovis Homes and Bellway all closing lower.

Wolseley fell 4.3 percent, also weighed by a price target cut from Goldman Sachs, while Kingfisher lost nearly 5 percent.

New York - US stocks closed higher on Tuesday, with the Dow and Nasdaq pushing off bear market levels, after GM reported a June sales loss that was steep, but not as steep as had been expected. A bounce in some of the recently battered financial stocks also helped the market recover.

The DJIA closed 32.25 points lower at 11382.26, the S&P500 gained 4.91 points higher to close at 1284.91 and the Nasdaq added 11.99 points finishing at 2304.97.

Stocks were volatile throughout the session, turning higher in the late morning after a report showed a surprise pickup in manufacturing activity and then sliding again in the early afternoon as the bank sector slumped. Stocks recovered again in the late afternoon after GM reported that US sales fell 18 percent in June versus a year ago. While that continued the string of big losses for the auto sector, the figure was shy of the 25 percent decline analysts had been looking for. The Dow and the Nasdaq both briefly fell to levels that meet the technical definition of a bear market before bouncing back a little.

Ford Motor reported June US sales slipped 28.1 percent, reflecting the impact of high oil prices and a lack of investor confidence.

Lehman Brothers rose as investor’s mulled talk that the bank may need to put itself up for sale and at a discount. Such concerns sent the stock plummeting on Monday, but Lehman bounced back Tuesday after Morgan Stanley started coverage of the stock with an outperform rating.

American Express gained after UBS upgraded it to neutral from sell as part of a broader upgrade of the credit card sector, saying that the stock is now fairly valued relative to the difficult outlook.

CIT Group rallied on news it is selling its home lending business to Lone Star Funds for $1.5bn and the assumption of $4.4bn in debt. CIT is also selling its mobile home mortgage business for $300m to Vanderbuilt Mortgage and Finance.

UBS slipped after the company said it will reshuffle its board following big sub prime mortgage losses.

In economic news, the Institute for Supply Management said its manufacturing index rose to 50.2 in June beating forecasts for a slide to 48.6. The report showed a big jump in the prices manufacturers pay for raw materials, reflecting the run up in oil prices and other inflationary pressures.

A separate report showed a decline in May construction spending, although it was not as big a decline as had been expected US light crude for August delivery rose 97 cents to settle at $140.97 a barrel on the NYMEX, an all time closing high. The contract moved close to the all time trading record of $143.67 per barrel hit Monday before trimming gains.

The national average price for a gallon of regular unleaded gas rose to a record $4.087 from a record $4.086 the previous day.

In currency trading, the dollar fell versus the euro and the yen Treasury prices fell, raising the yield on the 10 year note to 4 percent from 3.97 percent.

COMEX gold for August delivery rose $16.20 to settle at $944.50 an ounce.

Tokyo - The Nikkei average fell 1.3 percent today to set its longest losing streak in more than 40 years, as worries about the global economy hit exporters such as Canon Inc. Shipping firms extended recent losses after freight charges on the Baltic Dry Index dropped over 2 percent and on worries high oil prices would hurt demand from emerging markets. The Nikkei average closed 176.83 points lower at 13286.37, the lowest close since April 16. It logged its 10th straight negative day and it’s longest

Economics

US ADP employment change (Jun) 13.15 bst

ADP employment has been notably stronger than the official private payroll figures so far this year, with an average monthly increase of 31,000 from January through May, while official BLS private payrolls have dropped by 79,000 per month. A soft ADP reading of 50,000 is expected, suggesting an even weaker result for private payrolls (HSBC est -110,000)

US Factory orders (May) 15.00 bst

Durable goods orders were flat in May, as an increase in aircraft demand offset a pullback in machinery orders. A 1.1 percent rise is expected for non durable orders, boosted by further increases in the oil prices. Total factory orders are seen rising 0.6 percent.

Corporate

CRH said today it expects a "high single digit percentage" drop in pre-tax profit this year due to a weak dollar and an economic downturn in the company’s major markets. CRH said dollar weakness, at current levels, would have an "adverse translation impact" of over E80m on profit. The company said "CRH anticipated that full year 2008 reported profit before tax may show a high single digit percentage decline compared with the record 2007 outturn of E1.904bn", it said in a trading statement.

Marks and Spencer reported a 5.3 percent fall in first quarter underlying sales today, and said the head of its food business was leaving with immediate effect. The company said in a trading update that like for like general merchandise sales fell 6.2 percent in the 13 weeks to June 28, with food down 4.5 percent. It said Steven Esom, director of food, was leaving after a "significantly weaker performance" in that business.

Taylor Wimpey said today that the UK housing market would remain weak at least through 2008 and said it had not been able to conclude a satisfactory rising of equity due to market conditions. The company said housing reservations had declined sharply since its last update in April as it announced the departure of finance director Peter Johnson at the end of the year.

John Wood Group said today that energy market remains strong and the company’s positive momentum had continued. The company said "All divisions are performing well, most notable Engineering and Production Facilities and the board is increasingly confident of delivering another year of strong growth".

Informa today confirmed it has received a bid proposal at 506 pence a share from a consortium of private equity firms, valuing the company at £3.4bn including debt. Responding to press speculation, the group said in a statement that an approach had been made by Providence Equity, The Carlyle Group and Hellman & Friedman. The company said "Discussions continue to be at an early stage and there can by no certainty that an offer will be made". The proposed offer values Informa at £2.15bn, or a £3.4bn including net debt. The purchase price would represent at 34 percent premium to Tuesday’s closing price of 378 pence. Informa said the price assumes no dividends or other declared and paid subsequent to the final dividend for 2007.

Balfour Beatty today said that its trading performance will remain strong throughout the year and the company will make good progress in 2008. This progress is due to particularly strong performances from the company’s US and UK construction businesses, along with its UK and Dubai engineering businesses. The company said in a statement that its confirmed order book is up £400m, or 3.4 percent to £11.8bn since the end of last year on new orders. Progress in the rail segment has been good, while the public private partnerships business is performing at anticipated levels.

An Alabama jury ruled on Tuesday that GlaxoSmithKline and Novartis must pay a combined $114.3m for inflating drug prices paid by the state’s Medicaid programme, Bloomberg News reported. Glaxo was ordered to pay $81m in compensatory damages, while Novartis was ordered to pay $33.3m

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 3rd, 2008 under Asset Management.
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