FTSE 100	5476.6, +50.28	Dow	11288.5, +73
FTSE 250	8656.4, -1.81	Nasdaq	2426.1, +1.7
FTSE All Share	2768.71, +20.44	S&P 500	1262.9, +1.4
Nikkei	13894.4, +30.9	Hang Seng	25914.2, +247.9
Oil (Brent)	$134.6	Gold	$934.15
Base Rate	5%	10 Yr Gilt	5.01%
£/$	1.9823	£/€	1.2623

 

Markets

London - After a initial rise at the open, the FSTE has now slumped and is down over 61 in what looks like could be another volatile session. With all but a handful of stocks in decline Marks and Spencer lead the fallers following a downgrade from Citigroup to a ’sell’ from a ‘buy’ with other retailers following suit after John Lewis announced store sales had fallen for a seventh week out of eight.

New York - The Dow moved into a bear market this week, though it finished yesterday with a bounce, as General Motors’ stock tried to fight back from its lowest levels since the 1950s. The Dow rose 73 to 11288.5, the Nasdaq added 1.7 to 2426.1 while the S&P gained 1.4 to 1262.9.

With the S&P on the brink of a bear market and on Thursday hitting its lowest intraday mark in more than a year, the only question now seems to be how low stocks will go before the next bull move starts.

Yesterday, the economic outlook darkened yet again after reports showing that unemployment remained at an elevated 5.5% rate in June, while other data showed contraction of the services sector. Initial claims for jobless benefits rose by 16,000 to 404,000, after seasonal adjustments, in the week that ended June 28, the US Labour Department said.

The European Central Bank warned about economic-growth worries even as it increased interest rates, indicating the twin pressures on central banks. Shares of GM finished yesterday’s truncated session at 10.12, up 14 cents, or 1.4%, taking back a modicum of its 15% loss Wednesday. The strongest stocks on the Dow were from the commodities and industrial sectors that also suffered a heavy sell off on Wednesday.
United Technologies rose 1.36, or 2.3%, to 61.05; Alcoa rose 67 cents, or 2.1%, to 32.78.

Tokyo - Tokyo stocks ended marginally lower today, marking a 12th consecutive day of losses.

Trading was directionless, with many participants away from the market ahead of Independence Day in the US.

However, shares in the real estate sector were battered, led by a 28% drop in Urban Corp. as credit worries continued to roil the sector after the collapse of Suruga last month.

Hong Kong - Hong Kong stocks were showing good gains intra-day led by Chinese Banks after Industrial & Commercial Bank of China issued a positive earnings estimate. The Hang Seng ended the morning up 234 points at 21477.

Economics

Nothing scheduled for today.

Corporate

Shares in troubled mortgage lender Bradford & Bingley slumped this morning after a Moody’s downgrade prompted US investment firm TPG to withdraw its capital injection plan. TPG had planned to invest £179m in B&B in return for a 23% stake in a move that formed part of an overall capital injection plan aimed at raising £400m. The plan upset at least four major shareholders who backed a rival proposal from UK restructuring firm Resolution Ltd that was rejected by B&B management.

An EGM planned for Monday to vote on the TPG injection plan has been cancelled. The TPG investment and a £258m rights issue, at 55 pence a share was B&B’s second capital injection plan.

It originally intended launching a straight rights issue of £300m at 82 pence a share. That plan was abandoned after B&B’s shares skirted dangerously close to the rights issue price, and because the lender found that its business wasn’t performing as well as previously thought. This prompted speculation that underwriters Citigroup and UBS had threatened to back out of the deal. Moody’s is downgrading B&B’s senior unsecured and long-term debt ratings to Baa1 from A3 while maintaining the short-term rating at P2. Moody’s said this reflected the a substantial deterioration in the bank’s asset quality so far in 2008 as well as the expectation that it will weaken further during the rest of the year, as well as B&B’s obligation to acquire mortgages from GMAC RFC - mortgages which have displayed significantly faster deterioration of asset quality than the bank’s own-originated loan portfolio. The downgrade gave TPG the right to pull out of its earlier deal.

Despite TPG’s withdrawal, B&B said it will still raise the £400m, but now through an enlarged rights issue, supported by a number of the group’s largest shareholders, including M&G Investment Managers, Legal & General Investment Management, Insight Investment and Standard Life Invest.

BSkyB is thinking about making a £2.5bn bid for pay-TV service Digital+, which is owned by Promotora De Informaciones, or Prisa. The possible bid has created a debate among officials at BSkyB and News Corp, which owns a 39.1% stake in BSkyB and is looking into other possible acquisitions in Europe. There hasn’t been a decision on the Digital+ bid yet, sources said, but BSkyB could get financing for the deal due to its good cash flow.

Origin Energy said today its board plans to recommend that shareholders reject BG Group’s hostile A$13.8bn bid, and a separate plan to look at options for its key coal seam gas assets are progressing well. BG unveiled A$15.50-a-share hostile bid last week, the same price that was rejected by Origin’s board after friendly takeover talks just over a month ago. At the time of rejecting the friendly approach, Origin invited proposals as to how best to exploit its coal seam gas or CSG reserves, with options ranging from the sale of its gas tenements to partnership in an LNG project. Origin chairman Kevin McCann said in a statement today that the process is progressing well, with expressions of interest due by 1000 BST Friday.

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 4th, 2008 under Asset Management.
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