FTSE 100	5312.60, -40	Dow	11131.08, -239.61
FTSE 250	8716.70, -151	Nasdaq	2264.22, -46.31
FTSE All Share	2700.01, -22.38	S&P 500	1234.37, -23.39
Nikkei	13353.78, +19.02	Hang Seng	22221.52, -465.69
Oil (Crude)	$124.73	Gold	$927.70
Base Rate	5%	10 Yr Gilt	4.961%
£/$	1.995	£/€	1.2661

Markets

London - Airline stocks were under pressure in London yesterday after warnings of losses from budget carrier Ryanair. The Dublin-based company’s 85% fall in first-quarter profits weighed down rivals Easyjet and British Airways, while higher crude oil prices added to concerns over fuel bills. A poor opening on Wall Street after disappointing corporate news added to the downward momentum as the FTSE 100 Index closed 40 points lower at 5312.6.

British Airways was among the leading fallers - off almost 5% or 12.25p at 234.5p as Ryanair said it could make a full-year loss of up to EUR60m (£47.3m) if oil prices remained high and fares fell by 5%. Easyjet took even greater damage in the FTSE 250, shedding 26.75p to 308.75p, or 8%. 

In the top flight, HBOS was the worst performer with a 22.75p dip to 287.5p, reflecting nerves ahead of results later this week. Speculation over the weekend suggested HBOS could lose top spot in the mortgage market, while half-year profits are expected to be more than 50% lower at around £1.3bn. Analysts said Thursday’s figures were likely to uncover more big write-downs and slowing revenue growth. Among other banks, Royal Bank of Scotland was also lower, off 8.75p to 206.25p, amid speculation it might call off the sale of its insurance division. RBS sold its 50% share in the Tesco Personal Finance joint venture for £950m.

Miners boosted by stronger metals prices ensured the Footsie limited its losses, with Antofagasta up 36p at 540p and Kazakhmys 60p higher at 1363p as the sector accounted for the top eight risers. 

The firmer oil prices of above $124 a barrel meanwhile helped BP and Royal Dutch Shell, up 2p to 519.5p and 16p to 1818p respectively, ahead of results this week.

New York - US markets fell yesterday as continued concerns over the credit crisis and the battered US economy drove investors to sell. Financial shares were again the big losers after federal regulators said late on Friday it closed First National Bank of Nevada and First Heritage Bank NA of California.

The Dow Jones dropped 239.61 points to close at 11,131.08, the S&P 500 fell 23.39 points to finish at 1,234.37. The Nasdaq tumbled 46.31 points to end at 2,264.22.

Lehman Brothers Holdings Inc went lower after an analyst at Merrill Lynch said the firm may post a third quarter loss and face a round of fresh write downs on its residential mortgage portfolio. Shares in the 4th largest US bank plummeted 10.4%. Elsewhere in the sector, Merrill Lynch fell 11.6%, while Citigroup shares lost 7.5% and Bank of America shares declined 5.1%.

Verizon Communications declined 2.5% after reporting quarterly earnings that grew 12%. The firm said profits were lifted by growing wireless operations, despite a shift away from land lines. Revenue also came in short of expectations. Apple caused the biggest drag on the Nasdaq, with shares in the company losing 4.8%. 

On the upside, Kraft Foods surprised investors with stronger than expected profit. Shares gained 4.9% as a result.

US light crude oil for September delivery rose $1.47 to $124.73 a barrel. COMEX gold for August delivery added $0.90 to close at $927.70 an ounce.

Treasury prices gained, lowering the yield on the 10 year note 4.01% from 4.11% late Friday.

Tokyo - The Nikkei dropped 194.33 points to close at 13,159.45 this morning. Nomura Holdings Inc, Japan’s biggest brokerage, sank to a near two week low after the International Monetary Fund said there’s no end in sight to the US housing slump. Mitsui OSK Lines Ltd led the shipping lines lower after cargo rates for commodities fell for a 12th straight day.
Hong Kong - The Hang Seng is currently 465.69 points lower at 22,221.52 this morning. Cathay Pacific Airways Ltd led losses among airlines after oil prices climbed for a second day. Agile Property Holdings Ltd dropped as JPMorgan Chase & Co cut its rating on shares of Chinese property developers.

Economics

UK Mortgage approvals (Jun) 09.30bst

Mortgage approvals according to the British Bankers Association fell 67 percent from the level a year ago in June. The total mortgage approvals data from the BoE adds the building societies and specialist lenders to the approvals from the BBA. Given that banks have been gaining market share from the building societies and specialist lenders in the past few months, it looks likely that total mortgage approvals will fall by at least the same rate implied by the BBA figures. Consumer credit is also expected to edge down as banks begin to tighten unsecured credit lines.

UK CBI distributive trades (Jul) 11.00 bst

Recent issues with the retail sales data from the Office for National Statistics will lead policymakers to place more emphasis on the various retail surveys. Activity in the retail sector is expected to continue trending down on the back of elevated energy and food prices, falling house prices and dismal consumer sentiment.

US S&P/Case Shiller home prices (May) 14.00 bst

The OFHEO purchase index fell 0.3 percent month on month in May (-4.8 percent year on year), a smaller than expected decline. Meanwhile, the Case-Shiller composite 20 index fell 1.4 percent month on month in April, after declines of 2 percent or more in each of the previous five months. A drop of 1 percent in May is expected, with the year on year rate falling to a new low of -16 percent, from -15.3 percent in April.

US Consumer confidence (Jul) 15.00 bst

Oil prices have declined and stocks have rebounded a bit since Mid July. So far, the various measures of consumer confidence have failed to show any significant recovery. The ABC/Washington Post survey has been steady at 41 for the past three weeks. The July preliminary Michigan survey was close to unchanged at 56.6. In this months Conference Board survey, the expectations component is seen rising to 45 from 41. However, weak employment conditions may put further downward pressure on the present situation index, which is seen falling to 63 from 64.5. Total consumer confidence could rise to 52, up from 50.4 in June.

Corporate

United Business Media reported an 11 percent rise in adjusted first half operating profit and said it was on track to deliver a good performance for the full year. Adjusted operating profit rose to £90.2m, adjusted earnings per share rose 15 percent to 30.1 pence and sales rose 10 percent to £445.6m. UBM said events, business information and news distribution generated 85 percent of its profits in the quarter. CE David Levin said "We are on track to deliver another good full year performance".
Bodycote posted a 5 percent rise in first half profit today and said all of its markets, apart from automotive, remained resilient. Bodycote recorded pretax profit of £44.7m in the six months to end June as sales grew 20.5 percent to £382.6m.

BP said today second quarter net profits soared and beat analysts expectations thanks to high oil prices. BP said its replacement cost net income rose 6 percent to $6.85bn. The replacement cost result, which strips out unrealised gains from changes in the value of fuel inventories, was dampened by a $2bn non cash charge related to long term gas sales contracts which accounting rules force BP to treat as derivatives. Excluding such charges and one off items such as field sales, the RC result was $8.63bn, ahead of an average forecast of $7.7bn.

Dignity Plc posted a 17 percent rise in underlying half year pretax profit today and said the outlook for the rest of 2008 was positive. Dignity said revenue in the six months to June 27 grew 12 percent to £90.6m and profit excluding the sale of fixed assets of £10m, was up 17 percent to £21.1m before tax.

St James Place reported a 5.3 percent fall in its first half profit and said it was sticking by its key long term sales growth targets. St James Place said group operating profit for the six months to June 30 was £114.2m, down from £120.7m in the same period last year. Analysts had expected a profit of £111.2m. It said it had benefited over the first half from strong demand for pensions products, which helped push total sales up 3 percent on the year to £220.7m.

St James Place’s chairman, Mike Wilons, said the company did not know of any plan by HBOS to sell its 60 percent stake in the group. He said "We have an excellent relationship with HBOS. We are no aware of any discussions taking place regarding the sale of St James Place and we’re sure we would be aware of them if they were taking place". Analysts have speculated that HBOS could sell assets, including its St James Place stake, in order to bolster its capital.

St James Place’s funds under management stood at £17.2bn as if June 30, down from £17.3bn a year earlier, with the decline driven by falling equity markets rather than clients withdrawing their money, Wilson added. St James Place said new business growth in the second half of the year is on course to be "broadly similar" to the first half, and said it was maintaining its long term target for new business growth of 15 to 20 percent per year. The company is paying an interim dividend of 1.84 pence per share, an increase of 5 percent.

Santander reported first half net profit of E4.73bn, up 6.1 percent and ahead of analysts forecasts. Santander said net interest income rose 14.5 percent to E8.49bn. A poll of analysts had forecast Santander would make net profit of E4.35bn, operating profit of £8.56bn and net interest income of £8.3bn. Non performing loans ratio for the whole group stood at 1.34 percent and 1.08 percent in Spain.

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 29th, 2008 under Asset Management.
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