FTSE 100	5320.4, -129.8	Dow	11348.55, -130.84
FTSE 250	8867.6, -256.4	Nasdaq	2384.36, -32.62
FTSE All Share	2710.74, -66.82	S&P 500	1266.69, -11.91
Nikkei	12851.69, -13.37	Hang Seng	20905.36, +420.99
Oil (Crude)	$114.53	Gold	$813
Base Rate	5%	10 Yr Gilt	4.614%
£/$	1.861	£/€	1.2610

Markets

London - The FTSE is currently 40.5 points higher at 5360.9. Tullow Oil leads the risers board after UBS upgraded the stock to ‘buy’ from ‘neutral’ on valuation grounds.

New York - US stocks slumped again yesterday on worrying economic data, poor retail earnings and continued credit worries. The Labor Department reported that the annual Producer Price Index for finished goods rose 9.8% in the 12 months that ended in July, this is the fastest annual rate in 27 years. While on the month PPI rose 1.2%, against expectations of just a 0.3-0.6% increase. This now puts the Federal Reserve in an uneasy position when it comes to maintaining its policy of low interest rates.

The Dow Jones lost 130.84 points to close at 11,348.55, the S&P 500 fell 11.91 points to end at 1,266.69. The Nasdaq dropped 32.62 points to finish at 2,384.36.

Lehman Brothers suffered another dismal session, plummeting 13% after JP Morgan forecast a further $4 billion in write downs on mortgage-related investments. Losses in the financial sector were broad based with American International Group tumbling 5.9%. The shares suffered after Goldman Sachs cut its price target on the stock to $23 from $30.

Home Depot dropped 3.7% after reporting a steep drop in quarterly profit, even though they topped expectations. However, the world’s largest home retailer did forecast weakness into 2009 as the housing slump continues. This was backed up by figures from the Commerce Department which showed housing starts and building permits fell in July to levels not seen since the 1991 recession. The Dow Jones index of home builders shares lost 3.5% as a result.

After the bell, Hewlett Packard provided a bright spot. The world’s biggest computer maker reported a higher quarterly profit and strong sales, sending shares about 3% higher.

US light crude oil for September delivery gained $1.66 to $114.53 a barrel as the threat of Tropical Storm Fay passed.

COMEX gold for October delivery climbed $11.20 to $813 an ounce. Treasury prices slipped, raising the yield on the 10 year note to 3.84% from 3.81%.

Tokyo - The Nikkei slipped 13.37 points to close at 12,851.69 this morning. Shipping lines fell in line with transportation fees, overshadowing a gain by oil explorers as crude rebounded. Nippon Yusen led shipping lines lower with a loss of 2.7%, while Inpex Holdings, Japan’s biggest oil explorer, jumped 2.5%.

Hong Kong - The Hang Seng is currently 420.99 higher at 20,905.36 on speculation that China will introduce measures to support the economy. China’s government is considering spending as much as 400 billion yuan, or 1.5% of the countries GDP, to stimulate the economy and may ease monetary policy this year.

Economics

UK Public Finances (Jul) 0930 BST

July tends to be a ‘tax take’ month (around a £6bn yield in the past couple of years), but borrowing has been significantly higher than expected this year, and so smaller tax take is expected. The Chancellor is expecting public sector net borrowing to total $43bn in the current fiscal yea. Analysts think this is optimistic and expect borrowing to be closer to £50 bn.

UK Bank of England Minutes (Aug) 0930 BST

Having already received the Inflation Report the main information from these minutes will be the voting pattern. The recent declines in commodity prices appear to have eased concerns on inflation. Analysts believe a three way split will continue, with Besley voting for higher rates, but Gieve joining Blanchflower in voting for lower rates. The other six members are likely to have voted for rates unchanged.

UK CBI Industrial Trends (Aug) 1100 BST

The Monetary Policy Committee are placing a lot of weight on the potential for the decline in sterling to boost activity. But there was no sign of this optimism in the manufacturing sector last month and analysts expect sentiment to deteriorate further. Unlike the MPC, analysts believe the decline in demand from the US and Eurozone in the recent months will outweigh the effect of the increase in competitiveness that a weaker pound brings.

Corporate

Britain’s Competition Commission said it may order UK airport operator BAA to sell three of its British airports. The commission said it could require BAA, owned by Spain’s Grupo Ferrovial, to sell two of its London airports and either Edinburgh or Glasgow airport, if the findings of its inquiry into BAA’s airport ownership are implemented. The regulator said it had provisionally found competition problems at each of BAA’s seven UK airports, which include Heathrow, Gatwick, Stansted and Southampton in England, and Edinburgh, Glasgow and Aberdeen in Scotland, with adverse consequences for passengers and airlines. BAA said in a statement that it believed the commission’s findings, including calls for a fundamental restructuring of BAA and a review of the government’s air transport white paper, risk delaying delivery of new runways. "We will be seeking urgent clarification from the government of how it believes this report’s findings can be reconciled with the air transport policy it established in 2003 and its current review of economic regulation," BAA said.

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: August 20th, 2008 under Asset Management.
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