FTSE 100	4291.65, +49.11	Dow	9180.69, +189.73
FTSE 250	6223.78, +234.67	Nasdaq	1698.52, +41.31
FTSE All Share	2143.87, +30.83	S&P 500	954.09, +24
Nikkei	8576.98, -452.78	Hang Seng	13968.67, -361.18
Oil (Crude)	$65.96	Gold	$738.50
Base Rate	4.5%	10 Yr Gilt	4.454%
£/$	1.616	£/€	1.2739

 

Markets

London - The FTSE 100 is down 41.73 points at 4,249.92 this morning. BT tops the fallers board, down 19%. After saying EBITDA and earnings per share that were "slightly below expectations" in the last quarter. Kazakhmys tumbles 12% after UBS cut its rating on the stock from "neutral" to "sell".

Barclays tops the risers board, up 9.6%, following news that it will raise £7.3 billion in a share sale to an investor group including Abu Dhabi and Qatar. BSkyB gains 3.1% following higher quarterly earnings.

New York - US stocks rose yesterday as investors embraced lower interest rates and a report that said the economy contracted at a slower pace than expected in the third quarter. Gross domestic product fell at an annual rate of 0.3% in the quarter and although this was the worst performance for seven years, it did beat expectations for a 0.5% drop.

Also helping stocks was the continued improvement in credit markets. Libor, the overnight bank to bank lending rate, fell to 0.73% from 1.14%, while the 3 month figure fell to 3.19% from 3.42%.

The Dow Jones jumped 189.73 points to close at 9,180.69, the S&P 500 gained 24 points to end at 954,09. The Nasdaq added 41.31 points to finish at 1,698.52.

In the financial sector, Hartford Financial Services plunged 51.6% after reporting a huge quarterly loss, raising concern it may need to raise more capital. Elsewhere, Prudential Financial dropped 18.1 after reporting a quarterly loss just shy of analysts forecasts.

US light crude oil for December delivery slipped $1.54 to $65.96 a barrel. COMEX gold for December delivery dropped $15.50 to close at $738.50 an ounce. Treasury prices declined, raising the yield on the 10 year note to 3.97% from 3.85%.

Tokyo - The Nikkei slumped 452.78 points to close at 8,576.98 this morning. Lower company earnings forecasts overshadowed the central bank’s first rate cut in seven years. Konica Minolta Holdings and Mazda Motors Ltd dived more than 10% after slashing profit targets. Pioneer Corp dropped 15% after widening its annual loss forecast. Olympus Corp dropped 7.7% after reporting an 89% drop in first half earnings.

Hong Kong - The Hang Seng is currently 361.18 points at 13,968.67. Bank of Communications Ltd sank 8.8% after profit growth slowed. Cathay Pacific Airways Ltd fell 6.1% after China’s three biggest airlines reported quarterly losses. Li & Fung Ltd, a supplier of Wal-Mart, dropped 14% on concerns of a slowing economy.

Economics

US Employment cost index 12.30 gmt

The Q3 employment cost growth is expected to have been moderate, with the overall ECI rising 0.8 percent. The year on year rate may increase to 3.1 percent from 3 percent. Wages and salaries are expected to have risen by 0.8 percent, comparable to the 1 percent increase in payroll average hourly earnings. Meanwhile, benefit costs could remain muted, and a rise of 0.6 percent for the third straight quarter is expected. Medical care inflation in the CPI has been quite low recently, up by only 0.4 percent in Q3.

US Chicago PMI (Oct) 13.45 gmt

The latest Beige Book indicated slowing or soft demand for a wide range of manufacturing industries, including steel, medium and heavy trucks, construction equipment and home appliances. Aviation manufacturing contacts noted a negative impact from the Boeing strike. On the other hand, a number of categories continue to do well, including heavy machinery, pharmaceuticals, and export oriented industries. This suggests that the Chicago PMI may continue to outperform relative to ISM manufacturing. However, the overall slowdown in conditions are expected take Chicago PMI down to 48, from 56.7 in September.

Corporate

Blacks Leisure Group said today half year losses widened by 55 percent but the group’s turnaround plan was making good progress. The company reported a pre-tax loss for the six months to end-August of 6.7 million pounds on sales 9.4 percent lower at 133 million pounds. Blacks performed broadly in line with expectations in the first half, recording a 5.2 percent fall in like-for-like sales. However, it said its board wear business — 57 Freespirit, Mambo, Animal and O’Neill stores — endured a "very difficult" market with like-for-like sales slumping 16.1 percent.

Blacks said group like-for-like sales were down 7.7 percent in the first-half but that its trading performance over Christmas would be key to shaping the group’s annual results. "The outlook for the remainder of the year will be influenced by trading over the important Christmas period and possibly, wider economic factors," Chairman David Bernstein said in a statement.

The company said the initial phase of its turnaround plan was going well and that it had reduced costs by 5.6 million pounds and had made improvements in working capital, with stock at the half year being 10.5 percent below the prior year.

BT Group said on Friday its second-quarter earnings would be slightly below expectations due to a poor performance of its Global Services unit and the boss of that division has now resigned. "For the second quarter we expect to report that group revenue will be ahead of expectations but that EBITDA and earnings per share will be slightly below expectations," it said.

It expects its BT Retail, BT Wholesale, Openreach and other activities to deliver results in line with or ahead of expectations but said the performance of the Global Services division which provides networks to global companies had been poor.

"We expect revenue growth in this division will remain strong, up 15 per cent year on year, but EBITDA of around £120m will be significantly below expectations," the group said. Global Services boss Francois Barrault will be replaced by group Finance Director Hanif Lalani.

 Meggitt Plc said on today that it was on track to meet its full-year guidance. In a trading statement, the company said it was confident of achieving further growth in the second half of the year, and added that it has seen little impact so far from the anticipated slowdown in civil aerospace. It said that while the rate of growth has slowed, civil passenger fleet utilisation, measured in Available Seat Kilometres, continued to grow. Announced capacity reductions to date in the civil fleet would potentially affect Meggitt’s sales of spares and repairs by around £15m per annum from the fourth quarter of 2008, representing less than 2 percent of total group sales, it said. However the profit impact of the reduction in the civil fleet and of the Boeing strike will be largely mitigated by the recent strengthening of the US dollar, it said. Meggitt has recently renegotiated the terms of a $500 million bank facility, extending the maturity from May 2010 to May 2013, following which no new financing will be required before March 2012, it added. 

Friends Provident said it is abandoning the sale of wealth management unit Lombard, nine months after putting the business on the market, as it reported a 14 percent drop in nine-month sales. "We received a number of proposals for Lombard but it is clear to me that we should not only retain but also develop this unique business," Friends Provident chief executive Trevor Matthews said in a statement. The company also confirmed that it plans to distribute its 52 percent stake in British asset manager F&C to its own shareholders, with the transfer expected to complete by mid-2009.

Friends Provident’s sales for the nine months to Sept 30 stood at 701 million pounds, down 14 percent on the same period last year, the insurer said. Analysts had expected sales of 764 million pounds, according to the average of nine forecasts collected by the company.

Barclays Plc is close to raising about 6 billion pounds from a number of potential investors and could announce details today, a person familiar with the matter said; Barclays has been in talks with a mix of existing and new investors, the source said, but declined to identify them. Existing investors expected to invest more in the bank are likely to include Qatar’s sovereign wealth fund, after it invested in the summer.

Libya is not expected to invest, the source said. The FT reported the Libyan Investment Authority was likely to be an investor. Barclays declined to comment. Earlier this month, it said it would raise capital but would raise the funds privately rather than take government cash.

Royal Bank of Scotland, Lloyds and HBOS are all taking billions in taxpayers’ funds to help weather the financial crisis. Barclays said when the government’s recapitalisation plan was announced that it planned to raise about 6.5 billion pounds, with about half from preference shares and half from the sale of ordinary shares. The bank has lost billions of pounds from credit-related asset write downs and is faced with a sharply slowing UK housing market and economy, but it has fared better than many rivals. It has raised funds from investors in China, Singapore and Japan as well as Qatar. The bank expects to gain a competitive advantage by raising capital privately, while RBS and others will have the government as a major shareholder.

F&C Asset Management said today assets under management fell during the third quarter as its parent insurer Friends Provident confirmed plans to distribute its stake in the firm to shareholders. The firm said assets under management fell 3 percent to 93.3 billion pounds at end-September, compared to levels at end-June.

Separately, insurer Friends Provident, which holds a 52 percent stake in F&C said it intended to complete the process of selling its stake in the fund firm to its shareholders by mid-2009. Friends decided to divest its F&C stake in January this year, but uncertain market conditions have hindered the sale. F&C said it continues to "explore opportunities and remains in discussions with interested parties". "These discussion may or may not lead to an offer for F&C," it said. The fund manager said there was "satisfactory progress" in executing a 12-million-pound cost-reduction exercise.

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: October 31st, 2008 under Asset Management.
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