FTSE 100	4152.69, -185.6	Dow	8726.61, +247.14
FTSE 250	5831.04, -1.95	Nasdaq	1532.10, +67.37
FTSE All Share	2065.25, -8.6	S&P 500	887.68, +30.59
Nikkei	8373.39, +160.17	Hang Seng	13441.33, +71.88
Oil (Crude)	$54.44	Gold	$811.30
Base Rate	3.5%	10 Yr Gilt	3.782%
£/$	1.5395	£/€	1.1927
1 month LIBOR	3.301	3 month LIBOR	3.946

 

Markets

London - UK stocks closed lower on Wednesday as weakness in oil stocks offset gains in miners. The FTSE100 closed 18.56 points lower at 4152.69, after swinging from a high of 4198.74 to a low of 4050.67. Oil stocks were the top losers with BP, Royal Dutch, Tullow Oil and Cairn Energy all losing between 0.8 and 5.8 percent. Miners offered some support, with the FTSE350 mining index gaining 5.4 percent. Kazakhmys, Antofagasta, Fresnillo, BHP Billiton and Vedanta Resources rising between 5.7 and 9.9 percent. Rio Tinto underperformed the sector, up 1.1 percent after BHP announced its decision on Tuesday to walk away from its hostile takeover bid for Rio.

Johnson Matthey soared 15.2 percent to top the FTSE100 gainers list after it posted a 20 percent rise in first half profit and forecast full year earnings per share growth of 1-5 percent, in line with market forecasts.

Compass Group gained 9.3 percent after the company posted a 30 percent increase in annual profit, meeting expectations, and said trading in the new financial year had started well.

Banks were mixed, with HBOS losing 6.7 percent, Standard Chartered fell 6.6 percent and Barclays shedding 4.2 percent. HSBC gained 2.1 percent. Alistair Darling said the government was prepared to take further action to ensure banks lend more and that it was right to have the appropriate monetary policy to help support the economy which shrank at its fastest rate since 1990 in the third quarter of this year.
United Utilities fell 4 percent after it cut its dividend payment by 30 percent, despite reporting a 6 percent rise in its first half underlying profit. Severn Trent slid 5.6 percent.

New York - US stocks surged on Wednesday, with the Dow and S&P500 closing higher for the fourth session in a row, as investors scooped up stocks hit by the recent selloff. Trading volume was moderate ahead of the Thanksgiving holiday. All financial markets are closed Thursday for the Thanksgiving holiday and close early Friday. The DJIA closed 247.14 points higher at 8726.61, the Nasdaq added 67.37 points to close at 1532.10 and the S&P500 closed 30.29 points higher at 887.68.

Stocks fell in the morning on weak economic reports, but staged a comeback in the afternoon. The latest edition to President elect Obama’s economic team, a rally for the automakers and seasonal factors all contributed to the advance. Barack Obama announced the creation of a special economic advisory board to be headed by former Federal Reserve Chairman Paul Volcker. Volcker is the latest addition to the economic team Obama announced this week. Investors also benefited from the tendency of stocks to post gains in the trading days surrounding Thanksgiving. Between the Wednesday before Thanksgiving and the Monday after, the Dow has gained in 14 of the last 20 years by an average of 470 points.

In economic news, October sales of new homes tumbled to an annual rate not seen in roughly 18 years, the government reported. The decline was worse than what economists expected and suggests that the housing market has not yet bottomed. Consumer spending continued to slump, with spending down 1 percent in October after falling 0.3 percent in September. That was the biggest decline since September 2001 and worse than economists had forecast. The core PCE deflator rose 2 percent over the past 12 months, versus a rate of 2.2 percent in September. Personal income rose 0.3 percent, after rising 0.2 percent in September. Economists thought income would rise just 0.1 percent. Consumers also spent less on durable goods, with orders slumping sharply in October. The report was seen as another bad indicator for the manufacturing sector. The Chicago PMI slumped to a fresh 26 year low in November, falling to 33.8 from 37.8 in October. Economists were expecting a slight improvement in the reading. Another report showed that the number of Americans filing new claims for unemployment dropped last week from 16 year highs hit the previous week. However, claims still remained at high levels above 500,000. Consumer sentiment continued to erode, according to a report from the University of Michigan. Its November sentiment index was revised down to 55.3 from an initial reading of 57.9. Economists thought it would be revised up to 58.

In company news, GM rallied 32 percent and Ford rallied 29 percent on growing bets that the two companies and Chrysler will receive a government bailout after all. Deutsche Bank put out a note late Wednesday saying the industry’s prospects have improved. The industry was rebuffed last week when it made its first pitch to Congress. But there is increased speculation that its second pitch, expected next week, will be more successful. The companies have until December 2 to submit proposals for how they would use $25bn in taxpayer money to make their companies viable. The House Financial Services Committee holds a hearing next Friday and the Senate Banking Committee is expected to hold a hearing too.
Citigroup gained 20 percent, leading the banking sector higher.

In global news, China slashed a key interest rate and also lowered the amount of money banks must set aside as reserves, in an effort to increase lending.

The dollar gained versus the euro and the yen.

US light crude for January delivery rose $3.67 to $54.44 a barrel on NYMEX.

COMEX gold for February delivery fell $9.20 to $811.30 an ounce.

Gasoline prices continued to fall to a nearly four year lows, with gas down 1.7 cents to a national average of $1.868 a gallon.

Treasury prices rallied, lowering the yield on the 10 year note to 2.98 percent from 3.10 percent. Last week the 2 year, 10 year and 30 year government bonds all hit their lowest levels since the Federal Reserve started keeping records in 1962.

The yield on the 3 month Treasury bill fell to 0.06 percent from 0.105 percent Tuesday, not far from 68 year lows of zero hit last week.
Lending rates were mixed. The 3 month Libor rate fell to 2.18 percent from 2.2 percent Tuesday, while overnight Libor rose to 0.99 percent from 0.93 percent.

Tokyo - The Nikkei average rose 2 percent to its highest close in more than a week as hopes that a Chinese interest rate cut would help China’s economy bolstered shippers, steel and construction machinery makers such as Komatsu Ltd. High tech stocks such as Kyocera Corp climbed in the wake of gains by their US peers, though Panasonic Corp bucked the trend by falling more than 4 percent after a source said it would slash its profit forecast, which it did after the close. The Nikkei closed 160.17 points to close at 8373.39 in extremely thin trade, with many investors sidelined.

Economics

There is no major economic news today

Corporate

DSG International swung to a first half loss and suspended its dividend as it grapples with the deepening consumer downturn. The company said "Given the current economic conditions, the outlook is uncertain for peak trading and 2009". This compares to analysts forecasts of a loss of £25m-£35m and a profit before tax of £52.4m for the same period last year. No interim dividend will be paid compared to 2.02 pence last year and there will be no full year payout.

Britvic reported an increase in full year profits, sending its shares higher, as it benefited from consumers trading down to its brands from pricier alternatives. Britvic said pre-tax profit increased by 14 percent to £70.1m as each of its key brands gained market share. That was at the top end of expectations which ranged between £59m and £71m. CE Paul Moody said "Consumers this year traded from premium into value soft drinks categories, such as into Cola and juice drinks and away from more expensive price point categories such as smoothies and pure juice". He added that squash drinks had also seen an increase in sales as customers abandoned more expensive products for "staple offerings", and that the company is continuing to look to expand outside the UK through acquisitions. Britvic said Robinsons had increased sales by 6.5 percent against a 3 percent drop in the overall squash market, benefiting in part from its sponsorship of the Wimbledon tennis tournament.

Woolworths said it had put its retail and distribution into administration after discussions relating to the potential sale of its 815 stores ended on Wednesday. In a regulatory filing the company said following the collapse of talks with restructuring specialist Hilco UK the boards of Woolworths Plc and its Entertainment UK distribution arm concluded there was no longer any prospect of those businesses being able to operate as a going concern. However, Woolworths Group is not in administration and remains in discussion with BBC Worldwide relating to the possible sale of its 40 percent interest in DVD publisher 2 Entertain Ltd, the group said. The boards of both companies on Wednesday night filed petitions for administration in the High Court, Woolworths said. Woolworths board had been in talks about selling the retail business to Hilco for £1 this week, with Hilco expected to take on about £300m of the groups £385m debt.

Pennon Group Plc today announced a 9.8 percent rise in first half underlying operating profit to 136.8 million pounds and said its businesses were well placed to weather the economic slowdown. The group said the regulated water division was on target to deliver its regulatory commitments between 2005 and 2010. It said Viridor was seeing continued strong growth in profits before interest, tax and amortisation. Citigroup had forecast group pre-tax profits before interest, amortisation and exceptionals of 134.9 million pounds, against a market consensus of 133.2 million and last year’s figure of 123.6 million. Credit Suisse was looking for 131 million. Chairman Ken Harvey said: "The group businesses are both well-positioned in the current economic slow-down."

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: November 27th, 2008 under Asset Management.
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