FTSE 100	4052.47, +0.24	Dow	8077.56, -45.24
FTSE 250	6088.13, -79	Nasdaq	1477.29, +11.8
FTSE All Share	2030.6, -2.94	S&P 500	831.95, +4.45
Nikkei	7682.14, -63.11	Hang Seng	12578.6
Oil (Crude)	$46.47	Gold	$897.70
Base Rate	1.5%	10 Yr Gilt	3.72%
£/$	1.369	£/€	1.0582
1 month LIBOR	1.608	3 month LIBOR	2.193

 

Markets

London - The FTSE 100 is currently 49.85 points higher at 4,102.32. Barclays tops the risers’ board, up 37%, after reporting a profit of £5.3 billion. This gives support to a number of other financials which follow in its wake. Lloyds Banking Group adds 18%, RBS climbs 12.5% and HSBC rises almost 4%. Wolseley tops the fallers after saying profit will be down by almost two-thirds in the current year, shares are 15% lower. 

New York - US stocks were mixed on Friday with the S&P 500 and Nasdaq making small gains, while the Dow Jones ended lower. Rallying bank stocks and some positive earnings from the technology sector offset a disappointing outlook from General Electric that ensured the Dow stayed in negative territory.

The Dow Jones fell 45.24 points to close at 8,077.56, the S&P 500 gained 11.80 points to end at 831.95. The Nasdaq added 4.45 points to finish at 1,477.29.

General Electric plummeted after reporting its earnings figures. Although they met expectations, the company warned that 2009 would be "extremely difficult". Even though GE’s chief executive tried to reassure the market that it would maintain its dividend, investors still fretted that this would not be the case and sent the stock almost 11% lower.

Google led the Nasdaq higher after its earnings beat estimates on sales that topped last year’s performance. Shares in the web search leader gained 6% as a result. Financials were buoyed by the prospect of further government aid. JPMorgan Chase jumped 5.1%, making it the strongest performer on the Dow, while Bank of America rallied 9.3% and Citigroup surged 12%. Chevron was also among the top risers on the Dow. The energy company added 1.2% after crude oil futures rose more than 6%.
In contrast, Caterpillar slid 4.2% after rival Komatsu Ltd lowered its profit forecast for the year, citing a sharp decline in global demand.

US light crude oil for March delivery climbed $2.80 to $46.47 a barrel. COMEX gold for April delivery jumped $37.20 to settle at $897.70 an ounce. Treasury prices went lower, raising the yield on the 10 year note to 2.61% from 2.59%.

Tokyo - The Nikkei slipped 63.11 points to close at 7,682.14 this morning as earnings concerns dragged down real estate and machinery companies. As previously mentioned Komatsu have warned of falling demand and shares fell 4.7% as a result. Pacific Holdings tumbled 17% after the real estate asset manager delayed its earnings release.

Hong Kong - The Hong Kong Stock Exchange is closed today.

Economics

UK Leading indicators (Dec) 15.00 gmt

December LEI is expected to rose 0.3 percent. The biggest positive contribution should come from a sharp rise in the money supply, with real M2 growth of over 2.5 percent in December. This could add about 1.0ppt to LEI. Negative contributions should come from most of the other indicators, including a decline in the manufacturing work week, higher jobless claims, lower building permits, and a fall in ISM supplier deliveries.

US Existing home sales (Dec) 15.00 gmt

Pending home sales have fallen for the past three months, suggesting the existing home sales could drop again in December. However, existing home sales through November are already down 11 percent year on year, compared with -5 percent year on year for pending sales. Existing home sale are expected to hold steady at 4.5m.

Corporate

Barclays said on today that its projected 2008 pre-tax profit of more than 5.3 billion pounds would include the impact of £8bn in gross write downs. "We will report a profit before tax for the year well ahead of the consensus estimate of 5.3 billion pounds," Barclays said in an open letter to staff, clients and shareholders. "The profit is struck after all costs, impairment and market valuations." Net of its own credit, hedging and attributable income, the bank said its write downs for the year would be about 5 billion pounds. Barclays said it had 36 billion pounds in committed equity capital and reserves and that it was not seeking new capital from either the British government or the private sector. The bank said it had seen "a good start to 2009" and that customer activity levels had been high. "In particular the operating performance of Barclays Capital, benefiting as it is from the now completed integration of the Lehman business, has been extremely strong."

Wolseley today said half year profit would be around two-thirds lower than last year and that its debt had increased due to the adverse effect of currency exchange. In a trading update for the five months to the end of December 2008 Wolseley said pre-tax profit was down around 66 percent and that its net debt had increased 22 percent to 3 billion pounds since last summer. The company said that until consumer confidence returns and availability of finance for customer projects improves, the group expects its performance to decline. Wolseley also said it would continue to evaluate all of the options and implement the actions necessary to position the balance sheet appropriately for the medium term.

WH Smith Plc posted a worse-than-expected fall in underlying sales for the key Christmas period but said profits were in line with expectations. The group said that sales at stores in its high street business open more than a year fell 7 percent over the 20 weeks to Jan. 17. The result was worse than analysts’ expectations of a decline of 5 percent and compares with fall of 4 percent for the 10 weeks to Nov. 8. But WH Smith said gross margin in the high street business "improved strongly" year on year. In the travel business — stores at airports, train stations, motorway service areas and hospitals, like-for-like sales were down 1 percent, while gross margin "improved further". This compares with a flat underlying sales performance in the earlier 10 week period and analyst forecasts of flat to minus 1 percent.

The retailer said sales at airport stores outperformed weaker passenger numbers. WH Smith’s total sales over the 20 week period were flat, reflecting the impact of recent acquisitions and new business wins. Group like-for-like sales fell 5 percent. "Looking ahead, we expect consumer spending in our markets to remain subdued and we have planned accordingly," said Chief Executive Kate Swann. Prior to today’s update, analysts had forecast a consensus underlying pretax profit for the year to the end of August 2009 of 79 million pounds, up from 76 million pounds last time.
The Christmas performance reflected Swann’s strategy of cutting costs and improving gross margins by focusing on more profitable products, better sourcing and better control of markdowns, rather than driving top-line sales. The mix of products has been re-balanced towards WH Smith’s core categories of stationery, books, newspapers and magazines and away from entertainment products such as CDs, DVDs, computer games and consoles. Like-for-like sales, excluding entertainment, in the high street business were down 3 percent over the 20 weeks.

International Ferro Metals Ltd said today it does not expect to report a first half pre-tax profit due to a sharp fall in ferrochrome prices and sees its full-year profit "materially below" market expectations. The profit warning for the full year to end June 2009 is based on the weakness of current demand for ferrochrome, an essential ingredient in stainless steel, even after the recent increase in Chinese consumption. In the closing weeks of the six-month period to end December, the South African company said it experienced "a rapid deterioration" in ferrochrome pricing. First-quarter 2009 European benchmark prices for ferrochrome dropped to $0.79 per pound from $1.85 a pound in the fourth quarter of 2008, it said. "The overall financial impact of these price reductions on the company’s half year results is not expected to exceed $18 mln" and includes a write down in inventory of about $4.2 million, it said.

New Star Asset Management Plc said today it was unlikely shareholders would see a significant return from any transaction with Henderson Group Plc as proceeds would be used to pay off its debts. Henderson confirmed yesterday it was in discussions over a possible offer for the troubled fund manager, although cautioned there was no certainty any deal would be forthcoming. New Star, which has struggled with performance woes, outflows and a heavy debt pile, said it could not guarantee that any offer would be at or above the company’s current share price. Shares in New Star have lost 98 percent of their value over the last year and closed on Friday at 1.99 pence, valuing the company at just 5.3 million pounds.

Hilton Hotels Corp today launched a new extended-stay hotel brand, Home2 Suites by Hilton, aimed at the mid-price market. It will compete with chains like Intercontinental Hotels’ Candlewood and Marriott International’s  TownePlace Suites, said Bill Duncan, brand manager for Home2 Suites and Homewood Suites, Hilton’s more upscale existing extended-stay brand. Duncan said the new chain will aim for an average room rate of about $100, compared with Homewood’s average of $122. He described the new brand’s style as "hip and humble," with a modern but comfortable vibe that in consumer focus groups "appealed to everybody from millennials to baby boomers." The millennial generation is made up of those born roughly between 1982 and 2002.

The company said it had already received 10 franchise applications, with the first Home2 Suites hotel expected to begin construction in the next 6 to 12 months. Duncan said all of the applicants had secured financing for their projects. The per-room cost will be $70,000 to $75,000, Hilton said.
"During challenging economic times, developers turn to strong brand names they can trust that are supported by proprietary systems and programs", Christopher Nassetta, Hilton’s president and chief executive, said in a statement. The company estimated that 100 Home2 Suites will be open by the end of 2012, with another 60 to 70 opening each following year. The immediate focus will be on U.S. development, with expansion into Canada, Mexico and abroad in subsequent years.

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: January 26th, 2009 under Asset Management.
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