FTSE 100	3848.98, +32.54	Dow	7270.89, -80.05
FTSE 250	6042.15, +136.40	Nasdaq	1425.43, -16.40
FTSE All Share	1937.81, +19.15	S&P 500	764.90, -8.24
Nikkei	7457.93, -3.29	Hang Seng	12894.94, -110.14
Oil (Crude)	$42.50	Gold	$966.20
Base Rate	1%	10 Yr Gilt	3.55%
£/$	1.4217	£/€	1.1161
1 month LIBOR	1.414	3 month LIBOR	2.063

 

Markets

London - UK stocks closed higher on Wednesday after a roller coaster afternoon, with gains from oils and financials countering weak miners and sharp falls on Wall Street after home sales data. After the close the FTSE100 was 32.54 points higher at 3848.98. The Chairman of Britain’s Financial Services Authority, Adair Turner, said on Wednesday he now believed the way it regulated banks such as HBOS before its near collapse last year was wrong. Financials moved higher as Britain’s Treasury and the banks hammered out final details of a plan to limit lenders’ losses on about £500bn pounds of risky assets, which the government said, should help prevent full nationalisation. Britain has pledged to unveil the scheme this week and is expected to announce terms for part-nationalised RBS and Lloyds Banking Group when they report results today and tomorrow, respectively. RBS, Lloyds Banking Group, Barclays, HSBC and Standard Chartered all gained between 3.2 percent and 7.5 percent.

BP, Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy gained between 0.8 percent and 2.4 percent. Hammerson rose 7.5 percent with its shareholders backing the firm’s rights issue on Wednesday, and after JP Morgan upgraded the stock to "overweight" from "neutral", citing confidence in its ability to weather brutal UK property market conditions. Liberty International added 3.8 percent ahead of its results on today. British Land rose 5.0 percent, while Land Securities gained 5.5 percent. Segro jumped 12.4 percent after renegotiating its debt covenants.
Vodafone took the most points off the blue chip index, down 2.1 percent as investors assessed Tuesday’s news the company is to cut 5 percent of its UK workforce. Other telecom blue chips also fell, Cable & Wireless by 1.9 percent and BT Group by 1.4 percent.
Heavyweight drug issues suffered as well, with GlaxoSmithKline, AstraZeneca, and Shire down between 0.6 percent and 1.1 percent.
Big miners were also weak as demand concerns continued, with Anglo American and BHP Billiton down 1.7 percent and 2.3 percent respectively. The UK economy shrank at its fastest pace since 1980 in the last three months of 2008, unrevised official figures confirmed, as households cut spending at the sharpest rate since 1991.

New York - US stocks ended lower on Wednesday, as investors took a mixed response to new details on the Treasury’s plan to help stabilize the banking system. Investors will today focus on Obama’s fiscal 2010 budget plan, the weekly jobless claims and reports on new home sales and durable goods orders. The DJIA closed 80.05 points lower at 7270.89, the Nasdaq fell 16.40 points to close at 1425.43 and the S&P500 fell 8.24 points to close at 764.90.

Stocks fell in the morning after a report showed existing home sales plunged to an 11 year low in January. But stocks managed to cut losses and turned higher in the afternoon after the bank plan announcement, with a number of financial stocks rallying. Stocks however turned lower again, as investors continue to worry about the depth and duration of the recession. Shares of bank stocks were volatile after the Treasury news. Citigroup and Goldman Sachs ended lower. Wells Fargo, JPMorgan Chase and Bank of America ended higher.

In company news, Ford Motor’s CEO and chairman agreed to cut their pay by 30 percent for the next two years and to suspend bonuses for salaried workers. Ford will also offer another round of buyouts and early retirement packages to all of its hourly workers. The changes were announced and union members are nearing a vote on contract concessions.

General Motors rallied nearly 15 percent, currently an Obama administration task force is reviewing turnaround plans from GM and Chrysler, which have asked for a combined $22bn more in bailout money on top of the $17.4bn they have already received. GM issues fourth quarter results before the start of trading today.

In deal news, Canadian fertilizer Agrium made a hostile bid for US rival CF Industries worth $3.6bn in cash and stock, a 30 percent premium over CF’s closing price Tuesday. Any deal is conditional on CF giving up its hostile offer for Terra Industries, which the company has already rejected.
First Solar plunged 22 percent in unusually active Nasdaq trade after the company warned late Tuesday that first quarter and full year 2009 revenue will fall from a year amid a bleak outlook for the industry and economy.

Treasury prices fell, raising the yield on the 10 year note to 2.92 percent from 2.79 percent.
In currency trading, the dollar gained versus the euro and the yen.

US light crude oil for April delivery rose $2.54 to settle at $42.50 a barrel on NYMEX. The price of oil was volatile after the government said the supply of crude increased less than expected last week.

COMEX gold for April delivery fell $3.30 to settle at $966.20 an ounce.

Tokyo - Japan’s Nikkei stock average ended flat on Thursday, giving up early gains on a weak yen as heavy falls in chip-testing equipment maker Advantest Corp and drugmaker Daiichi Sankyo dragged the market back down to earth. Advantest Corp tumbled nearly 13 percent after warning of a record loss and steep job cuts. Daiichi Sankyo sank more than 9 percent after U.S. regulators said Indian generic drugmaker Ranbaxy Laboratories, in which it holds a controlling stake, had falsified data. Exporters gained an early boost after the yen fell to a three-month low against the dollar, but that evaporated in late trade as market players said Japan’s worsening economic and political woes were feeding a "Sell Japan" trend. In the latest hint on what the government might do to support the stock market, a newspaper reported that Tokyo was considering asking the central bank to buy stock exchange-traded funds to prop up Japanese share prices. But market players remained wary, noting that such a proposal alone might not be enough to give stocks a sustained boost.

Foreign investors sold a net Y450.8bn of Japanese stocks last week, Ministry of Finance data showed, and some in the market said foreign investors may have been a key part of the day’s selling too. The benchmark Nikkei lost 3.29 points to 7,457.93.

The biggest drag on the Nikkei 225 today was Advantest, which tumbled 12.7 percent to Y1,245 after the world’s biggest supplier of machines that test semiconductors said it would cut more than a quarter of its workforce and warned it faces a record $804m annual loss. It was followed by Daiichi Sankyo, which sank 9.5 percent to Y1, 680.
Economics

US Durable goods orders (Jan) 13.30 gmt

ISM new orders rose 10 points to 33.2 in January, but this is still a weak overall level and suggests that durable goods orders will contract for the sixth month in a row during January. Total orders and ex-transportation orders are expected to have declined 1.8 percent. Boeing aircraft orders have remained quite low over the past four months, falling from 23 to 18 in January. Meanwhile, there is still a sizeable backlog of orders in categories like machinery and fabricated metals, which may be acting to further constrain new orders in the current environment.

Corporate

BBA Aviation Plc said its full-year performance would be in line with company estimates thanks to strong cashflow, but warned of a difficult year ahead. The company said its underlying pre-tax profit for the year ending Dec. 31 rose by 3 percent to £89.2m, up from £86.4m in 2007, while revenue grew by 18 percent. Underlying profit excluded a one-off gain of £38.4m from the sale of businesses at Oxford airport in 2007. Chief Executive Simon Pryce said BBA had achieved robust cashflow through 2008, up 77 percent on the previous year, despite a slowdown in the aviation sector but warned that the company’s outlook for 2009 was murky. "We enter 2009 with sufficient flexibility and the vast majority of our bank debt is committed until 2012," Pryce said in a statement. "However, markets remain volatile with limited visibility and we anticipate a difficult year." BBA, which provides services such as engine repair to corporate jets and military planes, also said its net debt had swelled to £554.4m from £368.6m the previous year, partly due to the appreciation of the dollar. "Our primary focus remains strong cash generation and debt reduction," the company said, adding that it would maintain a dividend payment of 7.6 pence per share.

British American Tobacco reported a 19 percent rise in 2008 earnings, at the top of forecasts, and said it is more resilient than most companies in the downturn. The company reported adjusted earnings per share of 128.78 pence, compared to forecasts ranging from 124.8p to 129.0p, with a consensus of 126.9p. Chairman Jan du Plessis said the group was alert to the risk of downtrading to cheaper cigarette brands, but its range of brands and geographic diversity help mitigate this risk. "We are very much aware of the potential challenges but the inherent strength of our businesses, our brands and our people should make us more resilient than most," he said in a results statement. BAT said its underlying cigarette volumes rose 1 percent in 2008, within its 1 to 1-1.5 percent annual growth target, but its more expensive cigarettes grew faster with its top four brands 16 percent ahead.
Earnings were boosted by the acquisition of Turkey’s Tekel and Denmark-based ST, both completed in the middle of 2008, and also profits growth in all its regions and the weaker pound against most of the world’s major currencies. The group said operating profits rose 23 percent, or 14 percent at constant currency rates, showing the boost to its results from the weaker pound against many currencies. The group raised its 2008 full-year dividend payout by 26 percent to 83.7p a share.

Royal Bank of Scotland reported a loss of £24.1bn for 2008, the biggest in British corporate history, and said it planned to place £325bn in assets in a state insurance scheme. Under the government backed insurance scheme designed to extend another lifeline to banks, RBS will be responsible for the first £19.5bn of losses, or 6 percent of the asset value. The government will bear 90 percent of any losses after that, and RBS incurs the remaining 10 percent. The UK government will also provide another £13bn of capital through the issuance of B shares.

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: February 26th, 2009 under Asset Management.
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