FTSE 100	4416.23, +4.51	Dow	8300.02, -173.47
FTSE 250	7588.05, +58.03	Nasdaq	1731.08, -19.35
FTSE All Share	2251.90, +4.11	S&P 500	893.06, -17.27
Nikkei	9451.39, +12.62	Hang Seng	17885.27
Oil (Crude)	$63.45	Gold	$953.30
Base Rate	0.5%	10 Yr Gilt	3.81%
£/$	1.591	£/€	1.1481
1 month LIBOR	0.671	3 month LIBOR	1.276

 

Markets

London - The FTSE 100 is currently 46.38 points lower at 4,369.85 this morning. Man Group tops the fallers’ board, down 12%, after reporting a 64% decline in pre-tax profit for the year. Banks lose ground following the yield movement in the US. RBS falls 3.1%, Lloyds is down 2% and Barclays slips 1.7%. Miners also decline following a dip in metal prices. Rio Tinto loses 2.6% while BHP Billiton dips 1.7%.

New York - US stocks tumbled yesterday as treasury yields spiked fuelling concern that consumers could face higher borrowing costs. Treasuries sank following a government statement that they had received healthy demand for Wednesday’s $35 billion worth of 5 year notes. This has suggested there could be lower demand for longer term bonds such as the 10 year term which is linked to mortgage rates. Analysts are also concerned that the sheer volume of debt coming to the market could overwhelm demand, pushing yields higher.

The Dow Jones slumped 173.47 points to close at 8,300.02 while the S&P 500 dropped 17.27 points to end at 893.06. The Nasdaq lost 19.35 points to finish at 1,731.08.

General Motors plummeted 20% after confirming reports that bondholders rejected an offer from the company to trade $27 billion of debt for equity stakes. This suggests GM will now declare bankruptcy by the June 1st deadline, set by the US Treasury, to win concessions from its union, creditors and other parties.  

SanDisk Corp and the semiconductor sector kept the Nasdaq’s losses to a minimum after the company renewed a chip licence with Samsung Electronics. Shares jumped 14.3%.

US light crude oil for July delivery climbed $1 to $63.45 a barrel. COMEX gold for August delivery was unchanged at $953.30 an ounce. Treasury tumbled, raising the yield on the 10 year note to 3.71% from 3.51%.

Tokyo - The Nikkei gained 12.62 points to close at 9,451.39 this morning. Sanyo Electronic, the world’s largest maker of rechargeable batteries, leapt 5.2% after the government said it will try to boost usage of rechargeable cells. Japan Tobacco dropped 6.9% after Reuters said an opposition lawmaker proposed increasing cigarette taxes.

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

Economics

UK CBI distributive trades report (May) 11:00 BST

The massive improvement in sales in April (from -44 to 3) was probably due to the timing of Easter and the unseasonably warm weather, so some setback this month looks likely.

US Durable goods orders (Apr) 13:30 BST/ 08:30 EDT

Boeing reported 17 aircraft orders in April, quite low by historical standards but up from the single digit orders in February and March. Meanwhile, the ISM new-orders index has risen strongly for the past two months, up 6pts in April to 47.2 after climbing 8.1pts in March. Still, in the latest Philadelphia Fed survey, the majority of respondents still saw lower underlying demand over the past two months. Analysts look for April durable orders to rise 0.6%, with ex-transportation orders rising 0.2%, not quite reversing the declines registered in March.

US Initial jobless claims (week 23 May) 13:30 BST/ 08:30 EDT

Last week’s initial claims fell to 631,000, down from 643,000 previously. The Labour Department indicated that the weekly drop in claims came in states that had reported a jump in auto-related filings, which probably reflected auto-dealer closings. Analysts look for claims at 625,000 this week. Continuing claims for the prior week could rise to a new high of 6.74m, up from 6.66m.

US New home sales (Apr) 15:00 BST/ 10:00 EDT

The latest Beige Book noted some signs of stabilisation in housing markets. Many districts pointed to home-buyer tax credits, low mortgage rates, and more affordable prices as boosting the number of potential buyers. A number of districts noted modest sales improvement in some areas. The NAHB homebuilder survey has also shown some uptick in its indexes of present sales and prospective buyer traffic. Analysts look for April new home sales to rise to 390,000, which would be the highest reading since last October. 

Corporate

Man Group reported a 64% decline in pre-tax profit for the year ending March 31, but said it is well positioned in an environment that will result in a major shakeout of weaker investment managers. The world’s largest publicly traded hedge-fund manager said that profit before tax was $743 million, down from $2.08 billion last year. "After the turmoil of 2008, the hedge fund industry has shown signs of stabilization in early 2009," the group said in a statement. It referred to market commentators who anticipate that industry funds under management will bottom-out this year, then regain upward momentum. "With overall industry performance in positive territory for the year to date and outflows slowing, there are some signs in support of this view," it said. But, it said there will be a "sharp fall" in the number of managers that haven’t been able to survive the decline in assets under management: "The factors underpinning these trends play to the strengths of Man’s business model." Funds under management were down to $46.8 billion from $74.6 billion a year ago, and from $53.3 billion at end December, resulting in a 23% drop in net management fee income, a trend that Man said will continue.

Building supplies group Wolseley reported an 80% fall in pre-tax profit in the first nine months of its fiscal year and warned that trading conditions will remain challenging until at least early 2010. The company said that most of its markets continued to weaken in March and April and, adding to economic woes hurting the business, that Wolseley’s nine-month results were hurt by unfavourable foreign-exchange rates. Trading profit for the nine months ended April 30 was down 58% to £189 million, or 65% at constant currency-exchange rates. Pre-tax, pre-items profit fell 80% to £72 million, or 88% in constant exchange rates. Chief Executive Chip Hornby said, "Recent trading has proved extremely challenging and we continue to anticipate this will be the case until at least early 2010." However, he assured investors that having sold its troubled U.S. Stock Building business and improved Wolseley’s financial position through a £1 billion capital hike, the company is well placed both to meet the current challenges and to capitalize on a future market recovery. Wolseley earlier this year raised £1 billion in new capital to shore up its balance sheet, and offloaded its troubled Stock Building business to a joint venture with private-equity firm Gores Group LLC. The company said, looking ahead, it will focus on tighter cost control and strong cash generation.

U.K. water company United Utilities said its full year pre-tax profit rose 10.8% due to increases in regulated prices and better cost control. For the year ended Mar. 31, 2009, the company’s profit before tax was £529.8 million, compared with £478.3 million the year before. Revenue was 3% higher at £2.44 billion, compared with £2.36 billion in 2008. "This is a robust set of results in a difficult economic climate," said Chief Executive Phillip Green. "United Utilities continues to benefit from a robust financing position and we have a healthy level of headroom to cover our projected financing needs through to mid-2011".

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: May 28th, 2009 under Asset Management.
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