FTSE 100	4405.22, -33.34	Dow	8764.49, +1.36
FTSE 250	7687.86, -59.47	Nasdaq	1842.40, -7.02
FTSE All Share	2251.85, -16.84	S&P 500	939.14, -0.95
Nikkei	9763.40, -102.23	Hang Seng	18024.22, -229.17
Oil (Crude)	$68.09	Gold	$952.50
Base Rate	0.5%	10 Yr Gilt	3.87%
£/$	1.6035	£/€	1.1605
1 month LIBOR	0.669	3 month LIBOR	1.259

 

Markets

London - UK stocks closed lower on Monday, weighed down by weak energy and mining stocks, depressed by lower commodity prices, while banks fell as recent bullish sentiment soured. The FTSE100 closed 33.34 points lower at 4405.22. Gordon Brown came under more pressure after damaging European election results added to his woes after six government ministers quit the government last week. The political worries saw sterling hit a near two week low against the dollar.

Miners were the main drag on the index as commodity prices retreated, impacted by a strengthening dollar, with Anglo American, Vedanta Resources, Fresnillo, Eurasian Natural Resources and Kazakhmys down 1.8-4.9 percent. Rio Tinto and BHP Billiton boosted on Friday by iron ore joint venture news after Rio terminated its investment deal with China’s Chinalco, fell 2.5 and 3.9 percent respectively. Oil stocks also dragged the index lower, tracking lower crude prices with Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy losing 0.7-2.1 percent. But BP rallied 0.3 percent after earlier falls.

Lloyds Banking Group was the heaviest faller, down 7.7 percent after rump shares from its placing and open offer were placed at 60 pence each. Lloyds said it had raised just under £3.5bn from shareholders, 87 percent of which subscribed to a capital raising that will be used to pay back some of the money injected into the bank by the government last year. Barclays fell 0.4 percent after it said it is in talks to sell Barclays Global Investors, with US fund manager BlackRock the front runner according to people familiar with the matter.

Despite the more gloomy mood in the market, further evidence pointed to an improving economic outlook. The recession on Britain is over for now, a slim majority of economists said in a poll published by the FT on Monday. Britain’s businesses felt more confident about their prospects than at any other time in the past 12 months, Lloyds Banking Group’s monthly "Business Barometer" found, providing further evidence of improving sentiment in the economy as the slowdown at least bottoms out, the Independent said.

BSkyB was the top FTSE100 riser, up 2.1 percent as traders suggested the company would be the beneficiary of the likely demise of rival Setanta. The board of Setanta was due to meet Monday, following media reports the group was close to going into administration. Rolls Royce gained 1.9 percent after Goldman raise its rating to neutral from sell in a European aerospace and defence review. But Cobham fell 3.2 percent as Goldman cut its rating in the same review.

New York - US stocks closed slightly higher on Monday as investors scooped up bank and consumer shares and kept an eye on Treasury bond yields, the dollar and commodity prices. After the close, the Supreme Court granted a stay in the sale of Chrysler’s assets to Fiat, at the behest of a group of shareholders. The move delays Chryslers exit from bankruptcy, which had been expected to occur as soon as Monday. The DJIA closed 1.36 points higher at 8764.49, the S&P500 closed 0.95 points lower at 939.14 and the Nasdaq fell 7.02 points to close at 1837.14. All three major indexes had slumped through the session, before turning higher near the close and ultimately ending mixed.

Banks were in focus Monday. The 10 banks that were required to raise a collective $75bn as a result of the government stress tests have to submit detailed plans by Monday. Bank of America, Morgan Stanley and PNC Financial are among the companies that have already met or exceeded requirements. In addition, the government is expected to announce which banks can pay back the TARP funds.

In other company news, Apple introduced a faster version of the iPhone, lowered the price on its existing phone and offered details of its revamped operating system. Fidelity and KKR are teaming up to give customers of Fidelity access to IPO’s of KKR companies. McDonalds fell after the company reported May sales at stores open a year or more rose 5.1 percent versus a rise of 6.9 percent in April.

In currency trading, the dollar gained versus the euro and fell against the yen. US light crude for July delivery fell 35 cents to close at $68.09 a barrel on NYMEX. COMEX gold for August delivery fell $10.10 to close at $952.50 an ounce.

Tokyo - The Nikkei average closed 102.23 points lower at 9763.40, as exporter stocks such as Honda Motor ran out of steam after leading the index to an eight month closing high the previous day.

Economics

UK RICS house price balance (May) 00.01 bst

There are signs that the government’s various schemes are beginning to improve mortgage availability, and this survey suggests that mortgage demand is also increasing. The prices balance of this survey is expected to improve significantly again this month, suggesting that the pace of price declines is moderating.

UK DCLG house prices (Apr) 09.30 gmt

The DCLG house price index is the last of the house price indices to be released for the month of April and therefore tends not to be as significant for the markets as the Nationwide or Halifax release.

US Wholesale inventories (Apr) 15.00 bst

The wholesale inventory to sales ratio has risen from a low of 1.1 in June last year up to around 1.3 in recent months. Wholesalers have been cutting their inventories since last September and continued liquidation is expected in April, with inventories falling 0.9 percent.

IS IBD/TIPP economic optimism (Jun) 15.00 bst

The relationship between the IBD.TIPP index and other confidence surveys has not been that great over the past year, but the 4 point rise in April turned out to be a good leading signal. The latest reading for May fell 0.5 points to 48.6. The personal financial outlook series has only climbed 2.4 points since its February low of 50.2, rising to 52.6 in May. This index can provide some clues as to whether higher gasoline prices and continued job losses are overwhelming the benefit of tax cuts and direct transfers from the economic stimulus package. The overall IBD/TIPP index is expected to drop to 48 in June. 

Corporate

IG Group expects full year profits to rise by 29 percent after reporting higher revenues in the fourth quarter. IG said it expects an adjusted pre-tax profit of £125m in the year ending May 31 compared to £97m in the same period last year. Revenues jumped nearly 40 percent to £257m. The company said revenues at its core UK and Australian businesses fell in the third quarter, but improved in the fourth quarter. Analysts said tighter credit criteria resulted in fewer bets being placed by the group’s top clients in the third quarter.

Heritage Oil said today it had entered a preliminary deal to merge with Genel Energy International, a unit of Turkey’s Cukurova Group, creating a Kurdish focused group worth around $5bn. Heritage said in a statement that the deal would be structured as a takeover of Genel by Heritage, whereby Heritage paid with shares and Genel investors ended up with around 50 percent of the enlarged group. Heritage has two main assets, stakes in oil blocks in Uganda and in Iraq’s semi-autonomous Kurdistan region. Last month Heritage said a successful well in its Miran block in Kurdistan could contain up to 4.2 billion barrels of oil. Genel has interests in a number of blocks in Jurdistan including Miran and the two main producing blocks. The Bagdad government, which is in dispute with the Kurdish regional government about oil revenue sharing, has said the licences are illegal.

Gas Turbine Efficency Plc said today that trading in the first five months of 2009 was robust and in line with its expectations, and added that its Chairman plans to step down. The company said revenue and order backlog are up to $30.4m. Gas Turbine Efficency said its board is looking for a replacement for Chairman John Bryant who will step down once the new appointment is made.

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: June 9th, 2009 under Asset Management.
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