FTSE 100	4158.66, +18.43	Dow	8183.17, +4.76
FTSE 250	7234, +37.19	Nasdaq	1752.55, +5.38
FTSE All Share	2124.90, +9.32	S&P 500	882.68, +3.12
Nikkei	9287.28, -3.78	Hang Seng	17,678.92, +111.67
Oil (Crude)	$60.41	Gold	$916.20
Base Rate	0.5%	10 Yr Gilt	3.86%
£/$	1.628	£/€	1.1696
1 month LIBOR	0.61	3 month LIBOR	1.06

 

Markets

London - The FTSE 100 is currently 18.23 points lower at 4,140.43. Rio Tinto causes one of the biggest weights on the blue chip index, down 1.5%, as allegations continue from the Chinese government that four of its employees stole state secrets. Liberty International tops the risers’ board after UBS upgraded the stock to Neutral from Sell on valuation grounds. UBS noted the company’s unique and concentrated share register and thinks this will continue to provide share price support. In other news, the Daily Mail suggest Lloyds Banking Group boss Eric Daniels will be sidelined under plans to parachute an all-powerful chairman into the state-controlled bank - shares gain 1.2%.

New York - US markets finished marginally higher on Thursday despite Alcoa’s quarterly results being better than expected and the number of Americans filing new claims for unemployment falling. US initial jobless claims fell to 565,000 last week, compared to 617,000 the previous week. This was also short of the 605,000 expected by analysts. However, continuing claims rose to 6,883,000, a fresh record high.

The Dow Jones added 4.76 points to close at 8,183.17 while the S&P 500 gained 3.12 points to end at 882.68. The Nasdaq rose 5.38 points to finish at 1,752.55.

Financials were stronger after Goldman Sachs got upgraded to Buy, courtesy of Bank of America Securities-Merrill Lynch. The broker cited the firm’s earnings power and a rapidly increasing book value. Goldman’s shares climbed 3.4% while on the Dow, JPMorgan rose 2.8% and Bank of America gained 1.1%. Merck caused the biggest weight on the Dow, sliding 3.7%. Investors sold on speculation that its Zetia cholesterol drug fared poorly in a clinical trial comparing it to a drug from Abbott Laboratories.

US light crude oil for August delivery added $0.27 to $60.41 a barrel. COMEX gold for August delivery gained $6.90 to $916.20 an ounce. Treasury prices went lower, raising the yield on the 10 year note to 3.40% from 3.31%.

Tokyo - The Nikkei edged 3.78 points lower to 9,287.28 this morning, having swung between gains and losses more than 25 times throughout the session. Shipping related companies fell after the Nikkei newspaper said container rates between Asia and North America are being cut and an index of bulk cargo fees fell for a seventh day. Chip equipment maker Tokyo Electron added 0.7% after orders nearly doubled in the last quarter. 

Hong Kong - The Hang Seng is currently 111.67 points lower at 17,678.92, reversing gains, as funds were being diverted to new share listings and investors took advantage of recent gains to sell. Amber Energy, which operates gas-fired power plants in eastern China, rallied 63% on its debut.  

Economics

UK PPI (Jun) 09:30 BST

Despite recent gains, oil prices are still lower than the level seen one year ago which should continue to reduce headline producer price inflation. However, the decline in sterling may mean the core rate of producer price inflation starts to prove more resilient now that underlying activity is stabilising.

US Trade balance (May) 13:30 BST/ 08:30 EDT

We expect a trade deficit of USD31bn in May, the third straight deterioration on the back of higher oil prices. Total imports could rise by USD1.3bn as the 1.3% rise in import prices for goods should offset an estimated 0.4% decline in import volumes. Meanwhile, analysts expect exports to fall by USD600m, declining for third straight month despite a 0.6% rise in exports prices.

US Import price index (Jun) 13:30 BST/ 08:30 EDT

Successive monthly increases in the oil price should continue to boost the import price index. With oil averaging around USD69/barrel in June compared with USD59/barrel in May, analysts expect petroleum import prices to rise by around 17%. Ex-petroleum import prices have started to stabilise and we assume a 0.2% increase, the same as in May. Overall, import prices could rise by 2.5%, although the year-on-year rate would still fall to -18.1% from -17.6% due to earlier declines.

US University of Michigan confidence (Jul, prelim.) 15:00 BST/ 10:00 EDT

June Michigan sentiment rose to 70.8 from 68.7 in May, but the upward momentum in consumer confidence may be fading, at least temporarily, in the face of steadily rising gasoline prices and still sizeable job losses. The weekly ABC News consumer comfort index has fallen 11pts since mid-May. Analysts look for the July Michigan reading to fall back to 69. The measure of 5-year median inflation expectations was at 3.0% in June, while the 1-year median was 3.1%. 

Corporate

Insulation and construction materials supplier SIG today warned that trading will remain difficult in the near term as a seasonal pickup in activity hasn’t materialized. "SIG’s diverse market sectors and countries of operation are all at different stages in their cycles and are affected differently by the macroeconomic situation, which limits visibility and renders the short to medium term outlook difficult to predict," the company said in a trading update. "Overall however, trading is expected to remain extremely challenging in the near term," it added. SIG in the first half of 2009 booked a 10% fall in sales to £1.35 billion from £1.49 billion in the same period a year ago. Like-for-like sales were down 13% in the same period. Discounting for currency fluctuations, sales and like-for-like sales dropped 15% and 17.5%, respectively. In the U.K., which represents 46% of group sales, the company reported a 22% decrease in like-for-like sales and said gross margins continued to weaken. It said that mainland Europe sales were more resilient with like-for-like sales falling 9.3% while margins held up better than in the U.K. The company still believes that it will benefit in the future from the longer-term positive trend of demand for housing and for insulation. SIG said is had reduced net debt in the first half by £96.1 million to £276 million. It added that cost-saving measures announced in 2008 were proceeding well and actions so far in 2009 have yielded annualized savings of £39 million with a one-off cost of £18 million.

Rio Tinto said today it is not aware of any evidence that would support allegations by Chinese authorities that four of its employees stole state secrets relating to the current round of iron ore price negotiations. Australia’s foreign minister, Stephen Smith, said Friday that Chinese officials have linked the arrest of Stern Hu, an Australian citizen who heads of Rio’s iron ore operations in China, to the current round of iron ore price negotiations. A spokeswoman for Rio Tinto said the company was following developments closely and was "surprised and concerned" about the allegations. "We are not aware of any evidence that would support these allegations," she said. "Rio Tinto is committed to high standards in business integrity and takes its ethical responsibilities very seriously." The miner has not been informed by Chinese authorities about any charges in relation to the allegations and remains ready to assist authorities in their investigations, she said. Hu, the head of Rio’s iron ore operations in China, has been detained since Sunday along with three Chinese employees of Rio, and Chinese authorities have said they have evidence Hu stole state secrets for a foreign country. Confirmation that Hu’s detention is related to this year’s iron ore price negotiations adds another layer of complexity to an already heated round of negotiations that have seen Chinese negotiators seeking deeper price cuts than those agreed between Rio and
Japanese steel mills. Smith said comments posted on an official Chinese website Thursday night state that the Rio Tinto employee stole state secrets by illegal means, including bribery of Chinese steel company officials.

Bodycote said today that as a consequence of the short order book and continuing uncertainty in market conditions visibility is very limited, but if demand remains at its current depressed levels the Board would anticipate the outcome for 2009 being materially below recent market EBIT consensus of £24 million.

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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: July 10th, 2009 under Asset Management.
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