FTSE 100	4528.84, -57.29	Dow	9096.72, -11.79
FTSE 250	7731.16, -145.7	Nasdaq	1975.51, +7.62
FTSE All Share	2308.01, -30.45	S&P 500	979.62, +2.56
Nikkei	10113.24, +25.98	Hang Seng	20289.10, -335.44
Oil (Crude)	$67.23	Gold	$941.70
Base Rate	0.5%	10 Yr Gilt	3.959%
£/$	1.6371	£/€	1.1588
1 month LIBOR	0.584	3 month LIBOR	0.905

 

Markets

London - UK stocks closed lower on Tuesday, ending its two week running streak after profit taking in mining and energy stocks erased earlier gains on the index, which had risen for the past 11 sessions. The FTSE100 closed 57.29 points lower at 4528.84. Miners took the most points off the index, with Antofagasta, Kazakhmys, Eurasian Natural Resources, Lonmin and Rio Tinto falling between 3.6 and 7.2 percent. Xstrata fell 5.8 percent, as investors cashed in on recent gains after the miner posted an 11 percent rise in first half production of coal, while copper output rose 1 percent. Randgold Resources fell 8.6 percent after the company announced a share offering to fund the development of its Gounkoto and Massaqa projects in Senegal and Mali as it reported a rise in quarter on quarter profits and production.

BP fell 3.2 percent after the company reported a halving in second quarter profits due to lower oil prices, but said it increased its cost reduction targets. BG Group, Royal Dutch Shell, Tullow Oil and Cairn Energy fell between 1.1 and 2 percent, while crude prices fell below $67 a barrel.

Banks were under pressure, with Barclays, HSBC, Lloyds Banking, RBS and Standard Chartered falling between 0.3 and 3.8 percent. UK Financial Investment, which manages Britain’s stakes in its part and fully nationalised banks, said John Kingman would quit as chief executive.

Vodafone fell 1.5 percent. The company said there was no sale process underway for Deutsche Telecom’s T-Mobile UK subsidiary at a gloomy annual meeting overshadowed by economic and performance concerns. GlaxoSmithkline rose 0.7 percent after the company said it aims to start selling Amgen’s keenly awaited new osteoporosis drug denosumab in Europe by the middle of next year. Shire rose 1.1 percent after it said it was still confident of launching its hyperactivity drug Intuniv despite approval being delayed by US regulators. Sage Group rose 3.4 percent after the company reported an in line trading update, prompting Evolution Securities to raise its rating to neutral from sell.

In economic news, a survey by the CBI showed that the decline in British retail sales eased in July but by less than expected. And in the US, consumer confidence fell more than expected in July, recording its second consecutive decline as sentiment remained hampered by a difficult job market. 

New York - US stocks closed mixed on Tuesday, as investors weighed a weaker than expected consumer confidence report and a better than expected housing report in the aftermath of a big rally. The DJIA closed 11.79 points lower at 9096.72, the Nasdaq added 7.62 points to close at 1975.51 and the S&P500 closed 2.56 points lower at 979.62.

In company news, Valero Energy reported weaker revenue and earnings that topped estimates. The stock fell 2.4 percent. Bank of America rose after the company said it plans to reduce some of its 6,100 branch networks. Reports said it planned to cut as much as 10 percent of the network, but the bank said the figure was smaller. IBM said it will buy Chicago based business software maker SPSS in an all cash deal worth $50 per share or $1.2bn. Sprint Nextel will buy the remaining 87 percent of Virgin Mobil it doesn’t already own in an all stock deal worth $5.50 per share of $483m. Viacom reported weaker quarterly profit that nonetheless topped expectations.

This week is the biggest for corporate results, with 146 of the S&P500 due to release results. So far, 77 percent of reported earnings have topped forecasts, versus the long term average of 61 percent.

In economic news, Consumer confidence slipped for the second month in a row, as growing joblessness and a prolonged recession took its toll on investor psychology. The index dipped to 46.6 in July from 49.3 in June. Economists expected the index would slip to 49. On a more positive note, the S&P/Case Shiller 20 city home price index rose 0.5 percent in May. The index dropped 17.1 percent versus a year ago, short of forecasts for a bigger drop of 17.9 percent. It was the fourth month in a row that the pace of declines lessened.

US light crude for September delivery fell $1.15 to close at $67.23 a barrel on NYMEX. Treasury prices rose, lowering the yield on the 10 year note to 3.7 percent from 3.72 percent. The 2 year note fell after a $42bn auction did not generate as much interest as the prior month’s 2 year note auction. COMEX gold for December delivery fell $14.60 to close at $941.70.

Tokyo - The Nikkei average closed at a seven week high today, buoyed by high tech stocks such as Tokyo Electron, but gains were capped ahead of key company earnings. Nippon Steel fell 3.5 percent after the company said it swung to a quarterly loss, widened its first half loss forecast by 10 percent and said it would not pay a first half dividend. But trade was thin and investors were hesitant, after a nine day rising streak was broken on Tuesday, the longest run in 21 years, and ahead of a slew of Japanese earnings this week. The Nikkei average gained 25.98 points to close at 10113.24, its highest close since June 12.

Economics

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

June ISM new orders slipped to 49.2 from 51.1 but remains close to the breakeven level of 50. Meanwhile, the latest Empire survey showed new orders improving into expansionary territory (5.9 from -8.2). Boeing reported 20 aircraft orders in June, equalling its number of orders for May. After an increase of 1.8% last month, analysts expect June durable goods orders to rise 0.4%, with an even stronger increase of 1.3% for ex-transportation orders. Meanwhile, analysts think nondefense capital goods orders excluding aircraft could climb 3.5% after rising 4.7% in May.

US Beige book 19:00 BST/ 14:00 EDT

Economic conditions remained weak, according to the previous Beige Book, but five out of 12 districts noted that the downward trend was showing signs of moderating. The general tone of this Beige Book should be similar, but on the margin a few more districts could upgrade their assessment to indicate a slower rate of decline, and one or two districts could even say that economic activity was steady. The manufacturing outlook is slowly improving given that recent survey readings have climbed close to or even above breakeven levels. Housing market comments should also be more positive, given recent signs of stabilization in home sales, housing starts, and even home prices. Consumer spending is likely to stay “flat or mixed” in most districts, while labour market and wage conditions remain weak.

 

Corporate

Morgan Crucible posted a 61 percent slump in first half profit and said it expects its industrial markets to remain weak in the second half. The company reported first half pre-tax profit of £15.3m, down from £39.5m a year earlier. Sales of £492m came in slightly below expectations. Morgan Crucible had in May forecast first half sales of close to £500m, prompting analysts to cut forecasts. Analysts currently forecast on average 2009 pre-tax profit of £65m on sales of £956m. The company said "Whilst we believe it is still premature to call to an end the downturn, there are some signs of a stabilisation in order books and sales levels in recent weeks in certain sectors".

CSR Plc posted second quarter revenue of $113m, including $2m from its SiRF acquisition, broadly in line with expectations, and said orders were improving. CSR said it expected third quarter sales to be in the range $195 to $215m. The company reported an underlying loss per share of $0.04, an improvement from the $0.06 loss in the first quarter, but worse than the market expected. Analysts were expecting the group to report revenue of $109m, excluding a contribution from SiRF, and underlying loss per share of 3.2 cents. The company said the substantial ending of destoking, coupled with normal seasonality meant it was seeing an improvement in order levels.

Reckitt Benckiser beat forecasts with a 29 percent jump in second-quarter net profit, as the company raised its sales and profit targets for 2009. The company posted net profit of £310m for the April-June quarter, beating forecasts of between £290m and £309m, and a consensus of £301m. The half-year dividend rose 34 percent to 43 pence. The company raised its targets for 2009 to see a 5-6 percent rise in underlying sales from a previous 4 percent target, and now expected net profit growth of 10-11 percent from 8-10 percent previously, both at constant currency.

Halfords posted a 1.3 percent rise in underlying first-quarter sales today, but said tough property markets would limit new store openings. Halfords said sales at shops open at least a year rose 1.3 percent in the 13 weeks to July 3. Adjusting for the timing of Easter, underlying sales were up 0.1 percent. Demand for cycles and car maintenance products were offset by a fall in sales of car enhancement products and weak trading in central Europe. Halfords said the performance was ahead of its internal plan but that tough property markets meant it would open fewer stores than initially planned, which would crimp sales growth.

Bodycote swung to a first-half operating loss and said it was seeing no improvement in demand levels. The company posted an operating loss from continuing operations of £50.8m, compared with a profit of £40.3m last year. "Whilst a number of market sectors now appear to be stabilising, there is, as yet, no sign of any meaningful improvement in demand levels," it said in a statement. The company warned on 2009 profit earlier this month, saying it would miss the EBIT consensus forecast of £24m by a material amount if demand stayed depressed in its main car, aerospace and oil and gas markets. Analysts on average currently forecast 2009 EBIT to fall to £11m from £91.7m in 2008.

Renishaw reported an 89 percent fall in full-year pre-tax profit, scrapped its final dividend and forecast bleak prospects until the second quarter, sending its shares down more than 5 percent. "It is difficult to predict how long the current market conditions will prevail. Current activity levels are showing some signs of an improvement, but we do not anticipate returning to profitability until the second quarter of this financial year," Chairman David McMurtry said in a statement. Renishaw reported a pre-tax profit of £4.7m, compared with £43.1m a year ago. Revenue for the year ended June 30 fell to £171.2m from £201.1m in the previous year. Total costs rose about 17 percent, including an increase of about £5m in distribution costs and a redundancy cost of about £4.1m related to 20 percent job cuts. Renishaw said the redundancy programme yielded an annual cost savings of £17m. Net cash balances at the year end were £20.5m, compared with £38.2m last year, it added.

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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 29th, 2009 under Asset Management.
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