FTSE 100	5125.64, +17.75	Dow	10005.98, +203.82
FTSE 250	9020.40, +27.65	Nasdaq	2105.32, +49.80
FTSE All Share	2624.68, +8.6	S&P 500	1066.63, +20.13
Nikkei	9789.35, +71.91	Hang Seng	21824.20, +345.12
Oil (Crude)	$79.78	Gold	$1089.30
Base Rate	0.5%	10 Yr Gilt	3.87%
£/$	1.66	£/€	1.1161
1 month LIBOR	0.513	3 month LIBOR	0.603

 

Markets

London - The FTSE 100 rose 17.75 points to close at 5,125.64 yesterday. Shares had spent much of the day in negative territory, even after the Bank of England held rates at 0.5% and said it would pump £25bn more into the economy.  But stocks staged a late rally following the economic data from the US. Cable & Wireless shares fell 6.2% after it cut its full-year earnings guidance. The firm also said it would revive plans to split itself in two. In contrast, shares in ITV jumped 9.6% after the broadcaster said it expected ad revenues to increase next month. This morning the FTSE is 12.34 points higher at 5,137.98. British Airways is the biggest percentage riser even though it posted its worst first-half results in history.  

New York - US stocks rallied yesterday, sending the Dow back past 10,000. Investors cheered positive economic data, while stronger than expected results from Cisco lifted tech stocks. The Dow jumped 203.82 points to 10,005.96, the S&P 500 gained 20.13 points to 1,066.63 and the Nasdaq surged 49.80 points to close at 2,105.32.

Government data showed that the number of Americans filing for new claims for unemployment fell to 512,000 last week, while continuing claims fell to 5.749 million from 5.817 million - the eighth decline in nine weeks. Data also showed U.S. non-farm productivity rose more than expected in the third quarter as companies squeezed more output from a smaller pool of labour.

In corporate news, Cisco Systems reported weaker quarterly earnings and revenue that beat estimates. The company’s CEO, John Chambers, said current-quarter revenue would also top estimates and that business conditions had bottomed at least six months ago. Shares gained 2.8% making it one of the top performers on the Nasdaq.

Tokyo - The Nikkei climbed 71.91 points to close at 9,789.35 this morning. Exporters rose after good news on U.S. jobs renewed hopes about the pace of economic recovery and tech shares rose after gains by their U.S. peers. Financial companies’ limited gains on concern stricter rules will force them to raise funds, diluting the value of current shareholdings. Leaders from the Group of 20 nations are expected to favour stricter capital requirements at a meeting today that will exclude preferred shareholdings from core capital, a move that may force banks to issue new shares.

Hong Kong - The Hang Seng is currently 345.12 points higher at 21,824.20, again following the buoyed mood in the US. Lenovo Group, China’s biggest maker of personal computers, gained after releasing better than expected earnings.

Economics

UK PPI (Oct) 09:30 GMT

Like consumer prices, producer prices surprised to the upside throughout Q2 and Q3. Both headline and core producer price inflation rose in September. The weakness of sterling and rising oil prices are expected to have continued this trend, as analysts expect the annual rate of change of output prices to rise to 2.0%.  

US Non-farm payrolls (Oct) 13:30 GMT/ 08:30 EST

Analysts expect October non-farm payrolls to fall by 175,000. The unemployment rate could rise to a new cycle high of 9.9%. Although many industries are showing clear signs of slowing job losses, there have been a number of negative labour signals over the past month. The sum of the state payroll data for September showed a sizeable decline of 452,000. This included a 140,000 drop in government jobs, which could point to another drop in this month’s official estimate for government payrolls (analysts assume -30,000). In October’s consumer confidence report, the jobs-plentiful index fell to a new cycle low of 3.4, while nearly half of consumers said that jobs were hard to get, the highest proportion since 1983. Analysts look for average hourly earnings to be muted at 0.1%, with the year-on-year rate slowing to 2.2% from 2.5%. 

US Wholesale inventories (Sep) 15:00 GMT/ 10:00 EST

Analysts expect September wholesale inventories fell by 1%, down for the 14th month in a row.

US Consumer credit (Sep) 20:00 GMT/ 15:00 EST

Revolving credit-card debt outstanding has fallen for 11 consecutive months and total consumer credit peaked in September 2008. In the latest University of Michigan survey, 38% of consumers planned to reduce their credit card debt over the next 12 months, nearly the same proportion as in early 2008. Analysts look for consumer credit to fall USD10bn in September, marking a full year of declines. 

Corporate

British Airways today posted its worst first-half results in history due to falling passenger numbers and yields and plans to cut a further 3,000 jobs by the end of the fiscal year. BA posted a pre-tax loss for the six months to Sept. 30 of GBP292 million compared with a pre-tax profit of GB52 in the same period a year ago. Its operating loss for the period fell to GBP111 million from an operating profit of GBP140 million a year ago. The results are worse than the GBP45 million first-half pre-tax profit it posted for the same period in 2001. First-half revenue fell 14% to GBP4.1 billion as a result of selling cheaper tickets and the absence of favourable fuel surcharges in effect last year. On a constant currency basis, revenue fell 20%. Average passenger revenue per filled seat for each kilometre flown, or yield, fell 12% in the six months to 5.99 pence compared with 6.82 pence a year earlier. BA will cut winter capacity by 6%, more than the 5% it had originally planned. The airline said it has already cut the equivalent of 1,900 jobs and plans to axe a further 3,000 by March 31. It currently employs 38,704 workers.

Royal Bank of Scotland Group, which is about to see its government ownership rise to 84%, on Friday said its operating loss for the third quarter narrowed from the second quarter, although it remains cautions on the outlook. The U.K. bank posted an operating loss for the three months ended Sept. 30 of GBP1.53 billion, narrower than GBP3.53 billion it posted in the second quarter. Adjusting for movements in the fair value of the bank’s own debt, it posted a pre-impairment operating profit of GBP2.24 billion, compared with GBP2.09 billion in the previous quarter. RBS is about to embark in a massive restructuring–including big asset sales–ordered by the European Union, as the U.K. government pumps an extra GBP25.5 billion into RBS through an scheme to insure GBP280 billion in toxic assets. Last year, RBS received GBP20 billion in state money, after it fell into disarray when the financial crisis intensified and revealed deep problems in the ABN Amro businesses it had acquired in an ill-timed acquisition, late in 2007. In exchange for the government aid, RBS will now have to shed businesses over the next four years, as the EU seeks to make sure the bank isn’t at a competitive advantage over peers that stayed independent.

Rentokil Initial today reported third-quarter pre-tax profit more than doubled amid difficult trading conditions and said in the fourth quarter it would continue to focus on delivering service, cutting costs and generating cash. Chief Executive Alan Brown said he would continue to drive operational excellence through service productivity and reducing administration and overhead costs but, above all, "we are focusing on the development of a strong growth agenda." Third-quarter pre-tax profit rose to GBP24 million from GBP11.1 million in the same period a year ago while revenue fell 3.2% to GBP583 million. Rentokil’s earnings were boosted by the strengthening of the euro against sterling as some 70% of its earnings are denominated in the common currency. The company revised its guidance for its troubled parcels business City Link, which is expected to make an operating loss of GBP7 million for the full year, compared with GBP12 million previously forecast. Rentokil is undergoing a three- to five-year restructuring process after the performance of its City Link business sparked several profit warnings and a change of management. The company cut its dividend as part of this process but CEO Brown said in July that the company would reconsider its dividend in 2010.

Orthopaedics firm Smith & Nephew today reported a 73% rise in third-quarter net profit and said there are signs the market for new hips and knees is stabilizing. The company said U.S. revenue at its orthopaedic reconstruction unit grew close to the market rate of about 5% on year and by 2% worldwide. The market is showing signs of stabilizing following sequential fall in previous quarters, Smith & Nephew said. It said third quarter net profit rose to $128 million from $74 million a year earlier, on revenue down 2% at $915 million. Earnings per share, excluding restructuring, amortization and other costs, were 16.8 cents, beating forecasts. Analysts forecast revenue of between $887 million and $927 million and adjusted earnings per share of between 13 cents and 14.5 cents, according to the company.

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Posted: November 6th, 2009 under Asset Management.
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