FTSE 100	5494.39, -39.02	Dow	10609.65
FTSE 250	9572.07, +33.87	Nasdaq	2287.99
FTSE All Share	2807.96, +18.21	S&P 500	1136.03
Nikkei	10764.90, -90.18	Hang Seng	21677.98, +217.97
Oil (Crude)	$77.86, -$0.14	Gold	$1131, -$12
Base Rate	0.5%	10 Yr Gilt	3.9%
£/$	1.641	£/€	1.1403
1 month LIBOR	0.518	3 month LIBOR	0.611

 

Markets

London - The FTSE 100 gained 39.02 points to close at 5,494.39 yesterday. Mining stocks were among the biggest risers, with Eurasian Natural Resources leading the way, up 3.9%. Cadbury rose 1.8% on expectations Kraft will increase its takeover bid. On the downside, International Power dropped 3.4% after talks ended over a possible tie-up with France’s GDF-Suez. This morning the FTSE is 29.62 points lower 5464.77. SABMiller leads the fallers after its third quarter figures disappointed. In contrast, Burberry tops the risers, up 4.8%, after its third quarter results topped forecasts. Cadbury gains 3.4% after Kraft Foods Inc confirmed it was finalising a recommended offer with the U.K. confectioner.

New York - The US stock market was closed yesterday.

Tokyo - The Nikkei lost 90.18 points to 10,764.90 this morning after the yen climbed to a one month high. Shipping companies gained on expectations earnings will improve.

Hong Kong - The Hang Seng reversed losses this morning, rising 217.97 points to 21,677.98. The bounce came after Caijing Magazine said Shanghai may allow individuals to invest abroad, such as Hong Kong.

Economics

UK CPI (Dec) 09:30 GMT

Base effects on petrol prices will place less downward pressure on inflation and the reinstatement of 17.5% VAT on 1 January is likely to see a sharp rise in inflation over the coming months. But there is a lot of uncertainty surrounding when the rise in VAT will be passed through to consumer prices. Some retailers appear to have brought it forward to December while some are waiting till February. Hence, there is a lot of uncertainty about the inflation numbers over the next few months.

US NAHB housing market index (Jan) 18:00 GMT/13:00 EST

The NAHB homebuilder optimism index failed to improve in the second half of last year, drifting lower to 16 in December. Until we have seen a more substantial recovery in new home sales, the survey appears likely to remain deeply pessimistic. Analysts look for a small increase to 17 in January.

Corporate

Luxury clothing and accessories retailer Burberry smashed third-quarter sales forecasts amid revived demand from department stores and strong sales of outerwear and accessories at its thriving retail stores. The company, which last year was forced to discount heavily in the run-up to Christmas to maintain sales at the expense of margins, expects adjusted pre-tax profit for the full year to be towards the top end of market expectations. The company reported total sales on a constant currency basis up 12% to GBP380 million in the three months to Dec. 31, with same-store sales at its network of retail stores up 10% in the period, smashing analysts’ forecasts for a rise of 3%. Including new store openings, total retail sales at constant currency rose 16% in the period, again outperforming analyst expectations for an 11% increase. Tight stock control at its retail stores and strong full-price sales of the groups autumn/winter collection mean there will be fewer clearance sales in the current fourth quarter which will impact sales but benefit margins. Wholesale revenue, which comes from department stores that stock the group’s iconic red, black and camel coloured check design, rose 5% at constant currency, compared with market expectations of a 16% decline. The swing to positive sales growth at Burberry’s wholesale division, which has been declining for several quarters, will push up the full-year expectations for the full year, and the company now expects wholesale revenue to be down between 10% and 12%, from previous guidance of a 15% decline.

Shares in Cadbury rose more than 3% this morning after U.S. food giant Kraft Foods Inc confirmed it was finalising a recommended offer with the U.K. confectioner. "The boards of Kraft Foods and Cadbury confirm that they are finalising the terms of a recommended offer for Cadbury," said Kraft in a brief statement. "A further announcement will be made shortly." The statement follows a Wall Street Journal report that the two parties are discussing a deal that would value Cadbury at 850 pence a share, with about 500 pence worth coming in cash and the rest in Kraft shares. Kraft’s original offer, comprising 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, is currently worth just over 760 pence a share. Analysts have said consistently said the offer would need to be raised above 800 pence a share to have any chance of success. While many shareholders had hoped for a higher takeout price, the fact that about 25% of Cadbury’s shares were in the hands of hedge funds meant a deal at this level was always likely to succeed. A deal would end more than four months of public verbal sparring that followed Kraft’s hostile takeover approach for Cadbury, and would also end the nearly 200-year independence of Britain’s most famous candy company.

Publisher Pearson today upgraded its earnings guidance for 2009 again, underpinned by its vast U.S. education operations, digital learning and the strength of the dollar against the pound, and said it sees significant long-term growth opportunities. Pearson expects full-year adjusted earnings per share, which excludes intangibles such as goodwill, to be up around 10%, ahead of its previous guidance of at least 60 pence a share and the current market consensus of 61 pence. In October, the group raised its guidance to at least 60 pence a share from its previous forecast of at least 57.7 pence a share. Chief Executive Marjorie Scardino said the group is "heartened by our performance in the face of the economic downturn, and emboldened by the accelerating worldwide take-up of our brand of personal and digital learning."

Brewer SABMiller said today that its third quarter lager volumes were unchanged but soft drink volumes were up 2% from the same period last year as the slight recovery seen in some of its markets was offset by other markets which remained subdued. On a nine-month basis, the world’s second-biggest brewer by volume after Anheuser-Busch Inbev NV said lager volumes were 1% lower than in the same period last year. "Consumer demand during the quarter varied across our markets, with some showing tentative signs of recovery, whilst in others demand remained subdued," the company said in a statement. The London-based company–which counts Grolsch, Peroni Nastro Azzurro, Castle Lager and Pilsner Urquell among its brands–said in November its outlook was starting to improve, after a difficult first half. Adverse currency exchange rates in the first half have turned into a benefit in the second half, largely due to the recent strengthening of the South African rand and the Colombian peso.

The above details are provided for information only and are not intended to be construed as solicitation for the sale or purchase of any particular investment nor as specific investment advice.

 

 

Posted: January 19th, 2010 under AML Information.
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