FTSE 100	5060.95, -78.39	Dow	10012.23, +10.05
FTSE 250	9035.91, -187.93	Nasdaq	2141.12, +15.69
FTSE All Share	2596.72, -41.31	S&P 500	1066.19, +3.08
Nikkei	9951.82, -105.27	Hang Seng	19454.28, -210.80
Oil (Crude)	$71.19	Gold	$1052.80
Base Rate	0.5%	10 Yr Gilt	3.89%
£/$	1.5571	£/€	1.1395
1 month LIBOR	0.524	3 month LIBOR	0.619

 

Markets

London - UK stocks closed lower on Friday on fears over the health of the global recovery as US employment data failed to impress, while ICAP fell following a warning on profits. ICAP fell by nearly 20 percent, after the company said full year earnings would miss analyst’s expectations. The FTSE100 closed 78.39 points lower at 5060.92. Energy stocks were lower, with BG Group 3.2 percent lower after its fourth quarter earnings, excluding non operations, missed expectations. Royal Dutch Shell and BP fell 0.9 percent.

Miners were also under pressure, as metals prices, retreated as investors turned to the dollar as a safe haven. Sterling fell to an eight and a half month low against the dollar as concerns over euro zone sovereign debt problems boosted the appeal of the currency. Xstrata and Randgold Resources were 5.2 and 2 percent lower ahead of results today.

Banks were lower, with Barclays, HSBC, Lloyds Banking Group, Standard Chartered and RBS were 1.2 to 5.7 percent lower. BAE Systems rose 1.6 percent, after the company reached a settlement with the US and the UK that will see it pay total fines of around $450m, and draws a line under a long running corruption investigation on both sides of the Atlantic. Compass rose 5.1 percent after the company said it made a good start to its current fiscal year, with its rate of sales decline slowing and its pipeline of new business remaining strong.

New York - US shares erased big losses at the close on Friday, with technology stocks leading the advance. The DJIA closed 10 points higher at 10012, having fallen as low as 9835 earlier. The S&P500 rose 3.08 points to close at 1066.19, and the Nasdaq added 15.69 points to finish at 2141.12. Stocks fell sharply in the afternoon as worries about a growing debt crisis in Europe exacerbated uncertainty about the US economic outlook. But the market changed direction, as the dollar trimmed bigger gains and some of the selling pressure gave way. Worries about the Euro zone caused investors to drop riskier assets and seek the US dollar and government debt. The dollar rose to a more than 6 month high versus the euro and also gained against the yen. The dollar’s strength then dragged on commodity prices, oil and gold stocks and companies and sectors that have benefited from a weaker dollar. Strength in tech stocks such as Cisco Systems, Microsoft and Intel helped temper broader losses and eventually led a comeback.

In company news, Goldman Sachs has surprised Wall Street by announcing that it is paying CEO Lloyds Blankfein $9m in company restricted stock as his bonus. He was expected to receive a much larger payment. Earlier, JPMorgan said CEO Jamie Dimon was given a $16m bonus last year, in restricted stock and options.

Toyota’s chief executive apologized Friday for the recall of 8 million cars. However, he did not announce a new recall of the Prius Hybrid, despite reports of brake problems. Earlier the company said it is also examining the brake systems of the Lexus Hybrid vehicles since they used the same system as the 2010 Prius. The stock gained 3.5 percent.

In economic news, the Labour Department reported that employers cut 20,000 from their payrolls last month. Employers had been expected to add about 15,000 jobs. Employers cut a bigger than initially reported 15,000 jobs from their payrolls in December. The January report had some positive signs, including an increase in the work week and an increase in temp agency employment. But the report also showed that the impact of the recession on the labour market was far worse than initially reported. The unemployment rate fell to 9.7 percent from 10 percent in December. Economists expected it to hold steady at 10 percent.

US light crude for March delivery fell $1.95 to close at $71.19 a barrel on NYMEX. Treasury prices rose, lowering the yield on the 10 year note to 3.54 percent from 3.61 percent.

Tokyo - The Nikkei average fell 1.1 percent to a two month closing low today, with exporters such as Sony Corp hurt by a stronger yen, while anxiety over fiscal problems in Europe continued to dent investor confidence. Beer maker Kirin Holdings slid more than 7 percent after saying that it and fellow beer maker Suntory had scrapped a plan to create one of the world’s largest good and beverage makers, citing differences over governance and a merger ratio. The Nikkei closed 105.27 points lower at 9951.82, its first close below 10,000 since December 10.

Economics

There is no major economic news today.

Corporate

Xstrata reinstated dividends today citing an encouraging outlook for commodities demand in the medium term after posting an expected 41 percent fall in 2009 profit on weaker metals prices. "Robust economic growth and demand for commodities from industrialising nations is likely to continue," Chief Executive Mick Davis said in a statement, adding that Asia would be the main driver of metals demand as the pace of recovery in rich nations was uncertain. "The medium term outlook for commodity demand remains very promising.”A final dividend of 8 cents per share will be paid in May. Xstrata said attributable profit, excluding exceptional items and discontinued operations, fell to $2.77bn last year from $4.70bn in 2008 mainly due to weaker metals prices on 16 percent lower revenue of $23.5bn. This compared to a consensus profit forecast of $2.76bn. Xstrata said it delivered real cost savings of $501m, representing a 5 percent fall in the operating cost base. The group said it had over $8bn in projects currently under construction and a further $9bn were due to be approved in 2010. The mine expansions will cost $14bn in capital spending over the next three years, including $4.9bn in 2010. Xstrata dropped a "merger of equals" proposal for Anglo that would have created a group with a market value of $96bn after refusing demands from Anglo shareholders that it pay a premium. Xstrata posted mixed production data last week, showing an 11 percent rise in coal output and a five percent fall in mined copper, its two most profitable products. Any increased output, however, was offset by currency effects and weaker prices after demand was hammered during the downturn. Average coal prices last year fell as much 38 percent, copper slid 26 percent and zinc 11 percent. Xstrata has said currency effects, such as a strong South African rand, also pressured margins.

St Modwen Properties reported a 20 percent decline in full year net asset value per share, but said the property market was showing signs of recovery and it was confident of returning to growth in profits and NAV in 2010. The company said its portfolio had not yet seen the resurgence in values experienced in other parts of the property market, but added that it was now starting to see important signs of improvement. The company said "Property market prospects still remain uncertain. The economy may be slowly emerging from recession, but business confidence remains fragile, with continued pressure on rents and occupancy levels". St Modwen’s net asset value per share for the year ended November 30 fell to 200 pence from 251 pence a year earlier. Pre-tax loss for the year widened to £119.4m from a loss of £73.1m in the previous year. The company said it was not paying a final dividend for the year, and it expected to resume payment of dividends when it starts seeing a rise in NAV.

YouGov Plc said it remained confident that trading for the full year would be in line with expectations and said it was well placed for further growth. The company repeated its belief that group profitability would be stronger in the second half of the financial year than in the first. They added "YouGov’s financial position remains strong with substantial cash balances of £15m as at 31 January 2010. This will leave the group well placed to support its strategy of growth and innovation." Numis analysts said the £15m cash balance was well ahead of their forecast of £12m and said they retained their view that YouGov was well placed to benefit when markets recover.

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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: February 8th, 2010 under Asset Management.
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