FTSE 100	5244.06, +76.59	Dow	10268.81, +169.67
FTSE 250	9176.27, +103.31	Nasdaq	2214.19, +30.66
FTSE All Share	2682.24, +37.6	S&P 500	1094.87, +19.36
Nikkei	10306.83, +272.58	Hang Seng	20534.01, +265.32
Oil (Crude)	$77.01, +$2.88	Gold	$1119.80, +$29.80
Base Rate	0.5%	10 Yr Gilt	4.04%
£/$	1.568	£/€	1.1442
1 month LIBOR	0.535	3 month LIBOR	0.641

 

Markets

London - The FTSE 100 jumped 76.59 points to 5,244.06 yesterday. Barclays led the advance after reporting profit that beat analyst’s estimates. Royal Bank of Scotland was also among the biggest winners after JPMorgan Chase agreed to buy the non-US units of RBS Sempra Commodities. Anglo American rose 3.8% after agreeing to sell parts of its Tarmac building materials unit. This morning the FTSE advances 23.18 points to 5,267.24.

New York - US stocks rallied higher yesterday, giving the Dow its biggest boost since the 9th November. Strong corporate results and positive economic data both added to the momentum after the holiday weekend. The Empire State index, a read on manufacturing in New York State, rose to 24.91 in February from 15.92 previously. Analysts had only expected a rise to 18, so the jump gave the broader market a lift. The Dow Jones jumped 169.67 points to 10,268.81, the S&P 500 rallied 19.36 points to 1,094.87 and the Nasdaq climbed 30.66 points to 2,214.19. In corporate news, drug maker Merck rose 2% after posting quarterly revenue above analysts’ estimates.

Tokyo - The Nikkei surged 272.58 points to 10,306.83 this morning, its biggest gain in more than two months. Investors cheered the manufacturing data from the US, the strengthening euro versus the yen and rising commodity prices.

Hong Kong - The Hang Seng climbed 265.32 points to 20,534.01.

Economics

UK Bank of England minutes (4 February meeting) 09:30 GMT

Given how dovish the February Inflation Report was, it seems likely the committee was divided about whether to extend QE at the February meeting. Analysts think the governor and David Miles will have dissented and wanted a further extension, most likely of GBP25bn.

UK Unemployment (Dec/Jan) 09:30 GMT

The KPMG survey, which provides a reasonable lead on claimant unemployment, now points to job creation in both full- and part-time positions. The PMI survey for manufacturing also points to employment growth. So analysts expect a further decline in the number claiming unemployment benefits in January, and, in line with recent revisions, analysts would also expect the past data to be revised showing a larger fall in unemployment in December.

UK Average weekly earnings (Dec) 09:30 GMT

The latest pay settlement data suggest that pay growth is starting to pick back up, albeit from extraordinarily low levels. With RPI also moving back into positive territory, those pay deals linked to RPI will also start to push up on average earnings.

US Import price index (Jan) 13:30 GMT/ 08:30 EST

Higher oil prices are likely to push total import prices up 0.9% in January, with the year-on-year rate climbing to 11.1% from 8.6% in December. Meanwhile, non-petroleum import prices have climbed for the past five straight months, and a further rise of 0.5% in January could take the year-on-year rate into positive territory for the first time in 13 months.

US Housing starts (Jan) 13:30 GMT/ 08:30 EST

Analysts think housing starts and permits are unlikely to trend higher at a robust rate until homebuilder optimism improves significantly, which, in turn, probably requires a substantial reduction in the overhang of existing homes for sale. However, some of the December decline in starts was probably weather-related (especially in the Northeast and Midwest), so analysts expect January starts to rise to 600,000, while building permits could fall back to 600,000.

US Industrial production (Jan) 14:15 GMT/ 09:15 EST

The upturn in manufacturing hours worked since October (including a 0.7% increase in December) suggests that a number of industries are trying to ramp up activity, and this is likely to translate into an upside surprise for industrial production. Some of the notable increases in aggregate hours included areas like wood products, electrical equipment, transportation equipment, textile products and apparel. Analysts look for manufacturing output to rise 0.7%, with total industrial production up 0.9% owing to higher utilities. However, this would still leave manufacturing output down over 12% from the peak back in December 2007, highlighting the long road ahead for recovery. Capacity utilisation should climb to 72.7%, up for the seventh consecutive month.

US FOMC minutes (26-27 Jan meeting) 19:00 GMT/ 14:00 EST

These particular minutes are likely to receive more attention than usual following the Hoenig dissent and the inclusion of the FOMC members’ quarterly economic projections. Analysts believe that this meeting saw the FOMC switch to a more activist approach with regard to both the assessment of current conditions across the economy and the degree of guidance provided on outlook for policy, and analysts expect the minutes to reflect such discussions. The decision by Kansas City Fed President Hoenig to back away from supporting the formal commitment to an extended period of unusually low rates will be a natural focus of attention, but in truth this debate had been ongoing for several months and dissenters have not proved to be a good guide to the path of future Fed policy in recent years. Analysts do not expect the FOMC’s economic projections for the January meeting to change substantially from the previous set of forecasts from last November. The biggest scope for adjustment could be in the 2011 and 2012 GDP estimates, where some members could feel pressure to cut back on their above-trend growth forecasts as next year comes closer into view. However, they will be hesitant to slash their estimates too much, as strong growth is a prerequisite for achieving the projected decline in unemployment over the next two years. 

Corporate

Legal & General Group posted a 5.4% fall in fourth-quarter new business sales, hit by continued weak consumer spending, and the company forecast a modest recovery for the U.K. economy. Total worldwide new business sales for the fourth quarter ended Dec. 31 on an annual premium equivalent basis, or APE, were GBP330 million, down from GBP349 million a year ago. APE counts 100% of regular premium sales and 10% of the money earned from selling single-premium products. On a full-year basis, the company had sales of GBP1.39 billion, down 6.7% from GBP1.49 billion. The result was in line with the GBP1.39 billion average expected by 11 analysts polled by the company. Before the release of the sales figures, Oriel Securities said that L&G has "stood back from writing new business during 2009, through cutting commission and avoiding capital intensive new business."  

Rexam, the world’s largest producer of drinks cans, said it expects its performance to improve this year, despite continuing challenging trading conditions, as it benefits from cost saving measures. Hit by the economic downturn, Rexam introduced a cost cutting programme, which was ahead of plan in 2009, saving GBP29 million. Its operational efficiencies came at GBP42 million. Rexam, which produces beverage cans and plastic containers for food, home care and chemicals, as well as syringes and lipstick cases, posted a 13% decline in full-year pre-tax profit before exceptional items to GBP285 million, from GBP328 million in 2008. Sales rose 5.4% to GBP4.86 billion, benefiting from favourable foreign exchange translation. As a result of the difficult trading conditions and efforts to preserve cash, Rexam cut its dividend to 8 pence per share from 18.7 pence. Chief executive Graham Chipchase said that "although the strength of any global economic recovery is unclear, volumes appear to be stabilising. However, we expect business conditions in a number of our operations to remain tough." He added that Rexam will continue to maintain tight cash management and limit capital expenditure, focusing on cash flow optimisation, cost control and improving return on capital. The company reduced its net debt to GBP1.8 billion and reported a strong cash inflow of GBP290 million, compared with an outflow of GBP128 million in 2008.

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 17th, 2010 under AML Information.
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