FTSE 100	5276.64, +32.58	Dow	10309.24, +40.43
FTSE 250	9329.92, +153.65	Nasdaq	2226.29, +12.10
FTSE All Share	2701.93, +19.69	S&P 500	1099.51, +4.64
Nikkei	10335.69, +28.86	Hang Seng	20422.15, -111.86
Oil (Crude)	$77.33, +$0.32	Gold	$1120.10, +$0.30
Base Rate	0.5%	10 Yr Gilt	4.05%
£/$	1.563	£/€	1.1521
1 month LIBOR	0.536	3 month LIBOR	0.642

 

Markets

London - The FTSE 100 gained 32.58 points to close at 5,276.64 yesterday. Financial companies were among the biggest winners. Barclays advanced almost 3% after analysts recommended the stock. Man Group jumped 5.2% as its flagship fund advanced and investors speculated the company may become a takeover target. This morning the blue chip index slips 8.2 points to 5,268.44. BAE Systems leads the risers, up 3%, after swinging to a loss in 2009. However, the defence company said it expects three of its four units to grow this year.

New York - US stocks continued to rise on Wednesday following upbeat company news and stronger than expected economic data. Housing starts rose 2.8% in January to a 591,000 annual unit rate, according to a National Association of Home Builders report, against expectations of a rise to 580,000. Meanwhile, the central bank released the minutes from its last policy meeting. The bankers also gave a slight boost to forecasts for economic growth this year, lifting the target to growth of between 2.8% and 3.5% in 2010 versus November forecasts for growth between 2.5% and 3.5%. The Dow Jones gained 40.43 points to 10,309.24, the S&P 500 added 4.64 points to 1,099.51 and the Nasdaq climbed 12.10 points to 2,226.29. In corporate news, Deere & Co reported higher than expected earnings. The world’s largest farm equipment maker also boosted its 2010 sales forecast.

Tokyo - The Nikkei added 28.86 points to close at 10,335.69 this morning as confidence in corporate-earnings prospects outweighed concern the global economic recovery will slow.

Hong Kong - The Hang Seng loses 111.86 points to 20,422.15. Commodity producers lead the fall as metal prices decline.

Economics

UK Public finances (Jan) 09:30 GMT

Analysts expect a net tax receipt inflow of GBP3.5bn in January and borrowing in the 2009/10 fiscal year to be GBP160bn which would be less than the GBP178bn the chancellor anticipated in the Pre-Budget Report.

UK CBI industrial trends (Feb) 11:00 GMT

Despite adverse weather conditions in January, this manufacturing survey still improved. Analysts expect it to increase further in February as weaker sterling starts to boost prospects for the tradable goods sector. A rise to +8 would be the highest reading since March 2008.

US PPI (Jan) 13:30 GMT/ 08:30 EST

The turn in the inventory cycle has restored some pricing power in the supply chain for manufactured goods. This is most clearly visible in the core prices of crude and intermediate materials. The crude materials PPI excluding goods and energy is up 28% since May 2009, but still down 26% from its July 2008 peak. The PPI for intermediate materials excluding food and energy is up by a much more modest 2.4% since May 2009, while still down 6.9% from its September 2008 peak. So far, these increases have not flowed through into the core finished goods PPI, which has been essentially unchanged since the middle of 2009. However, some modest upward pressure on finished goods prices is possible in the months ahead. Analysts look for the core PPI to rise 0.2%, assuming that there are no unforeseen swings in the auto components. The headline PPI could rise 0.9%, boosted by increases in food and energy.

US Initial jobless claims (week 13 Feb) 13:30 GMT/ 08:30 EST

Last week’s initial claims reading fell to 440,000, with the Labour Department declaring that the administrative backlog from year-end was ending and that, as a result, claims were now resuming a normal level. This week’s reading may be distorted downwards as blizzards in the US Northeast reduced traffic and shut down government offices in places ranging from Washington to Baltimore, Philadelphia and New York. Analysts expect a decline to 410,000 and will monitor comments from the Labour Department to gauge the impact of the weather.

US Philadelphia Fed (Feb) 15:00 GMT/ 10:00 EST

The mix of manufacturing in the Philadelphia area generally matches up well with the overall composition of manufacturing for the US as a whole. However, the region is somewhat underweight in transportation equipment/autos, a sector where activity has been recovering since the middle of last year. This may help explain why the detail of the Philly Fed survey has not looked quite as strong as other reports, with new orders (3.2) only just above breakeven in January. Still, analysts look for the headline index to remain respectable at around 15 in February. 

Corporate

BAE Systems today reported it swung to a net loss for 2009 due to impairments, regulatory penalties and financing adjustments, but said it expected growth in 2010 at three of its four operating groups. The defence giant expects its land and armaments business to be the laggard this year, though it said return on sales at the unit will improve as rationalization and efficiency programs progress. Its results were hurt by a GBP973 million impairment charge at its Armor Holdings business following the loss of a U.S. Department of Defence contract for follow-on production of vehicles under the Family of Medium Tactical Vehicles program. BAE Systems in October last year warned of impairments if it failed to win the contract. BAE generates about 58% of its sales in the U.S. and is the sixth-largest supplier to the Pentagon. The company earlier this month settled long-standing allegations by the U.S. Department of Justice and the U.K.’s Serious Fraud Office that it failed to provide accurate records in connection with the supply of an air-traffic control system to Tanzania. The company agreed to plead guilty and pay a fine of $400 million to the DOJ in connection with making false statements in regulatory filings. Under the agreement with the SFO, BAE will plead guilty to one charge of breach of duty to keep accounting records in relation to the payments made to a former employee. It will pay an agreed penalty of GBP30 million, comprising a fine to be determined and the balance paid as a charitable payment for the benefit of Tanzania. Earnings before amortization and impairment of intangible assets, finance costs and tax in 2009 climbed 17% to GBP2.22 billion from GBP1.90 billion in 2008. This profit figure is closely watched by investors as it is considered the best guide for the underlying performance of the business. It swung to a net loss of GBP67 million from a profit GBP1.75 billion. Operating profit fell to GBP982 million from GBP1.72 billion. Sales jumped 21% to GBP22.42 billion from GBP18.54 billion. The defence company’s order book in 2009 edged up to GBP46.9 billion from GBP46.5 billion in 2008.

European home improvement retailer Kingfisher reported a 3% fall in same-store sales in the three months to Jan. 31, hit by severe weather particularly in the U.K. and Poland, although the group expects full year pre-tax profit to be slightly ahead of analyst expectations. The company said analysts currently expect pre-tax profit adjusted for exceptional items and amortization of GBP540 million, compared with GBP368 million in the prior year period. The improvement in profit comes as the company continues to cut costs and implement a margin improvement program across its stores, offsetting pressured sales in the home improvement market which have suffered in the economic downturn. Total sales fell 1.6% to GBP2.31 billion in the fourth quarter, while sales at stores open one year across the company’s portfolio of home improvement stores, which include B&Q as well as stores in seven more countries across Europe and Asia, fell 3%.

Reed Elsevier reiterated its outlook today as the Anglo-Dutch publishing group posted forecast-beating full-year earnings on higher revenue. The group, which has its main businesses in science, medical, legal and business publishing, exhibitions and conferences as well as data businesses such as LexisNexis and ChoicePoint, said the weak revenue environment and increased investment in legal markets would likely lead to a modest reduction in adjusted operating margin in 2010. It added that business trends seen in the second half are expected to continue for the rest of the year and into 2010. The group also said advertising and promotion and certain other markets, such as employee screening, remain difficult. The rate of revenue decline is, however, expected to slow as comparatives get easier. The company reported adjusted operating profit, a figure closely watched by analysts and which excludes amortization, goodwill, restructuring and exceptional items, of GBP1.57 billion for the full year to Dec. 31, up 14% compared with GBP1.38 billion a year earlier. This beat a FactSet survey of 23 analysts for adjusted operating profit of GBP1.54 billion. Revenue rose to 14% to GBP6.07 billion from GBP5.33 billion last year, in line with expectations. "In the near term, some of our customer markets remain under pressure but longer term our prospects are encouraging. We have high quality assets in attractive global growth markets and we are focusing each business on its own top priorities in order to capture these growth opportunities," Chief Executive Erik Engstrom said.

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 18th, 2010 under AML Information.
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