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 |  Subject: ADVFN Morning Euro Markets Bulletin March, 2nd 2010  Tue Mar 02, 2010 11:16 am | |
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Steady start for Footsie
Market Movers
FTSE 100 5,427.95 +0.41%
techMARK 1,594.03 +0.32%
FTSE 250 9,493.94 +0.15%
Footsie has edge higher in early dealings following a strong showing from Wall Street yesterday.
After recent slew of results from the Footsie heavyweights it is the mid-caps day
Persimmon completed 8,976 house sales last year and the housebuilder has seen a 7% increase in sales and steady prices since the start of this year. The number of legal completions was down 12% on the 10,202 achieved in 2008, but in line with the figure flagged in an update in January. The average selling price dropped to £160,513 from £172,994.
Irish bookmaker Paddy Power’s results last year reflected how well the punters did with profits lower despite revenues rising slightly. The bookie says things are more even this year, despite the bad weather hitting the number of events.
Strong demand for the latest home entertainment products despite the economic downturn helped set-top box supplier Pace post a sharp rise in profits in the year to December 31. Pre-tax profits climbed to £69.9m from £13.1m the previous year on revenues that rose to £1.13bn from £745.5m.
Engineer and ceramics group Cookson reported a 57% slump in full year headline pre-tax profit but expects its performance to 'recover significantly' in 2010 as end markets improve.
Ground engineering specialist Keller suffered a 34% slump in profits in 2009 and is yet to see any sustained upturn in orders.
Oil services firm Wood Group pointed to a sharp reduction in development activity as it posted a fall in profits in 2009. The Aberdeen-based group posted a pre-tax profit of $264.8m for the year, down from $384.1m the previous year as revenues fell to $4.92bn from $5.24bn.
Aerospace and defence systems group Meggitt posted a 3% dip in annual operating profit but expects to return to growth in the second half of 2010.
Insurance broker Jardine Lloyd Thompson made a bit more than expected in 2009 and smashed revenue forecasts, led by its Risk & Insurance businesses.
Sportswear retailer Blacks Leisure has scrapped its planned £20.3m fund raising after rival and 28.5% shareholder Sports Direct indicated it might make a bid.
Among the Footsie companies that are reporting, motor insurer Admiral reported record profits and sales in 2009, but cautioned conditions will remain challenging for its price comparison site Confused in 2010 as competition increases. Profit before tax at £215.8m was 7% ahead of 2008, while turnover rose 18% to £1.08bn.
Fresnillo, the world's biggest primary silver producer and Mexico's second largest gold producer, more than doubled profit after tax in 2009 on higher metal prices and record silver output. |
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| | UK Event Calendar for today | INTERIMS
AI Claims Solutions
INTERIM DIVIDEND PAYMENT DATE
DS Smith, IG Group Holdings
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
PMI Construction (EU) (09:00)
PMI Construction (GER) (08:55)
RBA Interest Rate (AUS) (00:00)
Retail Sales (AUS) (00:00)
Q4
Cryptologic Ld
GMS
Downing Planned Exit VCT 1
FINALS
Admiral Group, Corin Group, Cryptologic Ld, Fresnillo, Futura Medical, Goldenport, Hydro International, Informa, IP Group, Jardine Lloyd Thompson Group, Keller Group, Meggitt, Pace, Paddy Power, Persimmon, Telit Communications, Vitec Group
EGMS
Bank Audi SAL- Audi Saradar Group GDR (repr 1 Com Shr LBP12250)(Reg S), Finsbury Worldwide Pharmaceutical Trust
AGMS
Avon Rubber
UK ECONOMIC ANNOUNCEMENTS
PMI Construction (09:30)
FINAL DIVIDEND PAYMENT DATE
BlackRock New Energy Technology Inv Trust, British Portfolio Trust, Framlington AIM VCT |
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| | Currencies Market Report |
Sterling and Euro continue to look soft
The pound continued to remain under pressure overnight after posting some of its biggest falls in months, and also making 25 year lows against the Australian dollar after the RBA raised rates to 4% overnight.
The pound hit its lowest level against a basket of currencies since March last year at 76.10. A number of reasons contributed to the declines, not least of which was investor fears of a hung parliament come polling day, and the lack of any credible plan to deal with the UK's deficit as well as speculation that the Prudential deal would require the execution of a large currency transaction to fund the deal.
A weekend poll showing that Labour had cut the Conservative lead in the opinion polls to 2 points also reinforced fears of a paralysis at the heart of Government after the election with respect to plans to deal with the deficit.
Yesterday’s UK figures were a combination of positive news, and some negative, but the M4 money supply data continued to show weakness and keeps the pressure on the Bank of England to consider further extending QE at this weeks meeting.
Sterling hit a low of 76.10 on its exchange rate index, its lowest level since March 31st last year.
The Euro continues to remain in the spotlight with investors seemingly optimistic about the prospect of a bailout plan for Greece this week. Someone seems to have forgotten to tell this to German Chancellor Angela Merkel as she continues to send the message that Greece would have to sort out its own problems which seems to be sending mixed messages to the market. EU Monetary Affairs Commissioner Olli Rehn yesterday told Greece that it must reveal new measures to allay officials’ concerns that the current austerity plan falls short.
Merkel wants Greece to do a lot more so any prospective aid package can be justified to taxpayers and political opponents who say that it shouldn’t be bailed out after living beyond its means. Failure to satisfy these demands before this week’s Berlin talks on March 5, will probably kill any hopes of a German-led lifeline, spurring investors to reverse yesterday’s rally in Greek bonds. The EU has clearly placed the ball in Greece’s hands and the market is watching and waiting for them to run with it and come up with the measures required to restore international confidence.
EURUSD – the lows around the 1.3450/60 area continue to support the Euro in the short-term. The key 1.3485 Fibonacci support level continues to remain intact on a daily close for now. Talk of a German led bail-out plan continue to lend some support in the short-term, and could see the Euro push up towards 1.3720, but changes nothing with respect to the longer term downside risk of a move towards 1.3200.
GBPUSD – cable plummeted yesterday hitting a low of 1.4783 as investors bailed out after it dropped through the psychologically important 1.5000 area. The key level on a daily close is 1.4850 which is the 61.8% Fibonacci Retracement of the up move from 1.3500 to 1.7045.
The pound now needs a recovery back above 1.5020 to try and stabilise in the first instance, something it was unable to do late last night in order to re-target the 1.5270 resistance area.
EURGBP – the cross blew away the resistance at 0.9040/50 yesterday morning, hitting a high of 0.9150 in the process, which was also the November and December 2009 highs.
This surge higher was short-lived and the cross pulled back below the 0.9040/50 area before rebounding. The Euro should find support around the 0.8980 and as long as the Euro can stay above the 200 day average currently at 0.8830 then further upside could well be possible. Let the battle of the uglies begin.
USDJPY – the yen has been pretty much sidelined over the last 24 hours as riskier plays take centre stage, trading between 89.00 and 89.45 for most of the time. It continues to trade at the upper end of its recent range, as it continues to strengthen and benefit from a certain amount of risk aversion.
A move to 88.25 remains the risk, while a break above 89.50 could see a gradual move back towards 90.00. |
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| | US Market Report |
Stocks close with strong gains
The sale of AIG’s Asian business to Britain’s Prudential for $35.5bn, well-received consumer spending data and optimism that Greece’s European neighbours may come to its rescue helped send US stocks higher.
AIG, bailed out by the US government to the tune of about $180bn, will put the cash towards repaying the American taxpayer.
The Dow Jones closed up 78 at 10,403, the tech-laced Nasdaq Composite finished 35 points higher at 2,273, and the broader S&P 500 was 11 points higher at 1,115.
US personal spending grew by 0.5% in January, a fourth consecutive month of increases.
Hopes France and Germany are preparing to dig Greece out of trouble by buying Greek bonds also lifted sentiment
Techs went well, with Hewlett-Packard, Intel and IBM among the best blue chip performers. Memory card maker SanDisk posted good gains after raising its revenue forecast late on Friday.
Among other economic data, personal income rose just 0.1% in January, less than the 0.5% increase predicted by analysts, while personal spending rose 0.5% versus expectations of a 0.3% advance.
The ISM manufacturing index fell more than expected, down to 56.5 in February from 58.4 the month before and worse than the 57.8 predicted, although a read of over 50 still indicates expansion.
Meanwhile, construction spending dropped 0.6% in January in line with expectations.
Warren Buffett presided over one of the strongest growth spurts in Berkshire Hathaway Inc.'s 45-year history in 2009, he said in his annual shareholder letter Saturday. He also delivered another message to investors: Don't get used to it.
The conglomerate, which sells everything from ice cream to machine tools to house paint, reported that its book value gained 19.8% to $84,487 per share in 2009 from the prior year, based on a metric the company uses to track performance. It was the strongest such gain since 2003, says the WSJ. |
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| | Tuesday paper round-up |
Sterling, Prudential, HSBC
The pound suffered its biggest one-day fall for more than a year yesterday amid the prospect of a hung Parliament and growing fears that this will prevent swift and decisive action being taken over Britain’s public finances.
Sterling crashed by more than four cents at one stage against the US dollar, dropping below $1.50 for the first time in ten months. It also fell to its lowest level against the euro for nearly two months, the Times reports.
Three banks handling Prudential’s $21bn rights issue will share a record $600m in fees, it emerged yesterday, as the insurer secured a transforming takeover to become the largest international player in the Asian markets. Credit Suisse, JP Morgan Cazenove and HSBC will take the lion’s share of the $1bn costs associated with the Pru’s cash call, the largest in history, the Times reports.
The head of HSBC’s investment banking business, Stuart Gulliver, has received one of the largest bonuses paid by the bank after accepting a £9m bonus. Mr Gulliver, who in addition to running HSBC’s Global Banking and Markets business and its asset management arm is also head of the bank’s operations in Europe and the Middle East, has been paid the stock bonus in addition to his basic annual salary of £800,000, the Telegraph reports.
Meanhwile, HSBC is heading for another clash with leading shareholders after it vowed on Monday to continue fighting for substantial pay rises for top executives that have been blocked by investors. As the bank revealed that three of its top executives earned more than £9m ($13.5m) each last year, Stephen Green, chairman, said the board believed chief executive Michael Geoghegan was underpaid, the FT reports.
BAE Systems has pleaded guilty to a criminal charge of misleading the United States Government over past arms deals in what a judge has called one of the most serious offences by a defence contractor "in this or any other decade." David Parkes, BAE's company secretary, entered the guilty plea in Washington DC on behalf of the defence group, agreeing to a $400m penalty for conspiracy to defraud and the making false statements to the US Government, the Times reports.
Lord Mandelson wants to impose root-and-branch reform of the City Takeover Code, but has stopped short of introducing a “public interest” test that could block a corporate acquisition by a foreign company. Speaking at Mansion House in the City last night, the Business Secretary said he was in favour of forcing financiers to reveal how much they stand to earn in advisory fees before shareholders vote on a takeover, the Times reports.
Warren Buffett has thrown his weight behind Goldman Sachs and its chairman Lloyd Blankfein, arguing the investment bank has a "place in the universe". Mr Buffett, who has run the Berkshire Hathaway conglomerate since 1965, dismissed the political and public backlash against Goldman, praising Mr Blankfein and the bank's business model, the Telegraph reports.
Diageo has sought to take advantage of the continued march of the Chinese consumer by launching an offer worth up to £610m for a local white spirit venture in the Asian country. The drinks giant said the full offer for the company, which is not expected until the second half of 2010, would give it a springboard to expand its share of one of the fastest-growing spirits markets in the world. It already owns a 39.7% stake in the company, Shui Jing Fang, through a holding company called Quanxing, the Telegraph reports.
Jim O’Neill, Goldman Sachs’ chief economist, is drawing up a putative plan to wrest control of Manchester United, the club he has supported since he was a boy, by buying out the Glazer family. Mr O’Neill, a former United board member, organised a meeting of City financiers and advisers on Monday at the offices of Freshfields, the law firm, to discuss the fledgling idea, which seeks to harness the disaffection of fans who want to see an end to the Glazers’ regime, the FT reports.
The US has offered to help the UK and Argentina resolve a new dispute over the Falkland islands, but insists that it will remain neutral in the saga.“It is our position that this is a matter to be resolved between the UK and Argentina,” Hillary Clinton, US secretary of state, said on Monday. “If we can be of any help in facilitating such an effort, we stand ready to do so,” the FT reports.
Those who break City rules face a threefold increase in fines for cheating and misleading their customers and for other serious failings, the Financial Services Authority said yesterday. Individuals could be fined up to 40 per cent of their total pay and bonus package, the regulator said in a report that spells out the penalty tariff in much greater detail than before, the Times reports.
Manufacturing output rose at its fastest rate for 14 years in last month thanks to rising orders and strong exports. The sector's purchasing managers' index (PMI) remained at January's 15-year high after five successive months above the neutral half-way point, the Chartered Institute of Purchasing and Supply (CIPS) said yesterday, the Independent reports.
Royal Bank of Scotland stands accused of "cashing in on blood oil" from tar sands just days after the taxpayer-owned bank was battered by the £1.3bn bonus scandal. The bank denied the charge, maintaining that it has "very limited direct involvement" in such projects and pointing to its role as a leading arranger of finance for renewable power schemes, the Independent reports.
Liberty, the 134-year-old British luxury retailer mostly owned by MWB Group Holdings, has confirmed plans for the sale and leaseback of its mock-Tudor flagship store on Great Marlborough Street in London’s West End. After months of speculation, the group on Monday said it had instructed Knight Frank to sell the building, which is expected to command a price of £40m, or a 5% yield, the FT reports. |
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