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 |  Subject: ADVFN Morning Euro Markets Bulletin - June 22th 2010  Tue Jun 22, 2010 9:53 am | |
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Lower ahead of Budget
Market Movers
FTSE 100 5,268.81 -0.57%
techMARK 1,650.86 -0.22%
FTSE 250 9,942.19 -0.56%
Footsie has opened lower ahead of the coalition government’s eagerly awaited emergency budget, which will be revealed around lunchtime.
Chancellor George Osborne has been vocal about making Britain competitive by cutting corporation tax so that big businesses find it worthwhile to come to the country. But the focus on Tuesday will be on what taxes will be raised.
Miners are dragging the index down, as yesterday's China-inspired run-up fizzles out. Fresnillo and Kazahhmys are the worst performers.
On the company news front, British Airways has taken a major step towards restructuring its huge pension liabilities after the trustees of its two pensions funds agreed a recovery plan that avoids their closure to members. The airlines' New Airways Pension Scheme (NAPS) and Airways Pension Scheme (APS) have a deficit of about £2.9bn. The recovery plan maintains British Airways' annual contributions at the current level of some £330m, plus agreed annual increases in line with inflation expectations averaging 3%.
Premier Inn and Costa Coffee were the star performers for hotel and restaurant chain Whitbread as it posted a record 7.6% like for like sales rise. For the 13 weeks to 3 June 2010 total sales were up 13.5%. Premier Inn put in a strong performance with sales up 14.1% during the quarter and like for like rising 10.5%.
Electronic sensors firm Halma has produced record results for the seventh year in a row and topped analyst forecasts with an increase in adjusted profit of 9%. Profit before tax from continuing operations jumped to £86.2m in the 12 months ended 3 April, up from £79.1m in 2009, trumping expectations of about £82m.
Distribution and outsourcing group Bunzl said overall trading is in line with full year expectations with revenue growth of 2%. Operating margin has improved in the six months ending 30 June compared to the same period in 2009 as a result of increases in the UK & Ireland and the Rest of the World, largely due to the favourable impact of cost reduction and the absence of a negative transaction impact from foreign exchange which particularly affected these business areas in the first half of last year.
Mitchells & Butlers announced the appointment of Tim Jones as new finance director of the pub group. Jones, who is currently holding the same position at services, maintenance and building group Interserve since 2003, will replace Jeremy Townsend.
Shares in cigarette vending machine maker Molins went up in smoke after it issued a profit warning. Molins' shares skidded 16% after it warned its full year performance was now lower than previously thought as orders were delayed or cancelled and as it counted rising costs at its Packaging Machinery division. |
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| | UK Event Calendar for today |
The main focus of interest next week will be the first Budget from chancellor of the exchequer George Osborne in which he will have to perform the difficult balancing act of showing the UK means business about reducing its debt without going overboard and threatening the fragile economic recovery.
In the election campaign the Conservative party made no secret of its desire to slash public spending, though it was careful to be vague about where the axe would fall, but it will also have to bite the bullet and raise taxes. The expectation is that the ratio of projected cost savings to increased tax revenues will be about four to one.
The government has already flagged its intention to hike capital gains tax (CGT) from its present level of 18% to 40% but it is probable that there will be numerous exemptions and taper relief clauses following grumbling from the Tory back benches.
Value Added Tax (VAT) could be increased from 17.5% to 20%, or the number of items which are exempt from VAT could be reduced, or the chancellor could do both of these things. Retailers moaned when the previous chancellor temporarily cut VAT to 15% in an attempt to keep the economy ticking over, and they moaned again when VAT went back up to 17.5% so soon after the busy Christmas trading period and ahead of the January sales, so there is a good chance that any increase in VAT will be delayed to give the retail trade time to adjust their prices.
The departed Labour administration was surprisingly macho about cutting the basic rate of income tax and the political world really will have turned on its head if a Conservative dominated government puts income tax up. It is possible, however, given than a two point rise in the basic rate would still leave income tax lower than it was under the last Conservative government, plus they could lump the blame for it on to their Liberal Democrat partners.
More probably the chancellor will bump up the tax-free allowance, with the consensus view being that it will raised to £10,000 from £6,475, a move that will be of greater benefit to those on low wages.
Elsewhere on the economic front the minutes from the recent meeting of the Monetary Policy Committee are due for release on Wednesday.
On the corporate front consumer electronics retailers DSG International and Kesa Electricals both bring out trading statements.
Currys and PC World owner DSG said last month that it had seen an improvement in trading this year as the economic outlook improved and said it was looking to this year's football World Cup for an extra boost.
The experience of Argos owner Home Retail suggests that DSG might be disappointed if it is expecting the World Cup to have boosted sales of TV sets, as weak sales of tellies were responsible for much of the sales decline Argos reported in the 13 weeks to 29 May.
It is possible, of course, that Argos has simply been losing market share to Curries.
In the 28 weeks to May 1 DSG said UK and Ireland electricals sales were up by 6%, though UK computing was down by 11%. Overall sales in the UK and Ireland division were flat but they were up by 3% on a like-for-like basis.
Sales in the Nordics were up by 33%, or 16% on a like-for-like basis. Other international sales were flat with like-for-like sales up 4%.
With Kesa, the group’s Comet stores in the UK have been letting the side down while Kesa’s French chain, Darty, has been seeing like for like sales growth.
Kesa reported a 1.2% drop in like for like sales in the period from 9 January to 30 April overall. Darty France's like for like sales increased by 0.5%, excluding the Darty Box, but Comet's revenue dropped by 4.0% on a like for like basis.
Monday June 21
INTERIMS
Domino Printing
QUARTERLY PAYMENT DATE
Frontline
GMS
Invocas
FINALS
Eckoh, Kewill
ANNUAL REPORT
Dee Valley Group, Sepura
EGMS
Norsk Hydro
AGMS
AGI Therapeutics, Albion Technology & General VCT, Albion Technology & General VCT 'C' Shares, Albion Venture Capital Trust, All Nippon Air., Castle Asia, Coca-Cola Hellenic Bottling Company SA, Crawshaw Group, Elderstreet VCT, Fujitsu, INVU, JZ Capital Partners, NextGen Group, Octopus Apollo VCT 1, Octopus Apollo VCT 2, Plantic Technologies, Tandem Group, Titanium Asset Management Corp, Water Hall Group
FINAL DIVIDEND PAYMENT DATE
Martin Currie Portfolio Trust, NTT DoCoMo Inc, Provident Financial, Stobart Group Ltd.
UK ECONOMIC ANNOUNCEMENTS
Rightmove House Prices (00:01)
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
All Industry Activity Index (JPN)
Nationwide Department Store Sales (JPN)
Convenience Store Sales (JPN) |
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| | European Markets |
Winning run ends
European shares snapped their recent winning streak on Tuesday, with banks among the worst performers. China's decision to allow its currency more flexibility to move against the US dollar lifted exporters across Europe yesterday.
In early dealings on Tuesday, Societe Generale, Credit Agricole and BNP Paribas are the three main fallers in Paris, while Commerzbank and Deutsche Bank have dropped in Frankfurt.
BNP Paribas was hit after Fitch downgraded its rating on the lender by one notch to AA- late Monday.
Across the markets, the Dax in Frankfurt is 21 points lower at 6,272, with the Cac in Paris falling 19 points to 3,717. The Swiss market is 15 points down at 6,505.
Elsewhere in the world, the new UK coalition government’s eagerly awaited emergency budget which will be revealed around lunchtime.
Chancellor George Osborne has been talking tough since taking office, but now he will have to play his hand and analysts will speculate whether the decisions he makes can provide the economy with stability and move Britain forward.
Osborne has been vocal about making Britain competitive by cutting corporation tax so that big businesses find it worthwhile to come to the country. But much of the focus on Tuesday will be on what taxes will be raised.
CAC 40 - Risers
EADS (EAD) € 18.02 +0.81%
Cap Gemini (CAP) € 39.19 +0.75%
Alstom (ALO) € 42.09 +0.44%
PPR (PP) € 108.25 +0.42%
Sanofi-Aventis (SAN) € 50.20 +0.40%
Danone (BN) € 44.62 +0.26%
Suez Environnement Company (SEV) € 14.48 +0.10%
Veolia Environnement (VIE) € 21.68 +0.09%
France Telecom (FTE) € 15.31 +0.03%
CAC 40 - Fallers
Societe Generale (GLE) € 37.35 -3.96%
Credit Agricole (ACA) € 9.72 -2.45%
BNP Paribas (BNP) € 49.16 -2.31%
Renault (RNO) € 33.37 -2.04%
Technip (TEC) € 53.14 -2.01%
Alcatel-Lucent (ALU) € 2.27 -1.81%
Peugeot (UG) € 22.84 -1.78%
Michelin (ML) € 60.06 -1.51%
Dexia (DEXB) € 3.33 -1.33%
ArcelorMittal SA (MT) € 25.82 -1.22% |
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| | US Markets Report |
Dow lower as early gains fade
The Dow failed to hang onto its early gains and closed lower. News that China will relax its currency’s peg to the dollar had given the markets’ a positive boost early on.
The People’s Bank of China said it would end the currency peg started during the global financial crisis to help protect exporters. The yuan would be allowed to make a 'modest appreciation.' It’s hoped the decision will reinvigorate the Chinese economy.
Across the US markets, the Dow closed 8 points lower at 10,442, with the Nasdaq down 20 at 2,289 and the S&P 500 down 4 at 1,113.
Alcoa was the best performer in the Dow. Other metals-related companies also rose including Freeport-McMoRan Copper & Gold, US Steel and AK Steel. Good box office for Toy Story 3 pushed Walt Disney higher.
Amazon was a late faller as it cut the price of its Kindle ereader to match a price cut by rival Barnes & Noble earlier in the day.
It had looked like BP may have ridden out the worst of the backlash following the Gulf of Mexico oil spill, but its hapless boss has walked into a fresh row about his private life just as the company is accused of ignoring safety fears.
Tony Hayward, having survived a meeting with US president Barack Obama and an 8-hour grilling by US politicians on Capitol Hill last week, rewarded himself with a day’s sailing on his yacht off the Isle of Wight. Another PR blunder furious Americans call it. The costs of the spill have already hit $2bn.
S&P 500 - Risers
Alcoa Inc. (AA) $11.72 +5.49%
Visa Inc (V) $80.90 +5.01%
Mastercard Inc. (MA) $223.34 +4.24%
M&T Bank Corp. (MTB) $94.45 +4.12%
S&P 500 - Fallers
Supervalu Inc. (SVU) $12.34 -4.04%
Mylan Inc. (MYL) $17.93 -3.76%
Eastman Kodak Co (EK) $5.15 -3.74%
Darden Restaurants (DRI) $42.92 -3.51%
Dow Jones I.A - Risers
Alcoa Inc. (AA) $11.72 +5.49%
American Express Inc. (AXP) $42.60 +1.36%
General Electric Co. (GE) $16.10 +0.94%
3M Co. (MMM) $81.52 +0.42%
Dow Jones I.A - Fallers
Home Depot Inc. (HD) $31.43 -1.60%
Merck & Co. Inc. (MRK) $35.11 -1.57%
Microsoft Corp. (MSFT) $26.10 -1.29%
Wal-Mart Stores Inc. (WMT) $51.02 -1.03% |
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| | Tuesday newspaper round-up |
Budget, Sainsbury's, Jupiter
George Osborne will claim today that the harshest Budget for 30 years will squeeze the rich more than it hits the poor.
The Chancellor will seek to sell his package of record spending cuts and tax rises as being stamped by fairness as he tries to win public support for a four-year austerity drive. Nick Clegg moved to pre-empt any revolt by Liberal Democrats last night by insisting that his party’s values were at the heart of Mr Osborne’s assault on the deficit, the Times reports.
George Osborne will attempt to soften the impact of what is expected to be the most brutal Budget in a generation by promising to take up to 900,000 low earners out of the income tax system. The chancellor will announce that all basic rate taxpayers will benefit from a £1,000 rise in the income tax allowance – worth £200 a year – at a cost to the public purse of £3.7bn. But in an act of political symmetry, Mr Osborne is expected to raise a similar amount from a new levy on Britain’s banks – based on their balance sheets. Banks will also be required to lend more to companies, the FT reports.
J Sainsbury is considering entering the Chinese market after announcing the biggest management shake-up of Justin King’s six-year reign. The supermarket appointed a new chief financial officer yesterday as part of a boardroom reshuffle, with Darren Shapland, the incumbent finance boss, taking on a new executive role in charge of business development. Mr Shapland’s remit will include studying Sainsbury’s international options. Consultants have already been asked to explore the Chinese market, The Times has learnt.
Alliance Medical needs an immediate cash injection of up to £150 million to stave off possible insolvency. The Times has learnt that Dubai International Capital, which bought Britain’s biggest independent provider of MRI scans to the NHS in 2006 for £600 million, is in negotiations with its lending syndicate to pay the money before a deadline arrives next month.
One of the best-known figures in the City has sidestepped a potential £8m tax bill by contracting to sell shares in his two companies ahead of today’s Budget. Terry Smith has kept control of his shares in Tullett Prebon and Collins Stewart, selling them to a trust of which he is the sole beneficiary, but the transaction is aimed at ensuring his gains are taxed under the existing capital gains tax rate, the Times reports.
Shares in Jupiter Fund Management surged 15% on their first day of trading. Jupiter, a private equity backed fund manager led by Edward Bonham Carter, on Monday formally returned to the public markets for the first time since 1995 after selling £220m of shares last week, the FT reports.
The global crisis has revealed weaknesses in the eurozone's economic framework which left it particularly vulnerable to the downturn, Fitch has warned The ratings agency said that although the risk of a eurozone break-up was low over the short to medium term, further episodes of "extreme market volatility" were likely to persist until the recovery and deficit reduction were secured in the region, the Telegraph reports.
A consortium of Eurotunnel, Goldman Sachs Infrastructure Partners and M&G is being formed to bid for High Speed 1, the fast rail link being sold by the Government for about £1.5bn.Eurotunnel, the operator of the Channel Tunnel, has long been touted as a bidder for the line – but it has strengthened its financial hand by joining forces with two of its biggest shareholders, the Telegraph reports.
David Abraham is making his mark as the new chief executive of Channel 4 by slashing a quarter of senior managers and calling for a "fundamental evolution" at the group. The former advertising executive had pledged to restructure the broadcaster shortly after taking over at the beginning of May, and yesterday he announced an overhaul of the business, focused on greater integration of its digital operations, the Independent reports.
Rio Tinto and BHP Billiton yesterday agreed to pay Western Australia increased royalties if the companies' huge iron ore joint venture in the state is given the green light. The controversial $116bn (£78bn) plan, which would see the mining giants combine their operations in the Pilbara region, still has a several competition hurdles to overcome, not least in Europe, where Eurofer, the steel manufacturers' association, has vehemently opposed the tie-up, the Independent reports.
Bob Diamond, head of Barclays' investment banking business, was criticised by a Manhattan judge for an "evasive" performance on the witness stand yesterday as he defended the company's acquisition of Lehman Brothers. In a insolvency court hearing last night, at which it was alleged Barclays misled the judge when it sought permission for the deal back in 2008, Mr Diamond was reprimanded for refusing to give straight answers and apparently contradicting testimony he had given under oath earlier in the case, the Independent reports. |
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