Archive for February, 2008

Hi Dan,

Gordon

The FTSE 100 closed up 111 points at 5,999.5, which was down about 12 points off the high, wjhich was through 6k at 6,011.7. The FTSE 250 closed up 224.3 points at 10,275.3. 6,000 seems to be a target for most, with sellers moving in at that level each time we hit it.

By the time London closed, over the pond the DJI was up over 70 points at about 12,452, whilst the S&P 500 was up nearly 6 points at 1,358, whilst the Nasdaq was up nearly 10 points at 2,313. News that Visa said it will still go ahead with a US$19 bln IPO this year was taken well, as was the balout out troubled bond insurer Ambac Financial Group Inc, that would receive a capital injection to help preserve its coveted “AAA” rating.

Back here in London, as mentioned this morning, Lloyds TSB could be making a move for Alliance & Leicester and Bradford & Bingley as acquisitions. Lloyds TSB, which announced decent full-year profits of £3.9 bln on Friday, said that it was ‘early days’ on any possible action, and that the bank’s board had not discussed anything at meeting as yet. Added to the Lloyds TSB news was the rumour that the Qatari government could be contemplating a fair-siized investment in RBS said the same newspaper. The QIA has not bought RBS shares as yet, and no contact has been made as yet, but sources confirmed a stake may be bought. Peer RBS closed up 19p at 397, Alliance & Leicester ended up 45.5p at 555, HBOS was up 32p at 678 and Lloyds TSB closed up 9p at 466.5p, and Bradford & Bingley was up nearly 12p at 200.25p. Broker Lehman upgraded Lloyds TSB to ‘overweight’ from ‘equal-weight’.

Friends Provident closed up nearly 3p at 135p on the press news that US Private equity Group JC Flowers was talking with a group of leading banks about providing financing for a bid for the insurer. Peers were also up, with the Pru up 18p at 628 and Aviva up 19.5p at 588p.

Commercial proprty group Hammerson closed up 63p at 1,122 after its said it was confident it would still continue to do well, and received a Deutsche Bank repeate of its ‘buy’ stance and 14-quid target. Hammerson said it saw a 3% increase in NAV to £15.45 per share. Peer Land Securities closed up 88p at 1,626 and British Land closed up 33p 996.5.

Housebuilders were also up, with Persimmons up 47.5p at 763.5 as the group is expected to report a full-year profit of about £590 mln stg tomorrow. Peer Barratts was up over 14p at 413, whilst Redrow closed up nearly 21p at 299.5 ahead of its half-year results on Thursday.

Oil was up again, but not through US$100 bbl as yet. Brent (Apr del) was up about 60c at 97.60 giving the oil giants some weight. BP ended up 14.5p at 562.5 and RD Shell was up 34p at 1,815.

Associated British Foods was down 26p at 850.5p despite a decetn update confirming all was well since its last update 6 weeks ago. profit taking there, it seems.

Perth-based bus and train group Stagecoach closed up 18.5p at 243p after the group said it was trading at the top end of forecasts. Peer Arriva was 39.5p up at 714p on the back of a Deutsche Bank upgrade to ‘buy’ from ‘hold’. Peer National Express closed up 64p at 1,125.

Waste management group Biffa closed down 22.25p at just shy of 346p after it said the previous bid interest it had received had now fallen cold.

But industrial group Charter was the top midcap riser, up 85 at 868-1/2, continuing its rally from last week after Credit Suisse initiated the group with an ‘outperform’ stance and 1,050 pence target. Traders also highlighted a positive read-across from Q4 results Friday from US peer Lincoln Electric Holdings Inc.
Recruitment group Hays was up 9-3/4 at 116 ahead of interim results tomorrow and following solid figures from small cap rival Robert Walters today. Michael Page rose 21-3/4 to 298-3/4. On the downside, Premier Foods headed the midcap loser board, down 9 at 97 after ABN Amro placed 15 mln of the company’s shares at 96 pence each, and with Credit Suisse slashing its target to 100 pence from 250.

Quiet Morning with Dollar/Cad breaking down towards parity.

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The FTSE was up about 102 points at 5,991 by 9am, which was an acceptable start to the week. The FTSE 250 was up about 107 points at 10,158.0.

Over the pond on Friday there was a late rally due to news that a bailout plan for troubled bond insurer Ambac Financial would be confirmed this week. The DJI closed up 96.72 at 12,381.02, despite being some 225 points lower than that during the day. The S&P500 closed up 10.58 points at 1,353.11 and the Nasdaq up 3.57 points at 2,303.35.

In the Far East this morning the Japan Nikkei 225 closed uo 414.11 points at 13,914.57, whilst in Hong Kong the Hang Seng actually closed down 35.90 points at 23,269.14.

Back here in the UK we saw the banks strengthening the FTSE, and some positive mergert news over the weelkend in the paperes also giving some positive feeling. It appears that Lloyds TSB is on the acquisition trail, and Alliance and Leicester and 2nd tier player Bradford & Bingley look like possible targets. Lloyds TSB, which announced decent full-year profits of £3.9 bln on Friday, said that it was ‘early days’ on any possible action, and that the bank’s board had not discussed anything at meeting as yet. Added to the Lloyds TSB news was the rumour that the Qatari government could be contemplating a fair-siized investment in RBS said the same newspaper. The QIA has not bought RBS shares as yet, and no contact has been made as yet, but sources confirmed a stake may be bought.

With all this we saw RBS up 21p at 399, Alliance & Leicester up 25p to 535, HBOS up 22p at 668, Lloyds TSB up 12p at 470p and Bradford & Bingley up 10p at 199.

Insurer Friends Provident was up 3p at 135p as other media reported that US private equity firm JC Flowers is in talks with a number of banks about financing a bid.

The housebuilders gained from recent pressure, with Persimmons up 21p at 737 ahead of its expected £590m profit announcement this week. Peer Barratts was up 5.5p at 405p, whilst Redrow was up 4p at 282.5p ahead of its results, due on Thursday. On Friday RightMove will give us the latest on the hosuing market for the UK.

Commercial property group Hammerson was up 55p this morning, at 1,114 after it announced some good figures, with a 3% increase in full-year NAV to £15.45 per share.

Resolution wasn’t having such a good morning, down 18p at 645 after weekend press said the company’s sale to Pearl Group has been put back again for the 3rd time in 5 weeks, sparking uncertainties the £5 bln cash deal will go through.

Associated British Foods fell 12p early doors to 864.5 after a trading update this morning, despite it being quite reassuring. Looks like profit taking. Broker Credit Suisse raised its target to 850p, up from 800p.

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The FTSE closed up 38.6 points at 5,932.2, which was about 70 points down from the ‘just through 6k level’ just after lunch. Hitting 6k was a target for many, it would seem. No gap close today, for those watching. The FTSE 250 closed up 57.3 points at 10,181.2.

By the time London closed, over the pond the DJI was about 18 points down at 12,409, whilst the S&P500 was only just down about 2.5 points at 1,357, and the Nasdaq was even at 2,328. The DJI and S&P both closed gaps.

Back here in London, Phramaceutical Shire closed up 23p at 974 after the drugs group reported stronger sales to US$2.4 bln against US$1.79 bln last time out. Shire said sales of its recently acquired ADHD drug Vyvanse had risen to US$76 mln for the year, whcih was better than the expected US$49m.

Reed Elsevier was top of the board, though, closing up 43.5p at 627.5 after the Anglo-Dutch publisher announced a US$4.1 bln acquisition of insurance data specialist Choicepoint. Reed Elsevier also reported some decent figures for last year, with a pre-tax profit of £998m, up from forecats of £954m. Revenue was up 2% at £4.58 bln.

DIY retailer Kingfisher closed up 3.5p at 135.5 after a trading update on its 4th quarter which showed sales were slowing but did see a forecastfor full year profit in line with expectations.

Heavyweight miners did well as gold and copper got stronger. Xstrata closed up 113p at 4,060 after Brazilian media got stuck in to the Vale saga stying there’s a bigger bid coming, maybe at 47-quid a share.

Sainsburys was up nearly 8p at 373p on news that the Sainsbury family trust has sold some of its shareholding to 71.3m shares, which is over 4% lower than last reports.

Centrica didn’t have a good day, down nearly 13p at 314p after mediocre annual results. Scottish & Southern Energy closed down 31p at 1,504, International Power down 10p at 408.25 and British Energy closed down 14p at 531p as the whole sector took a hit.

British Airways was also down, 10p less at 272 as oil prices rise and news that the pilots have voted for strike action because of allegations that the airline will be farming in some lesser qualified (cheaper, we expect) pilots for its new ‘OpenSkies’ subsidiary airline.

Bank Alliance & Leicester was down yet another 12.5p at 479.5 after its news yesterday sank in further. Broker Morgan Stanley gave the bank an ‘underweight’ from ‘equal-weight’ rating, together with a 370p target, down from 730p. HSBC also joined in with a downgrade to ‘underweight’ from ‘neutral’.

Scottish & Newcastle closed down 20.5p at 787 after it was just about confimed that South African brewer SABMiller wouldn’t be counter-bidding against the heineken/Carlsberg offer for S&N.

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The FTSE was up about 45 points at 5,938 in its first hour, whilst the FTSE 250 was up about 60 points at 10,185. The FTSE has rebounded about 2/3rds of its fall yesterday.

Last night over the pond the markets closed up, after initially falling, with the DJI closing up 90.04 at 12,427.26, which was about a 200-point turn from its low of the day. The S&P500 closed up 11.25 at 1,360.03 and the Nasdaq up 20.90 at 2,327.10. The reassurance by the Fed Reserve that it will put growth before inflation gave investors some comfort, as it looks like interest rates could even be cut again.

In the Far East this morning the Nikkei 225 closd up 377.91 points at 13,688.28, and in Hong Kong the Hang Seng closed up 32.42 at 23,623.0, although was up higher during the session and tailed back.

Oil prices are up yet again, with Light Sweet crude up about 75c at US$100.75 bbl on NYMEX last night, whilst Brent (Apr del) was nearly 40c at US$98.8 bbl this morning.

Here in London the oil price helped BP, who were up 1.5p at 559p, and Cairn Energy up 53p at 2,707. BP received a downgrade from Citigroup as well.

With gold now up at US$945 oz and copper also up, the miners were also mostly higher. Vedanta was up 70p at 2,288, Anto up 18p at 847 and Lonmin was up 65p at 3,529.

BAE Systems was up 13p at 485p after its reported 22% rise in earnings and a 14% rise in sales, together with a bullish fiorecast for the defence and aerospace group this year. Figures were an EBITA of £1.48 bln, up from £1.20 bln last time out. sales were up to £15.7 bln, up £2 bln from last year, and the order book was up nearly £7 bln to £38.6 bln.

Reed Elsevier was up 34 at 618 after the Anglo-Dutch publisher said it plans to divest its trade magazine subsidiary and announced a US$4.1 bln acquisition of Choicepoint, the insuranec data specialist, as part of a major restructuring aimed at enhancing profit growth. Profits were up to £1.13 bln, up from £1.08 bln last year.

Centrica was up 2p at 329p on the back of its £1.95 bln profit for 2007, which was 40% up on 2006. It added that it had 200,000 customers return to British Gas in the second half of the year.

Scottish & Newcastle didn’t fair as well early door, falling 20p 787p after it was clear that South African brewer SABMiller would not be launching a counterbid to the already agreed offer from Heineken and Carlsberg for S&N.

Mortgage bank Alliance & Leicester, which had another bad day yesterday after its reported massive write downs, had another fallback this morning, down 20p at 472p with a Morgan Stanley broker downgrade as well. New target is 370p, down from 730p. Goldman Sachs joined in, reiterating its ’sell’ rating and added its target was down to 455p from 627.

The FTSE closed down 73.3 points today at 5,893.6, up about 45 points from its low of the day, and down about 70 points from its high, whilst the FTSE 250 closed down 84.2 points at 10,124.4. It was a good day in the office with 3 decent trades on the FTSe itself.

The amrket suffered due to Alliance & Leicester, according to the various guys we’ve been talking to. We reckon the A&L figures have been ‘in the air’ for some time now - just read the recent blogs. Anyway, we can always blame the Ya… sorry, Americans, as their inflation figures were worse than anticipated today.

Which brings us to the other side of the pond, where we saw some negative feelings due to the inflation figures as a sharp rise in food costs for January, causing the Feds to admit that it was the highest annual increase in food prices in almost twenty years. Yes, 20 years - meaning annual inlation was at its highest for over two years. The US housing data added to the woe, with disappointing figures there giving a really negative atmosphere across the US markets. By the time London closed the DJI was down about 70 points at 12,268, whilst the S&P500 was down about 8 points at 1,341 and the Nasdaq off about 9 points at 2,297.

back here in London, and as we mentioned this morning and in the header, it was mortgage bank Alliance & Leicester that set trh tone for the day, and ended up closing down 36p at 492p after it reported an expected 29% fall in 2007 operating profit, with large write-downs on its debt-backed investments. Broker ’sell’ shouts rang round with a 6-quid target, down from 655p. The larger peers took pressure too, with HBOS closing down 12.5p at 646.5p, Lloyds TSB down 4p at 428 and Bradford & Bingley slipping down over a penny at 181p.

Housebuilders followed as a broker downgrade on the sector to ’sell’ saw Taylor Wimpey close down 13.9p at 166.2p, Persimmons close down 4.5p at 705.5p, Bovis close down 37p at 556.5p, Barratts off nearly 18p at 389p and Bellway off 31p at 769p.

Kingfishers alos closed down 4.7p at 132p after JP Morgan downgraded the retailer to ‘underweight’ from ‘neutral’ and lowered the target to 135p, down from 144p. A trading statement is due tomorrow.

Wolseley closed down 25p at 653.5 on another broker’s downgrade with a 540p target, down from 610p.

Johnson Matthey closed down 71p at 1,930 on a Bear Stearns equal rating.

Miners faired better, with bid-rumoured Xstrata closing up 57p at 3,946 giving strength to peer Anglo, who rebounded from earlier losses, closing up 14p at 3,161 after it announced it will receive new order mining rights for all of its operations in South Africa. This was on top of it posting record full-year underlying earnings, which were in-line with market expectations, and another binus of US$380m cost savings for last year too. Peers liked all this, with Kazakhmys closing up 40p at 1,488 and Vedanta up 45p at 2,218. Lesser traded Rexam had a good day too, closing up over 20p at 442.25p on the back of its annual figures that were ahead of expectations. Broker Seymour Pierce upped its rating to ‘buy’ from ‘outperform’.

Scottish & Newcastle closed up just shy of 20p on the day at 807.5 due to some more M&A rumours that SABMiller is sniffing with intent of a 8-and-a-half-quid bid.