Market Wrap, Monday 9th June 2008

The FTSE closed down 29.2 points today at 5,877.6, whilst the FTSE 250 closed down 93 points at 9,741.3. The banks pulled the FTSE down, which would have been lower had it not been for the oil stocks.

Over the pond, by the time London closed the DJI was actually up about 107 points at 12,317, whilst the S&P500 was up 5 points at 1,366, and the Nasdaq up 12 points at 2,462. News expected that home sales may be better than originally thought helped, as did news from Ronald McDonalds, who posted some decent numbers. It seems no matter how bad things are, those that use McDonalds for thier food can find the cash.  Worrying news, though, was that Lehman Brothers is raiing some serious cash thru’ a share offer at US$28 a pop, with 143m to sell.  That’s $4 bln they want to raise, so to boost the bank’s coffers. The bank also said it had lost a rather hefty US$3 bln in the 2nd quarter, which was heavier than expected. This news helped pull the London banks down.

Back here in London, the banks fell.  RBS closed nearly 12p down at just shy of 234p after saying that 95% took up the rights issue shares, which was as expected.  Peers were all dsown, with HBOS closing off nearly 24p at 307p, and Barclays closing down over 19p at 318.5p.

On to power, where we gave news this morning that France’s EDF was looking to take out British Energy had given the UK power group a boost, but this reversed during the session and it closed down 14p at 721p after saying it has actually not received any potential bid offers that are higher than the 6th June closing price of 735p.  Rumours that it had accepted the DF offer seem premature.

As we said this morning, oil had jumped a rather worrying US$11 bbl at the end of the week.  This has backed off about $2 or $3 bbl today, but the airlines and fuel users still suffered.  British Airways closed down nearly 6p at just shy of 228p, whilst orange-coloured peer easyJet closed down nearly 7p at just shy of 301p.  Cruise ship operator Carnival closed down 40p at 1,806p.

Had the oil stocks not been as strong, the FTSE would have been down much further today.  With the price of the black stuff so strong, we saw a boost to the heavyweights, with BP closing up 14p at just shy of 595p, RD Shell closing up 32p at 2,087p, BG Group up 24p at 1,280p, Dana Petroleum closed up 29p at 1,858, and Venture Production closed up 28.5p at 923.5p.  Oil services firm Petrofac also did well, closing up 62p at 7-quid on the back of a Goldman Sachs upgarde to ‘buy’ from ‘neutral’.

On to commodities, where metal prices were on the up too.  The mining sector really has been the only performer this last year, to really speak about, anyway.  Anglo closed up 43p at 3,298, Xstrata up 115p at 4,222, and Vedanta Resources closed up 25p at 2,283p.

On to the house builders, where all have had a really poor year.  This continued today, with Barratt Developments closing down 20p at just shy of 121p, Redrow down 17p at 197.5p, and Persimmons closing down 18.5p at just shy of 429p.  Persimmons, which is the only housebuilder still in the FTSE 100, looks like it will also be kicked out to the 250 in the next shuffle.

Pub group Mitchells & Butlers closed down 20p at 260.25p after weekend press reports that said M&B management had warned that it reckoned its pub beer sales (’on-trade’) would fall by over 40% in the next 10 years.

One riser worth mentioning was Informa, which closed up over 51p at 437.5p after announcing a tie-up deal with United Business Media, who closed up 12.5p at 618p.  News that this would be one bigger group was received well.