Morning Market, Friday 28th March 2008

The FTSE was fairly flat this morning, and we expect a slow end to the week.  The FTSE was up 6.5points at 5,724 after its first hour of trading, whilst the FTSE 250 was down 24 points at 9,958.

last night over the pond it was a bit topsy-turvey, with the rumour of a bank close to a Chapter 11 situation gaining some strength.  The DJI closed down 120.4 points at 12,302.5, whilst the S&P500 closed down 15.37 points at 1,325.76, and the nasdaq down 43.53 at 2,280.83.

In the Far East today the Nikkei 225 closed up 15.89 points at 12,820.47, and in Hong Kopng the Hang Seng recently closing up 621.73 points at 23,285.95.  Hong Kong jumped as on the Shanghai market there was some decent investors moving in as commodities gained strength with oil rising yet again on Nymex last night after problems in Iraq again with an explosion on a pipeline.  However, the price of the black stuff eased in the far East today as people calmed, as it turned out the explosion wasn’t as major as feared.  Light Sweet (May del) was down a buck at US$106.5 bbl.

Back here in London, funny goings on at the new £4.3 bln building and technology masterpiece, Terminal 5, have had many observers in fits and the debacle, but thousands and thousands of travellers in tears.  With 20 flights cancelled yesterday and 34 today, chaos is snowballing.  Passengers are being asked to tarvel with hand-baggage only, as well, which isn’t being accepted nor possible by most. British Airways was taking some stick over the fiasco, falling 5p to 242.5p as investors concern over the number of cancelled flights and compensation payments, as well as the hotel costs for housing the unfortunate customers.  With BA’s staff not being able to find parking spaces, not knowing how to opearte the state-of-the-art baggage system, and a host of other problems, claims of ‘early teething problems’ wasn’t washing with most.

Onto the markets, it was the housebuilders that were under pressure. Nationwide’s house price survey said the UK’s housing market was weaker again in March, causing the annual growth rate to be at its lowest level in more than a decade. Nationwide said house prices fell 0.6% in March from February, with annual growth down to just 1.1%.  Housebuilder Persimmon was down 35p at 755p, Bovis Homes was down 11p at 587p, and Barratts was down 19p at 419.  Property group Land Securities was off 17p at 1,519, and British Land down 12p at 922.

Banks were also under pressure early on, mainly due to the US rumours, it seems, and further speculation that the well-respected Lehman Brothers is also suffering with the sub-prime crisis. Lloyds TSB was down 10p at 450 and HBOS down 4p at 553-1/2. Broker upgrade of HSBC gave that a 5p boost to 826p, though, after Casenove upgraded it to ‘outperform’ from ‘in-line’ citing a healthy balance sheet.

Associated British Foods was down 12p at 877p after a Goldman Sachs downgrade to ‘neutral’ from ‘buy’ and a 929p target.

The miners were up this morning, helped by far Eastern trading, with Anglo up 64p at 3,055, Eurasian Natural Resources up 10p at 975, BHP up 23p at 1,496 and Anto up 11p at 669. Oil stocks were also stronger, with RD Shell up 8p 1,671 and BG Group 9p to the good at 1,132.

Enterprise Inns was looking good this morning, though, up 26p to 390p, or over 7%, after an update that said its figures would be in-line with expectations and nothing uch has changed since the start of the year.  Landsbanki liked the news, upgraded it to ‘buy’ rating, and said it could be worth another £1.50 to the share price. Staying with the licensed trade, Punch Taverns was up 21p at 540 after pulling out of the merger talks with Mitchells & Butlers, who were down 9p at 321p. M&B is understood to have received a number of approaches from various private equity groups, though, with TPG, CVC Capital Partners, Apax, Cinven, and Terra Firma all rumoured to be sniffing with intent, although the FT said a few of them had already also decided to pull out of the running.

The London Stock Exchange (LSE:LSE) was up again as well, 33p higher at 1,282 after an update that said it will start a share buy-back program using £500m to do so.