July 22, 2005
Filed under: Equities, Markets, US, Europe, UK, Japan
London: In the London equities markets, the FTSE 100 closed the week at 5,241.8, up 0.4 percent for the day and 0.2 percent for the week.
The FTSE 250 ended the day Friday at 7,495.8, also up 0.4 percent for the day and 0.3 percent on the week. It was a week of some confusion as Royal Dutch Shell began trading as a single entity but still has two share quotes on the London Stock Exchange.
Shares from the Dutch portion of the company are now listed as “A” shares, and shares from the UK portion of the business, Shell Transport & Trading, are now known as “B” shares.
The “A” shares were down 0.3 percent on Friday to close at £17.48 and “B” shares fell 0.2 percent to £17.95.0.2 per cent to £17.95.
Offshore Hydrocarbon Mapping lost a huge 32.7 percent on a Patent Office ruling against it and in favor of Statoil over data collection and analysis in the detection of offshore oil and gas reserves. Shares in OHM closed at 144p.
Among a number of rumors on takeovers, plasterboard manufacturer BPB gained 6.9 percent to 693 ½p on top of a 26.5 percent gain on Thursday as French company Saint-Gobain announced that it has approached BPB with the goal of acquiring the company.
Analysts said that a number of factors will affect the outcome of the bid, including how much of a dilution in the value of shares BPB’s shareholders will accept and how attractive shareholders consider the offer to be.
Europe: The FTSE Eurofirst 300 gained just less than 0.1 percent to close at 1,164.53 on Friday to end a week that saw more attacks on London’s transport system and the revaluation, albeit slight, of China’s currency.
In reporting its second quarter results on Thursday, Finnish telecommunications company Nokia said that its market share had increased from 32 percent to 33 percent, but that profit margins had shrunk due to the higher cost of manufacturing and lower average selling prices.
Following a series of downgrades, including a change to “underweight” by JPMorgan and a cut in target price from €17 to €16 by UBS, the value of Nokia’s shares lost 12.7 percent on the week to €12.90, to be the index’s largest decliner for the week.
On the other hand, Swedish company Ericsson reported strong results, but managed to gain only 0.6 percent for the week to close at SKr26.60 on Friday.
French food group Danone remained one of the weeks best performers on the strength of speculation that US company PepsiCo was ready to make a bid for the company, even though by the end of the week Danone’s chief executive had said he would oppose the bid.
Despite this negative news, Danone kept much of the 16 percent gain it had achieved at the beginning of the week to close at €3.42 on Friday, a gain of 10.7 for the week.
New York: In the New York equities markets on Friday, the Dow Jones Industrial Average, the Nasdaq composite, and the S&P 500 all ended the day and the week in positive territory, although only just in some cases.
The Dow was up 0.2 percent on the day to 10,651.26, with a fractional gain for the week, while the S&P gained 0.2 percent to 1,233.68 on the day and an 0.5 percent rise for the week and the Nasdaq added 0.1 percent to 2,179.74 for the day and a 1.1 percent gain for the week.
Many technology stocks couldn’t seem to find gains despite positive earnings reports.
Google exceeded earnings expectations but missed on its margins forecasts to lose 3.7 percent, $11.54 of their value, to sit at $302.40 at the end of the week even though Prudential had set $400 as its share price target. Despite the loss on Friday, however, Google was up slightly for the week.
Microsoft also reported that strong sales had led to better earnings than had been expected, but lost 2.90 percent to $25.68 on the day on the disappointment of some that projections weren’t higher.
Share values in Microsoft were also down slightly for the week. EBay bucked the trend after positive earnings reports even though it was down on Friday by 2.6 percent to $41.02.
EBay’s gain for the week was 17 percent. Conversely, although Yahoo gained 1.8 percent to $33.53 on Friday, its shares lost 8.3 percent for the week.
Airline stocks did well early in the week but lost ground late due to the new terrorist attacks in London, with the Amex airline index up slightly for the week but down from Wednesday through Friday by 4.8 percent.
The Chinese revaluation of its currency also had an impact when Wal-Mart shares lost 1.5 percent for the week to $49.54 as investors worried that if revaluation continues, the retailer’s costs for goods from China would go up.
Meanwhile, Halliburton gained 9.4 percent on Friday to $53.29 and was up 13 percent on the week after reporting good profits due to new military and energy contracts.
Tokyo: In Tokyo on Friday, equities markets saw declines as the yen appreciated sharply in relation to the US dollar in consequence of the revaluation of China’s currency on Thursday.
Share prices were especially hard hit among export-dependent companies.
The Nikkei 225 fell 0.8 percent to 11,695.05 and the Topix lost 0.7 percent to close at 1,186.76. The automobile manufacturing sector was hard-hit, as Toyota lost 0.9 percent to ¥4,190 and Nissan was down 1.5 percent to ¥1,145.
Additionally Sony, one of Japan’s largest exporters, lost 1.5 percent to ¥3,840. Another factor in Sony’s decline is worry over game development for the PlayStation 3.
The troubles within export companies did nothing to help companies oriented toward the domestic market, as the retail sector declined by 0.9 percent on the day and the banking and services sectors each lost 0.5 percent.
One drag on the retail sector was supermarket chain Seiyu, which had announced earlier that it will have a net loss this year. Seiyu lost 4.3 percent to ¥202 on Friday.
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Permalink: UK equities recover from tense week as US technology stocks fail to inspire
July 20, 2005
Filed under: Equities, Markets, UK
After a more vigorous rise early in the day, the FTSE 100 closed 0.2 percent higher at 5,215.2, while the FTSE 250 also rose 0.2 percent to 7,434.6 on a trading volume of 3.2 billion shares on Wednesday.
The rise was partly attributed to higher hopes for an interest rate cut next month when the minutes from this month’s Monetary Policy Committee meeting revealed that four members of the committee voted for a cut in the UK rates, two more than had voted for the cut in June.
Growth in China helped mining stocks to gains as Rio Tinto was up 4.4 percent to £18.38, BHP Billiton rose by 3.9 percent to 772p, Xstrata gained 2.9 percent to £11.48, and Antofagasta advanced by 3.4 percent to £12.74.
Retailer GUS gained 5.5 percent to 901p on a gain in sales at the Experian credit checking business and higher-than-expected sales for the Homebase outlets. The retailer also set a schedule for selling its majority share of Burberry.
Following this success, Next, the clothing retailer, gained 2.5 percent to £15.70, while electrical retailer Dixon added 1.8 percent to 159p. Marks and Spencer, however, only managed an 0.3 percent gain to 360 ¼p as Credit Suisse First Boston cut its target price to 350p per share, down from 380p.
In mid-cap stocks, P&O, the ports and ferry group, was up 3.7 percent to 319 ¾p as it was announced that it has gotten preliminary permission to turn a former refinery in Thurrock, Essex, into a major port.
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Permalink: FTSE closes slightly up on interest rate expectations
Filed under: Oil, Markets, US
August contracts for West Texas Intermediate crude oil on the New York Mercantile Exchange closed down 74 cents to $56.72 per barrel on Wednesday after it had fallen by $1.11 to $56.35 per barrel at one point in the day after early gains ahead of the release of weekly US inventory date.
With the August contract expiring at the end of the trading day, the September contract closed at $57.70 per barrel, down 99 cents.
WTI has lost nearly $6 in the past two weeks. Meanwhile in London, Brent crude for September delivery on the International Petroleum Exchange had lost 99 cents at one point in the day before closing down by 71 cents at $56.65.
The US Department of Energy’s weekly inventories report showed that stockpiles of crude oil in the US fell by 900,000 barrels last week, much less of a decline than the expected drop of over 3 million barrels.
The main reason for this was an increase in imports to 10.8 million barrels per day. Gasoline inventories fell by 1.3 million barrels, while stockpiles of distillates grew by 2.3 million barrels, mostly due to gains in heating oil inventories, which are now in the top half of the average range for this time of year.
This increase helped to further ease concerns about low supplies for the fourth quarter of the year. It also sent August distillate futures down 3.61 cents to $1.5950 per gallon, 12 percent below the record high price of $1.8125 per gallon, reached two weeks ago.
Meanwhile, US petroleum product demand has apparently not been affected by high prices. Gasoline consumption is up 2.5 percent from last year’s levels at 9.5 million barrels per day, while distillate demands are 3.6 percent higher at 4 million barrels per day.
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Permalink: Oil futures continue down but supply concerns continue
July 8, 2005
Filed under: Equities, Markets, UK
In London, the FTSE 100 gained 1.4 percent on the week to close at 5,232.2 on Friday, while the FTSE 250 gained 1 percent over the week and reached an all-time high when it closed at 7,518.7.
Volume on Friday was 2.8 billion shares, about average for a summer Friday and much lower than Thursday’s activity.
Some investors said the recovery after Thursday’s events shows the market’s resilience, while others were surprised that the market seemed to be ignoring weak economic data and a slowdown in consumer spending.
Investors seemed to be projecting a feeling that the threat of terrorism has become merely a normal part of everyday life.
Sectors that fell on news of the bombings on Thursday came back on Friday, including airlines and some but not hotel groups. Life insurers also rebounded. Meanwhile in the eurozone, the FTSE Eurofirst 300 was up 1.3 percent on the day and 1 percent on the week to close at 1151.34.
The oil sector was up on rising crude oil prices, but tire makers fell on high rubber prices. On a report that high demand from China could send prices to a 9-year high by the end of the year sent shares in Michelin down 6.4 percent to €47.67 while German tire maker Continental declined by 2.4 percent to €58.56.
In Tokyo, the Nikkei 225 lost 0.2 percent Friday to 11,565.99, while the Topix lost 0.22 percent to close at 1,177.61. Private sector machinery orders were down 6.7 percent in May compared to April. Exporters, including Sony, Canon, and Toyota were down, but retailers were up.
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Permalink: FTSE recovers from bombing outrage
July 7, 2005
Filed under: Equities, Commodities, Forex, Oil, Metals, GBP, Markets, Economy, US, Europe, UK
Special Report
Four bombs were detonated at four different points in London’s transportation system during the morning rush hour on Thursday, leaving a reported 37 dead and more than 700 wounded. The attacks are being investigated as terrorist acts.
A group claiming links to Al-Qaeda claimed responsibility for the attacks and warned Italy and Denmark to withdraw their military forces from the Middle East.
The claim, which one police official said had not been determined to be real, appeared on an Islamist website.
Prime Minister Tony Blair, who left the G8 meeting in Scotland to deal with attacks, declared the intent of the British people to preserve their way of life and their values in the wake of the attacks.
Equity Markets
In the economic community, the equities markets bore the brunt of the reaction to the attacks.
In London the FTSE 100 ended the day down 1.4 percent at 5,158.3 after a 4 percent drop earlier in the day.
The FTSE 250 closed down 1.4 percent at 7,387.9.
The volume of shares traded on the day was much higher than average at 4.6 billion shares.
The news of the attacks in London prompted a broad-based sell-off, but by afternoon more limited losses in New York and the expectation that the attacks might prompt the Bank of England to cut interest rates helped the equities markets to recover somewhat from what had been a traumatic day.
Analysts praised the resilience of the London markets and predicted that within a week they would be higher than current levels.
Almost all stocks on the FTSE 100 were lower on the day.
Among those feeling the most effect from the bombings were travel-related sectors.
Air carriers and cruise lines were down, as were hotel groups. British Airways lost 4.2 percent to 260 ¾p and EasyJet fell 3.8 percent to 254 ¼p, while airport operator BAA declined by 3.2 percent to 599p.
Cruise operator Carnival fell 2.2 percent to £31.59. Hilton lost 3.3 percent to 288 ¼p, while InterContinental Hotels was down 2.8 percent to 701 ½p.
Shares in companies touching on bus and train transport were down as well.
National Express, which bought the London bus division of Tellings Golden Miller just last month, lost 3.3 percent to 880p, while bus and train operator Go-Ahead Group was down 2.4 percent to £12.48.
First Choice Holidays initially fell by 8.2 percent but recovered by the end of the day to a loss of 2.9 percent at 187 ¼p.
Leisure companies with significant holdings in London also fell sharply. Ubrium, the nightclub operator, lost 4.3 percent to 770p, while Caffe Nero, the coffee shop operator, was down 2.9 percent to 187 ¼p.
Another sector seeing significant losses in the London markets was the insurance sector.
Those firms had recovered much of their losses by the end of the day, however.
Aviva closed down 2.2 percent at 611p after having fallen to 585p earlier. Prudential fell to 482½p before recovering to 502 ¼p at the close of trade, a decline of 1.9 percent.
Gainers were few in London, and included pharmaceutical group Shine, which rose 0.2 percent to 620p, and Quadnetics Group, which supplies CCTV and video systems to London Transport. Shares in Quadnetics rose 1 percent to 242 ½p.
Eurozone markets
In the eurozone, the FTSE Eurofirst 300 saw an up and down day much like that in the London markets.
The Eurofirst was down by 1.9 percent to 1,135.6 late in the trading day, but it had fallen as far as 1,107.49 earlier, down 4.3 percent.
Again, the leisure and insurance sectors were the hardest hit, especially airline and travel stocks.
Tui, the world’s biggest travel agency, lost 2.3 percent to €20.59 even though a company officials said that it does not believe Thursday’s terrorist attacks in London will have a long-term effect on travel bookings.
In the air travel sector, Lufthansa lost 2.3 percent to €9.95, Air France-KLM was down 1.3 percent to €12.42, Sweden’s SAS fell 1.5 percent to SKr64.25, and RyanAir lost 2.3 percent to €6.32.
European insurers were also down, with life insurers Aegon dropping 1.8 percent to €10.76 and Alleanza falling 2.7 percent to €8.77.
Reinsurers did even worse, with Munich Re, the world’s largest reinsurer, lost 2.4 percent to €87, even though it said it was not affected by the attacks in London. Other reinsures were down between 1.9 percent and 4.1 percent.
Energy stocks in the eurozone were down after the price of crude oil initially hit record highs after the attacks but subsequently fell by more than $5 per barrel on concerns about the impact of the attacks on air travel and economic growth.
Royal Dutch was down 2.7 percent to €54.90, Norsk Hydro lost 2.9 percent to NKr619.50, and Statoil fell 2.1 percent to NKr140.50. Crude oil prices recovered most of those losses later in the day but still ended the day down.
US markets
US stocks initially dropped on the news of the London bombings, but then recovered as European stocks recovered some of their early losses as the day progressed.
The Dow Jones Industrial Average, S&P 500, and Nasdaq all ended the trading day in positive territory.
The DIJA gained 0.3 percent to close at 10,302.29, the S&P 500 was up fractionally to 1,197.86, while the Nasdaq composite also gained 0.3 percent to close at 2,075.66.
Early declines on the New York exchanges were about half of those experienced after the March 11, 2004 terrorist attacks in Madrid.
Another factor in the late recovery in New York involved the weekly report on first-time jobless claims in the US, which came in at just about the level expected.
Still, as in London and in Europe, airlines and other travel-related stocks fell on the day.
Delta Air Lines closed down 2.9 percent at $3.38, after recovering from a 10 percent drop in pre-opening trade. Meanwhile, Marriott International was off by 0.4 percent to $68.59.
Currency Markets
In the currency markets, investors looked for safe investments after the London attacks.
Trade activity went up in London about 9 a.m., calmed down on initial reports that the explosions could have been caused by a power surge, then peaked again around 9:40 a.m. as it began to be increasingly clear that the blasts were due to terrorist activity.
Volume sank again after 10 a.m. but remained higher than average all day. Sterling fell to $1.7403 in relation to the US dollar, an 18-month low, from $1.752 before the attacks.
By late in the day, however, sterling had rallied back slightly to sit at $1.743. The pound also dropped in relation to the Swiss franc. It fell to SFr2.243 before recovering to Sfr2.263 by the end of the trading day.
The US dollar was also down in relation to the Swiss franc, falling to SFr1.285 before recovering slightly to SFr1.299.
The dollar also dropped initially against the euro, but by late in the day in New York it had returned to its previous level of $1.194.
Analysts said that the US dollar has been very sensitive to news of terrorist attacks since the September 11, 2001 attacks in the US, even when the US or its interests are not directly involved.
Bond Markets
The price of government bonds around the world surged, and yields fell, as investors looked for safe places to put their money after the events in London on Thursday morning.
In the UK, the 10-year gilt lost 8.3 basis points to yield 4.199percent at the close of trade. Earlier, yields on the 10-year gilt had fallen to a two-year low of 4.12 percent.
In the US, the 10-year Treasury bond was down, although not as much, losing 2.5 basis points to yield 4.049 percent, after falling to a yield of 3.96 percent earlier in the day.
In the eurozone, the 10-year German Bund registered a loss of 3.6 basis points to yield 3.175 percent after bouncing back from an all-time low of 3.08 percent. Trade was heaving at 1.4 million contracts in the eurozone.
Some analysts said that as long as confidence remains high in Europe, the London attacks will not have an effect on the overall economic outlook for Europe.
Crude Futures
The price of crude oil saw wide fluctuations in the wake of the attacks in London.
Before news of the explosions, Brent crude oil on the International Petroleum Exchange in London had reached a record high of $60.70 per barrel.
After the news of the attacks, however, Brent crude dropped $5.15 in the space of two hours, to $55.55.
By the end of trade, however, Brent had recovered to $59.28 per barrel, still down 57 cents from Wednesday’s close.
West Texas Intermediate ended the day 55 cents below Wednesday’s close at $60.73 per barrel in New York.
It had hit a new record high of $62.10 per barrel early in the day but dived to a low of $57.20 per barrel before recovering to its price at the close of trade.
Analysts said that the steep drops in crude oil prices had to do with fears that the day’s events were going to take on proportions similar to the September 11, 2001 attacks in New York.
Right after 9/11, oil prices jumped by $1 per barrel before falling for the rest of the year because of a slowed economy and a huge drop in air travel.
The price of gold was also affected by the London attacks, jumping by $4 on the news, only to fall back to $425.05/$425.80, still a gain of $2 on the day.
The Asian markets had closed before the attacks in London took place, and so were not affected by Thursday’s events.
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Permalink: London bombs impact world investment markets
July 5, 2005
Filed under: Equities, Markets, UK
In London on Tuesday, the FTSE 100 gained 0.1 percent to 5,190.1 while the FTSE 250 fell 0.4 percent to 7,407.4 on a volume of 3 billion shares traded.
British Airways was up 2.1 percent to 271 ¾p on reports of an 8.5 percent rise in premium traffic and a move to increase passenger fuel surcharges to protect profits from higher fuel prices.
In the drinks sector, speculation about takeovers and mergers surrounded pubs and bars group Mitchells & Butlers as shares gained 2.5 percent to 343p on a volume of 9.5 million shares, double its usual daily volume.
This rise in value and volume came on the possibility that the company might be the target of a takeover.
Brewer Scottish & Newcastle was linked to the speculation even though it has left the pubs industry to focus on brewing.
The rumors advanced shares in S&H by 0.7 percent to 467 ¼p. Also linked to a possible deal with Spirit Group.
Bookmaker William Hill added 2 percent to 551p on improved results and tight cost controls.
This news also aided Hilton Group, owner of Ladbrokes, to gain 1.4 percent to 294.75p.
TV broadcaster ITV gained 0.6 percent to 129 ¼p on speculation that Apax Partners, a US private equity firm and Goldman Sachs might join forces to buy ITV.
Goldman Sachs, however, later downplayed the possibility of a deal.
Bus and train operator Go-Ahead Group lost 4.5 percent to £12.80 as it was feared that higher fuel prices and wage inflation could cut into operating margins.
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Permalink: FTSE makes slight gains on strong trading volume
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