Monday 28 August 2012
QUOTE OF THE DAY
"There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle."
-Albert Einstein
THIS MORNING IN LONDON
FTSE 100
5,758.06
-18.54 -0.32%
FTSE 250
11,380.83
-68.23 -0.60%
FTSE 350
3,057.72
-10.95 -0.36%
FTSE All Share
2,992.13
-10.49 -0.35%
AIM 100
3,037.33
-31.06 -1.01%
AIM All Share
677.48
-4.83 -0.71%
14:15 pm
THOUGHT FOR THE DAY
Hello Share Fans,
One is a clot if one tries to forecast the way things are likely to go in the next few weeks, as far as the Footsie goes. So as I am one, here we go.
I think this week will see some rather nice gains all round. Why? Well, he Greek crisis seems to have eased a bit over the inert Bank Holiday period. There were some positive chats going on between the bosses of Greece and France, which have yet to have a chance to really influence the UK market.
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ON THE BLOG
My piece on how UK house prices will fall by 30% prompted a range of comments. I am not surprised, house prices and the weather are two defining British obsessions. A couple of folks asked why the media/politicians always talk about rising prices as a good thing when they are patently nothing of the sort.
Incidentally, the reason that they are a bad thing is that unaffordable housing prevents labour mobility thus making the UK economy less productive. Moreover the need to a) borrow vast sums to purchase a place and b) spend vast sums funding and repaying that debt leaves the UK population as a whole far too heavily overborrowed and b) have less cash to do sensible things like save for a pension.
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TIP OF THE DAY
A report by Growth Equities & Company Research
office2office (o2o) is a leading supplier of office products and services in the UK.
Major Contract Wins – The group has won a number of important contracts over the past 18 months that could generate revenues of over £60 million per annum when fully implemented.
Significant Growth Opportunities – We believe o2o has significant scope for revenue growth, both by expanding existing contracts and through new contract wins.
Impressive Dividend – o2o currently offers a dividend yield of 7.8%, which is supported by a strong historical free cash flow…
Click here to download the full report…
THIS MORNING IN LONDON
Stocks erase losses after Spanish auction
- Spanish bond auction lifts sentiment
- Miners lower on concerns over Japan
- Chemring drops profit warning.
London's blue-chip index was trading broadly flat by midday, having erased all of the morning's losses, after a solid Spanish bond auction eased concerns about the heavily indebted Eurozone country.
Miners were providing a drag on the FTSE 100 this morning on concerns about Japan, the world's third-largest economy. The Japanese government has reduced its view on personal consumption, housing construction, exports, imports and industrial output for the first 10 months of the year.
"The Japanese economy is on the way to recovery at a moderate pace, partly due to reconstruction demand, while some weak movements are seen recently," the Cabinet Office said in its monthly report.
JPMorgan Securities Japan and BNP Paribas are forecasting a 0.3% and 0.9% decline in third-quarter Japanese gross domestic product (GDP), respectively.
Turning to Spain, the Treasury raised €3.607bn in short-term debt this morning, above the top-end of its target rage of €2.5-3.5bn. Borrowing costs dropped dramatically and demand increased significantly compared with the previous auction in July. According to the country's national statistics institute, Spanish GDP declined at a 1.3% annual rate in the second quarter, compared with the initial estimate of a 1% contraction.
Markets continue to wait official news from the European Central Bank (ECB) regarding its proposed bond-buying programme. However, analyst Craig Erlam from Alpari said that recent market chatter has shown some consistency: "There have been numerous reports recently that claim to have inside knowledge on the matter. While they all differ slightly, there is also a lot of consistency. Based on these reports, it looks likely that the ECB will target short term debt yields, which will include a non-fixed yield cap on Spanish and Italian bonds," he said.
However, ECB member Jörg Asmussen has said over the weekend that the EFSF bailout fund must take the lead in the purchase of any sovereign debt before the ECB steps in. "The ECB council will continue to decide in full independence whether, when and how it will purchase bonds on the secondary market," he said.
FTSE 100: Kingfisher, G4S and miners weigh on benchmark index
B&Q owner Kingfisher was the heaviest faller of the day after Bank of America Merrill Lunch downgraded its rating on the stock to 'underperform'.
Security giant G4S fell after expressing disappointment over the problems related to its Olympics contract, saying that it will incur a £50m loss on the contract in the first half. Meanwhile, the company said that a restructuring of its overhead structure will lead the loss of 1,100 jobs. Nevertheless, the firm revealed that turnover at constant exchange rates rose 7.5% while profits were flat.
Miners were firmly out of favour this morning on concerns over the Japanese economy. BHP Billiton fell after announcing the sale of its Yeelirrie uranium deposit in Western Australia to Cameco for $430m. BHP and sector peers ENRC, Kazakhmys and Vedanta were also lower after Morgan Stanley reduced its target price for all four stocks.
Drugs giant AstraZeneca was lower after saying that it has appointed Roche's Chief Operating Officer as its new Chief Executive Officer. Meanwhile, the firm also announced that the European Commission has granted marketing authorisation to its ZINFORO treatment. Sector peer GlaxoSmithKline was suffering from a downgrade by UBS.
Bunzl, the international distribution and outsourcing group, fell despite saying that pre-tax profits and revenues in the first half rose 9% and 7%, respectively.
FTSE 250: Chemring drops after profit warning
Defence contractor Chemring dropped after it issued a profits warning, saying a computer glitch and production delays are likely to wipe £15m off full-year earnings as it considers a takeover offer from private equity giant Carlyle.
Heading the other way was chemicals group Yule Catto after reporting a pre-tax profit of £56m in the first half, up from £52.4m the year before. Sales, however, fell to £603.3m from £664.3m.
FTSE 100 - Risers
ITV (ITV) 85.00p +1.74%
Carnival (CCL) 2,128.00p +1.72%
Barclays (BARC) 190.20p +1.60%
CRH (CRH) 1,149.00p +1.59%
Fresnillo (FRES) 1,606.00p +1.52%
Capital Shopping Centres Group (CSCG) 332.90p +1.22%
United Utilities Group (UU.) 719.50p +1.20%
BT Group (BT.A) 217.50p +1.07%
Sainsbury (J) (SBRY) 332.60p +0.94%
Glencore International (GLEN) 370.00p +0.86%
FTSE 100 - Fallers
Kingfisher (KGF) 275.60p -3.54%
Evraz (EVR) 239.70p -2.88%
Kazakhmys (KAZ) 642.00p -2.80%
G4S (GFS) 259.10p -2.67%
Eurasian Natural Resources Corp. (ENRC) 330.50p -2.48%
Bunzl (BNZL) 1,084.00p -2.43%
Vedanta Resources (VED) 906.00p -2.00%
Marks & Spencer Group (MKS) 364.30p -1.99%
IMI (IMI) 840.50p -1.93%
InterContinental Hotels Group (IHG) 1,587.00p -1.79%
FTSE 250 - Risers
Yule Catto & Co (YULC) 152.80p +7.76%
Moneysupermarket.com Group (MONY) 138.10p +5.42%
Ted Baker (TED) 1,000.00p +3.41%
Renishaw (RSW) 1,568.00p +2.55%
Dialight (DIA) 1,099.00p +2.33%
Imagination Technologies Group (IMG) 578.50p +2.12%
Home Retail Group (HOME) 95.15p +2.04%
Homeserve (HSV) 216.30p +1.93%
St. Modwen Properties (SMP) 202.40p +1.71%
COLT Group SA (COLT) 119.20p +1.71%
FTSE 250 - Fallers
Chemring Group (CHG) 324.00p -12.55%
Bumi (BUMI) 335.30p -5.55%
Heritage Oil (HOIL) 191.00p -4.45%
Cairn Energy (CNE) 285.10p -3.78%
BTG (BTG) 310.30p -2.64%
Afren (AFR) 126.80p -2.39%
Cape (CIU) 188.50p -2.38%
Bwin.party Digital Entertainment (BPTY) 92.90p -2.26%
Perform Group (PER) 372.00p -2.11%
NMC Health (NMC) 193.00p -2.03%
WHAT THE BROKERS SAY
While Investec has maintained its 'hold' rating for distribution and outsourcing group Bunzl, the broker says that company has once again delivered a strong trading performance.
Credit Suisse has highlighted Ophir Energy as its focus list stock in its sector review of oil and gas explorers and producers (E and Ps).
UBS has lowered its recommendation for pharmaceuticals giant GlaxoSmithKline from 'buy' to 'neutral', saying that there's limited potential for further upside.
Click here for the rest of the broker recommendations
THE LATEST ON THE CRAZY BOARD
The top 5 hot company threads on the Bulletin Board:
CONROY GOLD & NATURAL RESOURCES (CGNR)
Transense - the most certain investment?
KURDISTAN-TXO JOIN GULF KEYSTONE WITH 10% STAKE
PUNTLAND - RANGE HIT MASSIVE OIL COLUMN - PL
Aggreko
Click here to discuss shares with other ShareCrazy members
BOOK OF THE WEEK
By Rodney Hobson
A book review by Luka Lukic of t1ps.com
In this book Rodney Hobson aims to provide a straight forward introduction into the world of portfolio management and best practices to employ when selecting what you want to invest in. Thankfully it doesn't pretend to offer a guaranteed, one size fits all, scheme to become a millionaire, but instead attempts to compel the reader to assess what they wants to get out of their investment and then provides guidance to that end.
The book aims to explain the different behaviours of the various market sectors, and the importance of not only holding a range of shares, but diversifying them throughout the sectors to ensure a proper hedge. It also walks the reader logically through a range of factors than can, and most likely will, affect the share price and gives case studies to demonstrate the impact on real companies.
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Regards,
ShareCrazy
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