Another volatile week as traders watch results of liquidity injection
20/12/2007
14th December - Better start in London after yesterday's turbulence Although there was still some turbulence in the market, buyers had the upper hand this morning with the FTSE 100 index up 40 points mid-morning. Northern Rock reversed some of the week's falls as Virgin Group was stripped of its preferred bidder status last night after rival Olivant threatened to walk away unless it was put on an equal footing with Sir Richard Branson's company. Rentokil also bounced a little after yesterday's hit following its warning on the parcels division. Otherwise most of the action reflected a busy day for corporate news.
Centrica said that excluding the impact of the Humber power station lease prepayment, 2007 pre-tax results were in line with expectations. The reduction in UK residential margins in H2 was offset by the stronger performance from Centrica Energy and a lower underlying interest charge, and the shares were unchanged. United Business Media said that overall trading for H2 was in line with expectations, with underlying revenue growth seen at between 6% and 7%, significantly ahead of the first half. Xchanging expected its trading performance for 2007 would be in line with expectations.
PartyGaming announced that its financial performance in Q4 to-date had been in line with expectations, and remained confident about the prospects for the current year. Northern Foods confirmed that since the announcement of its half year results in November and following the successful recovery of recent commodity cost increases, it had continued to make steady progress across its businesses.
17th December - Footsie follows Far Eastern markets to the downside There was a surge of selling at the open in London, and with few buyers around after Friday's disappointing inflation news in the US, the FTSE 100 index was down over 100 points. Retailers took the brunt of much of the falls, with Home Retail Group, Next, DSG International and Marks & Spencer all down over 3%. There was some caution after the CBI downgraded its outlook for UK economic growth in 2008, believing annual growth will hit 2% next year, down from the 2.2% predicted in September. Rightmove added that UK house prices fell 3.2% in December from the previous month, the largest drop since it began collecting the data back in January 2002. This news also hit Barratt Developments, Persimmon and Taylor Wimpey, and the miners also saw falls on weaker metal prices. A ray of light came from Collins Stewart which bucked the trend on reports it had held preliminary discussions about a possible takeover by Nomura, although the talks are not thought to be very far advanced.
In corporate statements, Arriva said it could cope with a potential rise in fuel prices and full-year results were expected to be in line with expectations. 888 Group said trade continued in line with management's expectations, underpinned by stronger than expected current trading and it remained confident about the group's prospects for the full year. Provident Financial said it was trading well and expected to report strong profits growth for the year as a whole, in line with market expectations. Elsewhere, Alphameric called off bid talks after it failed to receive an adequate offer, and NSB recommended a takeover offer from rival Epicor worth 38p per share, or £160m in total.
18th December - Better start in London but still some uncertainty For a change there was a surge of buying at the open today but there is still plenty of two-way business, and mid-morning the FTSE 100 index stood just one point up. Retailers bounced, with Debenhams up 8% on press reports that retail entrepreneur Mahesh Jagtiani had taken a 7% stake and may be mulling a bid. DSG International, Home Retail and Kingfisher all rallied on the news. At the other end, the fall in commodity prices again hit the mining sector, with Anglo American and Rio Tinto down around 2%.
Most of the corporate news was in the mid-250 index, with Aggreko up after it said it expected full-year operating profit to rise by 50%, although it warned that conditions in North America could become more difficult. National Express expected full year results at the top end of market expectations and was confident for future prospects during 2008, with like-for-like revenue growth in the UK set to be 11% on trains, 6% on buses and 6% on scheduled coaches. Cookson also predicted full year results would be at the upper end of expectations, with continued substantial improvement in anticipated performance. Bodycote said sales growth for the year to date had been 18% of which 8% was organic and a further 10% was from acquisitions, and the board remained confident for 2008. Shares in Drax fell though as it said it continued to trade in line, with operating profits in 2007 to be around £500m with a closing cash position of between £55-60m. Also down was Kingspan despite trading for the first 11 months of the year having shown strong growth. It expected operating profit growth of approximately 22% over the €194m achieved in 2006, but present market conditions left it difficult to guide for the coming year. Regus said all four regions in which it operated were firing on all cylinders and it was on target to meet market expectations with its results this year. Finally, Inchcape saw solid sales growth this year as it continued to trade in line with market expectations. 19th December - Footsie struggles after a bright start Another difficult session saw the FTSE 100 index begin well, but there was some selling and by mid-morning the index was down around 14 points. There were no major movers of note in the blue chips, but the housebuilders saw some value buying, as did Northern Rock on vague takeover talk.
On the downside, Barclays and HBOS edged down in a struggling bank sector while Home Retail and Kingfisher fell again after yesterday's rally.
Cadbury Schweppes was unchanged despite the ultimatum from Nelson Peltz, its third largest shareholder. He wants the group to sell businesses, return capital and appoint several new executives. Biffa opened its books to Montagu Private Equity and Hg Pooled Management after it confirmed it would recommend a 350p per share offer from the firms In results, Sports Direct saw interim underlying profits fall by 35% to £52m on revenues down 7.1% to £668m, with the results reflecting a very challenging UK market and the comparative period last year including the World Cup, but the shares rallied on fears it could have been worse. Wood Group said it expected full-year profits to be ahead of market expectations with all three divisions delivering increased revenues and margins. Cobham said trading profit in the technology division in the eleven months to November was ahead of the prior year, despite currency headwind, and the group also said it would consolidate its six divisions into four. Moneysupermarket.com expected revenue and underlying profit for the current year to meet the current consensus of analysts' forecasts, which show revenues of £160.9m and profit of £51.3m. 20th December - Early buying pushes Footsie up, but still volatile There was a brighter start in London this morning, although two-way business was still prevalent, but mid-morning the FTSE 10 index Footsie was up just over 40 points. Banks improved with RBS and HSBC seeing value buying, but Northern Rock retraced yesterday's gains on reports that mortgage lender Bradford & Bingley was mulling a bid. ITV rose on news that BSkyB would have to cut its 17.9% stake if the government decided to act on a recommendation from the Competition Commission that BSkyB should reduce its stake to below 7.5% and not take a seat on the ITV board. At nthe bottom end, Tullow Oil fell after having completed tests at its Mputa-4 well in Uganda's Block 2, which tested at rates of 950 to 1,100 barrels a day on a small half-inch choke.
On the second line, shares in Keller rose after it said it expected results for the full-year to be slightly ahead of the top end of market expectations, with a strong order book leaving it well placed for 2008. Forth Ports said it saw overall group result for the year ending 31st December in line with expectations. Sthree announced that it was in the process of appointing a new CFO after Michael Nelson had stepped down. Lavendon said its performance during 2007 was set to be ahead of expectations, adding that it was confident of further significant progress in 2008. McBride expected H1 operating margins to be below that in the comparable period last year due to high raw material costs. Finally, Erinaceous rose on a press report that James Caan of Dragons' Den was studying the possibility of making an offer for some or all of the company.
|
|
The author is an advisory CFD dealer at Blue Index, the CFD specialists. For more information on CFD Trading with us, go to Blue Index or ring one of our friendly client's services team on 0207 398 2555.
IMPORTANT NOTES: This CFD research report is issued by Blue Index Limited, which is authorised and regulated by the Financial Services Authority. This Report was prepared and distributed by Blue Index for information purposes only. This document does not constitute an offer, or a recommendation to enter into any transaction. The opinions contained in the Report were considered by Blue Index to be valid when published. Whilst Blue Index has taken all reasonable steps to ensure this information is correct, Blue Index does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the Report to undertake trading does so entirely at their own risk and Blue Index does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Short term trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. The investor may not receive back the amount of his original investment and in certain circumstances may be liable for a greater sum than this. If in any doubt, please seek further advice. Blue Index Ltd. 23-26 St. Dunstan's Hill, London, EC3R 8HN. Visit Blue Index to open up a Contracts for Difference (CFD) trading account.
Some services on this report are not available to private inexperienced investors. Services may also not be available to certain investors due to regulatory or other constraints either in the UK or elsewhere. You are advised that most services are only available following completion of Blue Index documentary and other account opening requirements.
|