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THE ECONOMIC MONITOR U.K.
INSIDE THE REPORT
MARKETS AT A GLANCE
Stock recommendations and price targets from top brokerage firms Forecasts on Economic Indicators List of companies earnings that hit and miss the analysts’ expectations Important Events Scheduled on 22 September
The FTSE 100 closed dropped 0.47% or 26.35 points closing at 5576.19. By 1505 GMT, the euro traded at 84.40 pence, having closed just above the psychologically key 84.00 pence on Monday. By 0938 GMT, the December gilt future was eight ticks higher at 122.30. ICE Brent for November was much more buoyant than U.S. crude, rising 30 cents to $79.62 per barrel. Spot gold was bid at $1,276.25 an ounce at 1524 GMT, against $1,279.25 late in New York on Monday.
Minutes of the Monetary Meeting
INDEX FTSE 100* FTSE 250* FTSE 350* FTSE Tech Mark 100* LAST 5576.19 10545.07 2943.75 1942.80 3538.98 2879.32 1083.95 6275.98 3784.40 2552.71 CHNG -26.35 -3.12 -12.18 -6.80 2.00 -11.22 -3.43 -18.60 -3.61 -18.33 % CHNG -0.47 -0.03 -0.41 -0.35 0.06 -0.39 -0.32 -0.30 -0.10 -0.71
BrainJuicer Group, Burst Media Corp, Judges Scientific, Nationwide Accident Repair Services interim results PureCircle, RSM Tenon Group final results
FTSE AIM 100* FTSE All Share* FTSE Eurofirst 300* DAX* CAC 40* Stoxx Europe 50 * CLOSING VALUES
JD Sports profit soars Betfair looks for London share listing Experian buys Mighty for cost synergies Minerva returns to profit Wellstream receives multiple bid approaches Serco forms JV with NHS Savile FY profit drops, looks for acquisitions Public sector borrowing at record high Mortgage lending falls to its lowest since 2000 Manufacturers tussle to access finance Birmingham in talks with M.East on asset sales
INDEX Euro (EUR/USD) U.K. Pound (GBP/USD) Japanese Yen (USD/JPY) LAST 1.3131 1.5558 85.37 PRIOR 1.3062 1.5552 85.75
All prices are at 11:45 AM EDT
LAST Crude Oil 73.12 4.123 1275.40 348.15 728.00 CHANGE -1.74 0.118 -5.40 -2.30 -3.75
Overregulation hampers growth: Secretary Britain cautious on hasty derivatives rules
Natural Gas Gold, Dec. Copper (¢), Dec Wheat (¢), Dec.
All prices are at 11:35 AM EDT
THE ECONOMIC MONITOR - U.K.
STOCK RECOMMENDATIONS BY BROKERAGE HOUSES
BROKERAGE/ COMPANY Canaccord Genuity Nautical Petroleum Evolution Securities Nautical Petroleum Wellstream Desire Numis Zincox Resources Charles Stanley British Airways KBC Peel Hunt Ashmore Group Panmure Asos Deutsche Bank Lloyds Banking UBS Redrow Credit Suisse Compass Canaccord Genuity Hochschild Mining Recommends to hold from buy Hold Raises price target to 643p from 634p Outperf C. Raises price target to 160p from 120p Buy B. Raises price target to 100p from 90p Buy Raises price target to 1216p from 956p Buy A. Blue chips were higher after the 145-point surge on Wall Street overnight. Cairn Energy was best performer after an update on its drilling in Greenland. It abandoned one well, but said the overall results so far are "extremely encouraging". Banks were in demand led by Standard Chartered and Royal Bank of Scotland. Randgold was the worst performer. FTSE 100 up 13 at 5,616. Cairn was the top riser in the FTSE 100 after updating the market on its operations in Greenland. Oil group Cairn Energy was the top riser, with miner Vedanta not far behind. Banks were also strong, led higher by Standard Chartered. FTSE 100 up 23 at 5,626. Cairn Energy is still the top riser after the oil explorer's latest update on Greenland. Miner Vedanta was among the top risers but ENRC at the bottom of the pile. FTSE 100 up 12 at 5,615. Recommends to buy from hold Buy Reduced rating -Recommends to buy from hold Buy Raises price target to 350p from 265p Recommends to buy from neutral Cuts to add from buy -Buy Add Raises price target to 337p from 214p Buy ACTIONS RATING
Disclaimer: The views and investment tips expressed by investment experts are their own, and not that of IBTimes or its management. We advise users to check with certified experts before taking any investment decisions.
The oil and gas sector boosted U.K. stocks with Cairn Energy climbing after an update on its drilling activity in Greenland and pipeline manufacturer Wellstream Holdings gaining on hopes of a takeover. Oil and gas explorer Cairn Energy was the best performer even though it has abandoned a well that it drilled in Greenland because it said that the discovery was not commercial. Cairn did say that the presence of both oil and gas confirms an active, working petroleum system in the basin and it believes that is extremely encouraging at this very early stage of exploration. The pan-European FTSEurofirst 300 closed 0.39 percent lower at 1,083.95 points, with investors cautious ahead of the Federal Reserve's monetary policy meeting, though gains in construction stocks after strong U.S. housing data limited losses. The FTSE 100 closed dropped 0.47% or 26.35 points closing at 5576.19. Sterling hit a two-month low against the euro as the single currency rose on robust investor demand for Irish and Greek government paper, which eased concerns about euro zone peripheral sovereign debt. The euro rose to a two-month high of 84.70 pence, up 0.7 percent on the day after stops were triggered initially above 84.16 pence and then 84.50 pence, traders said. By 1505 GMT, it traded at 84.40 pence, having closed just above the psychologically key 84.00 pence on Monday. The pound sagged briefly against the dollar after data showed U.K. public sector net borrowing at an August record high as interest payments on gilts shot up because of higher inflation. Sterling hit a low of $1.5503 against the dollar in early London trade, before pulling back to $1.5550, little changed on the day. Gilt futures erased most of their early gains after a well-received Irish bond auction boosted sentiment towards peripheral euro zone debt and weighed on core markets. Ireland sold 1.5 billion euros of bonds due 2014 and 2018, achieving yields well below market levels seen on Monday. The auction was a key test of investor appetite for higher yielding debt amid heightened concerns about sovereign risk. By 0938 GMT, the December gilt future was eight ticks higher at 122.30, outperforming the equivalent Bund by a few ticks but down from a session peak of 122.65 hit in opening trade. Technical support was seen at 121.93, the one-month low hit last week. Ten-year gilt yields were flat at 3.15 percent, while the spread over Bunds narrowed a fraction to just under 67 basis points. Oil fell to around $74 a barrel on concerns over the outlook for the global economy ahead of a key Federal Reserve meeting on U.S. monetary policy. The U.S. central bank is expected to restate its existing policy with no fresh stimulus and interest rate kept at almost zero but is coming under increasing pressure to inject more money into its sluggish economy. U.S. crude for October fell 96 cents to $73.90 per barrel by 1330 GMT, a much sharper fall than contracts further out, ahead of its expiry later on Tuesday. The November U.S. crude contract was up 35 cents at $75.84. ICE Brent for November was much more buoyant than U.S. crude, rising 30 cents to $79.62 per barrel, supported by healthy physical demand for oil in Europe and relatively tight supplies of crude from the North Sea. Gold eased in Europe as the market consolidated after three days of record highs, but remained supported by speculation the Federal Reserve may signal a move towards further stimulus measures after a policy meeting later in the day. Prices came under a little pressure in early afternoon trade as the dollar pared losses against a basket of currencies, helped by data showing U.S. housing starts rose more than expected in August, but remained firmly underpinned. Spot gold was bid at $1,276.25 an ounce at 1524 GMT, against $1,279.25 late in New York on Monday. U.S. gold futures for December delivery fell $3.30 to $1,277.50.
THE ECONOMIC MONITOR - U.K.
COMPANY NEWS ECONOMY NEWS
JD Sports profit soars
JD Sports, the sport-themed fashion chain reported 64% gain in first-half pretax profit, while revenue was up 18.5% to £384m. Profit before tax in the 26 weeks ended 31 July jumped to £16.6m from £10.1m in 2009 and was up 36.5% to £19.4m before exceptional items. Like for like sales are up 2.7%. 15% increase in the half-year dividend to 3.8p from 3.3p could create curiosity among investors, though the results for the full-year remains “very dependent” on December and January trade
Public sector borrowing at record high
Public sector net borrowing in August jumped to a record high at £15.302bn, up from £14.1bn in August last year, and well ahead of forecasts of £12.51bn, figures from the Office of National Statistics (ONS) showed. The unexpectedly high borrowing figures will be a major concern for the Treasury to hit its annual borrowing target of £149bn.
Mortgage lending falls to its lowest since 2000
August mortgage lending falls to 10-year low, to £11.4bn last month, down from £13.3bn in July, the Council of Mortgage Lenders (CML), reported. The CML said due to lack of the stamp duty holiday this year, the lending volumes is expected to remain below last year’s level in coming months.
Betfair looks for London share listing
Betfair Group, the world’s largest online sports betting provider, announced its plans to join the U.K. bourse, by apply for trading on the main market of the London Stock Exchange. This new plan is with regard to the development of its international operations, London-based Betfair said. A total of 14 major investors hold around 75 percent of the company’s fully diluted share capital.
Manufacturers tussle to access finance
It seems a tough time for Britain’s manufacturing sector to raise money from the banks which have kept lending levels at a negligible change for the past two months. Engineering Employers Federation (EEF) survey also revealed that banks are still cautious due to uncertainty surrounding the recovery. It also said that medium and large companies had better edge than small firms on access to finance during July and August, despite demands from government that banks lend more to businesses.
Experian buys Mighty for cost synergies
Mighty Net, the American online credit monitoring business has been bought by Experian, the credit checking firm for $207.5m (£133.2m). Experian's said that U.S. group’s consumer marketing brands are highly complementary to the U.K. company’s own suite of credit monitoring brands. The company also estimates huge cost synergies in technology, infrastructure and back office functions which it thinks could save $4m in the year to 31 March 2012 and $5-6m the year after.
Birmingham in talks with M.East on asset sales
Birmingham council leaders are in talks with Middle East sovereign funds as it eyes on selling some of the billions of pounds of trophy assets owned by Britain's second city. The leaders are looking for funding big capital projects, while the NEC -- Britain's biggest exhibition centre, prime real estate and a stake in Birmingham Airport could all be up for grabs. Huge infrastructure investment despite expected cuts of 20-30 percent in their budgets was unpredicted.
Minerva returns to profit
Minerva, central London office space developer returned to profits as property valuations increased 17.4% in the year ended 30 June. The company’s pre-tax profit stood at £9.1m for the year as compared to a pre-tax loss of £89.2m the year before. Net property income also rose to £6.9m from £5.2m before. Net assets per share, which reflected trading properties at cost, increased to 8.9p per share versus net liability of 28.8p per share in 2009.
Wellstream receives multiple bid approaches
Wellstream, an oil services group has received a number of preliminary takeover approaches which led to the rise in its share. Promising trading news and recognition of its growing presence in the fast developing oil prospects offshore Brazil have also led its share to rise by a third since the start of July. The company said that its August order stood at over £280m, driven by awards in Brazil and winning smaller projects elsewhere and expects its order backlog to increase further in the second half. First half profits dropped to £10.6m compared with £25.7m a year ago, due to the lower level of market activity outside of Brazil.
Overregulation hampers growth: Secretary
Mark Hoban, financial secretary to the Treasury cautioned the U.K.'s financial sector, saying that overregulation in the financial sector could hinder its competitiveness and harm economic growth. He also highlighted the sector's importance to the economy rather than its risks, in his speech. He also said "We need to get the balance right. We're determined to avoid a situation where an ever-growing burden of red tape undermines the attractiveness of the U.K. economy."
Britain cautious on hasty derivatives rules
Britain government gave only a partial agreement to a draft European Union law aimed at cracking down on the opaque $600 trillion (£386.69 trillion) derivatives sector. It also cautioned against rushing to push all trading onto exchanges. The draft law initiates the bloc made on the Group of 20 leading nations level to standardize contracts where possible so that trades can be centrally cleared and reported by the end of 2012.
Serco forms JV with NHS
Serco, an outsourcing giant announced that a prominent National Health Service (NHS) foundation trust is joining its pathology joint venture to form the UK’s largest provider of pathology services. King's College Hospital NHS Foundation Trust has merged with GSTS Pathology, the joint venture between Guy's & St Thomas's NHS Foundation Trust and Serco. Serco expects the tieup to lead to incremental revenue and to conduct over 10m individual tests per year for customers from within the NHS and wider health sector.
Savile FY profit drops, looks for acquisitions
Savile, human resources consulting group announced that its profit before tax fell to £0.5m in the year ended 30 June as compared to £1.85m in the previous year. Company’s revenue fell to £8.2m during the year, down from £10.38m in 2009. A reduced dividend of 1p per share has been recommended, down from 2.25p the year before. The company’s says it remain optimistic on its future growth and is reviewing new acquisition opportunities.
THE ECONOMIC MONITOR - U.K.
NEXT TRADING DAY ECONOMIC INDICATOR WATCH
No major economic events scheduled
Minutes of the Monetary Policy Committee Meeting
Rates vote outcome Forecast: 8-1 Previous: 8-1 QE vote outcome Forecast: 9-0 Previous: 9-0 LONDON - Bank of England will publish the minutes from the most recent MPC meeting at 0930/0830/0430 Local/GMT/ET. Economists expect that minutes of the BoE's September 8-9 Monetary Policy Committee to show the same vote maintaining the total of quantitative easing purchases at 200 billion pounds.
Imperial Tobacco Group, an international tobacco company will provide Trading announcements. Analysts will look for sales volumes in Spain, Russia, Ukraine and the US when the group updates the market, as all those regions were weak in the first half. Analysts expect full-year pre-tax profits of £2180 million, up from £1541 million reported last year. Revenue is expected to rise to £8485 million, up from £7782 million reported last year. It is expected to report full year profit of £174 per share. BrainJuicer Group, an international online market research agency will announce its interim results. Analysts expect the company to report full year profit of £10.3 per share, up from £9 per share reported a year earlier. Company's full year revenue is expected to be at £14.46 million, higher than £11.81 million reported a year earlier. Burst Media Corporation, a global provider of media, technology and professional services to online advertisers and publishers will declare its interim results. Analysts expect the company to report full year revenue of £26.84 million, up from £20.67 million reported a year earlier. EG Solutions, a back office optimization software company that specializes in operations management solutions will declare its interim results. Analysts expect the company to report full year earnings of £0.30 per share, against £0.60 per share reported last year. It is expected to reports full year revenue of £5.10 million against £4.15 million reported a year earlier. Judges Scientific, a U.K. based company engaged in designing and manufacturing of scientific instruments will declare its interim results. It is expected to report a full year profit of £31.6 per share. Analysts expect the company to report a full year revenue of £14.10 million. Nationwide Accident Repair Services, engaged in the provision of support services to the motor insurance industry will release its interim results. The company is expected to report full year profit of £8.8 per share, down from £8.9 reported a year ago. Analysts expect the company to report a full year revenue of £180.10 million higher from £170.89 million reported a year ago. Real Good Food Company will announce its interim results. Analysts expect the company to report a full year revenue of £221 million, higher from £215.61 million reported a year earlier. PureCircle, engaged in the business of investment holding will release its final results. The company is expected to report full year profit of £0.20 per share, up from £0.084 reported a year ago. Analysts expect the company to report a full year revenue of £60.83 million, against £60.02 million reported a year ago. RSM Tenon Group, formerly known as Tenon Group will release its final results. The company is expected to report full year profit of £6.517 per share, up from £6.42 reported a year ago. Analysts expect the company to report a full year revenue of £194.46 million against £150.81 million reported a year ago.
DATE WED 09/22 LST 1400 1400 INDICATOR MPC Vote Outcome MPC QE Vote Outcome F’CAST N/A N/A PRIOR 8-1 9-0
DATE - 22/September/2010
COMPANY NAME EVENT
Imperial Tobacco Group Burst Media BrainJuicer Group Easydate, EG Solutions Judges Scientific Nationwide Accident Repair Real Good Food Company Hochschild Mining Brewin Dolphin PureCircle RSM Tenon Group
Trading Announcement Interim 2010 Interim 2010 Interim 2010 Interim 2010 Interim 2010 Interim 2010 Interim 2010 Interim Dividend Payment Interim Dividend Payment Final Results Final Results
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