UK stocks Rise, Retailer Next Drops

123jump.com Staff
03 Jan, 2008
New York City

UK stocks edged higher on rising oil prices and stable metal prices. FTSE 100 Index addded 1% or 62.70 to close at 6,479.40. Of the 102 stocks in the index 56 gained, 44 declined, and 2 closed unchaged. Anglo American gained 3.1%, Rio Tinto added 2.2%, and Lonmin jumped 4.4%. Tullow Oil surged 5.6% on oil trading near $100 per barrel. Next Plc declined after reporting same store sales decline of 3.2% in the 21 weeks ending on December 24.

[R]1:30PM New York, 6:30PM London - Commodity and energy stocks lift UK 0.98%.[/R]

Stocks in London rose after crude oil prices soared to $100 per barrel.

In London trading FTSE100 gained 0.98% or 62.7 to 6,479.40.

Of the 102 FTSE stocks 56 rose, 44 declined, and 2 were unchanged. Tullow Oil led advancers with a rise of 5.58%, followed by an increase of 4.4% in Lonmin Plc.

Commodity stocks gained as well. Anglo American Plc rose 3.10% and Rio Tinto spiked 2.19%.

Bank of England reported today in its Credit Conditions Survey for fourth quarter 2007 that availability of secured credit to households had been reduced materially in the three months to December and further reduction is expected for the next three months. Similarly, unsecured credit for households had been reduced.

According to the Survey, corporate credit availability was reduced significantly in the past three months and further reductions are expected.

Demand for secured lending increased though less than, while demand is projected to fall over the next three months. Conversely, demand from non-financial corporations fell in the past three months.

Default rates on secured lending to households were broadly unchanged over the past three months. However, lenders expected default rates, and losses given defaults, on secured lending to increase.

The Office of National Statistics said today overall profitability for U.K. non-financial corporations was 16.0% in the third quarter of 2007, compared to 15.6% recorded in the second quarter.

Annual net rate of return for private non-financial corporations in 2006 was 14.5%. Annual net rate of return for oil and gas extraction companies increased to 32.5% in the third quarter of 2007 compared to 30.1% in the second quarter.

Manufacturing companies’ net rate of return was estimated at 9.7% in the third quarter.

Generally, service sector profitability is higher than that of the manufacturing sector, reflecting the more capital-intensive nature of the manufacturing sector.

Of the FTSE 100 index stocks Tullow Oil led gainers with a rise of 5.58% followed by rises in Lonmin Plc of 4.37%, in Vedanta Resources of 4.24%, in BHP Billiton of 3.97%, and in Xstrata Plc of 3.17%.

Energy stocks rose after oil surged to $100 per barrel on falling oil inventories.

Next Plc led declining FTSE 100 stocks with a fall of 6.84% followed by losses in Enterprise Inns of 7.76%, in Home Retail Group of 5.93%, in Kingfisher Plc of 4.91%, and in Persimmon of 4.73%.

Next Plc fell after reporting today sales at stores open at least a year and not affected by openings of nearby Next outlets fell 3.2% in the 21 weeks through December 24.

Retailers also declined after DSG International said pre-tax profit for the year through April will be below estimates and between 40 million pounds and 50 million pounds.

Marks & Spencer dropped 3.21% and Wolseley declined 3.0%.

Persimmon slipped after UBS lowered its rating on the stock from “buy” to “neutral”, citing tougher credit conditions. The brokerage also cut the price target of the stock by 44% to 779 pence and reduced the target of Baratt Developments Plc by 47% to 562 pence.

Prospects for the retail industry are projected to improve in the second half.

Ford Motor Company Executive Vice President Lewis Booth said today Ford had chosen Tata Motors Limited as the preferred bidder for Jaguar and Land Rover, adding that Ford and Tata “will proceed with further substantive discussions”. Analysts value Jaguar and Land Rover at one billion pounds.


[R]11:30AM New York – Oil remains near elevated level after the weekly inventory report in the U.S. State Street replaces its fixed income head after losses.[/R]

State Street ((STT)) rose 7% or $5.68 to $84.52 after it said that it has booked a reserve of $618 million to cover losses from fixed income investments.

State Street announced today that it will record a net charge, after taxes, in the fourth quarter of 2007 of $279 million, or $0.71 per share. The purpose of the charge is to establish a reserve to address legal exposure and other costs associated with the underperformance of certain active fixed-income strategies managed by State Street Global Advisors, the company’s investment management arm.

In aggregate, the reserve will be $618 million on a pre-tax basis. The impact to earnings of the net charge, after taking into account the tax effect of the reserve and associated lower incentive compensation cost, will be $279 million.

The press release from State Street also said that State Street also announced that James S. Phalen, currently executive vice president and head of international operations for investment servicing and investment research and trading, is returning to SSgA as interim president and chief executive officer. Phalen, age 57, succeeds William W. Hunt who has resigned from State Street.

Oil traded 67 cents lower to $95.96 after the U.S. weekly report on inventories.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 4.0 million barrels compared to the previous week. At 289.6 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year.

Total motor gasoline inventories increased by 1.9 million barrels last week, but are in the lower half of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week.

Distillate fuel inventories increased by 0.6 million barrels, and are near the lower limit of the average range for this time of year. Propane/propylene inventories decreased by 1.7 million barrels last week.

Total commercial petroleum inventories decreased by 7.3 million barrels last week, and are in the bottom half of the average range for this time of year.


[10:30AM New York – U.S. stocks trade sideways as oil and gold are near elevated levels and jobless claims rise at the end of last week.[/R]

Dow Jones Industrial Average rose 50.16 to 13,093.98, Nasdaq declined 2.40 to 2,608.48, and S&P 500 increased 5.64 to 1,452.80.

Oil and gold are trending lower by a fraction but are still trading near the record levels.

Wheat futures are up 2.6% to 938.75 cents per bushel in New York Mercantile Exchange trading. Soybean futures are up 1.4% or 4.60 cents to 348.70 cents and sugar futures added 2.2% or 0.23 to 10.96 cents.

The Labor Department reported weekly jobless claims fell 21,000 to 336,000 at the end of the last week. In a separate report published by Automatic Data Processing and Macroeconomic Advisers showed that the December private sector payroll increased 40,000. The Labor Department is scheduled to issue its report on the December payroll tomorrow.

Ford Motor is in advanced talks with Tata Group of India to sell its luxury division. The division includes brands such as Jaguar and Land Rover, has struggled in the past on high operating cost, strategic focus, and rising competition from German makers.

Monsanto ((MON)) jumped 5% to $5.65 to $117.19 after it released its first quarter earnings.

The company reported net sales of $2.1 billion for the first quarter of fiscal year 2008, which were 36 percent higher than those in the first quarter of fiscal year 2007. The results in the quarter reflect the strong performance of the company''s businesses outside the United States.

Key drivers for the quarter were increased sales of agricultural herbicides in Brazil, Argentina and Europe, as well as stronger adoption of the company''s seed and trait technologies in Brazil and Argentina.

For the first quarter of fiscal year 2008, Monsanto recorded net income of $256 million compared with net income of $90 million for the same period last year. Earnings per share for the quarter, both on an as-reported and ongoing basis, were 46 cents a share compared to 16 cents a year ago.

The company raised its annual earnings guidance between $2.50 and $2.60 per share.


[R]9:00AM New York, 7:30PM Mumbai - Sensex stocks fell, dragged by cement and IT shares.[/R]

On the second day of 2008, the Sensex on the Bombay Stock Exchange fell on loses recorded in cement and IT shares and in large cap stocks.

The 30-share BSE Sensex eased 0.6% or 120.10 at 20,345.20 and CNX Nifty fell 0.1% to 6,178.55.

Cement stocks declined on heavy selling following government''s warning that it will take over all cement factories, which defy its directive to control cement prices.

Grasim led the losers from the Sensex index. The stock plunged 4% to 3,606 rupees. ACC fell 1.8% to 1,004 rupees, India Cements retreated 2.9% to 298 rupees while Ambuja Cements fell 1.7% to 146 rupees.

IT shares also extended their recent loses on the BSE. Loses were also visible in TCS Wipro, Satyam Computers and Infosys Technologies.

Oil exploration shares were on rise on surging crude oil price while oil marketing stock traded higher on the local news reports that government was considering cutting exercise duty on oil firms to reduce tax recoveries in oil firms.

Of the stocks traded on the BSE, 1,677 shares advanced, 1,199 stocks declined and 25 remained unchanged. Among the index shares, 24 advanced while the rest fell.

On BSE, 6.07 lakh shares were traded.

Turnover on the BSE stood at 10,785 crore rupees, lifted Reliance Natural Resources was the top traded stock on the BSE. It netted a turnover of 521.85 crore rupees. Burnpur Cement revenues stood at 462.58 crore rupees, Reliance Energy turnover was 395.39 rupees.

The National Stock Exchange revenue stood at 24,710 crore rupees.

Elsewhere in Asia, Hong Kong''s Hang Seng slid 2.4% at 26,887.28, Taiwan''s Taiwan Weighted fell 1.7% at 8,184.20, Singapore''s Straits Times shed 1.9% at 3,397.06 and South Korea''s Kospi retreated 0.04% at 1,852.5.

Government is considering a marginal increase in fuel prices to reduce losses for oil utilities in light of the soaring crude oil price. Crude oil for February delivery increased $3.64, or 3.8%, to $99.62 per barrel after touching $100 per barrel earlier in the session on Wednesday.

The record price in oil since the start of the commodity trading in 1983, has stoked inflation expectation in the country.

Government ministers are expected to meet sometimes next week to look at alternatives including price hike and a reduction in excise duty.

Crude oil prices reached an all-time high of $100 dollars a barrel on Wednesday in New York Mercantile Exchange, triggering fears of more losses for the utilities controlled by the government.

Of the BSE shares, TCS fell 2.9% to 1,018.35 rupees, Wipro shed 2.9% to 496.25 rupees, and Satyam Computers fell 2.52% to 425.50 rupees while Infosys Technologies closed weaker at 2% to 1,715.2 rupees.

Oil & Natural Gas Corporation rose 3.9% to 1,319.45 rupees. Cairn India jumped 4.8% to 254.95 rupees, Selan Exploration Technology was up 20% to 219.80 rupees, Asian Oilfield Services gained 5% to 385.7 rupees, Jindal Drilling & Industries advanced 2.5% to 1,521 rupees and Aban Offshore surged 0.5% to 5,100.15 rupees.

National Thermal Power Corporation with a rise of 6.8% to 274.7 rupees led the advancers in the Sensex index.

Reliance Energy added 6.1% to 2,513.4 rupees. Reliance Industries advanced 1.2% to 2,898 rupees, recovering from session''s low of 2831.1 rupees.

Hindustan Petroleum Corporation gained 6.8% to 399.7 rupees, Bharat Petroleum Corporation surged 4.3% to 538 rupees and Indian Oil Corporation jumped 1.1% to 780.4 rupees.


[R]8:00AM New York, 8:00PM Hong Kong – Hong Kong stocks fell for the second time in a row. Gold producers limit loses as price steadies below the record $860 an ounce.[/R]

Stocks in Hong Kong fell for the second consecutive trading day of the year on fears that the weakening U.S. economic growth will widen credit market losses.

In Hong Kong trading Hang Seng Index declined 2.44% or 673.24 to 26,887.28, while the China Enterprises Index of Hong Kong-listed mainland companies fell 3.39% to 15,464.66.

The financial markets in Japan were closed today and will reopen for the first time in 2008 on Friday.

Daily turnover crossed HK$47.36 billion by mid-day against HK$43.88 billion in the previous session.

The U.S. Institute for Supply Management manufacturing index in December slipped to 47.7, the lowest since April 2003 suggesting that the manufacturing activities declined in the month. The report sparked a wide sell-off in U.S. trading and major indexes lost more than 1.5%.

Gold producers rose after the price rose to record highs at $860.10 an ounce yesterday. Zhaojin Mining increased 5.8%, Zijin Mining rose 1.5%, and Sino Gold climbed 9.3%.

Construction companies also added to yesterday’s gains on expectations solid economic growth will continue in China. China Communications Construction rose 2.3% and Sinoma spiked 5.9%.

Oil companies fell despite the 4.2% price increase to $100 per barrel in international markets. Sinopec fell almost 4%, PetroChina shed 1.9% and CNOOC slipped 0.76% percent.

PetroChina fell on reports of expected delays, by almost a year of a new 100,000 barrels-per-day refinery in China''s remote northwest, to late 2008 due to construction complications.

The Standard reported today that Singapore Airlines spokesman Stephen Forshaw says the company is not prepared to raise the offer price for a 24% stake in China Eastern Airline after shareholder China National Aviation Corp said on Tuesday the subscription price of HK$3.8 per share doesn’t reflect the fair value of the company.

Forshaw reportedly told newswires “it is the maximum justified on business fundamentals”, adding that Singapore Airlines was a long-term partner rather that a short term trader and China Eastern stands to benefit from the business alliance.

Separately, the Wall Street Journal Asia reported that CNAC will vote against the proposed acquisition by Singapore Airlines and its parent company Temasek Holdings at a shareholders meeting on January 8.

China Eastern shares closed the morning session down 7.5% and Air China tumbled nearly 9% on expectations it might be used to bankroll a counter bid by CNAC.

Bloomberg news reported today PricewaterhouseCoopers announced yesterday the value of IPOs in China will grow from Rmb 63 billion last year to Rmb 480 billion as more companies traded in Hong Kong are allowed to sell shares to the nation’s bourses.

IPOs in Hong Kong are projected to raise 5% less this year at HK$280billion.

China Petrochemical Corporation Chairman Su Shulin said on the company’s Website yesterday that the company will acquire more foreign oil and gas assets in order to make it a global competitor.

In addition, Sinopec, a unit of China Petrochemical Corporation has bought 60,000 tons of spot gasoline for January and will not export any oil products for the second successive month.

Beijing announced last week that it will halve fuel import tax on gasoline, diesel and kerosene to 1% this year and will waive its 17% value added tax on diesel imports from December and March to augment domestic fuel supplies.


[R]5:00AM New York, 9:00PM Sydney - ASX 200 index declined 1% after broader market worried about the U.S. economy.[/R]

ASX 200 index lost 1% or 62.50 to close at 6,290.70.

The Preliminary market turnover was 1.33 billion, worth $3.56 billion, with 460 stocks moving up, 725 moving down, and 312 unchanged. The most actively traded stock was Retail Star with 131.7 million shares worth $3.3 million.

National Australia Bank Ltd. led lenders lower on the prospect that slowing U.S. economic growth will worsen the current credit-market crisis. Westfield Group lost 4% and News Corp declined 3.7%. The U.S. markets in the overnight trading declined more than 1.7%.

Newcrest Mining Ltd. jumped to a record as gold prices rose to a three-decade high of $860 an ounce. Gold traded in 1978 at $873 an ounce.

Newcrest Mining Gold extended a seven-day rally as the U.S. dollar weakened, boosting the appeal of the precious metal as a hedge against inflation. Bullion for February delivery recently traded at $858 an ounce, after rising to a record $860.10 an ounce yesterday.

Newcrest Mining added 10.2% and Lihir Gold Ltd was up 5.8%. Woodside gained 1.6%, Oil Search added 3.3% and Santos was up 2.8% after crude oil rose to $100 a barrel for the first time in New York as global fuel consumption threatens to outpace production.

Crude oil rose $3.320 to close at $99.30 per barrel for a front month contract in New York Mercantile Exchange trading, natural gas increased 37 cents to $7.859 per mBtu, and gasoline futures increased 7.22 cents to close at 256.30 cents per gallon.

Crude oil futures in the U.S. trading crossed a previous intra-day high $99.29 on the rising worries that the U.S. weekly inventory report due to be released tomorrow will show another decline in inventories and growing violence in Nigeria. Natural gas and heating oil rose nearly 5% on the harsh winter in the North East region of the U.S.

Separately, Woodside and Santos resumed production at their oil fields off the northwest coast of Australia yesterday after they were shut down by a tropical cyclone.

Woodside Petroleum Ltd. climbed as oil traded near $100 a barrel.

Qantas today ruled out possibilities of it importing temporary skilled workers to break the effect of a looming strike by 1,700 of its maintenance workers. The new Immigration Minister Chris Evans issued a strongly worded a message that the Labor Government will not tolerate the temporary skilled migration scheme.

Qantas has been grappling with a series of contingency plans to reduce the impact of the industrial action but it has been dogged by reports that it had been considering importing foreign engineers on so-called 457 temporary work visas to replace the striking workforce and keep flying next week.

The Australian Licensed Engineers Association (ALAEA) wants Qantas to agree to a 5% pay rise but the company is offering 3% with another 1% in superannuating. Qantas could potentially source engineers from Jetstar but this may not be enough. Qantas'' share shed 0.2%.

Centro Properties Group share gained 7.7% today after unconfirmed media reports that Blackstone Group and Citadel Investment Group may consider bidding for Centro’s properties. AMP Ltd. and DB Trust have also expressed interest.

Centro put itself on the market when it announced yesterday that it is willing to sell all its assets including its 700 malls in the United State as it struggles to raise money to refinance its $3.9 billion (US$3.4 billion) of debt. The Group also invited bids for stakes in his Australian and U.S. wholesale fund management and distribution which Centro values at $3.7 billion.

Centro Properties lost more than 80% of its market value as a result of the announcement.



The Australian dollar traded at $0.8831/34, up from yesterday''s close of $0.8797/00.

Of the ASX 200 index shares, Sino Gold Mining led the gainers with a rise of 13.4% followed by increases in Newcrest Mining of 10.2%, in AED Oil Limited of 7.9%, in Centro Properties of 7.7%, and in Nexus Energy Limited of 6.9%.

Of the ASX 200 index stocks APN/UKA European led the decliners with a fall of 7% followed by losses in Timbercorp Limited of 5.3%, in Bradken of 5.2%, in Goodman Group of 5.2 and in Valad Property of 5.1%.

In the media sector Consolidated Media Holdings was down 1.9%, News Corp lost 3.7%, and Fairfax Media declined 1.3%.

In other sectors resource stocks were down with BHP Billiton declining 0.5% and Rio Tint shedding 1.8%. In the banking sector, ANZ shed 0.9%, Westpac lost 1.7%, Commonwealth Bank of Australia declined 1.8% and the National Australia Bank lost 1.4%.

Retailers stocks were mixed, with Wesfarmers gaining 0.5%, Woolworths losing 0.9% and David Jones declining 2.4%.