Rate Decision Fails to Lift London

Ivaylo
08 Feb, 2007
New York City

The FTSE advanced slightly on the news to trade mostly flat after the announcement was made.The benchmark index also recovered some losses at lunchtime after upbeat earnings results from medical device maker Smith & Nephew. HSBC surprised investors as it issued a warning on its debt and on the plus side, BT reported strong Q3 results. In late afternoon, the FTSE 100 was 0.37% lower at 6,346.

[R]9:30AM The FTSE 100 slipped into the red Thursday, Bank of England keeps rates unchanged.[/R]
The UK market was slightly lower on Thursday. The FTSE 100 shed 0.37% to trade at 6,346 in late afternoon.

Advancers

Smith & Nephew posted a 7% rise in full year underlying earnings and announced plans for a $1.5 billion share buyback over the next two years. Fixed line telecoms company BT Group posted a strong set of Q3 numbers, with profits for the period meeting expectations and net retail broadband additions showing considerable growth. BT advanced almost 1%. Tapas restaurant operator La Tasca said today that it is was in takeover talks but added they remained at a preliminary stage. La Tasca gained 4.2%. BG, the third largest oil and gas producer in the UK, reported its net profit fall 18% in Q4 as milder than usual weather in the US and Europe hit oil prices, although this was not as bad as expected as the company surged 2.9%. Stocks in Vodafone were buoyant as dealers welcomed the announcement today that the mobile phone company and France Telecom owned Orange will merge their third generation mobile phone networks in the UK. Vodafone advanced 0.5%.

Decliners

HSBC plunged Thursday as the banking company warned that its bad debt charge for 2006 would be over $10.5 billion, 20% higher than expected. Shares were 2% down. Imperial Tobacco today agreed to buy Commonwealth Brands, the fourth largest cigarette manufacturer in the US, from Houchens Industries Inc for 974 million pounds, or $1.9 billion in cash. Shares of Imperial Tobacco plunged 3.1% as dealers thought the company had made it more difficult for William Morris to propose a takeover bid for Imperial Tobacco. Unilever was another decliner, down 2.3%, after the annual revenue was toward the bottom end of the expected ranges. Lower metal prices weighed on Anglo American, Vedanta Resources, Xstrata and Rio Tinto. Anglo-American was down 1.7%, Vedanta was also off 1.7%, Xstrata lost 2.6% and Rio Tinto shed 1.5%.

[R]8:00AM Asian stocks finish flat Thursday with Japan unchanged on profit-taking.[/R]
Asian markets ended flat on Thursday. In Japan, Nikkei 225 ended almost unchanged, down 0.1%, at 17,292.48. Tokyo Electric Power Co fell 5.6%, while Kansai Electric Power declined 3.4%. Japanese technology shares advanced on the strong earnings from Cisco Systems, which gained 3% overnight in US. NTT DoCoMo, the largest mobile-phone operator in Japan, rose 4.4%, while shares of KDDI advanced 1.8%. KDDI gained after Merrill Lynch updated its target price on strong subscriber growth. Canon also added 0.8%.

Australia S&P/ASX 200 closed flat at 5899.50. BHP Billiton and Woodside Petroleum both declined weighing on the resources sector after crude oil and other industrial commodities declined in New York. In Australian trading, BHP shed 2%, while Woodside Petroleum was down 1.1%. Hong Kong Hang Seng Index bucked the downtrend and edged 0.3% higher to 20,735.05. Shanghai Composite in China closed also up 0.8% at 2,737.73. However, other major indexes declined including Singapore Straits Times Index down 0.9% to 3,217.76, Taiwan Weighted Price Index off 0.1% to 7,842.22 and Kospi in South Korea 0.2% lower to 1,423.58. The yen lost against the dollar on fading expectations that the Group of Seven finance ministers will take steps to stop the decline of the currency at the summit that starts this Friday.

[R]6:30AM European stocks were flat on Thursday morning on profit-taking.[/R]
European markets were flat on Thursday morning. By mid morning, Frankfurt Xetra Dax was unchanged at 6,914.53, the CAC 40 in Paris inched up to 5,704.11 and London FTSE 100 was 0.2 per cent lower at 6,358.9.

Advancers

ABN Amro gained 1.6% after posting a 7.6% gain in annual net profit that topped market forecasts. The bank intends to raise shareholder returns in 2007 after concentrating on acquisitions and restructuring over the past two years. Julius Baer, Swiss bank, gained 6.1 per cent after reporting a forecast-topping 35 per cent rise in full-year net profit on growth in newly-developed Asian markets. MAN of Germany rose 3.4 per cent after Goldman Sachs updated the stock to buy and JPMorgan raised its price target. Fixed line telecoms groups advanced after After BT Group of Britain announced robust Q3 core earnings and a bright guidance as it continued to add new broadband customers. BT shares gained 3.8 per cent, while Deutsche Telekom gained 1.1 per cent, Hellenic Telecom rose 1.8 per cent and Telekom Austria climbed 1.4 per cent. Renault, the French carmaker, reported its 2006 operating margin declined on last year but that it achieved its 2.5 per cent target through cost cuts and improved quality. Renault shares gained 1.1 per cent.

Decliners

Altadis, the Spanish tobacco company, shed 2.8% after Imperial Tobacco of Britain said it its acquired US group Commonwealth Brands. Altadis had been supposed to be top of Imperial acquisition list - earlier on Thursday UBS had downgraded Imperial on the expectation it would launch a hostile bid. Syngenta, Swiss agrochemicals maker, posted a 12 per cent rise in full-year net profit which missed expectations, as sales declined 1 per cent. Shares fell 2.3 per cent. Dutch office supplies wholesaler Buhrmann plunged 10.1 per cent after falling short of expectations with Q4 underlying profit

Oil and gold

Oil prices recovered toward $58 on Thursday after cold weather cut fuel stocks in United States. U.S. Crude oil futures gained seven cents to $57.78 a barrel in early trade in London. Brent crude gained 20 cents to $57.43. Gold fell for a second straight day on signs supply to refineries is growing faster than demand from investors seeking an alternative to the dollar. Gold for immediate delivery dropped $1.90, or 0.3%, to $649.55 an ounce in early trade in London.

Currencies

The euro declined against the U.S. dollar on Thursday as markets awaited a decision by the European Central Bank on interest rates. The 13-nation euro bought $1.2986 in morning European trading, down from $1.3006 in New York late Wednesday. The British pound fell slightly to $1.9676 from $1.9692. The dollar gained traded at 121.09 Japanese yen, up from 120.66 yen on Wednesday.

[R]5:00AM Platinum surges Wednesday, while gold and copper decline.[/R]
April gold lost $1.40 to settle at $657.30 a troy ounce, while silver futures gained 3.5 cents to end at $13.71 an ounce. Platinum futures breached the $1,200 an ounce level. The contract later closed at $1,203, up $12.70. March palladium gained $1.15 finish at $345.20 an ounce. March copper contract shed 4.15 cents to settle at $2.4550 per pound.

March crude oil declined $1.17 to end at $57.71 a barrel after reaching $59.85. March heating oil also dipped 2.48 cents to finally end at $1.6661 a gallon and March gasoline slipped 3.10 cents to close at $1.5415 a gallon. March natural gas bucked the trend and settled up 9.3 cents at $7.709 per million British thermal units.

On the New York Board of Trade, March Arabica coffee futures advanced 0.35 cent to end the session at $1.1685 a pound. March futures on raw sugar in foreign ports edged 0.07 cent lower to finally stand at 10.12 cents a pound.