Energy, Mining Companies Lift UK Stocks

123jump.com Staff
21 Jul, 2008
New York City

UK edged higher on a rebound in energy prices and expectations of milder than expected recession. Home prices in July dropped 1.8% from June and 2% from a year ago. Rebound in energy and metals prices lifted metals and energy companies stocks. A member of the UK Monetary Policy in an interview stated that UK is probably in a recession and unemployment will jump to 7% from current rate of 5.2%.

[R]1:00PM New York, 6:00PM London - UK home prices fall 1.8% in July.

Of the 102 FTSE 100 stocks 54 gained, 47 declined, and 1 was unchanged. Ferrexpo led advancers in the index shares with a rise of 7.6% followed by Land Securities increasing 5.8%.

Housing Prices Decline 1.8%

Rightmove Plc reported on its Web site today that the average asking prices for properties slumped 1.8% for the week and declined 2% from a year ago to £235,219 in July.

Sales volumes also continued to decline, with the average unsold property numbers gaining from 74 to a record 77.

Commercial director of Rightmove Plc Mike Shipside said it could be a better outcome for sellers to price aggressively and sell now rather than accept a bigger reduction later as prices continue to fall.

Shipside said, “We are measuring very low levels of new sellers for this time of year, around 20% down on 2007. This has a limiting effect on the supply of unsold property, unlike America where excessive new build and forced sellers have really flooded the market.”

Separately, the Royal Institution of Chartered Surveyors reported that second quarter tenant demand for commercial property declined the most since 1998.

Surveyors reported that the amount available floor space increased across all sectors, but the growth in availability did not rise any further in the review period.

In addition, confidence in the outlook for occupier demand and rents also plummeted to the lowest on record.

UK Heading For A Recession

A member of the UK Monetary Policy Committee Professor David Blanchflower said in an interview with the Telegraph that the country is heading into a recession. “I think we are going into recession and we are probably in one right now"""", he said. He further added that unemployment will jump more than 7% from the current 5.2%.

Gainers & Losers

Ferrexpo led advancers in the FTSE 100 index shares with a rise of 7.59% followed by increases in Land Securities of 5.82%, in Lonmin Plc of 5.02%, in Kazakhmys of 4.59%, and Johnson Matthey of 4.38%.

Vedanta Resources increased 3.75%, Rio Tinto advanced 2.96%, BHP Billiton soared 2.88% and Anglo America surged 2.04%.

HBOS Plc led decliners in the FTSE 100 index shares with a fall of 6.21% followed by losses in WPP Group of 4.18%, in Intercontinental of 3.23%, in Schroders of 3.06%, and FirstGroup of 2.74%.

HBOS Plc declined on news that the mortgage lender’s underwriters Morgan Stanley and Dresdner Kleinwort Ltd will seek to sell £3.8 billion of shares after 92% of shareholders did not buy stock in the rights offering.

HSBC Engaging HSBC

The Sunday Telegraph reported yesterday that HSBC has held talks with China Investment Corporation (CIC) over a possible investment, adding that chairman of the lender Stephen Green has met officials from CIC several times in recent months.

Europe Markets Review

In London FTSE 100 Index closed higher 27.90 or 0.52% to 5,404.30, in Paris CAC 40 Index increased 27.78 or 0.65% to close at 4,327.14 and in Frankfurt DAX index higher 42.19 or 0.66% to close at 6,424.84. In Zurich trading SMI increased 30.91 or 0.45% to close at 6,858.22.

Asian Markets Review

Hang Seng index in Hong Kong increased 658.71 or 3.01% closed to 22,532.90. ASX 200 index in Australia increased 171.40 or 3.54% to close 5,011.80. The KL Composite index in Malaysia decreased 1.56 or 0.14% closed to 1,103.48. Financial markets in Japan were closed today.

The Kospi Index in South Korea increased 52.93 or 3.51% to close at 1,562.92, SET index in Thailand closed higher 22.78 or 3.43% to 687.30 and JSE Index in Indonesia increased 53.93 or 2.52% to 2,195.07. The Sensex index in India increased 214.64 or 1.57% to 13,850.04.