Mortgage Approvals, Manufacturing Drops

123jump.com Staff
01 Sep, 2008
New York City

The British pound fell to a two-year low to below $1.80 after mortgage approvals fell and manufacturing index showed a contraction. Base metals and precious metals prices fell in London. Crude oil prices dropped as impending tropical storm in the Gulf of Mexico weakened. Headlam Group declined 14% after it reported profit decline of 3.9%. Kenmare Resources, the titanium miner in Mozambique fell 10% after its sold $30 million in an offering.

[R]1:00PM New York, 6:00PM London- Home prices decline 0.9% in August. Manufacturing activity drops in August.[/R]

London market averages fell after a spate of negative data that showed that manufacturing activity declined and metals prices plummeted.

Market Sentiment

In London trading FTSE 100 lost 0.6% or 33.8 to 5,602.80.

Of the 102 FTSE 100 stocks 59 rose, 40 declined, and 3 were unchanged. British Airways led advancers in the index shares with a rise of 4.28% followed by RSA Insurance increasing 3.91%.

Manufacturing Activity Falls in August

The Chartered Institute of Purchasing and Supply reported on its Web site today that according to the CIPS/Markit Purchasing Managers’ Index, where a measure below 50 shows contraction, activity in the manufacturing sector fell to 45.9 in August from 44.1 in July.

A lack of new business in the U.K and cost inflation adversely affected activity. For the period, new orders index eased from 40.6 in July to 42.7 in August on soaring costs and poor economic conditions. In addition, output price index increased to 64.5 as producers sought to diffuse the soaring cost of raw materials by increasing and input price index eased from 79.3 in July.

House Prices Fall 0.9% in August

Hometrack reported on its Web site today that house prices declined 0.9% in August from a decline of 1.2% a month earlier, falling for the eleventh straight month. Prices are also down 5.3% year-on-year, the lowest since 2001.

Average home prices were down in 58% of the country, over August. According to the report, the proportion of asking price being achieved is starting to level off and now averages 90.7%.

The demand has remained weak with continued falls in new buyer registrations over August, but a small - and growing - proportion of agents are reporting some improved signs of buyer interest in the wake of lower prices a modest reduction in the cost of mortgages.

A 20% rise in the supply of homes for sale over the spring also heightened the fall of prices over the second quarter, but in the last quarter the volume of home coming to the market gained 2%.

The average time a property remains on the market before going under offer has increased to 11.3 weeks.

Hometrack Director Research Richard Donnell observed, “Evidence from the latest survey may suggest that the level of price falls is beginning to moderate, but a recovery in the housing market remains some way off. Realistic pricing and confidence over the outlook for job prospects and the wider economy is fundamental to any sustained turnaround in market conditions.”

U.K. Mortgage Approvals Fall to 33, 000

The Bank of England reported that mortgage approvals fell to 33,000 and added that the value home loans increased to £3.23 billion in July from £3.14 billion in June. The value compares with £9.35 billion in the same period a year earlier.

Vivendi SA, engaged in telecommunications services and media entertainment said second quarter revenues increased 15.1% to €5.99 billion from €5.20 billion a year earlier. Net income in the quarter climbed 0.3% to €757 million or €65 per diluted share compared to net income of €755 million or €65 per share, a year earlier.

Vivendi SA ((VIV)) in the last one year traded as high as €26.70 in December 2007 and as low as €25.71 in August 2008. Based on the Friday’s trading closing price the company has a market cap of €30.67 billion.

Headlam Group plc, Europe’s leading floor coverings distributor said first-half revenues increased 6.15% to £276.1 million from £259.1 million a year earlier. Net profit in the quarter rose 4.16% to £21.6 million or 18 pence per diluted share compared to net income of £20.7 million or 16.4 pence per share, a year earlier.

Headlam Group plc ((HEAD)) in the last one year traded as high as £594.50 in September 2007 and as low as £249.25 in July 2008. Based on the Friday’s trading closing price the company has a market cap of £241.03 million.

Gainers & Losers

British Airways led advancers in the FTSE 100 index shares with a rise of 4.28% followed by increases in RSA Insurance of 3.91%, in Wolseley of 3.48%, in Imperial Tobacco of 2.65%, and TUI Travel of 2.61%.

Kazakhmys led decliners in the FTSE 100 index shares of 5.80% followed by losses in Cairn Energy of 5.64%, in Anglo-America of 5.18%, in Xstrata of 4.70%, and Antofagasta of 4.68%.

Other commodity stocks also fell as copper for delivery in three months fell 1.5% to $7,399.75 a metric ton. Platinum, nickel, lead and zinc also declined. Vedanta Resources slipped 4.23%, Rio Tinto plummeted 4.19%, Tullow Oil shed 4.12%, and BHP Billiton tumbled 4.07%.