Stocks Fall, Hays Profit Up

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

UK stocks struggled to close higher and pound fell for the sixth day in a row against euro and dollar. A sharp drop in crude oil prices for the second day in a row with a total loss of 10% dragged stocks in the mining and energy sectors which dominate the benchmark FTSE 100 index. UK pound fell as investors worry that economy will remain in slump for the rest of the year. Ashtead Group, the equipment rental company surged 9% after it reported better than expected sales and earnings gains.

[R]1:00PM New York, 6:00PM London- U.K. scraps stamp duty land tax on purchases of residential property less than £175,000. Falling crude oil and commodities prices dragged stocks lower in two sectors.[/R]

London stock averages rose marginally as rising travel and retail stocks that were leveraged by falling crude oil prices offset falling commodity stocks.

Market Sentiment

In London trading FTSE 100 rose 0.32% or 17.9 to 5,620.70. Of the 102 FTSE 100 index shares 71 advanced, and 31 declined. Carnival led advancers in the index shares with a rise of 7.35%.

U.K Scraps Tax on Purchases Less Than £175,000

The U.K. Treasury reported on its Web site today that the Chancellor of the Exchequer Alistair Darling said that stamp duty land tax will not apply to purchases of residential property of £175,000 or less. The new dispensation is effective from tomorrow and before September 3 2009. Government will also help 16,000 people to meet mortgage payments and another 10,000 to buy their home.

Separately, the Chartered Institute of Purchasing and Supply said the index based on a survey of purchasing managers at construction companies rose to 40.5 in August from 36.7 in July, the most since April 1997.

Usually a measure below 50 reflects contraction.

Gainers & Losers

Carnival led advancers in the FTSE 100 index shares with a rise of 7.35% followed by increases in Thomas Cook of 7.29%, in Sainsbury of 6.09%, in TUI Travel of 5.90%, and Next of 5.51%. Thomas Cook and TUI Travel gained after oil prices fell to around $111 per barrel. British Airways rose 4.39% advanced as well.

Retailers also fell on retreating oil prices. Marks & Spencer soared 1.73% and Tesco increased 1.98%.

Wood Group led decliners in the FTSE 100 index shares with a fall of 5.88% followed by losses in Tullow Oil of 5.12%, in Anglo America of 4.82%, in Eurasian Natural of 4.33%, and BHP Billiton of 4.07%.

Commodity stocks were dragged by plummeting crude oil prices. Xstrata shed 4.04%, Rio Tinto slumped 3.59%, Antofagasta lost 3.13% and Kazakhmys slid 2.71%.

Homebuilders slumped after data from the CIPS showed that an index based on a survey of purchase managers at construction companies rose to 40.5% in August from 36.7 a month earlier. Land Securities fell 2.64% and HBOS tumbled 1.82% on the news.

Earnings Review

Hays plc, Britain’s largest recruitment company said full year revenues rose 20% to £2.54 billion. Net profit in the full year rose 25% to £182.2 million compared to net income of £166.5 million, a year earlier.

Hays plc ((HAS)) in the last one year traded as high as £160.50 in September 2007 and as low as £67.00 in July 2008. Based on the yesterday’s closing price the company has a market cap of £1.25 billion.

Lonmin says Xstrata Bid Undervalues the Company

Lonmin reported on its Web site today that it still contends that the unsolicited and pre-conditional proposed offer by Xstrata significantly undervalues the company’s assets, resources and reserves, adding that the board will continue to oppose the offer “vigorously”.

According to Lonmin Chairman Sir John Craven, based on reasonable assumptions for rating, production and platinum pricing, the share price value of the company exceeds Xstrata’s £33 per share bid, even before a control premium.

Europe Markets Review

In London FTSE 100 Index closed higher 17.90 or 0.32% to 5,620.70, in Paris CAC 40 Index increased 66.94 or 1.50% to close at 4,539.07 and in Frankfurt DAX index higher 96.67 or 1.51% to close at 6,518.47. In Zurich trading SMI increased 70.84 or 0.98% to close at 7,298.59.