Daily Market Summary Report - Wednesday 28th July 2010

Company updates gave traders plenty to mull over and after an uncertain start to the day, shares closed firmly in the red.

Centrica slipped even after the British Gas owner’s underlying interim profits jumped 65%. Earnings in the half-year to June rose to £886m from £537m on revenues of £11.7bn, barely changed from the previous year. British Gas' profits jumped 98% to £585m.

Cans and packaging maker Rexam took a kicking despite saying “relentless” cost control was behind a 47% surge in underlying profit during the first half, a result it expects to match in the next six months.

Oil group BG dropped despite delivering a “good” set of second quarter results with revenue up 18%. Operating profit rose 6% to $1.53bn on revenue up to $4.13bn from $3.49bn. Exploration & Production chipped in $746m, up from $728m in 2009, but less than the $825m expected by Charles Stanley.

Engineering firm Invensys fell even after saying it expects to deliver an improved performance in the current year. Invensys Operations Management produced a solid performance in the first quarter, according to the group, while at Invensys Controls was in line with expectations.

Higher metal prices boost demand for miners such as Xstrata, Vedanta and BHP Billiton. Rio Tinto is also wanted after Chinese state-owned resources company, Chinalco, which owns a 9% stake in Rio, indicated it would hold a signing ceremony tomorrow at which Rio executives are expected to be present. Market speculation suggests the ceremony could mark a deal between Chinalco subsidiary, Chalco, and Rio Tinto on the Simandou iron ore project in Guinea.

Mobile phone retailer Carphone Warehouse has repeated full-year guidance following better than expected first quarter retail sales.

British American Tobacco closed lower, even after it upped its dividend by a better than forecast 19% and said it expect another year of good growth in both earnings and dividends. The tobacco firm upped the dividend from 27.9p last year to 33.2p at the interim stage. Broker Charles Stanley expected a rise to 33.1p. Pre-tax profit rose to £2,279m in the six months to 30 June, up from £2,123m in the first half of 2009.

Tullow Oil moved ahead after it announced that the Ngiri-2 appraisal well, which is located in the Butiaba region of Uganda Block 1, has encountered over 40 metres of net oil bearing reservoir in two zones within an overall 131 metre gross oil bearing interval.

Contract caterer Compass has upped its forecast for sales growth this year to 2.5% after an uptick in new business and an improvement in contract retention.

Underwriter Brit Insurance has soared after saying it has granted suitor Apollo access to the books after the US private equity firm submitted a new indicative proposal worth £850m, or £10.75 a share in cash.

Chip maker CSR tumbled after it warned foundry capacity is becoming increasingly constrained.

Yellow Pages publisher Yell has taken a similar battering. It posted a decline in quarterly profit and sales but says it remains confident in future growth.

On the bright side Lamprell, the oil engineering services firm, his wanted after it won a $317m (£204m) contract to supply National Drilling Company (NDC) in Abu Dhabi with two new jackup rigs.

On a busy day for engineering, Bodycote fell after it swung back into profit as demand for its products picks up while full year expectations remain the same, but Renishaw gained after it tripled full year profit after strong demand in the Far East as it starts the new financial year with a record order book of £23.3m.

Also in engineering, Morgan Crucible saw first half profit more than double and said it enters the second half with good momentum.

EasyJet has lost altitude even after the budget airline's sales rose by 5.3% to £759.2m in the three months to June despite volcanic ash cloud disruption that cost the airline £65m.

Synergy Healthcare, which provides outsourced support services to the health industry, said trading has been in line with expectations for the first quarter and remains on track to meet full year forecasts.

Shares in Individual Restaurant fell sharply after the owner of the high-end Piccolino and Bar & Grill chains said extreme weather early in the year and the football World Cup will cost the company about £600,000 in pre-tax profits in the current year.

Synchronica shares jumped after the provider of mobile email and messaging technology said the mobile subsidiary of Telecom Argentina has launched an email service based on Synchronica's ‘Mobile Gateway.’

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Daily Market Summary Report - Tuesday 27th July 2010

A big chunk of the morning’s hard-fought gains went up in smoke late in the session as an early rally on Wall Street quickly turned into nothing.

Miners were the main culprits. All the big guns gave back big leads mid-afternoon following stronger-than-expected US home-price data that helped the dollar claw back losses against the euro.

Rio Tinto, BHP Billiton and Xstrata, which earlier announced a small decline in first half copper production, had all been up about 2% before the report, but ended the day little changed.

Things would have been worse but for banking stocks, which wrenched attention away from BP. The high street players were lifted by strong figures from European peers Deutsche Bank and UBS and also by rumours that banking regulator the Basel Committee is set to lower its minimum capital and liquidity requirements.

Barclays, Lloyds and Royal Bank of Scotland topped the blue chip risers. Net profit at UBS in the second quarter came to 2bn Swiss francs from a loss of 1.4bn francs last time, well above expectations for a 1.26bn francs profit. Deutsche Bank reported a 9% rise in Q2 earnings despite a weaker performance at its investment banking unit.

Oil giant BP confirmed Tony Hayward is to step down as chief executive on 1 October to be succeeded by fellow executive director, American Bob Dudley.

The group also unveiled a $32.2bn (£20.7bn) charge for the Gulf of Mexico oil spill, including the $20bn (£12.9bn) it has already committed to putting in escrow. As a result the company reported a headline loss of $17bn (£10.9bn) for the second quarter, the largest ever by a UK company.

InterContinental Hotels is leading the fallers after it emerged that the Barclay brothers, owners of the Daily Telegraph, have sold their 10% stake in the Holiday Inn owner. Shares in Premier Inn firm Whitbread have also fallen.

Profit takers hold ARM in their thrall. The shares are lower, even after revenues and profits continued soaring at the chip-designer in the second quarter as it continued to see strong demand for its technology from makers of mobile ‘phones and other must-have gadgets. It posted a pre-tax profit of £43.5m in the three months to June 30, up from £16.3m over the same period the previous year.

Higher production and a rising gold price sent half-year net income at African Barrick Gold up by 217% to $99m, but the shares are slightly lower. Revenue rose by 64% to $424m up 64% as production rose by 23% to 356,208 ounces and realised gold prices jumped by 28% to $1,155 per ounce.

Updates in the FTSE 250 have been mostly well received though.

Strong numbers from Croda have sparked a positive reaction in the speciality chemicals supplier’s share price. Record results at its two main divisions helped double half year pre-tax profit, with strong trading trickling into the first weeks of the second half. Pre-tax profit surged to £96.2m in the six months to 30 June 2010 from £46.3m the year before. Sales on continuing operations rose 27.6% to £516.1m.

Software group Misys is wanted after saying it has reduced the number of shares it will sell in the proposed disposal of its healthcare division Allscripts.

The size of the planned placing will be reduced from 36m shares to 25m shares as Misys’ board believes the current share price of Allscripts under-values the business. The proceeds of the sale are still expected to be approximately $1bn, which will be returned to shareholders.

Engineer Tomkins' board has backed the 325p per share cash offer from Onex and Canada Pension Plan Investment Board, prompting gains in the company’s share price. The offer values Tomkins' existing issued and to be issued share capital at approximately £2.89bn. The independent directors intend unanimously to recommend to Tomkins shareholders to vote in favour of the offer.

The top riser in the FTSE 250 is Connaught, which rallies partially after sliding yesterday when it warned it is set to breach its banking covenants.

Shares in PZ Cussons fell back after results. The international consumer products group saw profitable growth last year in all three of its operating regions.

Car parts and bicycles retailer Halfords drove through a 9.6% rise in group revenue from 3 April to 26 July, helped by its acquisition of Nationwide Autocentres in February, but it issued a cautionary stance on the economic environment.

Shares in Clipper Windpower dropped after the wind turbine blade maker said it expects to report an operating loss for the first half.

Shares in sweetener maker PureCircle slumped after it warned full year profitability will be below levels seen in 2009.

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Daily Market Summary Report - Monday 26th July 2010

Sentiment improved after the US open following a sluggish start, helping Footsie close with modest gains. A bigger than expected rise in US house sales reassured investors over the state of the world economy.

Banks Lloyds, Royal Bank of Scotland and Barclays were all strongly ahead after they sailed through the tests last week.

BPmoved ahead after the oil giant confirmed it will t will hold a board meeting today to decide the fate of chief executive Tony Hayward, but said no final decision has been made. All may be revealed tomorrow with the company’s second quarter results.

Elsewhere in the oil sector, Tullow Oil was in demand after it said it has found a significant column of excellent quality light oil when drilling the Owo-1 exploration well in the Deepwater Tano licence offshore Ghana. Results of drilling, wireline logs and samples of reservoir fluids have established Owo as a major new oil field requiring further appraisal, it added.

Financial Times publisher Pearson was another riser after it reported a rise in first-half profits and upped its full-year outlook. Adjusted pre-tax profit rose to £203m in the six months period from £111m on sales of £2.34bn compared with £2.15bn previously. The board declared an interim dividend of 13p per share, a 7% increase on 2009.

But household products group Reckitt Benckiser finished lower by a whisker even after it saw net revenue rise by 10% to £2,061m in the second quarter of 2010. Net income improved 23% to £380m. Chief executive officer Bart Becht said the results were in line with the group’s full year targets. Guidance on full year performance has been left unchanged.

In the FTSE 250, shares in Connaught collapsed. The bad news keeps piling up for the social housing group, which issued a profits warning last month, with the company admitting it is in dire need of cash. The company said its “urgent requirement for additional funds to meet the current and ongoing needs of the business” has been caused, in part, by additional pressure from suppliers and sub-contractors.

But results from Digital TV set-top box maker Pace were given a good reception. It reported a 46% hike in half year pre-tax profit and announced the proposed acquisition of 2Wire for an expected $55m to beef up its US customer base. "Given the group's first half performance and good visibility for the second half, the board is in the process of revising its expectations for the 2010 financial year," it said in a company statement.

Broker KBC Peel Hunt did not find much to get excited about in the interim results from set-top box maker Pace but it likes the look of the acquisition of 2Wire, the US network router firm.

Betting firm William Hill is to close down its UK telephone betting operations and switch them to Gibraltar.

Wind turbine gearbox maker Hansen Transmissions is seeing tentative signs of a recovery in a tough market. Revenue in the second quarter of 2010 fell 21% to €107.0m from €136.3m the year before, while earnings before interest, tax, depreciation and amortisation (EBITDA) dipped 6.4% to €6.68m from €7.14m.

Aberdeen Asset Management saw a net inflow of funds in the April to June quarter, with demand for its pooled fund products especially robust. The fund manager saw assets under management during its third quarter slide, however, to £164.7bn from £170.9bn at the end of Match, as equity markets declined and exchange rate movements proved unhelpful.

Insurance broker Jardine Lloyd Thompson (JLT) has acquired a stake in Austrian peer GrECo and entered into a trading agreement with the broker and two others. The company is paying €17.6m and transferring over its Polish operations, valued at €0.65m, to the Austrian firm in return for a 20% stake in GrECo.

Business process outsourcing specialist Xchanging and its business partner Allianz Global Investors are to take over administration of savings plan accounts for OnVista Bank.

Business support systems group Intec Telecom Systems has confirmed that it is in talks that may lead to an offer for the company following a sharp rise in its share price.

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Daily Market Summary Report - Friday 23rd July 2010

The day that was not without excitement, but shares were little changed overall amid uncertainty ahead of European banking stress tests due after the close.

The best performer was chip designer ARM Holdings . It was already higher, helped by strong results from US tech giant Microsoft overnight, and jumped later in the afternoon when it announced a new licensing agreement for its technology with Microsoft.

Also in the afternoon, power systems developer Rolls-Royce said it secured $1.7bn in new orders during the Farnborough Air Show.

Telecoms titan BT learned that industry watchdog Ofcom ruled out changes to the company’s funding that would have allowed it to raise wholesale prices to help close the huge deficit in its pension fund.

TUI Travel gave back some of the gains made early in the week as bid speculation fades, while a study by Co-op Travel suggesting travel companies are slashing prices to shift holiday packages will not have helped sentiment either.

Mobile phone network operator Vodafone returned to organic revenue growth in the April to June quarter of 2010 for the first time since the near global recession. Group revenue increased by 4.8% to £11.3bn and group service revenue increased by 4.9% to £10.6bn.

Water group United Utilities says current trading reflects lower prices for 2010/11, revenue pressures from reduced water volumes, bad debt and anticipated rise in property rates. However, the firm, which revealed a drop in full-year profits in May due to high borrowing costs, said these negatives are being partly offset by a drop in power costs.

Among second-liners Dana Petroleum show ahead after the Korea National Oil Corporation (KNOC) confirmed it has submitted an indicative bid of 1800p cash per Dana share, an improvement on its original indicative offer of 1700p made on 17 June.

Mergers and acquisitions activity is also driving the share price rise of property group St. Modwen, which owns the Elephant & Castle shopping centre in south London.

The response to results from Britvic has been sour, even though the soft drinks giant saw revenue increase by 16.2% from a year earlier to £289.5m in its third quarter. The underlying GB, International and Irish businesses saw a combined revenue increase of 6.9%.

Oil and gas exploration and production company Salamander Energy has plugged and abandoned its Tom Hum Xanh-1X exploration well, offshore southern Vietnam, but the shares have held up well. “This should not come as too great a shock to the market, as the first well it drilled in this basin also proved to be uncommercial,” noted Panmure Gordon.

Also in the oil sector, BP has temporarily suspended relief well activities at the MC252 well site in the Gulf of Mexico due to “potentially adverse weather” linked to Tropical Storm Bonnie.

Close Brothers shares fell back. The merchant bank still thinks it will deliver a “solid” performance for the full-year, although funds under management eased in the last three months and it’s making less per trade at its market making arm.

Multi-millionaire property developer Christian Candy’s has launched a mandatory offer to buy all the shares in Metals Exploration he doesn’t own for 13p each.

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Daily Market Summary Report - Thursday 22nd July 2010

London rose again to climb above 5,300 and close at its highest for over two months. A strong start on Wall Street got the afternoon session off to a good start, with buyers staying interested right to the end of the trading day.

Rolls-Royce was best performer, on the back of the orders placed at the Farnborough airshow for wide-bodied jests made by Airbus and Boeing. Rolls is the largest supplier of aeroengines in this market.

Outsourcing giant Capita was one of the best performing blue-chips. The company said pressures on public spending may affect growth in the short-term but it is confident its ability to deliver cost efficiencies will stand it in good stead. Rival Serco, under the cosh recently on fears over government cutbacks, also rallied strongly.

“There is buoyant demand for outsourcing across both the private and public sectors, with the most active markets in our strong bid pipeline remaining local government and life and pensions,” said Paul Pindar, chief executive of Capita.

In contrast Autonomy, a heavy hitter in the corporate software world, was hammered despite delivering record first half profits and revenues. Fully diluted adjusted earnings per share rose 7% to 28 cents, below the expectations of many brokers such as KBC Peel Hunt (29c) and Panmure Gordon (30c). Gross margins were also a concern.

Imperial Tobacco was left puffing behind its fellow blue-chips too, as it revealed cigarette volumes for the nine months to June were down 4.3% as a result of market declines in Spain, USA, Russia and Ukraine being only partly offset by gains in Central Europe.

Moving on from fags to booze, brewer SABMiller said both lager volumes and soft drinks volumes for the second quarter were 1% below the prior year on an organic basis.

Sales growth slowed at pub group Mitchells and Butlers during the football World Cup as viewers opted to watch the matches at home or in more drink-oriented pubs. The All Bar One and O’ Neills owner saw like-for-like sales rise by 1.2% from the same period a year ago in the nine weeks to 17 July, down from growth of 1.6% over the 42 weeks to 17 July.

DIY retailer Kingfisher, which owns the B&Q chain in the UK, also dropped after it reported a small drop in like-for-like sales in the 10 weeks to 10 July, but said half year profits remain on track. Like-for-like sales were down 0.8%, with total sales up 0.3% in constant currencies.

South African platinum miner Lonmin saw output from its underground mining operations increase quarter on quarter in the April to June period.

Sports Direct, owner of Sports World stores and Slazenger and Dunlop brands, posted a 50% rise in annual pre-tax profit, in line with expectations, and predicted more growth in 2010-2011.

Tate & Lyle has made a sound start to the year and continues to anticipate progress in the current full year. However, despite some improvement in demand, industrial starch margins are expected to remain at lower levels and the group continues to see little near term improvement in US ethanol markets.

Emerging markets lender International Personal Finance posted a three-fold increase in first half profit and is confident it will deliver further growth in the second half.

Pearson, which publishes the Financial Times and textbooks, is to acquire the school support operations of Brazilian education group Sistema Educacional Brasileiro for R$888m (£326m).

Energy provider Scottish and Southern Energy (SSE) is on course to deliver expected dividend growth, despite operating in a challenging environment.

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