LONDON -Pre-Market Report (27th November 2009 )

Carphone Warehouse more optimistic

London open

City sources predict FTSE 100 will open down 82 points from yesterday’s close of 5,164.

Stocks to watch

Carphone Warehouse has upped its full year guidance after posting better than expected half year figures. The group increased its headline EPS guidance for March 2010 to between 14.0p and 15.0p (full year 2009: 12.6p) due to the strong EBIT performance in both TalkTalk Group and Best Buy Europe. Headline earnings per share (EPS) almost doubled to 6.0p in the six months ended 30 September, compared to 3.2p previously.

Holidaybreak has suffered a big drop in full-year profit, but the firm’s education business had a better time of it as parents refused to let their kids go without. Headline profit before tax for the year to 30 September fell by 12.9% to Ł28.4m, while statutory profit slumped to Ł5.4m from Ł23.4m in 2008. Revenue rose to Ł473.4m from Ł455.1m.

Respiratory inhaler firm Vectura reported a 67% reduction in half year pre-tax losses and said it plans to establish an infrastructure in the US market.

In the Press

The FTSE 100 suffered its worst one-day fall since March closing down 3.2%. Companies with big Middle Eastern shareholders led the rout, on the back of concerns that high-rolling emirate Dubai would be forced to sell stakes to raise capital.

Barclays Bank tumbled 7.9% and the London Stock Exchange fell 7.4%. There were similar scenes across European stock markets with the French CAC-40 down 3.4p% and the German DAX index down 3.3%. In America, markets were closed for the Thanksgiving holiday, but electronic trading of the benchmark S&P 500 equity futures contract showed a potential drop on Wall Street of 2.2%, the Telegraph reports.

Millions of British households are facing rises of up to a third in their water bills over the next five years after Ofwat, the industry regulator, rowed back on its tough stance against the water companies. Worst hit will be the more than 14m households in England and Wales without a water meter. More than half a million unmetered South West Water customers can expect bills to rise by 29 per cent from Ł723 now to Ł935 by 2015. Its 1.1m customers with meters face arise of only 1%, to an average of Ł407, the Times reports.

Alistair Darling will admit in next month’s pre-Budget report that the recession has been much deeper than he forecast in March, the Financial Times has learnt. The chancellor is expected to say that the economy contracted by 4.75% in 2009, shrinking at least one percentage point more than predicted in the Budget. But he will also say that the UK has at last turned a corner and is on the road to recovery, ahead of a probable general election in May.

Newspaper tips

Daily Mail group’s sharp rise in the pension deficit is a concern, while Ł1 billion of borrowing acts as a brake on earnings-boosting acquisitions. But with the value of DMGT’s non-consumer businesses clearly showing through, and the remainder geared to cyclical recovery, the shares, at 424˝p, or ten times earnings, are worth holding says the Times.

Shares in DSGi, the pan-European electricals group that owns Currys and PC World, which trade on 2010 price to earnings ratio of around 40, are not cheap. Overall, the outlook now looks rosier, but there are safer retailers to hitch a ride on for the time being. Hold says the Independent.

The twin comforts from yesterday’s numbers from aerospace engineer Hampson are that tooling orders are up 27% cent from their August low and that the company continues to pay a dividend. Hampson’s strategic bet on composites will, one day, pay off. But even at 71źp, down 6žp, or less than six times next year’s earnings, it feels too soon to buy says the Times.

Sector Fallers

Name	Value	% Change
Forestry & Paper	3,352.05	-5.7%
Banks	4,825.64	-5.6%
Life Insurance	3,816.18	-5.3%
Mining	19,951.32	-4.9%
Industrial Transportation	1,885.32	-4.7%