Date: Monday 17 May 2010
London open
City sources predict FTSE 100 will open down 63 points from its previous close of 5,263. Stocks to watch
Life insurer Prudential has finally launched its delayed rights issue to finance the $35.5bn acquisition of AIG's Asian businesses (AIA), with the new shares priced at an 80% discount to the market price when the deal was originally announced. The terms of the £14.5bn rights are 11 new shares for every two at 104p. In a separate trading statement, Pru said current businesses enjoyed their best quarter ever in the three months to March. New business sales rose 27% to £807m and operating profits 26% to £427m.
Storage group Big Yellow swung into the black for the full-year and said it has seen an improving level of demand since spring last year. The group made a profit before tax for the year to 31 March of £10.2m compared to a loss of £71.5m before, thanks to the increase in the valuation of its open stores coupled with the improved recurring profit offset by the write down of assets in the course of development.
Record volumes and higher cream prices in the second half have produced a “very satisfactory” set of full-year results at Scottish dairy group Robert Wiseman. Turnover rose 4.5% to £886.2m and sales volumes leapt 9.1% to a record 1.77 billion litres, sending profit before tax up 60% to £49.2m, boosted by cream prices and a £1.9m cut in the OFT’s price-fixing fine. Chairman Alan Wiseman is standing down after July’s AGM, leaving brother Robert, the current CEO, to take on the role of executive chairman.
In the Press
Government advisers have dampened the likelihood of a break-up of Britain's major banks in favour of internal reforms in a move that will reassure the City that potentially damaging regulatory change is unlikely. New guidelines to govern the interplay between retail banking and investment banking are now more likely than an outright split, according to senior advisers, the Telegraph reports.
Britain’s carmakers are accelerating out of the slump in the motor industry and will be producing nearly 50% more vehicles a year within five years. But the extent of the depression among the country’s foreign-owned companies — with factories closed for months last year, shifts cut and short-time working introduced — means that even by 2014 Britain’s carmakers still will not match the number made in 2008, the Times reports.
Airports in parts of the British Isles remained closed until the early hours of Monday as a cloud of volcanic ash from an Icelandic volcano disrupted air passengers for the third time in a month. Manchester, Liverpool, Doncaster, Carlisle, Humberside and East Midlands airports were shut, as were those in Northern Ireland, the National Air Traffic Service said. Dozens of flights were cancelled as the no-fly zone was in operation between noon on Sunday and 1am on Monday – with a possibility that it might be extended. Heathrow and Gatwick were due to be shut down from 1am on Monday, the FT reports.
Fears that economic recovery will fail to stem a tide of rising unemployment are likely to be stoked today by revelations that businesses are reluctant or unable to recruit new staff. The Institute of Chartered Accountants for England and Wales says in a report that although businesses’ confidence stabilised in the second quarter, they plan to increase their workforces by only 1.1% in the coming year,the Times reports.
Newspaper tips
Tullett Prebon shares are trading on a December 2010 earnings multiple of just 7.2 times, falling to 6.8 in 2012. Rival ICAP shares are trading on a March 2011 earnings multiple of 11.6 times. The downside for Tullett shares should be limited because the current valuation is supported by the yield, which currently stands at a worthwhile 4.9%. Buy says the Telegraph.
Shares in telecoms giant Vodafone have come off highs, which means its dividend is looking attractive. The shares are now yielding almost 6.1%. Full-year results come on Tuesday, which look set to show a slight improvement in revenue and flat profits. The consensus view is for revenues of £44.3bn, up from $41bn, and operating profits of £11.4bn compared with £11.8bn. The shares remain a buy for their cash-flow and attractive dividend yield says the Telegraph.
The Mail on Sunday looks at London Stock Exchanges's retail bond market and suggets more cautious invetors could look at those from Tesco, paying a coupon of 5.5% and maturing in 2019, and from Imperial Tobacco, paying 6.25% and maturing in 2018. Both companies are strong, solid and extremely unlikely to go bankrupt any time soon the paper says.
US close Wall Street tumbled as concerns over European debt hit the US market with little sign of a rally. The Dow Jones closed down 162 points at 10,620. Nasdaq fell 47 at 2,346. The S&P 500 dropped 21 points at 1,135.
A slide in the euro sparked the selling as rumours flew about the health of economies in Europe with one story, later flatly denied, that France had threatened to pull out of the euro. Concern then spread to the impact if the eurozone slides back into recession on the back of the raft of austerity measures being imposed.
In the US, the Senate backed plans to limit credit card fees and this knocked shares in Visa, American Express and MasterCard. Banks were also hit with Bank of America, Wells Fargo and JPMorgan Chase all lower.
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