London open City sources predict FTSE 100 will open down 59 points from yesterday's close of 5,247.
Stocks to watch
Kesa Electricals, the company behind TVs-to-washing machines retailer Comet, traded in line with expectations during the 12 months to 30 April, but it’s the French chain that’s behind a recovery in profits. Adjusted profit rose 17.8% to Ł81.9m and retail profit increased by 28% to Ł98.6m, thanks mainly to Darty, which ramped up retail profit by 14% to Ł118.4m. Comet made Ł11.5m, up 13.9%.
Rail and bus firm Stagecoach’s profits beat market expectations despite raising earnings guidance as recently as the end of April. Underlying profit before tax in the year to 30 April were Ł161.3m, down from Ł196.4m the year before. The median estimate for profit before tax had been Ł149.5m. Revenue came in slightly below forecasts of Ł2,192m at Ł2,164.4m, but was up from the previous year’s Ł2,103m.
Central Europe focused lender International Personal Finance said trading has been ahead of plan so far in 2010. Credit issued is growing steadily and credit quality in all markets is good, the company said. After taking impairment charges in the first quarter because of the effects of the bad weather, the company’s performance in the second half has benefited from the reversal of these charges, with April and May proving to be particularly good months.
In the Press
Every household in Britain will be worse off after George Osborne unveiled Ł29bn worth of annual tax rises and the biggest cuts in public spending for almost a century. In an ambitious attempt to reduce the nation’s borrowing, the Chancellor said everyone had to share the pain to repair “the ruins” of the economy. Setting out what he described as the unavoidable Budget, Mr Osborne admitted that the better off would shoulder the largest burden of tackling the “emergency” facing Britain’s finances, the Telegraph reports.
Proposals to cut the rate of corporation tax to 24% over the next four years will give Britain the fifth lowest rate in the G20 and signal that it is "open for business", George Osborne said yesterday. The measure was greeted enthusiastically by many businesses, which face an overall reduction in corporation tax of Ł1bn a year after taking account of cuts in allowances that were less severe than feared, the FT reports.
Video games industry bodies have reacted with anger to the government's announcement that it will scrap plans to introduce tax breaks for the UK games industry. In the emergency budget, the chancellor called Labour's pre-election plans to offer tax cuts to video games companies "poorly targeted", the Guardian reports.
Asda's market share has fallen to its lowest level for 18 months, according to the latest industry figures, as Britain's second-biggest supermarket group battles more moderate food price inflation and nimbler rivals. Figures released by Kantar Worldpanel, the consumer research group, showed Tesco's sales grew in line with the market, maintaining its market share at 30.8%. J Sainsbury enjoyed a sales bounce, expanding at 4.4 per cent and lifting its market share from 16.1% to 16.2%, while at 6.1% Wm Morrison was the fastest growing of the big four supermarkets, increasing its market share from 11.6% to 11.9%, the FT reports.
Newspaper tips Halma, which specialises in hazard detection and "life protection" technology, looks in rude health itself these days, although it did have to undergo some painful cuts to get here. Its products include smoke detectors and safety sensors for lifts and automatic doors, water disinfection systems and ophthalmoscopes. There are grounds for thinking that management's promises on growth will be met this year and that the divi is secure. Investec has the share price of 13.7 times this year's forceast earnings, which is only slightly higher than the UK electronics sector's 12.7 times. Buy says the Independent.
The government is set to unveil the findings of a defence review later this year which will almost inevitably lead to spending cuts. That in turn is bad news for companies like Chemring, which will see a fall in demand from the UK and other cash-strapped nations. In the past year, investors have had a good run with Chemring, with its shares rising nearly 70 per cent. Now is the time to book those gains. Britiain's defence cuts will only hit the industry in 2011 or 2012, but the Independent is already nervous about the sector. Sell.
Grainger's business is primarily to buy homes worth around Ł190,000 and let them at levels below market value. It then aims to sell the property on for a higher value once the tenant moves out, or dies, or the asset has been refurbished. Tthe mature housing markets Grainger operates in are shielded from the worst of these, and it could benefit from the changes in CGT by picking up properties on the cheap. The housing market may be volatile in the short term, but Grainger still looks affordable. Buy says the Telegraph.
US close
US stocks turned sharply lower in the last hour as poor housing sales data knocked sentiment while BP had another tough day. The Dow tumbled 148 points to 10,293. Nasdaq fell 27 to 2,261 while the S&P 500 dropped 17 to 1,095.
Sales of existing homes unexpectedly fell in May, according to figures from the National Association of Realtors. Existing home sales were expected to rise to a seasonally adjusted annual rate of 6.1m units, but they fell to 5.66m. Analysts’ believe that tax incentives that come to an end in June have boosted the figures in earlier months. Sales could continue to be weak in the coming months.
Oil stocks had another tough day. Concerns about upcoming hurricanes disrupting the clean-up in the Gulf of Mexico have hit BP. Anadarko and Transocean also fell.
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