Date: Tuesday 08 Jun 2010
London open City sources predict FTSE 100 will open up 4 points from yesterday's close of 5,069.
Stocks to watch
Newsagent chain WH Smith announced the retirement of chairman Robert Walker as it revealed a 4% fall in like-for-like sales in the 14 weeks to June 5. Like-for-like sales were down by 4% in both the High Street and Travel divisions, with like-for-like sales at travel outlets down by 2% excluding the impact of the volcanic ash cloud that grounded flights across Britain.
Demand at the World Cup and a pick-up in business elsewhere means temporary power and temperature control services firm Aggreko expects performance this year will be significantly better than previously anticipated. At the interim stage group revenue in constant currency and excluding pass-through fuel will grow by around 10%, and trading profit by about 20%, the company said.
Falkland Basin oil explorer Rockhopper has wasted little time in tapping shareholders after its recent discoveries in the South Atlantic. The firm is to raise Ł48.5m through a placing of 17.3m new shares at 280p apiece, a small discount to last night's close of 290p.
In the Press
The Government would have to double the scale of the cuts it has already planned if it intends to come anywhere near to Canada's example of a public sector bonfire, experts have said. The 20% cut in public spending which Canada implemented in the 1990s would be equivalent today to some Ł140bn worth of public spending cuts, according to the Institute of Economic Affairs, reports the Telegraph.
Harvey McGrath, chairman of Prudential, on Monday did not rule out resurrecting its failed $35.5bn bid for AIA, as he defended the insurer’s strategy before shareholders at its annual meeting. Mr McGrath was asked several times whether the Pru would consider trying again to buy some or all of AIA. “We will of course watch what happens to AIA,” he said. “We are very interested to see what happens after our transaction was one that was not consummated.” He added later: “We will keep a very close eye on AIA,” the FT reports.
The political storm engulfing BP intensified yesterday as the group came under renewed pressure on its Russian front. Gazprom, the Kremlin-controlled gas monopoly, has raised new questions over the future of a giant gasfield in Siberia controlled by the British group’s Russian joint venture TNK-BP. Gazprom piled on the pressure by ending hopes that it might buy Kovytka from TNK-BP for up to $1bn, the Times reports.
Newspaper tips
A year after Workspace Group launched the property sector’s first post-credit crunch rights issue, the state of its balance sheet is again to the fore. Workspace remains a call on the fortunes of London’s smaller businesses — and a bet that they will emerge unscathed from this month’s austerity Budget. At 22p, or a 19% discount to historic net asset value per share, and providing a 3.4% dividend yield, there is better value elsewhere. Pass says the Times.
Brit Insurance's pre-tax net exposure to the recent earthquake in Chile was $71m. The shares are trading on a December 2010 earnings multiple of 7.2, falling to 5.7 next year. They are a buy for the 8.4% yield in turbulent times. Buy and tuck the shares away suggests the Telegraph.Phoenix IT is a rather odd sort of bird: a small-cap computer services group with no obvious peer. It provides disaster recovery — effectively emergency back-up IT services — from 18 sites across the country; acts as a sub-contractor to larger technology and telecoms groups and, through its Servo division, sells outsourced IT services to mid-sized companies. At 234p, Phoenix could follow the likes of Morse in attracting takeover interest. Either that, or the company should be able to use its stronger balance sheet to pursue acquisitions that might close the valuation gap with its peers. Buy says the Times.
US close
Dow Jones closed down 115 at 9,816. Nasdaq shed 45 at 2,173 while the S&P 500 fell 14 to 1,050. Europe was again the centre stage today on fears that Hungary could default on its debt. Growth in German factory orders helped to ease worries.
News that BP is having better success in stemming the flow of the oil leak in the Gulf. counted for little by the close.Goldman Sachs has been subpoenaed by the Financial Crisis Inquiry Commission and this has knocked other banks, including Bank of America. Apple launched a new mobile phone. It's thinner and uses less battery power.
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