London openCity sources predict FTSE 100 will open 2 points lower from yesterday’s close of 4,824.
Stocks to watch
Housebuilder Persimmon said private sale reservations have softened around the time of the new government’s budget proposals, though sales prices and margins have continued to increase. “Since early May we have experienced the normal seasonal slow down in private sale reservations. We believe this was also due partly to the uncertainty created prior to the announcement of the new government's budget proposals. In the short period since the budget, sales have been in line with our expectations,” the group said. Turnover for the six months to 30 June was up by 26% at around Ł785m.
Pub group Punch Taverns said market conditions remain challenging given the relatively weak UK consumer environment, though trading during the World Cup has been good with like for like sales growth over this period.
Tullow Oil has had a “very good“ first half during which production came in on target and revenue increased about 13% to almost half a billion dollars. Group working interest production averaged 55,800 barrels of oil equivalent per day (boepd) in the first six months of the year, in line with market guidance. It’s expected to be between 56,000 and 57,000 boepd for all of 2010.
In the Press
In a shock move the head of the Government's spending watchdog Sir Alan Budd is to step down after barely three months in the job. The man tasked by George Osborne to lead the economic charge to bring public finances back in order has told the Chancellor he intends to step down at the end of this month, dealing a blow to the coalition. The surprise decision will leave the Office for Budget Responsibility (OBR) without a chairman before it has been fully set up and enshrined in British law, the Telegraph reports.
BP can meet the costs of its huge oil spill in the Gulf of Mexico without issuing new shares, the company said on Monday, rejecting recent speculation that it was seeking a bail-out from a strategic investor. The company has launched an appeal for support to Middle Eastern and other international investors, arguing that its shares are good value after their near-50% fall since the Deepwater Horizon disaster on April 20. However, it had “no plans” to issue new equity to bring in a “cornerstone” shareholder, in the way that Abu Dhabi and Qatar supported Barclays Bank in 2008, the FT reports.
RBS and other City institutions have warned that Europe’s stress tests for banks are almost useless and may further damage confidence if they fail to cover the risk of large losses on sovereign defaults by Greece and other Club Med states. “I don’t think it is going to work,” said Jacques Cailloux, Europe economist at RBS. “These stress tests are not rigorous enough. Investors are already pricing in a 50% “haircut” on some Greek bonds so this has to be included, and perhaps 30% for Spain, the Telegraph reports.
Newspaper tips
The City's bearishness on Kesa shares partly reflects concerns over the tough trading environment that Comet faces in the UK. Furthermore, the City's UK-centric view glosses over the fact that Darty continues to deliver the bulk of the group's operating profit. Therefore, along with an improved performance in its developing businesses, such as in Italy, Spain and Turkey, investors could score by focusing on the bigger, long-term picture at Kesa. Buy says the Independent.
Lloyds Banking is cleaning up its act. When your list of misdemeanours, perceived or real, is as long as Lloyds's charge sheet this is not an overnight project, but the UK's largest high street bank is getting there. On Monday it took a major step by selling HBOS's integrated finance business – a significant slice of the business that got HBOS and then Lloyds into so much trouble – to private equity business Coller Capital. Buy says the Telegraph.NCC has two areas of operation. Escrow is a software insurance policy that provides a back-up repository. The second business, assurance, provides IT security. This, inevitably, is a growth area, given the seemingly unstoppable rise of online fraud and identity theft. NCC has been quoted on the main list for three years. It sells on about 11 times this year’s earnings, not dear for such a strong business. Worth tucking away says the Times.
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