London openCity sources predict FTSE 100 will open up 11 points from yesterday’s close of 5,167.
Stocks to watch
Underlying revenue at luxury goods maker Burberry was up 24% in the May to June quarter. Underlying retail sales were up 15% while underlying wholesale revenue rose by 46% from a year earlier. “With double-digit sales growth in both retail and wholesale, Burberry has delivered a strong start to the year,” said chief executive officer Angela Ahrendts.
Northern Foods' sales fell in the first quarter as good growth in chilled foods could not offset falls in the bakery and frozen divisions. Overall, sales in the three months to end June were 1.6% lower, in line with the firm’s targets in ‘challenging conditions’.
Engineering and project management company AMEC has won a five year master services agreement with BP Azerbaijan valued at $340m.
In the Press
The Government is considering introducing taxes on banks’ pay and profits — on top of the Ł2bn funding levy announced in the Budget. Mark Hoban, Financial Secretary to the Treasury, revealed the plan at a dinner for the country’s most senior bankers at the Mansion House last night. He said that banks should reform themselves, but warned that the Government would still explore the costs and benefits of a financial activities tax on profits and remuneration, the Times reports.
A seventy-five tonne containment device lowered over the rogue BP oil well offers the best hope yet of finally capturing all the oil spewing from the well-head into the Gulf of Mexico. For the first time in 84 days, the fountain of black crude that cameras have filmed since soon after the Deepwater Horizon rig blew up appeared briefly to have been stopped altogether last night, the Times reports.
China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West. Dagong Global Credit Rating used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's. The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia, the Telegraph reports.
Newspaper tips
Thomas Cook shares have taken a thumping since the spring and are now selling on less than seven times this year’s earnings, with a yield approaching 6%. The fall is probably overdone; but concerns over the European travel industry remain says the Times.
News that the Toroa well in the South Falklands Basin contains about as much useable oil as the average deep fat fryer inevitably focused attention on the other operators drilling there, but has few implications for others such as Rockhopper Exploration. Rockhopper’s Sea Lion well is on the North Falklands Basin, geologically entirely different from the south and in shallower waters. Those with a taste for excitement should retain some exposure to Rockhopper, although it could be a rough ride says the Times.
Contractor and housebuilder Kier’s full-year profits will be towards the upper end of market expectations, which provided the impetus for yesterday’s 3.4% price jump. On almost nine times’ this year’s earnings, probably up with events says the Times.
US close
Wall Street rallied as concerns eased over European financial problems and a decline in Chinese demand for copper.
Alcoa also got the results off to a good start, beating analyst expectations with underlying profits of $137m, or 13c per share, in the three months ended 30 June. The aluminium giant made a loss of $312m, or 32m per share, this time last year. The Dow constituent was tipped to report earnings of 12c per share.
Weakening copper demand hit Freeport McMoran and other metals companies have fallen in sympathy – including US Steel and AK Steel.
Across the markets, the Dow Jones rose 18 10,216, while the Nasdaq added 1 at points at 2,198. The S&P 500 was flat at 1,078.
On the M&A front, insurer Aon has offered $4.9bn (Ł3.3bn) for Hewitt Associates in a deal that will triple the size of its human resources consulting business. The world’s biggest insurance broker has put together a package of cash and shares that values Hewitt at $50 a share, a 41% premium to Friday’s closing price. Shareholders will get $25.61 in cash and 0.6362 Aon shares for every Hewitt share they own.
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