*** FTSE near six-week high
*** It's Sir Ken versus his stroppy shareholders
*** M&S angst...a looming liquidity black hole...why to avoid bonds...and more
------------------- – With the oil price down once again, and British Airways gaining 2% as a result, the blue chip index was boosted to its fifth consecutive gain.
– The FTSE 100 added 18 points on Monday, to close at 4,989 – languishing just 2 points below a six-week high. The FTSE 250 gained 0.8%, to trade at 6,987, while the All Share index added 0.4%. Meantime, the sticky stuff remained low: with Dated Brent trading at $47.34 per barrel by London's close – well below April's high of $58 a barrel.
– 'Generally for those who were thinking it was 'lights out and last one out close the door' it certainly hasn't been that,' Insight Investment's Tim Rees said yesterday. 'Although we're seeing a slowdown in growth it's by no means a move into recession on either sides of the Atlantic.'
– Hotel and gaming outfit Hilton closed atop the blue chip index, amid hopes that the group may dump its health-club chain and buy more hotels in exchange, which could eventually lead to a demerger. The firm, run by the family of the distressingly famous Paris, closed 4% up at 284p.
– The real estate sector added 0.4% on consolidation hopes, following British Land's agreement to buy retail park specialist Pillar Property for around £800m in cash. British Land closed 0.7% up at 856p, while Pillar shed 0.2% to 843p. Why the fall? Because according to broker Merrill Lynch, Pillar won't be worth the while for British Land if a number of its volatile sources of income don't meet specific levels.
– Meantime, Wm Morrison closed as a top blue chip loser, down 1% on reports that its founder Sir Ken Morrison and a number of stroppy investors are hauling out their boxing gloves ahead of its annual general meeting on Thursday. The pressure is now on Sir Ken to convince his shareholders that he's not delaying the appointment of four new non-executives...but would that merely be one very unconvincing white lie?
– And fellow retail wobbler Marks & Spencer releases its results today – with investors expecting a fall in pre-tax profits to £610, versus the £805m the previous year. Sales at M&S have also fallen more than 3% year on year in each of the past two quarters, while like for like sales stumbled 5% in the past quarter. M&S traded 0.5% up on Monday.
------------------- – If you think that you're paying the government the income tax it's owed every month, think again, says MoneyWeek reader E.C. Forster. It's an illusion. Instead, you only start paying the government income tax the moment you buy goods such as bread – goods that both the rich and poor can't live without. How does this work?
– This summer you'll undoubtedly hear people worry about the rising volatility, says Dan Denning in Strategic Investment. But that's a 'red herring'. Instead investors should fear the liquidity black hole – where price falls result in more sellers, which in turn generates even more sellers – something that could just spiral out of control this year. What could cause this? Just about anything from a hedge fund to a big bomb. And when it happens? Just let the black hole 'do its work', says Dan.
– For those investors who favour bonds, beware: bonds are, at root, 'mere liabilities', says Sage Capital. Why? Because bonds, which can be issued almost at will, are commonplace...but also poorly paying. If you do invest in bonds, albeit with the 'utmost suspicion' and also with the 'greatest reluctance', hold only the shortest maturities, and only buy the highest grade credits.
Published in Stock markets
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by
Heather D'Alton
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