*** No more soft patches for the retailers
*** The day of courtroom drama...
*** What next for global bond yields?...oil's super- spike...who's most at risk from China's textile war?...and more...
------------------- – Even the most die-hard of retail bulls must now be convinced that the ailing sector is suffering from a great deal more than a slight 'soft patch'. Instead the problems plaguing the sector are genuine and very deeply entrenched. Anyone still in doubt need only look to the latest figures out from the CBI yesterday: according to them, sales expectations fell to their lowest level for 13 years last month.
– 'Broadly speaking, the categories of goods most closely correlated with housing transactions have fared worse than the average over the past year,' said the CBI's John Longworth. The household goods sector slumped 2.5% on the news.
– The blue chip index also lost 22 points to close at 4,964. The FTSE 250 gained 0.1%, to trade at 7,114, while the All Share index fell 0.4% on Tuesday.
– Bug and robber-fighter Rentokil tumbled 4% following weekend reports that it may bid for workplace services group PHS. 'Sell asap', broker Dresdner told its clients yesterday – as structural problems and pricing pressures will continue to hamper the group. Its shares closed at 147p.
– At the other end of the index, Imperial Tobacco's stock closed 3% up, as the top blue chip gainer on Tuesday. Good news for Imperial shareholders; bad news for Margaret McTear, whose attempts to sue Imperial for £500,000 for the death of husband Alfred from lung cancer failed yesterday.
– The reason for the shareholders glee? Well, not only did they win the case against Ms McTear, but the case – a first of its kind in Britain – may also turn out to be the last of its kind in the UK for up to 10 years, JP Morgan reckoned yesterday. Gallaher also added 2%, while the tobacco sector closed 1% in the black.
– Ryanair said it posted record profits – up 19% from the previous year to 269m euros – as rival carriers pushed their own passengers to the group following a series of fare hikes. And according to controversial chief executive Michael O'Leary, 2005 ought to be sufficiently better than last year. But is he right?
– And finally, more than one month after Mikhail Khodorkovsky first thought he would be sentenced, a Russian court has found him guilty of tax evasion and jailed him for 9 years – only one year less than the maximum sentence. Crippled oil giant Yukos – set-up by Khodorkovsky – reacted immediately, in turn suing the Russian government for nearly $12bn. Not good news for Russia: the case has generated much uncertainty, and Khodorkovsky's guilty verdict will certainly not halt the capital flight out of the country.
------------------- – Global bond yields – the average yield of 10 year US, Japanese and Euro bonds based on core inflation – are currently close to their lowest levels reached over the past 15 years. Are they likely to fall much further? No, says John Stopford of Investec Asset Management. The US Federal Reserve is likely to lift interest rates to 'more normal levels' without pulling the country's growth down in the process...and ensuring a positive yield curve in the process.
– The oil price seems to have peaked at around $56 a barrel, and is currently trading closer to the $50 a barrel mark. Does this mean that, like the era following the 1970s oil price peak, oil is about to fall again – perhaps even to as low as $10 per barrel, as was the case in the 1990s? Don't count on it, says the Profit Hunter team: there are a number of crucial differences between then and now. What's more, billions are about to be poured into some crucial oil stocks.
– China's 'flood of cheap textile exports to the US' could have a direct effect on the wallet of the US small-cap investor – but not perhaps in the same way you would expect, says Irwin Greenstein in the Penny Sleuth. Those most at risk are the US small cap outfits that outsource their goods to China. So if you insist of continuing to invest in these groups, stay 'vigilant' as things get ugly...
Published in Stock markets
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by
Heather D'Alton
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