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*** Oil touches new records
*** The snags of investing in PartyGaming
*** Our 'sublime ignorance'...getting US rates down the middle...the EU's death spiral...and mor -------------------
– With oil prices touching record levels of $60 a barrel, fuel-dependent stocks took flight before the weekend.
– Chemicals group ICI hurt the most, falling 4% on Friday. British Airways also closed more than 1% down after announcing that it intends to hike its fuel surcharge on flights as of today.
– But avoiding the skies won't help you steer clear of the soaring crude prices: gas bills are set to rocket this autumn, according to British Gas owner Centrica. With huge rises in the cost of wholesale gas, bills are set to climb by a lot more than the 12% increase imposed last year. Centrica shares slipped 2% on Friday.
– The blue chip index fell nearly 1% before the weekend, to 7trade at 5,079. The FTSE 250 also tumbled 0.7%, to close at 7,328, while the All Share index closed just under 1% in the red.
– 'The FTSE is now back to where it started the week, so the upside from the MPC meeting minutes has essentially been off-set by this general concern over high fuel prices impacting the economy as a whole,' CMC Group's Geoff Langham said before the weekend.
– Retailers suffered after supermarket giant Tesco warned that it too would be knocked by the consumer slowdown. Despite this, the group reported sales growth five times higher than that of rival Sainsbury - with sales in the first quarter to mid-March up by some 15%. The group's shares slipped 0.6% on Friday.
– Tesco's warning sent shares in clothing group Next and retailer Dixons down nearly 2%.
– The world's biggest online poker group PartyGaming is set to float today on the London Stock Exchange today - with a phenomenal market capitalisation of some £4.6bn set to give the group blue chip status. In fact, there are so many investors that the support should cover its books more than twice over.
– Yet despite the influx of investors, PartyGaming has had its fair share of negative press of late. With the US - where PartyGaming makes some 90% of its profits - still deciding whether online poker is legal, there could be a number of snags to investing in the business. There’ll be more on this to come in Money Morning.
------------------ – What do we know about market developments and other types of news? asks MoneyWeek's Tim Price. Not all thatmuch: what we think we know is confirmation of 'sublime ignorance muddied by a dash of personal prejudice', along with a touch of flashy salesmanship from others with attendant biases. And nowhere is this more pronounced than in the coverage of financial markets, says Tim. In fact, looking for any form of a tip in mass-market publications 'seems like a fool's errand'.
– While some hacks are calling for the US Federal Reserve to cut interest rates, others are demanding further hikes. But just who is right? Both are, says John Mauldin in FrontlineThoughts. 'The Fed is trying to play it down the middle. It wants to see longer-term rates rise enough to slow surging U.S. home prices, but not enough to choke off the market,' says John. Or in other words, it's looking for the sweet spot...but just where is that?
– For investors, the main concern regarding the European Union is that the 'no' votes in both Holland and France will act as a brake on economic reform, says Brian Durrant in The Daily Reckoning. Now the region is in danger of being 'sucked into a death spiral' in which a struggling economy leads to unpopular governments...which in turn weakens attempts to carry out essential reforms. As a result, the continent could just fall even further behind Asia and America...
Published in Money-Morning
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by
Heather D'Alton
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