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*** Shareholder relief at Shell’s merger
*** Coldplay comes to HMV’s rescue
*** Citigroup’s fleeting irritation...the end of the bubble...why Europe’s not all that bad...and mor -------------------
– Anglo-Dutch group Shell has finally merged its two holding companies, Shell Transport and Trading and Royal Dutch Shell into one unified company. That’ll be a relief to shareholders, who have been calling for the group to operate from either London or Holland since it overstated its reserves some 18 months ago. Yesterday Shell shares traded 3% up.
– Yet the idea behind the group’s merger was to simplify things...and that doesn’t look the case. Shares have been divided into two groups: A shares and B shares in an attempt to keep both British and Dutch interests happy. So which of the two should you consider buying? For more on that, click here/article/943
– And also in the oil sector: Morgan Stanley yesterday reckoned that the industry was due for another “wave of large-scale M&A”. BG Group complied – as it rose some 4% on vague rumours that Italian oil giant Eni was eyeing up the firm. It closed at 472p – as the blue chip’s top gainer.
– The FTSE 100 gained just under 1%, or 46 points, to trade at 5,090. That’s the blue chip index’s biggest rise in a day for six weeks. The FTSE 250 gained 0.6%, to close at 7,310, while the All Share index traded 0.9% in the black.
– On the other side of the scale, Computacenter slumped 21% as it became the latest retailer to suffer under straining consumer spending. According to the computer hardware group, sales were likely to fall 10% for the first quarter of the year. The outfit had already warned that full-year profits would be “substantially” lower than 2004’s £65m.
– At least Coldplay and Harry Potter provided some cheer for HMV, who said that sales for both had helped to hike group sales by some 4%, to £1.9bn in the year to end-April. Pre-tax profit rose 10%, to £130m. HMV shares traded 3% up on Tuesday, at 236p.
– And the world’s largest bank Citigroup has been on the receiving end of the second-largest fine ever levied by the Financial Services Authority. Citigroup will now have to cough up £14m following its controversial multi-billion-euro bond trade last year. The bank had sold 13bn euros of cash bonds in one minute – and then bought back nearly 4bn euros of paper half an hour later on a day that the American market was closed for trading due to a public holiday.
– This will hardly be a problem for Citigroup, however: the £14m fine is but a fleeting irritation when compared to Citigroup’s 2004 net income of £9.4bn. ------------------ Sold a dummy– Bank of England governor Mervyn King recently brought attention to the upside risk of inflation in the UK. This is despite the spate of soft economic data – which recently led to two Monetary Policy Committee members calling for a 25 basis point rate cut. Why are King’s comments important? It’s not so much what he said, but that he said it, says F&C economist Steven Andrew. That he is prepared to “articulate such risks” is indeed more than telling...For more, see/article/940
Fin De Bubble, 2005– A recent article in the Daily Mail tells the story of a Mr Mark McDonald of Norfolk. He suffered, what the paper referred to as “Death by credit”, says Bill Bonner in The Daily Reckoning: his debt rose to some £65,000 – and when the burden became too great, he decided not to remain “in the ranks of those living with enormous, unsustainable debt”. His story, and many more that tell of the growing debt crisis in the US and the UK, have a certain ‘fin de bubble’ tone to them...More: /article/941
The Euro vs Oil– While the price of oil remains around the $60 a barrel mark, Mr Market is becoming increasingly convinced that ailing Europe will be “the first shoe to drop”, says Morgan Stanley economist Eric Chaney on The Global Economic Forum. But they’re wrong to think that the region will flounder. Even with a weaker euro – which many reckon will make the pain even worse – the positives that come from the currency’s depreciation far outstrips the negatives from the crude prise rise. To see why Chaney has hope for Europe, click here/article/942
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Heather D'Alton
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