*** ITV’s stroke of luck
*** Oil trades down at $55 a barrel
*** How things have changed for the retailers...why commercial telly has a thing coming...Boris Becker’s dislike of caviar...and mor -------------------
– ITV investors certainly hadn’t counted on the television regulator’s generosity yesterday. Yet Ofcom benignly agreed to slash ITV’s 2005 licence fee from £215m to just £80m. The result? ITV shares shot up just short of 6%, to close as the top blue chip gainer.
– Why the big-heartedness on the part of Ofcom? Perhaps the regulator is rightly feeling rather sorry for ITV. As more viewers swap their analogue systems for multichannel television, ITV, amongst others, will have to face down an increasing number of channels vying for viewership. As a result, advertising revenue could be teetering on the brink of one rather nasty slump.
– ITV’s 7p climb helped cheer the FTSE 100 yesterday: the index closed 18 points up at 5,109 – just shy of last week’s three-year highs at 5,114. The FTSE 250 gained 0.3%, to trade at 7,329; and the All Share index also closed 0.3% in the black.
– The telecommunications sector traded 3% up yesterday, as both Cable & Wireless and O2 were seen as potential takeover targets. A decision by France Telecom to remove its 500m euro acquisition ceiling convinced investors that the group may be checking out C&W, pushing its shares up 4%.
– And according to market gossip, O2 remains a firm acquisition favourite for Deutsche Telekom. O2 shares closed 3% in the black.
– In the oil sector, BG Group, which closed atop the FTSE 100 leaderboard on Tuesday, fell some 2%, as traders reckoned that Italian oil group ENI looked unlikely to make a play for the group. BP also fell over 1% on easing oil prices. Brent crude traded 2% down at $55.48 a barrel by London’s close following a surprise jump in US crude inventories.
– And how things have changed for the retail sector since 2004. Just “a year ago retailers were reaping the benefits of Euro 2004, which was credited with boosting sales of everything from football clothing to TVs and beer”, the CBI’s John Longworth said yesterday. This month however retailers have recorded their biggest year-on-year fall in 22 years, the CBI said.
– While the fall could partly be attributed to there being no competition this year, something else is up, the CBI notes. “With the slowdown in the housing market and a rise in energy bills it is not surprising retailers are suffering...”, Longworth added. Next fell 0.6%, while Dixons closed 0.3% down.
------------------ Churning Out the Piffle– Proctor & Gamble’s recent decision to cut its commitment to conventional television is a “big deal”, says MoneyWeek’s Tim Price. Just last year, P&G was America’s largest television advertiser, spending some $2.5bn on the medium. So why are more companies moving away from traditional telly advertising? It’s called the Internet...or Sony Playstations...or even TiVo. The result? Commercial telly is really up against it in a new media world.
Extraordinary Asset Price Inflation– As foreign banks such as banks in Asia continue to buy US bonds – pushing down the yield in the process – mortgage credit is set to get even cheaper. This would give “new impetus to the bubble in US real estate”, which would then lead to more consumer borrowing, says Martin Spring in his newsletter On Target. The ultimate result? America would be hit by an “extraordinary asset price inflation” way beyond the control of the US Fed.
Where emerging markets guru Mark Mobius is investing now– When emerging markets authority Mark Mobius reckons that their stocks will continue to outpace major western markets for the fifth straight year in 2005...well, then he’s probably onto something, we note in the latest issue of MoneyWeek. Strong GDPs and falling inflation are boosting incomes and domestic savings. His favourites? Take a closer look at Turkey and Korea.
Published in Stock markets
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Heather D'Alton
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