*** Mass bear confusion
*** Sterling slips to 8-month lows
*** How to learn from Mr Price...where’s all the oil money going?...can Tesco maintain its top spot?...and more.. -------------------
- Those blue chip index bears must surely be stumped: we’ve come to the end of the half year and the FTSE 100 is now 6.2% higher than at the start of 2005. Yesterday the index again touched 3-year highs, before easing slightly to close at 5,113, a 4-point gain for the day. The mid-cap 250 index gained 0.5% to close at 7,368.
- So where’s all the FTSE’s strength coming from? “You’ve got some momentum in earnings estimates but when you drill into it, it’s almost all coming from the resources stocks, there’s a much less bright picture for earnings expectations in the rest of the market,” Seven Investment’s Alex Scott said yesterday.
- And yesterday the index was also boosted by O2, which closed as the top FTSE gainer, as rumours continued that it was receiving attention from either Deutsche Telekom or a private-equity group. Although O2 claimed to be oblivious of the potential bid, investors pushed the share price up some 3%.
- Meantime the Office of National Statistics said the economy grew at its weakest rate for over two years in the first quarter of the year. Economic growth was revised down to just 0.4% from the previous estimate of 0.5% - while the annual rate was revised down from 2.7% to 2.1%, its weakest pace since the final quarter of 2002. But there’s more...
- Consumer spending eased to its weakest rate since 2001, while house prices fell 0.2% last month, according to Nationwide building society. This means that the annual rate of increase has fallen to a nine- year low of just over 4% - well below the 20% recorded this time last year.
- It’s no surprise then that the pound slipped to an eight month low versus the dollar, to trade below $1.80. It also fell 1% against the euro, to trade at 1.48 euro to the pound by London’s close. “This suggests that the UK downturn has been much sharper than previously expected and will increase pressure on the Bank of England to cut interest rates,” ING Financial Markets’ James Knightley said yesterday.
- And across the pond, Bank of America is set to become one of the world’s biggest credit card issuers after agreeing to buy MNBA Corp for some $35bn. The deal will not only double Bank of America’s card base to 40m, and give it $143bn in card balances, it should also lead to total savings of $850m after tax by 2007. Yet with the US currently facing an about turn in the credit cycle as an increasing number of households are stretched beyond their means, is now such a good time to be investing in a credit card business? For more on that story, click here/article/954
------------------ The Three-Step System of T. Rowe Price- The founder of the T. Rowe Price investment management firm, Thomas Rowe Price, Jr is probably best known for developing the growth stock style of investing. He certainly knew how to make “really big money on the stock market” using his simple three-step system, says Irwin Greenstein in Penny Sleuth. So what were his tips? For one, make sure you’re intimate with all the companies you invest in. And secondly, remember that “change is the only certainty in the world”... To learn more from Price, click here/article/955
The 1970s Redux- It was in the early 1970s that the oil price first started to soar: surging from some $2 a barrel to nearly $12 a barrel. And it wasn’t only the sheiks who made masses of money. Oil-rich Mexicans and Venezuelans, as well as oil-producing Texans grew wealthy “virtually overnight”, says Chris Mayer in Whisky & Gunpowder. But just what happened to all that money they made? And will the same thing happen this time round? See/article/957
Tesco is way ahead of the pack – but for how long- Retailers across the board may be suffering at the moment, yet somehow supermarket giant Tesco has managed to outmanoeuvre the sliding sales: it recently reported an 11% hike in like-for-like sales in the last 12 weeks to mid-May. And it seems the opposition is “unable to keep up”, we note in the latest MoneyWeek, with the likes of Sainsbury and Wm Morrison the more obvious market losers. But surely Tesco is due a fall in the not too distant future...not least because of the way it treats its suppliers... For more, click here/article/956
Published in Stock markets
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by
Heather D'Alton
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