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*** Stale fags and a lipstick-stained collar...
*** Nanny's heavy hand smacks investors...high hopes forCanada's MS sufferers...
*** Pubs up...oil up...mining up...sterling down - and more! More! MORE!
- The big investment themes of 2004 clung to the City onTuesday like so much cigarette-smoke after the officeChristmas party.
- Even as traders and investors cleared out of themarkets ready for the festive shutdown, a narrow tradingrange...oil and mining...sterling vs the dollar...andthe heavy hand of regulation all came together to sendthe FTSE100 crawling just two points higher to 4,733 onTuesday.
- But Mr Market's collar was missing one lipstick stain.Where did the tittle-tattle over mergers & acquisitionsgo? Nothing on the newswires this morning about thetakeover of the London Stock Exchange - down 0.8% at575p - nor of Manchester United, up 0.5% at 279p.
- In the drugs sector, GW Pharmaceuticals rocketed morethan 8% higher to 113.5p after the Canadian authoritiesdecided to approve the biotech firm's cannabis drug,Sativex. It could be prescribed to 50,000 multiplesclerosis sufferers across the Atlantic.
- British regulators, however, have already said theywant more evidence about Sativex's benefits. That newssent shares in GW Pharma down by one-third in onesession earlier this month!
- British regulators yesterday took a chunk out ofRyanair's share price, chewing it almost 1% lower afterthe budget airline - along with Stansted Airport - lostan appeal against having to provide free wheelchairs fordisabled passengers.
- The Court of Appeal ruled Ryanair had a jointresponsibility with BAA, which operates Stansted, toassist disabled travellers between check-in and thedeparture gate. The airline had tried to wriggle out ofits obligation by saying BAA was responsible. Ryanairfell to €5.20. BAA, however, gained more than 1% to578p.
- UK regulators also whacked insurance firm Axa Sun Lifewith a £500,000 fine yesterday - the highest such fineever imposed by City watchdog, the Financial ServicesAuthority. The FSA said Axa's promotion of its withprofits endowment policy - 'Cash Builder Plus' - focusedattention on benefits rather than risk.
- The adverts star June Whitfield and Carole Smillie,but whether that's a benefit or a risk, we just can'ttell this morning.
- 'We expect firms to comply with the spirit, not justthe letter, of the rules,' said FSA enforcement directorAndrew Procter. The regulator found that investors whocash in their Cash-Builder Plus early can receivesignificantly less than the value of the premiums paidin.
- No one in Paris - where Sun Life's parent Axa istraded on the CAC40 - seemed to care about that halfmillion quid fine, however. Axa dipped barely 0.1% to€17.75 yesterday. But here in London, the very idea thatan insurance company might have to be honest in its adsspooked investors. They sent Legal & General to thebottom of the blue-chip pile with a drop of 2.25% to109p. The sector closed 0.6% down for the day.
- Nanny was kinder to investors holding pub stocks. TheTrade and Industry Select Committee concluded a 7-monthinvestigation into a possible 'stranglehold' on beer bysaying no one holds a dominant position in the UKmarket. Enterprise Inns rose 0.9% on the news. PunchTaverns leapt almost 3% to £6.70.
- 'Everyone expected the pubcos to be cleared,' said ananalyst at Morgan Stanley, 'but the report is even morebenign than we expected. This is about as good a reportas the pubcos could have expected.' Cheers!
- At the top of the FTSE100 on Tuesday was oil explorerCairn Energy. It recovered 27p of its 23% plunge fromlast Friday, after a note to the FSA said that Aegon UK- a consortium of large institutional investors - hasraised its stake to more than 3% of shares in issue,despite last week's disappointing drill results fromRajasthan. Cairn's stock closed up at £10.77.
- Mining stocks rose too, up 2.8% on average to becomethe best place to put your money on Tuesday overall.
- At the two extremes of the FTSE All-Share, it was atale of two publishers. Consumer magazine minnowHighbury House slumped 17.7% to 6.4p on news of 'soft'trading since its weak update in September...while J.K.Rowling's Bloomsbury ended the day third from the top -with a gain of more than 8% to 296p - after it wasannounced she's just delivered her sixth Harry Pottermanuscript, Harry Potter and the Half-Blood Prince. Itwill launch into the English-speaking world in July.
- Homebuilder Persimmon topped the mid-cap 250, adding20.5p to £6.99 as the group said it expects 2004 toclose as another record year for profits. Quite what theoutlook might be for 2005, the City's property bullsjust don't seem to care.
- But the Royal Institution of Chartered Surveyors saidon Tuesday that nearly 1-in-2 of their members arereporting falling house prices right now...the worstlevel since December 1992. Back then, of course,Britain's housing market was in mid-crash. And now?
- 'Not only do price falls appear to be becoming morewidespread, but the scale of price falls appears to beincreasing,' notes Ed Stansfield, property marketeconomist at Capital Economics. 'The survey suggeststhat 2005 will be a difficult year for the housingmarket.'
- Currency traders didn't like this poor housing data.They sold the pound in your pocket down two centsagainst the dollar to $1.925. Sterling also dropped 1.5centimes against the euro...to fall beneath €1.44 forthe first time this month.
- Let's see now - Gordon Brown ran up £313m in publicdebt every day in November...consumers are struggling toget festive in time for Christmas...and manufacturing isteetering on the verge of recession.
- If you're giving cash gifts to friends and family thisChristmas, perhaps you should advise them to spend theirpounds early!
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Adrian Ash
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