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London midday: Footsie undermined
Wed, 08 Feb, 2012
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London midday: Footsie undermined
Fri, 19 Feb 2010, 12:49:00
The blue-chip index ended the morning marginally lower, but that performance counts as a moral victory given the bashing mining stocks have taken following the decision by the US Federal Reserve to lift its key lending rate to banks by a quarter of a point to 0.75%. Though the US central bank was a couple of months or so behind the Australian central bank in upping its base interest rate, the Fed's move is more likely to be taken as a signal that global governments are beginning the process of tightening up economic policies. Any move by governments to turn off the fiscal stimulus tap is likely to put a crimp on growth in demand for metals, which has resulted in a sell-off of mining stocks. <b>Fresnillo</b>, <b>Kazakhmys</b>, <b>ENRC</b> and <b>Randgold Resources</b> are among the hardest hit in the mining sector. <b>Anglo American</b> is also sharply lower after a trading update. Full-year earnings tumbled in 2009 as the recession impacted demand for commodities, causing a slump in prices, but the numbers still came in a the top end of forecasts. The world's largest platinum producer reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $6.93bn, down 41.5% on 2008, as revenue fell 25% to $24.64bn. There was good news on the dividend, which Anglo said it hopes to resume "at the earliest possible time", likely in the current financial year. In contrast, defensive stocks are back in favour with investors rushing to snap up beer and ciggies related stocks <b>BATs</b>, <b>IMPS</b>, <b>JD Wetherspoon</b>, <b>Mitchells & Butlers</b>, <b>Punch Taverns</b> and <b>Greene King</b>. Hotel group <b>Millennium & Copthorne</b> is also on the up, even though its profits fell again in the final quarter of a tough 2009. Investors drew comfort from the fact that the last three months were better than expected, according to chairman Kwek Leng Beng. Q4 operating profits fell by 19% to £34m on revenues down 6.6% at £178m. Revenue per room or RevPAR, the standard industry measure of profitability, fell by 6.1%. Sector peer <b>InterContinental Hotels</b> rises in sympathy. Profits surged at cleaner and pest control specialist <b>Rentokil</b> last year as its cost cutting programme bore fruit, with a further £75m of cuts earmarked for the current year. Pre-tax profits jumped to £65m, from £22.8m, on sales of £2.53bn, up from £2.41bn. Operating profits rose from £82m to £119m, while adjusted profits rose by 54% to £166.5m. <b>GlaxoSmithKline</b> has jumped to the defence of its asthma drug Advair after the US Food and Drug Administration proposed changes to the labelling for asthma medications containing long-acting beta-agonists (LABAs), which includes GSK's best-seller. Shares in <b>Cluff Gold</b> rallied after the West African focused gold mining company said it has received a bid approach from a third party. Fixed income fund manager <b>Blue Bay</b> is taking advantage of a bumper six months to raise up to £45m though a placing of 13m shares. In the half-year to December, assets under management jumped 105% to $34.3bn, profit before tax soared 202% to £26m and the dividend rises by 341% to 7.5p. Industrial engineer <b>Charter</b> saw profit slump by 53% in 2009 as the company battled "the challenges of recession and dislocation in the financial markets". Profit before tax for the year ended 31 December fell to £92.7m from £197.7m in 2008 on revenue down 12% to £1.66bn. Adjusted pre-tax profit was down 41% at £126m. <b>BlackRock World Mining Trust</b> had a bumper 2009, easily outperforming its benchmark index, and maintains its positive outlook on the sector. Net asset value (NAV) grew 103% in the 12 months to 31 December, with income reinvested, while the share price jumped 122% against an 83.2% rise in the group's benchmark index. <b>FTSE 100 - Risers</b> Shire Plc (SHP) 1,340.00p +2.29% British American Tobacco (BATS) 2,213.00p +1.98% Carnival (CCL) 2,371.00p +1.67% Unilever (ULVR) 1,923.00p +1.42% Imperial Tobacco Group (IMT) 2,062.00p +1.33% Smith & Nephew (SN.) 668.00p +1.29% Compass Group (CPG) 475.60p +1.26% AstraZeneca (AZN) 2,832.00p +1.23% Thomas Cook Group (TCG) 238.50p +1.15% Pearson (PSON) 885.00p +1.09% <b>FTSE 100 - Fallers</b> Fresnillo (FRES) 757.50p -3.56% Anglo American (AAL) 2,419.00p -3.32% Kazakhmys (KAZ) 1,314.00p -2.59% Eurasian Natural Resources (ENRC) 1,012.00p -2.41% Randgold Resources (RRS) 4,650.00p -2.41% Xstrata (XTA) 1,062.00p -2.21% Lonmin (LMI) 1,852.00p -2.17% Antofagasta (ANTO) 875.50p -2.07% Wolseley (WOS) 1,438.00p -1.84% Rio Tinto (RIO) 3,384.50p -1.64%
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