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Footsie reverses after yesterday’s big rise
There was a glimmer of hope for the bulls yesterday as the FTSE 100 index powered to almost a triple digit gain, but the bears are back in control today. Mid-morning the index is down 67 points after another raft of downbeat news on the UK housing market, which is seeing the biggest falls for sixteen years.
Barratt Developments has been hitting new lows regularly but there was an early mark up on press reports that it was close to securing a rescue refinancing with lenders that would relax its banking covenants and help it ride out the property downturn. Having seen a 12% rise earlier on, it has given some of these back to stand up 7.3%, and we remain cautious as before.BP continues to suffer from its problems in Russia, with the shares down again today despite the rise in the price of crude after authorities in Moscow refused half of the work permits requested by TNK-BP. British Airways and Carnival are again down with oil prices still at record highs.
In the retailing sector, there were a couple of bright sparks with HMV saying it was ahead of schedule in its recovery programme after a strong set of full-year results. Profit before tax and exceptional items from continuing operations grew 25.2% to £56.6m in the year to 26 April 2008 from £45.2m the year before, and total sales growth from continuing operations was 11.3%, with like-for-like sales up 7.3%. These are impressive figures, but much has already been factored into a resilient share price, which is down 7% so far, which looks a bit harsh. N Brown also increased revenues by 12.3% in the 17 weeks to 28th June 2008, a slight rise from the rate up until April. Sales were particularly strong during the sunny spell in May, which coincided with the mailing of summer catalogues. After a big mark up here, the shares also drifted back but look just about the best of a bad bunch in clothing retailing.
Head of Research at Blue Index, specialists in trading Contracts For Difference
01/07/2008
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