Weekly Markey Summary

By Raymond Chatlani

On Monday, European and US markets closed higher on US home sales that were sharply higher in June compared to May's slide to a record low since 1963. This reaction may have been overdone as new sales only comprise 7% of all house sales compared to an annual average of 15% of all house sales in the past. Also a better than expected profit outlook from transportation stock Fedex Corp also helped to boost market sentiment.

On Tuesday, Asia started mostly down on thin volume due to rumours that Chinese banks are facing rising default risks on loans to real estate developers, but recovered towards the end of the session. While European markets were up, US indices fell slightly as the Consumer Confidence Index fell as Americans worry about job prospects and skimpy wage growth. Spot gold fell to a three month low of $1,162 an ounce as deflation worries continue.

On Wednesday, Asian equities were positive at the end of the session after being neutral earlier due to mixed earnong reports from the USA and the drop in consumer confidence. European and US markets fell as orders for durable goods dropped 1 percent in June and the Federal Reserve beige book report painted a picture of a less than robust recovery.

On Thursday, Asian stocks were mostly higher as the US dollar dipped due to fears that the US economy is slowing. European and US markets fell due to these fears which may be confirmed if US second quarter GDP figures confirm this slowdown.

ON Friday, Asian markets fell due to reports out of Japan that the jobless rate unexpectedly rose, deflation deepened and industrial production fell the most in a year amid worries that US GDP growth would be lower than expected. Both European and US markets fell for a second straight day as second quarter US GDP growth was reported at 2.4% which was down from 3.7% in the first quarter of 2010.

Equities and especially commodities had a second consecutive positive week but have given up their gains over the past two days. Markets are going up and falling without any clear direction although July was mainly a positive month for stocks and commodities. Although reported earnings by companies have been good, this has largely been achieved by strict cost cutting without an increase in revenues. Without increasing sales, these earnings cannot be sustained in coming quarters. The present risk reward ratio is negative and a prudent stance should be taken for now. Also, we can expect thin volumes over the next 6 weeks as most traders will be away on their holidays.

Hopefully, we shall see opportunities materalise in September and go back in the market into the sectors that we feel offer value. After its recent pullback, gold look interesting. We expect the price of gold to fall back further over the next few weeks and are looking to launch a gold structured product with one of the institutions that we know.

Hollingsworth Daily Post

• A consortium headed by Hong Kong billionaire Li Ka-Shing has agreed a deal to buy the UK networks of French power group EDF for £5.8bn ($9.1bn).The group includes his holding company Cheung Kong Infrastructure (CKI), Hongkong Electric, which is 40%-owned by CKI, and the Li Ka-Shing Foundation.The bid has been mooted for a number of months.


• British Airways has revealed a steep loss for the April-to-June quarter after being hit by cabin crew strikes and disruption caused by the volcanic ash cloud from Iceland.BA reported a pre-tax loss of £164m, larger than the £148m loss it made in the same period last year.BA said the impact of all the disruptions was £250m in the quarter, in line with previous estimates.


• Entertainment giant Walt Disney has announced the sale of its Miramax film division for about $660m to a group of private equity investors.The investors, Filmyard, includes construction magnate Ron Tutor and investment firm Colony Capital.Disney has been negotiating with potential buyers for months to sell the division, which has made films such as Pulp Fiction and Shakespeare in Love.


• Assets bought by the US to bail out AIG and Bear Stearns are showing a paper profit for the first time, the Federal Reserve Bank of New York has said.This increases the likelihood that US taxpayers will get repaid the tens of billions of dollars used to stop the financial giants going bust.Only when the assets held by the bank are sold will any profit be realised.


• Banking giant Citigroup has agreed to pay $75m (£48m) to settle civil charges that it misled investors over potential losses from high-risk mortgages.It agreed the settlement with US financial watchdog the Securities and Exchange Commission (SEC).The SEC said Citigroup had repeatedly made misleading statements about the extent of its exposure to subprime loans as the housing market slumped.


• China has allowed the publication of an International Monetary Fund (IMF) staff report for the first time since 2006.China had previously blocked the annual report's release because it objected to the IMF's view that its currency, the yuan, needed to be a lot stronger.The report contained some criticism, saying "several directors agreed that the exchange rate is undervalued", but added that others disagreed.


• The Financial Services Authority (FSA) has announced plans to update its guidelines on bankers' pay, following the agreement of new European rules earlier this month.The rules include tighter restrictions on bonus payments and pension deals, and will now apply to more than 2,500 City firms.Previously, only the biggest banks were subject to FSA pay rules.The changes are due to come into force in October after consultation.

BBC Business News 30th July 2010

Hollingsworth Daily Post

• Second-quarter profits at oil giant Royal Dutch Shell have almost doubled after the firm completed a year-long corporate restructuring programme.The firm reported profits of $4.5bn (£2.9bn) on a current cost of supplies basis, up from $2.3bn a year ago.But it marked a drop from the $4.9bn it made in the first three months of the year as it continued to see "mixed signals" in the world economy.


• The Greek government has used a rare emergency order to force lorry drivers back to work after a three-day strike.The drivers have until later on Thursday to return to the roads or face arrest and the loss of their licenses.Most petrol stations in Athens are out of fuel and shops and factories are running low on supplies.


• Satellite TV group BSkyB has reported a sharp jump in annual profits, driven by new subscriptions, particularly for high definition (HD) services.Profit for the year to the end of June came in at £878m, up more than threefold on the £259m the broadcaster made in the previous 12 months.Revenue also rose to £5.9bn, up more than 10% on the £5.4bn recorded a year earlier.The company said it had doubled the number of HD customers over the year.


• Aircraft giant Boeing has reported a sharp drop in profits between April and June amid falling plane deliveries.Net profit for the quarter was $787m (£504m), higher than analysts had expected but down 21% on the $998m the firm made in the same period last year.
  Group revenue also fell, to $15.6bn from $17.2bn a year earlier.


• Russia has announced plans to sell minority stakes in 11 state-run firms which it says could raise about one trillion roubles ($30bn; £19.2bn).The part-privatisation scheme, its biggest since the 1990s, is set to begin next year and will include Sberbank and its oil firm Rosneft.But state railways operator RZhD will not be included, said Alexei Uvarov of the economic development ministry.


• Consumer products giant Procter & Gamble has signed up as a global Olympics sponsor.
  The deal with the International Olympics Committee (IOC) makes Procter & Gamble the 11th global sponsor of the London 2012 Olympics.It joins other 2012 sponsor companies, such as Coca-Cola and McDonalds.

BBC Business News 29th July 2010

Hollingsworth Daily Post

• French car giant Peugeot Citroen has reported a return to profit in the first half of the year, driven by strong demand in China and new models.Net profit came in at 680m euros ($885m; £567m) for the six months to the end of June, compared with a loss of 962m euros a year earlier.
  Revenues increased by 21% to 28.39bn euros.
• Steel giant Arcelor Mittal has reported a big jump in profits between April and June, with sales up as the global economy continues to recover.Net profit was $1.7bn (£1.1bn), compared with a loss of $792m in the same period a year earlier and a profit of $679m in the previous quarter.
  Revenue for the period rose by 43%, from $15.2bn to $21.7bn.
• South Korean electronics firm LG Electronics has reported a slump in profits of a third as it struggles to keep pace in the smartphone market.Net profit came in at 856.4bn won ($723m; £463m) for the three months to the end of June, down 33% on the 1.28bn won it made a year earlier.
• Defence group BAE Systems and engine supplier Rolls-Royce have signed a £700m deal to supply India's Hindustan Aeronautics with 57 Hawk training jets.Over £500m will go to BAE and £200m to Rolls-Royce in the deal that should create about 200 jobs in the UK.The jets will be used to train pilots in the Indian air force.
• David Cameron has begun a two-day visit to India with the aim of strengthening relations and creating jobs in the UK.The prime minister is leading what Downing Street describes as the largest UK trade delegation in living memory.Beginning his tour in Bangalore, Mr Cameron will say he wants to make the UK the "partner of choice" for India.
• BP will emerge from the Gulf of Mexico oil spill crisis a smaller and wiser company, according to the man who is due to take over the reins.Bob Dudley, currently in charge of BP's clean-up operation, will replace Tony Hayward as chief executive in October.Mr Dudley described the oil spill as a terrible tragedy from which the company and the industry would learn a lot.

BBC Business News 28th July 2010

Hollingsworth Daily Post

• BP says it has set aside $32.2bn (£20.8bn) to cover the costs linked to the oil spill in the Gulf of Mexico.The company said the charge gave it a loss of $17bn for the three months between April and June - a UK record.


• Deutsche Bank has reported a second-quarter net profit of 1.2bn euros ($1.56bn; £1bn), up from the 1.1bn-euro profit it made a year ago.Germany's biggest lender was helped by lower provisions for bad loans.


• The iPhone manufacturer Foxconn has temporarily shut a factory in India after some 250 workers fell sick.Spraying of pesticide could be the reason, and local authorities were investigating the incident, the Taiwanese company said in a statement.


• New home sales in the US rose sharply in June compared with the previous month, but the pace of sales was the second slowest on record, official figures show.The Commerce Department said sales rose to an annual rate of 330,000 in June from a revised 267,000 in May, which had been the worst month on record.


• The Unite union says it is planning legal action against British Airways over the removal of travel concessions from cabin crew who went on strike.Unite, which represents 11,000 cabin crew at the airline, said the management's action was a breach of European Human rights legislation.


• Rosneft, Russia's state oil giant, has reported a jump in profit thanks to a rise in output, higher oil prices and zero export duties for a key field.Its net profit rose to $2.6bn (£1.7bn) in the first half of 2010 from $1.6bn a year earlier.


• Japanese exports rose in June but at a slower pace than in recent months, raising questions about the strength of Japan's economic recovery.Exports climbed 27.7% to 5.87 trillion yen ($67bn; £43.4bn), the Finance Ministry said.

BBC Bubsiness News 27th July 2010

Hollingsworth Daily Post

• BP's chief executive Tony Hayward is expected to stand down following widespread criticism of his handling of the Gulf of Mexico oil spill.Mr Hayward has been widely criticised over the Gulf of Mexico oil spill.


• Japanese exports rose in June but at a slower pace than in recent months, raising questions about the strength of Japan's economic recovery.Exports climbed 27.7% to 5.87 trillion yen ($67bn; £43.4bn), the Finance Ministry said.


• Shares in India's Maruti Suzuki, the country's largest carmaker, have sunk more than 10% after it reported a 20% fall in quarterly profits.Shares fell to 1,218 rupees ($26; £17), from Friday's close of 1,358 rupees.


• Seven of the 91 European banks that underwent stress tests have failed the healthchecks, the Committee of European Banking Supervisors (CEBS) has said.They include five Spanish banks - Diada, Espiga, Banca Civica, Unnim and Cajasur. The other two were Germany's Hypo Real Estate and Greece's ATEbank.The tests assessed banks' ability to survive future economic shocks.


• Gordon Brown has said he wished his government had spotted the UK's financial crisis earlier, in his first interview since leaving Downing Street.The former prime minister told the BBC's Zeinab Badawi he "wasn't bruised" by losing the election, and that it was the "end of an era" for him.
  And he said it would have made a difference if the banking crisis had been acted upon earlier.
  Mr Brown gave his interview while in Kampala, Uganda's capital.

BBC Business News 26th July 2010

Weekly Market Summary

By Raymond Chatlani

Markets kept falling at the beginning of this week as investors anxiously waited for the results of stress tests on European banks due on Friday. A sharp drop in US consumer sentiment and Moody's cut of Ireland's credit rating added to the gloom in stock markets. Also fresh concerns over Hungary's ability to pay its debts and a fall of 1.3 percent in the Dow Jones home construction index contributed to markets' falls.

On Tuesday, Asian stocks rose for the first time in 4 days on optimism that China may relax policy tightening measures which could boost domestic demand in the last quarter of the year. European and US markets went down due to disappointing results from Goldman Sachs and news that housing starts had fallen in June 2010. Later the US market became positive as Apple reported earnings that exceeded expectations.

On Wednesday, Asian indices rallied and tech stocks were a major beneficiary due to Apple's stellar results. Also, domestic asian stocks and commodities were boosted as investors felt that China would relax tightening measures soon. Later on Ben Bernarke, chairman of the Federal Reserve Bank stated that although the US economy is weakening, no new steps were planned to bolster the economy without more signs of a slowdown. Consequently US indices fell and investors shifted money into the safety of US treasury bonds while asian markets slid on Thursday with the exception of China and Singapore.

On Thursday, European and US stocks surged on strong company earnings and some encouraging signs of growth in Europe. Statistics showing that sales of previously occupied homes fell in June and are expected to keep sinking did not derail the market. On Friday, Asian shares were positive and european and US markets are drifting as they wait for the EU banks' stress results.

These past four weeks, markets have been going up and down without any clear direction. Four weeks ago they were negative, three weeks ago positive, last week negative and this week positive. There are still no clear indications as to whether last year's bull market rally will continue or if we will soon face a double dip recession (Think 2008). Neither the bulls nor the bears can gain the upper hand.

At the time of writing, this weekly market summary is complete except for the most important news of the week. Today, the EU will release results of the stress tests that it has done on 91 of the Major banks within the European Union. These results will have a big impact on the market. If the results are perceived as positive, markets will probably rally. If they are analysed as being problematic, then fears of a double dip recession will resurface and possibly fuel fears of a depression. Investor perception of these results will probably drive the markets next week.

Hollingsworth Daily Post

• The health of Europe's banks will come under scrutiny again later, when the results of EU-wide bank stress tests are published.Results for a total of 91 banks across Europe will be made public, in a move designed to reassure investors over the health of Europe's financial sectors.
• The UK economy grew by a faster-than-expected 1.1% in the second quarter of the year, according to official data.The figure - a preliminary estimate from the Office for National Statistics (ONS) - was almost double the 0.6% growth rate expected by economists.It was the fastest quarterly expansion since 2006, and marked a sharp pick-up in pace from the 0.3% growth of the first three months of the year.
• Dell has agreed to pay $100m to settle charges that the computer maker used accounting fraud to make it appear it was meeting analysts' profit forecasts.Under the settlement with the Securities and Exchange Commission (SEC), Dell's chairman Michael Dell will pay a separate $4m civil penalty.The SEC alleged that Dell did not disclose large payments received from Intel to not use chips made by a rival.
• Microsoft has reported profits of $4.52bn (£2.96bn) for the three months between April and June - up 48% on the same period last year.The software giant said strong sales of its Windows 7 operating system helped to boost profits.The company said 175 million Windows 7 licences had now been sold since its launch last year.
• Vodafone says quarterly service revenues have risen for the first time since the global recession hit.The world's largest mobile operator by revenue saw organic service revenue rise 1.1% to £10.6bn in the April to June quarter, helped by improvements in Germany, Britain and Turkey.
• Kosovo police have arrested the territory's central bank governor Hashim Rexhepi in an anti-corruption investigation.The EU's rule of law mission (Eulex) said the probe concerned suspected bribes, tax evasion, influence-peddling and money laundering.
• The number of fraudulent insurance claims made in the UK rose to a record high in 2009, according to insurers.There were 122,000 detected fraudulent claims, valued at £840m, the Association of British Insurers (ABI) said.This was a 14% rise on the previous year, the figures show.

BBC Business News 23rd July2010

Hollingsworth Daily Post

• Ben Bernanke: "Financial conditions have become less supportive of growth in recent months"US Federal Reserve chairman Ben Bernanke has warned that the country's economic outlook remains "unusually uncertain".He told the Senate Banking Committee record low interest rates would still be needed to support economic recovery. The Fed was also prepared to step in with "further policy actions" to boost the economy if needed, he added.Investors reacted negatively to the comments, with the Dow Jones Industrial Average closing 1% lower.


• Swiss bank Credit Suisse has reported higher-than-expected profits of 1.6 billion Swiss francs ($1.5bn; £1bn) for the three months to the end of June.The net profit figure was slightly higher than a year earlier.The profit was achieved despite a fall in revenue from investment banking of almost a third, to 4.1bn francs.


• Auction site operator eBay has reported a 26% rise in profits for the last three months thanks largely to increased use of its PayPal service.Profits for the quarter totalled $412m (£272m), the company said, up from $327m a year ago.Sales were up 20% internationally, but rose only 2% in the US, demonstrating its reliance on international growth.


• The International Monetary Fund (IMF) has agreed to cancel Haiti's $268m (£176m) debt and lend the impoverished Caribbean nation a further $60m.The IMF said both decisions formed part of a strategy to support Haiti's reconstruction plans in the wake of the devastating earthquake six months ago.The disaster left some 230,000 people dead and more than a million homeless.


• High-value deals are continuing to drive up the price of arts and antiques, according to a survey.The art market was "buoyant" despite tough economic times, said the Royal Institution of Chartered Surveyors.The proportion of surveyors reporting price rises in the £50,000-plus bracket doubled in the second quarter of the year compared with the first three months of 2010.

BBC Business 22nd July 2010

Hollingsworth Daily Post

• Profit figures from Apple soared past Wall Street forecasts, boosted by sales of Mac computers.
  Apple's "phenomenal" quarterly figures will relieve recent concerns.The company reported net income for the three months to 26 June of $3.25bn (£2.1bn), or $3.51 a share, up from $1.83bn for the quarter last year.Analysts were expecting earnings of about $3.11 a share.


• BP is to sell assets in Texas, Canada and Egypt, to part-fund the clean-up cost of the Gulf of Mexico oil spill.The oil giant said it had reached a $7bn (£4.6bn) deal with US-based oil production firm Apache Corp.


• The EU is to challenge a World Trade Organization (WTO) ruling that it paid illegal subsidies to aircraft giant Airbus.The US lodged a complaint with the WTO six years ago, but the decision was only made public last month.


• SSL International, the maker of Durex condoms, is set to be sold to Reckitt Benckiser - the firm behind Cillit Bang cleaner and Finish dishwasher tablets.The two companies have agreed a deal that values SSL, which also makes Scholl footcare products, at £2.54bn.


• Mining giant BHP Billiton saw output continue to rise in the three months to June, but fears a slowdown in China.Iron ore production jumped 16% from the same period last year, bringing total output for the last 12 months to a record 125m tons.


• A member of the Bank of England's Monetary Policy Committee (MPC) has called again for a rise in interest rates.Minutes from the MPC's July meeting show Andrew Sentance voted to lift the Bank rate to 0.75% from the record low of 0.5%, citing stubborn inflation.

BBC Business News 21st July 2010

Hollingsworth Daily Post

• A US appeals court has granted bail to the media tycoon Conrad Black pending an appeal against his fraud conviction.The British peer has served more than two years of a 78-month sentence. His bail conditions are to be determined by a district court judge in Chicago.


• Ratings agency Moody's has downgraded the Irish Republic's sovereign bond rating to Aa2 from Aa1.The ratings agency said the move had been driven by the government's gradual but significant loss of financial strength.


• Ryanair's first-quarter net profits have fallen by 24% to 93.7m euros ($122m, £80m) because of the volcanic ash disruption earlier this year.The airline said the Icelandic ash cloud had caused it to cancel almost 10,000 flights at a cost of 50m euros.


• Targets to cut government department spending by £35bn by 2011 are "unlikely" to be met, the National Audit Office (NAO) has warned.Labour announced the target to cut spending by £35bn by the end of the 2010-11 financial year in 2007.


• The Hungarian forint has fallen against the euro after the International Monetary Fund (IMF) said the country had to do more to cut its deficit.The currency fell by 9 forints, more than 3%, against the euro, to 291.38 forints. Shares on the Budapest Stock Exchange also fell by almost 3%.


• Nokia Siemens Networks plans to take over some of rival US mobile phone giant Motorola's network operations in a $1.2bn (£784m) deal.The purchase will give it second place in the huge North American market.

BBC Business News 20th July 2010

Weekly Market Summary

By Raymond Chatlani

To summarise, two weeks ago markets tanked and last week they rallied. This week they went down again. We can expect this directionless occurence to happen throughout the summer with risk higher to the downside. Also, the rally that we saw last week was on the lowest volume of stocks bought in any one week this year.

After positive earnings at the start of the week from Alcoa and Intel, Investors were disappointed with results from JP Morgan Chase who has a very cautious outlook on the economy and Google that reported second quarter earnings that missed analysts' projections. Although financial results from Citigroup and Bank of America exceeded analysts' expectations, the market was disappointed that these banks' figures showed that their loan business revenue did not grow over the quarter. Also, for the first time in 12 months, US manufacturing output fell in June.

This week BP managed to stop its Gulf of Mexico oil leak, so their share price is up but this good news has not stopped the indices from dropping this week. China reported second quarter GDP growth of 10.3 percent lower than the 11.9 percent growth reported in the first quarter as China pared down its stimulus spending and reined in its red-hot property prices. The US Federal Reserve policy makers were increasingly cautious on the US economic outlook and stated that risks to the downside were rising and warned that lost jobs will be harder to regain than expected. Investors were nervous on concern that the global economic recovery is losing steam.

This fight between the bulls and the bears looks like it may take some time to be resolved and we will have to continue to wait and see if an opportunity presents itself to go back into the markets in the next few months

Hollingsworth Daily Post

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Hollingsworth Daily Post

• US chipmaker Intel has reported bumper profits in what it describes as its "best" quarterly results. Net profit came in at $2.9bn (£1.9bn) for the three months to 26 June, against a loss of $398m a year ago - a higher figure than analysts expected.


• Mining giant Rio Tinto is investing $200m (£150m) in an expansion of iron ore operations in Western Australia - less than two weeks after a row over a proposed mining tax was settled.


• Nigeria's state oil firm is insolvent, unable to pay debts of $5bn (£3.3bn), a government minister has said. Junior Finance Minister Remi Babalola said the Nigerian National Petroleum Corporation had asked for help to cover its debts and fund its operations.


• Comprehensive legislation to regulate the US financial sector is one step closer to becoming law. Senate Majority Leader Harry Reid is planning a vote later this week, after four undecided senators said in recent days that they would vote for the bill.


• US book retailer Borders has agreed a deal to sell UK-based stationery group Paperchase to private equity group Primary Capital for $31m (£20m). Borders said it would use the proceeds from the sale to reduce debt levels and would continue to carry Paperchase products in its US stores.


• US aluminium-maker Alcoa has reported a return to profit as sales surged in the three months to the end of June. Net profit came in at $136m (£91m) for the quarter, compared with a loss of $454m a year earlier, and a loss of $201m in the previous three months.


• Visits abroad by UK residents fell by 15% in 2009, the fastest rate since the 1970s, according to the Office for National Statistics (ONS). A total of 58.6 million trips were made last year, 10.4 million fewer than in 2008.

BBC Business News 14th July 2010

Hollingsworth Daily Post

• Greece has successfully sold government bonds in its first attempt since the huge EU-IMF loan bail-out was launched in early May.


• BP will do a key test on its leaking Gulf of Mexico well to see if the flow of oil can be shut off.


• Indian outsourcing giant Infosys has reported 2.4% a fall in profits between April and June.


• EU finance ministers have given final approval for Estonia to adopt the euro as its currency on 1 January 2011.


• International ratings agency Moody's has downgraded Portugal's sovereign debt rating, citing worsening public finances and weak growth prospects.


• British luxury goods store Burberry enjoyed 24% underlying revenue growth in the first quarter of the tax year.


• Avtovaz, Russia's leading carmaker, returned to profitability in the April-June period thanks to a Russian car scrappage scheme launched in March.


• UK inflation slowed for a second month in June, to 3.2% from 3.4% in May.


• Businesses can and should take a key role in stemming biodiversity loss around the world, a report concludes.

BBC Business News 13th July 2010

Hollingsworth Daily Post

• China's frothy property market may have peaked after a government clampdown on speculators, new data has shown.


• BP shares have risen sharply on speculation it may have buyers lined up for possible asset sales.


• Shares in Falkland Oil & Gas (FOGL) have fallen sharply after the company said it would give up on one of its oil wells, not far off the coast of the South Falklands.


• Spanish bank Santander has signed an agreement to buy Swedish bank SEB's German business for 555m euros (£466.5m, $699m).


• The Vatican has seen its third consecutive financial loss, with a 4.1m euros (£3.4m; $5.2m) deficit in 2009.

BBC Business News 12th July 2010

Weekly Market Summary

Weekly Market Review
Global stock markets fell slightly on Monday on increasing investor concern about slower global economic growth following a week of disappointing macroeconomic data, including evidence of a downbeat US labour market and a slowdown in Chinese manufacturing and the continued fragility of the UK economy.
European equities also declined further with miners lower on a gloomier economic outlook although volumes were thin as Wall Street was closed for the Independence Day holiday. Banks edged down as caution prevailed ahead of the outcome of the stress test on European banks. BP managed to gain ground due to optimism that the plugging of the leaking well in the Gulf of Mexico is now only about a month away and market speculation on its share price. Asian equities were mixed this morning with Japanese exporters falling significantly due to the strengthening yen.
British shares rallied Tuesday as BP extended gains and other commodity-sector firms advanced with the overall index up 2.9%.The index closed down 0.3% on Monday, extending year-to-date losses to nearly 11%.However whilst the American market started well the market ended up flat after a volatile days trading.
Miners were among the strongest advancers after the Reserve Bank of Australia left interest rates on hold. Also helping the advance in London, BP shares rose 3.7% bringing gains made since the start of the week to 7.3% with further speculation that the Libyan and Middle East sovereign wealth funds now see the company as a “ cheap buy “.
British shares closed higher on Wednesday led by gains in BP and J. Sainsbury amid speculation of Middle East interest and helped by strong early gains in the U.S. The FTSE 100 index closed up 1% at 5014.82. BP shares rose again by 4.8%, amid further speculation that the oil giant could gain more investors, possibly from the Middle East. In retail, the supermarket group J. Sainsbury rallied nearly 5% to 344 pence a share on Wednesday as speculation resurfaced that the firm could get a bid from minority shareholder Qatar Investment Authority, British department store retailer Marks & Spencer fell 2.75%, paring gains made since July 1.
The International Monetary Fund (IMF) has raised its forecast for global economic growth this year, from 4% to 4.5%.It said the world economy grew strongly in the first part of this year, mainly due to robust growth in Asia. Developed economies maintained a modest but steady recovery in the same period. But it warned risks had increased and there had been a setback in progress towards financial stability.

Thursdays news and market movement was all about bank and jobs data in the US and Asia. Credit Suisse equity strategists recommending that investors buy into the sector, as the Bank of England left its key rate on hold. Shares of Lloyds Banking Group rose 4.3%, Royal Bank of Scotland climbed 3.6% and shares of Barclays rose 3.6%.Credit Suisse said U.K. banks have clear advantages over European rivals. The firm upgraded the entire European banking sector to market weight from underweight. Finally, the U.K appears to be in a stronger position has had its stress test, has a single regulator and has a government committed to fiscal orthodoxy, thereby limiting sovereign credit risk, they added.
U.S. stocks opened with gains ending the session 1% up with Asian shares also seeing advances, both markets being boosted with better than expected jobs data. Royal Dutch Shell enjoyed a strong session, climbing 3.7% with shares of BP edged up 1.4%.
After a positive overnight in the Asian markets, European and American markets are fairly flat for the end of the business week. With high profile companies losing a little of this weeks gains including BP, Royal Bank of Scotland and Barclays. With the Dow Jones and Nasdaq both showing an upward trend today, all indicies will show a rally for the week.

Overall, the market rally has been due to the trading of stock in companies generally seen as having been oversold in previous weeks and months and now been seen as “cheap stocks” among them being stocks in the energy and global banking sectors.
This temporary rally is set against most economic fundamentals pointing to a continued market weakness in the remainder of 2010 as interest rates remain low, and economic austerity plans continue to be put in place.


Paul Tillbrook

Hollingsworth Daily Post

• Google boss Eric Schmidt has said he expects the internet giant to be granted a new licence to operate in China.


• South Korea's central bank has unexpectedly raised interest rates for the first time since the onset of the global financial crisis.


• The European defence contractor, EADS, has submitted a new bid to supply refuelling aircraft for the US Air Force.


• The US Treasury has released its much-delayed semi-annual currency report.The report, originally due to be published in April, says China's currency, the yuan, is undervalued.


• The Bank of England has kept UK interest rates on hold at a record low of 0.5% for the 16th consecutive month.


• The government wants to change how some private sector pensions are calculated, the proposals mean millions of people would be likely to see lower increases to their pensions in retirement.

BBC Business News 9th July 2010

Hollingsworth Daily Post

• The International Monetary Fund (IMF) has raised its forecast for global economic growth this year, from 4.2% to 4.6%.


• Stock markets, oil prices and the euro have gained ground for a third day, spurred on by hopes that European banks will pass EU stress tests.


• German imports have risen at their fastest rate since unification in 1990, outpacing a sharp rise in exports.


• The Bank of England has kept UK interest rates on hold at a record low of 0.5% for the 16th consecutive month.


• The European Central Bank (ECB) has held eurozone interest rates at a record low of 1% for the 14th month running, as expected.


• Australia's employment level surged by 45,900 in June, a much higher figure than economists had expected.


• China has confirmed that a new tax on sales of primary resources will be rolled out nationwide.

BBC Business News 8th July 2010

Hollingsworth Daily Post

• A leading Libyan oil executive has said he will recommend that the country's sovereign wealth fund buys a stake in troubled oil giant BP.


• The UK economy continued to grow in the second quarter of this year, according to a survey by the British Chambers of Commerce (BCC).


• Mining groups Xstrata and Rio Tinto have said they will resume projects in Australia after a deal was agreed last week over controversial tax plans.


• Leading Chinese shares have rebounded strongly after closing at a 15-month low on Monday, as investors await the details of a major share offering.


• China is to build an $8bn oil refinery in Nigeria.


• Greece's Finance Minister, George Papaconstantinou, has said the country cut its deficit by 42% this year.


• A ballot of BT workers for strikes over pay has been cancelled following legal advice, according to the Communication Workers Union (CWU).

BBC Business News 6th July 2010

Hollingsworth Daily Post

• The oil spill in the Gulf of Mexico has so far cost BP a total of $3.12bn (£2bn), the company has said.


• Normal life has been disrupted in many parts of India because of a strike called by opposition parties against fuel price rises.


• The result of stress tests carried out to show if Europe's banks can cope with more economic shocks will be published later this month.


• Nearly $2bn (£1.3bn) in loan guarantees will be given to two companies to kick-start the US solar energy industry, President Barack Obama has announced.


• The billionaire investor Warren Buffett has donated $1.6bn (£1.05bn; 1.5bn euros) to the charitable foundation created by Microsoft founder Bill Gates and his wife Melinda.


• The BBC's director general Mark Thompson has said overhauling the corporation's pension scheme is "by far the toughest thing we have had to do in recent years".


• There were about 125,000 US jobs lost in June, the Labor Department has said, the first time jobs were shed on a month-on-month basis since October.


• Apple says a fault on its new iPhone 4 is causing it to incorrectly display the phone's signal.


• Officials from Iceland, the Netherlands and the UK have held two days of talks in Iceland's capital Reykjavik over the settlement of a £2.3bn banking dispute.

BBC Business News 5th July 2010

Weekly Market Summary

On Sunday, the G20 came out with a statement that they have agreed to half their deficit by 2013 and to reduce their debt to GDP ratios to more reasonable levels by 2016. They agreed that every country would implement austerity at their own pace as different countries had different needs. Japan was granted an exemption due to its high debt to GDP ratio and also as it had been in recession for the last two decades. Obama stated that he was convinced that the austerity measures that would be chosen would be carefully implemented so as not to affect global growth. While asian markets were mixed, european futures were up.

On Tuesday, global equity markets and commodities dived because investors were concerned that european banks would have great difficulty in paying back a one year emergency loan of 442 Billion Euros to the ECB which expied on Thursday. The EU sought to calm the markets by saying that any banks who did not have enough liquidity to pay their full commitment on Thursday would have access to unlimited funding on 3 month loans on Wednesday. Also, investors appetite for risk faded after a report showed a sharp drop in US consumer confidence which pushed up the price of US treasuries as safe havens were sought. Also a sharp downward revision to China's leading indicators index and weakness in Japanese exports and unemployment added to worries about the global economy.

On Thursday an unexpected rise in US Jobless claims added to concerns of a slowing economy in the United States. Also in the US, pending home sales of previously owned homes plunged a record 30 percent in May and the manufacturing index shed 6.3 percent in the second quarter. On Friday, us employment figures disappointed mainly because the private sector only employed 83,000 people in June which was less than market expectations of 112,000.

A very bad week for commodities and equities. The stockmarket is forward looking and is stating that the US and Chinese economic recovery is slowing and that the European debt crisis has not been resolved. Although we base our investment decisions on fundamental analysis, we noticed that there has also been a breakdown in technical analysis this week with the Dow Jones, Nasdaq and the S & P 500 all breaking below their 20 day moving average. Over the past two months, these indices had already gone below their 50 day and 200 day moving average. In layman's terms, this signifies that we are now officially in a bear market again.

As a precaution, we opted to review our strategy for the summer and have decided to pull out completely out of equities and commodities for the duration of the summer and instead rebalance into 80% high grade UK corporate debt and 20% US Dollar cash deposits. Our rationale is that low interest rates are here to stay for the foreseeable future which is good for bonds. Secondly, the investment into the US Dollar cash account is a play on currency appreciation which may benefit our Sterling and Euro clients. With the UK and the EU starting their austerity programmes, we expect their GDP's to lack behind US GDP growth. Also, if the concerns regarding possible debt default of the PIIGS accelerate, we may see a flight to safety to US treasuries which will cause the US Dollar to continue to appreciate.

Raymond Chatlani
Investment Analyst

Hollingsworth Daily Post

• The Australian government has reached a deal with mining companies over controversial tax plans.


• Toyota has announced it will recall 270,000 cars worldwide because of an engine fault.


• Disappointing manufacturing reports from China and Europe have worried investors, raising concerns over the strength of the global recovery.


• The Times newspaper has begun charging readers to access its online content.


• Graduate unemployment could hit record levels due to planned public spending cuts, a research body has warned.


• Relief that a second day of lending by the European Central Bank (ECB) to commercial banks passed off without any nasty surprises helped boost the euro on Thursday.


• Greater protection to prevent mobile phone and computer users from running up large data bills when overseas has come into force across the EU.


• Contracts for sales of previously-owned homes plunged a record 30% in May, far higher than expected.

BBC Business News 2nd July 2010