As I write the FTSE 100 is down 4.6% since the beginning of the year. As an index it has not suffered the same ‘slings and arrows of outrageous fortune’ as some others. The NIKKEI is down 11% and the DOW about 6%. Most major indices were beginning to look fully valued at the end of the year – the S&P 500 15.7X and the FTSE about 13.4X. So unless the economic data continued to be appetising and the quality of earnings was impressive plus tapering not taking its toll, there was every chance of a sell-off of sorts. What we don’t want is a blood bath. Let’s hope we do not get one. Uncertainty is unfortunately playing a ‘Matinee Idol’s’ roll in the behaviour of equity markets.

Following the unpleasant sell off in New York – 2%+ and the adverse reaction in Tokyo -4.18%, The FTSE was bound to open in negative territory; and it did not disappoint. However at 11.45am the FTSE was down just 25 points at 6440. Volumes were very light!

Of those companies that reported this morning few shone through the gloom. Ocado’s shares are up 400% since just before Sir Stuart Rose became chairman. However it is still ‘all jam tomorrow!’ Losses have been impaired to £12.5 million with an operating profit of £43 million with a big contract with Morrison’s and a new warehouse being built. But many really would like to see some more profit – shares were down 4.4%. BP’s profits were down in the last quarter from $3.9 billion to $2.9 billion and for the year from $17.1 billion to $13.4 billion. If the Gulf issues can be finalised at a realistic claim between $21bn and $40bn with the Russian joint venture with Rosneft starting to become meaningful, then the show should be back on the road. Shares were down 1.7%. BG Group had already pre-empted a profits warning last week. Shares were up 0.5% after a 5% drop in profits and a 9% drop in operating profits thanks to Egypt and also gas prices falling in the US? EPS fell 33% to 64.8cents. The damage to BG was done last week with a double-digit reverse ARM Holdings failed to glitter after satisfactory numbers – down 4%

We must hope that Janet Yellen, the new FED chairman can raise our spirits and that Friday’s Non-Farm payrolls offer solace and comfort.
These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: