MARKET UPDATE – A TALE OF TWO CITIES!

It’s been a strange old day.  In terms of stocks market activity the fact that the FTSE 100 is down 20 points at 6708 at 4.34pm does not really tell the story.  The oil & energy sectors have been weak ahead of the OPEC meeting on Thursday.  Mining looked perky initially, but it is just below the Plimsoll line as I write at 4.04pm, despite gutter talk about Glencore flirting again with Rio is the alleyways.

Most people expected De La Rue to get larruped after a 36% fall in profits but October’s profit warning was already priced in, but it had a roller-coaster ride starting down just 1%, then rallied to +8% then back down to -2% and is now looking as if it might end the session down virtually unchanged.  Kingfisher did not please its acolytes – down 4%. Banks leapt out of the traps on very good terms with themselves – with most banks up 2% plus.  However the sector was only up 1% towards the close with RBS the outstanding performer – +2%.

 

With all the chat and buzz about EE and O2, BT had another good day adding 2% as did SKY – also up 2%.  However the Vodafone appeared to be ‘the ugly duckling’ of the sector – down 0.4%.  Ashtead and Merlin are expected to join the MSCI today.  Both stocks turned over about 3 million shares but there was little change in their share prices.

 

Mortgage applications fell by 16% last year – with only 37K mortgages approved in October the lowest figure for 17 months. Political uncertainty and lending banks pulling in their reins, thanks to the requirement of larger deposits, were largely to blame. Lloyds Banking Group also predicts house prices to fall between 3-5%. However if the GDP remains around 3% in 2015, demand could well be robust.

 

In the US revision for 3rd quarter GDP was better than many expected – some thought it might even fall.  It rose to 3.9% from 3.5% last time, against expectations of 3.3%. Let’s hope the recent severity of the weather does not blunt demand. The S&P Case Shiller Housing index rose 4.9% on the year.  GDP in the US, after a really dreadful start, is expected to grow by 2.2% this year. Consumer spending, which accounts for 70% of GDP, was also up by 2.2%. Wall Street’s response was relatively muted, but let’s face, it US equities have had a tremendous run on the rails, reaching record levels. At 4.30pm the DOW was up a smidgen by 0.04%, the S&P 500 by 0.29% and the NASDAQ by 0.89%.

David Buik

Market Commentator

 

+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom  www.panmure.com

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