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Low consumer confidence seen to be affecting the FTSE

February 5th, 2009 by admin | Filed under Daily News, Global Credit Crisis, Money Management, Recession, Retail, Stocks and shares, UK Bank Accounts, UK Banks.

Consumer confidence sank to the lowest level since at least 2004 last month as shoppers found it harder to access credit and became more concerned about job losses were seen to be putting a damper on consumer based share prices yesterday on the FTSE.

With the News Corp expected to announce cutting jobs in the coming weeks, due to a dramatic decline in revenue from print advertising, requiring cost reductions for News International, whose papers include The Times, Sunday Times and the Sun. The group is reported to be in the final stages of an efficiency review some 2.5 per cent of its staff, although some new posts may be created.

In mining, U.K. stocks continued to advance. The rally was caused by the devaluation of Kazakhstan’s local currency , the tenge causing the Kazakhmys, Kazakhstan’s biggest copper miner, and ENRC, the Kazakh ferroalloy producer part-owned by Kazakhmys to jump at least 9 percent after the central bank devalued the tenge by 18 percent. ENRC also reiterated its 2009 outlook. Kazakhmys climbed 34 pence to 278, with ENRC rising 30.75 pence to 361.

Meanwhile the world’s largest mining company, BHP gained 63 pence to 1,223 on reports of a 17 percent increase in first-half sales to $29.8 billion. BHP announced that they will pay a first-half dividend of 41 cents, up 41 percent from a year earlier, while cash flow from operations rose 74 percent to $13 billion.

There was a mixed bag of stocks that showed rises on the FTSE yesterday among them:

Aviva Plc the U.K.’s largest insurer increased by ten percent, (34.5 pence to 367.25). The company announced that despite the downturn, their life and pension sales rose by nine percent in 2008, The Company also said it plans to scale back a promised one billion pound payout to policyholders.

Rallying by two percent (9.75 pence to 497) were the British Sky Broadcasting Group Plc on the news that the group had succeeded in retaining U.K. rights to broadcast live English Premier League soccer for season 2009/2010.

To display that the UK consumer still loves to take part in sports and not just watch them was the news that JD Sports Fashion Plc, the U.K.’s third-largest sporting-goods retailer earnings will be higher than estimated. Their shares increased in value by 5.2 percent (11 pence, to 224.)

Sports property development also appeared to be strong with Quintain Estates & Development Plc shares also jumping a whopping 19 percent, (5 pence to 31). The company, heavily involved in developing the area around London’s Wembley Stadium, announced that it had succeeded in reducing its considerably as well as portioning a part of it three percent annual interest.

On the Iberian Peninsula, another worrying sign that protectionism may become part of commerce for the foreseeable future.

Spanish politicians announced a call for locals to adopt patriotic shopping habits, with the aim to protect jobs and beat the recession, amid stronger than ever signs of Spain’s accelerating economic slowdown. Yesterday the government announced that unemployment had risen to almost 14 per cent.

Consumer consumption in Spain was expected to fall by €7bn (£6.6bn) in 2009, with the loss of 120,000 jobs.

A leading Madrid based economics experts pointed out that Spain’s economic success from the nineteen sixties onwards had coincided with the abandonment its protectionism. Its open market had raised from 10 per cent in 1959 to 65 per cent today.

On the stock markets the FTSE 250 index fell by 1.1% or 69.49 points to 6252.32 while the FTSE 100 finished the session down by 1.33 per cent, or 56. Points, to 4,172.52.

Sterling continued to rise against the main currencies, closing at:

Pound/US dollar 1.4405

Pound/Euro 1.1127

Pound/Japanese Yen 129.12

Pound/Swiss Franc 1.6726

Wall Street shares had a bad day on Wednesday’ trading U.S. stocks declined for a third day yesterday after consumer spending slumped for a sixth straight month and companies from Mattel Inc. to Rockwell Automation Inc. posted lower-than-estimated profit.

The Dow Jones Industrial Average dropped 121.7 points to close at 7956.60 NASDAQ rose a mere 1.71 50.5 points to 1515.94

On the market, Merck climbed 6.4 percent after savings from job cuts boosted profit, while Schering-Plough added 8.2 percent on earnings helped by cost reductions and added sales from an acquisition.

Harley-Davidson Inc., the biggest motorcycle maker, added 16 percent to $13.73 for the third-biggest gain in the S&P 500. Billionaire investor Warren Buffett’s Berkshire Hathaway Inc. agreed to buy $300 million of Harley-Davidson debt, adding to holdings of corporate bonds as yields rise.

Tyco International Ltd. climbed 19 percent to $24.27. The world’s largest maker of security systems through its ADT unit posted first-quarter profit that exceeded analysts’ estimates.

Stocks in Asia climbed today after governments from Japan to Australia widened efforts to revive economic growth. The MSCI Asia Pacific Index rose 0.8 percent.
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