Retailers won the closely watched holiday skirmish with shoppers, who opened their wallets a little bit despite a still struggling economy, fewer discounts than last year and limited variety on store shelves, according to recently released data. A late boost from last minute shoppers and an extra day of shopping increased total retail sales by 3.6% over the year. According to estimates Shoppers in Britain spent over £130 million pounds online on Christmas Day alone, a 29 percent increase from a year earlier. The number of U.K. customers on Boxing Day, the day after Christmas, also increased, by 19 percent. Retailers avoided last year’s pre-Christmas discounting by cutting inventory to “much healthier” levels, according to Morgan Stanley analysts. Prices, which were slashed by as much as 75 percent in 2008, were down by about 50 percent on London’s Oxford Street shopping district on Dec. 26 at retailers including the Zara clothing chain, House of Fraser Ltd, Bhs and Topshop clothing outlets.

Recent data has shown that demand from house buyers in the UK fell in December for the first time since January 2009, with the number of new buyers registering with agents down 2.2 per cent. The monthly survey showed a slight rise in prices for the month of 0.1 per cent and also noted that about half of all homeowners had no mortgage or owned less than 25 per cent of the value of their home. This is the sole sector of the community said to be behind the increased demand for new houses.

Britain’s recovery from recession has so far been sluggish compared with other developed nations but stronger growth in 2010 should help it narrow the gap. The UK economy is forecast to shrink 4.5 per cent this year and Consensus Economics says that the consensus forecast is for a rebound of 1.4 per cent in 2010. The UK looks set to lag behind the recovery in the US where the consensus forecast suggests growth of 2.7 per cent. The sharp fall in the value of the pound will help UK exporters and the manufacturing sector will see a projected growth of 2.1 per cent.

Recent research has revealed that only one-in-three British businesses believe that plans by Lord Mandelson to boost production industries will do any good. In the survey of 57 manufacturers, only 20 said that the business secretary’s programme of ‘industrial activism’ was likely to benefit UK manufacturers. The remaining 37 said the programme would not help the sector or were unconvinced about its outcomes. However, there was better news regarding manufacturers’ expectations of an industrial recovery, with almost two-thirds of those polled saying the sector was in line for an upturn in 2010.

A spokesman for the Anglo-Dutch steelmaker Corus has said that Britain should shrug off worries about the huge government deficit and prepare to spend ‘tens of billions of pounds’ on infrastructure investment to push the economy out of recession. The spokesman went on to add that that the UK needed to draw up a ‘real industrial policy’ that would make the country more attractive to manufacturers. Lord Mandelson’s efforts to encourage ‘advanced manufacturing’ as a way of rebalancing the economy were worthy of praise, while stating that these initiatives did not go far enough, and that investment programmes should also railways, schools, roads, hospitals and other public amenities.

Virgin Money is reported to be in advanced talks to buy a small UK bank, which will provide an opening for the company to be granted a banking license, completing the Virgin’s long-standing ambition to provide a full range of financial products, including mortgages and current accounts to the British consumer.

The FTSE was closed on Friday as the market awarded itself a long weekend for the Festive Season.

Sterling remained below the $1.60 level on Fridays trading, although rising a little, whilst falling slightly s against the Euro

• Dollar 1.5962
• Euro 1.1089

A resurgent dollar is likely to power through to 2010 with its up-trend intact, as a steadily improving economy leads investors to believe U.S. interest rates will increase sooner than had been expected. The demand for riskier currencies has broken down as the year has come to an end, with the dollar now gaining on positive U.S. data. Analysts predict that the U.S. economy continues to show strength, the dollar stands to strengthen even more.

Wall Street was closed on Friday for the Christmas holiday.

In Japan early Monday the Nikkei average hit its highest close in four months on Monday as stronger-than-forecast output data boosted the manufacturing sector. Adding to the upbeat mood in the market, data before the start of trade showed Japan’s industrial output rose a better-than-expected 2.6 per cent in November, the strongest gain in six months as rising exports to Asia bode well for a recovering economy. The benchmark Nikkei climbed 1.3 per cent, or 139.52 points, to 10,634.23, its highest close since August 26.

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Tags: Bank, Banking, Bhs, British Economy, British Pound, Christmas, Consensus Economics, Corus, Currency, Economics, Economy, Employment, Financial News, FTSE, House of Fraser Ltd, industrial activism, Lord Mandelson, Money, Money Markets, Morgan Stanley, Mortgage, Mortgages, Nikkei, Recession, Retail, Stock Markets, Stocks and shares, Topshop, U.S. economy, UK Banks, UK Economy, UK export, UK government, UK manufacturers, UK Recession, Virgin Money, Wall Street, Xmas, Zara clothing chain

Despite all the fancy paraphernalia that surrounds a modern-day stock market, it is based on a very simple principle: it allows the buying and selling of mainly company stocks and shares.

It’s a market place, albeit a quite complicated market place, with plenty of rules, regulations and specialist players.

But, it all comes down to the trade of publically quoted companies, or trusts, which have their shares listed on the stock exchange and are quoted at a price which represents their perceived value. 

The largest stock exchanges are found in London (the Footsie), New York (the Dow Jones) and Tokyo (the Nikkei)

Each lists a large number of national and overseas companies in a number of indices, the main one of which is used to show the market’s performance.

When you hear that the Footsie is down say 100 points, it refers to that day’s performance of the London Stock Exchange’s Financial Times top 100 companies index. In other words, it calculates, while the market is open, a minute-to-minute value of the combined 100 top U.K. companies (the blue-chips) market worth (known as their market capitalisation).

So if British Telecom, one of the U.K.’s largest companies, gains a few pence on it’s share price, it’s gain along with other gains, or other losses of the other 99 blue-chips, are added together every day and this movement is calculated on a points basis, leading to the expression that today the Footsie closed up 99 points, or maybe down 50 points. And those points represent a monetary value after a complex series of calculations.

On the London Stock Exchange (LSE) there are over 3,000 individual stocks and shares traded, and mostly are companies, or equities, although there are a number of other tradable entities. The LSE organise the stocks and shares of its Main Market into a number of groupings, each with its own performance rated index. Therefore, as well as the FTSE 100, there are the FTSE 250 (top 250 stocks), the FTSE 350 (top 350 stocks) and the FTSE Small Cap (some of the Main Markets smallest stocks). And as well as the Main Market, there is a junior market as well, known as AiM, and on which is listed generally smaller companies (although not necessary as a requirement) which are slightly less restricted in their ownership and trading rules.

A company qualifies to join a stock exchange by having at least a set percentage of its shares in public ownership (i.e. not in the hands of one, or a small number of shareholders). Thus, for a company share to be listed on a stock exchange, there has to be a degree of liquidity, in other words, there have to be enough shares in enough hands to create a theoretical market.

Prior to its entry to being listed on a stock exchange and its shares eligible for trading, a company will have to organise something similar to what is known in most markets as a flotation, in which financial institutions and private shareholders are offered shares in the new stock exchange company coming to the market. There are various mechanisms and methods, including certain flotations which only allow recognised financial institutions to take part and excludes, at the start, private investors.

Shares are bought and sold by market-makers, owned by the firms of stock-brokers. Since the Big-Bang revolution in the City in the mid 1980s, market trading is computer screen based and not on a physical stock exchange floor.

Market-makers do as their title suggests; they make markets in particular stocks and create trading spreads. You buy at one price and sell at another. The difference between the two is the spread and a wide spread usually suggests a rarely traded stock, whereas a tight spread suggests an active stock.

Firms of stock brokers are there to advise both institutional and private clients on what shares they should buy, when, and if they should hold onto them, or sell them.

A stock exchange is usually an extremely complex financial mechanism with a whole host of supportive firms and people. For many countries, it reflects their wealth, well-being and status.

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For More information on specific Banks use these links

• Alliance & Leicester
• Barclays
• Capital One
• Child Trust Fund
• First Direct
• HSBC
• Post Office
• Tesco Savings

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Tags: British Telecom, Dow Jones, Footsie, Nikkei, Stock Exchange, Stock Markets, Stocks and shares

In Japan, after the Nikkei bust and the infamous Nick Leason made the transition from high flying wide boy to jail bird to become a caring, sharing psychotherapist, the Japanese had what they refer to as the lost decade. Growth was anaemic at best, bad loans were held on banks books and real interest rates were negative. Since 1990, the stock market is still down over 75% and the property market is down over 50%. The world was awash in Japanese savings as traders raced to exploit the Yen carry trade, borrowing cheap yen and buying things like Icelandic Bonds and US treasury bills in what was regarded for a long time as a risk free punt. Bubbles formed on every other continent as mal-investment ran rampant.

Will the UK experience a similar lost decade?

Well, you could argue, not that we are already seeing it…but that we’ve already seen it! The FTSE is down in real terms over the last 10 years when inflation is taken into account. The measure of real returns is seldom looked at in the financial media when looking at the stock markets.

However, as all sophisticated investors know, measuring inflation is a key part to measuring returns. There’s little point in getting 10% returns if inflation is 10%….in reality there has been no appreciation in this scenario. Property could soon follow stocks dismal decade long performance in real terms as the printing presses whirr into high gear. Couple that with shaky looking growth prospects as we look out over the horizon right now and the picture isn’t a pretty one.

As companies struggle in the current climate, corporate earnings are likely to fall further and interest rates look set to continue to come down (in a attempt?) to try and push liquidity into the system. The problem is, as was the case with Japan that everyone is already up to their eyeballs in debt and so pushing liquidity into the system is like pushing on a piece of string…it may eventually find a way into savings as households rebuild their balance sheets….as is currently the case with banks and many large companies.

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Tags: FTSE, Inflation, Interest Rates, Nikkei, Yen

The stock markets are filled with opportunities right now. The slump in stock prices isn’t a reflection on the underlying companies; it’s a reflection of the need to raise capital and the desire to avoid risk. The tide in the stock markets has well and truly gone out….but it won’t stay out forever.

Take Japans Nikkei index. Today, almost 20 years after Nick Leason worked his magic, the index is still down over 75% from its 1989 high…and share prices have recently fallen to levels that many are calling absurd. The average price of the index in total is slightly UNDER one times book value. This is just a ridiculous state of affairs for one of the most advanced economies in the world. But with the memory of the 1990s rout still fresh in the minds of many Japanese investors, the words “it can’t go any lower” have been banished from the collective consciousness for at least a generation.

They know the painful truth….stock and property prices can fall further than anyone thinks possible in the after math of a bubble…a lot further. Yet, with undoubted fear across many global markets, this is a once in a lifetime opportunity to pick up shares at prices not likely to be seen for a generation….and it’s not only in Japan. In emerging markets from Russia to Malaysia to Brazil, valuations are completely out of whack with normality.  The growth stories may have stalled in these economies, but the longer term demographic and developmental trends are still firmly in place.

While the future may not be bright in the stock markets of the western world, soon emerging market economies keep their savings for themselves and invest in their own productive capacity. They will redirect their cash away from the US and other western economies that desperately need it to keep their consumption based economies from total collapse.  Once they do, the west will cease to be a drag on the global economies and the emerging markets will witness a boom never before seen in the global economy. Grab your share, before it’s too late.

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Tags: Bargains, Econonmy, Nikkei, Property Prices, Stock Markets, Stocks and share, World Economy