London Market: Reports expected to be 'gilt positive'
Sunday 21 February 1999
The figures "will be gilt-positive", said David Coleman, chief economist at CIBC Wood Gundy. The fourth-quarter gross domestic product "will be revised down and the CBI will be weaker", he said, referring to the CBI's February industry survey.
Analysts expect the Government to revise down its fourth-quarter growth estimate to 0.1 per cent or zero per cent from an initial 0.2 per cent growth estimate. At 0.2 per cent, economic growth was its slowest in six years. On Friday, the benchmark government bond yield fell 3 basis points to 4.37 per cent.
Stock gains are likely to be led by National Westminster Bank and other financial companies. "One should be looking at the banks because retail banking will benefit. People will be surprised at the growth they see in 1999. The investment theme is about being close to the consumer," said Michael Browne, head of European equity strategy at Chase Asset Management.
NatWest shares gained 4 per cent last week, boosted by earnings of rivals Lloyds TSB and Barclays, whose better than expected retail banking sales more than offset heavier losses on loans overseas. "This corporate earnings season is providing us with one or two positive surprises," Mr Browne said. The FT-SE 100 index fell 0.7 per cent to 6031.2 on Friday, paring a 2.1 per cent gain earlier in the week.
Some of the biggest insurers, such as Prudential Corporation and CGU, will release their 1998 profits. Cadbury Schweppes reports earnings on Wednesday. British Aerospace reports on Thursday. The shares dropped 4.2 per cent Thursday following a report that it will see a suspension of payments from Saudi Arabia for the so-called Al Yamamah defence contract. While BAe and the Ministry of Defence denied the report, the shares fell another 2.4 per cent Friday to 402p.
Stronger than expected employment and retail sales reports last week raised concern that the Bank of England will pause next month after five consecutive months of interest rate cuts. "It'll be a close call, but the Bank won't cut [next month]," Mr Coleman said. "It would be unwise to put too much weight behind any set of numbers."
- 2 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 4 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
Amber Peat: Body found in search for missing 13-year-old who ran away after argument with her parents
California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
Sepp Blatter resigns: FBI are investigating outgoing Fifa president, claims report
Alton Towers crash: Four guests seriously injured as Smiler ride carriages collide
Charles Kennedy dead: A guy once asked the Lib Dem leader who his favourite Muppet was and his letter response was wonderful
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...