A Year in Review: Carnival helps market cruise to the year-end

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The Independent Online

With Christmas around the corner, and the markets therefore winding down, there are not many results for investors to pour over this week. Carnival is one of the few to release any, with the world's largest cruise company set to reveal its fourth-quarter earnings tomorrow.

John Beaumount, an analyst at Matrix, expects the group to "confirm its recovery from 2009 is well underway" and release guidance for 2011 that should "reflect a strong outlook".

Meanwhile, Numis Securities' Wyn Ellis – who believes Carnival is a "high quality business with compelling secular growth prospects" – thinks its share price will move up from here as it "enters a period of relatively modest capacity growth and yield recovery gathers pace".

Given the dearth of updates this week – and today's official update to the FTSE 100 Index – we are casting our eye back over 2010 to recap how the blue-chip benchmark has changed over the year.

After 2009, in which the Footsie finished up 20 per cent despite suffering a fall of around the same amount in the first two months, investors were hoping that the rise could be maintained. The new year saw an initial dip, but by the time the changes of the first review were implemented in March, it had started to make gains.

South Africa-based Investec was the sole name moving up, as the investment bank made its debut on the top-tier index following a recent rise of more than 20 per cent.

Making way for it was the insurance buy-out vehicle Resolution, which only floated at the end of 2008 and had suffered a disappointing first few months of the year, sliding steadily.

The second round of changes came in June, and this time both of the FTSE 100's new entrants were not only commodities-focused but did not exist before 2010. African Barrick Gold was one, spun off from Barrick Gold – the world's largest miner of the yellow metal – in March following an IPO that raised £581m.

Essar Energy was an even newer name, coming to the London Stock Exchange in May in the largest ever Indian IPO on the London markets. In its short trading time before making the move up, the oil and gas group managed to gain despite a weak performance from the rest of its peers.

The March eruption of the Eyjafjallajokull volcano in Iceland not only disrupted travellers, but also severely damaged Thomas Cook, which led it to become one of the names leaving the top-tier index.

It was joined by the London Stock Exchange itself, which had narrowly escaped dropping down to the mid-tier index in March. This time, however, increased competition and a fall in equity markets meant that its time on the blue-chip index was up.

September's review saw the highest number of changes of the year, as three companies went either way. Poor sales figures at its Argos stores were to blame for Home Retail Group's relegation, despite the Homebase chain performing better.

Also making way was Cable & Wireless Worldwide, joining Cable & Wireless Communications – from which it demerged in March – on the mid-tier index. The business telecoms company was one of many to be hit by public spending cuts as it found contracts drying up. Completing the set was Segro, the industrial landlord.

Among the trio moving up was Resolution, making a triumphant return after it was boosted by a successful takeover attempt of Axa's life insurance business. The valve and pump manufacturer Weir also qualified for the move, reaping the rewards of a steady rise since late 2008, a trend which the company has managed to maintain since.

The third and final entry was Tomkins, but it proved to be a short-lived promotion with the engineering group not even lasting the week. It qualified after making gains from being the target of a £2.9bn takeover bid from a consortium of Canadian companies, and once that deal went through, it was removed from trading.

Vehicle and aircraft parts-maker GKN took its place, rejoining the index that it had left six years before. The British company looked in dire straits in 2006, with one month bringing two profit warnings, but the move up from the FTSE 250 showed quite how well it had recovered.

The final review of the year was announced earlier this month, with the companies involved set to start trading on their new indices today. IMI is the only group moving up, and the engineering company's most recent update was in November, when it said that it expected to post adjusted earnings around the top half of previously-indicated expectations.

Today also sees defence group Cobham beginning life on the FTSE 250 after suffering a significant share price drop last month in the wake of a disappointing trading update, although it recently enjoyed a modest uptick thanks to speculation that it is a takeover target.

Today

Chicago Fed national activity index; EC consumer confidence.



Tomorrow

GfK consumer confidence barometer; Public sector net borrowing requirement.



Tomorrow

Bank of England Monetary Policy Committee minutes; GDP; US existing home sales; US GDP.



Thursday

BBA loan approval figures; University of Michigan consumer sentiment index; US new home sales; US weekly jobless claims.



Friday

Half-day of trading on the LSE.

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