Market Report: Asian assets lifts the Pru on good news day
Tuesday 10 November 2009
The man from the Pru was looking sharp as several news items pushed the UK insurer to one of the strongest performers of the day. Prudential ended up 30p at 608p, as Germany's Allianz beat forecasts to post a 23 per cent jump in third-quarter operating profits. The results helped lift insurers across Europe as did a note from ING. The Dutch broker raised its valuation on 12 insurers across Europe, upping the Pru's price target from 392p to 584p.
Yet it was news from France that pushed the Pru up ahead of its UK-listed peers as news emerged that Axa had decided to buy out its Asian assets. The move prompted the market to speculate on the valuation of Prudential's own assets in emerging Asia. Turns out traders valued them pretty highly. Axa suffered slightly different fortunes as it also announced a €2bn capital raising, sending the stock down before crawling back, just, into positive territory.
The FTSE 100 enjoyed a storming start to the week, rising for the fourth session in a row as it followed strength in Japan with the Nikkei up 19 points to 9,808.99. The blue chips were led up by strength from the commodities, with the miners spearheading the index's rise, while the banks also weighed in. It closed up 92.46 points at 5,235.18.
The price of gold hit fresh highs again to a new record of $1,111, while metals including copper, tin and nickel also advanced yesterday. Of the giant miners, Kazakhmys, which has huge copper operations, was the top performer in the sector, rising 73p to 1286p.
Oil prices were up to almost $80 a barrel on the weaker dollar. Big oil also received backing from Cazenove, which said it "may finally be turning itself around" and picked BP and BG Group. "Although the sector has historically showed a tendency to underperform the market during the fourth quarter, we stay overweight on the space to play valuation recovery," the blue-blooded broker said in a note. BP closed up 11.3p at 1403p; BG gained 8.5p to 1090.9p
The banks also had some momentum after a meeting of finance ministers from the G20 nations hosted by the Chancellor, Alistair Darling, this weekend. Royal Bank of Scotland ended the top performer of the day, rising 2.3p to 39.3p as the central bankers and ministers said they were not prepared to pull economic stimulus quite yet.
The chatter rose around Inmarsat, which provides satellite communications services to everywhere, Poland aside. The group rose 26p to 621p on numbers that beat consensus expectations by what Jonathan Groocock of Investec called a "frankly astonishing" 9.3 per cent. The share price rise marked its sixth consecutive session gain, closing at a four-year high.
Cadbury soared in the morning as investors licked their lips in anticipation of a sweet bid from Kraft. As soon as the formal offer came out just after lunch, the excitement melted. As Kraft went hostile just hours before the "put up or shut up" deadline from the Takeover Panel, the terms were unchanged. Cadbury's shares slammed into reverse on the news as it rejected the offer. A note of optimism returned before the close as it crept up 3p to 761p.
One stock that did not make it back to positive territory was Cable & Wireless, the telecoms group that unveiled a demerger and a profit warning on Thursday. It fell again as Royal Bank of Scotland analysts cut their target price from 200p to 175p, while Morgan Stanley cut it 20p to 170p. The group closed 2.2p down at 136.8p.
Standout performer on the second line was the engineering group IMI, as it said it would comfortably beat full-year earning expectations. The group has a range of operations from making valves used in power plants, oil and gas production and the like, to "delivering still and carbonated beverage dispensing solutions" – as the jargon heavy website said – which seems to be taps in pubs as far we can make out. The shares soared more than 15 per cent, or 69.7p to 511p, its highest position for more than a year.
IP Group, which specialises in intellectual property, in the wider market was down as it agreed to buy a 19.8 per cent stake in Fusion, a rival based in Yorkshire. The group lost 2.25p to 53p, on the deal that gives it co-investment rights to Fusion's portfolio companies.
On London's growth market AIM, the natural resource companies aped their bigger brothers on the top tier, with Bezant Resources top of the tree at lunchtime. The group, which takes its name from a medieval gold, silver and copper coin, rose 2.25p to 25p. It was overtaken by Euro Nickel, which stormed 11.36 per cent up to 12.25p.
On the downside, Inspired Gaming's share restructuring plan failed to catch investors' imagination. The group fell 4p to 6p as it proposed a reorganisation that would put 90 per cent of the new issued shares in the hands of preference holders. The group, which is a takeover target, wants to simplify the capital structure, but analysts do not think the small shareholders will go for it.
Latchways, the safety products group, saw first half pre-tax profit fall 26 per cent on lower construction sales, and the management didn't have much more good news for the future, although added "specific local events such as the 2012 Olympics will help mitigate this". Confidence itwould emerge from the crunch well placed saw the shares remain flat at 650p.
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