The new young investor: Shunning stocks

When 18-year-old Robert White decided to jumpstart his retirement plan, he invested his life savings of $25,000 into an aggressive mutual fund.

GlaxoSmithKline shares slip on Avandia concerns

GlaxoSmithKline shares have come under pressure on worries about its diabetes treatment Avandia ahead of a European meeting later this week to review the drug’s safety.

The company’s case has not been helped this morning by comments from the UK medicines and healthcare regulatory agency that the drug – once Glaxo’s second biggest seller – should be pulled from the UK market. The news, coming ahead of Wednesday’s European meeting, has seen Glaxo’s shares decline 11.5p to £12.57. Joshua Raymond, market strategist at City Index, said:

We have seen some selling in shares of GlaxoSmithKline this morning ahead of the important European Medicines Agency meeting on the safety of its Avandia drug. The meeting comes amongst damaging comments from the UK regulator that the risks of the diabetes drug outweighed its benefits. Sales of the drug have fallen by over a half in the last three years on concerns over the side effects and today’s share price weakness is a result of fears by investors that the drug could be pulled from the shelves.

FTSE moves higher again but Barclays misses out

Leading shares are continuing last week’s gains on the back of better than expected US jobs data and a host of takeover speculation, but Barclays is an exception, falling around 1% after a downgrade.

The bank’s shares are 7p lower at 321.3p after Evolution Securities repeated its sell recommendation and cut its price target by 12% to 298p. The broker said:

Barclays is one of the very few stocks in our universe of banks that shows downside. This downside is limited, at only 8%, but it is in stark contrast with the 17% upside that we see in our universe of banks coverage currently.

In our view, Barclays has a very difficult business mix: we estimate that by 2012 76% of its capital needs (£36bn) will correspond to corporate and investment banking activities, activities for which we forecast a low 12.2% sustainable return on equity.

It also questions the success of the bank’s diversification moves. Overall though the mood in the market is more positive, following on from last week’s 4% rise in the FTSE 100. The leading index is up another 11.36 points to 5439.51, although with the US market closed for Labor Day and very little in the way of corporate and economic news, volumes are likely to be fairly light. Ian Williams at Altium Securities said:

After last week’s thrills and spills the diary looks rather light, especially today’s with the US off for Labor Day. Most of the data later in the week report on the health of the global manufacturing sector but these are mainly backward- looking rather than sentiment numbers. The Bank of England’s monetary policy committee meets this week and, although the majority view is likely to remain that further policy stimulus is necessary, action is unlikely while headline CPI inflation remains so far above the 2% target.

Some of the recent takeover targets continued to move higher, with Cable & Wireless Worldwide up 3.55p to 76.5p after bid reports and hedge fund group Man up 2.9p to 234.8p.

Ahead of figures later this week Home Retail is 3.2p higher at 224.5p, helped by a bit of takeover speculation and a broker upgrade – analyst Freddie George at Seymour Pierce has turned more positive on the business:

The trading update will show that sales and gross margins for the quarter ended August 2010 remain relatively weak but are likely to be better we suspect, than market expectations and better than the previous quarter. We expect Homebase is expected to report flat like for like sales and a gross margin decline of 75 basis points while at Argos we project a like for likedecline of 5% and gross margins down by 75 basis points. Homebase, we believe, will have benefited from price increases of up to 5% over the previous year and less promotional activity, while Argos will have received some help from better TV sales ahead of the World Cup.

Ahead of these figures, we are upgrading our recommendation from sell to hold. Our view is that a possible downgrade to earnings is fully reflected in the current share price. The stock, which has been the worst performing FTSE 100 stock to date declining by 28% over the last year, is beginning to look good value. The company also has a relatively strong balance sheet with cash forecast at £320m by end of March 2011, even after a share buyback of £150m, and strong cashflow, which would be attractive to a predator.

Among the mid-caps there are some notable declines in some of the more debt-laden businesses, with Yell down 0.73p at 16.02p, Premier Foods off 1.25p at 19.6p and Punch Taverns 2.65p lower at 83.7p.

Wall Street faces an economy at a ‘crossroads’

Stocks started September with a bang as investors cheered a rare dose of good economic news but investors may need to buckle in for the coming week: It’s a holiday-shortened week with little on the docket to set the tone.

FTSE hit three-month high on bid talk and US jobs relief

A rare positive surprise from the US jobs market and more bid talk helped the FTSE 100 end the week on a high note as worries about a dip back into global recession receded.

M&A chatter around various London-listed firms and news that the US economy shed far fewer jobs than expected in August helped the bluechip index add 57.1 points, or 1.1%, to 5428.2 – its highest close in three and a half months.

Aggreko, the temporary power supplier behind the football world cup, Vancouver winter olympics and Glastonbury festival, was the top riser on the back of positive broker comment and word in the market that it had become an attractive buyout target. The company declined to comment on reports that it may have caught the eye of of Swiss engineering group ABB but its shares still rose 79p, or 5.5%, to £15.15.

Software company Autonomy was also boosted by M&A talk and rose 59p, or 3.4%, to £17.75 and Cable & Wireless Worldwide continued to climb following rumours earlier this week that American giant AT&T is considering a bid for the business. The shares, which are set to drop out of the FTSE 100 in the latest reshuffle of the index next week, closed up 3.2p, or 4.5%, at 72.95p and rose more than 10% over the course of the week.

Manufacturer Weir Group, set to join the bluechip index in the quarterly rejig, ended up 35p, or 2.8%, at £13.06 after Evolution Securities raised its price target on the shares to £14.50 from £14.00.

In the absence of much company news, broker comment also moved a clutch of insurers. Collins Stewart altered its recommendations on several stocks in the sector. Among them, Amlin fell 4.6p, or 1.1%, to 414.8p after it was moved to a “sell” from “hold” recommendation, while a cut to “hold” from “buy” for Hiscox left it down 5.1p, or 1.4%, at 360.5p.

Elsewhere, Deutsche Bank made price target changes on a swathe of European telecoms companies. Among them, Vodafone rose 1.7p, or 1.1%, to 159p after analysts at the investment bank raised their price target on the shares to 200p from 190p.

Wm Morrison was headed the other way, however, ahead of new chief executive Dalton Philips presentation next week on where to take the business. The grocer ended down 1.7p, or 0.6%, at 289.3p, putting it among the day’s biggest bluechip losers. Rival J Sainsbury lost 1.7p, or 0.5%, to 368.6p.

Among the midcaps, oil explorer Soco International was one of the biggest losers, down 40p, or 8.4%, at 436.6p after it disappointed investors with news that a well being drilled in Democratic Republic of Congo had been abandoned. Analysts at RBS, however, said the dip could provide a good buying opportunity. It said Soco’s findings overall at the site provided “encouragement for the future”.

Finally, Aqua Bounty, the company that has genetically engineered salmon to grow twice as fast as normal, leapt after its fish were deemed safe to eat by US regulators. It closed up 3.25p, or 26%, at 15.75p.

Dow back in the black for 2010

Stocks closed near session highs Friday, with the Dow erasing its losses for the year, as investors welcomed a better-than-expected report on the U.S. job market.

Carluccios shares soar after restaurant chain agrees Landmark Group takeover

Carluccios shares soared 44% after the Italian restaurant chain said it agreed to be taken over Landmark group, a Dubai-based retail firm, for £90.3m.

The deal valued Carluccios shares at 142p in cash, sending the stock 43p higher to to 138.6p.

London restaurant entrepreneur Richard Caring is the company’s largest shareholder with a 12% stake. Caring, who has also owned the Strada and Belgo chains, as well as Annabel’s club in London, ranked number 146 on the 2009 Sunday Times Rich List, with a fortune in excess of £350m.

David Bernstein, Carluccio’s Senior Independent Director said in a statement: “The Offer from C1 represents an excellent opportunity for all those involved with Carluccio’s. For our Shareholders, it represents an attractive premium, in cash, at a time of continued macro-economic uncertainty. For our employees, it represents the opportunity to benefit from belonging to an international organisation of enlarged scale and breadth. Our customers will, however, see no change in our focus on quality, value, authenticity and the highest standards of service.”

Carluccios shares soar after restaurant chain agrees Landmark Group takeover

Carluccios shares soared 44% after the Italian restaurant chain said it agreed to be taken over Landmark group, a Dubai-based retail firm, for £90.3m.

The deal valued Carluccios shares at 142p in cash, sending the stock 43p higher to to 138.6p.

London restaurant entrepreneur Richard Caring is the company’s largest shareholder with a 12% stake. Caring, who has also owned the Strada and Belgo chains, as well as Annabel’s club in London, ranked number 146 on the 2009 Sunday Times Rich List, with a fortune in excess of £350m.

David Bernstein, Carluccio’s Senior Independent Director said in a statement: “The Offer from C1 represents an excellent opportunity for all those involved with Carluccio’s. For our Shareholders, it represents an attractive premium, in cash, at a time of continued macro-economic uncertainty. For our employees, it represents the opportunity to benefit from belonging to an international organisation of enlarged scale and breadth. Our customers will, however, see no change in our focus on quality, value, authenticity and the highest standards of service.”

Carluccios shares soar after restaurant chain agrees Landmark Group takeover

Carluccios shares soared 44% after the Italian restaurant chain said it agreed to be taken over Landmark group, a Dubai-based retail firm, for £90.3m.

The deal valued Carluccios shares at 142p in cash, sending the stock 43p higher to to 138.6p.

London restaurant entrepreneur Richard Caring is the company’s largest shareholder with a 12% stake. Caring, who has also owned the Strada and Belgo chains, as well as Annabel’s club in London, ranked number 146 on the 2009 Sunday Times Rich List, with a fortune in excess of £350m.

David Bernstein, Carluccio’s Senior Independent Director said in a statement: “The Offer from C1 represents an excellent opportunity for all those involved with Carluccio’s. For our Shareholders, it represents an attractive premium, in cash, at a time of continued macro-economic uncertainty. For our employees, it represents the opportunity to benefit from belonging to an international organisation of enlarged scale and breadth. Our customers will, however, see no change in our focus on quality, value, authenticity and the highest standards of service.”

Not even M&A activity can lift gloomy markets

European shares failed to keep the optimism that fuelled Wednesday’s rally, and stayed subdued ahead of more economic data from the US.

The FTSE 100 Index barely added 4 points to 5,371, while Germany’s DAX practically didn’t move to stay at 6,083 points and the CAC40 added 0.2% to 3,631 points in Paris.

Man Group led risers in London with a 4%, or 12.2p jump to 225.7p after Numis Securities recommended the shares.

British software maker Autonomy soared 85p, pr 5.2%, to £17.16p on speculation that the company could be the target of a takeover bid. Traders cited US software giants such as Microsoft and Oracle as possible bidders, but company officials did not return calls seeking comment.

Shares in Royal Bank of Scotland rose after the bank confirmed it plans to axe 3,500 jobs in the UK. The stock rose 0.8% to 46.1p as investors cheered the news on hopes that the cuts will lift profits at the tax-payer owned lender. The government owns 84% of RBS after the bank had to be bailed-out last year following multi-billion pound losses.

Carluccios shares jumped 47% after the Italian restaurant chain said it agreed to be taken over Landmark group, a Dubai-based retail firm, for £90.3m. The deal valued Carluccios shares at 142p in cash, sending the stock 45p higher to to 136.2p. London restaurant entrepreneur Richard Caring is the company’s largest shareholder with a 12% stake. Caring has also owned the Strada and Belgo chains, as well as Annabel’s club in London.

Markets were also flat as more gloomy economic data pushed down hopes of a pacey economic recovery. Nationwide Building Society said UK house prices fell the most in six months in August. The average home price fell 0.9% from July to £166,507, the mortgage lender said.

The pessimistic outlook on the economy sent gold prices higher to $1,250 an ounce. Investors have recently poured money into commodity and precious metals funds to avoid roller-coaster equity markets. Inflows into precious metal funds reached $550m over the past four weeks, said ETF Securities, one of the largest providers of Exchange Traded Funds. “Flows into gold ETPs rose at an unprecedented pace, with ETF Securities seeing gold ETC assets rise almost $3bn to $11.4bn,” the fund company said. Global physically-backed gold fund assets soared to $83bn, up $18bn, in the first half, ETF said.

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