*** 5,000 but not for long...
*** Euronext comes semi-clean on its LSE bid
*** Miner WMC fights hard...America's Ciscodisappoints...why should we buy?...and more..
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So the blue chip index hit the 5,000-mark on Wednesday a level not seen since May 2002. But didn't hang around there for long. By closing time, the FTSE100 had in fact shed 5 points, to trade at4,990.
The mid-cap 250 index also slid 11 points yesterday its first fall in eight sessions. The index traded at 7,347, a fall of 0.2%. And with indices across theboard down, the All Share index followed suit, trading 0.1% down at 2,509.
Retailer Somerfield shot up 14%, on news that Icelandic venture capitalists Baugur have made anoffer of £1bn for the company. Yesterday Somerfield closed at 184p, having gained nearly 20% over the pastseven trading days. In fact, the group has not had the best of times since its launch on the LSE having fallen from 297p to just 44p in 2003.
As for Iceland's Baugur, if they succeed in pairing with Somerfield, they would have a combined share of nearly 8% in the UK grocery market after recently buying Big Food.
Euronext has finally spoken out about its plans for the London Stock Exchange should it bid for the group.The Paris exchange has kept remarkably quiet up to now following two failed bid attempts by German rival Deutsche Boerse. According to Euronext, a combination between itself and the LSE could lead to €200m costsavings double that foreseen by the Boerse.
So why are the French despite the move no closerto bagging the LSE? Well, Euronext CEO Jean-Francois Theodore refuses to give an indication of his bid price. As it is, the Germans have offered 530p pershare well below the LSE's current trading level at 572p. The LSE added a further 1.2% on the news yesterday.
Toilet-cleaner and health group Reckitt Benckiser said its profits surged 20% in 2004. According to the Anglo-Dutch firm, pre-tax profits rose to £770m upfrom 2003's £660m. The news didn't help the shareprice on Wednesday, which fell 0.5% to £15.74. Yet the group's success is not only attributable to productssuch as Harpic and Lemsip.
According to CEO Bart Becht, Reckitt's strength also follows its rejection of the traditional Anglo-Dutchdual board structure a structure used by the likes of Shell. And mind you, one that got Shell into loads of trouble following reports that the oil group overstated its reserves. According to Shell, thereserve-downgrade was largely to be blamed on lack of communication between the English and Dutch boards.
Talking of Shell, the oil group closed 3% down as atop FTSE faller yesterday. The reason? Well, the group went ex-dividend, shedding 14p per share in theprocess, to close at 472p.
And in other news, the Bank of England's MonetaryPolicy Committee meet again today, to once again decide what to do with interest rates. What can we expect? Well, not that much, as analysts reckon rateswill stay steady at 4.75%...again
In Australia, miner WMC Resources said it saw a fivefold jump in its net profit last year pushing profit up to A$1.3bn. According to the group, sales rose around 30% from the previous year proving the Aussie group is doing very well indeed.
So why do we mention this in Money Morning? Because it was clear from yesterday's results that the miner is doing everything to put Swiss predator Xstrata offits bid attempts. Xstrata, a FTSE blue chip group, has offered up to A$8.4bn despite WMC's continued refusal. But for how much longer can the Aussies hold out? Not only are more blue chip miners set to join the attack on WMC; the bid is developing into a political battle. While government backbenchers have voiced support for Xstrata, the Swiss group has a number of enemies in the west of the country, following its closure of the state's vanadium mine in 2004. While Xstrata traded 0.4% up yesterday, both Rio Tinto andBHP shed 2%.
And just over the Pacific Ocean in North America, the Internet's largest maker of communications gear to direct traffic, Cisco System, reported its results earlier this week. According to the group, quarterly earnings were up, but concerns about weak revenue and rising inventory pulled the share price down.
'The Cisco numbers are being seen as flat at best,and perhaps a little disappointing,' Seven Investment Management's Alex Scott said yesterday. Yet there's something about Cisco and a number of top Yankee computer companies that's a lot more telling...
Insider selling has been rife in a couple of top American companies over the past six months. Let's take Cisco as an example. The group has seen nearly 3m of its shares sold by company employees and directors since August last year. That means that 3.4% of insider shares were sold over the period. The number of shares bought? Well, that would be zero.
The same goes for Apple, Google and Dell. Between 4m and 26m shares were sold by each company within thelast six months. Dell's insiders sold 9.7% of its net shares, while Yahoo.com states that Apple employees dumped an enormous 40.2% of net shares. Yet the number of shares bought by each of these company workers and bosses over the same period? Once again, a rather large nought.
What does this mean? Well, could it be that thesecompany employees know something about their businesses that we don't? After all, if workers aren't buying the stocks...then why should we?
Until tomorrow,
Heather D'Alton
Money Morning
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