Uninspiring Opening on Wall Street

Posted on | May 27, 2009 |

An uninspiring opening on Wall Street has done little to energise international markets.

At 4pm (London time) the Dow Jones is down 35.36 points (0.42%) to 8438.13 and the S&P 500 is virtually flat, down 0.59 points (0.06%) to 909.74. The FTSE, after a day of little movement, remains up only 4.92 points (0.11%) at 4416.64.

This afternoon, GM stands as the only major mover on the Dow Jones, down $0.17 (11.81%) to $1.27. The company’s future became even more uncertain today, as bondholders rejected part of the company’s restructuring plan. A possible sale of the European arm of the company this week will most likely have a large effect on the stock, as well as on the international market as a whole.

However, positive news regarding US home sales may have an impact on Wall Street as it picks up energy later in the day. Purchases increased 2.9% to an annual rate of 4.68 million, up from 4.55 million in March. Low-mortgage rates, tax credits, and falling prices appear to have attributed to the increase.

In the UK, the hedge fund manager Man Group is among the big risers on the FTSE 100, up 12.5p (5.27%) to 249.75p, and was closely followed by another financial company, savings group Old Mutual, which is up 2.8p (3.99%) to 72.9p. The latter rose after the news that it has cancelled its plans to acquire Chinese fund management business ABN Amro TEDA Fund Management.

Intercontinental Hotels also performed strongly today, despite Tuesday’s report that their first quarter net profit fell 56% to $27 million. Considering the company’s exposure to the current climate, the announced loss was not as extreme as expected, which boosted investor confidence.

Home Retail Group also performed strongly; it was given a boost by positive performance by its small rivals Topps Tiles, which investors have taken to be a sign of improvement in the sector. Home Retail Group is up 9.25p (4.08%) to 235.75p.

Other retailers did not fare so well. Next and Marks and Spencer both lost ground today, with the former down 5.8p (3.11%) to 1430p, and the latter down 2.25p (0.78%) to 285.5p.

Mining companies also weigh heavily on the losing end. Lonmin is down 46p (3.39%) to 1310p, and Fresnillo is down 20.50p (2.9%) to 687p. However, mining company Anglo American looks to end the day up after significant gains; it is up 51p (3.15%) to 1671p.

The pound had a very good day, rising above $1.60 for the first time since November. The dollar, however, strengthened against the euro, which dropped to $1.3965.

By Anthony Grech, Research Analyst, IG Index.

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