Good Afternoon ,
Up and down and up and down and ultimately getting nowhere at the end of the day. European market indices traded within a range to close just above yesterdays closing levels . Once again very little news to give the markets much direction.
DCC fell -2.7% helped downwards by the news from Game Group has reported results for the half year to end July. Total group sales fell 7% (LFL down 16.3%) in H1 with sales in the 33 weeks to 19 Sep 2009 down 8.8% and LFLs down 16.6%. Pre owned sales grew 12.3% and now account for 25.7% of total sales (21.3% in 2008). The Group expects the installed base of 3rd generation consoles to continue to build as recent price reductions on Xbox Elite and Sony's Playstation 3 are helping to stimulate demand. Game also says that there is a broad and exciting line up of software products scheduled for all consoles in the run up to Christmas. The Chairman of Game goes on to say that "we remain optimistic for the key Christmas selling period".
The news that two UK builders announced rights issues today was the highlight on the news front. Redrow is seeking to raise £150m through a 13 for 14 rights issue at 105p (a 55% discount to yesterday's close). Redrow will use £15m (10%) of the proceeds to acquire land assets and employees from Harrow Estates. Barratt Developments is looking to raise £720m, with £545m through a 1.3 for 1 rights issue at 100p (a 37.8% discount to TERP) and £175m through a placing at 240p (a 10.6% discount to yesterday's close). Barratt also reported results for the year to end June, reporting that after experiencing a deteriorating market in H1, it was able to maintain price levels and increase reservation rates in H2, "with these encouraging trends continuing through the summer and into the autumn". These equity raising address two of the relatively more indebted balance sheets in the sector and so further reduces financial risk in the sector, which together with reduced unsold stock levels will underpin supply discipline in new housing in the UK.
In Ireland we have the Ryanair AGM tomorrow. There is a possibility that the company will not say anything about trading as there is an investor day on Friday week and they may prefer to discuss trading at that stage. The stock has had a strong run and it looks overbought but that being said it is less overbought looking than some of its peers even Aer Lingus is more technically overbought on Relative Strength index calculations.
In Ireland the Financials rebounded with Irish life restoring most of its last weeks losses at this point and also a bit of nibbling in AIB and BOI too after the pullback. CRH has traded back to Early Friday morning levels before the big squeeze. We may see some short closing soon from those who sold stock into the auction on Friday.
Grafton looks interesting , it got whacked last week on the index changes stuff and looks interesting here as a trade , it is down over -10% since last week and is underperforming Travis Perkins now by a significant factor.
Glanbia continues to find favour as it appears to react with a lag to the price of US cheddar cheese on the CME. More investigations to check out why or if this observation holds true over a prolonged period but so far so good. Glanbia could get back towards the Eur3.00 to follow the Cheddar Block price.
Wall Street which opened lower has crept back to flat in terms of performance.
Lets see what tomorrow holds , mid week hiatus…
Have a good evening.
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
www.merrion-capital.com
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Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.
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