Member Article

Northumbrian water signs off with a splash

Chinese inflation data provided some positive news to top off what had already been a strong week of gains in financial markets. Although in line with economist’s expectations, figures showed that consumer prices rose 6.1% in the year to September, lower than the 6.2% and 6.5% rises seen in August and July. Whilst food prices remained stubbornly and worryingly high, the data added to hopes that China will put its monetary tightening on hold. Authorities in China have already raised interest rates five times this year in an effort to quench the overheating, a policy that has been successful in denting the country’s strong economic growth.

Relief was also taken from news that the Slovakian parliament became the last of the 17 nation bloc to ratify the expansion of the European Financial Stability Fund (EFSF). An earlier vote had stalled following dissent from one of the four governing coalition parties, however today’s vote was supported by the opposition in return for an early election.

Markets were broadly higher, once again undeterred by yet another downgrade; this time from Standard & Poor’s who reduced Spain’s credit rating one notch form AA to AA-. The ratings agency cited weak growth, a highly indebted private sector and high unemployment as justification for its reassessment. Miners extended their recent rally on the aforementioned Chinese data, helping the FTSE 100 to advance around 1% into positive territory.

Locally, shares in Northumbrian water were being delisted today following the purchase of the Durham based utility by Cheung Kong Infrastructure Holdings, of Hong Kong, for465p. The shares waved goodbye to public life at 464.2p which gave investors who bought at its floatation in 2003 a 325% profit on their investment. Additionally, shares in Sage Group finished 1.5% higher following a buy-back of 150,000 shares by the business software provider.

Within the FTSE 100, energy stocks and miners benefited from a broad based commodity rally which saw Brent crude up 2.3% to $111.8 and copper higher by a similar degree. Banking stocks across Europe struggled following yesterday’s Fitch downgrade, Lloyds positioned towards the bottom of the index with a 3% loss, although Barclays fared better with a 1.6% gain. Glencore found itself under pressure following market rumours that the commodity trader is placing $175millions worth of convertible bonds with Goldman Sachs, the shares finished down 3%. The UK’s blue chip index gained 63 points in today’s trade, finishing up 1.2% to 5466.

This was posted in Bdaily's Members' News section by John Dance .