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Firstly, another club triumph: the 2006 Achievement Award by ProshareClubs. Our night was complete when we managed an informal chat with Alpesh and he sounded amenable to helping us for our 10th anniversary celebs. He is a cheerful chap.
Markets seemingly have power to walk on water. But this week both the Dow Jones and FTSE100 fell. Perhaps 6000 on the FTSE has proved a step too far at this point in time. In Japan, the Nikkei, on it’s own for once, hit a new multi-year high (plus 3% in the week but not the only riser). The Nikkei fell in February but has been a star riser in March..There are however plenty of worrying signs elsewhere. Inflation is definitely a persistent trend throughout the world. The US jacked rates up again with hints about continuing the process for as long as it takes to quell continuing demand but there are suggestions that personal consumption and expenditure data are steadying. It seems the price of energy has perhaps done enough. Other awkward movements such as commodity price rises, but especially the new peak in gold, point to safe haven tactics by worried investors.
Some countries, as I mentioned last month are in dire straits particularly Iceland. Their central bank raised rates again by 0.75% on Friday which took the currency up by 2.1%. against the dollar. Who would rather not have their assets bought by businessmen paying with Icelandic Krona? Shades of ‘The pound in your pocket’ speech by Harold Wilson when things went pear-shaped for the UK all those years ago.
Opening today’s paper, I see that war with Iran is still on the agenda. Just another unsettling factor. However, buy on the sound of gunfire or so they say. Will Tony Blair stand up and be counted this time by resisting pressure to join a US coalition force? Or perhaps it will fall to Gordon Brown to engineer the final decision for the UK.
My particular worry is the end of the ISA season that is imminent. The wall of cash entering the equity markets will, I believe, tail off. This tightening of the money tap will see plenty of weakness over summer months and market indices will soon reflect that. Numerous stockbroker and wealthy investor types will be taking their bonuses elsewhere for the long summer break. On the other hand M&A activity may keep our markets excited for the rest of the year. Hang on in there for thrills and spills. Any sign of sustained weakness over the summer could lead to a time to buy.
Last month I mentioned that the auguries (in this case-French commentators) were predicting trouble to occur around about the 20th of March (not the ides).The trouble to which they were referring could well be the riots that France has been suffering for a couple of weeks.. Readers might conclude that the prediction was a call to arms to the students and others.
Oil has ticked up steadily this month. A dollar or so each week. Nigerian pipelines have been the problem, even though warmer weather in the Northern hemisphere has been a benign influence.
On the Highs (182) and Lows (38) list this week. were several miners, real estate and supports services compamies. To name one or two.; Kazakhmys and Vedanta, Ashtead and W S Atkins all made new highs. Sectors to gain over the first quarter are Industrial Metals (+49.15%,, only 4 stocks in sector), Oil Equipment & Services (+26.27%) and General Financial (+22.20%). In the bottom three is Mobile Telecoms (-2.70%) definitely showing sign of pressure over roving phone charges.
The club had a forced sale this month, fortunately with minimal loss. Tribal had been looking a little sick for some weeks and in spite of a lifeline, eventually succumbed. As sometimes occurs for us, it bounced when sentiment changed. Sustained volumes over the last 10 days have sent it out of the danger area. One of my current favourites, Kenmare Resources, has been a gem so far for Notton club (who accumulated last month) and for me. Good news last week about further increase in reserves of ilmenite took the share to a new high. The chairman said work on the mine was still on target.
Other club shares are doing well especially the miners, such as BHP and Merrill Lynch World Mining. Some have dropped back a bit. News on MITIE in FT, quoting Investec Securities, says that pre-tax for 2006 will be £50m giving forward p/e of 17.4 a slight discount to the sector which is 18.1. Looking at the chart for 12 months it appears as if it may fall back to the 200 ema at about 180p however that would be an accumulation opportunity, in my view. The article suggests a hold but not a buy at 190p. Synergy has strengthened a little and Hamworthy seems to be adrift just now. Good news for Hydro fans is the recent climb to a new high of 126p for the 12 months.
Good (or fortunate) investing to all
ML April 2nd 2006
Acknowledgements to Daily Telegraph and FT.