Monday’s Stock Market report featuring Carillion, Rolls Royce, Petra Diamonds and Colefax

The Markets

The Euro dropped to a fresh 11-year low of 1.1088 against the US dollar today following news that the anti-austerity Syriza Party will lead a new coalition Greek government. Senior ECB figures have warned incoming politicians from the left-wing movement that there is little support for a debt write off among EU policy makers. Yields on Greek bonds rose, but rates are still below the levels seen ahead of the announcement of the ECB’s stimulus measures last week.

Computing giant IBM plans to cut 110,000 jobs, over a quarter of its total workforce, according to a leaked report. The company recently announced its 11th straight quarter of falling revenues and profits, once again failing to hit analysts’ forecasts. It is believed that the cuts will be focused on global service operations at the once-ubiquitous manufacturer, which has struggled to adapt to changes in the market over recent years.

At the London close the Dow Jones had decreased by 15.99 points to 17,656.61 and the Nasdaq shrank by 11.93 points to 4,266.21.

In London the FTSE 100 closed up by 19.57 points at 6,852.40 and the FTSE 250 rose by 11.62 points to 16,470.52. The FTSE All Share increased by 8.57 points to 3,672.98 while the FTSE AIM Index fell by 1.33 points to 694.93.

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Broker Notes

Northland Capital has rated Global Energy Development (GED) as a “buy” despite a steep reduction in proven and probable oil reserves in the firm’s holdings following the sales of its Llanos producing assets and poor results from Catalina shale tests. The broker was expecting a downgrade in this area after the recent oil price drop affected the viability of many current oil projects. The shares dropped by 5p to 37p.

Westhouse Securities reiterated its “buy” rating and 9p target price on Advanced Oncotherapy (AVO) after the company announced it had successfully manufactured the first coupled cavity linac modules, a key part in its LIGHT proton therapy system. The broker said that the investment case for Advanced Oncotherapy depends on it being able to come to market on schedule and that this represents a significant milestone in the process. The shares grew by 0.05p to 3.9p.

Beaufort Securities rated support services specialist Carillion (CLLN) as a “buy” with a target price of 348.4p after the company signed major contracts worth 200 million pounds over five years with the UK Ministry of Justice. The broker believes that these deals, coupled with a number of other recent wins, demonstrate that Carillion is well positioned for the medium-term. Shares in the company rose by 1.6p to 350p.

Blue Chips.

Energy firm SSE (SSE) has confirmed that results for the year ended 31st March 2014 will be in line with expectations laid out in its interim trading statement and that the firm is still committed to increasing the full year dividend by a minimum of the change in retail price inflation. SSE also said that it would cut UK household gas prices by 4.1% at the end of April and guaranteed to hold them at that level until 2016. Shares in the firm rose by 24p to 1,516p.

Automobile and engine manufacturer Rolls Royce (RR.) has received a major order from Chinese locomotive producer CNR Dalian with a value of around €100 million (74.8 million pounds) to supply around 232 of its most powerful locomotive engines, which will be used by CNR’s local consortium for freight trains in South Africa. The order will be fully delivered by the end of 2017. Rolls Royce shares climbed by 1.5p to 903p.

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Mid Caps

Mining and exploration outfit Petra Diamonds (PDL) said that output for the six months to December fell by 2% to 1.6 million carats, leading the firm to revise its full year guidance downwards to 3.2 million carats. Petra also announced that it had adjusted its expectations regarding ore grades and diamond prices for the second half of its financial grades and warned that full year results may not meet market consensus. The shares fell by 15.3p to 165.2p.

IT specialist AVEVA (AVV) has said that results in the Engineering and Design Systems division for the period from the start of October to 23rd January are in line with expectations, with the transition to a recurring revenue model proceeding to plan. However, there are higher levels of uncertainty in the Oil & Gas sector due to the recent oil price fall. The shares dropped by 20p to 1,379p.

Infrastructure outfit Balfour Beatty (BBY) has been appointed as preferred bidder for a 120 million pound student accommodation project at the University of Sussex. the deal is to design, construct and manage a 2,000 bedroom facility for the next 50 years. Construction is expected to begin next year and would be one of 15 student housing projects in Balfour Beatty’s portfolio. The shares rose by 1.5p to 228.5p.

Small Caps

Furnishing fabrics and wallpaper firm Colefax (CFX) saw sales drop by 4% to 37.44 million pounds for the six months ended 31st October due to the negative effects of currency translation. Sales in the core Fabric arm were up by 4% on a constant currency basis, but pre-tax profits dropped by 6% for the period as the interior decorating business struggled. Colefax shares fell by 15p to 360p.

Bus transport provider Rotala (ROL) recorded pre-tax profits for the year ended 30th November slightly ahead of those from the prior period, despite a modest fall in revenues. The firm’s 2015 fuel requirements have been fully hedged in advance, so the recent falls in the oil price have had little to no effect on the company’s immediate prospects. Rotala shares declined by 1.25p to 57.5p.

Clinical equipment developer Sphere Medical Holdings (SPHR) said that its UK commercialisation activities for blood monitoring device Proxima 3 are proceeding according to plan, with over 20 solid prospects in the sales pipeline and ten on-site evaluations planned for the first quarter of 2015. Steps are underway to launch the product in Europe over the next six months. Shares in Sphere Medical closed flat at 23p.