Monday’s Master Investor Market Report

In today’s Market Report: Morgan Stanley, Aveva, Quindell, Advanced Oncotherapy and HSS Hire Group…

• Average UK house prices hit an all-time high of £286,000 in March as supply tightened and the number of prospective buyers rose sharply, according to data from online property broker Rightmove. The site reported that there were 20% more house hunters on the site than 12 months earlier, but 4% fewer prospective sellers.

• The International Monetary Fund has suggested that the odds of a positive solution to the Greek situation are improving after a long weekend of talks between the organisation and Greek government officials. Poul Thomsen, Director of the IMF’s European Department, said that there was still a long way to go and the results of Finnish elections over the weekend, where Eurosceptic parties performed more strongly than anticipated, may add further obstacles to the process. The Royal Bank of Scotland believes that there will be fresh elections in Greece by June, but that an exit from the Eurozone remains unlikely.

• The Chinese Central Bank cut its reserve ratio for the second time in two months yesterday. The reserve ratio requirement was reduced by 100 basis points to 18.5% with effect from this morning, and the bank expressed concerns regarding deceleration in the industrial and retail sectors. Analysts said that steep borrowing costs in the country remain an issue, with Arthur Kroeber, head of research at Gavecal Dragonomics commenting that “real interest rates are extremely high, and they are also quite high relative to returns”.

• The FTSE 100 closed up by 57.50points at 7,052.13 points; the FTSE 250 climbed by 31.04 points to 17,603.47; the FTSE All Share rose 26.32 points to end the day at 3,804.69 points; and the AIM Index dipped 0.63 points to 749.05.

US financial giant Morgan Stanley (NYSE:MS.), reported its most profitable quarter since the onset of the financial crisis, driven by increased revenues from equity and bond trading. The investment banking sector has been boosted by international developments over the last 3 months, including the Swiss Government’s decision to end its Franc cap and the introduction of Quantitative Easing at the European Central Bank. The quarterly dividend was increased by 50% to $0.15 (c.10p). At the London close, the shares were up by $0.38 (c.25p) to $37.13 (c.£24.90).

ADVERTISEMENT

Engineering software provider Aveva (AVV) confirmed that results for the year ended 31st March should meet market forecasts, a result that management believe shows the resilience of the firm’s model in the face of mixed market conditions. The company is heavily reliant on the oil and gas sector, and Aveva had previously warned that declining activity in these areas due to the recent drop in oil prices could negatively impact results. Broker Numis Securities reiterated a positive stance on the stock and said that Aveva’s current valuation “does not feel aggressive to us“. The shares dropped by 26p to 1,574p.

Quindell (QPP) has confirmed a second takeover approach for its telematics arm from Tantalum. The vehicle tracking telematics business now makes up the majority of the controversial company, following its decision to sell off its legal services arm at the end of last month in a deal worth up to £637 million, which was approved by shareholders on Friday. Both sales remain subject to regulatory approval in the UK. Quindell shares rose by 0.75p to 128.5p.

Photon treatment systems designer Advanced Oncotherapy (AVO) said that it is not aware of any reason for the dramatic rise in its share price over the last week. However, the board has confirmed that it is considering an equity issue to ensure that it has sufficient funds to complete its first LIGHT machine by the end of 2016 and accelerate the development of subsequent devices. As a result, broker Westhouse Securities has withdrawn its “buy” rating, target price and forecasts until more information is made available. The shares dropped by 1.87p to 12.38p.

Tool rental outfit HSS Hire Group (HSS) increased revenues by 25.5% to £284.6 million in the year ended 27th December 2014, in advance of the company’s listing on the stock exchange in February this year. Growth was principally driven by the acquisition of Apex, a Scottish generator hire specialist, and organically via the company’s regional expansion programme. However, HSS posted a pre-tax loss of £8.5 million. After the close of the year, the firm’s IPO generated £103 million, which was used to reduce leverage. The shares closed flat at 209p after hitting highs of 215p earlier in the day.

Tomorrow’s News Today

Arm Holdings (ARM), Sky (SKY), Associated British Foods (ABF) and Green Dragon Gas (GDG) will be among the firms publishing updates and resultstomorrow morning.

Quote of the Day

“Mondays are a good day to make statements, not Friday.”
― Ernie Els