MARKET REPORT

By Julian Sudre

There was a certain form of optimism in the air that investors have been breathing in lately even though the miasma of turbulence impaired healthy speculations; it has seemed that everyone was oblivious to the long-term repercussions in the markets. A string of banks issued profits warnings while shares were going north.
The latest investment bank Merrill Lynch announced yesterday that its US mortgage-related losses were not $4.5bn but $7.9bn which resulted in an indeed very volatile session for Wall Street stocks.
Now the procrustean bed has to be un-made as it is time people in the financial sector ate humble pie because on the strengh of another set of weak US housing data and a surge in oil prices added fuel to the fire once again.
Meanwhile Industrial and Commercial Bank of China - ICBC - is to aquire a stake of about 20 per cent in Standard Bank, the largest African bank by assets.
The chinese bank is coughing up £2.6bn according to a banker close to the deal.
It will be the largest banking deal in South Africa since Barclays bought Absa Group.
GSK, the second-largest pharmaceuticals company reported third-quarter profits 7 per cent lower at £1.9b is to take a significant charge this year that will depress earnings per share growth below the 2007 guidance it gave in February of 8-10 per cent at constant exchange rates. The £1.5bn "operational excellence" programme will see the closure of factories and several thousand job cuts in the coming months.
RV Capital, a london-based market-maker that trades in futures was the latest casualty of the credit market turmoil after putting itself into administration yesterday facing losses of £10.4m -£14m so far.
Another grim news for BP which reported it will cut about 17 per cent of its onshore workforce for the North Sea with an average of 350 jobs to be slashed as part of plans to downsize from the North Sea, where its production has dropped by more than a third in three years.
In the mining sector, production problems cut Kazakhmys' output in its third quarter, with copper ore extraction down 19 per cent year-on-year. The shares in the Kazakhsran-based company were pushed down 108p or 7.2 per cent to £13.77 yesterday.
The production of cathode, a refined copper, was almost 19 per cent lower in the third quarter.
The reduced output of the company has had a knock-on effect on production of other minerals.
Zinc in concentrate slipped 18 per cent and zinc metal was more than halved.
On the upside, Home Retail showed a 40 per cent rise in first-half profits as it benefited from stronger-than-expected earnings at Argos, its catalogue business. Underlying profits at Argos increased 50 per cent to £99.5m and sales were up 1.4 per cent like-for-like but down 2.5 per cent at Homebase. Overall group sales rose 3 per cent to £2.74bn. Pre-tax profits were £169.3m compared with £59.7m last time.
In the banking sector, JP Morgan is considering acquiring a stake in a chinese brokerage as part of its expansion strategy in the country. But other banks, including Merrill Lynch, Citigroup, Deutshe Bank and Credit Suisse, are believed to be preparing to negotiate deals to set up Chinese brokerage joint ventures.
Mounting concerns about the 787 programme has triggered Boeing to cut its sales forecasts for next year by $3.5bn or 5 per cent as a result of the announced delays to deliveries of the new 787 Dreamliner.