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Friday Email: 02 October 2015

Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:

The past week has once again been volatile with the markets hitting lows mid week, but having recovered somewhat in the past two days. The FTSE 100 once again fell below the 6000 level but is now trading above 6100 for a modest gain on the week. The falls on Tuesday and Wednesday resulted in the FTSE 100 recording its worst quarterly loss since September 2011. There was very little of note from companies last week with Wolseley delivering its usual dividend increase of around 10% and announcing a share buyback. James Halstead maintained its record of being one of the most consistent dividend payers on the UK stock market with an increase of 10%.

The week ahead is even quieter than last week with Ted Baker and Tesco both reporting their interim numbers, but that's about it.

The story of the week came from Glencore, which is spite of its size has been trading like a dodgy AIM stock as Investec tried to suggest that there was potentially (if commodity prices remained at current levels) no value in the Equity of Glencore and little in that of Anglo American, which is a pretty big call. The shares of Glencore fell 30% on Monday in reaction to the research note from Hunter Hillcoat and Marc Elliott of Investec. They have recovered most of that since and trade at around the level they were trading before the Investec note came out as Citi group suggested that Glencore was both solvent and liquid. The strangest thing about all of this was that the Investec analysts who caused all the havoc actually had upgraded Glencore and Anglo to 'hold' from 'sell'. We have always preferred Rio and BHP to Glencore and at some point commodity prices will rise and focus may well move away from China and over to India as the current push by the Indian Government for inward investment realises its potential.

In my view, the Glencore episode just showed the level of fear currently around in the market which is reflected also in the volatility that we are seeing day to day. The market has fallen quite dramatically since May and we are now seeing an expected period of volatility on the back of the situation in China. For income seekers now is a good time as yields continue to stay very attractive, particularly in the UK and in the light of continued low interest rates.

This email was originally sent on Friday 02 October 2015

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