YP75: US jobless figures brings fresh fears of double-dip recession

Once again, markets started last week in a positive mood with M&A activity dominating headlines, in particular, BHP Billiton's hostile bid for Canadian fertiliser producer Potash Corporation.
By The Newsroom
Published 24th Aug 2010, 13:06 BST
Updated 24th Aug 2010, 13:06 BST

Having seen a $130 per share offer rejected, BHP has changed its approach and gone hostile in an effort to acquire the world's largest fertiliser producer. Whether or not the mining giant will have to put forward a more attractive deal remains to be seen.

However, the positive momentum couldn't be sustained as poor economic data from the US hit the markets on Thursday. Investor sentiment was knocked by higher-than-expected jobless figures and disappointing manufacturing activity which, again, brought about fears over a double-dip recession.

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Technology-led plastics group Carclo has made a strong start to the fiscal year 2011 on the back of good levels of demand witnessed in its technical plastics division and inkjet technology unit.

Carclo's technical plastics division, which makes moulded plastic components for use in medical and electrical products, saw robust trading in comparison to the previous year. The conductive inkjet technology business, the group's new venture, has shown upbeat trading, and with a new fine-line pixel technology, presents exciting growth opportunities for the Osset based-firm.

In addition, the group's Wipac subsidiary, which makes lighting for supercars, is expected to see much stronger trading in the second half of the year.

While it is clear that economic conditions remain tough, management believe the group are in a financially strong position and expect a larger proportion of operating profits to be generated in the second half of the year.

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The supplier of software solutions, Electronic Data Processing, continues to see a gradual improvement in sales and order levels compared with the previous year.

Despite the encouraging news, the Sheffield-based company remain cautious over the outlook because of the uncertain economic climate. However, the software group's recurring revenues remain strong and fully cover day-to-day operating costs while the balance sheet also remains debt free.

Elsewhere, recycling firm Straight has bought the injection moulding firm, Dyro Holdings, for 2.9m. Hull-based Dyro Holdings, which trades as Powell Plastics, is the leading maker of kerbside recycling boxes and has supplied Straight for a number of years.

Dyro's business operates more than 20 injection moulding machines, and the supply of plastic recycling and waste containers to Straight currently accounts for a sizeable proportion of group's revenues.

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Straight's management plan to invest in the Dyro's factory in effort to boost its efficiency which is in turn expected to lead towards an increase in the groups overall profitability. Dyro's location is also expected to prove beneficial for the group's growing exports.

Edward RH Marsden, Assistant Investment Manager at Brewin Dolphin, Leeds