FTSE 100 gets a good pasting after China worries

The FTSE 100 fell 109 points today to close at 5,868 on fears that that the Chinese government will be forced to increase interest rates to dampen growth in an economy growing at over 10% in the last quarter of 2010. This meant bad news for commodity stocks on concerns on a fall off of Chinese demand.

Bay day for parts of the portfolio (Sirius, Bowleven, Imagination Tech) as technology and oil stocks were hit hard. On the positive side, Angel mining stayed flat after a weak start and largest holding Xcite finished the day up 7.5p (after rising as much as 16p) in the early afternoon.

Rising commodity prices are beginning to take their toll on some sectors. EasyJet (EZJ) dropped16%, the most in 6 1/2 years, after it said its first-half loss may double after increasing fuel costs due to the high oil price rose and poor weather caused flights to be canceled. Pretax losses for the six months to March 31 will be around £160 million compared with £78.7 million a year earlier. Associated British Foods (ABF) and Dominoes Pizza (DOM), dropped 3% and 6% respectively on fears of the impact of rising food ingredient prices. Prices of many commodities continue to rocket to multi year highs due to bad weather, speculation and the effect of the falling dollar (as many of these commodities are sold in US dollars). Ultimately, this may feed through to rising retail inflation and rising interest rates which will curtail economic growth.

As I predicted in my forecast for 2011, the year would be choppy with many opportunities to buy on corrections and many opportunities to sell on market peaks (see my post on the FTSE and DOW for 2011 http://contrarianinvestoruk.blogspot.com/2011/01/prediction-for-ftse-100-and-dow.html)

At last we have lift off on Xcite!

Price now ticking up strongly on Xcite Energy. Up 15p to 369p. Very tight spread for a change (1p). Looks like oilbarrel presentation has had the desired effect or realisation that news is just around the corner, especially on rig situation.

Google results after the close will point to strength of online ad recovery

Google (GOOG) will post its fourth-quarter results after the closing bell today. Interesting because like Apple it is one of the tech bell weathers on the Nasdaq stock exchange

Analysts expect revenues of $6.1 billion for the quarter (versus $5 billion a year ago) and earnings of $8.06 a share (versus $6.79 a year ago).

Investors will be watching for:

1. Growth in mobile advertising

2. Whether YouTube and other acquisitions are starting to contribute to earnings e.g. DoubleClick

3. Whether costs are being held in check or whether job hiring continues to grow

4. Growth in Adwords.

The stock currently trades at $630, on a forward price/earnings (p/e) of 18.

Sirius Minerals Investor presentation January 17th 2011

The link to Sirius Minerals (SXX) investor presentation is:
http://www.siriusminerals.com/wp-content/uploads/2011/01/Sirius-Minerals-Investor-Presentation-17-Jan-2011.pdf

Xcite Energy Oilbarrel presentation YouTube link

Here's the YOUTUBE link to last week's presentation by Charles Lucas Clements (Dir. of Strategy and Business Development) at the Oilbarrel conference in London.

http://www.youtube.com/watch?v=L4mGoRte104

At the 9-10 minute mark, very interesting that he talks about the potential of the share price doubling or trebling is a "fairly safe bet". A bold statement from a Director of a company.