Happy New Year.

Well, it looks like there is still some bubbly flowing as the FTSE fizzes up 142.86 points to 6042.8 to erase the memory of last week's damp squib.
The fickle nature of the markets show clearly when last week took 2.5% of my portfolio's year end performance (Christmas Eve to New Years Eve), but this mornings optimism has recovered it! Has anything really changed in company valuations and prospects over that period except for New Year optimism? Lets hope its through rose tinted glasses and not blood shot eyes that are a prelude to a hangover!

The renewed optimism has been spurred by new 2 year highs in the US for the Dow Jones Industrial Average and the S&P 500 following news that the US manufacturing sector expanded for the 17th straight month and US construction spending is at its highest since June. The Nasdaq joined in the party mood by hitting its highest mark in 10 years as earnings estimates and price targets for Apple were increased.
Asia carried on the good feeling as prospects for US recovery improved which in turn has spilled over into UK stocks as the FTSE plays catch up led by mining and resource stocks.

But, there are still plenty of risks to recovery out there!

A few interesting moves in the market for me with:

• BP@ 490.45, +24.9 (5.35%). An article in the Daily mail adds weight to BP's currently discounted value with further suggestions that Royal Dutch Shell and Exxon had considered oppurtunistic bids for the bombed out company and continue to wait in the wings should any sign of weakness become apparent. In an ever increasing cycle of consolidation between the oil majors, the article goes on to suggest that Shell would counter any move for BP as it seeks to maintain its own position as a major player. This "Plan B" potential for an enthusiastic auction around BP (should management fail to restore credibility, of course), should continue to underpin BP's recovery as it suggests that the intrinsic value of its assets is recognised by its sector peers.
• National Grid@ 566, +13 (2.35%), more odd trading patterns as NG opened at 570 following some large purchases bang on 8:00, before dropping back to 563 at 8:01. On New Years Eve, NG was a big disappointment for me dropping 12 to 551, so I can only assume that these trades are a carry over from Friday's early close or opportunistic purchases based on technical weakness caused by low trade volumes on Friday.
• Aviva@ 409.6, +16.6 (4.2%), continues to quietly build momentum in what could be breakout year should world economies stabilise. The company is building on its Q3 Interim statement on the 2nd Nov when it declared that it "is on track to deliver strong profitable growth for 2010" and confirmed:
• an identified £400m of cost savings and efficiences for the next year and that;
• it is on track to deliver £1.5bn of operational capital

All 3 of the these are in my Value, Income and Recovery Portfolio

May you all have a Happy and "Prosperous" New Year!


Link to the Daily Mail BP article