January blues

IC's share index for the world's major crane manufacturers barely moved in the first four weeks of the year. There was a tiny gain of 0.07 %, and the range of movements between the start and finish of January was only a few points.

As one might expect, there were no spectacular price movements for the individual companies that make up the IC share index. The Japanese manufacturers were the pick of a fairly indifferent bunch, with all three companies seeing an increase in their share prices. In the case of Hitachi and Kobe Steel, the improvement was around the 3 % to 4 %-mark, while Tadano edged ahead just 0.42 %.

The biggest gain, though, was for Finland's KCI Konecranes. The company saw its shares rise 5.52 %, perhaps as a positive reaction to its acquisition of Morris Material Handling in the UK (see January News).

In contrast, Palfinger, the other European company on the Index, experienced a 3.44 % fall in its stock. The company announced its 'expected results' for 2004 in mid-January, and these showed sales, operating profit and margins up significantly. The fall in share price would therefore indicate that, despite the improvement, these were below analysts' expectations.

Having said this, it should also be noted that Palfinger's stock is the most improved of all the crane companies over the last 12 months. It has risen 54.4 % since the end of January 2004 – significantly more than any other company on the IC Index.

Both the major US crane manufacturers saw their stocks fall in January this year, and the losses were steeper than that of the Dow. Results are expected from both companies in February, and these will make interesting reading. While US and world demand for construction equipment boomed last year – market leader Caterpillar's sales were up 38 % for 2004 – it remains to be seen how the lifting sector faired.

Dow down

While the IC Index remained neutral in January, the Dow lost 1.47 % to finish the month on 10467 points. Interestingly, it was also 1.47 % down on its position at the end of January 2003, which illustrates what a lacklustre year it was for the US markets.

It seems that the same problems that dogged the markets in 2004 are still around this year – part of the reason for the fall in January is the spell of cold weather seen in the US that month, which edged oil prices up again. The Topix 500 was also down in January, with only London's FTSE 100 blue-chip index putting on a moderate gain.

Despite the US stock market's difficulties, the US Dollar managed to recover some ground against the Euro in January. It gained 1.19 % over the month to finish with a valuation of €0.7673 (€1 = $1.303). Any improvement is welcome of course, but European exporters would like to see the Dollar and Euro back around the one-toone mark.

Outlook

Annual financial results in Europe and the US will set the tone for the early part of the year, and it will be a few weeks until all companies report. The other factors that will play a part remain unchanged – commodity prices, particularly oil and steel, and the effect of the US deficit on the value of the Dollar.