Bearish comments on economic growth from the chairman of the Federal Reserve, Ben Bernanke, and a "sell" note from broker Goldman Sachs, combined to send shares in plumbing and heating group Wolseley crashing, despite Monday's upbeat trading statement.
Goldman believes that stocks with exposure to the US, UK and Spanish property sectors are at particular risk, "where affordability is looking stretched, potentially limiting growth in the sector". The broker also recently downgraded Hanson to a "sell" recommendation, and with both companies generating more than 50 per cent of profits in the United States a rally is looking some way off. Goldman set a new target price for Wolseley of 1,150p, and the shares tanked 55p to 1,079p. Meanwhile, Hanson continued to weaken, falling another 8.5p to close at 633.5p.
Mr Bernanke's comments also put the skids under banking stocks, sending the sector sharply lower. Barclays shed 11p to close at 597.5p, Lloyds TSB closed 6.5p lower at 523.5p and Northern Rock lost 6.5p to 1,026p ahead of next week's half-year numbers.
There was some speculation in the market about trading at Cadbury Schweppes, the confectionery and soft drinks group. A recent salmonella scare resulted in the recall of more than 1 million chocolate bars from stores and the group warned the market on deteriorating margins as recently as 7 June. At the time, the group blamed rising energy costs, and some traders believe that the issues raised in June have worsened. The shares lost 6p to close at 518p, on decent volume with more than 26 million shares changing hands.
Interest rate concerns, weak banking and mining sectors and disappointing earning news from the US combined to send London shares weaker, losing more than half of the gains made on Thursday. The FTSE 100 index closed 53.4 worse at 5717.1.
Britvic topped the FTSE 250 leaderboard as, for what seems like the umpteenth time, takeover rumours pushed the shares higher. Traders said that PepsiCo may still bid and that selling its stake to other potential suitors is highly unlikely. The word in the market is that bidding for Britvic will not require a significant premium, the company having warned on profits twice since becoming a publicly listed company. The shares rallied 15p to close at 206p.
A second-quarter profit warning from Dell and poor numbers from Intel hit London technology shares hard, with CSR, Autonomy and Wolfson Microelectronics all sharply lower. All three report first half numbers on Wednesday next week and have been volatile in recent weeks even for technology stocks, despite most brokers expecting strong results. CSR fell 84p to 1,028p, Wolfson shed 17p to 390p and Autonomy, which has already confirmed that results will be ahead of expectations, fell 14.25p to 396.25p.
Brokers remain unconvinced that business will improve for MFI Furniture, after the group revealed a £45m loss on Thursday. In a note to clients, Deutsche Bank said that the anticipated bid for the retail arm may not come and that it expects the group to generate a pre-tax loss of £15m next year, against consensus forecasts of a £10m to £15m profit. Even so, the shares rallied 3.75p to 88.75p.
Market-makers put a 29.5p fall to 179.5p in Highland Gold down to a poorly handled sell order early in the day that saw the shares go as low as 160p, a 49p fall. Shares in the Aim-listed gold mining group recovered later in the day but traders said that the rogue trade had scared retail investors into getting out, ensuring that the stock stayed well below Thursday's closing price all day.
Star performer in the small cap stocks was Metal Bulletin after the group rejected a 340p per share offer from rival publishing group Euromoney Institutional Investor, comprising 75 per cent cash and 25 per cent shares. Accepting the offer would have meant an end to the merger between Metal Bulletin and Wilmington Group, announced on 26 June, and traders believe that another offer will come before long. Metal Bulletin shares closed at 355p, a 53p improvement, as Wilmington investors decided that its chances of a deal are now looking far less likely sending the stock 18.25p lower to 178p. Meanwhile, Euromoney closed out of the money, 4.75p lower at 392.5p.
Finally, Northern Ireland-based property developer Ross Home Builders got off to a good start on Aim after an introduction at 0.6p by broker SVS Securities. The private equity giant 3i owns 7.9 per cent of the shares, and although the company raised no new funds in the placing there was good demand for the shares, which closed at 1p, a whopping 66.7 per cent premium.Reuse content