Market Report: Warm-weather woes leave Next out of fashion

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The Independent Online

The fashion retail trade is hard graft these days. A quick glance down any high street will reveal a mass of bargain basement mid-season sales trying to lure shoppers and, to make matters worse, it is nearly November and people are still wandering around in T-shirts. So perhaps it is little wonder that traders are speculating Next is poised to issue a profit warning.

The shares were under pressure against a much stronger market yesterday as rumours spread that the company is suffering more than most in the current difficult trading conditions, just five weeks after reporting record first-half profits. However, some market sources put the rumours down to reports of a shareholder presentation in which Next said there has been a slowdown in September in line with the rest of the retail trade. The shares traded down 50p in early trade before closing 19p weaker at 1,851p.

National Grid was also unable to join in the market rally as Citigroup placed a line of 26 million shares on behalf of an anonymous seller at 675p per share - a 10.5p discount to Tuesday's close. Traders said the whole line had been placed with investors by the end of the session as shares in National Grid closed 11p worse at 674.5p.

Stronger-than-expected housing figures in the US helped the Dow Jones power through the 12,000-barrier for the first time and gave a boost to shares in Hanson and Wolseley. The building supply groups surged 19.5p to 754p and 35p to 1,233p respectively.

British Energy continued to rally after Monday's disastrous cracked pipes news, as Deutsche Bank cut its target to 750p but told its clients that the share-price reaction "looks overdone". The shares topped the blue-chip leader board for most of the day, closing 24p firmer at 474p, still some way short of the value it will need to retain its place at the top table.

In the wider market, the Dow helped London shares to recover most of Tuesday's losses as the FTSE 100 closed 41.8 firmer at 6150.4. There was particular strength in pharmaceutical and mining issues. AstraZeneca climbed 46p to 3,422p, a four-year high, while GlaxoSmithKline added 12p to 1,476p on rumours that its latest batch of drug-trial data will be better than expected.

A rumour that the Indian rival Reliance is mulling an offer for Wood Group, the mid-cap oil services company, sent the shares sharply higher early in the session. The stock peaked at 259p, a gain of 19p, before a round of profit-taking saw it close just 7.75p firmer at 247.75p. Both companies declined to comment on the rumours, leading some traders to comment that the denial is a sure sign something is going on.

The weapons developer Qinetiq is enjoying something of an Indian summer after a tough first year on the public markets. The shares have performed poorly since a controversial initial public offering in February, marked by severe criticism of the Government and its private equity backers, The Carlyle Group. The shares closed 8.25p better at 188p, a 16.6 per cent jump from the low. Traders said the bounce is in part attributable to consolidation speculation, with VT Group, 3.25p firmer at 488.75p, continuing to attract support on word that talks with BAE Systems could be revived.

It was another quiet day in the small-cap market, with the majority of significant movers being shares valued at less than a penny. Small-cap market makers are blaming the volatility and relentless rumour mill in the large and mid caps for the current malaise.

Leading the small-cap fallers was Bango, after the mobile telecoms service provider said it would not break even by the end of the year, as had previously been expected. The shares tanked 22.5p to 87.5p, an awfully long way from the 227.5p they peaked at in January.

Traders are looking out for developments in the takeover situation at Sports Café. Buried deep in yesterday's trading statement was confirmation that the group has received more than one offer. The word is that the company has already turned down an offer worth 65p and that the final price will be closer to 75p. The shares added another penny to close at 48p.

There could also be developments for MonsterMob, 2.25p better at 71p. The mobile phone content provider has collapsed this year after a brace of grim profit warnings over Chinese regulatory changes and weakness in its core UK operations. The group confirmed it is in takeover talks in August and there is speculation a deal could be announced any day now, according to one trader "valuing the shares at more than 100p".