The Week That Was: US uncertainty leaves Footsie down at heel

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The Independent Online

Fears of inflation and a slowdown in the world's biggest economy hit the FTSE 100 last week after the publication of gloomy US economic figures. The Dow Jones fell by up to 1.2 per cent before Federal Reserve comments on Friday eased investors' interest rate jitters.

But by then the damage had already been done to global indices. Japan's Nikkei and the German Dax both slid by nearly 2 per cent, while the FTSE 100 index was pushed 1.8 per cent lower to 5879.3. Of particular concern to investors was a US labour market report, which revealed that productivity had slowed and labour costs were up by almost 5 per cent during the second quarter.

Also upsetting investors was a report showing US house prices had suffered their biggest fall in three decades during the June quarter.

The US slowdown has hit UK automotive and household goods manufacturer Tomkins, which warned investors that it would miss profit forecasts. Its shares plunged 14.2 per cent to 245p.

But Britain's booming property sector helped Brixton report that the value of its properties had increased by 6 per cent in the six months to 30 June. However, profits slipped 2.1 per cent to £129.4m in that time as the sale of assets cut rental income.

Commercial property group Derwent Valley increased the value of its property portfolio by 15 per cent to 1,540p as first-half pre-tax profits, excluding revaluations, climbed 11.5 per cent to £9.7m.

But housebuilder Wilson Bowden reported a first-half profit fall of 16 per cent to £91.3m, having sold fewer houses.

The oil price fell and so too did the fortunes of Shell's $20bn (£10.7bn) Sakhalin oil and gas project in Russia after regulators asked a court to suspend work, citing environmental violations. If the action succeeds, work on the project would have to stop pending new environmental reports.

Stanley Leisure quickly rebounded from failed merger talks with London Clubs. Just one trading day after Stanley's discussions with London Clubs ended following the latter's agreement to a £279.3m takeover bid from US-based casino group Harrah's, a new takeover proposal for Stanley Leisure was on the table. This was reportedly made by Malay-sian gaming group Genting.

Also getting a slice of the takeover action was Pizza Express owner Gondola Holdings, which received a £559m bid from UK private equity firm Cinven less than a year after the company floated.

A takeover plan for high street retailer Woolworths from one of the grocery chain's biggest shareholders, Baugur, pushed its shares 6.1 per cent higher to 35p. Baugur wants to carve up the group, which has 800 stores, and keep only a smaller part of the business.

Supermarket sector leader Tesco had egg on its face after it failed to launch its much-hyped direct shopping website and catalogue, Tesco Direct. This is blamed on IT problems.

Pubs operator Punch Taverns revealed average revenue at its 7,840 pubs had increased by 2.7 per cent in the year to 19 August.

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