Blue-chip profits spur Footsie across the 5,000 line

MARKET REPORT

Footsie did not just break records as it soared above the 5000 mark yesterday: it did so in style. Once the index cruised into uncharted territory shortly after 10.30am yesterday, it did not stop to look back, powering ahead to 5027.7 in early afternoon, and closing just a fraction lower at 5026.2, up 65.6 points.

The main driving force behind Footsie's romp was another raft of strong company results, and a emerging belief that the Bank would not increase base rates today even though recent economic date points to the need for a further hike in the cost of borrowing.

Thoughts of a delay in raising rates were clearly evident on the foreign exchanges. Sterling fell to 3.01 against the German mark, down around 5 pfennigs.

A batch of exporters revelled in sterling's decline, with the likes of TI Group, up 20p to 574.5p, putting on a spurt. Other companies that have been hit by the pound's strength in recent weeks included Reuters, which closed up 23.5p at 686.5p, and Reed International, which reports results today, ending the day 18.5p better at 630p.

GKN benefited not only from the pound's antics but also its better-than- expected results. It was among the best Footsie performers, up 70p at pounds 11.56. The company was helped by positive sentiment from SBC Warburg, which set a target price of pounds 12, and buy notes from Charterhouse Tilney and Credit Lyonnais.

GEC followed on GKN's heels, adding 18p to 379.5p, despite news that an executive director and former trade minister, Sir Richard Needham, was to leave. However, the defence electronics group was buoyed by news that GEC Alsthom's energy transport and distribution division had received a large order for an electric turbine.

While investors were busily buying former sterling casualties, retailers and utilities - domestic stocks safe from the effects of a strong pound - were decidedly out of favour. Tesco, which had been wanted earlier in the week, dropped 6.5p to 427.5p, and Asda followed suit despite a buy note from Hoare Govett, losing 1.25p to end at 145p. Sainsbury - off 2p to 435.5p - and Safeway - down 1.5p to 392p - did not fare any better. WH Smith was preferred, up 8p in early trading, and closed up 5p at 354p. Well-worn rumours of a takeover resurfaced, with one follower describing the retailer as a "sitting duck".

National Power led the Footsie fallers though, off 15p at 524p, and PowerGen dropped 5p to 708p. Water stocks were again looking washed out, with Thames Water, poorer by 8.5p, closing at 776.5p. Severn Trent was also trickling away, losing 15.5p to 834.5p

Oil and water certainly did not mix yesterday, as oils continued their rally after British Petroleum's results earlier in the week. BP, encouraged by buy advice from Societe Generale and BZW, jumped 30p to 891.5p, and Shell, due to report today, rose 15p to 473p.

Buyers were supping up Cadbury Schweppes, up 16p to 611.5p, after results roughly in line with expectations. However, analysts were not unanimously in favour, with Hoare Govett saying it was undervalued, but Societe Generale advising investors to reduce.

Two banks reported interim results yesterday, Standard Chartered and the Woolwich. Both met City expectations and Standard rose 32.5p to pounds 10.38, while Woolwich added 5p to 297p. Barclays was back in favour again, richer by 50p to close at pounds 13.28; and HSBC Holdings continued its heady ascent, up 57.5p to pounds 23.09. Halifax was less in demand, sliding 1.5p to 736.5p after NatWest changed its recommendation from hold to reduce.

First Leisure, the bingo to nightclubs group was also in the doldrums, losing 9p to finish the day at 296.5p. Merrill Lynch has advised investors to reduce, although an analysts' visit next Thursday could help to revive the stock.

Petra Diamonds, the mining group which is quoted on AIM, ended 7p better off at 115.5p, after announcing that it had won 10,000 square miles of diamond concessions in north-eastern Angola.

Vocalis, the voice recognition and call processing specialist, improved 6p to 64.5p after signing deals with nine telecoms equipment suppliers.

Viglen Technology, the personal computer group spun off from Amstrad, continued to languish, down 3.5p at 61.5p. And the purchase of two Kiss dance stations by radio group Chrysalis failed to woo investors. The stock closed off 3.5p at 562.5p. Network Technology, the AIM-quoted network connectivity specialist, which announced that it had applied for admission to the full market, closed unchanged at 162.5p.

Taking Stock

While blue chips are basking in sunshine, there is a dark cloud hanging over some of the small technology stocks. Fibernet Group is a case in point. The company, which supplies and installs electronic networking equipment, optical fibre and copper cabling systems, reached a year high of 184.5p in the spring, but closed down 4p at 116.5p yesterday amid growing concerns over earnings growth for the sector.

Dealings in Meltek Group were suspended at 40p after the company, which provides computer support services, said receivers would be appointed to wind up its Webb Corporation division. Meltek bought Webb in December. Meltek said in May it would announce a "significant loss" for the first half of the year to the end of June because of a difficult trading environment.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before