Footsie takes heart from confidence in New York
Tuesday 10 December 1996
By the close the index was up 48.6 points, returning above 4,000 and reclaiming more than half Friday's slump. Government stocks rose by around pounds 1.
On Friday US influences spooked the market. US banking chief Alan Greenspan created alarm when he talked about the "irrational exuberance" of stock markets and shares around the world collapsed, expecting New York to follow their example.
But American investors, for once, were made of sterner stuff and New York was rather more robust than many expected. When London opened yesterday the betting was on New York staging a rally.
It did not disappoint. And with Hans Tietmeyer, president of the Bundesbank, talking about "some overreaction" to Mr Greenspan, there was not an audible dissenting voice to hinder Footsie's comeback.
The crash could, some reasoned, be something of a blessing in disguise, removing much of the pressure for another interest rate increase. The monthly Ken and Eddie meeting occurs tomorrow and the Chancellor could feel his case for unchanged rates has been reinforced by Friday's shocks. With the Bank of England governor seemingly less keen to press for higher charges tomorrow's get together looks likely to be a non event.
Still the market could face a turbulent week. New York's confidence has been ruffled and the splits in the Tory ranks have not even been papered over. Thursday's Barnsley election result will wipe out the Government's majority.
Last week's slide, with Footsie at one time down 168.5 points, has already hit two flotations. Discovery Inns, a managed and tenanted pubs chain, and Wise Speke, the stockbroker, have postponed their plans to sell shares to investors.
The 48.6 index gain was scored on the back of thin trading. Few investors were prepared to chance their arm; content to sit on the sidelines until the still hazy investment scene becomes somewhat clearer.
BAT Industries led the Footsie gainers, scoring a 25p gain to 476.5p. A 60-page buy circular from Merrill Lynch helped.
BTR, the only blue chip to resist Friday's onslaught, continued to stretch from its year's low, gaining 11.5p to 249p.
Cadbury Schweppes, the soft drinks to sweets group, melted 9.5p to 477p. There were stories of profit downgradings as the company started a series of investment meetings. ABN Amro Hoare Govett was said to be among the securities houses to lower its estimates.
Tate & Lyle, the sugar group, was another in presentation mode - off 7p to 458p.
Scottish Television shaded 1p to 679p. It has discovered a large shareholder in the shape of Chase Nominees. Apparently Chase has acquired 3.85 million shares (6.34 per cent) but Scottish does not know when, from where or the identity of the beneficial owner. It only discovered the extent of Chase's involvement when the nominee house responded to a 212 notice which obliges a company to reveal its shareholding.
Sedgwick, the insurance broker, was given a takeover whirl with US groups named as likely predators. The shares gained 5p to 126.5p. Commercial Union rose 4p to 664.5p on bid speculation; GRE was another in the bid arena, up 10p at 273p.
The story of an Abbey National deal with Prudential Corporation continued to go the rounds with Abbey up 10p to 691p and the Pru up 4.5p to 485.5p. Greycoat, the property group, fell 2p to 154p as Moorfield Estates, a much smaller group, abandoned its ambitious takeover bid. Moorfield firmed to 30p.
The Labour Party's latest move to tap into the profits of utilities produced some spillage among the waters but electricities were generally a few pence higher. BT slipped 3.5p to 393.5p.
Bass shrugged off the not-unexpected referral of its bid for Carlsberg- Tetley to the Monopolies and Mergers Commission, gaining 14.5p to 803.5p as the market decided to concentrate on the merits of a possible US hotel deal. Other brewers were strong, with Whitbread up 13.5p to 770p and Scottish & Newcastle 19p to 672.5p.
Lanica Trust, aiming for a mail order future, posted a 195p gain to 895p; the shares have risen from 56p since it was first realised Andrew Regan, ex-Hobsons, was involved. The three major shareholders have sold 825,000 shares following a pledge to increase the outside interest.
rStruggling Owen & Robinson held at 11.25p. Former chairman Maurice Dwek has sold 1.6 million shares and now has a 1.95 per cent stake. Egon von Greyerz, the former Dixons executive, is the new leading light at O&R and is thought to be keen to develop the remaining sportswear side.
rParkwood, involved in park maintenance and leisure contracts, has picked up work worth pounds 10m since publishing its prospectus and now has contracts valued at pounds 68m under its belt. Its shares, placed at 65p by Wise Speke, are due to start trading today.
rSunderland FC's flotation by Charterhouse Tilney is apparently going well with the offer oversubscribed and likely to be fixed near the top of the price range. Dealings should start on Christmas Eve.
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