Institutions step in to temper the Greenspan factor


It was the day Alan Greenspan nearly did it again. In December comments by the US Federal Reserve chairman's about the "irrational exuberance" of the markets prompted an immediate sell-off in shares on both sides of the pond.

That attempt to stop a raging bull market in its tracks failed as share prices quickly resumed their upward path.

Yesterday Mr Greenspan had another go, with some success. In testimony to the US Senate, he hinted that US interest rates may have to go up to check inflation and questioned the sustainability of recent stock market strength.

In response Wall Street dropped by over 100 points in early exchanges and London fell in sympathy, hitting a low of 4,316 before institutional buyers emerged to leave the FTSE-100 15.4 points adrift at 4,329.3.

Company results again provided the main focus for dealers. Standard Chartered firmed 13.5p to 783.5p after posting 1996 profits at the top end of the range and raising its dividend by almost a third. SBC Warburg and SocGen were among the many brokers making positive noises about the investment bank.

Insurers were a mixed bag. Profits in line with market expectations saw the Prudential Corporation hang on to a 4.5p gain to close at 567.5p, but Commercial Union finished 24p weaker at 666p amid disappointment that its stated net asset value of 545p was 55p below forecast. Guardian Royal Exchange was the weakest blue chip, down 10p at 273.5p on further consideration of this week's results.

GRE's apparent enthusiasm for acquisitions, coupled with its relatively large exposure to UK motor insurance business, makes the shares a sell according to Japanese broker Nikko.

Barclays, 5p better at 1,127p, was the most active stock with over 35 million shares changing hands as brokers Cazenove and BZW went into to the market to buy back some of the bank's shares for cancellation.

Away from financials one of the main talking points was Grand Metropolitan, down 16.5p to 273.5p on fears of a burger price war being sparked by McDonald's' reported decision to slash the price of Big Mac from $1.90 to just 55 cents in a bid to jump-start sales. Last year McDonald's operating profits in the US fell by 9 per cent. John Wakely, analyst at Lehman Brothers, thinks McDonald's renewed focus on value - code for price cuts - could cost Grand Met's Burger King pounds 15m both this year and next.

That, he argues, raises the question of why Grand Met needs to own Burger King at all, not least because it offers no synergies with the rest of the food and drinks conglomerate and offers investors little or no upside.

As a result, Mr Wakely expects pressure for a Burger King spin-off to mount. One possible outcome is that if capital gains tax problems on disposal can be solved Grand Met could spend up to pounds 2bn raised from a trade sale on buying back its own shares.

Leading media stocks were weak on vague talk that the proposed digital terrestrial television alliance between BSkyB, Carlton and Granada may run into regulatory problems. BSkyB is also facing a revolt from several pub chains about the price it charges them to screen live Premier League football matches. BSkyB ended 10p lower at 610, Carlton closed 16.5p off at 460.5p while Granada eased 2.5p at 815.5p.

But the day's booby prize went to Pace Micro Technology. News of a second profits warning this month and the sudden resignation of joint chief executive Barry Rubery sent the shares crashing 71p to 86p. The shares were as high as 241.5p as recently as November. Volume was a hefty 19.5 million shares.

Traders expect the shares to bounce this morning on hopes that a contract to make at least 150,000 digital set-top boxes for BSkyB will still be awarded.

Merrill Lynch cut shares in paper maker David S Smith to ribbons as the broker slashed its forecasts to reflect cheaper continental paper prices.

The shares hit a year low of 252p, down 6p as Merrills noted that prices for testliner and corrugated board are about 20 per cent cheaper in Germany than the UK, causing significant import pressure for domestic producers such as Smith. The strength of sterling is another worry.

As a result the US broker has lowered its pre-tax forecast for this year by pounds 15m to pounds 85m and trimmed the 1998 estimate back by pounds 20m to pounds 115m.

Newcomer Aortech, the artificial heart valve manufacturer, made an pulsating stock market debut, closing 13.5p above the125p placing price.

A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn