Market Report: Blue chips hit by Asian worries

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The Independent Online
BLUE CHIPS suffered their third heaviest fall since order-driven trading was introduced in October last year.

Footsie ended at its lowest of the day, off 134.9 points at 5,852.5, as the stock market decided to fret about Asia - there was even talk of a Chinese devaluation - and the Russian turmoil. When New York displayed similar symptoms, plus the added worry of higher interest rates, the market's cup of woe was complete. Another strong sterling performance added to Footsie's tribulations.

It was the escalating Asian crisis which gave the order book such a bruising launch on what become known as Brown Monday. On the following Thursday Footsie endured a 157.3 fall and at one time on the Friday was smashed a record 457.9 before ending off 85.3. In April US interest rate fears caused a 141.5 fall.

Many observers believe the inherent volatility of the order book exaggerates Footsie moves. Supporting shares, mostly traded through the market-making system, suffered much less severely, with the mid cap index off 19.9 points at 5,917.0 and the small cap 14 lower at 2,767.4.

The Footsie fall, calculated by Datastream, was pounds 24.3bn; the overall market decline was pounds 27.58bn.

Only 11 Footsie constituents made headway. Best of the bunch was Asda, up 6p at 191.25p as independent research said it was the best performer of the top four supermarkets. Buy advice from Dresdner Kleinwort Benson was another influence. An upbeat trading statement lifted Tesco 10p at one time but the shares succumbed to the general unease, ending 3p off at 540p.

SmithKline Beecham was another to give up much of its earlier gain. At one time 34.5p higher, it closed with a 3p plus at 718p. The Glaxo Wellcome imbroglio continues to dominate sentiment but a presentation on its diabetes drug was also a factor.

Other Footsie stocks to struggle higher include Nycomed and Whitbread.

Pound-sensitive shares were hammered. British Steel tumbled 10p to 140p; GKN 42p to 820p and Siebe 60p to 1,266p. Rolls-Royce dived 13.25p to 264p. Besides sterling, Rolls was hit by Boeing's decision to curb production. The aero engine group is also a casualty of Asia's woes as airlines delay orders for new aircraft.

Cable & Wireless fell 35p to 685p as ABN Amro placed 7 million shares at 700p. The group's cable offshoot, C&W Communications fell 23.5p at 474.5p as the market prepared for the sale of 14.25 per cent of the capital today. But the market slide could force a rethink. Goldman Sachs is handling the placing of Canada's BCE stake and was said to have settled on a price of 475p.

BTR ended 6p off at 180p (after 175p) and TI fell 27p to 552p.

HSBC and Standard Chartered were obvious casualties on their extensive Far East exposure. The ordinary HSBC shares tumbled 63p to 1,447p and Standard 27.5p to 666p. Other financials were weak after their recent strength. Halifax fell 34p to 827p.

Somerfield, the supermarket chain, lost 11p to 361p as a large line was placed by BT Alex.Brown and Goldman Sachs. The two are thought to have acquired around 8 per cent of the company at 346.04p, selling on at 350p. The US houses should have made around pounds 1m between them.

Cazenove hit GRE with sell advice; the shares fell 13p to 374p.

Billiton, the mining group, remained under the whip of a stock overhang, falling 7.75p to 128.25p. DKB is thought to have chunky lines of stock on its book, acquired around the 155p mark. Lonrho, at last selling its Princess Hotels, rose 16p to 307p.

SHL, a business training group, had the dubious distinction of achieving the biggest fall. Nothing to do with Asia, etc, simply disappointing profits. The hitherto high-flying shares collapsed by 45 per cent to 144p. Ideal Hardware, a distributor, fell 40p to 235p after a downbeat trading statement.

The gloom did not, however, get to PizzaExpress. The restaurant chain's remarkable run continued with the shares 28.5p higher at a 950p peak in brisk trading. Five year's ago the shares were 75p.

Long-suffering Powerscreen, the troubled engineer, managed a rally, up 23p (48 per cent) to 70.5p despite an announcement of institutional selling.

Comino, the software group,rose 9p to 267.5p as results came in at pounds 1.95m against pounds 1.4m. The market expects around pounds 2.4m this year.

HR Owen, the upmarket car dealer, purred 1.5p higher to 20.25p, highest for three years. Heavy trading suggested that Ong Beng Seng, the Malaysian businessman, may have reduced his remaining interest. The shares were 15p when he sold the bulk of his stake last week.

Vaux, the Sunderland brewer and hotelier which has received an "unsolicited" takeover approach, held at 356p. Its new chief executive, Martin Grant, joins on June 22. He has been recruited from Allied Domecq. Another regional brewer, Marston Thompson & Evershed, sold its third interest in the Mercury Taverns chain for around pounds 2m. The shares fell 13.5p to 340p.