Market report: Buying spree pushes Footsie over the 6,000 mark
Thursday 02 April 1998
The benchmark index first broke this psychologically important level 10 days ago, but could not hold on to the gains and slipped back.
Since then, the market has drifted as stock market strategists tried to come to terms with a market which had reached these heady levels about nine months earlier than most had expected.
However, investors clearly decided yesterday that just because the market has already risen by a fifth that did not mean shares weren't worth buying.
After a cautious start, the Footsie burst through the 6,000 mark at lunchtime and briefly touched 6,030 before closing at 6017.6, up 85.4 points.
Leading the charge was Orange, the mobile phone operator, which slumped recently after SBC Warburg was left holding a large chunk of shares that it took over from British Aerospace.
First-quarter subscriber figures, due out today, are widely expected to show Orange making up some of the ground it lost before Christmas and the shares bounced 25.5p to 406p.
Rival Vodafone released its figures yesterday and pleased the market by reporting a net increase in subscriber figures of 172,000 - at the very top of expectations. The shares, which have almost doubled in the past six months on bid speculation, added 3.5p to a new all-time high of 628.5p.
Vague bid chatter linked Glaxo Wellcome with American Home Products, the group which Smithkline Beecham left in the lurch when it announced its ill-fated merger with Glaxo. Glaxo added 73p to 1680p while Smithkline climbed 8.5p to 763.5p.
Value-hunters sniffed out two Footsie constituents which have been left behind in the recent rush. ICI added 60p to 1125p on the back of its recent US acquisition while BTR's 11p rise to 207p took the engineering group above the the 200p mark for the first time since last December's profit warning.
Other industrial stocks were not so fortunate as vain hopes that the Government would act to reduce the strength of the pound were dashed by Gordon Brown's comments on Tuesday. Among the casualties were GEC, 11p lighter at 462p, GKN, down 20p at 1595p, and British Steel, off 1.5p to 140.5p.
Recent Footsie entrant Compass, up 47.5p to 1065p, continued its recent surge on persistent rumours of interest from Rentokil Initial, 32p better at 1012p. Broker HSBC also repeated its recommendation of the catering group's shares.
The Office of Fair Trading's decision not to refer retailer GUS's bid for rival Argos gave both shares a lift. Argos, expected to produce its final defence tomorrow, gained 21.5p to 645p. GUS notched up a 23.5p rise to close at 765p.
Buyers returned to the new information technology sector in force. Micro Focus, selling software which helps fix the millennium bug, surged 45p to 612.5p. The shares were 718p a few weeks ago. Consultancy Admiral remained a favourite with a 52.5p rise to 990p. However, Misys, the sector's largest constituent, crashed 69p to 2911p on profit-taking.
Buoyant figures lifted Johnston Press, the regional newspaper publishing group, 3.5p to 231.5p. The shine rubbed off on fellow publishers Trinity International, up 19p at 551p, and Newsquest, 1.5p better at 292.5p.
BSkyB shrugged off the Independent Television Commission's ruling that bundling of television channels was anti-competitive with a 4p rise to 452p. However Carlton Communications, down 9.5p to 465p, and United News & Media, 3p lighter at 815p, lost ground on suggestions that their channels might find it harder to win viewers if they were not bundled with more popular offerings.
Chiroscience, up 25p to 348.5p, continued its surge on the back of Tuesday's distribution deal with Zeneca. Dresdner Kleinwort Benson has hiked its share price target from 440p to 750p and rates them a "strong buy".
Tiny US-based oil explorer XCL was dumped 57.5p to 232.5p after announcing that it would file its results late in order to allow it to recalculate its reserves and that 1997 losses would be about $14m, compared to $12m in 1996. Two minutes before the market closed, the group rushed out a statement clarifying that its proven reserves had increased.
Save Group, the petrol retailer, slipped 7.5p to 91p following Tuesday's disappointing results.
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