Market Report: Clinton's tax plans bring out the bears

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The Independent Online
BILL CLINTON rattled shares yesterday. One minute the stock market was dwelling contentedly on unexpectedly encouraging economic figures; the next it was in freefall.

The Clinton administration's U-turn on taxes had a devastating impact on New York, re- opening after its Presidents' Day holiday. The Dow Jones Average quickly crashed more than 70 points and the FT-SE 100 index slumped 37.9 points in sympathy, closing 33.7 lower at 2,812.2.

The New York slide clearly caught London on the hop. Selling, however, was moderate with precautionary marking down by market-makers doing much of the damage.

President Clinton is due to give details of his new tax on individuals today. He is also expected to increase corporate taxation and there are strong fears that overseas companies will be singled out for particularly savage treatment.

With Hillary Clinton's curbs on health spending also on the horizon it was an unhappy session for drug shares.

Glaxo Holdings, due to announce interim figures tomorrow, also had to contend with a surprise price cut in the Netherlands for Imigran, its anti- migraine drug.

There has been criticism of the Imigran price and the 15 per cent reduction was seen as heralding cuts in other markets. To pile on the distress, James Capel and Societe Generale Strauss Turnbull were thought to have bought put options on the shares.

Glaxo's figures are expected to be good, say pounds 785m against pounds 709m. But the nagging fear that it will accompany the results with a massive cash call to help fund the takeover of a US drugs group contributed to a 32p fall to 667p in busy trading.

Wellcome lost 24p to 900p; SmithKline Beecham 15.5p to 449p and Hunting International 10p to 218p.

Other internationals were also under the US weather. Imperial Chemical Industries lost 25p to 1,134p. Besides the New York influence the shares were ruffled by stories that some of the Goldman Sachs stake still lingers and a sell suggestion from the stockbrokers Shaw & Co.

Grand Metropolitan, the food and drink group, bucked the trend as a number of investment houses, including NatWest Securities and Panmure Gordon, made confident noises. With its US fresh-food operation recovering from last year's glut and its fast-food and wine and spirit businesses well positioned to benefit from a US upturn, there are hopes that the chairman, Sir Allen Sheppard, will make an encouraging statement at next week's shareholders' meeting.

But Greig Middleton was less enthusiastic, drawing attention to the problems Grand Met is experiencing over its huge Inntrepreneur pub estate. The shares rose 8p to 446p.

The poor Courage figures unsettled the brewers, with Whitbread 'A' down 17p at 457p, hit by sell advice from SG Warburg. There was also talk that Barclays de Zoete Wedd may cut its profit forecast.

Inchcape, the international trading group, put on 1p to 579p as Nikko Securities lifted its 1993 profit forecast by pounds 30m to pounds 300m and said buy.

Pearson rose 9p to 388p with BZW moving from sell to buy, but BET eased 3p to 100p as Lehman Brothers was said to be negative.

Oils were unimpressed by the Opec deal. British Petroleum retreated 5p at 262p. Among second-liners Clyde Petroleum held at 46.5p despite BZW's enthusiasm; Aviva Petroleum edged forward 3p to 54p following a Colombian drilling report, and Pittencrieff jumped 28p to 351p on its proposed mobile phone spin-off.

Norman Hay made a rise of 21p to 51p in the two days since Roger Seelig arrived. There is speculation that it could be a big beneficiary of BAA's proposed fifth terminal at Heathrow.

AH Ball, the pipe group, crashed 30p to 75p after a profits warning; Gieves, the tailor, held at 31p as USI, a Hong Kong group, edged closer to mounting a bid, buying 5.13 per cent from Brierley Investments; Cupid, the bridal group, jumped 11p to 50p on revamp hopes.

Osprey Communications added 4.25p to 22p on recovery hopes; Castle Mill International gathered another 1p to 9.5p and National Home Loans Holdings firmed a further 0.5p to 10.25p. Shield Group rose 2p to 10p.

Whessoe, the engineer, advanced 17p to 338p. It has moved nearer to taking over Autronica, a Norwegian fire prevention group, by lifting its interest to more than 66 per cent, and now awaits Norwegian regulatory approval.

The FT-SE index measuring the top 100 shares fell 33.7 points to 2,812.2. The FT-SE index covering the next 250 lost 13 to 3,009.5. Turnover was 634.3 million shares with 30,228 bargains logged. Long dated Government stocks improved but mediums and shorts tended to give ground

Shares of MTM, which have displayed twitches of life following Swedish buying and a US disposal, get no support from Martin Evans at Hoare Govett. Debts are between pounds 120m and pounds 150m and net assets perhaps pounds 2m. Any chance to sell 'should be seized as there would seem to be little hope left for any sustainable recovery'. The shares are 16p against nearly 300p last year.

Shares of Hadleigh Industries Group have improved 18p to 72p since it revealed two US orders for bulk tank containers worth pounds 10m last week. The specialist supplier of storage and transport products lost pounds 1.15m last year but reported a reduced deficit at the interim stage. It is now trading profitably. The shares, placed at 160p in June 1989, have been as high as 228p.

The outlook for LIT Holdings, the heavily indebted financial group, could be transformed if it succeeds in selling its US futures and options business. Talks are going on. Any deal should sharply reduce LIT's debt and allow the development of its successful Johnson Fry operation. The shares (once nearly 500p) hold at 6p but some are watching the preference shares at 19p.