Market Report: Foostie boosted by the growing contingent of banks
Friday 25 April 1997
Barclays, up 49p to 1,107.5p, led the charge with the other big clearers, HSBC, Lloyds TSB and National Westminster, making their presence felt.
The sudden reawakening of banking support has been spurred by this week's impressive debut of the old Alliance & Leicester building society and some encouraging trading statements.
With four other building societies, including Halifax, the biggest of them all, in their stock market starter blocks, institutional investors are again fretting about the extent of their exposure to the financial sector which could dominate Footsie in the next few years.
Other, perhaps more crude, considerations were in also play. For example, takeover talk seems a regular feature of the sector, with Bank of Scotland's determination to underline its desire for independence seen as an illustration of its vulnerability. The prospect of bankers flexing their muscles in other financial areas is also enticing the market.
Barclays was, however, said to be a seller. The ever active rumour mill ground out the suggestion it was on the verge of selling its BZW securities arm to a leading US investment house, perhaps Goldman Sachs or Salomon Brothers.
The story is not new; but Barclays latest figures strengthen the possibility that the bank's tough new management will rest its case on high street banking.
The dilemma of the institutions over the composition of Footsie and their consequent financial exposure becomes more acute with each financial addition.
Footsie is already tilted towards the financial sector and with this year's recruits approaching one fifth of its constituents will have a money background.
The financials elbow their way into Footsie at the expense of, in the main, the more traditional representatives of Britain's industry and retailing.
So Footsie should, some argue, be constructed to mirror the wide spread of commerce. At the moment its rulers have little discretion; they have to reflect size.
Financials have led Footsie higher this year encouraging thoughts that so long as they remain in rampant form, the index will push to new highs. The latest gain, a modest 0.8 points to 4,388.5, was entirely due to money shares.
Alliance gained 9.5p to 554.5p and Abbey National 10.5p to 825.5p. Standard Chartered put on 23p to 923.3p and Bank of Scotland 18.5p to 357p. Royal Bank of Scotland, on Direct Line worries, was restrained to a 1.5p gain at 566.5p.
The Footsie flurry did, however, extend its winning run to nine sessions.
Profit warnings took their toll. Vickers, the engineer and Rolls-Royce cars group, reversed 23.5p to 202p, lowest for two years, and retailer Laura Ashley was cut 41p to 104p.
Kingfisher edged forward 5.5p to 668p with Schroders seemingly increasing its profits forecast by pounds 20m to pounds 465m and Next firmed to 658p following investment meetings.
Vodafone slipped 4p to 272p although Lehman Brothers remains keen on the shares. "We believe that Vodafone offers 19 per cent upside and a total return of in excess of 20 per cent over the next nine months", says the US investment house.
LucasVarity, the aerospace and vehicle components group, fell 1.5p to 191p after buying in, through ABN Amro Hoare Govett, another one million shares at 192p.
Sterling's strength took its toll with GKN and Siebe among the more prominent casualties.
The optimistic Eurotunnel statement left P&O lower in the water, off 15p at 596.5p and Eurotunnel firmed 1.5p to 71p.
Omnicare, a health group, jumped 28.5p to 157p following a signalled takeover approach and VideoLogic lost 5.5p to 51p on competition fears. Waverley Mining slipped a further 4p to 35.5p, reflecting its Scottish coal mining debacle.
Three newcomers made sound debuts. Comino, a software house, reached 139.5p from a 130p placing; Lady in Leisure, a health club business, traded at 125.5p from a 110p placing and Qualceram, a bathroom suite maker, rose from 143p to 159.5p.
Hopkinsons, the engineer, firmed to 29.5p after producing profits of pounds 814,000 compared with a pounds 3m loss. It is confident enough to raid reserves to hold the dividend at 1.3p. The group plans more disposals and a change of name, to Carbo.
Arthur Shaw, the hardware group, edged forward another 1.5p to 6.25p on the arrival of Ashley Levett, the commodities trader, with 12 per cent.
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