Market report: Footsie outcasts tread a forlorn downward path
Saturday 20 March 1999
For most of their last day as full-blooded blue chips, Gallaher, Safeway, Tomkins and Williams looked decidedly forlorn as Footsie tracker funds and others moved to adjust their positions.
Williams had the dubious distinction of heading the Footsie fallers board. Besides the index indignity, the security group had to contend with problems in the US where two models of its gas alarms had to be recalled.
The US consumer watchdog was responsible for a million of the company's Nighthawk and Lifesaver systems being taken off the market because they could fail to trigger when a gas build-up reached unacceptable levels. Only the Lifesaver model will be recalled in this country.
Williams, which has moved from being a wide-ranging conglomerate into a security and alarm group, said the detector problem would have no material impact on its profits. The shares tumbled 24.25p to 356.75p.
Tomkins, still an old fashioned conglomerate, retreated 3p to 224p despite its tender offer to buy back 15 per cent of its shares, announced a week ago.
Gallaher continued its failure to benefit from the tobacco industry's litigation success, dropping 10p to 354.25p. Safeway, at one time off 2p, managed to firm 3p to 245p, although it remains perilously close to its 12-month low.
Footsie climbed 48.9 points to 6,163.2 as the Dow Jones average returned to territory above 10,000 points. Ahead of the double-witching hour, when futures and options positions expired, the Footsie was up 96.9. Trading in London was again heavy with turnover above 1.2 billion shares.
Besides New York's early exuberance, the market was encouraged by further indications that another interest-rate cut is justified.
Utilities were strong, inspired by positive comments from Goldman Sachs. Scottish & Southern headed the leader board with a 49.5p gain to 592.5p. The US investment house described the company as the "most compelling value play in the sector". It also upgraded its stance on PowerGen, switching the shares 33.5p higher to 725.5p.
Other electricity utilities to reflect the Goldman enthusiasm were National Power, 18p at 482.25p, and United Utilities, 23p at 750p.
Pearson, the banking and media group, bounded on Lehman Brothers, Merrill Lynch and Salomon Smith Barney support. The shares rose 94p to 1,333p. SSB offer a 1,400p target price, and Merrill suggest the shares will be 1,550p in a year's time. EMI, the showbiz group, spun 18p higher to 436.5p after indicating that its profits for the year ending this month would match market expectations ranging from pounds 198m to pounds 240m. Last time the company achieved pounds 307.1m.
Rolls-Royce, hit on Thursday, recovered 8.5p to 263.5p. The shares fell on trading fears following the figures from Smiths Industries but Charterhouse Tilney, after talking to Rolls, said it could find no reason for changing its profits forecasts. The investment house expects the aero-engine group to make profits of pounds 365m this year and pounds 422m in 2000. It said Rolls should maintain double-digit earnings growth over the next four years.
Rio Tinto, the mining group, was another to feel the benefit of analytical support. Morgan Stanley upped its target price to 950p from 900p. It is encouraged by signs of a recovery in some Asian markets and Rio's cost- cutting endeavours. The shares, after gaining 11p, encountered late profit taking, closing 2p higher at 854p.
Internet fans were again out in force. Dixons surfed to a new peak, up 40.5p to 1,343.5p, after Schroders suggested its Internet Freeserve provider commanded a 1,000p valuation, with the core retail business in for 970p. Arm, the computer chip maker, rose 10p to 2,640p; it plans a four-for- one share split. Stockbroker Durlacher, deep into hi-tech shares, rose 75p to 1,225p, a peak.
BICC, the cables and construction group where Wassall has finally broken cover and indicated its bid intentions, jumped 12.5p to 92.5p in busy trading. Wassall added 2.5p to 211p.
First Choice, on hopes that Airtours will barge into the comfy Kuoni Reisen merger, flew a further 4p higher to 182.5p. European Leisure held at 92p as Waterfall, where Euro Leisure has a 23 per cent stake, attempted to move in on the proposed Euro Leisure merger with Allied Leisure.
Hall Engineering's management moved to prevent a hostile offer from the TT conglomerate. The chief executive, John Sword, is trying to put together a management buyout. TT's offer values Hall at 97p a share; the price rose 15p to 140p on the possible Sword intervention.
Aspen, the media group which was in the red in the second half of its last financial year, put on 6.5p to 55p after confirming that takeover talks had reached "an advanced stage". Any offer, however, would not be "significantly" above 55p.
Proteus International firmed a further 2.5p to 45p following investment presentations, and Tepnal Life Sciences edged ahead 2p to 20.5p. Eidos, the computer games group, rose 195p to 1,957.5p on US interest.
Next, the fashion chain, smartened up 24.75p to 743.75p as Tiger Management, the US hedge fund, again cut its stake. The investment group sold a further 4 million shares, cutting its holding to 8.25 per cent.
Skillsgroup, an IT services business, rose 44.5p to 316.5p; it paid pounds 34m for Pontis Consulting, a specialist IT firm. The shares have moved up from a 12-month low of 158p in November; they were 320p last summer.
Arlen, the electrical group which produced a late profits warning on Thursday, fell 4p to 19.5p.
SEAQ VOLUME: 1.2 billion
SEAQ TRADES: 107,502
GILTS INDEX: n/a
PROBUS ESTATES, with properties in Holland and interests in Scotland's Aviemore mountain resort, eased to 3.5p despite positive comments from Teather & Greenwood.
The market appeared unsettled by the pounds 5.9m buy of a Dutch office and warehouse complex. Teather sees profits reaching pounds 1.15m by 2000. Probus has suffered losses in the past three years; the shares hit 66.5p in 1995.
QUINTAIN ESTATES and Development, with help from Benchmark group, looks like upsetting Chesterfield Properties' planned assets sale to GE Capital with a takeover bid.
Chesterfield hopes to postpone a shareholders' meeting to consider the GE deal. Its shares shaded 2.5p to 291.5p; Quintain was unchanged at 169p. Three weeks ago Chesterfield began property sales to return cash to shareholders.
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