Market Report: Footsie sold off into ragged retreat
Friday 28 August 1998
With the exception of an opening blip, the index spent the day in ragged retreat, ending 176.9 points down at 5,368.5.
There was, for the first time in the present downturn, some signs of determined selling. Turnover, although not high by historic standards, was enough to indicate that some investors are being panicked into snatching what profits they had left.
Many City professionals, however, were banking on a recovery next week when the holiday season should, more or less, be consigned to the photo albums.
Some institutional big hitters, it would appear, have left much more restricted roles to their stand-ins than in the past. One major institution has blocked share dealings unless the understudy considers conditions to be of an "exceptional nature".
Certainly the lack of buying firepower has been a major factor in the dramatic decline which has taken Footsie down from its 6,179 peak in July. Order-driven trading has also contributed to the slump. It was expected to increase volatility, but in the eyes of many market men it has also, by the very nature of the order book procedure, been an influence in the decline.
Rogue trades still appear. SmithKline Beecham is the latest casualty: the shares were at one time down 80p on an incorrect input. Even by the standards prevailing, such a fall seemed extreme. In fact it was; SB ended just 12p off at 718p.
Footsie's day's low was a 191.9-point retreat. Uncomfortably, the rest of the market suffered record falls. The mid cap index crashed 126.7 to 4,897.9, its lowest since early February. The small cap slumped 64 to 2,187.4, another year's low.
Most overseas markets were sharply down. Hong Kong was an exception as the Chinese government continued to offer support. New York, during London opening, was shrouded in gloom.
Tesco, with a mere 1p gain (just 0.63 per cent) to 160p, led the blue- chip leader board. Zeneca, at one time 74p higher, ended 14p up at 2,380p.
Blue Circle Industries, on turnover of less than 800,000 shares, tumbled 53p to 261p and Tomkins, which has suffered savage redress in the retreat, lost 28.5p to 241.5p.
The extent of some falls was mind-boggling. Cable & Wireless, presumably on its Hong Kong exposure, suffered a 72p misdial to 646p. Computer group Misys lost 250p to 2,600p.
The carnage among the second liners was just as daunting. But brewer Greene King, famed for its Abbot Ale, frothed up 8.5p to 536p on suggestions of corporate action and Kalon, the paint maker, hardened just 1p to 92.5p on yield considerations.
Builders, generally, suffered another demolition job. Barratt Developments, with results due late next month, succumbed 6.5p to 169p, its lowest since 1996. Prowting fell 7.5p to 102.5p.
Even when the market is in ragged retreat the odd hero appears. Step forward David Brown, a proud old name in engineering. The shares jumped 58p to 216.5p after the company disclosed it could receive a bid.
Newcastle Utd also bucked the slump. The departure of Kenny Dalglish and the arrival of Ruud Gullit sent the underperforming shares of an underperforming team 6.5p higher to 63p. A year ago they were 128.5p. The Gullit connection could be good for Hay & Robertson, which produces the new manager's Ruud and Admiral sports kits. The shares firmed to 117.5p.
Results produced little, if any joy. Rolls-Royce dived 18p to 203p; Reckitt & Colman 66p to 996p and Ladbroke 5.25p to 237.5p.
Oriflame International, the cosmetics group, confirmed its vulnerability to the Russian crisis. The shares tumbled 75p to 205p after it said Asia and Russia were hitting sales. Before the Asian crisis erupted the shares were 548.5p. Another with strong Russian links, the Middlesex Holdings metals group, expired 0.75p to 2.5p. And Soco International, the oil group, fell a further 24.5p to 87p in a turnover of just 5,000 shares.
Suggestions that timber group John Mansfield, which once nursed aspirations to acquire the much bigger Norcros building materials group, is near to launching the bid which would transform its operations lifted the shares 0.25p to 5.75p. Textile group Leslie Wise, which has been the subject of reverse takeover speculation, gained 0.5p to 9.25p.
Megalomedia admitted, following share price weakness, that it would not meet market hopes because of a slowdown in its film processing business and fell 9.5p to 22.5p.
JJB Sports, the retailer, held at 441p. The Warburg Dillon Read-supported cash call at 440p closes next week. There are fears that much of the issue will be left with underwriters and the shares will suffer once the rights issue is out of the way. The group is buying Sports Division, a rival, for pounds 290m.
SEAQ VOLUME: 881m
SEAQ TRADES: 56,740
GILTS INDEX: n/a
HOUSEBUILDER Ben Bailey shaded 4.5p to 60p: the shares touched 95.5p in April. There are suggestions that rival Westbury building group has put together a 3.7 per cent holding.
Westbury's intentions, at least initially, are not thought to be hostile. It seems to be interested in joint developments where Bailey's entrenched position would be helpful. Bailey is trading well and profits are expected to be around pounds 2.2m this year against pounds 1.3m.
STENTOR, the Irish telecoms company, got its lines crossed when it returned to market. The shares, suspended at nearly 200p, ended at 111.5p. It warned that year's figures were expected to record a pounds 5.5m loss and its planned reverse takeover of a European telecoms business had been abandoned. The company did, however, say it had received takeover approaches.
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