Market Report: Ill wind for IT sends blue chips tumbling

THE INFORMATION technology bubble came close to bursting yesterday as gloomy noises from one of the sector's stalwarts sent dealers scrambling for the exits.

A shock profits warning from Admiral sparked a wave of selling in the highly-rated IT stocks. The plight of the hi-tech brigade was the defining feature of a bearish day which saw the FTSE 100 take a three-figure tumble.

Admiral led the way downwards, losing over a quarter of its market value. The computer services group shed a chunky 277.5p to 790p after warning that first-half profits would be hit by overstaffing and a slowdown in one of its key projects. The company did not name the project's client, but traders speculated that a major bank or telecoms company may have decided to reduce its IT spending.

The statement fuelled the market's worries that the IT bonanza is coming to an end. Software-fixing companies have had an astonishing run in the past few years as the millennium bug and the euro launch boosted demand for their costly services.

But with the euro in place and the year 2000 on its way, many believe that IT stocks and their gigantic price/earning ratios are due for a correction. The poor sentiment has been heightened by some sharp falls on the technology- laden Nasdaq index in the US.

The IT bears were out in force yesterday, selling the blue-chip high flyers Misys, down 44.5p to 532.5p, and Sema, 44.5p lower to 550p. On the IT undercard, FI Group tumbled 35p to 295p, Logica 48.5p to 540.5p, CMG 129p to 1,586p, Sage 142.5p to 1,937.5p and Guardian IT 39p to 572.5p. Overall the software sub-index was down by 7 per cent.

The FTSE 100 fared little better, closing 131.4 points lower at 6,401.7 as US and domestic interest-rate worries took centre stage. A 100-plus fall in the Dow overnight set the bearish tone at the start of London trading.

The gloom deepened in the afternoon when Wall Street opened lower amid fears that US rates are going up. Jitters over today's interest-rate decision by the Bank of England also lurked, and the blue-chip index closed at its lowest level of the session. The undercard was hit by the leaders' malaise, with the FTSE 250 closing 42.7 points down at 5,844.8, while the small cap lost 10.6 to 2,573.2.

The bearish winds boosted traditional defensive stocks. Utilities soared for the second day as investors looked for safe havens and high yields. Scottish & Southern Energy led the way, rising 32p to 614.5p, followed by Severn Trent, up 39.5p to 877p. Scottish Power surged 18.5p to 542p; today's results should provide some news on the sale or float of its Scottish Telecom unit. Powergen, up 29p to 723p, and British Energy,19p higher at 568p, completed the utilities' feast.

Sainsbury rose 6p to 410p amid renewed talk of a sale of the sizeable family stake. Whitbread, up 29p to 1,115p, was boosted by its talks to buy the pubs owned by Allied Domecq, 2p higher to 545p as CSFB upgraded. Bass, 43p better at 1,000.5p, and Scottish & Newcastle, up 12p to 784p, benefited from hopes of further consolidation.

Woolwich cashed in a 1.5p rise to 401.75p. Developments over its mortgage securitisation venture in the US are believed to be imminent. Reckitt & Colman shed 4.5p to 745.5p despite vague talk of a strike by Colgate.

BSkyB's decision to give away the digital TV kit for nothing, establish its own free Internet service and offer cut-price phone calls caused a few ripples among the techies. Rupert Murdoch's company soared 65.5p to a 12-month high of 607p as the market got hooked on the idea. Its ally Flextech rose 36p to 914.5p. Sky's audacious move put rival ONdigital on the back foot; its co-owners Carlton, down 48.5p to 544.5p, and Granada, 24p lower at 1,343p, will have to respond soon.

Dixons shed 102p to 1,233p on Sky's Internet foray. Telewest Communications lost 17p to 254.5p amid fears of a cable price war. Would-be merger partner Cable & Wireless Communications fell 81.5p to 627p despite announcing its own digital TV plans.

On the undercard, sausage-skin maker Devro sizzled 15p higher to 150p. A stock overhang was cleared and talk of a 200p-a-share management buyout returned.

Condom maker London International Group rose 1p to 178.5p amid rumours that a foreign buyer will trump the merger with Seton Scholl, down 2p to 825p. Publisher Charterhouse Communications rose 2p to 21.5p after confirming bid talks; Columbus Group, unchanged at 36.75p, is the mooted bidder.

Sugar company Tate & Lyle lost a sour 7.75p to 432.25p amid rumours of a boardroom bust-up. Insurer Benfield & Rea was flat 114p; a big line of stock moved, with some mentioning interest from George Soros.

Antonov motored 17.5p ahead to 58.5p on progress of its new gear system.

SEAQ VOLUME: 1.1bn

SEAQ TRADES: 82,153

GILTS INDEX: 109.12 -0.12

MINMET, a small mining group, was among the market's biggest risers yesterday amid talk of a large find. The Irish driller soared 2p, or 27 per cent, to 9.5p, with over 7 million shares traded.

There are whispers that Minmet might have discovered a large quantity of gold in one of its South American developments. The find, possibly in Brazil, could boost the shares, which hit a high point of 10.75p last year.

THE CHINA manufacturer, Royal Doulton, could be in the sights of a predator. The shares rose 14p to 143.5p yesterday after two US funds disclosed an 8.6 per cent stake.

Insiders believe that an American predator could have been attracted by reports that a European or another US group was having a look at long- suffering Royal Doulton, whose shares have slumped from their peak of 226p reached last summer.

Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind-the-scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
News
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
PROMOTED VIDEO
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone