During sterling's apparently unstoppable rise, dealers had been falling over each other, trying to get their hands on shares in the likes of Asda and Tesco. Now that the pound has taken a knock, falling 2.5 per cent since Monday and languishing below DM3 yesterday, it was a different story, with engineering companies becoming the flavour of the day. In the end, the engineers won out, with the FTSE 100 index ending 14 points higher at 4,876.6.
TI Group powered ahead 32.5p to end the day at 546p, which, although still some way off its year's high of 591p, is a significant improvement on its year low earlier this month of 456.5p. Other beneficiaries from sterling's shenanigans were GKN, up 67.5p at 1057.5p, and Smiths Industries, which chugged ahead 29.5p to close at 785p.
EMI and Reuters, both heavy exporters, also caught a slice of the action yesterday. EMI firmed 9p to 565p while Reuters added 15p to finish the day at 657.5p.
Market-makers have been used to taking refuge in retailing and pharmaceutical stocks over the past few months as sterling has wreaked havoc among big exporters. But Tesco, Asda, and Safeway were licking their wounds yesterday, as analysts suggested food retailers may have had their day after a strong run since the Budget. Asda plunged by 7.25p to finish at 140.5p; Tesco did little better, shedding 18.5p to close at 410p; and Safeway joined the fray, retreating 17p to 380p. Rumours of a supermarket price war in the autumn further unsettled the sector.
Glaxo Wellcome and Zeneca, also beneficiaries during sterling's heady rise, had a tough time. Glaxo, which lost 18.5p and finished at 1,327p, was pushed lower after Lehman Brothers slashed its earnings per share forecasts in advance of the company's interim results tomorrow.
Zeneca shed 25.5p to 2,015p and SmithKline Beecham dropped 14p to 1,226.5p.
Footsie came within a whisker of the 4,900 mark in early morning trading on the back of the buoyancy of the exporters. But the market lost its impetus after Wall Street dropped 29 points in early trading after lunch in London, adding to Footsie's nervousness about forthcoming employment statistics in the States.
Banks were in the money yesterday after Abbey National's figures reassured the City. Nervousness ahead of the reporting season had sent shares in the sector down on Monday, but there were big gains virtually across the board yesterday. Abbey's shares recovered from initial jitters after positive feedback from analysts, pleased there was no bad news on debts and that the interim dividend had been increased by 1.5p to 10.2p. Abbey's shares gained 36p to finish at 846p. Other banks followed suit, buoyed by the revival of perpetual rumours that NatWest was to be taken over. This time, ABN Amro Bank was the unlikely suitor, and although a spokesman for the company was swift to pour cold water on the reports, NatWest's shares steamed ahead 24.5p to 865p.
Elsewhere in the market, BSkyB continued to climb, although gains of 11.5p in early trading, prompted by a buy note from Kleinwort Benson, began to fall off towards the end of the day. Nevertheless, the stock ended up 4p at 452p, helped by market optimism about the satellite broadcaster's full-year results. Merrill Lynch is forecasting a 17 per cent increase in pre-tax profits to pounds 300.3m, although other analysts are banking on around pounds 10m more than that. Sky is also reaping the benefits of presentations to analysts by Sam Chisholm, chief executive and managing director, and his successor, Mark Booth.
Telewest Communications firmed 3.5p to close at 77.5p on reports of an operational review at the company. The changes, which will involve cost cuts, are likely to be unveiled at Telewest's results next month. Meanwhile, the bus company, Metroline, the only new issue yesterday, revved up to finish 16.5p above its placing price at 189.5p.
Bucknall Group, the international project delivery and facilities management company, added 3p in morning trading after announcing pre-tax profits up 43 per cent to pounds 1.3m. It was encouraged by whispers of broker upgrades, but slipped back down to close unchanged at 55p.Reuse content