Market Report: All-weather appeal helps Burberry to shoot up
Burberry was strutting its stuff near the top of the blue-chip index last night after the luxury fashion brand was praised as the stock to buy whatever the economic weather.
Shooting up 39p to 1,257p, the group was in demand as Barclays Capital upgraded its rating to "overweight", saying the retailer was set to "benefit in either a benign economic outlook or under more testing economic conditions."
As well as pointing out its encouraging performance during the 2008 recession, analysts from the broker said that in the event of another downturn, the group's investment in growth "should provide some flexibility to cut costs".
Meanwhile, in a more positive scenario they calculated that Burberry's share price could rise as high as 2,000p, saying "the group has a significant sales growth opportunity from increasing its presence globally". Estimating its sales in China could reach £1,500m a year by 2016, the analysts added that it could also double its sales in the United States, while both India and Brazil provided longer-term opportunities.
The news that Britain's economic growth for the second quarter was being left unrevised at 0.2 per cent meant the session got off to a bad start, and a downgrade of US GDP for the same period to 1 per cent did not help.
The focus of the day was Ben Bernanke's speech at the meeting of central bankers in Wyoming, which was eagerly awaited following optimism earlier in the week that the US Federal Reserve chairman could reveal a third round of quantitative easing. However, traders were clearly more pessimistic yesterday, with the FTSE 100 down 2 per cent by the time his comments were released. Yet despite Mr Bernanke giving no signs of immediate action, the benchmark index still mounted a late rally ahead of the bank holiday weekend and closed just 1.18 points lower at 5,129.92.
The banks remained in the red, bringing to an end the partial recovery they had enjoyed over the previous few days. Royal Bank of Scotland occupied the bottom spot, jumping down 1.2p to 21.88p, while Lloyds Banking Group and Barclays declined 1.28p to 29.72p and 2.9p to 155p respectively.
As a result, the advice from Collins Stewart's Matthew Czepliewicz that "investors wary of the current relief rally in bank shares should take another look at Standard Chartered" proved rather timely. Reiterating his "buy" recommendation, the analyst said that while the bank may rise along with the rest of its peers, it would also "hold its gains better in any reversal", although yesterday it eased back 15p to 1,306.5p.
AMEC plummeted 26.5p to 849.5p – meaning the engineer has now lost over 7 per cent since the release of its interim results on Thursday – after Société Générale's Guillaume Delaby changed his advice to "hold" from "buy". Saying the company's growth figures were disappointing, Mr Delaby cut his earnings estimates as a result and warned investors there was "no catalyst in sight".
Another continuing to dip in the wake of an update earlier in the week was Glencore. The commodities trader, which actually posted a 50 per cent jump in its profits on Thursday, slipped 11.35p to 377.15p after the South African coal producer Optimum Coal revealed it had received a number of approaches, with Glencore one of the companies reported to be considering a move.
Admiral was among the major risers - a relief for the insurer considering the fact it had previously dropped nearly 17 per cent since Wednesday's interim results. Yesterday it was bumped up 39p to 1,318p by Deutsche Bank's decision to change its rating to "buy", with the broker's analysts saying the group had the highest "franchise quality" among its peers.
In fact they were positive on the sector as a whole, saying they "would be overweight ... other than in the scenario of a sharp pullback in risk assets from here". However, it did not stop Legal & General being driven back 0.9p to 98.2p, despite also being given a "buy" rating.
Vague bid rumours were still surrounding Pace, with the set-top box manufacturer creeping up 0.7p to 100.3p on the FTSE 250 as market gossips continued to suggest it may receive an approach worth 150p a share from Samsung.
Meanwhile, Exillon Energy slid 15.4p to 269.6p, despite the oil explorer revealing a first-half net profit of $11.2m after making a net loss of $8.7m during the same period in 2010.
Down on the Alternative Investment Market, the news that Beacon Hill Resources had received an approach worth 16.25p a share saw the coal producer rocket up 4.38p to 12.88p, a move of over 50 per cent.
Meanwhile on the fledgling index, the building services group T Clarke was also seeing a dramatic jump. However its shift of 16.5p to 61.5p was in the opposite direction after it announced a worse-than-expected drop in its profits before tax.
FTSE 100 Risers
ITV 57.85p (up 2p, 3.58 per cent)
Broadcaster takes the top spot, ending a week in which it has managed to add nearly 7 per cent to its share price.
Rolls-Royce 603.5p (up 14p, 2.37 per cent)
Engineering giant's joint acquisition with Daimler of Tognum receives final approval.
Diageo 1,192p (up 22p, 1.88 per cent)
Guinness owner climbs as both Bernstein and Nomura raise its target price.
FTSE 100 Fallers
Shire 1,921p (down 34p, 1.74 per cent)
Drugs company still falling despite the US regulator approving its Firazyr product on Thursday.
Serco 491.9p (down 8.1p, 1.62 per cent)
Outsourcer dips even as S&P Equity increases its price target to 673p from 600p.
G4S 260.2p (down 2.2p, 0.84 per cent)
Security services group drops as JP Morgan downgrades its rating from "overweight" to "neutral".
FTSE 250 Risers
Hansteen Holdings 79.5p (up 4.5p, 6 per cent)
Property investor more than recovers the losses it suffered after Thursday's first-half results.
Soco International 307.7p (up 9.2p, 3.08 per cent)
Oil explorer rises for third straight session, over which time it has added 8 per cent.
Stagecoach 256.9p (up 6.8p, 2.72 per cent)
Transport company climbs even though Royal Bank of Scotland changes its target price to 240p.
FTSE 250 Fallers
Regus 64p (down 3p, 4.48 per cent)
Office space group retreats after both Panmure Gordon and Peel Hunt reduce its price target.
Berendsen 489.2p (down 18.8p, 3.7 per cent)
Textile services company drops even as it reveals 18 per cent jump in its first-half pre-tax profit.
Stobart 128p (down 4.4p, 3.32 per cent)
Transport group slides despite saying its first-half pre-tax profit will beat the same period last year.
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