Market Report: Analysts laying odds on gambler deal collapse
Nick Clark is the arts correspondent of The Independent. He joined the newspaper in June 2007, initially reporting on the stock markets. He has covered beats including the City, and technology, media and telecoms and made the switch to arts in December 2011. He has also contributed articles to the sports section.
Saturday 01 October 2011
There were no Friday-night lights yesterday as traders saw in the end of the quarter with a whimper.
As caution gripped the City floors, the betting stocks were given a kicking, with Sportingbet a particular target.
The shares dropped 1.75p to 46.5p as Investec analyst Paul Leyland cut the stock to "sell" over fears Ladbrokes' takeover approach was set to fall apart. The broker raised concerns that Sportingbet had not offloaded its Turkish arm. "We believe it will be very difficult to disentangle Turkey 'cleanly', which we believe is critical to the deal consummating," he said.
The miners were under pressure as copper came under pressure. Simon Denham, head of spread-bettor Capital Spreads, said the metal "has seen a real slowdown in demand and the metal is taking its biggest beating since the start of the global recession".
Kazakhmys was the worst performer, giving up 41p to close at 793p. Yet two miners unexpectedly shrugged off the torpor, with Fresnillo top of the blue chips at the close. After losses the previous day, it was up 72p to 1,586p.
China's purchasing managers' index figures cast a shadow over the session, as traders feared growth in the country could stall. Citi also released a note that said: "China's vulnerability to global slowdown shouldn't be underestimated: total exports account for more than a quarter of GDP and the export sector employs a big army of labour."
This contributed to the continued decline of the FTSE 100. It had fallen 20 points the previous day, and gave up a further 68.36 points to finish the quarter at 5128.48. The Hong Kong index had suffered overnight, led lower by its banks, which was also reflected in UK trading. Worst on the day was Standard Chartered, which is also heavily exposed to Asia. UBS also yesterday shaved its 2011 forecasts by 4 per cent as it predicted trading revenues would fall, and reduced forecasts of balance-sheet growth from 15 per cent to 12 per cent and lifted impairment growth to 20 per cent. The shares closed down 71p to 1,287p.
Also down in the banking sector was Barclays. The group fell 7.8p to 161.35p on sector pressure, as well as news that it had been slapped with a lawsuit from HSH Nordbank over losses related to residential-backed security losses. The claim said Barclays misrepresented the quality of the underlying loans and seeks at least $40m.
UBS was instrumental in pushing testing group Intertek right to the bottom of the blue chips as it downgraded the stock from "neutral" to a "sell" after pointing out the sector was "not immune to slowdown". UBS's analysts went on to say that margins were likely to be flat for the next 12 months. It also downgraded French peer Bureau Veritas. Shares in Intertek plunged close to 10 per cent, down 195p to 1,855p.
On the second line there were several more stocks in the blue. Among the top risers was RPC Group. The plastic-packaging company put out a bullish trading statement predicting a higher first half as its takeover of Superfos in December continues to pep up the results. Panmure Gordon said the medium-term outlook was "better than most", helping the shares up 10p to 337p. Worst on the day was Afren, which gave up 9.75p to 81.25p.
In the wider market Alterian shares took a tumble after the group said its company review would not consider a sale of the business. New chief executive Heath Davies kicked off the review when he arrived earlier this month and the company said it should be wrapped up in time for its interim results in November. Yet the shares retreated 11.75p to close at 63p, a drop of almost 16 per cent, after the statement added: "For the avoidance of doubt, the review is not investigating an option to sell the business."
Just Car Clinic decided it was time to hit the road, with the announcement it was to cancel its listing on the Alternative Investment Market. Shareholders in the repair group, whose website says it is "smiles better", were not grinning as the shares plummeted 45 per cent following the news. The group said the "perceived" benefits of an AIM listing included the ability to tap the equity markets, a higher profile, and incentivisation of staff. "After almost nine years as an AIM-quoted company, the company is not receiving these benefits to any extent that would justify the costs and management time associated with maintaining its status as an AIM company," it said. It is worrying news for the growth market, which saw 70 companies de-list in the first half. Just Car closed down 13p at 15.5p.
Also down on the AIM was San Leon Energy, though it actually had some good news to announce. The oil and gas group, which goes digging around in Poland and Morocco, was back in profit after a one-off payment from selling off an interest in the Rockall licence. Pre-tax profits for the first six months of the year hit €1.4m, up from a loss of €1.7m. Shares closed down 0.75p at 14.5p.
FTSE 100 Risers
Randgold Resources 6290p (up 160p, 2.6 per cent)
Along with Fresnillo, precious metals group manages to avoid sector rout.
United Utilities Group 624p (up 4p, 0.65 per cent)
Investors rush towards defensive embrace of the utility companies.
Autonomy Corporation 2550p (up 6p, 0.24 per cent)
Software company sneaks into positive territory as merger approaches.
FTSE 100 Fallers
Lloyds Banking Group 34.8p (down 1.6p, 4.4 per cent)
Financial services sector remains under pressure, while Evos cuts Lloyds to "neutral"
Man Group 168.5p (down 7.5p, 4.2 per cent)
Hedge fund to double job cuts to 400 just days after the group reveals significant customer outflows.
Burberry Group 1174p (down 27p, 2.2 per cent)
Designer clothes group feels more pain as investors fear for China growth .
FTSE 250 Risers
Domino's Pizza 445.5p (up 18.1p, 4.2 per cent)
Fast food group rebounds after two-day declines on some disappointing sales.
QinetiQ Group 116.7p (up 3p, 2.6 per cent)
Investors respond well to trading update as defence group says the first half was better than expected.
Electra Private Equity 1360p (up 6p, 0.4 per cent)
Buyout group announces sale of heating business Thermea Group.
FTSE 250 Fallers
Aquarius Platinum 177.3p (down 12.7p, 6.7 per cent)
US broker Citi cuts mining group's price target to 200p from 261p.
Millennium & Copthoren Hotels 401.7p (down 13.3p, 3.2 per cent)
Company declines as sector comes under pressure.
Aegis Group 124.5p (down 2.7p, 2.12 per cent)
Shares slide after Natexis cuts company price target from 175p to 170p
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