Market Report: Barclays up again on Abu Dhabi backing
Friday 19 February 2010
After a brief wobble in the morning, the FTSE 100 recorded its fourth day of gains, shrugging off some disappointing public finance data.
Barclays was once again a strong riser – it is up 18 per cent this week – still flying after announcing record profits on Tuesday, and helped by activity in the stock after the previous session's close. It was bolstered as Abu Dhabi investment group PCP3 exercised warrants bought during Barclays' fund raising in 2008 and took its stake to 5.2 per cent. The shares rose 6p to 308.3p.
The banks had started the day down, as had the miners, dragging the top tier briefly into the red. Yet sentiment shifted, sending the index up 48.45 points to 5,325. The miners returned to form before lunch on positive news announcements. Top sector riser was Eurasian Natural Resources Corporation, the Kazakhstan copper and iron ore giant, which announced it had bought a Zambian metals processing plant in a deal $300m (£192m). The move to buy Chambishi was made in part to cut costs by processing copper and cobalt dug out of mines in nearby Democratic Republic of Congo. The stock rose 31p to 1037p. It was followed up by rival Kazakhmys, which announced it was to put £1bn into a power plant it owns with the state welfare fund. It rose 38p to 1349p.
Top of the day was defence group BAE Systems, which posted its full-year results in the morning. The group met expectations, before buoying investor sentiment by saying it expects to boost its sales this year, then raised its dividend and announced the launch of a £500m share buyback scheme in 2010. Shareholders shrugged off the recent fine that settled its corruption investigation as well as the £973m impairments that dragged the company into a loss. The shares closed up 15p to 364p.
Another strong riser was consumer goods company Reckitt Benckiser Group, after support from Evolution Securities. The group, whose products include Finish, Cillit Bang, Nurofen and Vanish, saw its shares rise 83p to 3445p as Evo's Chas Manso de Zuniga upped the stock to a "buy" from "add". The analyst said Reckitt continued to deliver "regardless of concerns over competitive intensity in the core business" adding the prospects for the year would be as good as 2009.
A solid trading update helped put the wind beneath Kingfisher's wings. The group, which owns DIY store B&Q, rose 4.2p to 217.4p after a trading update said full-year profits would come in slightly ahead of forecasts. The management added that despite bad weather; cost cutting and sourcing its goods from cheaper margins would bring in the slight lift in profits. Analysts at Credit Suisse said it was in a position "where it can develop and reveal its medium-term strategy from a position of relative strength".
Worst of the day was publishing group Reed Elsevier, which put out its full year results. The group's profits were up 1 per cent at constant currencies to £1.75bn in a year when parts of the business has been hit by the recession and the chief executive had departed just eight months after taking on the role. Shares in the group retreated 7.3p to 486.2p.
Reed overtook BT Group, which had stumbled to the foot of the index before lunch after a downgrade by Standard & Poor's. The agency reduced its debt rating on the telecoms giant by one notch to BBB-, putting it just one level above junk. The stock fell 1.4p to close down at 115.8p, the lowest since July. It was also brought low by a bearish note from UBS. The Swiss analyst fears the uncertainty around the group's announcement that the Pension Regulator had serious concerns over its plan to sort out the pension black hole could cause problems, adding: "If it were to mean faster pension paydown [it would] reduce cash yield."
On the second tier, Halfords Group had its pedal to the metal as it revved 47.2p, or 12 per cent, higher to 438.9p. The acceleration came after the group announced it had expanded its operations to servicing cars, buying Nationwide Autocentres for £73.2m. The stock was helped up as analysts backed the deal.
Shares were soaring in VT Group after it sent suitor Babcock International away with a flea in its ear. VT said that the offer valued at between 680p to 715p per share was a "small improvement" on the previous 633.9p, but it wants 800p. The shares rose 38.5p to 660p.
On the downward spiral, investors were taking their chips off the table in bookies Ladbrokes. The shares gave up 5.5p to 151.1p after full year profits fell 28 per cent to £191.3m. It blamed the recession and unfavourable Footsie results. The company, which is still on the lookout for a new chief executive after Chris Bell announced he was to quit the group, said that so far the year had not been kind with horse races and football matches abandoned due to the poor weather conditions.
On Aim, Cove Energy, run by John Craven, stormed higher. It lifted 70 per cent, or 16.5p to 40p after a "significant discovery" off the east coast of Africa.
Also up on the growth market was SpaceandPeople, the marketing and media group whose clients include Audi and Smirnoff, on strong results, closing up 23p to 75p.
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