Market Report: BP slips after US chief called to testify in trial
Thursday 29 December 2011
It was a case of good-news-bad-news for BP yesterday. Overnight came the declaration from a federal judge in the US that accident-prone BP was not negligent in the Prudhoe Bay oil spill in Alaska. The decision on the 2009 accident was seen as a minor victory for the British giant as it battles to repair its reputation from the Gulf of Mexico disaster. However, that was followed soon after by the announcement that its top US executive, Lamar McKay, will be subpoenaed to testify in a February trial over liability for the Deepwater Horizon blowout.
The news, perhaps not altogether unexpected, reminded any investors who needed reminding that the shadow of that crisis still hangs heavy over the company. Its shares, which otherwise might have been expected to rise on the Alaska judgment, fell 3.95p to 455.75.
TV's upmarket drama Downton Abbey was beaten by the BBC's EastEnders in the Christmas Day ratings war, but thathasn't done much harm to the commercial broadcaster as it still won a strong share of peak-time viewing. Shares in ITV jumped as much 3 per cent, before settling up 1.1p or 1.6 per cent at 65.5p, making it one of the biggest risers on the FTSE-100 index on the first day back after the Christmas break.
The chatter in advertising circles is that ITV's December performance won't be as bad as previously feared, lifting hopes for 2012. Last month, ITV warned its December ad revenue could slide as much as 10 per cent year on year against tough comparisons.
Consumers' willingness to splash out in the final days before Christmas and during the sales helped to boost the retail sector. Anecdotal reports suggest that the unseasonably mild weather has also helped, with talk that footfall is up as much as 20 per cent in some areas. Tesco leapt 8.8p to 399.8p while FTSE-100 counterparts Sainsbury's climbed 0.9p to 296.1p and Marks & Spencer pushed up 1.6pto 308.6p.
That feelgood factor also cheered FTSE-250 retailers, notably Argos owner Home Retail Group surging 3.95p to 86.8p, and Debenhams lifting 0.85p to 57.45p. But not every retailer was on the up. Supergroup, behind the fashion brand Superdry, slumped more than 8 per cent, down 44.3p to 486.7p. Market-makers speculated that Christmas may have been less than stellar for Supergroup ahead of its next trading update on 11 January, although it is a notoriously volatile stock.
The most talked-about stocks of the day were the internet gaming firms as traders welcomed the US Department of Justice's decision to soften its stance on online gambling. FTSE-250 firm Bwin.Party surged by 29.7p, or more than a fifth, to 160p while smaller rival 888 Holdings leapt 3.25p or 9 per cent to 39.25p.
The FTSE-100 index had an up-and-down day amid thin trading. Theindex briefly dipped below 5500 in early trading after weakness in the Asian markets. Then it recovered strongly, thanks to a better-than-expected Italian bond auction that eased fears about the eurozone. But weak US data late in the day sent the Footsie down a modest 5.30 points to close at 5507.40. The CAC-40 in Paris and Dax in Germany also gave upearlier gains.
"I'm surprised the market has stayed above 5500, which is a reasonably critical level, so that's a good sign," said one trader. "People probably want to keep their P&Ls [profit and loss accounts] up."
Equities desks have one eye on their bonuses which will be finalised afterthe year-end, though payouts will beslim after a lacklustre 2011, duringwhich the FTSE is on course to fall around 6 per cent.
"I wouldn't be surprised to see the market drift down again towards 5200 in the new year," added the trader. "I think we'll be back down there soon because we need complete confidence about what is happening in the eurozone. Until we get that, we'll 'range-trade'." That's a reference to how the FTSE has been trading in a range between 5000 and 5700 since August.
Christmas is traditionally the time when some of us start planning our summer vacation but the sun didn't shine on embattled travel firm Thomas Cook, off 0.82p at 14.2p. The debt-laden group has sold a Dutch property for €18m in cash to the Fotex Group. However, that is less than the €20.8m in gross assets attributed to the Dutch site in Thomas Cook's accounts in September. The disposal is part of Thomas Cook's efforts to offload up to £200m of non-core assets as it urgently looks to reduce liabilities after a string of profit warnings. The shares are down 92 per cent on the year.
It's always worth watching what fund managers think about other fund managers, so ears pricked up at news that US giant Black Rock has cut its stake in Jupiter Asset Management below 10 per cent. However, Jupiter shrugged off the sell-off, rising 1.9p to 216.9p.
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