Market Report: Bright start in Asia helps the new year glow

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The Independent Online

The first session of the new year offered a little hope for those beleaguered traders in the Square Mile, although activity isn't really expected to start in earnest until Monday.

The post-new year's glow – which one observer called the "usual first-day rally" – saw the FTSE 100 open higher on thin volumes, but there was little indication that it would continue when everyone gets back to their desks next week.

Simon Denham, the managing director of Capital Spreads, said: "There is really very little to go on to indicate potential moves for the start of the year.

"There seems to be a sort of 'the worst is not over but we know what it will be' attitude filtering into the markets at the moment; the effect of bad news is now being discounted before it even arrives," he said, before issuing a stark warning: "It is quite certain the real pain for the UK has not yet even started."

The FTSE 100 ended up 2.88 per cent at 4,561.79. It benefited from rises in Asia, with the Hang Seng the pick, as it rose 4.55 per cent to close at 15,042.8. In India, shares rose 0.6 per cent as the market anticipated a cut in interest rates as well as a fiscal incentive package from the government.

The top tier was yesterday hauled up by big mining, with seven stocks topping the leaderboard. Xstrata was the most prominent, despite a fall in metal prices in the Far East, closing up 16.8 per cent at 747.5p.

The banking sector also enjoyed the first day of the new year on talk that interest rates would be further eased next week. Royal Bank of Scotland was the pick, rising 6.28 per cent to 52.50p.

The bounce was helped by calls from senior politicians to extend the ban on short selling sensitive stocks, which is set to expire later this month.

There was a mixed bag among the blue-chip fallers, with Inmarsat holding the wooden spoon as the session came to a close. Investors moved to bank profits after a week of gains in what is a pretty defensive stock. It ended 3.71 per cent down at 454p. The bus and train operator FirstGroup also hit the skids, sliding 3.23 per cent lower at 420p.

Good news out of India failed to lift the pharma giant GlaxoSmithKline. The shares softened 1.4 per cent to 1266.5p as investors also looked to cash in on the previous week's gains. This despite reports that rival Ranbaxy had failed to launch a generic copy of one of its drugs. "The failure appears to be due to regulatory issues, which promises the benefit to GSK to continue into 2009," said Savvas Neophytou of Panmure Gordon.

British Energy also lost its spark;it declined 0.45 per cent to 770p after it admitted that a nuclear power reactor had unexpectedly shut down yesterday.

There was precious little news driving activity on the second string, which was once more dominated by mining companies. Aquarius Platinum topped the lot, rising a fifth to 209.75p.

Worst on the mid-tier in the morning was the premium pork supplier Cranswick. The little piggies cried all the way home as the shares retreated over 5 per cent, but came back in the afternoon. The stock has come off since hitting 660p in the run-up to Christmas and closed at 583p yesterday, down 0.34 per cent.

In the wider market Thorntons, the chocolatier, was sickly but not sweet as it shed 7.25 per cent of its value to 92.75p, although the dubious honour of the worst on the All Share went to the software group Intec Telecom Systems, down 8.49 per cent at 24.25p.

The purveyor of sports fashion, JJB Sports, leapt almost 28.61 per cent to 5.26p, following a reshuffle of management. David Jones, former head of Next, was promoted to executive chairman, switching with the current chairman Roger Lane-Smith, who will move to deputy. The group added that the former Selfridges boss Peter Williams would join on Monday to head strategic development. Elsewhere it was a good day for retailers as John Lewis – often seen as a bellwether for the high street – put out pleasing numbers in the run-up to Christmas.

On the growth market, GCM Resources raged higher. The share price trebled, although there were conflicting views on the reason. The flakiest was talk it could be taken out at 75p per share, while others reckon the leap came off the back of the elections in Bangladesh. Word was GCM's coal project in Phulbari will now be able to move ahead. Bangladesh has vast amounts of coal, but foreign companies are yet to tap it. It closed up at 79.5p.

The shares in International Marketing & Sales Group continued to slump after the announcement earlier this week that it was to seek an extraordinary general meeting to cancel its AIM listing after three years. The announcement from the emerging markets sales and marketing group came a day after it said the trading environment was "very challenging". The shares fell 50 per cent yesterday to 1.25p.

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