Market Report: Cadbury declines as defensives retreat

Cadbury fell behind last night after Goldman Sachs, mindful of the "green shoots" that have been spotted in various parts of the economy in recent weeks, advised investors to switch out of the defensive food and beverages sector.

The clutch of economic indicators – including signs of recovery in the UK and the US housing markets, evidence of an uptick in consumer demand and the fourth consecutive rise in China's purchasing manager's index – brought the market well above the depressed levels struck in February; and, although the initial enthusiasm evoked by the news may wane, and while a recovery may still be some way off, Goldman said it was unlikely that the market was going to retest its lows. This is no bull market, the broker said, but "it is hard to ignore the stream of positive data that has come out".

So, factoring in the data, Goldman switched its stance on the food and beverages sector to "underweight" from "neutral".

"Like healthcare, food and beverage has been a strong performer due to its defensive nature and would likely underperform should signs of stabilisation emerge," the broker said, helping send Cadbury to 517p, down more than 3 per cent or 18p.

Healthcare was moved to "neutral" from "overweight", undermining sentiment around GlaxoSmithKline, which eased by 6p to 1014p.

Overall, the FTSE 100 strengthened to 3983.7, up 1.4 per cent or 58.1 points, while the FTSE 250 climbed to 6978.9, up almost 4 per cent or 260.5 points.

Amid low volumes ahead of the Easter bank holiday weekend, investors switched out of defensives and bought into the riskier financial stocks, which drove the market higher.

Barclays, which announced the sale of its iShares exchange-traded funds business to CVC Partners for £3bn, was among the best performers of the day, swelling in value by more than 12 per cent or 19.7p to 177.5p.

Royal Bank of Scotland was more than 11 per cent or 2.9p stronger at 29p as the shift in sentiment emboldened traders, who bought in on the recent weakness in the lender's share price. Wells Fargo, the American bank which yesterday said its first-quarter results were set to beat market expectations, helped sustain the rally in UK-listed banks.

But the strength in financials is only part of the story. Firmer metals prices and a positive production update from Vedanta Resources boosted the heavily weighted mining sector, which also helped boost the market. Vedanta itself was the best- performing blue chip of the session, advancing to 873p, up 13 per cent or 100p, while Kazakhmys, up more than 9 per cent or 39.7p at 466p, drew steam from some strength in the price of copper. The Eurasian Natural Resources Corporation was 10.7 per cent or 50.5p ahead at 521.5p.

The buoyant mood helped Marks & Spencer, up 7p at 317.25p, shrug off a new Morgan Stanley circular. The broker, which maintains an "equal-weight" stance on the retailer's stock, said the shares were already pricing in the recent positive newsflow and that, unless UK consumers begin trading up prompting big forecast upgrades, there was little further upside for now.

Predicting a 50 per cent reduction in the dividend when the company posts its preliminary results, Morgan Stanley added that despite recent policy action, and the improvement in the fortunes of the M&S food division, earnings were unlikely to recover rapidly.

On the downside, the drinks giant Diageo underperformed, easing by 1.2 per cent or 9.5p to 772.5p, amid speculation that it was eyeing America's Brown-Forman Corporation, which owns a number of well-known brands, including Jack Daniel's whisky.

Diageo was said to be one of two possible bidders for the group, which is controlled by the Brown family.

Any takeover is therefore only likely to succeed with the consent of the family, which was rumoured to be minded to sell, but only at a significant premium to the current share price of about $40. Speculators suggested that if a deal was agreed, the final takeout price may be as high as $65 per share.

On the second tier, the pubs group Marston's was 4.4 per cent or 6.5p firmer at 152.5p after KBC Peel Hunt upped the stock to "buy" ahead of a trading update, which is due next week.

PV Crystalox Solar, the silicon wafer manufacturer, climbed to 96.5p, up 6.6 per cent or 6p following a plug from Goldman, which added the stock to its "conviction buy" list, commending the quality of the company's customer base, its contractual cover, the strength of the balance sheet, and its premium margins and returns.

The various qualities, Goldman said, insulated the company from the tough operating environment in the solar sector, which faces the twin pressures of oversupply and weaker demand.

"With solar valuations having risen in the recent rally, we believe that this leaves many stocks looking exposed and that the best opportunities are offered by stocks most insulated from these effects, yet which trade at a discount to their peers," the broker said.



Get midday market updates at independent.co.uk/sharewatch

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee