Market Report: Glencore slides again as commodities fall
Tuesday 24 May 2011
It may be the biggest float ever seen on the London market, but Glencore's disappointing start to life as a listed company continued yesterday after the commodities trader dipped once again.
The group begins unconditional trading today, and is set to enter the blue-chip index after the session has closed, yet it has been trading on the grey market since Thursday following a prolonged build-up.
Despite its issue price of 530p being seen by some as conservative, Glencore failed to move upwards on its first day and was then pegged back 6p to 524p last Friday, before last night closing 10p worse off at 514p.
Its fall came as metal prices shifted down, resulting in a tough session for the miners that left Antofagasta 47p behind at 1,160p and Anglo American 121p lower at 2,830.5p. There have been fears that Glencore's market debut has arrived at the end of the commodities boom, with Goldman Sachs last month advising investors to take profits.
However, market voices remained optimistic about Glencore's chances despite its weak performance so far. "I don't think [its management] will be worried as it is still early," said Guardian Stockbrokers' Atif Latif, who pointed out a number of tracker funds will be mandated to buy the shares. "As long as they stick to what made them a success thus far I expect they will replicate that as a listed company."
The weakness in the mining sector – prompted by data showing signs of a slowdown in growth in China and the Eurozone, plus fears over the latter's debt crisis – saw the FTSE 100 slump 112.6 points to 5,835.89, its lowest level for two months.
The news that ash from the Grímsvötn volcano in Iceland was travelling towards the UK prompted flashbacks of last year when the eruption of the Eyjafjallajokull volcano caused more than 100,000 flights to be cancelled.
As fears spread a repeat could be on the cards, airlines shares across Europe fell, including International Consolidated Airlines which plummeted 12.6p to 235p. EasyJet was also behind, knocked back 17.6p to 345.1p, with little help provided by a warning from its Irish peer Ryanair over fuel costs.
The airlines were not the only ones affected by the volcanic eruption, as the tour operators Tui Travel and Thomas Cook slipped back 7.6p to 229.8p and 5.7p to 145p respectively. However, JP Morgan Cazone was more positive, saying that although the "reaction seems to be factoring in an economic impact similar to last [year]", a number of factors – including companies being better prepared – means the effect will be limited.
Wm Morrison dropped 10p to 298.3p, following reports over the weekend that the supermarket may make a move for the frozen food retailer Iceland. Matrix's Tom Gadsby was not a fan of the idea, however, saying that while "Iceland generally suits customers on a budget who are prepared to shop in tertiary locations... Morrison's range is rather more aspirational" and that therefore a bid "would be a big mistake".
its announcement last week that it had received a number of approaches – including from the private equity firms Bain Capital and Advent International – means investors have been feeling rather optimistic that not only will Micro Focus receive a formal offer, but that a bid battle would then commence.
However, the software group retreated 17.6p to 381p on the FTSE 250 after Collins Stewart poured cold water on their hopes, saying a bid would not be forthcoming for a number of reasons, most notably because its valuation was too high considering its "pedestrian" growth profile.
"While it would be tempting to hold on to wait for a bid to materialise, we believe that shareholders should consider taking some profits above 400p," said the broker, adding that the group could fall to around 325p if no offer is made.
TalkTalk increased 3.4p to 149.1p, maintaining its strong performance in the wake of its final results last Thursday, since when it has ticked up over 13 per cent. Further support was provided by UBS reiterating its "buy" recommendation on the telecoms group, and the broker also increased its forecasts while adding that there was "scope for a payout rise and merger and acquisition [activity]".
Pole position on the mid-tier index was taken by Mitie, which rose 10.4p to 220.4p after the support services company said its full-year profit had jumped up over 15 per cent. Also updating the market was British Land, and the blue-chip property group was driven back 16.5p to 576p as its final results prompted Panmure Gordon and Peel Hunt to reduce its rating to "hold".
down on the Alternative Investment Market, Fairpoint lost almost a quarter of its value after issuing a profit warning. The financial services company shed 20p to close at 68p following its announcement that it was being hit by a fall in the number of people unemployed.
Emergency call 'started off dumb, but got pretty serious'
Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'
Thought you'd seen it all after the Jeremy Paxman interview?
Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent
"History is violent," says the US Army tank commander Don "Wardaddy" Collier
Striker's four-month ban for biting an opponent expires on Friday
- 1 This 'woman calls police to order pizza' story isn't going where you're expecting
- 2 Axe wielding man shot dead after attacking four New York policemen on busy street
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 Jimmy Carr's controversial Oscar Pistorius joke goes a bit too far at the Q Awards
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Renee Zellweger on plastic surgery rumours: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
This 'woman calls police to order pizza' story isn't going where you're expecting
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Axe wielding man shot dead after attacking four New York policemen on busy street
Diwali: What is the festival of lights – and how is it celebrated around the world?
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Attacks on 'Ukip Calypso' show how skewed people’s priorities are
iJobs Money & Business
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
£100 - 125k: Guru Careers: A CTO / Chief Technology Officer is needed to join ...