Market Report: Icap falls as Libor concerns persist

City scribblers think the time to buy Icap will come, but it is not quite yet. The interdealer broker has been caught up in the Libor scandal and US authorities are now reportedly investigating it as part of a widening inquiry into Libor interest rate rigging.

Icap, which is run by the former Tory party treasurer Michael Spencer, is already being investigated by the Financial Services Authority. The Numis banking expert James Hamilton, in a note headed "Libor just won't go away", rated Icap a sell. He reduced his outlook from neutral and gave the stock a price target of 295p. The shares responded and ended the day down 5.5p at 352.2p.

But Mr Hamilton hasn't written off the broker. He thinks "the trading environment has improved" but the point when Icap becomes a buy is "when you believe US interest rates will be expected to go up, which looks to be coming closer".

Mr Hamilton believes "Icap remains a key part of the global financial plumbing" and consequently does not believe its business model is broken.

It isn't just Libor rigging that has thrown brokers into the spotlight though. A series of consolidations, takeovers and mergers is on the cards. As the market shifts – volumes are down and brokers are not making much money – firms need to be leaner.

Last week the City stockbroker Seymour Pierce was placed into administration and New York-based Cantor Fitzgerald rescued its broking business.

Cantor was said to be eyeing Capital Spreads' parent, London Capital Group. Cantor wasn't alone though. London Capital's share price jumped 8.5p to 48.5p and it was forced to announce that it received "preliminary approaches" from Cantor Fitzgerald Europe, GAIN Capital Holdings and Michael Spencer's spread-betting firm City Index.

Analysts at KBW said: "Consolidation among the smaller players in spread betting makes good sense in the same way it does for smaller, less well-diversified exchanges. The economic rationale of pushing more business through a largely fixed-cost platform is sound."

With a taste for takeovers, traders were still speculating over the mid-cap inter-dealer broker Tullett Prebon. Its shares were up 9.2p at 290p and it has been the subject of vague bid talk for a week.

Another subject of very vague takeover speculation was the online grocer Ocado. Traders thought a short seller squeeze was pushing its price up and its shares put on 9.8p to 137.1p.

Even the benchmark index wasn't without bid gossip, and ITV was said to be a potential target for overseas media groups. Most traders were sceptical and the shares ended the day with a 0.8p loss to 114.8p.

The equities bull run wobbled last week, but analysts think optimism is at a two-year high. Bank of America Merrill Lynch's experts published "Who's afraid of the big bad bull" and revealed that fund managers are the most optimistic they have been in more than two years.

Only one in 10 global fund managers expects a recession any time soon, and investors want companies to "pursue growth", with 48 per cent hoping companies will spend cash to expand.

Not only are the global fund managers at their most bullish, but finally the eurozone outlook is catching up too. Bank of America's John Bilton says: "After lagging global optimism for several months, eurozone growth expectations jumped in February."

The FTSE 100 index was boosted by good news from the banking sector – namely Barclays. It added 61.32 points to 6,338.38, the biggest one-day gain since last month.

Details of Barclays' drastic cost-cutting strategy and strong results took it to the top of the tree, up 25.85p to 327.35p, followed by Lloyds Banking Group, which gained 2.7p to 55.45p, and Royal Bank of Scotland, ahead 13.9p to 354.2p.

The embattled coal producer Bumi was up 18.9p to 404p. After the market closed Indonesia's Bakrie Group detailed its plans to unwind its interest in the coal miner in exchange for Bumi's stake in Asia's biggest thermal coal exporter, PT Bumi Resources. It also emerged that supporters of co-founder Nat Rothschild had increased their stake on Monday by buying six million shares for around £24m.

The small-cap pawnbroker Albemarle & Bond reported half-year profits down by a third, and the shares responded by plummeting 17p to 212.25p. Its cash-for-gold business has particularly suffered.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen