Market Report: If it doesn't rain it pours on UK shares

Buy everything. Sell everything. The eurozone is rescued. It's doomed. Banks will be fine. They're all about to fail. That was a 10-second snapshot of a trader's brainwaves yesterday, on a day when the only constant in the City was rain.

While the deluge continued, Monday morning's shoots ofeurozone optimism dissolved into outright pessimism; the banks — which surged at the start of the week on hopes that the Spanish bailout might fix, well, everything — floundered as solid plans for a "Grexit" emerged, and anyone who failed to whip profits off the table on Monday had their head in their hands.

"People have woken up to the idea that the Spanish deal is only a short-term solution," said one City suit. "Everyone with half a brain grabbed yesterday's early gains as an opportunity to take a profit. I didn't."

Safe haven was the phrase. The defensive stocks were flying high, with fag firms dominating the benchmark index.British American Tobacco, maker of Lucky Strike, put on 45p to 3156p, while JPS firm Imperial Tobacco was close behind, up 28p to 2406p. Drugs were in favour too: pharmaceuticals giant GlaxoSmithKline put on 12p to 1451.5p as the market liked the sound of its £146m eczema drug purchase.

Dividend payers were also in demand, with Unilever, which is the world's biggest ice cream maker thanks to Ben & Jerry's and Cornetto, up 17p to 2055p, BP ticked up 2.55p to 417.45p and Vodafone was 3.65p higher at 174.7p.

Also surging ahead in the FTSE 100 was interdealer broker ICAP, up 9.2p to 346.5p, after analysts suggested it could do well out of a "Grexit".

David Lowery at Faraday Research said: "More volatility and uncertainty would lead to more trades, which in turn leads to more commission for the company. Right now looks to be the calm before the oncoming storm. With a potential spike in volatility just around the corner, ICAP is perfectly placed to see earnings and profits increase over and above current forecasts."

The FTSE rose just 41.37 points to 5,473.74 by the end of the day.

"Whilst Spain's news gave a glimmer of hope yesterday morning, later on the really intelligent people worked out it was just a pretty weak sticking plaster, and we decided to listen to them," one trader said.

Although Apple impressed techies with the new operating system and "retina display" laptop announced at the Worldwide Developers Conference in San Francisco, the lack of a major product launch gave chip designer ARM Holdings a kicking. The Cambridge company which makes Apple's processors had risen ahead of hopes of a big announcement, but yesterday lost 1.5p to 504p.

Both Glencore and Xstrata put on weight after Jefferies analysts said — in contrast to speculation that Ivan Glasenberg's group could have to shell out more cash to seal the deal — that the merger plans were likely to go ahead on their original terms.

Christopher LaFemina, Jefferies analyst, said: "We have become much less convinced that a bump is coming," flagging up a "recent deterioration of seaborne thermal coal fundamentals, significant earnings downgrade risk for Xstrata, geopolitical risk in Peru and Argentina, [and] the risk to Xstrata's copper growth pipeline," among other issues to have eased the pressure on Glencore to sweeten the terms of its proposed merger. Glencore was up 3.3p to 366.85p whilst Xstrata ticked up 8.4p to 970p.

Things have come to a pretty pass when just telling the market you won't be missing your forecasts boosts your share price. But that was the case for Premier Foods, the indebted Hovis bread giant whose shares have halved since late March. Yesterday they leaped a hefty 6 per cent, or 4.75p, to 91p, after the company issued a statement declaring that "full-year expectations for 2012 remain unchanged". So stop selling our shares. Now. Alternatively, consider its numerous refinancing efforts, the recent loss of its chairman and the risks involved with its restructuring programme and keep baling out.

Amlin, the biggest of the Lloyd's of London insurers, jumped 3.2p to 326.7p — its biggest rise in four months — after a chunky upgrade from Deutsche Bank analysts. Price rises for insurance premiums and better underwriting should set the firm fair after arguably taking on too much catastrophe risk last year — a painful mistake given that awful time for natural disasters.

Deutsche praises chief executive Charles Philipps for buying more reinsurance — just in case...

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent