Market Report: Punch driven higher on trading hopes

The pubs sector was in focus last night, with Punch Taverns gaining ground as bargain-hunters piled in.

The stock rose to 84.7p, up 2.6 per cent or 2.15p, after Bank of America Merrill Lynch said the market may be overlooking the potential for upside gains as trading recovers from the depressed levels seen last year. The same was true of Enterprise Inns, the broker explained, highlighting the fact that both trade at discounts of over 60 per cent to their respective net asset values. "This means that the property would need to fall by a further 20 to 25 per cent to get to the current share price," Merrill said, helping Enterprise to rise by 3.4p to 117.4p. "Given the improvement in the property market and disposals at book value, we feel such a fall is unlikely."

The broker was also positive on Greene King, which added 14.4p to 457p, and Marston's, which rose to 90p, up 2.2p. "2010 is likely to be a challenging year for the industry, with VAT and other tax rises coupled with an uncertain macro outlook for the UK," Merrill said. "Also, the structural challenges for the pubs remain, with beer volume [declines], albeit lower ones, and ongoing pressure on rents. However, with sentiment depressed and valuations low, we think much of this is already priced in."

Overall, the FTSE 100, down 1.4 per cent or 71.73 points at 5145.74, began on a positive note, rallying to a session high of 5280.36, before falling below the 5200-point mark, while the FTSE 250 lost 31.47 points to 9213.78. Sentiment was hit by early weakness on Wall Street, where equities turned lower on the back of some disappointing jobless claims and durable goods data, and by expanded version of a recent Standard & Poor's note, which said the UK banking system was no longer amongst the most stable and low-risk in the world.

Concerns about the S&P comments sullied the mood around the banks, which began to give back gains as the session came to a close. As a result, Barclays, which touched a session high of 281.8p, up more than 5 per cent, ended 1.9p lower at 264.95p, while Royal Bank of Scotland, which swung to a high of 34.26p, up almost 4 per cent, was 1.3 per cent or 0.42p behind at 32.57p at the end of play. Lloyds Banking Group, supported by some positive comment from Deutsche Bank, almost managed to cling on to positive territory, closing broadly unchanged at 50.75p, down 0.09p. "We believe current conditions in asset markets (especially residential and commercial property) and low-risk free rates (which could stay low given slow GDP growth) favour LBG's restructuring, allowing it to term out wholesale funding at least cost," the broker said, maintaining its "buy" stance.

Elsewhere, the mining sector continued to weigh on the benchmark index, with concerns about Chinese monetary tightening refusing to go away. Xstrata was amongst the weakest here, losing 4.3 per cent or 45.5p to 1004.5p, while Antofagasta fell to 885.5p, down almost 4 per cent or 35.5p, and Vedanta Resources lost 63p to 2421p. Oil & gas issues were also unsettled, with BG easing by 16p to 1146.5p and BP, whose chief executive, Tony Hayward, yesterday said he expected oil to trade within a range of $60 to $80 per barrel during the rest of this year, retreating by 1.2 per cent or 7.1p to 587p.

The cruise operator Carnival overcame the downdraft, rising by 36p to 2272p, as traders bought in on the read-across from Royal Caribbean Cruises, which posted better than forecast results, reporting a good start to the busy "wave" season, which runs from January to March. "According to Royal Caribbean, the early 'wave booking' period has been encouraging with bookings and pricing both ahead," the Evolution analyst Nigel Parson said, repeating his "buy" stance on Carnival.

Further afield, IMI was 5p stronger at 546p after Citigroup upped its target price for the stock to 650p from 550p in an engineering sector review. The broker said UK engineering stocks offered better value than their European peers, arguing that "the downside is quite limited in nearly all cases". "Moving into what could be a strong reporting season we would highlight IMI as attractive given its low valuation on current earnings combined with still high economic recovery sensitivity," Citi added, sticking to its "buy" on IMI and upping Weir, down 2.5p at 771p, to "hold".

Also on the upside, the semiconductors group ARM Holdings touched a session high of 205p, up almost 6 per cent, before relaxing to 190.7p, down 2.9p, amid speculation about the technology used in the newly released Apple iPad. Imagination Technologies was boosted by similar hopes, rising by 6.7p to 263.5p. Although Apple is using own processor, Panmure Gordon analysts said the two companies should benefit from the device.

"It appears that this [the processor] has been designed by the PA Semi team which Apple acquired and it is extremely likely [that] it is ARM-based, like the processor in the iPhone," the broker said. "The chip also includes an integrated graphics engine which it is extremely likely based on Imagination Technologies IP [intellectual property]."

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: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

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

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
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