Market Report: Rod Stewart still sexy but Icap loses its attraction
It may have been Icap's annual charity day, but the rest of the City was not feeling so altruistic towards the interdealer broker yesterday. As celebrities such as Rod Stewart and Lewis Hamilton manned trading desks at its Liverpool Street offices, the group finished in last place on the top-tier index after punters were warned expectations could be too high.
Morgan Stanley was certainly not in a charitable mood, as analysts from the broker downgraded Icap's rating to "equal weight". Predicting that its volumes next year would continue to be under pressure as "subdued investor risk appetite persists", they claimed consensus earnings forecasts in the Square Mile for 2013 faced "negative revision risk" while also highlighting "significant uncertainties" around upcoming regulatory announcements.
The group was pegged back 16.1p to 350.4p in response, with the move coming a day after it revealed a sharp drop in its volumes. Icap announced that its electronic volumes over November had suffered a 7 per cent year-on-year fall to $770.7bn, which led Numis Securities' James Hamilton to say the chances of its second-half profits beating the first six months of the year was "very unlikely" and that the group's share price looked "far from compellingly cheap".
Although the FTSE 100 moved above 5,600 points during the first hour of trading following reports claiming that eurozone leaders could introduce two separate bailout funds, it ended up closing 21.81 points behind at 5,546.91.
Signs of discord ahead of today's eurozone summit did the damage, prompting IG Index's Yusuf Heusen to say that "trying to get eurozone politicians to agree is like herding cats – tricky, frustrating and a very lengthy process". However, it was only the benchmark index's second losing day in nine sessions, over which time it has managed to jump up 8 per cent.
The clear winner was Randgold Resources, which – appropriately enough – closed in the gold medal position after climbing 235p to 6,945p. One fan was Guardian Stockbrokers' Atif Latif, who said the digger represented "good value long term" partly because of his belief that the price of gold could reach $1,900 an ounce during 2012 thanks to demand from China.
Burberry was also on the rise, lifted 10p to 1,277p following supportive comments from Liberum Capital. In their first look at the luxury brand, the broker's analysts gave it a "buy" recommendation and predicted it would enjoy an acceleration in both sales and margins.
Meanwhile, Inmarsat (down 4p to 423.1p), Investec (down 4.8p to 358.5p) and Lonmin (up 3p to 1,053p) were confirmed after the end of trading as the three stocks being relegated from theblue-chip index in the latest indices reshuffle. Russia's Evraz and Polymetal, along with Irish building materials group CRH, will take their places when the substitutions are made at the end ofnext week.
A vote of confidence from its new chief executive pushed Cable & Wireless Worldwide up 0.97p to 17.82p on the FTSE 250. Gavin Darby, the former Vodafone executive who started his new role little more than a week ago, has spent nearly £340,000 on the troubled telecoms company's shares.
It was the opposite for AZ Electronics Materials, which slipped back 16.3p to 236p after the chemical group's former private equity owners, Vestar Capital Partners and Carlyle Group, both reduced their stake by selling 20m shares each.
Meanwhile, Kesa Electricals slumped 9.24 per cent to 74.15p in the wake of the retailer revealing yet more bad news for the high street. It admitted it had seen no improvement in trading trends yet in the run-up to Christmas, while sales at its Comet chain – which is being sold to the private investment firm OpCapita – had plummeted more than 15 per cent over the second quarter.
The recent flurry of takeover activity among the miners, including the news from European Goldfields (up 12p to 775p) earlier in the week that it had received a number of approaches, prompted analysts to cast their eye over who could be next in line for a takeover.
Liberum's Ash Lazenby said the sector was "warming up to M&A" and pickedout a number of smaller diggers whohe claimed may be boosted by bidspeculation.
Among them was the potash diggerSirius Minerals, which ticked up 2pto 28.75p on the Alternative Investment Market, while he also suggested that the South American assets of Metminco – 0.08p stronger at 9.38p – could attracta predator.
Hightex was celebrating a hat-trick after announcing it had won the contract to work on Brazil's Maracana Stadium, where the 2014 World Cup Final is to be held. It means the engineer, which shot up 23.08 per cent to 2p, will have been involved in three World Cup Final venues in a row.
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