Punters were taking the lead from Sports Direct chiefs yesterday as they dumped the retailer’s shares. Investors decided that the chief executive and finance director of the sportswear chain must know a thing or two about when to sell. Last week it emerged chief executive Dave Forsey and finance director Bob Mellors cashed out their bonus scheme options. The shares edged back on Friday but yesterday the stock bore the brunt of investors’ change of heart and it was the worst faller on the FTSE 100.
Michael Hewson, senior market analyst at spreadbetter CMC Markets, said: “The biggest fallers have been in the retail sector led by FTSE new boy Sports Direct which continued its sell-off from Friday after the £6.4m share sales of the chief executive and finance director.”
The share sell-off left the directors with just 50,000 shares. Sports Direct International – run by Mike Ashley - tumbled 30.5p, or 4.33 per cent, to 674.5p.
Sports Direct wasn’t the only retailer out of favour at the start of the week.
High street bellwether Marks and Spencer collapsed after a note from Credit Suisse, which reduced sales and profit estimates. They argued that signs that fashion sales declined in September would mean a weak second-quarter sales update next month. M&S lost 13.7p to 480.3p but the shares are still more than 26 per cent better since the start of the year.
Luxury brands exposed to China were weaker across Europe yesterday on poor Chinese forecasts over the weekend and comments from Burberry chief Angela Ahrendts, who reiterated her warning that the luxury slowdown in China could be more than a blip. Burberry stumbled down 20p – 1.22 per cent – to 1,608p while Louis Vuitton owner LVMH was down 1 per cent and Swiss watches group Richemont was 0.86 per cent worse off.
The wider market was still suffering from the fear factor emanating from the US shutdown and debt-ceiling worries. The World Bank lowered this year’s and next year’s economic growth forecasts for China which also weighed on investors’ minds. The FTSE 100 index was knocked back 16.6 points to 6437.28.
The outlook for China also hit the miners who are reliant on the global powerhouse but Mexican digger Fresnillo bucked the trend after a buy note from UBS. It was close to the top of the blue-chip index, up 18p to 931.5p.
For some City analysts there is only one match worth watching – and that’s between BSkyB and BT. Scoring the rights to broadcast the Champions League is “critical”, Nomura’s analysts claimed — and at any price. They explained that if Sky retains the rights, “even at a high cost”, it will signal a “robust defence of its business model”.
If BT is victorious, Nomura warned investors will “assume it intends to be even more aggressive on the Premier League next time around”, which could signal a “seminal change in market dynamics”. Sky’s shares are close to a 10-year high but Nomura still rated it a buy with a 975p target, although the shares declined 0.5p to 877.5. BT lost 3.9p to 347p.
On the mid-tier table, high costs and only a small rise in sales caused pork producer Cranswick to fall 50p to 1096p. It warned that rising pig prices are hitting margins and it now expects flat full-year profits. Petra Diamonds beat forecasts and reported first-quarter production up by 816,735 carats, and said it is on track for the full year. It was close to the top of the mid-tier table, up 2.9p to 119.3p.
On AIM, explorer Northern Petroleum’s finance director Nick Morgan and exploration and technical director Graham Heard bought shares at 33.75p and 33.5p, taking their stakes to 0.08 per cent and 0.65 per cent res- pectively. The shares jetted up 1.5p to 31.75p.
Home automation technology specialist JSJS Designs signed a deal to make Megaman UK, a subsidiary of Neolight Hong Kong, its sole distributor for the UK. The group, which distributes products that control home devices via smartphones such as dimmer lights and security sensors, was 0.07p brighter at 0.285p.
Sable Mining Africa has got a Guinea export licence for its Nimba iron ore project. It will transport ore across the border to Liberia and to the port of Buchanan. Sable jumped 0.74p to 10.25p.
US-focused Northcote Energy said its third Oklahoma fracking programme will start this week, as it gushed 0.05p to 1.3p.
Buy: PETROCELTIC INTERNATIONAL
Snap up shares in Petroceltic, Liberum Capital suggests. The broker thinks the oil group’s sale of a stake in its Ain Tsila licence in Algeria undervalues the asset. But even at this “disappointing” price, Liberum thinks it justifies buying the stock. The deal marks “definitive progress” for the group because it has “monetised some of the value in the project ahead of market expectations”. It rates it a buy with a 171p price target for shares that are 147p.
Sell: LAND SECURITIES
Flog shares in Land Securities, Galvan Research insists. The broker thinks any property boom is already accounted for in the share price. London property has continued to improve but Galvan thinks Land Securities’ “fundamentals may have already factored in the best of the boom”. The shares are 914.5p and Galvan says sell until it reaches 850p.
Hold: TATE & LYLE
Hang on to Tate & Lyle, Shore Capital suggests. The broker notes that the sweetener business’ recent trading update turned out to contain more negative drivers than positive ones. Tate downgraded its outlook and Shore rates it a hold with a 734p price target for shares that are 740.5p.