Market Report: Thomas Cook plunges on 'zero growth' warning

Raised fears over the state of the package-holiday industry prompted Thomas Cook to plummet towards the bottom of the mid-tier index yesterday, at one point reaching its lowest level since 2008.

Touching 164.5p near the start of the session, the travel group eventually closed at 167p – a retreat of 2.4p – as traders pointed to a "brutal" downgrade from Goldman Sachs. The broker turned dramatically bearish on the company, changing its "buy" advice to "sell" and slashing its price target by 80p to 150p.

As well as noting the numerous difficulties that have faced the travel sector in recent months, including the political unrest in North Africa and the Middle East, Goldman's analysts said the package-holiday business was "a zero-growth sector", pointing out that the number of such trips being taken by consumers in the UK has seen a steady decline over the past few years.

The analysts also warned "increasing online penetration will lead to lower barriers to entry and greater price transparency", adding that this will increase the pressure on its margins.

Thomas Cook is heavily reliant on package holidays, which accounted for nearly three-quarters of its sales in 2010. Tui Travel has an even larger exposure of 84 per cent, but Goldmans kept its "neutral" rating on the blue-chip group, and it eased back just 0.6p to 231.8p.

Overall, the FTSE 100 managed a positive response to Tuesday's large fall, shooting up 45.97 points to 6,010.44 after it lost 88.97 points the session before. The banks played their part, and Barclays was the sector's top performer with an uptick of 4.7p to 308.85p following impressive results from the US giant JP Morgan.

Another helped on the read-across was Arm Holdings, 38p ahead at 598p, in the wake of forecast-beating figures from its Dutch peer ASML. The market was also impressed by previews of Microsoft's Internet Explorer 10, which uses the chip maker's technology.

"Bears... argue that Windows on Arm could be late and/or unstable, which appears not to be the case," Morgan Stanley said. The broker added it was "positively surprised that... development is already well advanced".

The miners failed to see a major recovery from Tuesday's sell-off, with Xstrata just 3p higher at 1,468.5p and Antofagasta dipping 5p to 1,406p.

Elsewhere in the sector, Fresnillo stayed at 1,576p as it announced its silver production for the first quarter fell just over 2 per cent. It did receive support, however, from Numis Securities, which said the group was its "preferred play" among the silver miners, although the broker advised investors to switch into gold.

It is not every day brokers respond to entertainment gossip, but in the case of The X Factor and ITV it seems like analysts are keeping a close eye on the burning question of who will be in the judges' chairs at the start of the next series. Recent reports have suggested that Simon Cowell could only appear in the final, which was enough to prompt Nomura to examine the situation.

Its analysts pointed to the current series of American Idol, which is Cowell-less for the first time, saying that it "has not suffered as much as had been expected from his absence". They therefore decided the news was not enough for them to change ITV's "buy" rating, and the broadcaster edged forwards 0.05p to 75.35p.

JD Sports was out of shape on the FTSE 250, sliding 64p to 837.5p, despite beating expectations with its final results. But the damage was done by the tone of the high street chain's outlook statement, with the group warning it was "extremely cautious" over the problems facing trading.

Elsewhere in the retail sector, SuperGroup powered up 70p to 1,432p as its peer Asos finished a huge 243p better off at 1,950p on the Alternative Investment Market (AIM). The clothing website made the move after revealing its international sales in the first three months of the year recorded a 144 per cent year-on-year increase.

Back on the mid-tier index, WS Atkins was driven up to the summit, rising 38.5p to 727p, following a brief-but-positive trading statement. The engineer was bullish on its upcoming full-year results, saying it expected its figures to come in ahead of forecasts thanks particularly to the strength of its Middle East operations.

However, Cookson finished near the other end after Goldman Sachs took it off its "conviction buy list". The engineering group was knocked back 8p to 652.5p as the broker made the move because of an increase in raw-material costs, saying its earnings will be negatively affected in the short-term as a result.

A second profit warning in not much more than a week meant Alterian retreated 57.5p to 108p, with the small-cap software group saying there would be yet another update next Monday.

Meanwhile on AIM, Aureus Mining – the gold producer which has been spun out of African Aura Mining – enjoyed a positive first day of trading, adding 7.5p to close at 115p by the bell.

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
New Articles
i100... she's just started school
News
news
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
New Articles
i100... despite rising prices
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
voices
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam