The property website Rightmove saw its shares slump by more than 10 per cent last night, closing at its lowest level since the summer as traders sold on fears of competition from Google.
The stock fell by 57.6p to 499.9p after it emerged that the search engine might launch a UK-focused property portal, replicating an Australian initiative and potentially undermining the appeal of Rightmove and other British property websites. Traders said Rightmove, which charges estates agents, may struggle to compete, especially if Google's alternative was free for estate agencies to use.
Not everyone was spooked, however. Numis said Rightmove's market position was "firmly entrenched", with three-quarters of property queries on Google starting with a user typing "Rightmove" into the search box. Moreover, it is cheap, both in terms of the costs to estate agents and relative to other promotional outlets such as regional newspapers.
"Rightmove has been a market leader in UK property for nearly a decade," the broker said, highlighting the fact that the website had successfully maintained its position despite competition from Globrix, Tesco and the Daily Mail & General Trust's Prime Location portal.
Overall, the FTSE 100 index ended slightly lower at 5,313, a fall of 14.39 points, as the mining sector fell back amid a round of profit-taking. The FTSE 250 proved more resilient, standing firm a 6.8 point rise to 9,175.784. Xstrata, which said it plans to boost capital spending by 89 per cent in 2010, was the weakest of the blue chips, retreating by 44p to 1104p, while the platinum mining group Lonmin fell by 54p to 1857p. All eyes were on the US non-farm payroll numbers, which are due to be released later today. "The expectations are for 125,000 jobs to have been lost in the US economy in November," said Philip Gillett, a sales trader at the City spread-betters IG Index. "A slightly worse number than this could well provide the excuse to bank some of this week's profits."
The banks led the way last night, with Lloyds rebounding by 4.4 per cent, or 2.35p, to 55.45p and the Royal Bank of Scotland rising by 4.7 per cent, or 1.575p, to 35.125p. Traders attributed the turnaround to bargain-hunting and growing confidence in the banking sector's ability to withstand the fallout from Dubai's debt woes. News from Bank of America, which said it was moving to repay $45bn in US government funds, also boosted the mood, helping to offset the impact of a new Goldman Sachs circular.
Issuing its outlook for 2010, the broker said that while it continued to favour commodity-related sectors, it was less positive about financials, downgrading banks to "neutral" and the insurance sector to "underweight". "The banks have done very well this year. However, we believe this is primarily a re-risking driven rally," said Goldman's strategists. "Fundamentals for the banking industry are still challenging. Banking is a volume business and it is very difficult for the sector to do well without asset growth."
Elsewhere, Vodafone came under pressure and fell 2.8p at 140.5p, with traders blaming a bearish assessment from Collins Stewart, which was said to have sparked a round of profit-taking. "The shares are at the top of their trading range after leading the post-Dubai fallout rally," the broker said, adding that this was "perhaps a good time to remind investors that Vodafone looks to be effectively dead money for the next few years".
The music, DVD and entertainment retailer HMV was broadly unchanged at 112p, down 0.2p, as UBS considered the impact on Waterstone's books, owned by HMV, of Borders going into administration. "We believe Borders had book sales of around £100m from its around 35 stores," UBS said. "If we assume a similar 25 per cent transfer of sales as seen from Zavvi, then this may generate £25m of additional sales next year, or a 5 per cent like-for-like sales uplift for Waterstone's."
On the downside, Panmure Gordon failed to lift the mood around the solar technology company PV Crystalox Solar, which fell 2p to 58.9p despite the broker switching its stance to "hold" from "sell" in a sector round-up. Panmure's support proved more potent for PV Crystalox's rival Renesola, which rose by 4.5p to 129.5p after the broker reiterated its "buy" view.
"Our view of a continued up-tick in demand through to the first half of 2010 seems to be playing out... to the extent, we hear, that Chinese and Japanese original equipment manufacturers are successfully implementing price rises of up to 10 to 15 per cent," Panmure said. It added that if this occurred across the board, it could prove positive for stocks in the solar energy industry.
Further afield, the plastics group Victrex closed 2 per cent, or 16.5p, weaker at 815.5p after some negative comment from Deutsche Bank, which moved the stock to "sell", citing valuation grounds. "The company is well positioned to benefit from a recovery in key end markets in 2010 such as autos and electronics," the broker said.
"However, with the stock trading on [a multiple of 17 times forecast earnings for 2010] we see these improvements as more than factored into the current valuation."