Market Report: Ultra Electronics hit as defence cuts begin

Shares in the anti-submarine warfare specialist Ultra Electronics dived yesterday as US defence cuts began to hurt. But Ultra is in good company – its warning on delayed US deals follows similar alerts from peers Cobham and Meggitt.

Ultra has been furiously cost-cutting to offset any delays but it hasn’t been enough. The FTSE 250 group sank 80p to 1,816p as it warned its full-year sales would come in below last year as delays in the US and Oman hit.

Ultra sank 80p to 1,816p and was joined by Cobham, down 0.2p to 270.4p, and Meggitt, down 7p to 505p. Investec’s analysts are still supportive though and said they continue “to back management to do the right things to drive long-term shareholder value”.

The wider market was on good form and welcomed Federal Reserve chairman-elect Janet Yellen’s dovish reassurance that the US’s fiscal stimulus programme would continue. The FTSE 100 advanced 27.31 points to 6,693.44.

The good mood meant traders were willing to invest in riskier stocks, and the big oil stocks were in favour with Shell 43p better at 2,185.5p while Tullow Oil added 12p to 897p.

Broker Hargreaves Lansdown got a boost from analysts at JPMorgan Cazenove who said it would benefit from the recent regulatory changes in retail investment. They rated it overweight and the broker ticked up 15p to 1,179p.

SABMiller was firm, up 18p at 3,197.5p as the brewer reappointed John Manser as acting chairman because of the “recent sudden worsening” of the health of its chairman Graham Mackay, who had surgery for a brain tumour earlier this year.

Back on the mid-tier index, digital sports media group Perform was in the red for a second day after a profit warning on Thursday and fell 24.3p to 435.7p.

Ladbrokes rebuffed rumours it was to issue another profit warning by the year-end on Thursday but investors were still spooked by its vague comments in its update and it lost 3.1p to 177.1p.

Troubled Finnish nickel firm Talvivaara Mining lost another 2.64p to 3.51p as fears for its future increased and it did not rule out bankruptcy.