Market Report: Union strife weighs on Anglo American
Tuesday 19 February 2013
Embattled miner Anglo American was beset with more problems at its Rustenberg mine yesterday, as a standoff between rival unions led to bloodshed. Guards fired rubber bullets on crowds fighting for control of union offices and nine workers and three security guards were injured in the resulting fracas.
It's bad news for Mr Cutifani, Anglo's new chief executive who takes over from Cynthia Carroll on April 1. Anglo booked a $1.49bn (£962m) loss for last year after two months of strikes at the same mine in the autumn and Mr Cutifani will have to convince investors that yesterday's violence doesn't mean it'll be more of the same this year.
Shares fell 56p to 1997.7p.
Other miners also suffered yesterday as commodity prices slumped. Kazakh copper specialist Kazakhmys suffered as the price of the metal fell to a three-week low and shares lost 20.5p to 726.6p.
Despite the bad news among miners, the FTSE 100 remained flat, with the American market on holiday for President's Day and UK investors remaining cautious. The top flight index dropped 10 points to 6318.19.
The biggest riser was retail estate giant Hammerson, with analysts pointing to rehashed takeover rumours. It added 16.8p to 497.2p.As London's fashionistas descended on Kensington Gardens for a fashion show by Burberry, the City's style followers were marking the luxury brand out as one to watch on the takeover front. John Guy at Berenberg Capital Markets reckons Burberry is a target for trade buyers who are "looking to add a quintessentially English luxury brand with best-in-class digital execution".
London Fashion Week is in full swing and Guy thinks Burberry is better placed than some luxury groups suffering from "mega-brand fatigue".
Guy reckons the likes of Louis Vuitton – owned by Paris-listed LVMH – are facing "risks of relative sales weakness". He said investors have overreacted to bad news at Burberry and the firm's recent move to hire media expert John Smith as chief operating officer will help to boost its "digital media and sales platform and expand mobile technology".
The luxury fashion brand today unveiled its "bespoke personalisation service", an online tool allowing shoppers to not only buy items straight from its catwalk collection but also have their name stitched in. Guy rates Burberry a buy with a share-price target of 1600p. But punters were slow to follow Guy's fashion tips and the shares added just 1p to 1355p.
The City was keen to turn up the volume on bid rumours surrounding ITV. The media sector has been in focus recently after US giant Liberty Global's $23.3bn agreed takeover of cable company Virgin Media.
For ITV, rumours of possible takeover interest have been on the schedule for some time, with speculation that private-equity bidders are the most likely candidates for the Dancing on Ice broadcaster and TV production group.
Traders today also revived the suggestion that ITV could attract interest from retail billionaire Sir Philip Green and music mogul Simon Cowell.
ITV has been upping its profile in the States thanks to the cult-appeal of its Downton Abbey show and its deal to buy a majority stake in US-based reality TV producer Gurney Productions in December. The US angle could be an added bonus for any potential buyer, traders suggested. In response, ITV's share price hit its highest level since mid-2007, rising 3.3p to 120.4p. The climb came after it had already gained 3 per cent last Friday.
On the small-cap index, despite Canaccord Genuity's cutting its target price for electrical company Volex from 116p to 97p, punters piled in.
Shares in the cable-maker have plummeted since last autumn after Apple cut orders but last week the firm – which counts Nat Rothschild as its biggest shareholder – said it was in line with its much-reduced earnings targets and traders decided the price was right to move back in.
Volex was the highest riser on the small-cap index, soaring 15p to 112p.
The horsemeat saga galloped along on the small-cap index as sandwich and soup-maker Greencore clarified that none of its other products have been contaminated with horse meat after it admitted last week that its Asda's Chosen By You 350g Beef Bolognese Sauce showed trace levels.
Shares in the Irish food manufacturer recovered 7.5p to 100p today.
Elsewhere on the small-cap index, Panmure Gordon's Graham Jones reckons Premier Foods, which owns brands such as Mr Kipling, Oxo and Hovis, might have to ditch one of its stable ahead of its preliminary results on February 21.
Jones said: "We see further disposals as possible but it might take the sale of power brands to significantly improve the balance sheet."
The prediction spooked the market and Premier shares lost 5.25p to 77.75p.
Investors should have a healthy appetite for shares in Domino's, according to Numis Securities. Douglas Jack from the broker has a Buy recommendation on the pizza delivery company ahead of its final results next week and says he is looking forward to an update from its European operations which "we believe could drive a surge in growth". He has a target price for Domino's of 625p - shares are currently going for roughly 533p.
Morrisons may be buying 49 Blockbuster sites in an attempt to boost its portfolio of convenience stores, but that hasn't stopped Shore Capital labelling it a Sell. Analysts at the broker warn that the supermarket "needs to deliver an improvement in performance as the recent data has been most concerning". They have a price target of 261p, with shares at the moment in the region of 263p.
Keep hold of your shares in Amec, says Canaccord Genuity. The engineering services group saw its share price slump last week after releasing its full-year results, and while scribblers at Canaccord describe the fall as "harsh", they add that they "still struggle with Amec's slower growth against its peer group". They have kept their target price at 1215p, with shares currently around 1018p.
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