Market Report: Weekend blues – or has the rally ended?

Have we seen a quick bit of profit-taking, or is the rally really over? Yesterday the FTSE 100 index lurched and lost 100.4 points – the biggest one-day fall since early November. The finish, at 6,246.84, was in contrast to Friday, when the Footsie ended the week on a near five-year high.

Was a bad weekend to blame? Most traders think the tumble is down to savvy investors booking profits after a stellar January – the benchmark index was up 6.4 per cent on the month, its third-best start to the year since 1989.

So what rattled the market yesterday? George Osborne played his part. Details laid out by Mr Osborne on banking reform and threats that the big banks will be broken up if they don't follow his strict rules on ring-fencing risky investments sent investors running for cover, and banking stocks dived. The sector was down by 2.2 per cent, having been one of the best-performing sectors last month, when it was up around 10 per cent.

Renewed fears about Europe certainly haven't helped either. Concerns over alleged corruption within the Spanish government have added to the distress. And the focus on Spanish bond yields sent investors fearing a repeat of last year.

A plethora of downgrades and some poor company updates didn't help matters, and also weakened the previously buoyant sentiment.

Toward the bottom of the index, the chemicals group Johnson Matthey got a downgrade from analysts at UBS and Citigroup. Citi rated it neutral with a share price target of 2,450p and the shares fell 83p to 2,243p.

Citi also took the red pen to Vodafone. The telecoms giant had been on the City's buy list recently after a series of upgrades from analysts accompanied M&A rumours. The chat around Vodafone focused on the possibility that it might sell its stake in its US joint venture, or that its partner Verizon could even make an outright bid for Vodafone to gain full ownership of the Verizon Wireless partnership.

The shares rose more than 10 per cent in January, but investors hung up on them yesterday, and they lost 2.95p to 170.5p as Citi's Simon Weeden reckoned they are no longer a stock to splash out on. He downgraded Vodafone to neutral "post rally" and gave it a 180p price target. Mr Weeden thinks sales pressure in Europe is an obstacle in the short term.

But traders, ever the optimists, reckoned the FTSE 100 will recover after this "temporary" blip, pointing to some strong company updates as evidence to lighten the mood.

The gold miner Randgold Resources was bucking the trend and glittered at the top of the benchmark index after revealing a full-year profit jump of 16 per cent. Its shares glistened at 6,275p, up 190p.

On the mid-tier index, rumours of a decision over the validity of Centamin Egypt's flagship Sukari gold mine contract helped the miner to add 3.75p to 64.15p.

The oil specialist Afren was boosted by rumours that it is looking at selling its interests in its oil fields in Kurdistan and east Africa. China's Sinopec has been rumoured to be interested, and yesterday it announced a HK$24bn (£1.97bn) share placing. Afren trickled up 2.1p to 156.1p.

Shares in Salamander Energy jetted up to the top of the mid-cap index, adding 22p to 208p after the company announced an oil and gas find in Indonesia.

Lovers of luxury thought the outlook for the sector was looking up after the Swiss brand Swatch reported a 26 per cent increase in 2012 profit. There are still fears that growth is slowing, particularly in China, but Swatch's update showed there were still signs of hope that China was improving and back on the FTSE 100, London's luxury player Burberry sashayed up 10p to 1,397p.

Morgan Stanley concentrated on the pharmaceuticals specialist Shire and gave it an overweight rating as it thinks the market is under-appreciating the opportunities it has in the global attention deficit hyperactivity disorder (ADHD) drug market. It gave Shire a 2,350p share price target, while Barclays scribes raised their share target to 2,350p. Shire recovered 18p to 2,153p.

The chief executive of the AIM-listed pharmacy software supplier Emis has retired after the group unveiled a profit warning last month, and the shares were off 57p at 693p.

A positive update from the minerals processor Berkeley Mineral Resources helped it to add 0.22p to 2.62p. It got the go-ahead for its copper-processing pilot programme in northern Zambia.

Buy

WALKER GREENBANK

Snap up Walker Greenbank, Seymour Pierce advises. The broker is enthusiastic about the wallpaper business because it has an "impressive track record… its brands are unique in the luxury furnishings market", and it is "impressed with the dynamism of the design team". The shares are 85.5p but it gives a target of between 90p and 100p.

Sell

TUI TRAVEL

Dump shares in Tui Travel, Panmure Gordon urges. The broker says that although the travel agent's "current trading is strong", its price-earnings ratio of 10.7 "is too generous given the group's five-year average forward ratio is 8.8". The shares are 297.2p a pop but Panmure gives a target of 245p.

Hold

LONMIN

Hang on to shares in Lonmin, Investec recommends. The broker says the platinum miner's quarterly update showed that its "ramp-up is proceeding well". However, as the company hasn't disclosed expenditures, "the balance sheet position is unclear until the May interim results". It raises its target price to 366p from 353p for the shares, which are currently 366.4p.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Call The Midwife: Miranda Hart as Chummy
tvCall the Midwife Christmas Special
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there