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.

Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
beauty
PROMOTED VIDEO
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
transfers
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
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

BC2

£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

(Junior) IT Systems Administrator / Infrastructure Analyst

£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

Finance Officer

Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice