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.

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
News
i100
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
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

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world