Market update - 13 November

The FTSE 100 was down 50.18 points at 4131.84 while the FTSE 250 fell to 6158.01, down 93.17 points at12.45pm.

Inter-dealer broker ICAP, down 16.07 per cent or 45.75p at 239p, was depressed after Morgan Stanley issued a downgrade, switching its stance on the stock to “underweight” from “equal-weight” with a lowered 195 target price. The broker also moved Tullett Prebon, down 8.88 per cent or 15.25p at 156.5p, to “underweight”, lowering its target price for the stock to 245p.

“We see the financial crisis as having fundamentally changed the outlook for the inter-dealer brokers (IDB),” the broker said,

“We expect a material reduction in the IDB revenue pool in 2009 due to (i) financial de-leverage by banks and hedge funds; (ii) likely intensification of pricing pressures; and (iii) a shift away from more structured parts of the OTC [over-the-counter] market as banks cut capital allocations and headcount, and favour the use of more liquid centrally cleared products.”

Moving up

Positive second quarter results powered BT, which climbed to 123.1p, up 9.42 per cent or 10.6p. The telecoms group said second quarter revenues were up 4 per cent at £5.3bn, ahead of analyst forecasts of around £5.28bn, while earnings before interest, tax, depreciation and amortisation were down 1 per cent at £1.43bn, faring better than market expectations of a decline to £1.38bn. BT also said that, in a bid to increase efficiency, it was planning to cut up 10,000 jobs.

Trinity Mirror was the strongest on the FTSE 250, rising to 32.75p, up 11.97 per cent or 3.5p, after posting a better-than-feared interim management statement.

Also on the upside, vague bid rumours boosted ITV, which gained 4.92 per cent or 1.5p to 32p.

Moving down

A new note from Cazenove unsettled HSBC, which retreated to 681p, down 18.5p.

Downgrading the stock to “underperform” from “outperform”, the broker said: “We have reduced estimates to reflect a recession in several of HSBC’s major geographic markets, together with continued high levels of impairment at HSBC Finance.”

Cazenove added: “The significant reduction in EPS reflects our assumption of concurrent recessions in the US and Europe, together with a rise in Asia impairment as economies slow. There is currently more evidence for recession in developed markets, but an economic downturn in Asia looks increasingly likely (eg Singapore is in recession and we expect GDP to contract 2 per cent in 2009).”

Also on the downside, London Stock Exchange fell to 520p, down more than 10 per cent or 59.5p. Traders attributed the slide to concerns about the outlook for earnings, which overshadowed a set of positive interim results.