Market update - 24 June

The FTSE 100 was down 56.9 points at 5610.3 points at 11.43am on Tuesday. The FTSE 250 was also down and lost 136.3 points to 9184.3.

Moving up



Antofagasta was up 8.5p at 653.5p after Credit Suisse upgraded the stock to "outperform" from "neutral", citing higher metals prices. The broker also increased its target price for the stock, to 760p from 600p.



"We expect Antofagasta to perform strongly this year…Even with modest growth across its existing copper, water and transport businesses, strong prices should result in higher revenues. The company also has two attractive longer-term growth projects, Esperanza and Reko Diq, which we believe have the potential to increase attributable copper production by 50% in the medium term," the broker said.



Among the banks, HBOS was up 0.25p to 270.5p, but remained below its 275p rights issue offer price despite some positive comment from Collins Stewart, which said the current price is "discounting some unrealistically negative scenarios".



"Our fundamental view is that the stock is undervalued currently, even with the short-run earnings risk within the business. Our target price of 375p shows material upside though is, in part, driven from 2009E earnings, which show low visibility. Further, we see the long rights issue process continuing to impact so only upgrade to HOLD, for now. When the rights issue closes on 18th July, we hope management will be better-able to improve earnings visibility which will give us greater confidence in our price target," the broker said.



On the FTSE 250, Bradford & Bingley was up more than 10 per cent or 7.25p at 73.25p after the bank rejected a £400m cash-injection proposal from Resolution, an investment vehicle backed by entrepreneur Clive Cowdery.



"Resolution has announced plans to consolidate the smaller banking and lending industry in the UK with a potential £2bn investment over the next two years and has started with an approach to B&B. Resolution wanted B&B to assess its plans but B&B has rejected the approach, stating it would mean a change in control for the group, and is continuing with its own capital-raising plans," said Barclays Wealth, adding:

"While a roll-up model in the UK could have long-term value for the industry, its potential success is a large uncertainty and the negative macro outlook for the UK over the next 12 to 18 months means we retain out Neutral recommendation on B&B. The shares are trading close to our 75p fair value."



Debenhams was up 1.5p at 43.75p after reassuring the market over trading – the company, which has been dogged by speculation about its financial health in recent days, rushed out the trading statement to quell the rumours.



"In the event the trading news is somewhat re-assuring. After 10 weeks of the second half to June 21st like-for-like sales are ahead by 1% (Landsbanki estimate -1.5%) taking the cumulative position to -0.6% 42 weeks into the year. This suggests that the brand has continued to win market share. The guidance on gross margins remains the same which is for a flat to 20 basis point advance – a significant turnaround from the first half trend (Landsbanki estimate +10 bips). The net debt at the year end is expected to be in-line with market expectations. The statement is a positive pointer on estimates and our £130m PBT forecast for this year looks too conservative," said Landsbanki, which kept a reduce rating on the stock.





Moving down



Punch Taverns continued to trade low, down 25p at 313p, as traders citied mounting concern that the company may breach its debt covenants.

Traders also cited an earlier Morgan Stanley note, in which the broker said that "Punch faces four debt-related obstacles to overcome in the next three years, which will likely continue to weigh on its shares price", and new commentary from Redburn, a small London based broker, as reasons for the share price weakness.



"If we are to assume that the UK enters recession (as seems likely), the stock that continues to cause us concern is Punch Taverns (Sell). Our analysis of Punch's three securitisation structures means that IF WE DO ENTER A RECESSION we think it is almost inevitable that it will trip all three restricted payment clauses, denying the group holding company (and thus shareholders) from accessing any of the cash in the group," Redburn said, adding:



"It is also possible (although not certain) that IF WE DO ENTER RECESSION it will trip the default [debt service coverage ratio or DSCR] covenant on its ‘B’ bond structure in late 2009 or early 2010 (after it has to start paying capital repayments on these bonds), even though the default covenant will fall at that time."



"As such, in these circumstances we think it very likely that Punch will require a recapitalising rights issue sometime before the middle of 2010 - our model assumes a 3 for 2 rights at £3.10 in early 2010."



Elsewhere, fresh housing market data from the British Bankers Association, which revealed that mortgage approvals hit a record low in May, dampened sentiment among house builders and Taylor Wimpey was down 5.79 per cent or 3.75p at 61p.



Howard Archer, chief UK & European economist at Global Insight said the new data heightened "concern that we are in for an extended, deep correction in the housing market".

He added: "This is something that the Bank of England will need to take into consideration when setting interest rates, although inflation development will clearly be the main determining factor of where interest rates are headed - especially pay developments."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
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

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project