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19 Mar, 2008


Early rally peters out with banks under pressure again. 

 

(Update) The early rally that followed Wall Street's overnight surge on the latest Fed rate cut has quickly run out of steam as liquidity concerns return to haunt the banks.

 

HBOS was singled out at 434p, down 45p, prompting Britain's leading mortgage lender to refute rumours that it had turned to the Bank of England for funding as 'complete and utter rubbish.'

 

Other lenders were also under the cosh again with Alliance & Leicester at 497p and Royal Bank of Scotland 312p, down 18p and 15p.

 

In the jittery atmosphere the Bank of England was forced to quash a rumour that Easter leave for Monetary Policy Committee members had been cancelled.

 

Shares generally turned sour as investors rushed to take profits after yesterday's euphoric advance.

 

By 10am the FTSE 100 index was down 51 points at 5,553 and the Mid-250 index 119 points weaker at 9,483.

 

In Europe the German DAX was just 11 points firmer.. but the CAC-40 in France was eight points adrift.

 

On the economic front the Bank of England Monetary Policy Committee voted 7-2 to keep interest rates on hold at 5.75% earlier this month, while UK unemployment fell again in February, but at its slowest rate for 15 months.

 

Mining shares managed to cling on to some of their initial rises with Anglo American up 55p to £30.65 and Xstrata 28p better at £38.16.

 

An HSBC rating upgrade lifted AstraZeneca at £18.15, up 26p, while others to resist the trend included Experian at 373p, 3i Group 781p, Reckitt Benckiser £26.94 and SABMiller £10.35, all around 13p firmer.

 

Favourable trading statements underpinned ICAP at 558p, up 7p, Premier Farnell at 152.5p, up 10.5p and Smiths Group, 16p better at 963p, but Next tumbled 61p to £11.18 on its cautious oulook, unsettling other retailers.

 

Profit warnings knocked between 10p and 59p from easyJet at 316p, DTZ 215p, Hogg Robinson 43.5p and Delcam 275p and Mitchells & Butlers receded 34.5p to 318p in the wake of a negative note from Lehman Bros. Punch Taverns fell 37.5p to 509.5p in sympathy.

 

Phorm lost 275p to £18.75p on raising £32 million via a share placing.

 

Among numerous companies reporting Aegis put on 3p to 113p, Henry Boot, shed 3p to 149.5p, Cape decline 12pto 245p, Evolution lost 6p to 103p, Kesa Electricals slipped 5p to 192p and Northgate declined 19p to 576p.

Wall Street's biggest one-day gain in over five years in response to the US Fed rate cut and reassuring statements from Goldman Sachs and Lehman Bros gives share prices in the UK and Europe and early lift. although the underlying mood remains cautious.

By 8.30am the FTSE 100 index was up 38 points at 5,643, with ex-dividends in HSBC, Reuters and Standard Life accounting for almost 11 points. The Mid-250 index was 19 points to the good at 9,620.

In Europe the CAC-40 in France was 41 points better and the German DAX 36 points firmer.

The overall pattern was mixed as investors were tempted to take profits after yesterday's sharp gains.

HBOS slipped 8p to 472p, while Alliance & Leicester rose 7p to 523p.

British Airways gave up 5p to 226p following a profits warning from rival easyJet, 47p weaker at 327.75p. Ryanair softened 0.12p cents to 2.62.

Better-than-expected results boosted Smiths Group 34p to 981p and ICAP 22p to 573p, but Next eased a penny to £11.78 after a cautious statement, with other retailers a few pence lower in sympathy.

Mining shares were in good heart with Rio Tino at £55.59, Anglo American £30.80 and Xstrata £38.53 between 64p and 94p higher.

Among the smaller caps Premier Farnell added 15p to 156.5p after reporting in-line results, but profit alerts unsettled DTZ at 210.25p, down 51.5p and Hogg Robinson, 10.5p lower at 42.5p.

Mitichells and Butlers was another prominent weak spot at 321.75p, down 29.5p. 

 



       
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