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Thursday November 12 - afternoon update
The fallout from the banking crisis and stock-market collapse continues to shake investors, who remain sellers of everything connected with the financial sector.
The latest sell-off follows the decision by US Treasury Secretary Hank Paulson to do a U-turn on his $700 billion (£458 billion) bank bailout.
Instead of using the money to buy up toxic debt, he now plans to follow the lead of the Bank of England and inject the money directly into the banks and others in exchange for shares. His indecision rattled investors and led to last night's 400-point plunge by the Dow.
The financial sector also took a hit in London today. The biggest blue-chip casualty was inter-dealer broker Icap, down 33¾p at 251p, after Morgan Stanley dropped its rating from equalweight to underweight ahead of results next week. It has also slashed its target from 500p to 195p.
Rival Tullett Prebon, 12¼p cheaper at 159½p, which reports tomorrow, has been downgraded from overweight to underweight with its target cut from 710p to 245p. The broker says a drop-off in trading activity will result in a 12% fall in the IDB revenue pool next year.
The continuing drain in stock market values, increased margin calls and redemptions have taken a heavy toll on Man Group, the UK's largest hedge fund operator. Its shares rallied 21¾p from a record low to 211¾p despite Teathers beginning coverage with a neutral rating and 200p target.
Struggling High Street banks also came under fresh selling pressure. HBOS shed 5.2p to 91.6p, Royal Bank of Scotland 3.1p to 52.9p and Lloyds TSB 7.6p to 165.7p. HSBC fell 17¾p to 682¼p as Cazenove downgraded from outperform to underperform and cut its earnings estimate. The broker is worried about the effects of the recession on the bank's business.
Barclays also shed 7.7p to 160.5p. Panmure Gordon has cut its target from 160p to 130p and repeated its sell rating. It says Barclays is exposed to bad news given a potential shareholder revolt ahead of this month's EGM to approve its move to raise an extra £7 billion of fresh capital.
Shares in the London Stock Exchange fell 66p to 513½p on the back of a gloomy trading update and the decision to halt its share buyback.
Meanwhile, it's official — industrial output in China is slowing. Any remaining hopes that the country's soaraway economy could pull the rest of the world out of recession have been scuppered, and the Chinese blame slowing demand for goods from Western countries.
Raw-materials prices were on the slide again with copper, zinc and oil marked lower. That quickly hit suppliers such as miners and oil explorers.
Big falls were seen from Fresnillo, down 18.7p at 100p, Lonmin, 59p at 950p, and BHP Billiton, 35p at 913½p.
Oil producers were also hit, with Cairn Energy, which has huge reserves in India, dropping 75p to 1429p, Tullow Oil 21p to 456p and BP 8p to 468¼p.
The heavy weighting of the miners and oil companies among the top 100 companies meant leading shares were soon beating a retreat, leaving the FTSE 100 index down 18.4 at 4163.5 in another day of wafer-thin trading. This afternoon Wall Street lost an early rally after jobless claims topped half a million for the first time in seven years. but the Dow then rallied 56.7 to 8339.3 despite the world's biggest retailer Wal-Mart scaling back its earnings forecasts.
Yesterday's half-year results from
J Sainsbury, 7¾p firmer at 287½p, were good enough to win over JPMorgan, which has raised its rating from underweight to neutral, but trimmed its target from 330p to 300p.
Euromoney, the publishing group majority owned by Evening Standard owner Daily Mail and General Trust, smashed its previous profits guidance to post revenues up 9% at £332 million in the year to September. The shares lost 27¾p to 265¾p.
