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If there really are green shoots in the global economy, engineering group Charter International certainly isn't seeing them.
The FTSE 250-listed company shocked the market today by posting a thumping profits warning, making it the biggest loser among mid-caps. Its shares plunged 98p, or more than 17%, to 466p after warning that if the miserable trading it experienced in May continues, full-year profits will fall a long way short of expectations.
Charter, which has a broad geographic and sector spread so is considered something of a bellwether, said the ailing steel industry had taken a turn for the worse in April, resulting in a drop-off in demand for welding equipment at its ESAB division.
The company has already cut around one in eight jobs at ESAB but is now being forced to close two factories permanently and two temporarily.
Charter's shares had rallied sharply from their three-year low last November as investors turning to riskier punts bought up cyclical stocks.
Shares in London jumped thanks to a strong showing from commodity stocks but remained just shy of the psychologically significant 4500 mark. The FTSE gained 62.17 points to 4466.96 with the heavyweight miners contributing most of the gains.
They were boosted by positive news from China and the weakness of the dollar. According to reports in the local press, industrial production in China rose by 8.9% in May on the previous year, well ahead of forecasts and the fastest rate of growth since September last year. But traders warned the mining bulls not to get ahead of themselves, saying that the rally had gone too far and that it was partly down to short-sellers getting squeezed.
Vedanta claimed the crown, 163p higher at 1794p, while Xstrata added 59½p to 781p. Eurasian Natural Resources also stood out with a rise of 59p to 734½p after saying at its AGM that sales and production volumes were ahead of expectations. The Kazakhstan-focused miner said price pressures remain but it is cutting costs to stay competitive. Citi advised clients to hang on to the shares, saying the company is in a currency sweet spot but that a recovery has already been priced in.
In New York, the Dow Jones was up 47.61 points at 8810.67.
Xavier Rolet has clearly worked his charms on Lady Luck. The new chief executive of the London Stock Exchange, who is likely to be toasting the company's return to the top flight this evening, got another bit of good news as rival Turquoise's system crashed, suspending trading. The reshuffle of the FTSE indices, worked out on last night's closing prices, looks to have given London Stock Exchange, 3i and Wolseley back their places among top stocks, with Drax, Whitbread and Foreign & Colonial getting the boot. But Balfour Beatty — which some warned could be relegated — seems to have been spared the indignity. Those expected to return to the second tier include pubs group Punch Taverns and Yell, the struggling Yellow Pages publisher.
Big Brother will now be watching you as far away as South Korea. Phorm, the controversial technology company which monitors advertising responses on the internet, is raising £15 million through a share placing to fund its expansion in the UK and South Korea. It has placed 3.33 million shares at 450p a pop — a massive 16% discount to last night's closing price. Chief executive Kent Ertugrul said the placing had been supported by new institutions as well as existing shareholders. Its shares shot up 40p to 575p as broker Canaccord Adams slapped a buy rating on the shares but cut its price target from 2357p to 1922p.
BP received a double boost as the price of oil hit a seven-month high and ING upgraded its shares from hold to buy and upped its price target to 565p. Analysts reckon the oil behemoth will reap the rewards of its restructuring programme. Its shares gained 11¾p to 541p. But the broker is less fond of BG Group, 1p cheaper at 1139p, cutting its price target from 1150p to 1050p. BG's shares have rallied sharply in the past six months, and ING reckons investors should now pocket profits. Thomas Cook topped the Footsie fallers as takeover talk cooled. Its shares lost 15p to 220¾p as analysts warned that Rewe, its potential German suitor, may struggle to buy Arcandor's majority stake.
