Afternoon:
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The market paused for breath today as one of the best weeks in recent history rolled to a close. With the FTSE 100 poised to break through the psychologically important 5200 barrier, the rally is now a game of confidence.
After five days of straight gains propelled blue-chips to their highest close for almost a year, market watchers anticipated a scramble to bank profits this morning but investors held their nerve and the FTSE held its ground, up 1.95 at 5165.90.
Those who came in at the bottom of this current rally are enjoying a phenomenal ride. The FTSE 100 is 47% higher than it was in March when it hit a six-year low at 3,512.
Since July, it has risen by 21% and it could well be on course for the best quarter since it was created in 1984.
The drag today came from heavyweight miners and oil groups. Tullow Oil was down 29p at 1216p as Citigroup warned that the excitement over finds in Uganda and Sierra Leone has pumped Tullow up to the max. “We wonder how much more can be priced in at this stage,” says broker Mark Kofler. “In the absence of near-term game-changing catalysts and a relatively full value, we believe now is an opportune moment to take a breather.”
That's certainly what chairman Pat Plunkett did. Following yesterday's claim that the Ugandan find could be the biggest oil field in the country, he off-loaded 250,000 shares at £12.323p a share – a total of £3.08 million.
African mining remained in focus as Eurasian Natural Resources bought up the stake owned by major shareholder Dan Gertler in Central African Mining and Exploration, up 1¼p up at 19½p. Enrc, 13.5p ahead at 908.5p, said it will invest $230 million in Camec projects over the next five years.
Back home, private equity group Blackstone disposed of a large chunk of Cineworld, down 18p at 161p, in a secondary placing of 38.1 million shares at 165p a share. The sale amounts to 27% of the cinema operator and leaves Blackstone, which bought the business in 2004, holding just 20.1%.
Whether or not DIY is cool again may be debatable but Kingfisher extended its run on the back of yesterday's excellent figures for B&Q. Broker upgrades, including praise from SocGen,
Nomura and Citigroup, pushed it 6p up to 209p.
The changing economic outlook will be a welcome relief to property groups. City landlord Hammerson jumped to the top of the leader board, up 14.2p at 442.7p, as SocGen turned positive on the stock. British Land edged 4p higher to 515p following the sale of half of the Broadgate Centre and a raise to buy from hold from SocGen.
Recruitment stocks have risen strongly but Deutsche Bank for one is not buying. “We find little value on a 12-month basis” says DB. It warns that Hays is not well positioned for the upcycle. Some 30% of its business comes from the public sector and with swingeing cuts likely whichever party wins, that is an obvious weakness. However, Hays – up 1.9p at 112.7p – is so cheap that it merits an upgrade to hold with a price of 115p. Hays trades on 20 times next year's earnings compared to Michael Page's 47 times 2010 earnings. But Deutsche still reckons Michael Page, 5.8p up at 344p, is the best bet among the staffing companies. It has the highest exposure to professional recruitment and good prospects for international growth.
The FTSE's recent strength brings into sharp relief the difficulties facing hedge funds and asset managers.
Mayfair fund manager BlueBay, down 73/4p at 290.6p, was the biggest faller among the midcaps as it revealed that pre-tax profits plunged by more than half from £50 million to £22.5 million. Investors have been pulling money out of the riskier (and more profitable) alternative asset classes and shoving their money into safer long-term propositions. However, a number of leading BlueBay directors decided that now was the time to cash in and some 6.6 million were offered up today. Despite the plunge in profits, the shares changed hands for 290p, netting chief financial officer Nick Williams £2.9 million and chief operating officer Alex Khein, £5.8 million.
Primary Health Properties is asking shareholders for £60 million via an open placing to pay down debt and buy more properties. PHP, down 32.5p at 278p, builds or buys GP surgeries and clinics and leases them back to the NHS. It is offering one new share at 230p for every five existing shares and the deal has been fully underwritten.
