Wall Street weighs on FTSE indices
UK financials remain under pressure amid mixed banking news, while retailers rally on signs of improvement
The UK's benchmark index lost 12.4 points or 0.3% to end Thursday’s session at 4,018.2, while the FTSE 250 index closed 0.3% higher, having taken on 21.6 points, at 7,181.5. Both these performances were markedly better than those of their US counterparts, however, as the Dow Jones, S&P 500 and Nasdaq Composite all headed towards losses of 1% at the time of the UK close.
Depressing equity performances on both sides of the pond was the National Association of Realtors’ news that existing homes sales in the US fell by a worse-than-expected 3% last month. This turned out to be all the encouragement investors needed to return to their selling ways in the markets.
Looking at individual stock performances, having enjoyed a solid performance in the previous session, real estate companies British Land and Hammerson were both under the cosh today, the former falling 4.8% to 424.75p and the latter 3.2% to 300p.
Financials also put in a melancholic performance as forecast-busting earnings from Credit Suisse Group struggled to fill investors’ hearts with desire for banking plays after Morgan Stanley’s disappointing numbers earlier in the week.
Barclays outperformed the wider sector after revealing it will pay a dividend in the final quarter of 2009 and resume quarterly payments thereafter, but the shares still closed 0.3% lower at 217.25p. Lloyds Banking Group lost 4.5% to 96p as it announced further redundancies; private banking group Schroders shed 6.9% to 760.5p on the back of a 71% drop in its quarterly pretax profits; and insurers Aviva and Prudential were out of favour following downbeat broker comment, slipping 5.2% to 239.25p and 3.0% to 346p, respectively.
Retailers stood out amongst the winners as signs of improvements on the high street turned some investors into consumers. Mid-cap retailer Debenhams surged 21.7% on the FTSE 250 index to 77.25p after posting first-half results that far surpassed analyst expectations and allaying debt fears, prompting a number of estimate upgrades.
Blue-chip retailers including Next, Home Retail Group, Marks & Spencer, Morrison Supermarkets, Sainsbury and Tesco all took on between 1.6% and 6.6% on London’s leading index. The spotlight is now firmly fixed on tomorrow's retail sales numbers and GDP data.
A number of mining plays were also in demand following reassuring production reports: Rio Tinto gained 4.0% to 2,571p and Lonmin topped the leaderboard with a rise of 9.5% to 1,357p.
Returning to the second line briefly, gaming company Rank Group was the FTSE 250's main casualty, dropping 8.8% to 67.50p after announcing a surprise increase in gambling taxes in yesterday’s Budget will mean £6 million of additional costs in 2009 and £9 million on an annualised basis. Several brokers responded by cutting forecasts for the Mecca Bingo operator.
