Rally grinds to a halt as investors lack impetus
Banks and miners continued to dominate the headlines and the market movements on Thursday amid light newsflow
The FTSE 100 index slipped 14.4 points or 0.3% to 5,313.0, while the FTSE 250 index made a marginal move in the opposite direction, adding 6.8 points or 0.1% to 9,175.8. European markets were also largely flat at the time of closing, as was Wall Street. The latter’s performance was hampered by a weaker-than-expected reading the services industry’s activity.
The Institute for Supply Management’s index of non-manufacturing business, which accounts for the vast majority of the US economy, fell to 48.7 in November—representing a contraction, compared to the previous month’s slight expansion.
The opposite was true of the UK, however, where the services industry continued to expand last month, hitting 56.6 versus October’s 56.9 reading, according to the Chartered Institute of Purchasing and Supply and Markit Economics.
As has been the case since Dubai World’s announcement last Wednesday, banks and miners dictated the market direction today, this time converging and largely cancelling each other out.
Having hit a new record high of just over $1,200 per ounce, the gold price retreated on Thursday, followed by other previous metals, and took with it shares in mining groups Xstrata, Rio Tinto, Lonmin and Anglo American, among others. The four London-listed stocks each shed between 2.6% and 3.8%.
Turning to the blue-chip risers, Royal Bank of Scotland topped the FTSE 100 leaderboard with a 4.7% gain as the UK government moved to reassure the group it will not be singled out over its salary bonus payments. Prime Minister Gordon Brown inferred that other banks staff will also see bonuses decline as talk of a mass walk-out by the bank’s board gathered pace. Meanwhile, Treasury minister Paul Myners asked in a television interview for institutional shareholders such as Merrill Lynch and Standard Life to push for lower pay.
Comments coming from Barclays appeared to stoke the debate after an unnamed source reportedly said the group intends to raise investment banker’s base salaries as a percentage of total pay, i.e. potentially reducing bonuses but increasing the base rate.
Shares in Barclays added 2.4%, while other industry players Lloyds Banking Group and Standard Chartered took on 4.4% and 1.2%, respectively. Read this article on the winners and losers of the financial turmoil.
On the second line, pubs operators were in the spotlight once again after Marston’s completed the hat trick by confirming the picture of improving sales trends that was reported earlier this week and last by Greene King and Mitchells & Butlers.
Marston’s closed up 3.6%, Punch Taverns added 1.8%, JD Wetherspoon and Greene King each rose 1.0% and M&B gained 0.3% on the FTSE 250 index.
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