Yesterday’s trading: FTSE tumbles on King's comments
Isn't Bank of England Governor Mervyn King a bundle of fun? Barely a day goes by without him forecasting some kind of economic crisis or imminent rise in interest rates.
You wonder whether the man actually has a mortgage. And his constant gloomy predictions drive highly-geared dealers up the wall and more often than not spread panic among investors and homeowners.
His warning at the annual Mansion House Banquet that Britain could be facing a major debt crisis reinforced fears that UK interest rates will be raised a further quarter point to 5.75% in July. Shares took fright.
King's comments coincided with a heavy overnight fall on Wall Street after rising bond yields in the US revived concerns about higher global interest rates.
The possible collapse of two Bear Stearns controlled hedge funds over sub-prime loan exposure also gave markets the jitters. Down 85 points at one stage, the Footsie finished 53.3 points lower at 6596.
Interest rate sensitive sectors bore the brunt of the selling. Joe Public continues to see his disposable income substantially reduced by higher mortgage costs and bigger council tax, water and food bills.
The great British shopper is definitely pulling his horns in and summer sale signs are now commonplace in the High Street. Analysts fear that the impact on the consumer could be both deeper and longer lasting than investors are currently anticipating.
Marks & Spencer was heavily sold down to 639½p before closing 8p off at 650p, some 13% off May's high of 749p. The clothing giant held its annual summer drinks party on Wednesday evening. The body language of top management was described by one leading analyst as 'not at all positive'.
DSG International, which has pulled the plug on an option to buy Russian chain Eldorado for £1bn, lost 6.7p more to 162.8p. Home Retail fell 11¼p to 439p, Next 39p to 2061p and Kesa Electricals 10¼p to 312¼p.
Cautious noises this week about UK trading left numero uno supermarket Tesco a further 6p off at 422p. William Morrison shed 5¾p to 287p. J Sainsbury, which has the Qatari Royal Family breathing down its neck with a 25% stake, declined 5½p to 578p.
Dearer money fears hit properties. Land Securities dropped 62p to 1730p, British Land was 39p down to 1344p and Hammerson off 21p to 1495p. Higher mortgage rate concerns left housebuilders in arrears. Persimmon cheapened 15p to 1207p. It has appointed Merrill Lynch as joint broker to work alongside Citigroup. Barratt Developments eased 12p to 1005p.
International bank Standard Chartered rose 17p to 1675p on vague talk that Singapore state-owned investment group Tamesek is seeking to add to its 12% shareholding. A revival of the ancient Gazprom takeover tale lifted British Gas owner Centrica 2¾p to 379½p.
The City continued to give its verdict on Clara Furse's decision to fork out £1bn-plus on Boursa Italiana, the seventh largest stockmarket in Europe.
After Wednesday's late fall of around 40p, fund managers sold shares of the London Stock Exchange down further to 1330p before they closed 13p lower at 1353p. The year's high was 1429p.
City coverage and share tips
This is Money carries breaking City news throughout the day. Bookmark Companies & Markets and try these markets links...
David Buick, Cantor's equity guru said: 'This is a strategic deal of little significance, which if pulled off dilutes the Nasdaq 30% stake in the LSE.
'Boursa Italiana brings very little to the LSE's party apart from an opportunity for the Italian bourse to exercise its option to buy the 51% stake in the derivative trading platform MTS, which was sold to the NYSE/Euronext.'
Broker Citigroup added that strategically the deal is likely to be viewed as a defensive poison pill and LSE shareholders are likely to be displeased.
Weir Group pumped up the volume in the FTSE 250, soaring 67½p to 701½p after the City gave the thumbs up to its £328m acquisition of US pump manufacturer SPM.
Analyst Harry Phillips at Evolution Securities said: 'Chief executive Mark Selway has not just pulled a rabbit out of the hat, he has annexed all of Watership Down'.
International ground engineering specialist Keller advanced 37p to 1054p following a positive trading statement. For the first five months of the year, pretax profits will be 'well ahead' of the 114% increase posted in the first-half of 2006.
Fire, safety, security and defence group Westminster marched on to the AIM market yesterday. Placed at 67½p by broker JM Finn, the shares closed at the day's best of 71½p. Chairman is Lieutenant-Colonel Sir Malcom Ross, former head of the Royal Household. The group provides worldwide anti-terrorist equipment and systems which it tests on a four-and-a-half acre site in Banbury, Oxfordshire.
Most watched Money videos
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mini unveil an electrified version of their popular Countryman
- Iconic Dodge Charger goes electric as company unveils its Daytona
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- How to invest for income and growth: SAINTS' James Dow
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Land Rover unveil newest all-electric Range Rover SUV
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- How to invest to beat tax raids and make more of your money
- Britain must scrap 'double taxation' blighting popular...
- Royal Mail must not sell out to Czech Sphinx Daniel...
- Tesla boss Elon Musk makes surprise visit to Beijing as...
- CITY WHISPERS: City PR man Neil Bennett cries fowl after...
- Intermediate Capital Group snaps up leading legal...
- Coventry Building Society swimming with 'sharks' as it...
- Is it time for Dyson to feel scared? SharkNinja wants to...
- Is the UK stock market finally due its moment in the sun?...
- When will Gucci get its house in order? Fashion giant...
- FTSE 100 chiefs claim they are hard-up compared with the...
- It's 'high and buy' from FTSE 100: The more the index...
- Taxpayers could be on the hook for a multi-million-pound...
- FTSE 100 set for boost when Chinese online giant Shein...
- Takeover target Anglo American is forced to defend...
- FIDELITY SPECIAL VALUES: Best of British... fund that...
- Inventor Erno Rubik thought his Cube was so difficult...
- Emerald bond fund owes me £25,000: TONY HETHERINGTON...
- Revitalised corner of Scotland that proves banking hubs...