Market report: Wednesday close

By Mickey Clark for MailOnline
Updated: 13:10 EDT, 12 March 2008

Alistair Darling's first Budget as Chancellor did little to commend itself to stock-market investors. They saw it more as an irritating interruption to the working day, but, even so, were happy to give it a cautious thumbs-up.

Mickey Clark, Evening Standard

That was despite the fact that, by telling the Bank of England to stick rigidly to a central target for inflation of 2%, he may have limited the scope for future interest rate rises.

Dealers say that might not be the most helpful move when taking into account the worsening economic backdrop and the turmoil in money markets.

When the Chancellor stood up at 12.30pm to make his speech, the FTSE 100 index was sporting a rise of 80.3. By the time he sat down 50 minutes later the rise had extended to 92.2 points.

It later settled to close 86.0 up at 5776.4, underpinned by opening gains on Wall Street, which yesterday posted its biggest one-day rise in more than five years following the concerted cash injection by various central banks. The Dow is currently up 132.79 at 12,289.60.

British Airways rose 4½p to 242½p despite the Chancellor increasing airport charges by 10%. Brokers say BA will pass on the charge to travellers, but it could be bad news for the discount airlines because it makes up a bigger percentage of the overall airline ticket cost. That said, Ryanair rose 12 cents to €3.19, while easyJet traded 19p better at 416½p.

British American Tobacco rose 31p to 1933p, while Imperial Tobacco fell 10p to 2373p after duty was increased by 11p for a packet of 20 cigarettes. A packet of cigars will cost an extra 5p.

Diageo, of Johnnie Walker Scotch, fame, rose 4p to 1016p after the Chancellor ended a 10-year tax freeze on spirits by pushing up duty by 55p a bottle. Wines will rise by 14p a bottle.

Duty on beer goes up by 6%, or 4p a pint, with 3p on a litre of cider. C&C Group, which owns Magners cider, rose 17 cents to €4.17, while Scottish & Newcastle, which owns Bulmers, John Smith's and Kronenbourg, marked time at 780½p. Brokers point out these companies earn more overseas than they do in the UK.

Banks and financial companies made much of the early running with Standard Life climbing 28¼p to 247p following a 43% rise in profits last year. Old Mutual also put on 4.9p at 114.6p.

The banks are expected to benefit from yesterday's cash injection into the money markets and responded accordingly. Barclays rose 23¾p to 460¾p, and Royal Bank of Scotland 14p to 358¾p. Standard Chartered advanced 30p to 1656p amid reports it wanted to bid for RBS's stake in Saudi Hallandi Bank.

AstraZeneca was singled out for support-rallying 62p to 1895p as it began a legal defence of the patent covering one of its best-selling drugs, Seroquel, for the treatment of schizophrenia. It will face Teva Pharmaceutical and the Novartis generics unit Sandoz in the US District Court in New Jersey on 11 August after they filed marketing applications for generic versions of Seroquel, despite the drugmaker claiming patent protection until 2011.

AstraZeneca's share price has slumped from a peak of 2345p since the start of the year on concern that it may lose marketing exclusivity for key drugs including Seroquel and heartburn treatment Nexium. Drugs maker Goldshield jumped 11¼p to 300¼p, after the House of Lords found the company not guilty of price fixing.

Tullow Oil, a Footsie 100 constituent these days, rose 16p to 646p despite reporting a drop in profits last year from £263.3m to £114.2m on the back of lower gas prices and exploration write-offs.

TOMORROW'S AGENDA

• Home Retail Group, the company behind Argos and Homebase, is expected to offer fresh evidence of a slowdown on the High Street with its fourth-quarter trading figures. Analysts forecast like-for-like sales for the three months will be flat at Argos and down 6% at Homebase. But chief executive Terry Duddy's comments on the 2008 outlook will be the focus for investors.

• Morrisons' full-year results should give shareholders cause for cheer with the unveiling of a share buyback of more than £500m alongside strong figures. Pre-tax profits are predicted to climb around 70% as the resurgent supermarkets chain claims a bigger slice of the grocery market.

• Mike Ashley's Sports Direct updates the City on trading. Despite shares in the struggling leisurewear retailer recovering slightly in the last few months, analysts warn tomorrow is likely to bring more bad news.