Yesterday's trading: Tumble weed on the High St

By Geoff Foster for MailOnline
Updated:

 

Retailers remained the stock market whipping boys as dealers heard that consumer confidence has slumped to its lowest ebb since June 1990.

Geoff Foster, Daily Mail City

Geoff Foster, Daily Mail

Joe Public certainly has a lot less cash in his sky rocket to spend these days as a result of higher mortgage rates, exorbitant energy bills and sky high petrol prices.

The High Street continues to see a marked deterioration in business and in desperation, shop chains have begun summer sales with as much as 70% off.

Marks & Spencer's boss Sir Stuart Rose recently told leading institutional investors that trading conditions were dire and he could see very little improvement until next year.

Panmure Gordon's retail guru Philip Dorgan took a bearish view ahead of next Wednesday's AGM and first-quarter trading statement and downgraded his earnings forecast for this year by 4% and 10% for next. He slashed his target price to £4 from £5.

M&S shares dropped to 323½p before closing 6¾p easier at a year's low of 328½p. Last June the stock was changing hands above £7. Dorgan expects a 3% fall in like-for-like sales in the first-quarter and says even its food offering - traditionally its strong suit - will disappoint with sales here down 2%. But he maintains his buy recommendation because he reckons property support and yield attractions (almost 7%) will come into play on a 12 month view.

Apart from grim trading, Rose has other things on his mind. Major shareholders have been urged to vote against appointing Rose as executive chairman at the AGM as they say it would mean 'a dangerous concentration of power'. They are adamant that making Sir Stuart chairman while he was still chief executive breaches best corporate governance best practice.

End of the second quarter window dressing by fund managers before they meet trustees to explain their performance over the past three months helped the Footsie bounce back with a welcome gain of 96 points at 5,625.9.

On track for its worst June performance since the Great Depression in 1930, Wall Street dropped 58.9 points at the outset as the price of oil breached another record of $143 a barrel. It later rallied to trade 90 higher.

Defence stock Cobham topped the leader board at 197¾p, up 11½p. Dealers heard that a bullish broker tome would be landing on fund managers' desks this morning. Revived takeover gossip lifted oil services company Wood Group 24¾p to 494½p.

Mobile phone giant Vodafone provided more than 22 points of the Footsie's gain, buzzing 7.45p higher to 149.15p. Buyers celebrated its deal with News Corporation's MySpace under which footage from Vodafone sponsored music events will be made available to users of the social networking website.

Miner Rio Tinto soared 166p to 6009p on reports that steel magnate Lakshmi Mittal, who has joined the board of US broking giant Goldman Sachs, is keen to secure large supplies of iron ore for his company Arcelor Mittal. He could therefore decide to enter the takeover battle for Rio. Higher commodity prices lifted Anglo American 130p to 3526p.

Cheap buying and end quarter book squaring helped UK Commercial Property Trust climb 6¼p to 67p.

Stock market information

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Financial data - newspaper and pen

Intense speculation about an imminent bid from Regis Group saw shares of Britain's biggest residential landlord Grainger soar 50½p before profit takers moved in. The close was 13¼p better at 215p after Regis said it was not yet ready to make an approach given turbulence in the housing and financial markets.

Black cab maker Manganese Bronze held at 375p despite Martin Hughes' hedge fund Toscafield's purchase of 264,500 shares. It now holds 26.6%.

Any company with entrepreneurs Bob Morton and Vincent Tchenguiz as its major shareholders should be worth following. PSG Solutions, which provides property surveys and home information packs, eased 2½p to 51p on hearing that annual pre-tax profits had slipped to £3.24m from £3.52m. Not a bad performance considering the turbulence in the residential housing market. PSG has £3m net cash in the bank and chairman Jonathan Mervis is on the acquisition trail.

Construction firm Costain improved 1p to 22¾p following a positive trading statement. The forward order book now stands in excess of £2bn, a record level.

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