Market report: Tuesday close
If you're looking for a punt, you would be wise to avoid the betting shops. That was the message from JPMorgan, which today warned bookies are likely to suffer as consumers rein in spending while tighter gaming regulations, set to be introduced in 2010, will also hit the sector hard.
Movers: Latest from the stock exchange
The broker downgraded Ladbrokes to underweight from neutral and William Hill to underweight from overweight and slashed their target prices, with Ladbrokes cut from 345p to 200p and William Hill reduced from 465p to 285p.
Their shares sank in response, Ladbrokes 16¼p lower at 221p and William Hill 14¾p cheaper at 271¼p.
After yesterday's roller-coaster ride, the FTSE 100 index was moving in only one direction.
It plunged 129.8 points to 5320.4 as only eight stocks in the top flight managed to stay out of the red and losses from the heavyweight financial stocks weighed on the blue-chip index. In New York, the Dow opened 117.2 points lower at 11,362.2.
Meanwhile, the wider FTSE 250, the bellwether of the domestic economy, dived by 250.8 points to 8918.2 as longsuffering property shares again came under the hammer following Brixton's miserable statement.
Persimmon sank 27p to 305p ahead of Thursday's trading update, while Taylor Wimpey led the mid-cap fallers, off 4½p at 42¼p and Brixton shed 23p to 224¾p. Back among the top stocks, builders' merchant Wolseley led the Footsie fallers, losing 36¾p to 389½p, while Hammerson followed closely behind with a loss of 61p to 862p.
Volumes remained thin as traders mostly sat on the sidelines. Perennial takeover favourite Smith & Nephew was one of the few stocks sparking their interest and diverting eyes away from Britain's gold medal haul in Beijing. Talk of a bid for the artificial joints maker and its defensive nature, sent it racing to the top of the Footsie leaderboard, climbing 13½p to 632p.
US group Zimmer is thought to be eyeing up its UK rival, with traders noting that its recent strong results and the rally in the US dollar have made Smith appear desirable.
Despite the swathes of bad news pouring out of the High Street in recent months, Goldman Sachs said it may be time to reconsider the heavily sold-off sector. The broker is now tipping Next, 19½p cheaper at 993½p, and Kesa Electricals, 1½p off at 162¼p, as buys while it hoisted its target price for DSG International from 31p to 61p, Halfords from 260p to 307p and Marks & Spencer from 220p to 292p.
However, the upgrades were not enough to boost the sector's shares, with M&S retreating 16½p to 255¾p, Halfords down 9½p at 276p and DSG dipping 2¾p to 49½p.
But not even the bulls at Goldman think Woolworths looks tempting, and it cut its price target for the pick'n'mix seller from 7.3p to 7p.
Woolies' stock rose the most in two years yesterday after rebuffing a bid from frozen foods specialist Iceland, but Goldman wasn't the only broker recommending investors give it the cold shoulder. Its shares, languishing at 6.76p, down 0.63p, are overvalued according to HSBC, which cut the High Street chain to underweight from neutral but said that rejection of Iceland's "unworkable, undervalued" offer highlights that there is still some value to be had from the chain.
Fresnillo's results failed to put a shine on its shares, despite broadly positive comments from analysts and the announcement of a maiden dividend.
The Mexican silver miner, a prime candidate to join the hordes of foreign miners in the top flight following September's shake-up of the FTSE indices, reported a strong set of numbers, boosted by silver and gold prices reaching historic highs. But investors remained nervous over rising operating costs and its shares sank 8¾p to 353p.
City coverage and share tips
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• The Bank of England publishes minutes from this month's interest rate-setting meeting. Monetary policy committee members voted to keep rates unchanged at 5%, but the decision is unlikely to have been unanimous. Despite the dovish tone taken in its quarterly Inflation Report, analysts predict Tim Besley may have been joined by a colleague in voting for borrowing costs to rise, while arch-dove David 'Danny' Blanchflower is tipped to have been the lone voice calling for a cut. A rate move is not forecast to come before November.
• More property market misery is expected when the Council of Mortgage Lenders publishes July's lending figures. It has warned that lending will remain subdued in the coming months and forecasts a 35% drop in loans advanced to home buyers this year. The CBI also releases its industrial trends survey while the office for National Statistics publishes July's public sector finances figures.
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