Stock market report: Wednesday close
Bank shares came under the hammer again today following a big sell-off of their American peers on Wall Street overnight, where investors are fretting about their wholesale nationalisation in the wake of the US Treasury's $2 trillion bank rescue scheme.
Updates: Latest from the stock exchange
Lloyds Banking Group dropped 7.5p to 87.4p, Barclays 4.9p to 108.5p and Royal Bank of Scotland 0.2p to 23.6p. Institutional investors in the Square Mile are also concerned about their remaining holdings in UK lenders. Many of them have been forced to sell up because of the loss of dividend income. Others have been heavily diluted by the UK Government's own rescue scheme, which has seen it take a 68% stake in RBS while holding 43% of Lloyds.
Shares generally showed their resilience in the wake of yesterday's Wall Street losses. The FTSE 100 clawed back an opening fall to sport a rise of 21.2 at 4234.3. Its performance was made even more impressive by the number of companies going ex-dividend, the equivalent of a six-point fall in the index. Investors also had to contend with a big surge in unemployment and some gloomy forecasts on the UK economy from Bank of England Governor Mervyn King.
Results from Reckitt Benckiser got the thumbs-up from the City, the shares jumping 198p at 2820p.
Kazakhmys put the brakes on following yesterday's sell-off, with the price rallying 13¾p to 304¾p. That compares with the 1943p at which the shares were changing hands last year at the height of the raw-materials bubble. The Kazakhstan-based miner has been badly hurt by the slump in the copper price, which according to Citigroup could fall a further 20% this year.
Even so, the American broker has jacked up its target for the shares from 250p to 315p, claiming they should benefit from currency translation following the recent devaluation of the country's tenge.
'We believe Kazakhmys is ideally placed for the next upturn,' Citigroup said, 'but our conviction that copper still has more than 20% downside from spot during 2009 precludes a buy rating.'
Elsewhere in the mining sector, Rio Tinto added 66p to 1969p amid mounting speculation that its biggest shareholder aluminium Corporation of China (Chinalco), the nation's biggest producer of the metal, may invest up to $20bn, in return for which it would increase its stake from 11% to around 20%. Chinalco paid around 6000p a share for its stake in Rio and may be prepared to spend more in order to gain more access to commodities. Chinalco is in talks to buy bonds that will convert into Rio shares.
Rio needs to reduce its growing debt burden and is committed to lightening the load by $10bn before the year end. But there has been opposition to the Chinalco deal. Chairman-elect Jim Leng quit last week after less than a month, because of disagreements over how to cut debt.
Rio is said to be in talks with Japanese power companies about the sale of its 68% stake in uranium miner Energy Resources of Australia.
Footsie 100 newcomer Randgold Resources stood out with a rise of 236p to 3300p after HSBC moved from neutral to overweight and raised its target from 3340p to 3690p. It follows exploration results at its Massawa discovery in Senegal, which confirm the miner has struck it rich. The broker says: 'The potential for a significant resource - as much as 3.9m ounces - and initial positive metallurgy are the primary reason we are raising our target price.'
Société Générale has begun coverage of Anglo American, down 34p at 1377p, with a sell rating and 1200p target. It prefers BHP Billiton, 16p cheaper at 1294p, with its strong balance sheet.
Plus Markets Group, a rival to the London Stock Exchange, ran into profit-taking, easing 0.75p at 6p. But Plus says it has enjoyed a doubling of primary business, or flotations, and continues to increase market share. That could be bad news for the LSE, up 9p at 474½p, which next month faces being dropped from the Footsie 100.
City coverage and share tips
This is Money carries breaking City news throughout the day. Bookmark Companies & Markets and try these markets links...
Tomorrow's agenda
Could BT be set for another profits warning? The telecoms titan last month admitted it would take a £340 million hit at its ailing Global Services arm. Chief executive Ian Livingston warned then that there could be further charges, leaving investors concerned that tomorrow's third-quarter results will bring more bad news.
Guinness won star approval this month when actress Gwyneth Paltrow confessed to being a fan, but its maker Diageo is tipped to report less-than-stellar first-half figures. The drinks giant has performed well until now, but Deutsche Bank's analysts caution that spirits sales will be slowing. They warn that Diageo may lower its forecasts for earnings growth from its earlier predictions of between 7% and 9%.
Property giant British Land, which posts third-quarter numbers, this week sold a 50% stake in its Meadowhall shopping centre in Sheffield. The move calmed fears it could breach its banking covenants, but rumours still abound of a cash call.
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...
- Ocado boss Tim Steiner faces a shareholder revolt over...
- 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...