Stock market report: Wednesday close
Retail analyst Nick Bubb has been a bear of High Street electrical retailer DSG International for more years than most of us care to remember. Now, he has had a change of heart.
Market watcher: Latest from the stock exchage
The shares, which fell below 10p just before Christmas, lost an early lead to trade ½p cheaper at 21¼p despite Pali International's Bubb raising his recommendation from sell to weak hold, with his target price and sum-of-the-parts valuation increased from 16p to 20p.
Exasperated DSG shareholders may at least see it as a step in the right direction. Ten years ago, DSG - or Dixons as it was then known - traded at more than 300p a share.
Bubb's move follows a presentation yesterday at which the company said it had reached agreement with its banks on what has to be done relating to disposals and cost-cutting to avoid going into the red this year and next, and breaching loan covenants.
The retailer, which includes PC World, also highlighted the success of the ongoing Currys stores revamp, which it believes it can continue to finance.
Bubb warns such a move may prove to be too good to be true, but reckons investors will give DSG the benefit of the doubt.
The group is getting to grips with losses in Spain and Italy. US rival Best Buy has delayed its UK launch, giving DSG more breathing space.
Elsewhere-on the High Street, Marks & Spencer firmed 7¾p to 249¾p after Arden Partners started coverage of the shares with a reduce rating. It says M&S will continue to struggle in food and general merchandise.
Shares generally staged a relief rally, which led to the FTSE 100 index climbing back above 3600, closing up 133.8 points at 3645.9.
However, the growing number of companies cutting dividends or tapping shareholders for more money continues to undermine sentiment. Wall Street also staged a much-needed rally this afternoon, the Dow Jones rising 87.29 to 6813.31.
Miners and financials led the way up in London. The miners responded to possible moves by the Chinese to stimulate their flagging economy. It is hoped this will lead to increased demand for raw materials.
Xstrata rose 49¼p to 382p, Kazakhmys 46¼p to 281¾p and Antofagasta 81¾p to 501½p.
Standard Chartered continued to reflect yesterday's profits increase with a gain of 94½p to 724½p. Royal Bank of Scotland firmed 1.1p to 22.7p as Shore Capital raised its rating from sell to hold after seeing what it described as a material shift in the risk/return profile.
Not everyone was impressed with HSBC's ability to turn in a profit last year in the wake of the credit crunch. Citigroup has cut its target for Europe's biggest bank from 800p to 500p, and says the results highlight a weaker operating outlook. it adds that activity levels and credit quality are set to deteriorate. The shares rose 6p to 401p.
British Land rose 4¼p to 330½p while rival property developer Segro put on 15p to 97p after confirming plans to raise £500m through a 12-for-one rights issue at 10p a share. KBC Peel Hunt rates the shares a buy. At the other end of the property market, shares of Sirius Real Estate remained stagnant at 0.12p.
They have come under selling pressure along with the rest of the property sector, dropping from 0.5p since October. But father-and-son directors Frank and Kevin Oppenheim say the selling has been overdone. they have each bought 476,150 shares, taking their combined holdings to 14.7m, or 4.86%.
There has been a collective sigh of relief from brokers at BP's decision to at least maintain its dividend payment to shareholders. This has dispelled mounting fears that a cut of as much as 20% was on the way in order to conserve cash. Hanson Westhouse says the oil giant, up 16¾p at 421¼p, yields almost 10% and offers exceptional value. Citigroup agrees and says the shares should be bought. It is confident of modest growth beyond 2010 without reducing investment activity levels.
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Tomorrow's agenda
After five consecutive interest rate cuts, the Bank of England is expected to use this week's meeting to change tack. Economists believe the monetary policy committee will announce plans to boost the money supply by printing cash. But experts are divided on what the likely move on interest rates will be: most forecast a half-point cut to 0.5% but others believe the benchmark will be unchanged at 1%.
Premier Foods is expected to join the scores of companies lining up with their begging bowls. Britain's biggest food producer, which posts full-year results, is looking to raise £400m to reduce its £1.8bn of debt. Meanwhile, analysts tip the Hovis and Mr Kipling cakes maker to report pre-tax profits of about £185m.
Balfour Beatty's chief executive Ian Tyler must be the only man in the construction industry still smiling. While most of the sector is in turmoil, the construction firm is tipped to report pre-tax profits of about £240m, up from £201m last year.
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