ON STOCK MARKET
Copyright 2001 www.ananova.com
[ December 3rd 2001 ]
shares ended a slow session weak although off
their worst levels, as stronger than expected
US manufacturing data failed to support a Wall
Street still fretting over the implications of
Enron's collapse, dealers said.
100 index ended down 39.0 points to 5,164.6, having
traded in negative territory throughout the session.
Its weakest level was just after Wall Street's
open, when the index dipped by 51.3 points. All
other indices ended negative, while volume was
unimpressive with 1.52 billion shares changing
hands in 124,977 transactions.
traders went home, the Dow Jones Insustrial Average
was down 109.29 points to 9740.61, while the Nasdaq
composite had dipped 21.92 to 1908.85. The National
Association of Purchasing Management's report
on November manufacturing activity had helped
both indices off their worst levels. It showed
a rise to 44.5 from 39.8 in October, surpassing
expectations of 42.1, but still indicating a contraction
in the sector. Construction spending rose 1.9%
in October where a decline had been expected.
figures followed the latest personal US spending
data, with consumer spending rising a record 2.9%
in October. This was also stronger than expected;
Wall Street forecasters called for a 2.3% increase.
Despite the strong data, London could not cast
off its nerves. Banking and other financial stocks
were under pressure as jittery investors pulled
out fearing exposure to the energy trader Enron's
Abbey National and Dutch firm ING both laid their
cards on the table on Friday - detailing losses
running at £115 million and an unsecured $195
million respectively - an alarming Sunday Times
report claimed British banks will face losses
running into billions. Barclays saw renewed pressure,
down 62 pence at 2,088, as fears over its Enron
exposure overshadowed its upbeat trading statement
earlier - in which it gave no specific details
regarding Enron exposure costs, thought to be
around £50 million.
Bank of Scotland was a faller, losing 36 at 1,591
after weekend press reports suggested that the
firm is understood to have a combined loan exposure
of £1 billion to the Enron collapse. Schroders
led the fallers with a drop of 56 to 820 while
the fund manager announced the rush acquisition
of its incoming chief executive Michael Dobson's
former company Beaumont Capital Management. The
deal, announced last month, will be completed
group Standard Chartered once again managed to
buck the poor sector trend, adding 38 to 843 as
speculative interest remained following further
weekend press reports regarding a likely bid for
also focused on UK energy stocks. Though Centrica
warned last Friday its Enron exposure is about
£30 million, sector watchers say the exposure
of most UK companies is closer to that of International
Power, which said earlier it has exposure of less
than £2 million. They caution, however, that British
Energy its likely to be most exposed since it
sells a high percentage of its output through
the wholesale market - its shares lost 7 to 236,
while International Power was 3-1/4 lower at 204.
utilities stocks managed a convincing rally after
their steep declines last week in reaction to
Enron's collapse. Scottish & Southern was up 15-1/2
at 631, while Severn Trent rose 14 to 701. Advertising
and publishing stocks were among the key mid-cap
fallers, impacted by a profits warning from second
liner media group Cordiant and mixed comment on
advertising. The company indicated that its full
year revenues are expected to be 9% lower than
last year, which which in turn has dented its
full year profit expectations. Furthermore, in
response to the revenue shortfall, Cordiant said
it is cutting 1,100 jobs.
by global advertising agency Zeneth Optimedia
that advertising expenditure worldwide will fall
6% this year and 1% in 2002 provided an extra
drag to the sector. Cordiant shares were off 5-1/2
at 88, while blue chip rival WPP group lost 13-1/2
pence at 671-1/2. Publishing groups were also
suffering from the fresh worries raised today
over the advertising environment, with blue chip
Reed International down 15 at 575, Pearson off
7 at 820, and second liner Emap down 25 to 720.
put defensive stocks in demand, with tobacco issues
well bid. Imperial Tobacco took on 20 at 850 after
the Observer reported that the company is poised
to launch a £4 billion bid for Reemstma of Germany.
British American Tobacco rose 8 to 573, benefiting
from news that Merrill Lynch has added the stock
to its "Europe 1" list, with the broker also recommending
a 'buy' up to 700 pence.
Marks & Spencer lost 5 to 343-1/2 as two US value
funds - the biggest investors in the embattled
group - substantially reduced their stakes, the
Financial Times reported. According to the report,
the sales by Brandes Investment Partners and Franklin
Resources involved more than 5% of the shares
in Marks & Spencer. It also argued that the move
- coming at the end of a year in which M&S shares
have outperformed the FTSE 100 index by more than
120% - will be interpreted by some as a sign that
M&S' recovery is on track, since both investors
specialise in buying shares in companies they
believe are undervalued by the markets, before
selling when market sentiment turns.
chain Safeway gained 11 to 317 after HSBC Securities
upped its stance to "hold" from "reduce" on valuation
grounds. Regus was the day's biggest FTSE 250
gainer, up 5 at 48 after the serviced office group
announced that it has outsourced its information
technology needs to three major companies as part
of its drive to cut IT costs by 40%.
transport group Stagecoach rose 4-1/2 to 67-1/2
after unveiling proposals to take over the running
of the tracks of its South West Trains franchise
from Railtrack. The transport company is due to
post its interim figures this Thursday.
stocks were the main features on the downside
as Nasdaq slipped back. Innovation Group led the
fallers after the chief executive and another
board member hedged their holdings in the company.
Chief executive officer Rob Terry hedged 1.8 million
while fellow director Stephen Scott hedged just
over 500,000. With these holdings overhanging
the market the stock dipped 30 to 267-1/2.
among digital plays, Eidos slipped 19-1/4 to 217
and RM fell 15 to 225. Manchester United was also
defeated, dropping 4-1/2 to 125-1/2 after the
football club suffered a 3-0 loss at home to Chelsea
on Saturday, further denting the chances of the
club retaining their Premiership title.