By
Jonathon Hopkins
|
17.05 (close): Supermarkets remained in the spotlight as the sector fought back from yesterday’s sell-off despite another blow for Morrisons after it revealed employee payroll data was stolen and published on a website.
The UK’s fourth biggest supermarket confirmed the data theft, which includes bank account details and affects thousands of staff from all levels of the organisation, just a day after dismal annual results and fears of a price war sent shares plunging 12 per cent.
Its shares edged one per cent higher today while rivals Sainsbury’s and Tesco were among the biggest blue chip risers, but the retail rally was not enough to boost the wider FTSE 100 Index – down another 25.9 points at 6527.9.
Caution remains: Early gains by US stocks were reversed and Footsie stayed under pressure in late afternoon trade
It has been a poor week for the
London market amid ongoing worries over Ukraine and the health of
China’s economy, with the top flight suffering its sixth straight
session in the red.
Worries
that China, the world’s second largest economy, is entering a deeper
slowdown were heightened after data earlier this week showed industrial
production and retail sales grew slower than expected.
Investors
were also becoming anxious ahead of a public referendum in Crimea on
Sunday to decide whether to break away from Ukraine.
An
uncertain start to trading on Wall Street offered little respite for
the FTSE 100, with the Dow Jones Industrial Average struggling to make
headway after disappointing consumer sentiment and producer pricing
figures.
The pound
held firm at 1.66 US dollars and 1.19 euros amid mixed UK economic data
as official figures showed the trade deficit widening markedly in
January, while the construction sector continued to grow in spite of the
New Year floods and storms.
Among stocks, Sainsbury’s recovered from a sharp fall yesterday by climbing 8.7p, or three per cent, to 313.6p.
It
had been hit in the previous session when rival Morrisons became the
latest to launch a mammoth price cutting campaign to take on the
discounters after it slumped to a £176million annual loss and issued a
profits warning.
Tesco shares also made up some of their losses, climbing 5p to 303.7p.
Morrisons lifted 2.8p to 208p, although the data theft revelation dealt a fresh blow to the embattled chain.
Its
online delivery service partner Ocado has also suffered hefty losses
over the past two days, with shares in the FTSE 250 stock falling by
another four per cent, down 18.9p to 483.6p.
This followed a seven per cent fall yesterday after the Morrisons full-year results blow.
BP
was initially lifted by the US ending a ban on it winning federal
government contracts in the wake of the Gulf of Mexico oil spill,
although shares later slipped 1.3p to 477.3p.
Pub
group JD Wetherspoon eased 1p lower to 827.5p in the second tier,
despite reporting a 3.2 per cent rise in pre-tax profits to £36million
for the six months to January 26.
The
biggest FTSE 100 risers were Fresnillo up 26p to 925.5p, Sainsbury’s
ahead 8.7p to 313.6p, IMI 39p stronger at 1456p and Rolls-Royce 23p
higher at 1033p.
The
biggest FTSE 100 fallers were Aberdeen Asset Management down 11.7p to
365p, International Airlines Group off 11.6p to 421.3p, Glencore Xstrata
7.7p lower at 297p and Coca-Cola HBC 36p weaker at 1433p.
15.00: The
Footsie stayed weak in mid-afternoon trade dogged by worries over the
situation in Ukraine ahead of a key referendum this weekend, although it
eased off earlier lows as US stocks managed a steadier start following
sharp falls in the previous session.
With
an hour and a half of trading to go, the FTSE 100 index was down 26.1
points at 6,526.5, just holding off the session low of 6.500.4 but still
on course to register its biggest weekly fall since June last year.
It
has been a disappointing week for the London market amid ongoing
worries over Ukraine and the health of China’s economy, with the top
flight heading for its sixth straight session in the red.
Worries that China, the world’s second largest economy, is entering a deeper slowdown were heightened after data earlier this week showed industrial production and retail sales grew slower than expected.
Investors were also becoming anxious ahead of a public referendum in Crimea on Sunday to decide whether to break away from Ukraine.
Worries about the situation in Ukraine saw a modest early bounce on Wall Street quickly eroded, with the Dow Jones Industrial average – which tumbled over 200 points yesterday – down 3.9 points at 16,104.1.
Some disappointing US economic data also weighed in New York. Christopher Vecchio, currency analyst at DailyFX, said:
‘The U. of Michigan Consumer Confidence preliminary report for March disappointed expectations as the US consumer is starting to feel squeezed. ‘It could be the weather impact that recent Beige Book correspondents noted as having significant effect on business conditions, but it’s clear that the US economy hit a rough patch at the start of 2014.
‘With the Economic Outlook component to its weakest level since November 2013, higher energy, food, and housing costs in a sustained low wage growth environment may be starting to hit sentiment.’
In London, supermarket firm William Morrison remained under pressure after revealing payroll data relating to thousands of employees was stolen and published on a website just a day after dismal results sent shares plunging 12 per cent.
The UK’s fourth biggest supermarket failed to recover any of yesterday’s stock sell-off as it confirmed the data theft, which includes bank account details and affects staff from all levels of the organisation.
Rival Sainsbury’s bounced back from a sector-wide shares rout after Morrisons sparked fears of a price war, recovering from a sharp fall yesterday by climbing 8p to 312.9p.
It had been hit in the previous session when rival Morrisons became the latest to launch a mammoth price cutting campaign to take on the discounters after it slumped to a £176million annual loss and issued a profits warning.
Tesco shares also recovered some of their losses, climbing 2.1p to 300.9p.
But Morrisons remained in the red, down 0.4p to 204.9p as the data theft revelation dealt a fresh blow to the embattled chain.
Its online delivery service partner Ocado has also suffered hefty losses over the past two days, with shares in the FTSE 250 stock slumping by another 13 per cent, down 63.8p to 438.7p. This followed a 7 per cent fall yesterday after the Morrisons full-year results blow.
Pub group JD Wetherspoon dropped 1.8 per cent or 15.3p to 813.3p in the second tier, despite reporting a 3.2 per cent rise in pre-tax profits to £36million for the six months to January 26 with its outlook statement slightly cautious.
Back with the blue chips, energy giant BP was initially lifted by the US ending a ban on it winning federal government contracts in the wake of the Gulf of Mexico oil spill, although its shares later pared back gains to stand 0.1p higher at 478.6p.
11.45: The Footsie remained weak as midday approached, on track for its biggest weekly decline since June as tensions between Russia and Ukraine were ramped up ahead of a crucial referendum this weekend over the future of Crimea.
The FTSE 100 index, which was down 16.4 points at 6,537.4 before midday, has fallen 2.8 per cent this week. Its record weekly fall last year was triggered by the Federal Reserve hinting it would taper economic stimulus later in 2013.
Investors were cautious again as Russia made it clear it would veto a US-drafted UN resolution to declare Sunday’s referendum illegal, and launched new exercises near its Ukrainian border in the face of sterner-than-expected sanctions from the United States and the EU.
Glum times: Russian Foreign Minister Sergey Lavrov, left, and US Secretary of State John Kerry stand together prior to a meeting at Winfield House in London today
Crucial talks between the US secretary of state John Kerry and his Russian counterpart to ‘find a way forward’ over the crisis in Ukraine began this morning.
Kerry said he hoped the discussions would come up with a solution to ‘resolve some of the differences between us’ as he welcomed Sergey Lavrov to the US Ambassador’s residence in London.
Alastair McCaig, market analyst at IG said: ‘Traders are only too aware that the EU may be forced to take sanctions over Russia’s recent actions, after no doubt hoping to draw the line at disapproving comments, following this weekend’s referendum in Crimea.
‘Considering the region’s dependence on Russian oil and gas and the fragile state of the EU’s recovery, this is a high stakes game of poker, and you suspect that Vladimir Putin realises how strong his hand is.
‘This week has seen equity markets put the brakes on as the haggling over Crimea has intensified and this weekend’s referendum should ensure that the waters are kept suitably muddy.
‘Although events in the Black Sea might be getting headlines, the flow of economic data out of China is painting an ever more conclusive picture of an economy that is changing down gears,’ McCaig added.
Miners were under pressure, with Rio Tinto shedding 39.5p to 3,122.5p, partly on the Ukraine worries and partly after recent data indicated a possible economic slowdown in China, a key consumer of commodities.
Fund manager Aberdeen Asset, which has exposure to troubled emerging markets such as China and Ukraine also suffered, losing 9.3p to 367.4p.
Among other financial stocks, Royal Bank of Scotland fell 5.9p to 294.7p following a downgrade of its credit rating by Moody’s late yesterday, meaning the taxpayer owned lender is seen as a risky investment.
Supermarket firm William Morrison slipped another 0.6p lower to 204.6p following yesterday’s 12 per cent share price drop after it issued a profit warning.
Morrisons’ rivals were also hit after yesterday its update, on fears of a possible price war as well as the growing importance of discounters such as Aldi and Lidl.
But J Sainsbury recovered some ground today, up 8.4p to 313.3p as traders decided the fall was overdone. Citigroup cut its target price on Morrisons from 250p to 220p with a neutral rating, as well as reducing its targets for Sainsbury, albeit retaining with a buy rating.
Also among the minority blue chip gainers, BP added 1.2p to 479.7p after the US government lifted a ban that excluded the oil major from new federal contracts in the wake of the 2010 Gulf of Mexico oil spill.
‘The agreement was largely anticipated and should be seen as a small positive for the shares, Liberum analysts said in a note on BP today.
Lower down the market, magazine publishing group Future slumped almost 25 per cent, down 3.25p to 9.75p after warning that its profits would be significantly below expectations.
The day’s domestic data failed to provide any relief in the City. Britain’s goods trade deficit widened by more than expected in January as exports fell to their lowest level in more than a year and a half, official data showed.
The Office for National Statistics (ONS) said the goods deficit was £9.793billion pounds in January, when economists had forecast a shortfall of £8.6billion.
That compared with a deficit of £7.662billion in December, when one-off items helped push the shortfall to its lowest level in nearly a year-and-half.
Britain’ overall trade deficit, including the country’s massive services industry, widened to £2.565billion pounds from £668million in December.
However, ONS data today also showed the UK construction sector making a robust start to 2014 as output grew 1.8 per cent month on month and 5.4 per cent year on year in January.
09.30: Blue-chip shares were on the back foot again today amid continuing fears over Ukraine and jitters surrounding the Chinese economy.
As the morning session progressed, the FTSE 100 Index was down 21.6 points at 6,532.2, taking its cue from sharp drops on Wall Street and Asian markets overnight, and building on a 1 per cent fall yesterday.
Worries that China, the world’s second largest economy, is entering a deeper slowdown were heightened after data earlier this week showed industrial production and retail sales grew slower than expected.
Ukraine tensions: Pro-Russian protestors were attacked by police last night in the Ukrainian city of Donetsk
Investors were also becoming anxious ahead of a public referendum in Crimea on Sunday to decide whether to break away from Ukraine.
Markus Huber, senior sales trader/senior analyst at Peregrine Black said: ‘The problem stocks are facing is that there is still no solution in sight what the Crimean crisis is concerned instead it seems like that the two sides grow ever farther apart.
‘With not even a hint of any compromise in sight an escalation of the crisis seems like at this stage. All eyes will be on the meeting between US secretary of state John Kerry and Russian Foreign Minister Lavrov in London today.
‘While nobody expects the Crimean referendum on joining Russia scheduled to take place this Sunday being called off it needs to be seen if Russia straight way proceeds with ‘annexing’ Crimea or if both side might be willing to re-enter into further negotiations first.
‘Clashes between rival demonstrators overnight having caused many injuries and the first casualty is not making things any less complicated either. Instead they are clearly showing that it is not just politics which is responsible for the current crisis but also just how deeply this country is actually divided,’ Huber added.
Bucking the dull trend on the FTSE 100 index, however, was food retailer Sainsbury’s, recovering from a sharp fall yesterday by climbing 7.1p, or 2 per cent, to 312p.
It had been hit in the previous session by rival William Morrison declaring a price war to take on discount rivals after it slumped into loss and issued a profits warning.
Tesco shares also recovered some of their losses, climbing 0.4p to 299.9p.
Meanwhile, BP was lifted by the US ending a ban on it winning federal government contracts in the wake of the Gulf of Mexico oil spill. Shares rose 1.8p to 480.3p.
Stocks such as building materials group CRH were among those in the red on wider global growth concerns, with its shares down 36.5p, to 1,633.5p.
Online fashion retailer Boohoo.com made a sparkling debut on AIM today, as the retail float frenzy this year continued and followed on the strong listing debuts of online electrical appliance retailer AO.com last month and discount high street stores firm Poundland earlier this week.
Boohoo shares were trading at 77p against a 50p offer price.
08.30: The Footsie resumed its downwards path in early trading today, extending its falls into a sixth straight session having already dropped over 150 points this week on dual worries over a slowdown in global economic powerhouse China and growing tension between Russia and Ukraine.
In opening deals, the FTSE 100 index shed another 22.6 points to 6,531.5 having dropped over 1 per cent yesterday for the second session in a row to hit a new one-month low.
Rising geopolitical tensions in Ukraine helped push gold to a six month high and pushed Brent crude oil towards $108, while copper was set for its biggest weekly fall in 11 months unsettled by jitters in the Chinese credit market.
Six in a row: The Footsie notched up its sixth successive decline, sliding over 175 points lower over this week so far
Global stock markets plunged overnight, with the Dow Jones industrial Average in New York slumping by over 200 points with investors were reluctant to open new positions ahead of the weekend, when Crimean residents will vote on whether they want their region to join Russia or remain part of Ukraine.
Michael Hewson chief market analyst at CMC Markets UK said: ‘It would appear that reports of a build-up of Russian troops on Ukraine’s eastern border in the afternoon session yesterday was the catalyst to tip European markets sharply lower, only this time we also saw US markets turn lower as well, and today’s market action looks set to pick up where yesterday left off.
‘Concerns about China are also likely to continue to resonate, particularly given yesterday’s comments from Chinese Premier Li Keqiang that future defaults on bonds and other financial products were “unavoidable”, suggesting the potential for a domino of defaults, whose effects could ripple out across the globe, and in the process drive growth expectations for 2014 lower.
‘One thing is for sure traders would be foolish to make the mistake they made two weeks ago and go home long into the weekend, particularly with the situation on the ground in Ukraine so potentially fluid, and the Crimea referendum vote due on Sunday.
‘With economic data fairly light on the ground today it seems likely that market attention will be focused on events in Russia and Ukraine,’ Hewson concluded.
The latest UK trade balance numbers, due at 9.30 am, are expected to show that the January trade gap has widened to -£8.6billionn, with the total trade balance seen at -£2.2billion.
Stocks to watch include:
BP – The US government yesterday lifted a ban that excluded BP from new federal contracts, after the British oil major filed a lawsuit saying it was being unfairly penalised for its 2010 Gulf of Mexico spill.
BARCLAYS – Barclays is reviewing the size and shape of its investment bank, in a review that is expected to result in it shrinking and focusing on its most profitable areas.
JD WETHERSPOON – The pub operator’s first half profit before tax increased by 8.5 per cent, with the company saying it continues to expect a reasonable outcome in the current financial year.
STHREE – The staffing firm said its group gross profit was up 9 per cent year on year, boosted by a strong seasonal recovery in contractor runners.
BOOHOO.COM – The online fashion retailer starts trading on AIM today at 85p following an offering of shares priced at 50p each.
GULF MARINE SERVICES – Abu Dhabi-based Gulf Marine Services set the price for its impending flotation at 135 pence per share, giving the firm a market capitalisation of around £472million.
Comments (6)
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ali zafaron,
London,
2 hours ago
Time to buy
Dave,
Dartford uk,
5 hours ago
more talks more expenses and no action,all is normal then!
R.P McMurphy,
Southend,
8 hours ago
John Kerry looks like his eyes are dead . I wouldn’t trust him to keep a rabbit going with lettuce .
Graham,
York, United Kingdom,
9 hours ago
All very odd??. Buffet and a number of Hedge Fund operators. shout from the roof tops that the stock market is going to fall by as much as 50%. the reason? Interest rates are so low that the man in the street is buying into investments via various pathways. this it appears has created a bubble. What a wonderful time to tell these new and unskilled investors that their investments will be halved in value by the summer!!
I wonder what the hedge funds have been who gave out this info have been doing. maybe selling high in volume to start the stampede as we can see it has already started. need a smoke screen. Blame it on China and Ukraine. There is clear market manipulation going on it should be investigated. or was it the bubble bursting or deflating. One thing for sure now that houses and property are back in fashion they are sucking in funds, we are all chasing the next big thing….If the hedge funds get their way god help Endowments, Pensions and Investment bonds.
Tom MacNeece,
hythe, United Kingdom,
9 hours ago
Jetty,
London, United Kingdom,
9 hours ago
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FTSE CLOSE: Footsie suffers sixth straight session in the red
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