Forum Archive Index - December 1999

["David Reid" <aspex@ix.net.nz>]

I am posting the UK market information again for today only.

It is not available on any web page but is a consolidation of RNS and AFX data

Anyone interested in a continuation of this feed should contact me off list.

The information is FREE but does arise from a subscription feed.

D

 

Summary 14 Dec 1999

Leading blue chips ended a lacklustre session modestly lower as weakness in the heavyweight pharmaceutical sector and concerns about stronger-than-expected U.S. retail sales data offset another flurry of corporate activity and a fine performance from transport stocks, dealers said. With many investors content to sit on the sidelines ahead of more key UK and U.S. data later this week, the FTSE 100 index ended the day down 8.6 points at 6702.1, above a low of 6663.2 but well off its 6735.3 intraday high. Only the FTSE Mid 250 index bucked the downward trend, resting 15.7 points higher at 6283.1, buoyed by a raft of takeover action and speculation. The FTSE Small Cap closed down 12.2 at 2997.0. Volumes in London remained healthy despite the fast-approaching Christmas/YK2 shut-down, with 1.5 bln shares changing hands by 4.38 pm. United Biscuits (134.31 mln) and Vodafone AirTouch (108.23 mln) were the most actively traded issues. A lacklustre showing by the broader market in New York overnight -- though Nasdaq reached yet another record peak -- dulled investor appetite for leading shares here, with only a few special situations attracting any real interest earlier in the morning session. Falls in the heavyweight drugs and telecoms sectors were countered by rises in selected stocks linked to bid interest, but traders pointed out that -- after a fair run in recent weeks -- the market finally seems to be running out of steam and enthusiasm for the wider market is, at best, limited. News that the underlying rate of inflation was unchanged in November provided some comfort midmorning and added further weight to the Bank of England's decision last week to leave interest rates on hold last week - though the feeling is that the central bank will almost certainly tighten in January. The RPIX figure, which excludes mortgage payments, rose 0.1 pct in November, leaving year-on-year rates unchanged. The headline rate of inflation, however, ticked higher, up 1.4 pct from October and its highest level for seven months. In the wake of the UK inflation data, the market staged a limited recovery as traders anticipated a strong start on Wall Street. But these hopes were dashed when U.S. retail sales numbers came in much stronger than the market had been anticipating - though the inflation backdrop remains subdued. The continued strength of U.S. consumer demand triggered vague talk of a the FOMC opting for a bias towards tightening next week. This sparked an early markdown in New York, with the DJIA trading around 22 points lower at the London close. Even Nasdaq -- which has seen a remarkable performance over the past eight sessions -- finally succumbed to profit-taking - down 50 points. The heavyweight pharmaceutical sector accounted for the bulk of the FTSE 100's losses. Following a poor performance by U.S. peers overnight on reports that Massachusetts is pursing a plan to lower drug prices and after a downgrade of the sector by the strategy team at CSFB, the UK heavyweight pharmaceutical took a beating. SmithKline Beecham, which is the most expensive stock in the UK pharma sector in fundamental terms, was the worst affected, surrendering 41-1/2, or 5.07 pct, to end at 777-1/2, while Glaxo Wellcome retreated 39 to 1,645 and AstraZeneca slipped 67 to 2,578. Between them, the three stocks wiped 22 points off the FTSE 100. Overnight, CSFB strategists based in New York, cut their recommendation on the entire sector to 'underweight' from 'overweight', citing the threat rising U.S. interest rates could cause for valuations in the sector. On a brighter note, the transport sector -- one of this year's underperformers, shone. Railtrack, up 60, or 7.26 pct, at 887, ended the session as best performing blue chip stock fired by hopes that Tom Winsor, the rail regulator, will go easy on the company when he reveals the periodic review of what Railtrack can charge for access to the UK rail network tomorrow. Cruise and ports giant P&O steamed 46 higher to 1,001, after CSFB reiterated its 'buy' recommendation and upgraded its pretax profits forecast for the next three years on the back of last week's positive trading update. In last Friday's trading statement, Penninsular & Oriental Steam Navigation Co revealed that total capacity at its cruises division had risen by 14 pct thus far in 1999. British Airways Plc, up 16-3/4 higher at 394-3/4, completed the trio of fine performances for the sector as it basked in the glow of a strong performance from its U.S. counter-parts. Overnight the S&P airline index rose 2.5 pct following a move by most major U.S. airlines to raise the price of business class tickets, a move which seems to vindicate BA's recent shift in strategy. Robust 8-month passenger traffic figures from Air France also lent support. Enthusiasm for all things related to transport even made itself felt in the FTSE 250, where Stagecoach, up 8-1/4 at 162-1/2, motored higher in the wake of 'buy' recommendation from CSFB. The broker believes the transport group founded by Brian Souter is well placed to retain the South West Trains Franchise and reckons the share could hit 240 pence. A recent fine run by media group Pearson, off 14 at 1,834, came to a halt, following a downgrade from Merrill Lynch and a solid, but inspiring trading update. Although retaining its long-term 'buy' rating, Merrill took its intermediate-term rating on the stock back to 'accumulate' from 'buy' because of recent share price out performance. Since the start of the month, Pearson shares have risen by almost 350 pence, fired by consolidation moves in the media sector and hopes -- dashed by this morning's update -- that the group might be about to launch the first UK internet tracker stock. The profit-takers also descended on Logica, with yesterday's lacklustre trading update said to be the catalyst for the move. The shares, which reached an all-time closing high last Friday, ended 85-1/2 weaker at 1,548. But Shell, up 17 at 474, put in a good performance ahead of its annual presentation to analysts tomorrow. Lehman Brothers expects the meeting to very upbeat, providing a comprehensive update on restructuring and also further news on cost-cutting. Merrill Lynch was also bullish, advising clients to 'accumulate' the stock. Bid speculation continued to underpin Marks & Spencer, up 11-3/4 at 285-1/2, even though most analysts do not expect a takeover approach until the state of current trading is know. Although Marks & Spencer refuses to be drawn on the state of current trading, like-for-like sales are said to be down by anything up to 18 pct. Elsewhere in the retail sector, Sainsbury, 22-1/2 better at 887, continued to be supported by talk that the Sainsbury family stake may be up for sale, removing one of the key obstacles to a takeover. Bass saw gains of 22 to 741-1/2, after Goldman Sachs upgraded its stance on the stock to 'trading buy' from 'market outperform' and set an 850 pence target price. Goldman Sachs reckons the recently completed transaction with Punch Taverns and the stand-alone valuation of Bass Brewing (1.8 bln stg) have yet been factored into its share price. United Biscuits, up 19-1/2 at 254-1/2, dominated proceedings in the FTSE 250, as the prospect of a takeover struggle loomed after Finalrealm, a company formed by Paribas Affaires Industrielles, urged shareholders to reject Hicks, Muse, Tate & Furst and Nabisco's 245 pence a share recommended offer. However with Hicks Muse and Nabisco takeover vehicle, Burlington Biscuits, already believed to hold around 17 pct of United Biscuits, the prospects of a full-blown takeover battle are slim, with many institutions believed to be content to exit holdings at 245 pence a share. Nevertheless, the excitement generated by the scrap for United spilled over into some of the market's other favourite takeover targets. Pilkington shot up 6-1/2 to 8-1/2 and Securicor, which reports full year figures later this week, leapt 7-3/4 to 159. Cookson was also among the best performers, with a gain of 16 to 235, as its 310 mln stg acquisition of Enthone-OMI drew plaudits. Deutsche Bank, which rates the stock a 'strong buy', called the deal "another consistent, value-enhancing acquisition" and upgraded its earnings estimates for 2000 and 2001 by 6 and 11 pct respectively. But Photo-Me dropped 15 at 365 after news of a Merrill Lynch downgrade to 'neutral' from 'buy' and fears about an emergency rights issues continued to plague Hyder, off 24-1/2 at 268.

UK smaller company shares ended their run of recent gains in subdued trading today as the pre-Christmas/Y2K drag started to have an effect, dealers said. Bluechip shares also put in a dull showing, reflecting Wall Street's weaker performance following mixed U.S. inflation and retail sales data; although special situations drove the FTSE mid-cap index higher today. The FTSE Small Cap index slipped back below the 3,000 level, to end 12.2 points easier at 2,997.0. There were few real features among smaller company shares today as the wind-down started to get underway this week, the last full complement of trading sessions before the festive break. Profit-taking amongst tech stocks reflected a turn-down on Nasdaq after recent strong gains, dealers said. Recent UK small cap tech high-flyers came down to earth, such as eVestment - down 7-1/2 at 25-1/2; NetBenefit - off 135 at 592-1/2; and SuperscapeVR - down 54 at 275. Victory Corp recorded the biggest percentage small cap decline, dropping 3-1/2 at 9-1/2, though the group said it knows no reason for the recent rise in its share price. Recent market speculation has suggested that Richard Branson could inject his Virgin.Net business into the underperforming retail business. AIM-listed financial group Mondas also suffered today, shedding 32 at 101-1/2, after it reported increased interim losses, offsetting an upbeat outlook statement. But Giro Vend Cash Systems jumped 7-1/2 at 77 gained on switching out of Mondas. OnLine reversed recent gains, shedding 49 at 287-1/2 as profit-takers moved in after yesterday's news of talks on a Yahoo licensing deal. Birchin International also weakened, down 0-1/4 at 1-1/2 as dealers awaited further news on talks with ICI over the Wilton plant. Corporate news aided the smattering of small cap gainers today. Total Systems rose 13-1/2 at 61-1/2 as the group delivered an optimistic outlook statement despite reporting interim losses. Dawson Holdings also put on 20-1/2 at 161-1/2 after releasing an optimistic statement with its full year results. Property Internet advanced 25 pence to 149-1/2 after news that the Home2Home.co.uk, which the group is in the process of acquiring, has signed a deal with U.S. giant Microsoft's msn.co.uk portal. VHE Holdings saw some speculative demand ahead of first half results due this Thursday, up 3-1/2 at 33-1/2 after news that constructor YJL holds a 3.1 pct stake. Positive comment in the Daily Mail provided a spur to Mears Group, up 4 at 18-3/4. Murray Financial also continued its recovery following yesterday's restoration of trading, up 1-1/4 at 8-3/4 after being named as the Mirror's 'Tip of the Day'. After the failure of Murray Financial's bid to take over Leek United building society, commentators are speculating that the group will concentrate on its internet banking plans. Culver Holdings also felt the benefit of positive comment from the Mirror, ahead 50 at 467-1/2, with the paper advising investors to hold tight after yesterday's acquisition and demerger news.