FTSE knocked for fifth day as US results hit confidence
BRITAIN’S top share index ended lower yesterday for a fifth straight session as generally disappointing US results hurt investor sentiment, offsetting strong gains from mining stocks buoyed by firmer metals prices.
The FTSE 100 closed down 8.82 points, or 0.2 per cent, at 5,139.46, having fallen 0.2 per cent on Monday.
TELECOMS HIT BY BUDGET CUT
Telecoms stocks were weaker, with Cable & Wireless Worldwide topping the blue chip fallers’ list, off 17.4 per cent, as it warned that trading had been hit by a significant slowdown in the UK public sector following the government’s emergency budget in June.
BT shed 3.2 per cent on fears that it too would be hit by the cuts in government spending.
Mobile telephone operator Vodafone was also in retreat, down 1.2 per cent after ING cut its rating for the firm to a “hold” from a “buy” in a sector review, citing valuation grounds.
The mood was also dampened by some of yesterday’s US earnings.
“There is some pessimism that’s crept in after some results we’ve had out so far today,” said Keith Bowman, analyst at Hargreaves Lansdown.
“Those Goldman figures were at the lower end of estimates (and) the Johnson & Johnson figures saw sales below estimates, so they certainly have dragged on sentiment.”
WALL STREET FIGURES DOWN
Johnson & Johnson’s revenue fell far short of Wall Street expectations and it cut its full-year profit forecast for the second time this year, citing repeated recalls of Tylenol and other consumer medicines.
Goldman Sachs Group said quarterly earnings tumbled 82 per cent, coming in well short of expectations, as trading and underwriting revenue slumped.
Investors were apprehensive ahead of results from Apple and Yahoo, due to reports after the New York closing bell.
And nagging concerns over Europe’s debt situation bubbled to the surface once again after Hungary sold less of a debt issue than expected.
MINERS AND BANKS STRONG
Miners, supported by firmer metals prices, dominated the blue chip leader board, with Rio Tinto, Vedanta Resources and Xstrata taking the top three spots, putting on 3.7-4.1 percent.
Strength was also seen among banks, which have been in sharp retreat for several sessions. Royal Bank of Scotland and Lloyds Banking Group were the best off, adding 1.5 per cent and 1 per cent respectively, though Barclays bucked the sector trend, shedding 0.2 per cent.
High-end fashion group Burberry was also a good performer, up 1.8 per cent after Investec reinstated its coverage on the company with a “buy” rating.
UK FACTORY ORDERS ARE UP
A key index of British factory orders rose to its highest in almost two years in July, but export orders appeared to weaken, the CBI’s industrial trends survey showed yesterday.
Britain’s public sector net cash requirement rose unexpectedly last month to its highest level since records began in April 1984, official data showed yesterday.
The Office for National Statistics said the public sector net cash requirement in June was £20.905bn, up from £20.213bn a year ago and well above economists’ forecasts.