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FTSE goes into reverse as ex-dividend shares weigh
Markets
by Chris Marshall on Mar 13, 2013 at 10:11
This week’s stock market rally was brought to a sharp halt on Wednesday morning as the bears drove the FTSE back below 6,500, fanning fears of a deeper market 'correction' after a near 10% rise on London's blue chip index so far this year.
The FTSE 100 was the poorest performing major index in Europe, off 0.8% to 6,457, with a string of companies trading ex-dividend, led by Asia-focused bank Standard Chartered (STAN.L) and British American Tobacco (BATS.L).
'Some might say corrections start this way. For several days now it has felt as if a sense of exhaustion has beset global markets,' commented IG analyst Chris Beauchamp amid a dearth of major economic data to influence market direction.
G4S falls but finds favour
Security group G4S (GFS.L) also bore the brunt of the selling in London, down 2.4% to 300p, after announcing pre-tax profits of £175 million for 2012, dragged down by an £88 million bill for the Olympics. Analysts remained upbeat on the group, though. ‘We continue to believe that the valuation discount can unwind further, with G4S set to recover further poise into FY13,’ said Investec analyst Gideon Adler, who has a ‘buy’ rating on the shares.
G4S is a core holding of the M&G Global Basics fund. Fund manager Graham French has told us in an interview that G4S's woes contributed to an awful time for the fund's performance last year but that he has increased his stake in the company, regarding it as a good, well run business.
Meggitt (MGGT.L), Serco (SRP.L), Hargreaves Lansdown (HRGV.L) and Land Securities (LAND.L) were all meanwhile trading ex-dividend.
At the other end of the FTSE though, listed hedge fund Man Group (EMG.L) led the risers, up 3.4% to 101p.
Prudential (PRU.L) rose 2.6% to 1,056p after a strong set of financial results, with a 54% rise in pre-tax profits allowing the pension and savings group to boost its full year dividend by 16%.
Analysts at Berenberg noted that Prudential had beat consensus ‘on almost every metric’. They added: ‘Prudential’s ability to deliver such strong results against a challenging macro background reflects the strength and resilience of the business model.’
Thomas Cook (TCG.L) shares shot up by nearly 13% to 98p after the reforming tour operator announced a further £50 million in cost cuts, alongside a strategy to shift further online. Harriet Green, Thomas Cook group chief executive, told investors that ‘our business transformation plans are ahead of schedule and already delivering substantially improved performance’.
Analysts at Jefferies gave the plans the ‘green light’, reiterating their 'buy' recommendation on Thomas Cook shares.
Pause for pound
The pound, which has fallen some 8% so far this year, traded up against both the US dollar, 0.4% higher to $1.4966, and the euro, up 0.5% to €1.1492.
Analysts are questioning whether the British currency is over-sold, having been ditched amid weak economic data and a downgrade from Moody's of the UK's credit rating.
But others say it will still fall a lot further. ‘While there is a lot of bad news with respect to the economy priced into the pound it is not clear if the market has fully prepared for a potential era of more aggressive policy easing,’ wrote Rabobank’s Jane Foley in a note to clients. ‘We continue to favour a policy of selling sterling on rallies.’
See our FTSE data pages for the day's other risers and fallers
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- Prudential PLC (PRU.L)
- Standard Chartered PLC (STAN.L)
- Serco Group PLC (SRP.L)
- Meggitt PLC (MGGT.L)
- British American Tobacco PLC (BATS.L)
- G4S PLC (GFS.L)
- Thomas Cook Group PLC (TCG.L)
- Man Group PLC (EMG.L)
- Land Securities Group PLC (LAND.L)
- Hargreaves Lansdown PLC (HRGV.L)
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