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Wood Group leads FTSE drubbing
by Chris Marshall on Aug 20, 2013 at 10:03
Markets settled into default stimulus-angst mode, with little economic data on Tuesday to distract investors from their concerns about the eventual end of US bond buying.
European shares followed their Asian counterparts lower, with Britain’s FTSE 100 – which has spent most of August in the red – off 0.5% to 6,435 and the pan-European Eurofirst 300 lower by 0.8%.
As well as ongoing concerns about the ‘tapering’ of Federal Reserve stimulus – with tomorrow’s US central bank meeting minutes set to provide more clues about the fate of the scheme – the losses in London came amid some downbeat corporate results.
Analysts and investors sold down Glencore Xstrata (GLEN.L) after the news that the merged company had swallowed $8.5 billion worth of impairments. Overall earnings (EBITDA) were broadly in line with market expectations, down 9% year-on-year in the first set of first-half results since the formation of the commodities trader and miner. The shares fell 3.9% to 290p.
Wood Group (WG.L) shares slumped 8.3% to 827p after the energy services company reported first-half profit growth of 18.6%
‘Earnings in H1 were just about consistent with full-year expectations but cash generation was hit by working capital moves, the 2013 outlook for Engineering has been surprisingly trimmed and some caution also expressed for 2014,’ said Liberum analyst Andrew Whittock, keeping his ‘hold’ recommendation on the shares.
House builder Persimmon (PSN.L) was flat at £11.68 after reporting 12% growth in first-half revenues, in line with market expectations.
Despite Persimmon’s ‘strong’ results, Panmure Gordon analyst Mark Hughes concluded: ‘we maintain our Sell recommendation on the stock, believing it to be marginally overvalued’. He nonetheless raised his target price to £10.25 from 997p.
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