FTSE flattened by US rate fear
FEARS of an imminent rise in US interest rates after February’s employment data showed the booming economy created a much larger-than-expected 295,000 jobs during the month and that the unemployment rate had dropped to 5.5pc, prompted an early nervy 241 point fall on Wall Street.
That effectively ruined the chances of the record-breaking Footsie breaching the magic 7000 level. It closed 49.34 points lower at 6911.8, while the wind was also taken out of the FTSE 250’s sails and it ended 38.1 points off at 17,272.21.
David Lamb, senior dealer at forex specialists, Fexco, said: ‘Such a blockbusting rate of job creation will encourage the Fed to be more aggressive, and increase the prospect of an imminent rate rise. With the unemployment rate tumbling and wages growing steadily, Fed boss Janet Yellen could begin notching up rates within months’.
Craig Erlam, senior market analyst at Oanda.com, agreed. He said: ‘This is a very good labour market report and will only feed into expectations for a rate hike from the Fed in June. However, the June meeting may just come a little soon and with wage growth not quite taking off yet, I still believe that the Fed will wait until September to act’.
Bears roared that should the Fed bite the interest rate bullet sooner rather than later, it would then not be long before Mark Carney and his merry men at the Bank of England have a rethink and follow suit. Added to the uncertainty of May’s general election, fund managers now have interest rates to worry about and therefore could decide to cash in after the market’s strong performance in recent months.
Gold miner Randgold Resources fell 255p to 4581p and Fresnillo 38p to 698.5p as the gold price wobbled when the dollar jumped on the US data. Properties came on offer on rate fears with Intu down 14.2p at 348p. Hammerson shed 20.5p to 667.5p and British Land lost 23p to 839.5p.
Housebuilders held their ground with Taylor Wimpey 0.3p dearer at 149.3p.
Broker Deutsche Bank has TW as one of its top sector picks and sees dividends as the key attraction to housebuilders, with the sector yielding an average of 5pc in 2015 and a high of 7pc.
Glasgow-based valves and turbine maker Weir touched 1844p before closing 74p higher at 1813p as speculation about a possible £25a- share break-up bid from a US private equity consortium intensified.
Still drawing strength from excellent fullyear figures which showed 2014 pre-tax prof- its of £712m, against expectations of £675m, and included a special dividend, Downton Abbey broadcaster ITV rose 5.5p more to a year’s high of 246.5p. Numis upgraded to buy following the figures and lifted its target price to 275p. Liberty Global owns a 6pc stake and could one day decide to bid for the rest.
Financial Times publisher Pearson cheapened 4p to 1450p after chief financial officer Robin Freestone sold more than half of his stake ahead of his planned departure from the group in August. Freestone sold 130,000 of his shares and 130,000 indirectly – sold by Mirima Helen Freestone – at a price of 1,423.7p, landing £3.7m in his sky rocket.
Insurance giant Prudential put on 13p to 1671.5p as UBS advised clients to buy ahead of Tuesday’s results.
Just Retirement, which provides pensions to people with health problems, lost 14.6p to 160.2p after Avallux, a Luxembourg-based subsidiary of private equity group Permira, sold a 10pc stake, reducing its shareholding to 52pc. Broker Deutsche and Nomura placed 50m shares at 162p a pop with various institutional investors, raising £81m in the process.
Acquisition news lifted markets exhibitions specialist ITE 16p to 191.25p. It has bought 50.1pc of a portfolio of events including Africa Oil Week from its owners, GPP Energy Advisors Ltd, for £16m. A £12m placing at 167.5p helped fund the deal.
Audioboom, the spoken-word audio ondemand mobile platform, eased 0.25p to 8.75p despite announcing a global agreement with Aupeo GmBH, a supplier of in-vehicle platforms and personalised content for connected vehicles.
Midatech Pharma jumped 10p to 310p. Buyers dosed up with stock on hearing about a new diabetes drug delivery collaboration signed with an unnamed major international pharmaceutical company. Panmure Gordon’s target price is 420p.
What a rat sandwich Coms has turned out to be. A year ago shares of the internet telephony service provider were changing hands above 11p. Yesterday they closed a further 8.7pc down at 1.05p, much to the chagrin of retail investors who had chased the stock constantly higher on ‘jam tomorrow’ talk of a ‘transformational’ deal. ÷ PLACED on AIM at 58p by broker Charles Stanley, Bilby closed at 62.5p. The firm has raised £2.5m and plans to make strategic acquisitions in the gas heating and general building services industries. Founder and deputy chairman Phil Copolo said: ‘The listing provides us with a fantastic platform to take advantage of the significant market opportunity in the London and South East that is driven by strict government regulations.’