Slump for City recruiter as the banks stop hiring
HEADHUNTERS are often seen as a barometer for what is going on in the wider world.
When companies stop hiring, and senior staff give up looking for jobs elsewhere, it rarely bodes well for the outlook.
So the latest update from recruitment firm SThree will only fuel fears that the global economy is not in the best of health.
The company warned of a slowdown in banking and finance in the UK and the US and weak energy markets in the US.
‘The banking market has switched off completely,’ said SThree chief executive Gary Elden, adding: ‘It is also clear that the uncertainty created by the forthcoming EU referendum has led to a slowdown in our UK business.’
Group profits rose 6pc to £119.7m in the first half of the year but profits in the UK were down 5pc to £32m. The energy business saw a 31pc slump in profits to £9.3m.
The update sent SThree shares tumbling 8.4pc or 29.5p to 321.5p on a brutal day for the sector.
The mood was not helped by analysts at Deutsche Bank who downgraded their ratings on Hays and
PageGroup, which has changed its name from Michael Page International. Deutsche cut the pair from ‘hold’ to ‘sell’ and warned that slower growth in the US will be followed by weaker growth elsewhere.
PageGroup shares fell 6.6pc or 26.2p to 372.8p and Hays was down 6.2pc or 8.4p to 126.6p in a punishing session for investors around the world.
The FTSE 100 index closed down 1.86pc or 116.13 points at a threeweek low of 6115.76 – wiping £29.9bn off the value of Britain’s blue-chip stocks. Only four FTSE 100 companies ended the day up.
The sell-off in Europe was even worse, with Frankfurt down 2.52pc, Paris 2.24pc, Milan 3.62pc and Madrid 3.18pc. On Wall Street, the Dow Jones Industrial Average slipped more than 150 points in early trading. Investors bailing out of the stock market appeared to be piling their cash into the relative safety of government debt – pushing bond prices up and yields down.
The yield on ten-year UK gilts fell to a new record low of 1.21pc while the 30-year gilt yield fell to an alltime low of just under 2.04pc.
The yield on the ten-year German bund hovered just above zero at an all-time low of 0.015pc and US Treasury yields were also the slide at 1.63pc.
Back on the stock market in London, cigarette filter manufacturer
Essentra took another pummelling, following up Thursday’s 28pc slump with a drop of 6.7pc or 40p to 560p. The company this week warned that new tobacco taxes in India and China have hit trading, meaning it was unlikely to hit the fullyear targets set out in February.
Analysts put the boot in yesterday, with Numis cutting its target price from 1060p to 785p, JP Morgan reducing its target from 926p to 693p and Citigroup lowering its target from 950p to 730p.
There was more trouble for investors in Neil Woodford-backed
Hostelworld. Late last month, the hostel owner warned that trading has been hit be ‘recent geopolitical events’. Bookings in Europe in particular were disappointing.
The shares fell 11.9pc or 20.25p to 149.75p yesterday – taking losses since its mid-April peak of 299.75p to 50pc. Woodford holds a 22pc stake in the company, which listed at 185p last year, through Woodford Investment Management.
It was not all doom and gloom, however, and shares in WANdisco jumped 11.3pc or 17.5p to 172.5p after it raised £10.3m selling shares for 160p each. The company also said its chief financial officer Paul Harrison is leaving in September for a new job.
Tissue manufacturer Accrol, which supplies supermarkets, including Aldi and Tesco, with products such as kitchen roll and toilet paper, enjoyed a successful debut on AIM. The Black-burnbased company, which was set up in 1993 by husband and wife Jawid Hussain and Mahroof Begum and backed by private equity firm NorthEdge Capital, raised £63.5m selling 63.5m shares for 100p each. The stock closed at 110p.