| CATEGORY: MARKET REPORT - MIDMORNING SECTOR: BANKS |
London mid-morning: Financials out of favour |
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Fri 04 Dec 2009
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LONDON (SHARECAST) - Financial stocks are under the cosh this morning, with banks, properties and insurers all encountering selling pressure.
Banks are on the back foot after a lukewarm note on the sector from JP Morgan. The US bank is particularly down on part-nationalised bank Royal Bank of Scotland, which it advises its clients to sell.
It’s Asia-focused bank Standard Chartered that is the worst performer in the sector, however, while Lloyds is also on the slide after a report in the Times this morning suggested 200 Lloyds executives will get a bonus of 80% of their salary following the merger with HBOS.
The story coincides with a National Audit Office report that puts the size of UK taxpayer support to the bank sector at £850bn including guarantees and insurance.
Other fallers include commercial property groups afer a report by De Montfort University that some £30bn of commercial property debt was in default or in arrears in the first half of the year. Hammerson, Segro, British Land and Liberty are lower.
With most global markets in retreat today the heavily invested life assurance groups are nervously lower, with Prudential and Aviva the two biggest fallers in the sector.
British Airways is going well after it said yesterday long haul premium is showing signs of improvement with volumes above the levels of last year and yields improving. The stock has been given an additional lift by Citigroup, which has raised its recommendation on the shares from ‘hold’ to ‘buy’.
The share price of budget airline easyJet is in a holding pattern after the company said it flew 12% more passengers in November than it did the year before and packed its planes better than last time.
Housebuilder Bellway predicts sales volumes for the first six months to 31 January 2010 will be 10% better than the same time last year, with an operating margin steady at 6% to 7%. Reservations taken between 1 August and 30 November averaged 91 a week, up 51% on a year ago, while cancellation rates are back at a more normal level of around 13%.
Fewer sales and lower prices sent profits at London and south-east focused housebuilder Berkeley tumbling in the latest six months. Pre-tax profits came in at £52m for the six months ended 31 October, down 35% on the £79.6m in the same period last year. Sales fell to £290m from £453m.
Taylor Wimpey’s chairman Norman Askew has said he will leave the board of the housebuilder by the end of December 2010. Askew, also chairman of engineer, IMI, has been chairman of Taylor Woodrow since July 2003 and continued his role when the company merged with Wimpey in July 2007.
In other sectors, the US Food and Drug Administration (FDA) has approved the use of drug giant AstraZeneca’s bipolar disorder treatment Seroquel in conjunction with antidepressants to treat major depressive disorder (MDD).
Contractor Amec will today unveil a plan to more than double its earnings to over 100p per share by 2015. The group also confirmed 2009 guidance with an EBITA margin approaching 8% this year and 8.5% in 2010, although it expects the ongoing external environment to remain challenging.
Ukraine-focused Iron ore producer Ferrexpo has secured a new pre-export financing of $230m, the first successful financing to be concluded by a metals company with assets in the Commonwealth of Independent States since the global financial crisis began in September 2008, it said.
Recruiter SThree confirmed profits will tumble this year, though it says conditions have started to stabilise. Full year gross profit will be about £168m, down 23% year on year (2008: £218.9m).
Troubled pubs group Pubs’n’Bars has asked for trading in its shares to be suspended while it sorts out its financial position. Market makers have taken the view that this is not a good sign for similarly stretched sector peers such as Punch Taverns.
Shares in online banking software provider Intelligent Environments fell after it said its revenues and profits for the year to December 31 would not meet market expectations. The firm said the recent announcement of the merger of ‘two major UK financial institutions in the building society sector’ resulted in the cancellation of an order for one of its platforms.
An even bigger tumble is taken by Sound Oil after a reverse takeover of the Indonesia-focused oil and gas explorer collapsed.
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