FTSE CLOSE: Tech and bank shares under pressure; public sector borrowing falls

| October 19, 2012 | 0 Comments

By
This Is Money Reporters

01:58 EST, 19 October 2012


|

11:19 EST, 19 October 2012

Close (17.14):
London’s FTSE 100 Index dropped into the red today following heavy falls on Wall Street as third quarter figures from US giants disappointed investors.

Lacklustre earnings reports from the likes of McDonald’s and General Electric sent the Dow Jones Industrial Average 1 per cent lower, with traders still reeling after Google yesterday shocked the market with a 20 per cent earnings fall in results that were released earlier than planned due to a glitch.

The Footsie broke its four-day winning streak to close 20.9 points lower at 5896.2 as it was also weighed down by bank stocks amid fears over soaring bills for mis-selling of payment protection insurance (PPI).

Tech shares are likely to come under pressure after U.S. internet group Google tumbled 8 per cent yesterday

Tech shares are likely to come under pressure after U.S. internet group Google tumbled 8 per cent yesterday

The stock market falls come on the
25th anniversary of the Black Monday crash, when more than £50billion
was wiped off the value of London shares as markets worldwide nose-dived
into the red.

There was little cheer for stocks from news that UK
government finances improved last month, with borrowing down to £12.8billion in September, as experts said Chancellor George Osborne was
still likely to miss his annual target.

The pound gained strength
from the better-than-expected borrowing data, lifting to 1.23 euros,
although it eased to 1.60 US dollars.

In London, Barclays was nearly
3 per cent or 6.9p lower at 233.9p after yesterday’s news of another £700million to cover the cost of rising PPI claims.

Lloyds and Royal Bank of Scotland were also seeing share falls due to concerns they may have to set aside further provisions,

Lloyds
fell 1.4p to 40.5p as analysts at Investec Securities warned the
part-nationalised player could face another £2.3 billion in PPI claims. Fellow taxpayer-backer bank RBS fell 6p to 281p.

Temporary power supplier Aggreko was the biggest faller on the Footsie, down 7 per cent or 165p to 2137p after it warned over profits.

The
group – which supplied power to the Olympic Games – reported underlying
sales growth of 13 per cent, but said increasing bad debts and a currency hit
would impact full year profits by 2.5 per cent.

Renewed global demand fears
and falling copper prices hit miners hard, with Evraz off 10.6p to
248.3p and Eurasian Natural Resources 10.9p lower at 348.9p.

Outside
the top flight, William Hill jumped 4 per cent after a good performance from
football results, including a strong Euro 2012 in July, helped overcome
disappointing betting shop takings on the Olympics.

William Hill, the
UK’s largest bookmaker, reported a 26 per cent rise in operating profits in the
quarter to September 25. Shares were up 14.1p at 357.5p.

Fellow
second tier stock Redrow fell 4 per cent or 6.1p to 156.4p following news after
market close last night that boss Steve Morgan’s plans to buy back the
housebuilder had fallen through and takeover talks were over.

The
biggest Footsie risers were Johnson Matthey up 42p to 2329p, Hammerson
ahead 7.3p to 483.4p, Hargreaves Lansdown 10.5p higher at 753p and
SABMiller up 34.5p to 2633.5p.

The biggest Footsie fallers were
Aggreko down 165p to 2137p, Evraz off 10.6p to 248.3p, Bunzl 44p lower
at 1038p and Lloyds Banking Group down 1.4p to 40.5p.

15:45

The FTSE 100 is down 0.26 per cent or 15.86 points at 5,901.19.

The Bank of Scotland has been fined
£4.2 million for poor record keeping, which led to 160,000 homeowners
missing out on compensation payments.

For seven years it held inaccurate mortgage records for a quarter of a million of its Halifax mortgage customers.

The poor records meant the lender failed to contact 160,000 homeowners to offer them goodwill payments as part of a compensation programme. Read more here.

15:00

Bank shares weighed on the wider FTSE 100 Index, which fell 18 points to 5898, breaking its four-day winning streak.

Wall
Street’s Dow Jones Industrial Average was down 0.7 per cent as
lacklustre earnings reports from Microsoft and General Electric
disappointed investors.

And
traders were still reeling after technology giant Google yesterday
shocked the market with a 20 per cent fall in third quarter earnings in
results that were released earlier than planned due to a glitch.

In London, Barclays was nearly 3 per
cent or 6.4p lower at 234.4p after it revealed another £700 million hit
to cover the cost of rising PPI claims.

Lloyds fell 1.4p to 40.5p as analysts
at Investec Securities warned the part-nationalised player could face
another £2.3 billion in PPI claims.

Fellow taxpayer-backer bank RBS fell 5.8p to 281.2p.

Outside the top flight, William Hill
jumped 4 per cent after a good performance from football results,
including a strong Euro 2012 in July helped overcome disappointing
takings on the Olympics.

William Hill, the UK’s largest
bookmaker, reported a 26 per cent rise in operating profits in the
quarter to September 25. Shares were up 13.6p at 357.1p.

12:00

The FTSE 100 has fallen 13.8 points today to 5903.3, with banking and mining stocks leading the losses.

Today marks the 25th anniversary of
the Black Monday crash, when more than £50 billion was wiped off the
value of London shares as stock markets worldwide nose-dived into the
red.

Temporary power supplier Aggreko was
the biggest faller on the Footsie, down eight per cent or 174.5p to
2127.5p after it warned over profits.

The group – which provided power
generation and temperature control systems at events such as the Olympic
Games and US Superbowl – reported underlying sales growth of 13 per
cent, but said increasing bad debts and a currency hit would impact full
year profits by 2.5 per cent.

11:50

The FTSE 100 is down 14.56 points or 0.25 per cent at 5,902.49.

The ECB will have new powers to
oversee all 6,000 banks in the eurozone, after European Union leaders
came to an agreement this morning.

Banks
in all 17 countries that use the euro will answer to the ECB, in an
effort to help shore up the eurozone’s stricken banking system. 

The
move, which represents a major step towards a single banking union,
will see a framework in place by January 1 and become operational later
in 2013. Read more here.

Chris Beauchamp, Market Analyst at IG, said: ‘EU summits are such entertaining affairs. Whatever they’re discussing, we are almost always guaranteed a warm, encouraging communiqué that contains very little new information.

‘Last night’s was a case in point – we have an agreement to put the groundwork for banking reform in place by the end of this year, but further work is still required before the body is up and running.’

A woman apart: Merkel poses with other European leader at teh EU summit

A woman apart: EU leaders (Front row L-R)
European Council President Herman Van Rompuy, Lithuanian President Dalia
Grybauskaite, French President Francois Hollande, European Commission
President Jose Manuel Barroso and Greek PM Antonis Samaras. (Back row
L-R) Slovenian PM Janez Jansa, Portugal’s PM Pedro Passos Coelho, German
Chancellor Angela Merkel, Finland’s Prime Minister Jyrki Tapani
Katainen, Austria’s Chancellor Werner Faymann, Bulgaria’s PM Boyko
Borissov

11:30

The FTSE 100 is down 0.26 per cent or 15.62 points at 5,901.43.

Despite economic activity picking up
last month, Chancellor George Osborne is expected to admit in his autumn
statement that the debt mountain is still not being eroded despite all
his harsh austerity measures.

Thanks
to healthier tax receipts, public sector net borrowing dropped to
£12.8billion in September, compared with £13.5billion in the same month
last year.

It was the lowest level of borrowing for the month since 2008. Read more here.

09:00

Banks
remained under pressure today amid fears over a soaring claims bill for
mis-selling of payment protection insurance (PPI) after Barclays
revealed another £700 million hit.

Barclays
sunk 1 per cent or 2.6p into the red to 238.1p following a 2 per cent
fall yesterday after it said provisions to cover PPI compensation had
now reached £2 billion.

Lloyds
and Royal Bank of Scotland were also seeing share falls due to concerns
they may also have to set aside further provisions, while the wider
FTSE 100 Index fell 3.5 points to 5913.6.

Trading
was cautious on the London market following a downbeat earnings session
on Wall Street overnight, which saw technology giant Google shock the
market with news of a 20 per cent fall in third quarter earnings in
results that were released earlier than planned due to a glitch.

Microsoft also reported a 22 per cent drop in quarterly net profit.

But
banks were in sharp focus in London, with Lloyds down 0.8p to 41.1p as
analysts at Investec Securities warned the part-nationalised player
could face another £2.3 billion in PPI claims.

RBS fell 3.3p to 283.8p.

In
the second tier, housebuilder Redrow fell 6 per cent or 10.3p to 152.2p
following news after market close last night that boss Steve Morgan’s
plans to buy back the group had fallen through and takeover talks were
over.

08:00

The FTSE 100 has slipped back,
snapping a four-session rally in tandem with overnight weakness on Wall
Street and in Asia, weighed by weakness in heavyweight banks and miners.

Trading is expected to be volatile,
however, with the latest monthly futures and option expiries due to
occur in London around 0915 GMT.

At 08:09, the FTSE was down 0.78
points, or 0.1 per cent at 5,916.27, having gained 0.1 per cent
yesterday to hit a seven-month closing high.

Miners were a drag on the blue chips, falling back in tandem with weaker copper prices on demand concerns.

China’s Commerce Ministry said today
the top metals consumer’s September trade data, which showed a surge in
exports at twice the rate expected and a return to import growth, are
not yet enough to confirm that a recovery is in place for the external
sector.

Temporary power provider Aggreko and
packaging firm Bunzl were the two top individual blue chip fallers, down
8.4 per cent and 3.4 per cent respectively, after the duos latest
trading updates failed to excite investors.

PREVIEW:

The FTSE 100 is expected to open down
around 13 points, or 0.2 per cent this morning, according to financial
bookmakers, halting a four-session rally in tandem with overnight
weakness on Wall Street and in Asia.

Trading
is expected to volatile early on with the latest monthly futures and
option expiries due to occur in London around 0915 GMT.

The
UK blue chip index closed up 6.14 points, or 0.1 per cent yesterday at
5,917.05, a seven-month closing high, bolstered by gains from mining
stocks on a reassuring economic outlook from top metals consumer China.

Tech shares are likely to come under pressure after U.S. internet group Google tumbled 8 per cent yesterday after it posted quarterly results that missed analyst expectations as its core advertising business slowed. Microsoft Corp also posted lower-than-expected quarterly results. Read more here.

European Union leaders agreed at a Brussels summit to adopt a legal framework giving the European Central Bank overall responsibility for banking supervision, opening the way for the bloc’s rescue fund to inject capital directly into ailing banks.

Figures for Britain’s public sector finances will be revealed at 0830 GMT, with net borrowing (PSNB) seen at £11.40 billion, compared with £11.34 billion a year earlier.

Across the Atlantic, September U.S. existing home sales will be released at 1400 GMT.

SHARES TO WATCH TODAY

AGGREKO issues a trading update.
BUNZL issues a trading update.
PETROFAC issues a trading update.
PROVIDENT FINANCIAL issues a trading update.
RANK GROUP issues a trading update.
SPECTRIS issues a trading update.
WILLIAM HILL issues a third-quarter trading update.
DECHRA PHARMACEUTICALS issues a trading update.
BROOKS MACDONALD GROUP holds its annual general meeting.

Filed Under: finance news

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