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Carnage in the housebuilders and retailers on more bad news
There was major volatility today as defensive stocks pushed the FTSE 100 index higher but a raft of bad news sent retailers and builders down again.
Astra Zeneca led the way after it won a patent battle over its schizophrenia treatment Seroquel. The shares were up 6% mid-morning and sector peer Glaxo SmithKline was also strong. Vedanta also led a recovery in the mining sector following its sharp falls yesterday.The big news though was at Marks & Spencer, where the shares dropped around 20% after it said Q1 UK like-for-like sales fell 5.3% as it experienced deteriorating consumer confidence levels and more challenging market conditions. In addition, Steven Esom, director of food, is to step down from the board and will be leaving with immediate effect. It looks pretty bleak in the short term here, as it continues to do so for much of the sector.
Over in the housebuilders, Taylor Wimpey collapsed to 32p on news that it had failed to secure a deal with existing and potential investors to raise further equity capital. It had been expected to announce an injection of £500m, and will have to evaluate other options to secure value for shareholders. Here, it announced the departure of FD Peter Johnson and said that there would be no interim dividend. We have been bearish on the sector and it is clear that one or more of these stocks might soon be effectively bust, so buyers should avoid the temptation to dip in here.
Head of Research at Blue Index, specialists in trading Contracts For Difference
02/07/2008
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