FTSE 100 Friday close: Wall Street jitters and Petrofac market update halts progress

9th May 2014


A midweek Wall Street wobble coupled with a hefty share price fall for Petrofac ensured recent progress on the FTSE 100 ground to halt by market close on Friday writes Philip Scott.

In the US, shares in Twitter dropped sharply, as the expiration of the six-month lock-in period for early investors was lifted, prompting a sell off which sent the stock in the social network behemoth 18% lower over the week.

The fall hit the UK’s blue chips and by Friday’s closing bell, the FTSE 100 was flat over the week, and 24.68 points down on the day, at 6,814.57.

Petrofac was by far the steepest faller among the top 100 over the period with its stock plummeting 20%  to 1,177p, after the oil and gas services group slashed its 2014 profit estimate chiefly as a result of lower than expected earnings from its Integrated Energy Services (IES) division.

In its interim management statement, published on Friday, it said net profit for 2014 is now expected to be between $580m and $600m, some 11% below previous expectations, sending the stock down 15% on the day.

Global information services firm Experian shed 7% to 1,049p despite delivering some good numbers in its full year results. Traders however were thrown by a statement from chief executive officer Don Robert who said in the short term, the firm is facing a number of one-off headwinds, including a subdued trading environment in Brazil over the World Cup.

Business software firm Sage lost 6% to 396.5p, after its chief executive Guy Berruyer unexpectedly indicated his intention to retire next year as the group unveiled a 5% rise in first half revenues to £657m. However Berruyer said the firm is confident that the good first half performance will be carried through to the full year.

Other fallers over the week include Shire and International Consolidated Airlines Group, down 5% apiece, they closed respectively at 3,309p and 385p.

The Astrazeneca/Pfizer saga rolled on this week as the UK firm’s former chief executive Sir David Barnes said Pfizer would act like a “praying mantis” and “suck the lifeblood” out of the FTSE 100 group. In addition according to a report in The Guardian, the former science minister Lord Sainsbury launched an attack on the US drugs giant’s play for AstraZeneca, calling on the Government to stop its attempt to “dismember” a strategically important British company. Over the week AstraZeneca’s shares are off 4% at 4600.5p

Barclays firmed 1% to 260.15p, after analysts upgraded their position on the stock following the arrival of the news that it is shedding 19,000 jobs and creating a ‘bad bank’. Numis analyst Mike Trippitt upgraded the stock from ‘hold’ to ‘buy’ with a target price of 280p but said “in hindsight perhaps this was the restructuring that should have been announced in February 2013”.

The UK listed but Asian focused Standard Chartered, flat over the week at 1,292p announced that its operating profit in the first quarter was down by a high single digit percentage, in line with expectations as a result of tough market conditions. Its primary competitor HSBC witnessed its own shares slide by 2% to 596p as its profits plunged 20% to $6.8bn in the first quarter compared to the same period in 2013.

Elsewhere in the sector, Lloyds Banking Group lost 4% to close at 76.37p while Royal Bank of Scotland, which said it is cutting around a fifth of its branch managers in Scotland, dropped 2% at 325.2p

Supermarket group Sainsbury, was the week’s top FTSE 100 riser, firming 5% to 335.8p after reporting a 16% rise in pre-tax profit to £898m for the year to 15 March. Competitor Tesco also enjoyed a lift, rising 4% to 296.85p while and Marks & Spencer was also up 4% at 458.4p.

An upbeat note from Deutsche reaffirming its ‘buy’ rating on paper and packaging group Mondi, helped push the firm’s stock 4% higher over the week to 1.016p while growth in emerging markets helped first quarter revenues at security giant G4S, driving its shares 4% up to 248.2p.

Next week sees updates and results arrive from, among others, broadcaster ITV, Vedanta and insurer Aviva.

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