Date: Monday 14 May 2012
- Market Movers
- techMARK 1,959.85 -1.53%
- FTSE 100 5,465.52 -1.97%
- FTSE 250 10,813.60 -1.84%
LONDON (ShareCast) - - Footsie closes at levels not seen since mid-December
- Potential Greek exit from euro hammers stocks
- Banks, miners the worst performers in London
The FTSE 100 closed at its lowest levels in the year-to-date on Monday as investors speculated about what a disorderly exit of Greece from the Eurozone would mean for the single-currency region.
Greece’s radical left-wing party Syriza rejected an invitation from President Karolos Papoulias to meet for negotiations on the formation of a coalition. Papoulias attempted to organise talks with the country’s three-largest parties, New Democracy, Syriza and Pasok, along with the smaller Democratic Left that had been involved in attempts to come to an agreement. If an agreement cannot be reached, the Greeks will return to the polls for new elections.
“While exit might seem a simple solution when said quickly, the reality is far more complex. Unwinding the Greek economy not only has domestic implications, but it points the spotlight on the other struggling countries,” said analysts at RBS Group Economics.
A ‘disorderly’ Greek exit from the Eurozone could lead to ratings cuts for companies across Europe, especially in the periphery, according to Fitch Ratings. An ‘orderly’ exit - “where policy measures are effective” – means that the fallout would be confined to periphery countries, the ratings agency said.
Meanwhile, Paul Krugman, the 2008 Nobel Prize for Economics winner, wrote on his New York Times blog that Greece's exit from the euro will come as early as next month and will set off a negative chain of events which could lead to the end of the euro altogether. “And we’re talking about months, not years, for this to play out,” he said.
Not only that, while several European policy-makers have come out in the last few days, and played down the impact that a Greek 'exit' would have on the rest of the Eurozone, some other observers are less sanguine. Indeed, some fear it could lead to noticeable 'contagion' effects. That is part of the reason why yields on 10 year gilts hit a 100 year low last week no less. On the other hand, long-term bond yields in Italy and Spain rose by almost 20 basis points today, while Greek ones rose by 283.
The Eurozone finance ministers known collectively as the Eurogroup are to hold a meeting later this afternoon and will most likely be focused on political issues as they consider how to focus new policies towards bolstering growth in the euro area.
FTSE 100: Banks, miners lead the sell-off
Just a handful of stocks finished in positive territory with as investors fled from risk into defensive sectors such as utilities – Severn Trent and International Power were among the better performers. In contrast, the relatively ‘riskier’ sectors were firmly out of favour, such as financials and resources.
Barclays was leading blue-chip stocks lower by the close as concerns about Greece's potential exit from the Eurozone continue to hang over the financial sector. According to analyst Craig Erlam from Alpari, investors are also “concerned about the losses other banks have incurred 'hedging their risk' following the $2bn loss by JP Morgan Chase & Co” which was revealed last week. Lloyds, RBS and HSBC were also suffering losses. HSBC revealed today the sale of its operations in Colombia, Peru, Uruguay and Paraguay for $400m in cash.
Falling metals prices were weighing heavily on the mining sector as investors digested what the ongoing euro debt crisis means for the global demand for commodities. ENRC, Evraz, Xstrata, Glencore, BHP Billiton and Kazakhmys suffered steep losses. Meanwhile, with oil prices slumping to a near five-month low, Tullow Oil, BG Group and Shell were unwanted.
Outsourcing specialist Serco was lower after warning that its first-half performance will reflect the challenging environment in the US. Nevertheless, the firm said that it is on track to meet its full-year expectations.
FTSE 250: Rank rises on Gala hopes
Bingo, casino and online gaming company Rank Group was the best performer on the FTSE 250 after making a conditional agreement to acquire Gala Casinos from Gala Coral Group, making it the largest casino operator in the UK. The £205m acquisition, which includes 23 casinos in the UK, is to be funded by new three-year bank facilities totalling £175m, together with existing bank facilities.
Miners were tracking their top-tier counterparts lower with Aquarius Platinum, Talvivaara, Ferrexpo and Avocet Mining taking a hit. Lonmin, the world's third-largest platinum producer, fell after saying production in the first three months of 2012 was little changed from a year earlier, after losing 170,000 tonnes of production because of safety stoppages.
Essar Energy dropped after announcing that its 87.09%-owned Indian oil subsidiary, Essar Oil, saw a sharp drop in earnings in the year to March 31st due to the reversal of a sales tax benefits and a planned plant shutdown.
On the broader market in London, AIM-listed Chariot Oil and Gas plummeted after announcing that its Tapir South exploration well (offshore Namibia) found no commercial hydrocarbons. Shares lost over 50% of their value.
FTSE 100 - Risers
Sage Group (SGE) 265.50p +1.45%
Severn Trent (SVT) 1,704.00p +0.65%
Intertek Group (ITRK) 2,478.00p +0.24%
International Power (IPR) 419.40p +0.10%
United Utilities Group (UU.) 642.00p 0.00%
FTSE 100 - Fallers
Barclays (BARC) 189.80p -6.41%
Aberdeen Asset Management (ADN) 246.30p -5.63%
Man Group (EMG) 83.00p -5.57%
Lloyds Banking Group (LLOY) 29.38p -5.48%
Royal Bank of Scotland Group (RBS) 21.85p -4.83%
Tullow Oil (TLW) 1,393.00p -4.78%
CRH (CRH) 1,109.00p -4.73%
Eurasian Natural Resources Corp. (ENRC) 492.80p -4.59%
Evraz (EVR) 323.60p -4.09%
Johnson Matthey (JMAT) 2,181.00p -3.92%
FTSE 250 - Risers
Rank Group (RNK) 123.50p +5.83%
Invensys (ISYS) 209.00p +3.21%
De La Rue (DLAR) 1,024.00p +3.17%
Spirit Pub Company (SPRT) 56.00p +2.75%
JD Sports Fashion (JD.) 782.50p +2.15%
Stobart Group Ltd. (STOB) 123.70p +1.73%
QinetiQ Group (QQ.) 147.30p +1.38%
Dunelm Group (DNLM) 519.50p +1.07%
SDL (SDL) 707.50p +1.07%
Hansteen Holdings (HSTN) 72.95p +0.97%
FTSE 250 - Fallers
Moneysupermarket.com Group (MONY) 116.20p -8.14%
Exillon Energy (EXI) 108.80p -7.17%
Aquarius Platinum Ltd. (AQP) 101.50p -6.37%
Dixons Retail (DXNS) 15.95p -6.12%
Logica (LOG) 69.75p -5.68%
Talvivaara Mining Company (TALV) 156.80p -5.43%
Ferrexpo (FXPO) 239.20p -5.38%
Essar Energy (ESSR) 124.90p -5.31%
Cape (CIU) 342.00p -5.26%
Ophir Energy (OPHR) 508.00p -5.22%
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