After hitting a new peak on Monday leading shares came back down to earth with a bump.
A mixture of economic worries, mixed company results and geopolitical tensions pushed the FTSE 100 73.45 points lower to 7030.53, with European markets also under pressure. Chris Beauchamp, senior market analyst at IG, said:
The problem for investors in all markets is that while they haven’t found reasons to sell stocks, they haven’t got firm arguments for buying them either, condemning us all to more of this whipsaw action.
In the UK the latest GDP figures came in lower than expected with quarter on quarter growth of 0.3% compared to expectations of 0.5%, adding to the current general election uncertainties, while in the US consumer confidence figures also disappointed, as the Federal Reserve started its two day meeting with investors unsure of the future course of interest rates.
Meanwhile Apple shares fell back despite another postive profit performance, while elsewhere Commerzbank said it was raising €1.4bn in a share issue to bolder its balance sheet, while Pfizer and Whirlpool both cut their profit forecasts, blaming the strong dollar.
Elsewhere, to add to the downbeat mood, Finland reportedly fired on a vessel off Helsinki while Iran reportedly seized a cargo ship.
With gold and silver gaining ground as investors sought havens, Mexican precious metals miner Fresnillo added 15.5p to 743p and Randgold Resources rose 50p to £50.35.
Base metal prices also continued to recover, lifting Anglo American 25.5p higher to £11.29 and BHP Billiton 20.5p to 1589.5p.
British Gas owner Centrica climbed 6.2p to 275.3p as its chairman said it had made preparations in case of a takeover approach.
But BP dipped 0.8p to 476.1p despite better than predicted profits, while St James’s Place fell 31p to 875.5p after it reported slightly lower than expected first quarter inflows, up 9% year on year to £1.3bn compared to forecasts of £1.4bn.
Pharmacautical companies were also among the leading fallers, with AstraZeneca down 157.5p at £45.48 after US rival Merck’s diabetes drugs met heart-safety requirements in a recent study, putting it a step ahead of the UK company’s treatment.
Shire lost 175p to £53.95 as US regulators decided to speed up a review of Sanofi’s treatment for Fabry disease, a potential competitor for the company.
Standard Chartered dropped 35.5p to £10.80 after it reported a 22% fall in first quarter profits with a rise in bad debts.
Babcock International fell 29p to 995p as Goldman Sachs cut its price target from £14.38 to £13.59, albeit with a buy recommendation.
Among the mid-caps Kier climbed 5p to £16.30 as the construction group agreed to pay £265m for infrastructure company Mouchel, in a move to boost its motorways and roads business. It will fund the deal with a 5-for-7 rights issue at 858p a share to raise £340m. Mouchel went into administration in 2012 and was subsequently sold to its management and its lenders Royal Bank of Scotland, Lloyds Banking Group and Barclays. Analyst Andrew Gibb at Investec said:
The announcement that the group has entered into a conditional agreement to buy the entire issued share capital of Mouchel clearly helps accelerate the chief executive’s Vision 2020 strategy. However, this is another big deal, following on from May Gurney (July 2013) and we wonder whether the business would be better focusing on its core, rather than risk spreading itself too thinly across a myriad of verticals? Whilst the deal is expected to be materially earnings enhancing, we have some reservations and therefore move from buy to hold.
Finally Curtis Banks, a specialist Self-Invested Personal Pension adminstrator, has chosen polling day on May 7 to join Aim. The company is expected to raise £7.5m with the issue of new shares and have a market capitalisation of around £85m.
