London openCity sources predict FTSE 100 will open down 60 points from yesterday's close 5,086
Stocks to watch
Last night’s plunge in the value of BP’s US-listed shares has shocked the British oil giant into issuing a statement this morning claiming it knows of no reason for the dramatic sell-off. Its stock slumped 16% in heavy trade as rumours did the rounds that the Gulf of Mexico oil disaster could force the business into bankruptcy, or at the very least cause it to axe the dividend. The cost of the spill has now reached $1.43bn (Ł982m).
Home Retail Group complained of shoppers’ reluctance to part with their cash in uncertain economic times as it reported a decline in like-for-like sales at both its Argos and Homebase stores in the 13 weeks to 29 May. Argos like-for-like sales were down by 8.1% on a year ago, while DIY chain Homebase, suffered a less painful 1.4%, decline.
Car parts and bicycle retailer Halfords said it is confident of future earnings growth despite the uncertain economic outlook after posting a sharp rise in profits and revenues in the year to April 2. Pre-tax profits climbed to Ł117.1m from Ł92.4m on revenues that were up to Ł831.6m from Ł794.7m. The full-year dividend climbed to 20p from 15.9p.
In the Press
BP’s share price tumbled by 15.8 per cent to a 14-year low in New York trading last night amid mounting concerns about the financial impact of the Gulf of Mexico oil spill. Analysts now believe that it is likely that BP will cut or even suspend its dividend after intense political pressure in the US, writes the Times.
France and Germany have called for rapid agreement on new EU rules to ban elaborate forms of speculation on national debt and company shares, says the Independent.
Public spending should be cut sharply and tax rises kept to an “absolute minimum” in the June 22 emergency Budget, says the employers’ group, arguing that higher taxes would undermine the economy’s ability to grow, says the FTNewspaper tips
Imperial Innovations is starting to make strong gains on exits from its portfolio, selling Thiakis, the developer of an anti-obesity drug, to America’s Wyeth and, last week, disposing of Respivert, the maker of a respiratory treatment, to an offshoot of Johnson & Johnson. At 474˝p, tuck away
Autonomy has also moved into the social media space with the recent announcement of software designed to monitor, govern and protect organisations as employees' social media habits increase. Panmure Gordon has the stock on a price 16.4 times estimated 2011 earnings, and given its strength and edge in the sector, we reckon it is worth having to add more to the portfolio. Buy, says the Independent.
IG continues to grow at home and abroad — especially in Australia, Germany and France, now sizeable markets. Such expansion also brings steadily higher operating margins: aside from the initial marketing expenditure, IG can add new customers at little extra cost. Even after yesterday’s 39˝p rise to 431žp — or a multiple of 12 times earnings and offering a 4 per cent dividend yield — the shares look unstretched. Hold, says the Times.
US close
Wall Street turned down sharply in the last hour as US-listed shares in BP crumbled on renewed concerns over the Gulf of Mexico crisis.
Having been well ahead at lunchtime, the Dow closed down 40 at 9,899. Nasdaq shed 11 at 2,158, while the S&P 500 gave back 6 at 1,055.
Oil firms led the decline. BP shares fell 15% on speculation over how it will pay the costs of leak amid a day of other rumours and claims about its progress in stemming the spillage.
BP itself is now said to be so concerned about the recent tirades against the company by president Obama that it has urged David Cameron to appeal to the White House on its behalf.
Other oil firms are now also feeling the pressure. Exxon Mobil fell by nearly 2% with Andarko Petroleum another hefty faller.
The oil sector woes overshadowed earlier optimism about the prospects for the global recovery after China’s 50% year-on-year rise in exports in May.
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