FTSE falls as analysts declare profits are too high

A strange mood cut across the UK stock markets today as companies and traders admitted that profit expectations were still too high given the state of the global economy.

Worst hit were Standard Chartered, based largely in Asia, and the Dixons Group, both of which saw their ratings downgraded because they seem to have reached the peak of their value.

This led the FTSE 100 to close down 24.9 points or 0.6% to 3975, having earlier in the day crossed the 4000 mark again and reached a five-month high of 4023.2.

Goldman Sachs is said to have suggested that SARS will seriously affect the value of Standard Chartered and its profit margins when they produce their next round of reporting, taking the value of Standard down 31p or 4.2% to 713.5p by close of business.

Dixons, the electrical group also lost 3.25p or 2.6% to 120.75p after Deutsche Bank revealed Dixons had reached its target value.

Commodities firms have seen a real mix of trading, as have mobile phone-related companies. Abbot Group, an oil services company which today revealed new contracts won in Angola and Azerbaijan, leapt 10.5p or 7.4% to 152.5p.

In contrast, BHP Billiton lost 6.25p or 2% to 309p and Rio Tinto fell 39p or 3.3% to £11.50 as the US, European and Canadian regulators are reported to be investigating whether these two copper giants have been colluding to fix prices. This is primarily because the price has risen by 25% since 2001, to produce a £24bn market.

Emblaze Systems, which produces systems to manage mobile phone networks and multimedia services, leapt 14% in value from 100.5p to 115p, because it is testing new technology with MMO2, which also climbed 1p to 56p.

However, Filtronic, which makes mobile phone antennas, fell 22p or 16% to 115.5p.

And Taylor Nelson Sofres, one of the largest market research firms, closed up 22.5p or 17% to 158.5p after agreeing to buy NFO WorldGroup for $425m from Interpublic Group of Companies.

In the US, trading is not much better as predictions from chip manufacturers have disappointed investors.

The Standard & Poor's 500 index has so far fallen 3.44 points or 0.4% to 938.39 by midday while the Dow Jones is down 35.65 points or 0.4% to 8643.60 and the Nasdaq has lost 7.51 points or 0.5% to 1532.17by lunch EST.

Network Appliance, which stores and distributes computer data for companies, has dropped $1.20 to $15.53 after reporting first quarter profits of 7 cents a share.

Intel, now the world's biggest chipmaker and often the power behind trading, slid 32 cents to $19.50 while Texas Instruments was earlier down 29 cents to $19.41.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to