UK stocks fell this morning in reaction to the Nasdaq's dramatic fall yesterday to a five-year low. ...
UK stocks fell this morning in reaction to the Nasdaq's dramatic fall yesterday to a five-year low. Vodafone Group and MMO2 led declines in the aftermath of US trading, along with Prudential, and Pace Micro Technology.
The FTSE 100 Index lost 56.6 points or 1.2% to 4629.2 after the Nasdaq dropped 4.1% to its lowest level since June 1997, largely because a widening probe of WorldCom's bookkeeping gave investors more reason to question companies' accounting.
Vodafone is still managing to prevent its value from falling any further but has already shed 3.25p or 3.5% to 88.5p, having now lost 50% of its value this year. MMO2, Europe's fifth largest wireless company, also slid 2.25p or 5.1% to 41.5p.
Claims Direct dropped 1p or 16% to 5.25p, after the Financial Times reported the personal injury claims company said it needs more money to secure the future of the business even after selling three subsidiaries.
Pace Micro Technology fell 33.75p or 47% to 38.5p, a 4 ½-year low. Maker of set-top boxes that decode satellite television channels said pretax profit in the 12 months ending June 1 will drop £1.7m because of changes to a supply agreement with British Sky Broadcasting Group. Pretax profits in the following 12 months will be £8m less than previously forecast, says Pace.
Prudential dropped 29p, or 4.8%, to 572p after Morgan Stanley cut its rating amid concerns it may not do as well as hoped in new Asian markets.
WSP Group plunged 50.5p or 21% to 193.5p, their biggest ever drop as the UK construction and engineering consultancy said its full-year earnings will fall below analysts' forecasts and difficult trading conditions are likely to continue for the rest of the year.
Surprisingly, Asian stocks handled the fall of US confidence relatively well in today's trading, but that was mainly because stocks were responding well to the second weakening of the yen in a weak.
The Nikkei 225 stock average rose 0.3% to 10,622.32, while the Topix index added 0.04% to 1029.05, as exporters saw the benefits of a weaker currency. Some firms were not so lucky, however, as computer Tokyo Electron suffered in the wake of the Nasdaq decline.
The Nasdaq drop also triggered declines in other regional markets as Singapore's Straits Times Index fell 0.5% and the Jakarta Composite Index shed 3.3%, led by PT Telekomunikasi Indonesia, the nation's largest phone company.
And Hong Kong's Hang Seng Index fell 0.9% led by HSBC Holdings and China Mobile (Hong Kong).
U.S. stocks fell, driving the Nasdaq Composite Index to its lowest close in more than five years, as a widening probe of WorldCom Inc.'s bookkeeping gave investors more reason to question companies' accounting.
AOL Time Warner Inc. and International Business Machines Corp. helped drag down the Standard & Poor's 500 Index, which opened the third quarter with its biggest loss in four weeks.
The Nasdaq Composite indedx saw only three of the 100 biggest companies gain any ground yesterday as the index slid 59.41 points or 4.1% to 1403.80, the lowest close since June 10, 1997.
This had a knock-on effect with other indices as investors began to get nervous, and the S&P 500 fell 21.17 points or 2.1% to 968.65, on its own the steepest one-day drop since June 3.
The Dow Jones also slipped 133.47 points or 1.4% to 9109.79, led by IBM and JP Morgan Chase & Co.
While much of the concern towards trading related to more revelations at Worldcom - who may have to default on some of its debt - some investors said the prospect of a terrorist attack during the U.S. Independence Day holiday also deterred buyers.
Stocks also turned lower after a government report showed US construction spending unexpectedly fell in May, reflecting less work on offices and other non-residential buildings, whereas an industry report showed US manufacturing expanded in June.
Electronic Data Systems shares fell $6.70 to a four- year low of $30.45 as the computer-services company said problems at its client WorldCom will hurt profit, resulting in the suspension by Congress of US Navy orders from EDS for computer workstations.
AOL Time Warner dropped $1.20 to $13.51, Viacom slid $3.01 to $41.45, and Clear Channel Communications fell $2.24 to $29.78 while IBM reported its figures in February did not properly account for the sale of a unit to JDS Uniphase, and its share price soon lost lost $4.40 to $67.60.
Confidence is now so low that analysts are predicting it will take time and serious action on the part of the US regulator for the market to gain any trust again from investors.
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