CFD Traders Diary
S&P Turns Negative On The UK
21/5/2009
After so many positive drivers for the FTSE 100 and Sterling in recent weeks, the news this morning that S&P had downgraded the UK's credit outlook from "stable" to negative came as a shock. Logically though, this hardly surprising after losing major High Street banks and a large chunk of national wealth, so for S&P to stick the knife it at this stage is perfectly understandable. But the warnings stands against this country's triple A credit rating, one which if lost could really inflict lasting damage.
But the FTSE 100 and leading stocks were already looking decidedly weaker than they should given the modest decline on Wall Street yesterday, almost as if the privileged few in the know had somehow got wind of the news. Added to this, the latest Federal Reserve minute suggesting that the road to recovery in the US may be longer than previously expected also weighed on stocks and markets.
Things were also less than impressive on the corporate news front. The gloom and doom award goes to British Land (BLND), which announced a shocking 64% slump in NAV, even though profits had only eased slightly. Shares fell 5%, dragging fellow sector plays such as Land Securities (LAND) down by as much and more.
Telecoms groups have been reporting in recent days, with both BT Group (BT.A) and Vodafone (VOD) disappointing. It was the turn of Cable & Wireless (CW.) to complete a hat trick of underachievement, as the possibility of a share placing overshadowed in an in line trading update for the full year. Shares in C&W fell nearly 10%.
Although the pub sector has staged an impressive recovery of late, the reality is that the fundamentals have yet to catch up. The sector came back down to earth with a bump as Mitchells & Butlers (MAB) reported a near 50% slump in profits, and to add to the misery, also announced the loss of its CEO. Shares fell by over 8%, with similar losses for rivals Enterprise Inns (ETI) and Punch Taverns (PUB).
And news that Michael Spencer, CEO and founder of inter dealer-broker ICAP (IAP) is downsizing his stake went down poorly with the markets. The news followed the group's year-end figures announced yesterday. Shares fell by around 7%.
