Market report: Friday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

HARD-pressed market makers were taking no chances when trading resumed in troubled telecoms group Energis. The price closed on Thursday at 23p - a fall of 30 1/2p - after the group issued a profits warning and said it was in danger of breaching its banking covenants which could lead to new job losses. Today, the first price quoted by traders had a 60p spread between bid and offer. In other words, traders would sell stock at 75p and bid for it at 15p.

In frantic trading, the price soon went into backwardation whereby the bid of 21 1/2p was higher than the offer price of 18p. This triggered a brief, automatic suspension in trading which is normal when movements exceed 5%.

It was followed by an auction in the shares which by then had become liquid. During the first 15 minutes of business, more than 34m shares had changed hands as the price fell 4 3/4p to 18 1/4p. By the end of the session, turnover had swollen to 464m and the price was down 5p at 18p.

No doubt brokers at US securities house Lehman Brothers will be patting themselves on the back having downgraded Energis just a few hours before the profits warning. Other brokers followed Lehman's gloomy line. Goldman Sachs has downgraded from 'market performer' to 'underperformer', HSBC Securities from 'add' to 'reduce', while Schroder Salomon Smith Barney lowered its rating from 'buy' to 'neutral'.

National Grid slid 10 3/4p to 442p after Goldman cut its fair value estimate to reflect the power group's remaining stake in Energis.

Investors also had to contend with fresh bearish news from the telecoms sector as communications specialist Fibernet collapsed 157 1/2p to 207 1/2p after warning that sales in the current year would be significantly below market expectations. Colt Telecom, which scraped together a rescue rights issue last year, lost 7 3/4p to 85 1/4p. It has been a bad week for debt-laden telecoms equipment maker Marconi which has dipped below its 30p support level. It came under further selling pressure, sliding 1 1/2p to 24 1/2p.

Share prices started flat despite a positive performance overnight by the Dow Jones after Federal Reserve chairman Alan Greenspan's confident assessment of the US economic recovery. Punters in London seemed happy enough to lock in their profits after Thursday's strong gains and the FTSE 100 fell 40.1 to 5193.

New York was cheered by Compaq Computers issuing a statement saying that it sees IT spending recovering in the second half. It faces a European anti-trust regulator following its planned $24.1bn (£17bn) merger with Hewlett-Packard.

ARM Holdings fell 2p to 335p after Schroder Salomon Smith Barney lowered its rating to 'underperform' from 'neutral' ahead of results on Monday.

BAE Systems gained 1 1/2p to 343 1/2p after Credit Suisse First Boston repeated its 'strong buy' recommendation on the shares and its 430p target price.

Brokers gave a cautious response to the trading update from Wolverhampton & Dudley Breweries, which fell 12 1/2p to 625p. The group plans to hand back money to shareholders and broker ABN Amro reckons the shares are still a buy.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

The Daily Mail's Geoff Foster on yesterday's trade
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