Market report: Wednesday close

By SARAH MARKS FOR MAILONLINE
Updated:

 

THE greatly watered-down version of home sales information packs was today loudly welcomed by many and bemoaned by a few - most notably the estate agents who had been looking forward to makingms of pounds producing them at £700 a throw.

Given that about 1.5m property deals are done every year, the overall market could have been worth more than £1bn. Rightmove plummeted 71¼p to 280¾p, a fall of more than 20% that wiped £100m off its stock market value.

The company was considered particularly sensitive to the home information pack with the market ascribing £180m, or 135p a share to its overall value.

Analysts were slashing their targets and downgrading their recommendations. Rightmove competitor Countrywide was down 28p at 397¾p.

House sellers will now only be required to provide an energy-efficiency rating, searches and title deeds, which could cost as little as £150. This was interpreted favourably by investors in relation to mortgage lenders with specialist lender Kensington, up 74p at 875p, heading the FTSE 250 leaders. The bigger mortgage lenders also benefited with Northern Rock 38p ahead at 1032p and Alliance & Leicester gaining 25p to 1032p.

Leading shares advanced, buoyed by news that the latest interest-rate decision by the Bank of England monetary policy committee had been unanimously in favour of there being no change. This seriously dents the possibility of a rise in the next two to three months, and the FTSE 100 index was up 96.3 points at 5778.0.

The broadband offer from BSkyB continues to occupy the market, with many now factoring in significant downgrades to earnings in coming years. Merrill Lynch advised clients it was slicing 7.6% off its earnings estimate for 2007, knocking 10.1% off forecasts for 2008 and 3.2% from earnings in 2009 ,and making a modest upgrade of 1.6% in 2010.

Analyst Julien Roch also worries about the 'pure focus on broadband as opposed to broadband bundled with telephony'. He argues that increases the risk for BSkyB as it does not have the safety net of line rental and telephony.

Merrill does not disagree with BSkyB's strategy direction, butwarns that the subsequent downgrade makes the shares look expensive. It repeated its buy rating, warning investors that it will need to demonstrate good broadband take-up in order for the shares to outperform. After plunging more than 4% since the beginning of the week, BSkyB today rose 13½p to 531p.

Sugar producer Tate & Lylewas one of the top three FTSE risers after first-quarter results came in 'well ahead' of last year. T&L, 13p sweeter at 642p, said trading had 'started strongly', and the market responded in anticipation of upgrades to earnings forecasts.

Northern Foods was lifted 3½p to 82½p as investors heaved a sigh of relief that today's AGM trading update contained no further bad news.

A glimmer of hope appeared in recent trading figures, which showed that sales in the business not currently up for sale grew by 4.5% compared with sales growth of 1.6% for group revenues as a whole. There was no further update on Sunday's bakery fire, which may result in a one- of f loss of £4m.

Laura Ashley added ½p to 24¾p as it revealed UK like-for-like sales in the first 24 weeks of the year to 15 July were up by 14.3%. It warned that the figures were flattered by comparison to poor numbers last year and cautioned that sales growth in the second half is more difficult to predict.

However, it forecasts profits of between £2.5 and £3m compared with last year's loss of £200,000.

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