Goldman sends LSE shares down despite praise for CEO
The FTSE 100 was all about the power of the analyst today, with a number of individual movers spurred up or down by words of wisdom from the City’s finest.
The London Stock Exchange (LSE) shed 2.2 per cent to close at 914p after Goldman Sachs cut its rating on the stock to “neutral” on valuation grounds, and removed it from its pan-European “conviction buy” list.
The bank said that the shares have gained 26 per cent since 2 June, when it upgraded the company to “buy”, and are now trading close its 12-month target price of 1,000p.
“In the few months since becoming chief executive, Xavier Rolet has shown a clear understanding of challenges – and opportunities – faced by LSE,” it added.
Tesco jumped up by 2.3 per cent to 392.45 after Nomura analysts raised their price target on the world’s third-biggest retailer, saying that it would double in the next five year thanks to its banking expansion.
Positive broker comment also aided real estate issues, with BofA Merrill Lynch upgrading its rating on Hammerson to “buy” and Land Securities to “neutral”. Shares in the firms rose 0.6 per cent and 2.1 per cent respectively. The same broker also boosted plumbing supplies group Wolseley with an upgrade to “buy”, which helped send its shares up 2.9 per cent.
The FTSE 100 closed 0.3 per cent, or 14.45 points, higher at 5,257.85, lifted by forecast-beating results from US banks Morgan Stanley and Wells Fargo.
Banks rebounded on better investor sentiment around the results. HSBC rose 1.3 per cent, while Lloyds Banking Group, Standard Chartered and Barclays put on 0.2 to 1.6 per cent.
Banks had suffered earlier in the day from a call by Bank of England governor Mervyn King for fundamental banking reform and as higher earnings from Deutsche Bank failed to meet expectations.
Sterling hit a one-month high against the dollar on Wednesday, adding to broad gains after traders took BofE meeting minutes to suggest that an extension of quantitative easing next month was less likely.
Pharmaceutical stocks, perceived as defensive, were under pressure from a rising appetite for risk driven by the latest round of positive US earnings news.
GlaxoSmithKline fell one per cent, while AstraZeneca shed 0.4 per cent.
Miners were mixed, amid a touch of profit taking on a sector, which surged 26.5 per cent in the last quarter.
Lonmin, Fresnillo, Anglo American and BHP Billiton dropped between 0.1 and 1.8 per cent.
BHP Billiton reported near flat quarterly output of iron ore, placing it deeper in the shadow of rival Rio Tinto.
BAE Systems, BSkyB and Smiths Group fell after trading ex-dividend.
The FTSE 100 has surged about 52 percent from a six-year trough in March, though is still about 3 percent below its level in mid-September 2008 before the collapse of Lehman Brothers.