London’s FTSE 100 Index crept closer to the 4000 barrier today as the market’s recent crisis of confidence continued.
The Footsie ended lower for the third time this week – down 26.2 points at 4041.7 – after the US Federal Reserve failed to deliver the hefty half-point interest rate cut that many experts had been looking for on Wednesday.
Uncertainty about the strength of the economic recovery, particularly in the US, appeared to be mounting with dealers now fearful of a fall back below 4000.
Only last week, analysts had been looking in the opposite direction after the blue-chip index hit a nine-month high at above 4200.
But fears of deflation in the US – however remote – have knocked confidence, which took a further blow today when GDP figures came in below expectations.
With nerves becoming more frayed, many investors now appear content to sit on the sidelines and await inspiration from next month’s earnings season.
In London, building materials group Hanson put further pressure on the market, topping the losers board after warning first half profits would be lower than last year due to higher pension costs and negative currency effects.
Shares dipped almost 9% – down 31.5p at 337p.
The mining sector was also sagging after RioTinto warned that its Coal & Allied subsidiary had been hit by deteriorating conditions. Rio slipped 21p to 1154p while fellow miner Xstrata slipped 14p to 405p.
With sentiment weakening, investors switched back into more defensive sectors, as British American Tobacco lifted 15p to 677.5p, United Utilities rose 9p to 593p and AB Foods cheered 5.5p to 538p.
Media company Granada topped the risers board, up 2.25p to 87.5p, following a broker upgrade.
Retail companies also enjoyed a positive session after struggling yesterday.
Supermarket Sainsbury’s gained 2p to 258p, rival Tesco lifted 2.25p to 217.25p and takeover target Safeway moved 1.5p higher to 258p. Among others in the sector, Boots rose 10.5p to 637p.
Most of the session’s announcements came from outside the top flight, with housebuilder Berkeley rising 23.5p to 743.5p following a near 13% rise in annual pre-tax profits.
There was cheer from software firm Isoft and support services group WS Atkins after positive trading updates.
Isoft gained 26.5p to 286.5p and Atkins topped the FTSE 250 risers board, rising 12% or 30p to 287.5p after saying cost reductions were producing results.
The news was not so positive from newspaper publisher Trinity Mirror, which lost 9.5p to 427p after warning gloomy advertising conditions would continue.
Retailer Body Shop eased almost 4% – down 3.5p to 84.5p – after telling investors that first quarter like-for-like sales in the UK had fallen 8%.
The biggest Footsie risers were Granada, up 2.25p at 87.5p, BAT ahead 15p at 677.5p, Carnival up 39p at 1777p and Provident Financial ahead 12p at 652p.
The biggest fallers were Hanson down 31.5p at 337p, British Land off 18.75p at 482.25p, InterContinental Hotels down 15p at 420p and Xstrata off 14p at 405p.