FTSE stages late recovery to close up

Shares in transport firms were plunged into reverse today after blue-chip firm Stagecoach warned `

Shares in transport firms were plunged into reverse today after blue-chip firm Stagecoach warned `

over future profits at its rail division.

The South West Trains operator saw shares plunge 16%, while the wider Footsie was in negative territory for much of the session as the market paused for breath ahead of Thursday’s decision on UK interest rates.

The top tier recovered by the end of the session – aided by a positive opening in New York – to close 47.1 points higher at 4170.

Stagecoach headed the fallers board with a decline of 28.3p to 143.2p after it said the economic downturn and other challenges were likely to limit visibility for the rail division’s performance in the next financial year.

The news also dragged shares in rival FirstGroup lower, off 35.25p at 394.75p, while in the FTSE 250 Index Go-Ahead shed 154p to 1018p as investors worried about the performance of its Southern and Southeastern services. National Express fell 47.5p to 499p, or 9%.

Other high profile fallers included Marks & Spencer after it emerged the store chain planned to hold another 20% off sale this week. M&S fell 2.5p to 222.25p, while fashion rival Next shed 21p to 1013p.

The mood in the retail sector failed to benefit from predictions that the Bank of England could cut as much as 1% from its base rate, taking the level down to a record 2%.

Corporate results helped lift individual stocks, with software group Sage up 6%, or 10p at 167.8p, after it posted a 3% rise in annual profits. It also reassured the group’s market position should help it weather the economic woes.

The biggest gain in the second tier came from packaging and office products firm DS Smith, which rose 19% or 10p to 61.25p.

Profits for the half year fell to £44.1 million, but investors were reassured by chief executive Tony Thorne’s comments on a “robust performance” going forward.

The heightened hopes of a further hefty cut in interest rates lifted housebuilder Barratt Developments, which was ahead 3p at 53.5p. Barratt also announced continued progress on the sale of assets from its Wilson Bowden portfolio, with £109 million raised since the middle of last month.

Sports retailer JJB Sports was back under pressure after the Office of Fair Trading said yesterday it planned to investigate rival Sport Direct International’s purchase of a stake in the firm.

This further dented JJB shares, which were off 2p at 13p amid wider concerns about its financial health. Sports Direct also fell back, down 1.75p at 33p.

HMV was down 12% or 14.5p to 107.5p after HSBC cut its recommendation on the stock and said the chances of HMV escaping the Christmas retail gloom looked slim.

The biggest Footsie risers were Man Group up 16p at 256p, Sage ahead 10p at 167.8p, AstraZeneca up 133p at 2608p and Eurasian Natural Resources ahead 11.5p at 239p.

The biggest fallers were Stagecoach down 28.3p at 143.2p, Rio Tinto off 122p at 1148p, FirstGroup down 35.25p at 394.75p and Aviva off 20p at 364p.

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