Market Wrap, Monday 2nd June 2008

The FTSE 100 closed down 45.9 points today at 6,007.6, whilst the FTSE 250 closed down 121 points at 9,928.3.  We are actually pleased the FTSE broke back through the 6k level, as once under we thought it may stay there.

Over the pond, by the time London closed the DJI was down about 156 points at 12,482, whilst the S&P500 was down 14 points at 1,386, and the Nasdaq down 34 points at 2,489. Quite a drop today, which we predicted this morning in the Live Trading Room.

Back here in London it was Bradford & Bingley that was the main topic today. As we mentioned this morning, B&B issued a profits warning, said it was lowering its issue price of the rights issue from 82p to 55p, the CEO was ’stepping down’, and a US private equity group was buying 20% of the bank.  The shares closed down over 21p at 67p, down nearly a quirater.  Kleinwort jumped in by downgrading the bank to a ’sell’ from ‘add’.  Peer HBOS also had a poor day, closing down 10% on the day at 360p, off 40p. The bank had tried to reassure investors by saying that trading was satisfactory and that its £4 bln rights issue was going to plan. The B&B news probably hindered the situation, one might speculate. Peers followed, with Barclays down 9.5p at 365.5p, and Alliance & Leicester down over 22p at 403.

The miners did ok as metal commodity prices were strong, with BHP Billiton up 34p at 1,948 on the day, and Rio Tinto up 115p to 6,170, with both enjoying the news we mentioend this morning that the Chinese may up the iron ore purchase price by the region of 70%.

Tullow Oil also had a good day, closing up 22.5p at 912.5 after Morgan Stanley sung its praises and upped its target to 1,230p from 1,090. Dana Petroleum also did well, up 47p at 1,877, after saying it had made a significant gas find in Egypt, and also on the back of Morgan Stanley comments.

British Energy closed up 14p at 748 after rumours that Spanish energy company Iberdrola SA had finished sniffing and had actually made a bid of around the 885p per share level. Deutsche Bank then reminded everyone of its ‘buy’ stance and raised its target to 775p, up from 750p. Imperial Energy jumped 60p to 1,040 after saying that it had found new oil at its Kiev Eganskoye field. UBS promptly raised its target to 15-quid from 1,450.

On to building, where home construction group Persimmon closed down 14p at 467.25p, probably due to the news that mortgage approvals were at onkly 58,000 for April, a new record low. Persimmons looks like it will be booted out of the FTSE 100 later this month, where it will join Barratt Developments, who were down 15p on the day at 167.5p.

The London Stock Exchange (LSE:LSE) was down 68.5p at 958.5p on the day after Morgan Stanley reiterated its ‘underweight’ rating and cut its target to 945p from 1,060.