Morning Market, Monday 31st March 2008

The FTSE was down about 85 points after an hour at 5,608, following on from the US falling again on Friday.

Over the pond on Friday, the DJI closed down 86.06 points at 12,216.40, whilst the S&P500 close down 10.54 at 1,315.22, and the Nasdaq down 19.65 points at 2,261.18.  A profit warning from retail giant JC Penny didn’t help.

Today in the Far East the Nikkei 225 closed down 344.67 points at 12,475.8, whilst in Hong Kong the Hang Seng was down about 445 points at 22,840 by lunchtime chow time.

Back here in London, there were some broker downgrades, which caused some selling in a few blue chips.  British Airways was down 9p at 231p after Goldman Sachs reversed its opinion from a ‘buy’ to a ’sell’, and gave the airline a 2-quid target, down from 330p. The broker cited the rising cost of oil as thge reason earniungs will be lower over the next couple of years.  What with the farce at the new Terminal 5, it hasn’t been a good week for the airline.

ITV was down over 4p at 63.8p after a UBS downgrade to ’sell’ from ‘neutral’, and a 60p target, down from 70p.

Vodafone was off an unusal 7.5p at 149.5 after Morgan Stanley downgraded to ‘underweight’ from ‘overweight’, and lowered its target to 170p after it had reviewed the telecoms sector in general.  Morgan Stanley also raised its rating for BT Group to ‘equal-weight’ from ‘underweight’ in the sector review, but this didn’t help the price this morning, down 3p to 213p.

Supermarket chain Tesco was doewn 16p to 374p this morning on news that its US expansion program is on hold for 3 months. The marketing director for Tesco’s US Fresh & Easy business, Simon Uwins, said the company will take a 3-month break from opening new sites to ‘kick the tyres’ and ’smooth out the wrinkles’ following the opening of its first 59 stores.

Friends Provident was up 4.4p to 124.6 after confirming it had rejected JC Flowers 150p a share bid saying it grossly undervalued the business.  The 150p bid was 25p under its last bid of 175p in January.

AstraZenecawas up 26p at 1,876 after good news on its new hypertension drug, Crestor, which has flown through trials.