Stockwatch: Week in review

Mar 8 2008

London’s FTSE 100 Index fell in all but one session as US recession fears continued to plague world markets.

The Footsie started the week at 5884.3 but lost ground on Monday and Tuesday as record oil prices added to worries for investors.

Trading on Wednesday offered some relief, but the rally failed to last as more negative news on the US economy left the Footsie at 5699.9 on Friday evening.

A warning from British Airways that it expected an operating margin of 7% in the 2008/09 financial year - against the 10% expected for this year - caused shares to tumble 8% on Thursday.

BA said rising fuel costs, weaker economic conditions and the cost of moving to Heathrow Terminal 5 would put pressure on earnings, although it pointed out that all the factors were already well known to City analysts.

Sentiment improved on Friday, with BA shares finishing the week just 2% lower at 253.5p.

ITV executive chairman Michael Grade did his best to talk up the broadcaster’s prospects on Wednesday, even though the company also reported a 35% fall in annual profits to £188 million.

Mr Grade said the ITV stable of channels had delivered their first viewing increase last year since 1993, while the decline in ITV1’s advertising revenues also slowed.

However, shares failed to respond as investors remained concerned about expectations for another tough year in the advertising market. The stock closed at another record low after falling 3% to 65p over the week.

Motor insurance group Admiral was the biggest faller in the FTSE 100 Index, down 15% in the week after it said in annual results that its comparison website Confused.com lost market share during 2007.

The group, which also operates the brands Diamond, Admiral and Bell, said the site performed well despite increasing competition in the comparison site market, but warned growth in 2008 will be “much tougher”.

The stock market fall took the shine off the company’s latest bonus award for staff. Around 2,200 employees will share 310,000 free shares based on the results for the second half of 2007, meaning they will receive the full allocation of £3,000 worth of shares for last year’s trading.

HSBC rounded off the banking sector’s results season by revealing a 10% increase in pre-tax profits to 24.2 billion US dollars (£12.2bn) - despite a 17.2 billion dollar (£8.7bn) hit from bad debt and loan provisions.

The update was in line with expectations and included a pledge to keep hold of the company’s troubled US consumer business.

Shares were barely changed over the week, although Royal Bank of Scotland and Barclays fared less well amid concerns about the slowing US economy.