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Jonathan Plant, a strategist at Liberum Capital, said: “With stagflationary growth, geopolitical troubles and developed-market austerity on the way, it should be a good test of the ‘buy the dips’ scheme mentality that pervades this market.”
ARM Holdings, the Cambridge company that designs microchips for the iPhone and iPad, led the bluechip loserboard after analysts at JP Morgan downgraded the stock. The bank warned that ARM is likely to be one of the biggest losers from a slowdown in demand for tablet computers, such as the iPad and Samsung’s Galaxy Tab. The analysts said the Far East companies churning out tablets are sitting on a huge backlog of chips, which will hurt ARM’s royalty revenues going forward. The shares, which have risen by 26pc so far this year, had lost 41p to 533p by 3pm.
Next up among the losers is Aggreko, down 16.7 to 525p after the temporary power supplier warned that lack of major sporting events and the unrest in the Middle East and north Africa could make life a little tricky this year. A bumper year of sport in 2010, including the World Cup, the winter Olympics in Vancouver and the Asian games, added £87m to Aggreko’s 2010 revenues of £1.23bn. “We have tried to persuade FIFA to run the World Cup every year, sadly they have not listened,” Rupert Soames, chief executive, said. “Every even year, you get a big year for events and every odd year, youre basically down to the tiddlywinks championships.
Andrew Nussey, an analyst at Peel Hunt, who has a hold recommendation on Aggreko, said he “would not chase” the stock at 18.7 times 2011 forecast earnings “until there are signs of further earnings upgrades”. The shares were down 100p to £13.89.
12pm: Investors are filling their trolleys with shares in Wm Morrison after Britain’s fourth-biggest supermarket announced plans to join the internet shopping melee within two years.
Morrisons, the only one of the "big four" grocers that currently lacks an internet presence, is giving itself a head start by buying a 10pc chunk in posh New York online grocer Fresh Direct. Dalton Philips, chief executive, said investing £32m in Fresh Direct and buying baby clothes website Kiddicare.com for £70m, would enable it to “get to the right answers faster” before launching a British website.
Chris Hogbin, an analyst at Sanford Bernstein, said: “The initiatives are sensible and Morrisons is well able to afford them.”
However, Espirito Santo analysts said the step up in new store openings could raise concerns about investment returns, with all other major British grocers pledging to expand rapidly.
The Bradford-based chain also increased its dividend by 17pc following a 2pc rise in profits to £874m. It will also buyback £1bn worth of shares over the next two years. The shares were 4.5p up 284.9p at lunchtime and leading the bluechip index.
However, the sun wasn’t shining on Argos and Homebase after their owner, Home Retail, warned its full-year profits would be below expectations. Britain’s biggest household goods retailer said sales slid in January and Terry Duddy, chief executive, warned there were “clear signs” of “further pressure on consumer spending”. The shares dropped 14.7 to 196.2p.
Nick Budd, an analyst at Arden, said: “As bid hopes fade further, with share buyback support now finished, we think the shares will soon re-test new lows. We target 175p and reiterate our sell on Home, despite the cash mountain and the 14.7p dividend [covered only 1.25 times]. The yield is 7pc at 211p, but we think that needs to be 8.5pc to compensate for the risks in the earnings outlook.”
Overall, the FTSE 100 index was down 57 points to 5,880 points, as resource stocks took a hammering. Fresnillo was down 72p to £15.18 and Rio Tinto lost 150p to £39.39. Randgold Resoucres, Anglo American, Xstrata, BHP Billiton, ENRC and Vedanta Resources were also among the losers after Chinese stats hint at a slowdown in demand for metals.
9am: Spain downgrade forces down FTSE
The FTSE 100 was down almost 1pc in early trading on Thursday as Moody's downgrading of Spain and ongoing turmoil in LIbya weighed on European stocks.
The UK's blue-chips dropped 45.94 to 5891.36 at 9am, led by ARM Holdings (down 6pc), Aggreko (down 5.1pc) and Standard Life (down 4.4pc).
France's CAC 40 and Germany's Dax also both slipped around 1pc.
Ratings agency Moody's cut Spain's sovereign debt rating one notch on Thursday and warned of further cuts due to fears that bank restructuring will likely cost more than twice what the government expects.
Meanwhile, traders are keeping a wary eye on oil prices, which have been driven higher during weeks of anti-government unrest that has shut down most of Libya's 1.6m barrels per day of crude production.
"Oil prices now are the major concern in the market," said Jackson Wong, a vice-president at Tanrich Securities.
Brent crude for April delivery was up 16 cents to $116.10 a barrel on the ICE Futures exchange. Sustained higher oil prices could put a damper on the economic recovery by adding to costs for businesses.
Wall Street was poised to extend Wednesday's losses, with Dow futures down 70 points at 12,104.00. Broader S&P futures lost 9.5 points to 1,305.90.
In Asia, Japan's Nikkei 225 stock average ended 1.4pc lower at 10,434.38 after the government said the economy shrank 1.3pc in the fourth quarter. That's more than preliminary data last month suggested.
Chinese shares fell on expectations that February inflation data due out Friday would be lower than the previous month but still higher than the government's 4pc target.
The Shanghai Composite Index lost 1.5pc to close at 2,957.14. The Shenzhen Composite Index of China's smaller, second exchange lost 0.7pc to 1,302.65.
South Korea's Kospi extended losses after the central bank raised its key interest rate for the second time in three months. The index fell 1pc to 1,981.58.
Hong Kong's Hang Seng index retreated 0.8pc to 23,614.89.
6am: Japanese woes weigh down markets
Asian shares fell on Thursday, weighed down by ongoing fighting in Libya and a larger than expected contraction in Japan's economy.
Traders are keeping a wary eye on oil prices, which have been driven higher during weeks of anti-government unrest that has shut down most of Libya's 1.6m barrels per day of crude production.
"Oil prices now are the major concern in the market," said Jackson Wong, a vice-president at Tanrich Securities.
Brent crude for April delivery was up 40 cents to $116.34 a barrel on the ICE Futures exchange. Sustained higher oil prices could put a damper on the economic recovery by adding to costs for businesses. The dollar was higher against the yen and the euro.
Japan's Nikkei 225 stock average was off 1.6pc at 10,416.01, with nearly all sectors in negative territory. Toyota Motor Corp tumbled more than 2pc, and major bank Mitsubishi UFJ Financial Group fell 1.8pc.
Investors have also been digesting economic data from China.
Shanghai's composite index fell 1pc to 2,792.10 even after the Chinese government said trade grew strongly in the first two months of the year.
Wong said the focus is on inflation data scheduled to be released Friday. Surging food prices have pushed China's inflation higher in recent months, adding to pressure on Beijing to cool living costs with more interest rate hikes and other measures. Wong said the latest consumer price index (CPI) report will likely understate the problem.
"I don't trust the official CPI data," Wong said. "When we talk to people in China and also people in Hong Kong, they all say the inflation is worsening."
Hong Kong's Hang Seng index retreated 0.6pc to 23,660.79.
Cathay Pacific Airways, Hong Kong's biggest airline, fell 1.3pc a day after company executives reported annual profit tripled to a record but warned that higher oil prices threatened profitability in 2011.
Benchmarks in Australia, Taiwan, Singapore and also lost ground. South Korea's central bank raised its key interest rate for the second time in three months as it steps up efforts to control inflation that has risen to its highest level in more than two years.
The Bank of Korea lifted its benchmark base rate to 3pc from 2.75pc at a monthly monetary policy meeting.
In New York on Wednesday, stocks slipped as WTI crude oil prices hovered near $104 a barrel, continuing a three-week run of high prices that economists say could slow the economic recovery.
The Dow Jones industrial average fell 1.29, or less than 0.1pc, to 12,213.09.
The broader S&P index lost 1.80 points, or 0.1pc, to close at 1,320.02. The Nasdaq composite fell 14.05, or 0.5pc, to 2,751.72.
Thursday's Market Report:
Apple iPad success could hurt ARM Holdings
Wednesday's Market Report:
'Spectacular' Prudential leads the FTSE 100
FTSE today: market report as it happened: March 9, 2011
Tuesday's Market Report:
Falling oil price hits gold miners
FTSE today: market report - as it happened March 8, 2011
Monday's Market Report:
ENRC falls on talk of Kazakhmys stake sale
FTSE today: market report - as it happened March 7, 2011
Friday's Market Report:
FTSE today: market report – as it happened March 4, 2011
Tools: Shares and Markets: News, charts, data
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