Last night’s 192-point plunge on Wall Street prompted early heavy falls on the London stock market, before it staged a strong recovery.
At the opening bell, the FTSE-100 index was down 37.5 points before bargainhunters stepped in to leave it down 3.7 at 4572.1.
David McBain, UK strategist at NatWest Markets, said the London stock market was likely to face a turbulent run-up the Budget on July 2.
Causing most of the damage is a growing belief that Chancellor Gordon Brownwill leave consumers relatively unscathed and will hit the corporate sectorhardest.
If there are no moves in the Budget to “cool off the consumer”, then the Monetary Policy Committee of the Bank of England may well decide to raise interest rates soon by a further 0.5%.
“The market is in for a turbulent time. It will be dogged by uncertainty until the Chancellor has sat down on July 2. However, a major correction is not on the cards,” he said.
Takeover speculation kept several leading companies on the boil. Reports thatMidland Bank parent HSBC is interested in buying Royal Bank of Scotland sent thepossible target up 14p to 597p while HSBC itself was up 11p at £18.39p.
And the ongoing speculation that Barclays would like to buy NatWest prompted the target to soar 27p to 810p while Barclays was down 2p to £11.67p.
News that takeover talks have ended between Country Casuals and the formerchief executive Mark Bunce, sent the shares down 13p to 112p.
First Leisure, under its new boss Michael Grade, reported a slip in interim earnings and warned that trading in the first few weeks of the second half was disappointing. The City took fright and sent the stock down 17p to 318p.
Elsewhere, high street group W H Smith continued to feel the effects of yesterday’s announcement that its chief executive is to leave in October for a senior post with BT.
Investors remain worried that Bill Cockburn’s work to restore the group tofull health would not be completed, and the group shed 5p to 371p.
PA News 24/06/97
