Reuters logo
Weak Vodafone heaps pressure on Britain's FTSE
November 13, 2012 / 9:46 AM / 5 years ago

Weak Vodafone heaps pressure on Britain's FTSE

* FTSE 100 down 0.7 percent

* Index close to 200-day moving average

* Vodafone down 3.8 pct on Europe writedown

By Tricia Wright

LONDON, Nov 13 (Reuters) - Britain’s top share index fell sharply on Tuesday, testing a key support level, knocked by heavyweight telecom Vodafone after it posted downbeat first-half results.

The FTSE 100 was 40.09 points, or 0.7 percent, lower at 5,727.18 by 0921 GMT, close to its 200-day moving average at 5,729. The index closed flat on Monday.

“It’s looking worrying,” Phil Roberts, chief European technical strategist at Barclays Capital, said.

“Closing below both the 200-day (moving average) and the daily Ichimoku cloud base (5,705) would be a signal for trend followers to start jettisoning their long positions.”

A close beneath these levels, he said, would give a target area of 5,550 - the width of the range the index has been in for the last two months projected lower from the breakout level (the low on Oct. 1 at 5,738).

Vodafone shed 3.8 percent, accounting for about a quarter of the FTSE 100’s points drop, after it wrote down the value of its business in Spain and Italy by 5.9 billion pounds ($9.3 billion) and lowered its full-year outlook.

Some traders, however, saw the share price drop as a buying opportunity, noting that the stock had been trending down in the run-up to the results, falling from around 191 pence in August to 160.25 pence, the level at which it currently trades.

“We think that much of this has already been priced in ... providing a compelling entry point for a company that will allow a progressive increase in dividend,” Atif Latif, director of trading at Guardian Stockbrokers, said.

“Once the EU market starts to make progress we see a return to the upper end of the annual range,” he said.

Trading volume in Vodafone was robust, at 72 percent of the 90-day daily average, against the FTSE 100 index on just 20 percent of its 90-day daily average.

Worries about the potential effects of the U.S. “fiscal cliff” of spending cuts and tax hikes due to kick in early 2013, which could jeopardise growth, as well as concerns about Greece’s financing issues, took their toll on broader sentiment.

Greece’s international lenders did not disburse more aid to the debt-ridden country on Monday, but agreed to give it two more years to make the cuts demanded of it.

Cyclical miners and energy stocks, so-called as they are geared to the economic cycle, were among the worst hit sectors on Tuesday, suffering respective falls of 2 percent and 0.5 percent.

“As the Greek tragedy enters its final act whilst uncertainty increases over any resolution, this side of new year, for the U.S. fiscal cliff, investors are in no mood to push equities higher this morning,” Mike McCudden, head of derivatives at Interactive Investor, said. ($1 = 0.6302 British pounds) (Reporting by Tricia Wright; Editing by Pravin Char)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below