Following a large reserve downgrade earlier this year, Avocet Mining (AMV:AIM) takes another big hit after lowering its 2013 output guidance following equipment problems. The West African gold miner says reduced production has led to higher unit costs and lower cash generation. The shares fall 27.8% to 9.2p on the news, not helped by a need for further capital expenditure to fix equipment and the indication that it can no longer make cut backs to maintenance.
Private client wealth managers Rathbone Brothers (RAT) and Brewin Dolphin (BRW) rise 2.1% and 1.98% respectively to £16.18 and 304p as the market shrugs off the move by outgoing Federal Reserve chairman Ben Bernanke to taper quantitative easing on Wednesday (18 Dec). Some are interpreting this as a pivotal turning point following 36 years of loosening by the world’s most important central bank since Alan Greenspan began cutting interest rates on his appointment as chairman of the Fed in 1987. But the market clearly believes that either the global economic recovery is sufficiently strong to support elevated equity valuations, Bernanke’s promise to keep base rates within their current zero to 0.25% range well after the unemployment rate has fallen below 6.5% is as good as more QE, or that the man’s successor Janet Yellen will ultimately backtrack on tapering after she takes office in February. Rathbone is a running Shares Play of the Week.
FTSE 100 retail groups Tesco (TSCO), up 2.4% at 331.6p, Marks & Spencer (MKS), marked 8.1p higher to 452.3p and Morrisons (MRW), 1.1p dearer at 260.5p, are all higher as investors consider recent falls overcooked. Heavy promotions ahead of Christmas, fragile consumer confidence and the impact of market share gains from the hard discounters have weighed on sentiment towards these retailers in recent weeks and months. We recently examined the challenges facing the food retail sector.
Cruise ship operator Carnival (CCL) rises 3.9% to £24.02, extending gains seen yesterday afternoon when its fourth quarter results were better-than-expected. Booking volumes are up, albeit margins will be lower as the sales growth is being driven by special offers and lower pricing. Deutsche Bank reckons investment in marketing should help Carnival in the medium term with driving 'greater brand loyalty, higher pricing and improving returns'.
Low-cost carrier Ryanair (RYA) rises 1.8% as it starts a €70 million share buyback programme which will run until March 2014 at the latest.
Costain (COST) rises 0.6% to 283.8p as the heavy construction specialist – a running Shares Play of the Week – agrees to sell its minority shareholdings in three joint venture companies to Severn Trent (SVT) for £12 million.
Flexible office provider Serviced Office (SVO:AIM) falls 8.9% to 127.5p as its revenues and pre-exceptional earnings will be lower than expected this year. Its City property in King William Street is still not finished and the company has decided to halt any new refurbishment projects across its estate to concentrate on service.
Medical technology specialist Scientific Digital Imaging (SDI:AIM) drops 12.5% to 17.5p as it reports a £74,000 pre-tax loss for the six months to November versus an £11,000 profit a year earlier. The company expects sales to rise in the second half as demand for its new products increases.
Emerging doubts that forward guidance will be able to keep an anchor of Treasury yields has injected an element of uncertainty into emerging markets, even if they initially held up well in the immediate wake of Bernanke’s bombshell. Therefore best attempts by Edison in a research note to highlight the net asset value (NAV) discount of Invesco Asia Trust (IAT) have fallen flat, with the vehicle down 1% in early trade to 159p further widening the markdown to last reported NAV per share of 191p.
Displays technology parts supplier Densitron Technologies (DSN:AIM) collapses 30% to 5.25p after telling investors that order volumes haven't hit expectations, pushing the microcap into the red this year.
Hosting-to-cloud infrastructure provider Daily Internet (DAIP:AIM) sees half-year losses balloon to £401,000 from £173,000 a year ago, on lacklustre 5% revenue growth. Rising costs are to blame but investors pull the plug, sending the shares crashing 18% to 1.75p.