Citywire: Wall Street runs scared
Published: 15:32 Mon 22 March 2004
By Dylan Lobo, Market Reporter
Wall Street is in full retreat with US indices falling and pushing the UK market further into the red; news that the Association of British Insurers has had a 'constructive' meeting with troubled oil giant Shell gets lost in the general panic.
Within an hour of opening the Dow Jones had plunged 130 points to 10,055, the broader S&P 500 was off 14 points at 1,095 and the technology-heavy Nasdaq was down 32 points at 1,908. The fall off was in reaction to threats of revenge from Palestinian militants after Israel's assassination of Hamas leader Sheikh Ahmed Yassin.
It was a similar picture in the UK with the FTSE 100 sliding 92 points lower at 4,325, while the FTSE 250 was down 113 points at 6,126 and the techMARK was off 34 points at 1,143.
Shell extended early losses with a drop of 9.25p to 352.75p. Peter Montagnon, head of investment affairs at the ABI, said he was ‘pleased that the non-executive directors of Shell are listening to the views of the shareholders’. He added that there would be further talks with the oil company in due course.
Earlier in the day Shell confirmed plans to restructure its Nigerian operations in an attempt to cut costs and boost production. Nigeria, which accounts for a about 10% of Shell’s annual production, accounted for a about a third of the initial 20% cut in reserves in January.
Oil stocks in general were having a tough day as fears increased that the overestimation of reserve levels is not exclusive to Shell. BG slipped 3.25p to 320p and BP shed 12.75p at 440p. Meanwhile mid-cap Tullow Oil was further impacted by news that one its wells at Gabon was dry, leading house broker ABN Amro to downgrade the group from buy to add.
In other breaking news BAE Systems (BA.), down 6.25p to 185.75p, signed two joint ventures with Italy’s Finmeccanica. One of the ventures is a systems integration business, the majority owned by BAE, and the other is an avionics business, which will be majority owned by Finmeccanica
Meanwhile British Airways dived 15.5p to 258.75p and continued to be the worst performing blue chip as Hamas' promise of massive retribution against Israel after the assassination of its spiritual leader Sheikh Ahmed Yassin, heightened global security concerns. Online travel booking agency Lastminute was the biggest loser among the mid-caps with a drop of 16p to 190p.
Wolseley, down 33.5p to 819p, offset solid results by predicting that US and Canadian markets are likely to remain mixed and stating that current trading in Europe is flat.