BAE Systems nosedive sees FTSE 100 stall


A fall from aerospace and defence giant BAE Systems (LON:BA.) dragged Britain’s blue chips lower on Thursday, with miners exacerbating matters after downbeat data from China.

BAE shares hit their lowest point for seven months, down 8% to 402.2p, as it confirmed the market’s fears that the US budget defence cuts could trim earnings per share by 5-10% this year.

Pre-tax profits fell by two-thirds last year to £442mln, with the US budget pressures blamed for the decline.

The company generates 44% of revenues from the US and investors were hoping for a more upbeat outlook in this morning’s final results.

BAE was followed lower by mining shares following a drop in China’s factory activity, which reignited fears that the world’s largest importer of metals is suffering an economic slowdown.

Silver miner Fresnillo (LON:FRES) and Anglo American (LON:AAL) fell 3.4%, Glencore Xstrata (LON:GLEN) lost 2.3%, while Randgold Resources (LON:RRS), which has enjoyed a strong run so far in 2014, dipped 2.3%.

Minutes from the Federal Reserve confirming plans to continue tapering also dampened trading sentiment.

CMC Markets’ senior sales trader Toby Morris explains the significance of the US central bank’s decision: “At the same time while the Fed minutes are mostly just re-affirming what we already knew, markets no longer have the luxury of the Fed’s safety net when global macro numbers disappoint, leaving us far more vulnerable to sell-offs.”

The FTSE 100 retreated by 0.4% to 6,771, having added almost 300 points already this month.

Shares in British Gas owner Centrica (LON:CNA) fired up 1.4% despite watching profits tumble in 2013.

Miners also suffered on the FTSE 250, with Vedanta Resources (LON:VED), Evraz (LON:EVR), Ferrexpo (LON:FXPO), Polymetal (LON:POLY), Lonmin (LON:LMI) and African Barrick Gold (LON:ABG) all featuring in the top ten losers list.

Online gambling software group Playtech (LON:PTEC) topped the index, up 6.5% as it said it would pay shareholders a £100mln special dividend following a profits rise last year.

In the small-cap universe, Snoozebox (LON:ZZZ) shares awoke from their coma as the mobile hotel group suggested the hard times are now behind it.

The company, which has promoted finance chief Lorcán Ó Murchú to the role of chief executive, said it saw a marked improvement in the second half of the year thanks to lower operating costs and rising margins.

Snoozebox reported an 80% rise in revenues to £6.5mln in 2013, ending the year with cash in the bank in excess of £4.5mln.

Shares in the company tanked last year as it emerged demand for its pop-up hotels was not as strong as expected.

But it revealed it will be setting up shop at Glastonbury, Britain’s most popular music festival, and the Ryder Cup at Gleneagles this year, sparking a 72% rise from the stock, now at 11p.

Shares in mobile marketing and payments specialist Proxama (LON:PROX) surged 20% after it announced the launch of a new contactless payment solution.

It has partnered with Cryptomathic, a leading security provider, to launch EMV Tokenised Transaction (EMV-TT).

The new offering works with existing contactless payment terminals at merchants, so no point-of-sale changes to infrastructure are required.

Other notable small-cap risers included Oilex (LON:OEX), up 7.9% to 4.2p, shortly after raising $6.8mln in a share issue to pay for the upcoming Cambay 77H well in India.

SeaEnergy (LON:SEA) and Image Scan Holdings (LON:IGE), both up 24%, were also among the winners.

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