Marconi leads global shares down
Friday, 6 July, 2001, 21:05 GMT 22:05 UK
----But of course, the spin doctors will try to rally the market this week. Good luck.---- AD
Traders' screens were red across the world on Friday as US shares followed European and Far Eastern stocks into a downward spiral, pulled lower by concerns over corporate profits, and as the "Marconi shock" continued to unsettle investors.
Making matters worse; soon before trading ended in New York rumours of the chief executive designate of Marconi, John Mayo's resignation begun to spread.
And it became increasingly clear that the company had put on ice its original plan where the current chief executive George Simpson would replace chairman Roger Hurn.
Both will now stay in their posts longer than previously intended.
Wall Street
In the markets, a desperate week ended on a desperate note.
US markets, late afternoon
DJIA
-2.17%
Nasdaq
-3.65%
S&P 500
-2.1%
US shares were pulled down by the data storage giant EMC and the microchip maker Advanced Micro Devices which fell 28% and 27% respectively.
EMC warned that earnings will be 76% lower than Wall Street analysts had estimated while AMD said its earnings would be 90% lower
"Today is a day to be concerned about," said Shields & Company market analyst Frank Gretz. "We've done some real damage."
Both the broad ranging Dow Jones industrial average and tech-heavy Nasdaq closed sharply down, the blue chip index hitting lows not seen for three months.
The Dow closed down 227.25 points at 10,252.61while the Nasdaq fell 76 points to 2,004.18.
Europe
European shares, which recovered briefly after lunch, resumed their slide in mid-afternoon trading as investors, already unnerved by Marconi's warning of a "very, very significant slowdown in Europe", digested further profits downgrades.
Friday's market closes outside the US
FTSE 100 (London)
-1.27%
Cac 40 (Paris)
-2.43%
Dax (Frankfurt)
-2.29%
Nikkei (Tokyo)
-2.39%
In the UK, sentiment was also damaged by a report showing that Britain's manufacturing sector has almost certainly entered recession.
In London, the benchmark FTSE 100 index of leading shares closed down 70 points at 5,479.6, with Marconi shares again near the top of the losers' board.
Marconi stock, which halved on Thursday, stood 7.1% lower at 104.5p.
The shares, which closed at 1250p on 4 September, earlier fell to 96.5p.
London's Techmark index of technology shares, which on Thursday closed at its lowest level since it was launched in November 1999, closed 2.0% lower.
Weak stockmarket stock
What a day to enter the stock market; one might have thought a stock exchange, being an expert, would have stayed away on Friday, but no:
This was the day when the pan-European stock exchange Euronext made its debut as a listed company.
And the day was spent watching the stock sliding lower; it fell 8.46% on its first day of trading.
The bourse, formed by the Paris, Amsterdam and Brussels stock exchanges, listed 27.4% of its stock, floating the shares at 24 euros - at the bottom end of a planned float range of 24-27.5 euros.
And yet, the only way was down for the stock for the rest of the trading day.
European bourses
Elsewhere in continental Europe, share prices fell sharply.
"There is nothing to stop this yet. There is no good news in techs, telecoms or banks, and the brokerage houses have been hit hard, and the number of groups that are safe havens are getting less and less," Eureffect's Lex Werkheim said during hectic trading in Amsterdam.
"It's all worse than everyone expected, and it's getting worse."
For Euronext, there must have been some comfort to be had from this; its falling share price could be attributed, at least in part, to the torrid market conditions.
After all, other bourses whose shares can be traded, Sweden's OM which owns Stockholmsboersen and Germany's Deutsche Boerse, also suffered on Friday, losing more than 10% and 6% of their market value respectively.
Sony slumps
Europe's sharp losses followed declines on Far Eastern markets which, after a resilient performance on Thursday, succumbed on Friday to jitters over technology firms.
Marconi shock - Friday's UK victims
1: Arm Holdings
-6.7%
2: Colt Telecom -8.8%
3: Marconi -7.1%
4: Amvescap -6.9%
5: Carlton -3.3%
Share price losses, 1530 GMT
In Japan, the Nikkei 225 index of leading shares closed 2.4% lower, with shares in Fujitsu, the country's biggest computer maker, ending 3.3% lower, and stock in electrical appliances maker Hitachi closing 3.5% down.
Shares in electronics firm Sony - often viewed as a guide to wider market sentiment - slumped 4.5%, to their lowest level since September 1999.
"I think we can call this the 'Marconi shock'," said Haruki Takahashi, manager of equity dealing at Tsubasa Securities.
"Woes for a company as big as this are another solid reminder that Japanese investors should be jittery over the high-tech profit picture."
Marconi warned late on Wednesday that, thanks to "much tougher" market conditions, operating profit would slump 50% this year.
While the announcement was made after the close of London trading, and on a day when US markets were closed for 4 July celebrations, investors had already been spooked by the suspension of trading in Marconi shares throughout Wednesday.
And the release of the warning, which also announced the loss of 4,000 jobs, proved sufficient to send shares in European technology firms sliding on Thursday, with Alcatel plunging 11%, Arm Holdings losing 8% and Ericsson sliding 7%.
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