Newspaper article The Evening Standard (London, England)

Footsie Back below 4000 as Morgan Sounds Bear Alert

Newspaper article The Evening Standard (London, England)

Footsie Back below 4000 as Morgan Sounds Bear Alert

Article excerpt

Byline: ROSAMUND URWIN MARKET ROUND-UP

THE bear market is not over. That was the stark warning from Morgan Stanley today, which killed off any optimism in the City.

The heavyweight broker said now is the time to decide whether we are nearing the end of the equities rally or whether this is the start of a long-lasting recovery, and Morgan is feeling bearish.

The FTSE 100 index has risen almost 14% in the past month while US stocks have enjoyed their best four-week run since 1933. Investors have been keen to latch on to any indications that the worst is behind us, sending shares across the globe soaring.

But analysts warn the bulls not to get over-excited, saying this has all the hallmarks of a bear-market rally, sparked by the hope of successful policy action. Morgan is advising "selling into strength", and is moving out of shares into bonds.

It warns that fundamentals are not turning, and it will wait for an improvement in earnings, the US housing market and banks' balance sheets before it calls time on the gloom.

The downbeat note caused London's shares to run out of steam, losing early gains to fall below 4000. The FTSE 100 index slipped 38.18 points to 3991.49, having earlier hit a high of 4097. Volumes were light because of the Easter exodus.

HSBC rose 141/2p to 449p after revealing that its record [pounds sterling]12.5 billion cash call won the backing of the market, with investors snapping up 96.6% of the stock on offer. Underwriters sold the rump of 172.7 million shares not taken up at 448p a pop. It is understood the rump was more than three times subscribed at the clearing price. The rights issue has improved HSBC's capital ratios by 150 basis points (1.5 percentage points), and will help offset losses from its US business Household, which is being wound down.

The bookies were toasting their Grand National bonanza today. Ladbrokes rose 2p to 204p and William Hill gained 1p to 1971/4p after 100/1 outsider Mon Mome won Saturday's big race. The horse was the longest-priced for more than four decades to claim victory in the National, and William Hill took fewer than 2000 bets on it.

Credit Suisse cut their party short, cutting its target price for Ladbrokes from 235p to 202p. …

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