Triumph and tragedy
Last week was no ordinary week for London. As mayor Ken Livingstone put it, it was a week of “triumph and tragedy” for the capital. On Wednesday much of London, and certainly the construction industry, rejoiced at the news that it had won the 2012 Olympics. It was looking good for the city and those companies that would pick up major contracts over the next seven years as a result. But less than 24 hours later, Londoners were left shocked by the news, inevitable as it was, that it had been targeted by terrorist bombers.
The impact on the economy, although a secondary concern, was nevertheless mooted in the City. 9/11 had a widespread impact on the global economy, and some in the market feared that already weakening consumer confidence in the UK would take a further blow after the attacks.
However, the London Stock Exchange reacted much the same as its Madrid counterpart did in the wake of its terrorist attacks. Although the FTSE-100 immediately dropped 4% on Thursday morning, it recovered to a large extent through the course of the day and was just 1.4% down at the end of the day. Further attacks would surely see shares plummet across the board, but resilience and the prospect of lower interest rates were enough last week to stave off a major fall. At the close of trading on Friday, the All-Share actually rose 1.3% to 2618.
In the immediate period after the Olympic decision, construction shares were widely expected to rise in response to a guaranteed and large-scale workload for many in the medium term. However, shares in the sector overall fell 1% to 3637, not least because of profit warnings and downbeat trading statements from firms such as Mowlem, Wimpey, Travis Perkins and Gleeson.
The worst performer was Mowlem, shares in which dropped almost 16% after it revealed that 2005 profits would be £20m lower than market expectations. Travis Perkins also had a bad week, falling 10% to 1592p when it said that falling sales at DIY chain Wickes were hitting its profit.
There was some good news though, notably from T Clarke, which is expected to do well out of the Games. Shares increased 11% to 276.5p. Galliford Try rose 14% to 67p and WSP rose 15% to 327p after bucking the trend with positive updates.
Angela Monaghan is business editor
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