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Sector Vultures Circle Carillion Carrion

Published 15/01/2018, 11:32
Updated 21/10/2020, 09:15

Midday Market Comment

Carillion’s (LON:CLLN) collapse continued to dominate what would have otherwise been a very quiet start to the trading week.

Much of the morning has seen Carillion’s peers and partners let investors know whether or not they’ll be hurt by the company’s liquidation. Balfour Beatty (LON:BALF) – which has 3 joint ventures with Carillion, including the M60 Junction 8 to M62 Junction 20 scheme – revealed it would be hit by up to £45 million, an announcement that unsurprisingly led the stock 2.6%.

Galliford Try (LON:GFRD), meanwhile, fell nearly 3% as it stated that Carillion’s outstanding additional cash contribution to the Aberdeen Western Peripheral Route contract – a scheme that also involves Balfour Beatty – is between £60 million and £80 million, to be ‘funded equally by the joint venture members’.

As for Kier Group (LON:KIE), it nudged around 1% higher as it argued the implementation of its contingency plans for the High Speed 2 and smart motorways projects it shares with Carillion will mean it avoids any ‘adverse financial impact’.

Of course there were plenty of vultures in the sector circling the Carillion carrion. Serco Group (LON:SRP), which bought £47.7 million in healthcare contracts from the crisis-hit company back in December, jumped 4.5%, while Capita (LON:CPI) climbed 1% and Interserve (LON:IRV) rose 2.6%.

The understandably gloomy tone helped keep the FTSE from matching last week’s all-time highs, the index slipping under 7770 after falling 0.2%. Contributing to that decline will be sterling’s gains against the beleaguered dollar, with cable rising 0.3% to tickle $1.38 for the first time since the immediate aftermath of the Brexit referendum back in June 2016.

The pound wasn’t so successful against the euro, which is continuing to stomp all over its forex competition. Against sterling it rose 0.4%, while against the dollar it rocketed 0.7% higher to a fresh 3 year peak. This prevented the DAX from gaining any traction, with the German index straining to keep above 13200 following a 0.2% slide.

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