Baker Street, London -- Eddie George and Co confounded the combined forecasting might of the City of London today by raising interest rates by a quarter of a percentage point. Various straw polls, taken before the Bank of England made its decision, showed Wise economists unanimously convinced that the monetary policy committee would keep rates the same.
This surprise kick-started the FTSE 100 out of its morning slumber as traders reacted viciously when the news was released at noon. The blue chip index was down almost 100 points at one stage. Housebuilders and mortgage providers were the worst affected sectors, since the move was designed to dampen the bubbling housing market. TMF Essex seethes about this in today's Fool's Eye View.
English football supporters should be happy, though, as sterling strengthened after the move. Travelling fans will be able to get more zlotys for their pounds to celebrate their Polish victory this evening (or else drown their sorrows if the inconceivable happens).
Investors continued to focus on Allied Domecq's (LSE: ALLD) new make-up, shorn of its pubs division. Speculators suggested French drinks group Pernod-Ricard might launch a bid for Allied's drinks brands. The fact that fresh buyers of the stock will no longer qualify for the special dividend resulting from the sale of the pubs to Punch Taverns failed to deter bulls and the price moved up a further 9.75p to 377.25p. I wonder what Warren Buffett, who holds a 2.2% stake in the company, plans to do with his cash from the Punch deal?
Large media companies were bolstered after the mega-merger of US players Viacom and CBS. The $36b deal set sector watchers slavering at the prospect of further tie-ups. Consequently Granada (LSE: GAA) jumped 8.5p to 589p, United News & Media(LSE: UNWS) improved 10.5p to 640p and music company EMI (LSE: EMI) went up 3.5p to 535p. Qualiport holding EMAP (LSE: EMA), which is about to be booted out of the FTSE 100, also got caught up in this frenzy, rising 6p to 1060p as it prepared to wave goodbye to its premier league status.
Some solid stocks made ground in the afternoon after the Bank of England's shock interest rate decision had been made public, prompting a slight sell-off of growth-style shares. Mining group Rio Tinto (LSE: RIO) put on 28.5p to 1173.5p, despite pretty poor debut interim results from rival commodities concern Anglo American(LSE: AAL). Cigarette maker BAT (LSE: BATS) was up 10p to 538p and junk food and drinks producer Cadbury Schweppes(LSE: CBRY) shot up 7.75p to 416p.
Amongst mid cap shares Medeva (LSE: MDV) stood out from the pack, posting a 32.5p rise to 164p. This happened as the pharmaceutical company was forced to release a statement, after its shares leapt 10% yesterday, saying that it was in talks with a potential bidder. No other details were issued but analysts suspected an offer might come from an acquisitive US concern. As last night's Daily Fool pointed out, rival Shire (LSE: SHP), which held talks with Medeva earlier this summer, could be in the running again as well. But perhaps in the wake of the NatWest (LSE: NWB) and Legal & General (LSE: LGEN) takeover farrago, the company is being ultra-cautious and keeping things out in the open to avoid any accusation of insider dealing.
A couple of other stocks in the FTSE 250 enjoyed rises ahead of imminent interim results. Second line supermarket chain William Morrison(LSE: MRW) rose 17.5p to 169.75p. Investors were buoyed by the impressive results from similar-sized operator Iceland (LSE: ICE) yesterday. Pizza Express(LSE: PIZ), which reports on Monday, also improved 19p to 744p. Finally shareholders in IT contractor FI Group(LSE: FI.) welcomed the appointment of Geoffrey Dunn as finance director. The shares went up 18.5p to 392.5p. Investors are also expecting a positive trading statement at this Friday's AGM.
In the initial moments after the interest rate decision came through to their screens, traders slashed back the shares of housebuilders and mortgage providers. This was because Eddie George said the rate rise was designed to combat the overheating property market. The Woolwich (LSE: WWH) was the worst affected lender, falling 7.25p to 340p. On the housebuilding front, Beazer (LSE: BZR) dropped 17.5p to 171p, Berkeley (LSE: BKL) fell 46p to 731.5p and Wilson Connolly(LSE: WSNC) subsided 9p at 177.5p.
Business services providers Hays (LSE: HAS), down 24p to 669p, and Rentokil Initial(LSE: RTO), off 7.75p to 252.5p, both suffered in today's market. Perhaps investors are worried that these two companies' wage bills will be affected by Chancellor Gordon Brown's plans to introduce the working families tax credit. With large numbers of low-paid staff, many might qualify for this tax break, creating an administrative headache for these companies.
Investors in broadcaster Carlton Communications (LSE: CCM) failed to get excited by idle talk of media consolidation. Instead shareholders sat around in sackcloth and ashes to mourn the stock's imminent demotion from the FTSE 100. A downgrade from Goldman Sachs also affected the share price. The broker thinks the company should be worth around 560p, rather than 700p, its previous price target. This prompted a minor sell-off and the shares fell 15p to 473.5p.
Interim results from old industrial warhorses Associated British Ports(LSE: ABP) and RJB Mining(LSE: RJB) were poorly received. ABP fell 21p to 319p and RJB was off 2p at 50.5p. The ports operator said earnings remained static but the coal producer said pre-tax profits, before exceptionals, had declined over 90% at the half way stage.
A bid from US group Concentric failed to lift tiny ISP Internet Technology Group (LSE: ITH). Despite a 253p per share offer Internet Tech's shares collapsed 10.5p to 230p, which seems strange. The market obviously seemed disappointed that the £146m bid valued the Internet stock so cheaply, compared with its racier peers.
If you have moved house recently you can skip this. If you are about to move then read on (though after today's news on interest rates, you might want to change your mind about that).
The last time we moved was 15 years ago: that was fairly straightforward, and I was not expecting any particular problems this time round. However, the exercise took on the nature of a marathon hill walk. You know, those ones where you approach a rise and think it is the top only to discover there is another one behind it.
The first thing I have to say is that if you have any choice in the matter, don't do it. The process is archaic, drawn-out, stressful and, on the day, physically exhausting. I like to think I am reasonably fit, but helping to put all our worldly goods on a truck before midday and taking them all out on the same afternoon left me totally drained. And that was after four months of mental torture trying to complete the deal.
So what have I learnt from this exercise that we can profitably pass on to fellow Fools? Probably quite a few things, I suspect.
Lesson number one:
Do not buy a house the day before the Bank of England puts up interest rates. This raises the cost of your mortgage and immediately takes 5% of the value of the house you have just bought. Yes, Eddie, I know the property market in certain parts of London is going up sharply. But does the rest of the country have to suffer deflation because some Russian Mafiosi want a safe home for plundered cash and enthusiastic amateur property speculators think buy-to-let schemes are a surefire get-rich-quick scheme?
Gripe over -- but it does emphasise the importance of buying something you can afford in bad times as well as good.
Lesson number two:
Prepare to spend hours on hold and accept atrocious service from utilities as you notify changes of address and setting new accounts. British Telecommunications (LSE: BT.A) was by far the worst. I notified them as soon as we had exchanged and they faithfully promised that there would be absolutely no problem at all in changing our account over.
But on completion day, the phone at the new house made a horrible buzzing noise. Irritation level rises to category 1. Ring BT on mobile and navigate through all their options to find I need a different number. Irritation level rises to category 2. Repeat process twice before I reach the right person and IL rises to category 4. Nice lady says no problem; it'll be fixed at 3:30. So we carry on unloading. At 4:30 I check the phone to discover it is still not working. IL jumps to 8. Call BT again and spend 20 minutes on hold (yes, I am a sad git who timed it) before getting through to a real person who said "Er, sorry, slight technical hitch, can't connect you until tomorrow". IL rises one order of magnitude to 80.
Then I speak to the supervisor, who says there is nothing she can do because all the technical wallahs have gone home and, basically, tough. IL now falls by 50% and is replaced by fatigue. Who said BT had been privatised?
So, lesson number two is give up on BT.
This morning I signed up with NTL(NASDAQ: NTL), and got very good service from the salesman. Now, TMF does not give investment recommendations so all I can suggest is that you all go and move house to do your own research on this before buying and selling any phone shares.
Lesson number three:
Cheltenham & Gloucester, part of Lloyds TSB,(LSE: LLOY) could not be faulted in their rush to lend me money. OK, there was a two-day delay in getting the valuation report down, but that was due to everyone else in the country following my advice in lesson number two and all trying to move house in the same month. The funds were transferred on time and without any problem, so yes, I would use them again. The Halifax (LSE: HFX) seemed much less keen on going out of their way to help me spend their money.
Lesson number four:
Don't underestimate the amount of stuff you have. We are a family of four and completely filled one removal van, yet we started off with only 45 boxes. Come removal day we were furiously filling more and more boxes and even then we still forgot things. The unplanned packing meant that the schedule went to pot and in the new house no one (i.e. Mrs D) can find anything. If she can't find it, then, basically, it is unfindable.
One of the basic differences between men and women is the male inability to find anything, usually because they are standing on it. I think this is why Neanderthal man started hunting mammoths. It was the only thing they could find on a regular basis because it was so big even they couldn't miss it.
Lesson number five:
Don't get so much stuff in the first place.
Lesson number six:
Put all the animals in a home for the day. (No, not the children: but nice idea). Having a small dog running under your feet, and the feet of the removal men, as you carry a wardrobe downstairs doesn't speed up the process. Mostly he just barked all day as his best sleeping places were slowly carted out of the house. Understandably distressing. I would be upset too if someone removed my office chair without telling me. Although, that might signify something else altogether.
Lesson number seven:
At all costs, avoid a chain. We agreed our deal in May, but it took four months for all the other parties, five in total, to get their act together. In the end we had to break the chain to get an exchange. If you can separate the transaction into several separate ones, rather than one big one, it will probably save time in the end. And certainly wear and tear on the nerves.
So that's it for now. But it has to be done. Moving house is a necessary evil. And of course it is not the end of the process. We need extra sockets, a new garage& But at least I can look forward to my high-speed digital Internet access at the end of the year.
Beware. By Friday computer civilization as we know it could be in ruins. This might be the penultimate "And Finally". For tomorrow is the dreaded ninth day of the ninth month of the ninety ninth year of this century. In the computer world this is a vital date, second only in importance to January 1st 2000. Alarmist experts believe a millennium-style bug might strike certain operating systems, which will struggle to understand what comes after 9/9/99. Do you think the Internet will still be up and running on Friday? Or is there a remote chance we shall still be alive and kicking? It might be your last chance, so rush over to the Daily Fool message board and give us your panic-stricken final thoughts.
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