Unilever Warning Affect Shares Of Other Companies

Unilever Warning Affect Shares Of Other Companies

The possibility that other companies in emerging markets will be affected by lower sales of Unilever marked the start of the last quarter of the FTSE 100 for 2013. Shares of the company declined by 3.9 percent as it went down to its lowest level in eleven months. Sales projections of the company for the third quarter were reduced following the slowdown on its sales in emerging markets.

The earnings per share projection and target price were reduced by analysts from Nomura by six percent. The warning also makes the situation uncertain for its rivals in the market. Among the companies that also experienced declines were Diageo and SABMiller. Shares of Diageo went down by 1.7 percent while SABMiller shares declined by 2.9 percent.

Markit indicated that the warning was not expected since Unilever was the seventeenth least-shorted share on the FTSE 100.

Jordan Hiscott of Gekko Global Markets indicated that a number of consumers are foregoing premium brands and opted to purchase budget brands. This comes as Unilever continues to be traded by clients of Gekko Global Markets due to the quality the brand provides.

The FTSE 100 underperformed following the declines in the shares of different companies.

Investors were optimistic about the partial US government shutdown. The shutdown may result to the unpaid leave of around one million workers. Parks will also be closed while medical research will also be interrupted.

Despite the absence of a resolution for the budget that would deal with the shutdown, analysts have indicated that a compromise may be reach soon. Politicians may also agree to increase the debt ceiling, which will allow the US to avoid sovereign default.

Hiscott indicated that market volatility may decrease one a deal is completed before Friday. However, it remains uncertain when the drop in the value of the shares of Unilever will end.

Posted by James Fried on Wednesday October 02 2013, 3:38 AM EST. Ref: Reuters. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0