Two of the biggest fallers in the FTSE 100 so far owe their decline to Goldman Sachs sell notes. Transport business FirstGroup is 30p lower at 644.5p, while HSBC has fallen 32.5p to 642p.
On FirstGroup, Goldman has cut its price target from 620p to 600p. It says: "We downgrade FirstGroup to sell from neutral and add it to our Pan Europe Conviction Sell List. There are three main reasons for this: i) exposure to UK rail where we expect passenger journey growth to slow; ii) higher year on year fuel costs, which we expect to affect the profitability of those School Bus contracts that do not benefit from a fuel pass through; iii) we expect the US economic recession that our economists now forecast to impact Greyhound, which has struggled to grow revenues in the strong
economic environment of the past few years and where recent profitability
has been supported by a provision release."
As for HSBC, Goldman said a US recession and a 20-25% fall in the country's property prices would lead to "unnerving prospects for HSBC". These could include 70% of the bank's sub-prime loans falling into negative equity, and further possible provisions of $13bn on top of the $4bn already made.
Speaking of write-offs, Citigroup has made quarterly provisions of $18.1bn on its sub-prime mortgages and cut its dividend. It is raising $12.5bn to shore up its balance sheet.
The market has been falling sharply following this news, with the FTSE 100 now 91.2 points lower at 6124.5.
Back at Silverjet (sorry), analysts at Blue Oar have come out and backed the company, setting a rather heroic 130p a share price target.
Intriguingly, they suggest the company could now be a takeover target for one of British Airways' European rivals. Silverjet is 5.5p higher at 41p.
