Midland pubs and brewers underwent a difficult day after brokers issued a downgrade on them amid further concerns about a slowdown in consumer spending.
JP Morgan said it was concerned that with the squeeze on disposable income continuing discretionary spending on drinks and socialising was likely to be curtailed.
The broker cut Greene King (GNK) and Burton-upon-Trent-based Punch Taverns (PUB) to ‘neutral’ from ‘overweight’.
Former Wolverhampton and Dudley brewer Marston’s (MARS) also fared badly, as did pub owner JD Wetherspoon (JDW).
Birmingham-based Mitchells & Butlers (MAB), owner of All Bar One and Harvester, was another to struggle.
In a note to its clients, JP Morgan said that it continued to be cautious of pubs generally although it was warming to managed pub operators, who it said had the best long term prospects.
It was more cautious on pubcos with tenanted exposure given the increasing pressures that pub tenants are under, hence the downgrades for Punch, Greene King and Marstons.
Marston’s closed the day down almost 5.6 per cent at 194.25p, a drop of 11.5p. The pattern was repeated at M&B, which fell almost 5.9 per cent to 272.25, a drop of 17p.
Punch was the biggest faller, down 9.3 per cent to 265.5p, a drop of 27.25p.
Rival JD Wetherspoon ended four per cent down at 233.75, a drop of 9.5p, while Greene King finished almost 5.7 per cent down at 507.5p, a drop of 30.5p.
JP Morgan also added a note of caution to bookmakers, who it said were equally exposed to the decline in discretionary spending.
It downgraded William Hill (WMH) to ‘underweight’ from ‘overweight’ and Ladbrokes (LAD) to ‘underweight’ from ‘neutral’.
In a separate note, it said it was downgrading the two companies in light of continuing consumer concerns, tighter gaming machine regulations from 2010 and limited catalysts for further growth.
William Hill closed almost five per cent down at 271.25p, a drop of 14.75p, while rival Ladbrokes was almost seven per cent down at 221p, a decline of 16.25p.