Friday 22 June 2012
QUOTE OF THE DAY
A verbal contract isn't worth the paper it is written on
- Sam Goldwyn
THIS MORNING IN LONDON
FTSE 100
5,524.83
-41.53 -0.75%
FTSE 250
10,835.93
-108.73 -0.99%
FTSE 350
2,930.92
-23.00 -0.78%
FTSE All Share
2,866.89
-22.20 -0.77%
AIM 100
3,032.00
-25.57 -0.84%
AIM All Share
676.52
-4.53 -0.67%
11:56 am
Banks shrug off downgrades, but resources stocks drag
- Banks rise in spite of Moody's downgrade
- Spanish banks need up to 62bn euros, says private audit
- German business confidence falls to two-year low
Banks were making gains by midday as they shrugged off a sector-wide downgrade my Moody's, but the Footsie still remained in the red with oil and mining stocks providing a drag.
Credit ratings agency Moody's has downgraded 15 major banks and financial instiutions, including the major lenders on Britain's High Street. Royal Bank of Scotland (RBS), Barclays, Lloyds and HSBC all got the downgrade treatment as the agency completed its review of the global banking sector. Barclays' rating was downgraded by two notches while the ratings of the others were ratcheted down by one level.
Spanish banks will need €51-62bn euros in additional capital in a worst case scenario, according to the independent consultants Oliver Wyman and Roland Berger hired by the government to perform a new round of stress tests on its financial sector. Spain is expected to make a formal request for assistance from the EU some time over the next few days.
However, analysts at Barclays Capital said that the situation in Spain will remain "unsettled" for the near future. "Some reactivation of secondary market purchases, coupled with further ECB actions (a rate cut of 50 basis points on July 5th and collateral easing), along with fundamental progress at the June 28-29th meeting, is essential for the unstable equilibrium not to deteriorate further or for some long-lasting improvement in Spanish bonds, in our view," they said.
In other news, Germany's business confidence indicator compiled by the IFO Institute fell from 106.9 to 105.3 in June, a two-year low. The market was expecting a reading of 105.9.
FTSE 100: Banks rise on rumours of easing liquidity buffers
After slight fall early on, banking stocks Barclays, HSBC and RBS were making gains by lunchtime despite the Moody's downgrades. Nevertheless, RBS said it disagreed with the ratings change as it is "backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile."
Lloyds, which was downgraded in a separate report to the others, was a high riser after saying Moody's has recognised "the substantial momentum we have made in de-risking our balance sheet and delivering on our strategy."
It has been reported this morning that the Bank of England's financial policy committee (FPC) will announce a reduction of between 20-30% in banks' liquidity buffers to support lending.
Despite the strength in the banking sector, heavyweight oil and mining stocks were registering steep losses with Petrofac, Vedanta, Amec and Tullow Oil among the worst performers.
BHP Billiton was out of favour after giving the go-ahead to a massive investment on its coal operations in New South Wales, Australia. The group is spending US$845m to sustain operations at Illawarra Coal by establishing a replacement mining area at the Appin Mine.
FTSE 250: Michael Page drops on broker downgrade
Credit Suisse has downgraded its recommendation for recruitment firm Michael Page International from 'neutral' to 'underperform', saying that on a risk-reward basis, the stock is the "most vulnerable of the employment agencies given weakening economic conditions". Shares were nearly 6% down.
Heading the other way was price comparison website Moneysupermarket.com after Citi upgraded the stock to 'buy', while Domino's Pizza delivered gains after Canaccord Genuity raises its recommendation to 'buy'.
FTSE 100 - Risers
Lloyds Banking Group (LLOY) 31.73p +1.70%
BT Group (BT.A) 203.60p +1.04%
Royal Bank of Scotland Group (RBS) 244.90p +0.66%
HSBC Holdings (HSBA) 562.60p +0.61%
Barclays (BARC) 203.30p +0.49%
Associated British Foods (ABF) 1,238.00p +0.41%
Unilever (ULVR) 2,088.00p +0.38%
Shire Plc (SHP) 1,951.00p +0.36%
GlaxoSmithKline (GSK) 1,475.00p +0.17%
Tesco (TSCO) 310.85p +0.11%
FTSE 100 - Fallers
Petrofac Ltd. (PFC) 1,357.00p -5.63%
Fresnillo (FRES) 1,440.00p -3.49%
Amec (AMEC) 962.00p -3.41%
Tullow Oil (TLW) 1,432.00p -3.31%
Vedanta Resources (VED) 899.50p -3.28%
Johnson Matthey (JMAT) 2,216.00p -3.02%
Wolseley (WOS) 2,264.00p -2.92%
Marks & Spencer Group (MKS) 328.00p -2.76%
Eurasian Natural Resources Corp. (ENRC) 416.80p -2.75%
Kazakhmys (KAZ) 704.50p -2.69%
FTSE 250 - Risers
Moneysupermarket.com Group (MONY) 123.70p +2.91%
TalkTalk Telecom Group (TALK) 177.10p +1.78%
3i Group (III) 182.90p +1.55%
Domino's Pizza Group (DOM) 506.00p +1.40%
Telecom Plus (TEP) 835.50p +1.27%
Micro Focus International (MCRO) 482.00p +0.90%
Inmarsat (ISAT) 477.20p +0.89%
Dechra Pharmaceuticals (DPH) 488.50p +0.89%
Redrow (RDW) 118.30p +0.85%
Talvivaara Mining Company (TALV) 173.90p +0.81%
FTSE 250 - Fallers
Michael Page International (MPI) 359.20p -5.99%
Wood Group (John) (WG.) 670.00p -5.30%
Aquarius Platinum Ltd. (AQP) 50.45p -5.17%
Ruspetro (RPO) 130.00p -4.97%
Bumi (BUMI) 326.10p -4.34%
Imagination Technologies Group (IMG) 482.20p -4.04%
Barratt Developments (BDEV) 134.10p -3.32%
Hays (HAS) 74.95p -3.29%
Bodycote (BOY) 338.40p -3.29%
Spectris (SXS) 1,526.00p -3.17%
ON THE SHARECRAZY BLOG
What is money? Principally it is a means of exchange. I buy a loaf of bread from you and you accept in return something which you can then use to buy some fishes from Peter down the road. Historically we have used all sorts of things as money. Big stone wheels were used but have an obvious drawback. In the 19th century tribal spearheads were used as currency in a part of Southern Africa and could in fact be exchanged for 25 British pence. Which currency has held its value better? The spearhead of course – the rulers in bongo bongo land have not been issuing spearheads in the carefree manner Britain has issued bank notes. As late as the last century in Europe you found occasions where a country just ran out of notes and so stamps were used to buy and sell goods (Russia 1915, Turkey 1923). Today the whole world uses paper currencies – notes and coins.
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TIP OF THE DAY
A report by Growth Equities & Company Research
e-Therapeutics has announced the commencement of the first clinical trial evaluating its compound ETS2101, a drug discovered using the company's network pharmacology platform, as a treatment for cancer. The AIM-listed biotechnology company also reiterated that it will soon start a second, larger trial in the United Kingdom, which will evaluate the drug in patients with a wide variety of tumours.
Click here to read the read of the article
WHAT THE BROKERS SAY
THE LATEST ON THE CRAZY BOARD
The top 5 hot company threads on the Bulletin Board:
Borders & Southern
Sports Direct
1Spatial
Ariana Resources
Running trading thread
Click here to discuss shares with other ShareCrazy members
BOOK OF THE WEEK
By Simon Lack
A book review by Luka Lukic of t1ps.com
Hedge funds have always been the talk of the town. Every year we read about the billions paid to top 10 hedge fund managers and investors rush to give their money to them in the hopes of exceptional return. However, in this brutally honest book, industry insider Simon Lack looks to strip away the facade and reveal the cold truth about the profits hedge funds actually make. In the first sentence of the book he writes: "If all the money that's ever been invested in hedge funds had been put in treasury bills instead, the results would have been twice as good." A staggering statement which leads us to question why they have been placed on a pedestal.
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