Date: Monday 28 May 2012
- Support for New Democracy increases
- Financials, miners advance in morning trade
- Some European, US markets closed today
Reports of rising popularity for Greece's New Democracy party were giving a lift to London's FTSE 100 on Monday morning as fears over an exit from the Eurozone eased.
Several opinion polls published this weekend showed the pro-bailout party New Democracy as the favourite to win the elections in Greece on June 17th. Specifically, five separate polls show New Democracy leading by a margin of 0.5 to 5.7 points. This would put the group ahead of the radical left wing Syriza party that opposes the terms of the second bailout signed with the “troika” (name given to the combination of the EU, the IMF and the ECB).
“It’s clear that this information should calm the markets down somewhat and Greece’s leaders are trying to take advantage,” say analysts at Citigroup. “New Democracy leader Samaras is already warning that the country could go bankrupt and leave the euro if the agreement with the Troika was broken. He also says that the new Greek currency could plunge 50%, inflation could shoot up 25% and the debt-to-GDP ratio would double."
However, concerns about Spain were also in focus today after the government was asked for €19bn in aid from troubled financial institution Bankia in order to strengthen its solvency. Rumours of further recapitalisation across the sector were also doing the rounds.
Equity markets are closed in Austria, Denmark, Hungary, Norway, Switzerland and the US today for a bank holiday.
Financial stocks and mining groups, two sectors sensitive to the global economic outlook, were performing well as the newsflow surrounding Greece improved. Lloyds was a high riser by midday, while banking peers Barclays and RBS were also making gains.
Copper mining groups Rio Tinto and BHP Billiton were tracking copper prices higher on the back of falling stockpiles in China and favourable comments by Citigroup -Citi analyst Heath Jansen this morning adjusted his short-term view on the copper industry from bearish to neutral.
Oil and gas giant BG Group was making gains this morning, helped by comments at Galvan Research and Trading who said that the shares, whilst currently below 1,300p, "are in bargain territory".
Shares in British Airways parent International Airlines Group (IAG) fell after the president of Bankia (which holds a 12% interest in IAG) said the bank would sell assets to raise much needed funds. As well, there are reports that Madrid will look to privatize stakes in state companies, which may include selling their stakes in companies such as IAG.
Outsourcing group Capita was on the up after UBS upgraded the stock from neutral to buy on the back of improving trading momentum combined with a depressed valuation. Aggreko was also benefitting from an upgrade from AlphaValue from sell to add.
Guiness owner Diageo was in demand after saying that it is set to buy Ypioca, one of Brazil's largest cachaca brands in Brazil, for £300m in cash.
Rolls-Royce, the global power systems company, was also higher after saying it has secured contract extensions with the Royal Air Force worth almost £100m.
Engineering software company AVEVA surged on the second-tier index after it reported record profits for the 12 months ended March 21st as the firm capitalised on growing demand from deep-water oil and gas exploration.
Satellite group Inmarsat rose strongly after Jefferies upgraded its rating on the stock from hold to buy, saying that it now has greater visibility on the issues cited behind the August 2011 profit warnings.
FTSE 100 - Risers
Rio Tinto (RIO) 2,896.50p +3.63%
Lloyds Banking Group (LLOY) 26.73p +3.62%
Weir Group (WEIR) 1,607.00p +3.54%
ITV (ITV) 79.10p +3.26%
Capita (CPI) 630.50p +3.19%
Antofagasta (ANTO) 1,049.00p +3.15%
Xstrata (XTA) 939.70p +2.97%
Kazakhmys (KAZ) 698.00p +2.65%
Burberry Group (BRBY) 1,407.00p +2.55%
BHP Billiton (BLT) 1,747.00p +2.55%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 138.70p -1.56%
Severn Trent (SVT) 1,680.00p -1.23%
Kingfisher (KGF) 277.00p -1.04%
Centrica (CNA) 310.30p -0.77%
National Grid (NG.) 679.50p -0.73%
Resolution Ltd. (RSL) 201.10p -0.64%
United Utilities Group (UU.) 645.00p -0.62%
SSE (SSE) 1,352.00p -0.52%
British Sky Broadcasting Group (BSY) 695.50p -0.50%
Tesco (TSCO) 308.60p -0.31%
FTSE 250 - Risers
Aveva Group (AVV) 1,650.00p +11.41%
Cape (CIU) 222.10p +8.34%
Aquarius Platinum Ltd. (AQP) 73.40p +7.86%
Dixons Retail (DXNS) 14.84p +6.08%
Ferrexpo (FXPO) 218.00p +5.62%
Ruspetro (RPO) 155.20p +4.44%
JD Sports Fashion (JD.) 735.00p +4.11%
Stobart Group Ltd. (STOB) 114.90p +4.08%
Ashtead Group (AHT) 228.10p +4.06%
Afren (AFR) 117.80p +3.88%
FTSE 250 - Fallers
Dunelm Group (DNLM) 498.70p -1.25%
Britvic (BVIC) 341.80p -1.21%
ITE Group (ITE) 195.00p -1.02%
Jardine Lloyd Thompson Group (JLT) 675.00p -0.88%
Phoenix Group Holdings (DI) (PHNX) 436.10p -0.86%
Restaurant Group (RTN) 281.80p -0.77%
Brewin Dolphin Holdings (BRW) 141.50p -0.70%
Rank Group (RNK) 119.70p -0.66%
PayPoint (PAY) 616.00p -0.65%
Grainger (GRI) 91.45p -0.54%
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