Date: Tuesday 07 Aug 2012
- StanChart makes headlines on Iran dealings, shares tank
- Evraz jumps on positive read-across from steel peers
- Juncker says Greek exit manageable
The Footsie rallied in afternoon trade on Tuesday to close at a four-month high in spite of some weakness in the banking sector on the back of a massive slump from Standard Chartered.
The blue-chip index hasn't closed above the 5,841 level since April 2nd, when it finished at 5,875. Trading volumes were off slightly when compared to the average level for the last month.
"Were it not for Standard Chartered shares suffering significant losses today, the FTSE 100 would have seen much higher prices. Despite the drag from UK banks in the midst of the Standard Chartered scandal, another close above the 5,800 level for the FTSE breeds confidence that the 5,900 level remains in target," said Joshua Raymond, the chief market strategist at City Index.
By itself the bank´s retreat alone sliced 19 points from the benchmark´s advance.
"Tomorrow marks the start of two days of intense economic data including the release of the Bank of England quarterly inflation report (Wednesday) and a raft of Chinese data including industrial production and inflation due out on Thursday morning. It is here where investors will likely gauge the next phase of the FTSE’s bullish turn in momentum," he added.
The Footsie rose strongly yesterday after Germany backed the European Central Bank's (ECB's) plan to buy Spanish and Italian bonds, and Greece agreed with the Troika to strengthen policy efforts.
However, according to Jean-Claude Juncker, Luxembourg's Prime Minister, Greece exiting the Eurozone would be "manageable": "From today’s perspective, it would be a manageable process. But that doesn’t make it a desirable process. It would carry enormous risks, especially for the Greek people."
UK manufacturing data from June, released this morning, showed the sharpest decline since 2008 as companies took a hit from the two days of public holiday set aside for the Queen's Diamond Jubilee celebrations. Industrial production figures showed a drop of 4.3% compared to June 2011. However, this wasn't as bad as the 5% analysts had been predicting.
Emerging markets-focused banking titan Standard Chartered dropped after the US banking regulator accused it of collusion with the government of Iran to hide transactions from authorities. Nomura, Oriel Securities and Bank of America all downgraded their ratings on the stock this morning, causing the share price to fall by 24% at one point.
Analyst Craig Erlam from Alpari said today: "The allegation against Standard Chartered is the latest embarrassment for British banks over the last couple of months. The reputation of the UK banking system is taking one beating after another. There is only so long that they can pay these huge fines and simply move on." Both HSBC and Royal Bank of Scotland were trading lower by the close.
Steel giant Evraz surged today after European peer Voestalpine's figures beat analysts' expectations and US counterpart AK Steel said that it would be raising current spot market base prices by $30 a tonne.
London-listed miners ENRC, Polymetal and Anglo American were also making good gains. Xstrata advanced despite reporting a 23% decline in profits in the first half of the year after it was hit by a drop in commodity prices as well as increasing costs.
Following close behind was Holiday Inn owner InterContinental Hotels after seeing revenues rise in the first half and saying that it would return $1bn to shareholders.
Aerospace components engineer Meggitt gained after saying it entered the second half of the year with good momentum and an improved order book, although the civil aerospace after-market is a bit soft.
Heritage Oil jumped after shares were restored to the official list after being suspended following the reverse takeover of an oil mining lease in Nigeria (OML 30) first announced on June 29th. The acquisition will be financed by a $550m secured bridge finance facility and a fully underwritten rights issue raising proceeds of up to $370m.
House-builder Bellway fell after saying that its Chairman will retire next year and will be replaced by its CEO. The market reaction was negative in spite of the group saying that pre-tax profits will beat the current consensus estimate.
Coal and coke producer New World Resources was lower after saying that one of its miners in the Czech Republic died on site yesterday.
FTSE 100 - Risers
Evraz (EVR) 276.90p +10.32%
InterContinental Hotels Group (IHG) 1,725.00p +6.35%
Eurasian Natural Resources Corp. (ENRC) 426.90p +5.90%
Polymetal International (POLY) 932.00p +4.72%
Anglo American (AAL) 2,008.00p +4.26%
BG Group (BG.) 1,324.00p +3.20%
International Consolidated Airlines Group SA (CDI) (IAG) 156.60p +2.96%
BP (BP.) 453.80p +2.90%
Petrofac Ltd. (PFC) 1,589.00p +2.85%
Tullow Oil (TLW) 1,370.00p +2.78%
FTSE 100 - Fallers
Standard Chartered (STAN) 1,228.50p -16.43%
Serco Group (SRP) 592.00p -1.66%
Capita (CPI) 735.50p -1.28%
Hammerson (HMSO) 467.80p -1.08%
Bunzl (BNZL) 1,136.00p -0.96%
Tate & Lyle (TATE) 670.50p -0.81%
Associated British Foods (ABF) 1,268.00p -0.78%
Imperial Tobacco Group (IMT) 2,497.00p -0.72%
Rolls-Royce Holdings (RR.) 850.00p -0.70%
Aberdeen Asset Management (ADN) 266.60p -0.67%
FTSE 250 - Risers
Heritage Oil (HOIL) 148.80p +20.98%
Lonmin (LMI) 774.50p +5.37%
Domino's Pizza Group (DOM) 543.50p +4.72%
Talvivaara Mining Company (TALV) 154.20p +4.61%
Home Retail Group (HOME) 82.20p +4.38%
Dialight (DIA) 1,090.00p +4.31%
Anite (AIE) 126.90p +4.19%
Rank Group (RNK) 123.90p +4.03%
Henderson Group (HGG) 104.00p +3.59%
Kenmare Resources (KMR) 40.00p +3.01%
FTSE 250 - Fallers
BTG (BTG) 338.00p -5.59%
JD Sports Fashion (JD.) 671.00p -3.17%
Ocado Group (OCDO) 76.55p -2.92%
BBA Aviation (BBA) 178.00p -2.89%
PZ Cussons (PZC) 311.80p -2.84%
Greggs (GRG) 491.50p -2.67%
Perform Group (PER) 378.90p -2.35%
Hansteen Holdings (HSTN) 73.20p -2.33%
Atkins (WS) (ATK) 671.00p -2.19%
Dixons Retail (DXNS) 16.21p -2.11%
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