Closing comments from David Jones, Chief Market Strategist, IG Index:
As the London market closes, it has been a choppy day for traders that has left the FTSE broadly unchanged.
Better than expected first quarter results from oil giants BP and Shell provided a boost to London in early trade, with both ending the day with gains in excess of 5%. The morning also saw HBOS confirm recent speculation, with its trading statement revealing plans for a rights issue which aims to raise £4 billion from shareholders. There was little change to its share price in early trading, demonstrating how unsurprising this sort of move is following the RBS announcement last week. Speculation now centres around which of the other major lending banks will use this as an avenue for shoring up their balance sheet.
There is an element of treading water in markets at the moment which may well spill over to the early part of trading in the morning. Tuesday evening UK time sees the latest announcement from the USA on interest rates. Financial markets are pricing in a near 80% chance of a 25 basis point cut this time around – what is less clear is what the Fed are going to do next time around on interest rates. The past six weeks has seen a solid rally by global stock markets but the economic outlook suggested by many corporate and economic announcements suggest the short term future is still less than rosy. The tricky aspect for investors at the moment is trying to figure out whether the market has already factored all of this in – and if so is it time for further bargain-hunting.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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UK Market Comment, 28 Apr
Closing comments from David Jones, Chief Market Strategist, IG Index:
Going into the final few minutes of trading, the FTSE 100 has slipped back below the 6100 level.
After a strong start playing catch-up with strength seen in the US on Friday evening, it has been a bit of a disappointing afternoon for the UK market, with some of those earlier gains lost. Banking was once again at the forefront with speculation of the 'will they or won't they' variety surrounding HBOS and a rights issue. Plenty of people thought last week's announcement by RBS could mean that other banks would attach less of a stigma about making a cash call, but we will have to wait for Tuesday's HBOS AGM to find out more. It is a sign of the lack of surprise for this sort of move that there has been little market reaction today for any individual bank's share price.
Moving to the broader market, the major US and UK indices are all trading near what many think could prove to be key barriers. For the FTSE 100, it is the 6100 mark. Although today has seen a fair bit of time spent above 6100, the afternoon saw the index slide back down. However, as we have seen over the past couple of weeks, any weakness in UK stocks has proved to be a buying opportunity so it looks to be too early to say that the strength is finished. Many will be expecting this weakness to be a pause for breath before another assault is launched on levels not seen since the beginning of January.
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
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Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.
'Spread Betting on Oil Companies' edited by DJ, updated 29-Apr-08
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