Monday started out as Thursday and Friday had ended last week, as the FTSE 100 index continued its slide below 4,400 and issues such as Shell's missing oil reserves drove investors to the sidelines.
However, confidence did return in drips and drabs, sending the index up on three of the five trading days this week, helping support the 4,400 level at which the index traded as of midday today.
Today also saw the much-maligned insurance sector somewhat vindicated after Aviva announced its operating profit should beat expectations when it next reports major results, sending institutions everywhere scrambling to boost the weighting of insurance stocks in their portfolios.
Some may even harbour hopes of a dividend payment recovery at Aviva, while others have already expresses hopes of a possible consolidation sparked by the major cash raising Pru is undertaking through its sale of internet bank Egg.
TMT put in another week of strong results, with Reuters clocking up a 7.5% gain and MmO2 adding more than 5% on new subscriber numbers showing the company is still growing strongly.
Defensive stocks Scottish & Newcastle and Reckitt Benckiser that put in surprisingly strong showings, as they both added around 7% in market value. S&N was boosted by cost cutting news coupled with an admission that one of its major investors had increased its stake. Reckitt saw some of its debt upgraded by ratings agency Moody’s Investors Service.
UK blue-chip losers were hit by a raft of company-specific news. Vodafone dropped close to 3% on investors’ fears of dealings in the US as it tries to get out of its current joint venture there to claim another operator up for sale and establish an independent North American platform for growth. Investors fear the moves will dilute the value of existing holdings.
Shell shed more than 3% after its disastrous results confirmed its missing oil. Up to 20% of proven reserves simply do not exist because of mistakes made in toting up the numbers, but chairman Philip Watts says he will not fall on his sword over the affair.
British Airways fell more than 5% even as other airlines reported rising passenger numbers. Despite its improved debt situation, the airline is still squeezed between market share losses in the European short-haul market and the bird flu threat to its profitable Asian long-haul routes.
The mid-caps sector saw the resurgence of Invensys, which jumped more than 14% on hopes of a rights issue helping it cut debt. Cairn Energy continued to issue pleasing noises about its Indian oil story, helping it rise more than 13% in value. And EMI gained about 12% after competitors reported lost market share in the US.
Egg fell nearly 7% after unconfirmed reports Royal Bank of Scotland and a US bidder had withdrawn from the bidding for the business.
Interesting results due next week include Royalblue, which sells trading software to stockbrokers, and BP. Both should provide evidence of continued strength in the equities and commodities markets. Barclays reports yearly results along with GlaxoSmithKline, Unilever and Marconi.IFAonline
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