CFD Traders Diary
A busy morning as banks and M&A news sees Footsie higher again
17/4/2008
The bank sector is in fine form today after yesterday's big US rally as JP Morgan beat expectations despite a huge drop in profits. Alliance & Leicester, HBOS and Barclays are all up over 3.5%, with further stories that there will be a deal on mortgages to be backed by the Treasury. We have not yet seen major volume but this could mark a turning point both for the sector and the wider market.
Elsewhere, there has been a surge of takeover news, which shows that many bidders see plenty of value in various areas. The FSA has at long last approved the 720p per share, takeover of Resolution by rival Pearl, and British Energy is on the move again on a press report that Germany's RWE has teamed up with Vattenfall of Sweden, to bid for the group. There was also good news for one of our longstanding recommendations Expro International, which has agreed to be bought by a company formed by Candover Partners, Goldman Sachs and AlpInvest for or 1,435p a share. This is a premium of over 35% from when the first indications of interest came out and reaffirms how lucrative the ‘buy on a bid' motto can be.
The only area which looks weak this morning is retail, with M&S and Next leading the early fallers. Our view is that the UK credit crunch will severely affect consumer discretionary income and we remain firmly bearish on many shares in this sector, which continues to underperform.
