CFD Traders Diary
Footsie up despite RBS rights issue news
18/4/2008
It is a sign of the generally positive market background that the news of a potential £5bn plus right issue from RBS has not affected the FTSE 100 index so far, with most traders preferring to look at several special situations elsewhere. The miners and oils have also been strong again on solid commodity prices, and tech stocks saw support after Google's excellent after hours statement last night.
RBS shares actually rose at the open on the view that by being the first to raise capital it would put them in a reassuringly strong position, but we cannot help feeling that the huge extra supply of stock will depress the price for some time. Mid-morning the price has drifted back, and no doubt investors will await the actual announcement which is due early next week.
Elsewhere, shares in Punch Taverns and Mitchells & Butlers both fell around 4% after they effectively stopped all correspondence with each other regarding a potential merger. This is not good news for the latter, as we feel that investors will again focus on its high debt levels, concerns on which led to a big fall in its shares a month ago.
As we write, we are approaching double witching in London and we have triple witching in the US today, and these often precede a period of volatile action, so as we have said recently it may be easier to play individual stocks rather than the indices themselves for the next few days.
