CFD Traders Diary
No real clues from Bernanke as markets consolidate
3/4/2008
After the stunning gains seen on Tuesday, equities have settled down into a period of consolidation with plenty of two way action this morning, with little to report from Ben Bernanke's speech yesterday. He did concede that the US economy might contract in the first half of 2008, but he also reckoned growth should pick up later this year and mentioned inflation for a change without expressing a forthright view.
One area that is back in vogue this morning is the mining sector after another rise in the price of oil and gold overnight, with BG Group and Anglo American top of the pile early on. Whether or not this is just a snapback rally within a new downtrend for commodities remains to be seen, but we are extremely cautious towards these sectors and would again look to go short into strength.
In M&A news, the shares of Friends Provident still look interesting with press reports that it now has the backing of Scottish Widows, its biggest shareholder, in rebuffing the £3.5bn takeover approach from US private equity group JC Flowers. The offer is at 160p, but even allowing for the included dividend, the shares have drifted back to 133p today, and on a risk/reward view one would have to say these look a speculative buy from here.
