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CFD Traders DiaryFootsie runs into early selling as strong oils offset by other sector problems6/5/2008 Shares in London stared brightly today but soon hit a wave of selling as strong oil stocks were offset by some poor news in other sectors. Tullow Oil was the market's biggest riser as it said that its Mahogany-2 well offshore Ghana hit a significant column of light oil. Their view was that Jubilee is now a major discovery and is likely to lead to a material upgrade of current resource estimates, which suggests the shares will continue to be well supported, especially with crude oil prices hitting $120 per barrel. This should help another of our picks, Cairn Energy, which is also closing in on new high ground. At the other end, housebuilders are under pressure on two pieces of news. Bovis Homes said today that housing market conditions had deteriorated sharply in the last two months and results for the first half of 2008 would be substantially lower than previously anticipated. There were also press reports that US private equity group Apollo was understood to have approached Barratt Developments to offer to buy a stake in it, which was rejected, and many analysts still believe that Barratts will require a fundraising exercise at some stage. That is certainly our view as the tide of bad news suggests that builders will see more sales falls in coming months. One stock within the troubled bank sector that has been fairly resilient is Lloyds TSB which said write-downs in its Wholesale and International Banking had cost it £387m, but without that it achieved revenue growth in excess of cost growth, and a double-digit percentage increase in profit before tax in the first quarter of 2008. Again these are fairly solid numbers, and though we would pour cold water in the view that the credit crisis is over, there is certainly long term value in Lloyds although it could remain choppy in the short term. |
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