Authorised and regulated by the Financial Services Authority

A Good As Goldman

The FTSE 100 was saved from yet another wave of selling down to 5,000 from news that Warren Buffett’s Berkshire Hathaway investment vehicle had paid up to $5bn for part of Goldman Sachs. Obviously a very bullish move, he joins a long line of bottom fishers who have attempted to call time on the Credit Crunch. In the meantime jitters continue as we await the fate of the Troubled Asset Rescue Package (TARP). The problem with TARP is that it may simply take too long for the markets, even if it only a takes a few days in being approved by Congress.

That said, after an almost straight decline from Friday’s peaks we have seen some stability in banks and financials, with support for Lloyds TSB (LLOY) coming in at 250p, HBOS (HBOS) at 180p, and Barclays (BARC). Perhaps the best scenario at this stage is that from where these stocks are now they will go on to retest the intraday highs of last week.
One of the more bizarre stories of the day was reported in the Financial Times. Hedge fund group Man has approached the FSA to make it illegal to go short in its shares, as it has noticed that some of its hedge fund competitors have been dragging its stock down. The concept of dog eat dog comes to mind, as well as Not In My Backyard, in that this company made its name partly by being able to go short of the market.
The big event of the day so far has been the announcement of a takeover of British Energy (BGY) after EDF finally announced its bid for the electricity generator at a rather disappointing 775p a share. That said, one can imagine plenty or horse trading went on behind the scenes, not least because Centrica (CNA) will take a 25% share in the new British Energy (BGY). Indeed, it may be that Centrica is now the stock to follow in that it will be assuming new debt and has backed off its recent 340p range highs.
There were a couple of “normal” companies reporting, in the shape of Imperial Tobacco (IMT), where trading was in line and the integration of Altadis was progressing well, and Smiths Group (SMIN) which reported a 10% rise in full year pretax profits, ahead of expectations.
 

Head of Research at Blue Index, specialists in trading
Contracts For Difference

24/09/2008

< back