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Another bout of selling sends the bank sector down in London

Once again there were early signs of equity buying on value grounds, but this soon petered out as the bank sector was hit hard on worries of more credit crunch writeoffs. The FTSE 100 index was 20 points mid-morning, and the culprits were led by HBOS and Royal Bank of Scotland. Another big faller was Wolseley which dropped 5% on a poor update.

Trading profit dropped 28% in the eleven months to June, and it expected conditions to get worse. Although group revenue, including acquisitions, was up 1% the final dividend was axed and the outlook continues to look gloomy, so short positions continue to be recommended.

Over in the property sector, market leader Land Securities dropped almost 3% as it said progress in Q1 had been at a slower rate and added that it was currently assessing proposals for its Trillium business. There is a fair discount to net asset value here, but this has been the case for a while and the downtrend remains intact.

One share that looks unfairly tarnished is Icap, which again pleased the market with a solid statement. It said group revenue, excluding the recent Link acquisition, rose 15% in Q2, with the growth in electronic broking especially strong, particularly in foreign exchange. The shares are up 4%, and if the market turns, these should be in the forefront of any bull move.

There was also good news from JD Wetherspoon, which said it had performed better than expected for the 11 weeks to 13th July 2008 with like-for-like sales up by 0.4%. It is early days here, but we could be at a turning point after the 7.7% rise so far today.


Head of Research at Blue Index, specialists in trading Contracts For Difference
16/07/2008

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