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Another storming bank performance sets the Footsie alight

After a brief bout of profit taking yesterday, the bank sector roared ahead again following the huge rally in the US’s Wachovia last night and talk of a bail-out for Fannie Mae and Freddie Mac. The feeling among many commentators is that this phase of the credit crunch is now over, and today HBOS led the way with a 12% rise.

RBS, Barclays and Lloyds TSB were also well ahead, as were other financials including Friends Provident, Schroders and Royal Sun Alliance. Overall the FTSE 100 index was up over 80 points mid-morning.

The other main story was another big fall in crude oil prices, which saw early rises in British Airways and Carnival. Among the other winners, Vodafone also recovered some of yesterday’s heavy losses after it decided to buy back £1bn of shares, but this looks a stock to be very wary of given the huge selling yesterday.

The miners tended to dominate the laggards, and BHP Billiton’s figures were solid, if a little uninspiring. Q4 copper output rose 14% against the comparable year ago period, while iron ore rose 15%, though coal used in steel making dropped 18%. The group did warn however that the Escondida mine’s total output would drop 10% to 15% in the 2009 financial year due to lower ore grades, and we feel this might put a cap on any short term gains here.
 

Head of Research at Blue Index, specialists in trading

23/07/2008

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