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Buyers still around after early pause for breath

After the breathless rises seen towards the end of last week, the FTSE 100 index opened lower on news that HBOS only received acceptances for 8.29% of the shares on offer in its right issue leaving 1.375bn for the underwriters to find a home for.

The shares opened almost 4% down, but soon rallied along with others in the sector, and by mid-morning the index was slightly higher. For a change the miners were in good form after the falls seen in recent session with Kazakhmys up 4% so far.

It was a busy morning for results, mainly on the second line, and once again there was a solid performance from IG Group which raised profits last year by 41% to £97m on sales £184m, up 51%. It said the new financial year had started well and current trading remained very strong, adding that despite a deteriorating UK economic outlook there had been no signs of UK clients reducing their activity levels as a result. The shares are down a touch this morning, and just like Icap last week, we see these in the forefront of a bull move in due course.

Day traders will have had some fun following a profits warning from Hikma Pharmaceuticals. It said that problems at its US Generics business spoiled an otherwise strong H1 performance, adding that while its Branded business performed ahead of expectations in the first half of 2008 and its Injectibles business also delivered strong sales growth, the Generics business performed below expectations. We have seen a big gap down here, and the shares need to regain the 470p area above the rising 200 day moving average to keep the bullish trend alive, but profit warnings often come in threes, so we would be looking for shorting opportunities here.
 

Head of Research at Blue Index, specialists in trading

21/07/2008

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