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Good two way action in the recovery stocks

After the carnage of the last two weeks, value investors have been seen picking up some more of the beaten down stocks today after yesterday’s big reversals in banks and housebuilders. US stocks closed on a weak note after an earlier big rally so there is a possibility of another fall in markets, but we have an intriguing picture at the moment.

HBOS, which has a £4bn rights issue at 275p closing in July, saw a big rally yesterday and is up another 7% so far today as shorts have been closing positions, but companies that may possibly need to tap shareholders in future, such as Alliance & Leicester and Persimmon are also up. Before racing into these however, traders should be aware that a similar pattern occurred at RBS just before the rights issue closed, and the shares fell back again shortly afterwards.

Elsewhere, BG Group is up after it revealed another new oil discovery in the Santos Basin, offshore Brazil. The exploration well, known as Guara, discovered oil within the BM-S-9 concession area, the second discovery within the BM-S-9 concession area where BG holds a 30% interest along with operator Petrobras (45%). The shares have been quiet recently but this might be the kickstart they need to resume the longstanding bull trend.


Head of Research at Blue Index, specialists in trading Contracts For Difference
13/06/2008

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