News

Blue Index News and Press Releases. Please visit this page often for regular updates regarding Blue Index as an organisation.

Rescuing The Rescue Package

Perhaps it was not the $700bn rescue package that caused stock markets to bounce so sharply on Friday, and was the shorting ban instead. But the current position for equities is that Friday’s gains could be eroded unless there is a chance of salvation for TARP (troubled asset rescue package). In the meantime the FTSE 100 is down some 200 points off its intraday high of Friday at 5,351. This could be regarded as the level required to reignite a bull market – and it already far out of reach.

Back To Normal

While the stomach volatility on Friday was at least something to celebrate for the bulls, those who are just day / swing traders may be grateful that the London market seems to have returned to normal. At the very least the financials are perhaps less interesting if all you can do is go long. But they are in focus as ailing buy to let bank Bradford & Bingley (BB.) was revealed as having the FSA looking for a buyer on its behalf, something which might explain why there are no takers as of this point. As far as the other main plays in the banking sector, there was a distinct feeling of the dust starting to sell, especially as now only physical share dealing is moving the price.

Monumental rally after FSA statement on short selling

Shares in London saw one of their biggest ever rises after two major pieces of news. First, from midnight last night, the FSA introduced new provisions to the Code of Market Conduct to prohibit the active creation or increase of net short positions in publicly quoted financial companies, and this effectively prohibits short selling in financials from now on. Second, US markets exploded last night on talk that Treasury Secretary Hank Paulson was set to unveil a new rescue plan that would create a vehicle to take on the US banks’ worst bad debts and help get them lending again. This evoked comparisons with when the saving and loans industry collapsed in 1989.

Another day of volatility on HBOS takeover news

There were big moves in both directions today as Lloyds TSB and HBOS went in different directions after the former struck a deal to buy HBOS for £12.2bn. At last night’s prices the bid was worth around 230p, but Lloyds is currently down 7% and HBOS is up almost 30%, though well shy of the perceived value. Lloyds estimated that the deal would lead to an additional contribution to earnings before tax from cost synergies significantly in excess of £1bn a year by 2011, but there are concerns over opposition to the deal from shareholders, so it remains a risky situation. Overall the market saw value buying and was up 48 points mid-morning.