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Early rally pushes Footsie up in the wake of US gains

We saw the biggest rally for many months yesterday in the US, with financials leading the way at the expense of oil stocks, which fell as crude dropped for the second day. That theme has continued today with the FTSE 100 index up over 90 points at one stage although it has drifted back a little since then. Barclays, Royal Bank of Scotland, Lloyds TSB and Standard Chartered were all big winners early on, but there were even bigger rallies in the beaten down leisure and housebuilding sectors, with Taylor Wimpey, Persimmon and William Hill all showing major rises.

Possible low in sight as financials see dramatic action

11th July – Shares in London edge ahead but without conviction Yesterday’s M&A news in the US took some of the selling pressure off equities, but it is not at all clear that the downtrend is over for now. Early on there was buying in London, but this has again petered out to leave the FTSE 100 index up around 30 points. There are some bright spots, with selected rises in the mining sector on improved commodity prices, and the housebuilders have seen speculative support on hopes of more cash support to alleviate the gloom and talk that bargain hunters and vulture funds are circling. A big rise in the oil price overnight has helped the likes of Cairn Energy and BG but fuel users British Airways and Carnival are naturally weak.

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.

Sellers again dominant on more concerns over the financial sector

There was some hope yesterday that the bid for Alliance & Leicester together with the funding packages in the US for the two GSEs might change sentiment towards financials. In the event, the sector rose then fell and many shares are down again so far today as investors focus on the overall health of the US mortgage market. Footsie is down over 70 points mid-morning with Royal Bank of Scotland down 5% and Barclays not far behind.