ALTHOUGH the arrival of a new government did not see the FTSE 100 break immediately higher, there are nonetheless some clear suggestions in the markets that the cyclical UK-listed stocks are starting to gain favour at the expense of their defensive counterparts. In this case, any utilities stocks could find themselves coming under sustained pressure if investors continue to think defensively. IG Index is offering a price of 60.1p-60.3p on Cable & Wireless.
But for investors who remain worried about the sovereign debt crisis in Greece, gold is proving a popular bet. The precious metal surged to record highs this week – investors were concerned about the potential inflationary impact of the European Central Bank’s decision to buy up Eurozone government bonds.
It hit a record high of $1,244 a troy ounce on Wednesday morning on almost panic-level demand. With no technical resistance in the way and no immediate end to the debt crisis in sight, gold may well continue rising. Spread Co offers a spread of $1,141.50-$1,141.90.
While BP has come under fire for its handling of the oil spill, energy giant BG Group is worth taking a look at. It announced on Monday that it had entered into further joint venture arrangements with its US shale partner EXCO Resources, and this news was accompanied by a couple of broker upgrades. ING upgraded it to buy from hold and raised the price target to 1,300p. The bear trap dip for the stock last week reinforces the buy argument at the current range lows. Spreadex is offering a rolling spread of 1,063.4p-1,066.1p.
Oil and gas explorer Tullow Oil this week came out with a positive trading statement. It said that its financial performance so far this year was in line with expectations and that the outlook for 2010 was “very positive”. Shares have bounced just above last September’s intra-day low of 1,011p and the target for Tullow is expected to be the 200-day moving average at 1,202p over the next few weeks. IG Index offers 1,140.9p-1,143.1p.
Stockbroker Killik & Co yesterday outlined its positive outlook for Compass Group, a catering services company. It said: “The interim results from Compass Group were ahead of market expectations and underline the improving trend in both revenues and operating margins in the near term, and the attractive outlook for the business in the long term.” Spreadex offers a September spread of 556p-560.6p.
Deutsche Telekom, the German telecoms company, posted stronger-than-expected results for the first quarter of this year. Margins improved in Germany and most of western Europe, however the company still has problems with its operations in the US and in Southern and Eastern Europe. It’s US arm, mobile phone operator T-Mobile, lost 77,000 subscribers in the first quarter, which will make it hard to increase revenues in the region. This could impact overall performance for the company for the rest of the year. Spreadex offers a rolling spread of €9.067-€9.105.
The Spanish stock index the Ibex 35 has been under intense pressure since the Greek crisis came to a head last week, which caused investors to flee risky assets. After the announcement of the EU and IMF bailout plan at the start of this week the Ibex bounced strongly, however it’s unlikely to sustain any rally. IG Index offers a spread of 10,103-10,121.