Choppy start to trading as eyes remain on Athens – Sainsburys shares rally | Clinton Cards to enter into administration
City Index May 9, 2012 2:40 PM
<p> European shares swung between gains and losses on Wednesday after heavy selling pressure forced Indices lower by between 1% and 2% yesterday with trader […]</p>
European shares swung between gains and losses on Wednesday after heavy selling pressure forced Indices lower by between 1% and 2% yesterday with trader eyes remaining fixated on Athens for any progression on talks to form a new coalition government.
The FTSE 100 traded lost 12 points after the first 90 minutes of trading, whilst the DAX and CAC both swung between gains and losses of 0.3%. The FTSE 100 would have been trading flat had it not have been for dividends factors knocking 15.4 points off the UK Index.
There remains a large focus of the market towards the situation in Athens, where leftist leader Alexis Tsipras holds talks with the other main parties today in an effort to form a coalition. However, hopes of a coalition being formed at this stage are fairly weak as it would require a fairly dramatic change of positioning from Tsipras, who yesterday met fierce resistance from Samaras when he yesterday called for a full rejection of the bailout terms Greece signed onto.
Yesterday’s session typifies how sensitive traders are likely to be in reaction to each and every news story that emanates out of Athens over the coming days, which investors will use to help them to gauge the situation on the ground there and whether the stars continue to align themselves in such as fashion that would force a sharp exit from the Euro for Greece.
In the meantime, whilst we have seen some tentative buys in some European stock markets, trading remains with a short term edge.
The fact that both German and UK long term bond yields continue to fall shows that investors are exerting low risk attitudes in the medium to long term. UK 10yr yields continued to trade below the 2% level whilst German 10yr yields hit 1.533%.
Sainsbury’s continues to outperform with update Sainsburys shares continued to outperform the broader grocery sector in London trading, with shares gaining another 2.6% after the supermarket retailer reported a growth of 7.1% in underlying profits to £712m. Profits came in slightly ahead of the median forecast whilst sales also grew a healthy 6.8% with Justin King confident that the firm can continue to grab market share from Tesco’s.
Clinton Cards says it’s likely to enter into administration later today Shares in Clinton Cards were suspended from trading after the card maker said it was likely to enter into administration later today. Its biggest supplier American Greetings bought up its loan facilities from Barclays and RBS yesterday before promptly calling them in, effectively forcing the retailer into administration.
Clinton Cards said it was not party to the talks between its lenders and American Greetings leading up to the deal and when it was, it had anticipated that American Greetings would install similar waivers to that of its previous lenders in a move to help support the firm. However, the swift deal and immediate calling in of the loans will inevitably leave a rather sour taste not just in the mouths of its shareholders, but in the UK retail sector in general with some eyebrows raised in the City.
The firms shares price has fallen as much as 87% over the past two and a half years, epitomising the difficulties it has faced.
It’s likely administration marks yet another mainstream higher street retailer that has unfortunately succumbed to the incredibly tough economic environment.
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