Choppy Trading See’s European Union Indices Mixed. Royal Bank of Scotland’s Shares Lead Despite Loss

<p>A choppy trading session saw European indices swing between gains and losses on Thursday whilst shares in Royal Bank of Scotland charged over three percent […]</p>

A choppy trading session saw European indices swing between gains and losses on Thursday whilst shares in Royal Bank of Scotland charged over three percent higher despite posting a fourth quarter loss of nearly £2billion.

It has been another choppy trading session with early gains eaten into and forcing the FTSE 100 back towards flat territory on the day by mid morning.

There has been a slew of large cap stock earnings today, which has helped to shape much of the market sentiment on the day.

RBS results the headline 
The headline of the day however will be Royal Bank of Scotland’s earnings. Having opened slightly lower the state owned banks’ shares price rallied strongly as investors digested the results, despite impairment losses associated to sovereign debt being bigger than expected.

RBS reported a fourth quarter loss of £1.8billion with the quarter hurt by writedowns associated to exposures to Greece and Ireland as well as a costly restructuring of the bank. There was however a fairly broad spread of expectations of analyst views towards what these number might be, ranging from a loss of £1.1billion to £1.8billion. So as such, it is not surprising to see the share price open to a loss and then subsequently find support later in the morning session.

The headlines in the press will all be about the £785million paid out to staff as bonuses but realistically, shareholders and investors want to see the restructuring making tangible effects on the banks turnaround and the quarters numbers, whilst still a loss, does help to bring further clarity surrounding the numbers and losses at the bank.

Capita shares rally to the top of the FTSE 100
Shares in Capita raised four percent straight to the top of the FTSE 100 after the outsourcing firm reported a six percent rise in profits for the year of £385.2million. This rise was boosted in part by acquisitions after the firm spent £341million on as many as 21 firms, though organic revenues fell by seven percent to £2.93billion.

RSA Insurance earnings weigh on share price
RSA Insurance shares fell by four percent to the bottom of the FTSE 100 performers list, after the insurance firm told shareholders that dividend increases would increase more slowly than previously expected due to slower investment returns. The news was a key drag on its share price despite reporting bigger than expected profits for the year as cost cutting measures helped to stretch margins. Yearly profit came in at £884million, an increase of 38% when many had expected a figure closer to £845million.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.