FTSE 100 opens higher after 6 days of losses – Thomas Cook shares lose 51%
City Index November 22, 2011 9:01 PM
<p>The FTSE 100 saw a muted bounce in trading on Tuesday after six days of losses that wiped nearly 6% off the UK index. The […]</p>
The FTSE 100 saw a muted bounce in trading on Tuesday after six days of losses that wiped nearly 6% off the UK index. The FTSE 100 opened to gains of more than 0.5% led chiefly by some short term investor bargain hunting in the miners after a 2% bounce in the price of Copper this morning.
Two sectors that have been hit hard over the recent six day slump on the FTSE; the miners and the banks, have both attracted some buying today, mostly on short term bargain hunting. The FTSE 350 mining sector has lost 12% in the last six days trading whilst the FTSE 350 banking sector has also lost 10%. As a result, with the FTSE 100 starting the day in positive territory, it is only naturally that this has attracted the bargain hunters to these two badly hit sectors.
However, most contracts being picked up by clients today in mining and banking stocks are very short term, showing that a high degree of investor sensitivity remains and one should not get overly excited by today’s first positive start in seven sessions.
There remains significant concerns over the debt deadlock in the US after the congressional super committee announced that they had failed to reach a bipartisan agreement on cutting the US deficit, after three months of talks. This had already been well leaked into the markets over the weekend.
There has not been a significant cooling of Italian or Spanish bond yields at the start of trading to match the rally seen in equities, which opens today’s gains up to early profit taking or bearish investors selling into the rally by looking to close out positions at better levels.
Thomas Cook shares plummet 51%
Shares in Thomas Cook plummeted to a new low today, falling a massive 51% after the travel firm entered talks with its lenders over another renegotiation of its terms and delayed the publication of its full year results as a result. The news is yet another devastating blow for shareholders of the travel firm.
The firm has reported a string of profit warnings recently and only last month successfully renegotiated the terms of its lending with its banks. The fact that they are already looking to amend those terms so soon after the agreement tells one of two tales; either they drastically underestimated their fiscal requirements in October’s negotiations or trading conditions have deteriorated significantly since then. Both of those potential factors are significantly bearish for shareholders and investors in Thomas Cook alike and so today’s 51% loss in the firms share price may seen harsh at the outset but for some investors and considering the tough times they have faced, it is entirely justified. And what’s more, the last thing shareholders will want to see right now is a lack of transparency over the firms performance and so the delay in publishing their full year numbers will only feed fears and rumours of the firms potential demise.