Relief rally sees FTSE charge 0.9% higher
City Index February 13, 2012 9:26 PM
<p>Investors bought into stocks on Monday after the Greek Parliament passed the latest austerity measures needed in order for the indebted country to receive a […]</p>
Investors bought into stocks on Monday after the Greek Parliament passed the latest austerity measures needed in order for the indebted country to receive a second bailout, helping the FTSE 100 to rally 0.9%.
What we have seen today is a relief rally, with investors buying into heavyweight financial stocks on the back of the successful Parliament vote in Athens. The FTSE 350 banking sector rose near 2% in early trade, whilst miners were also sought after, as investor appetite for risk gained.
The Greek issue has long been an uncertain cloud hanging over sentiment and this has forced stock indices into consolidation mode for much of the past few weeks as investors were unwilling to add too much risk in case the situation imploded. Now that we are close to a final resolution, with Europe now set to ratify the bailout, investors’ hands are somewhat free to add more risk to their portfolios.
Naturally however, traders need to be on guard for more surprises, which cannot be disregarded considering nothing concerning Greece has been easy thus far. The rioting on the streets of Athens is likely to keep the debt situation highly sensitive, whilst the April election also poses a threat to Europe’s ability to trust the sincerity of Athens to now implement these austerity measures, despite them being passed into law last night. This is not in the slightest the end of the Greek debt crisis.
There is a lack of significant economic data out today and so investors have very little to trade on apart from the Greek austerity relief.
The rally in the FTSE 100, which has traded back above the 5900 level, and the fact that we have not seen a significant sell off yet, is very positive for UK stocks, and an attack at the 6000 level could now be likely in the near term.
Cable and Wireless shares charge 25% higher
Shares in Cable and Wireless Worldwide charged higher by a massive 25% today after Vodafone said it was considering making an offer. Vodafone said it regularly reviews opportunities in the sector and confirmed that it is in very early stages of evaluating the merits of a potential offer for C&W. The telecom giant now has one month to either launch a bid or walk away according to the Takeover Code.
The news has given a big boost to shareholders of the stricken Group after several profit warnings. C&W has long been rumoured to have been a bid target, but it seems that considering a fall of 75% in the value of its shares last year, this has attracted Vodafone to the table. They are only at the very early stages and so one cannot assume an offer will be made at this stage, but certainly we have seen speculators buy into C&W shares on the back of the news.
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