MARKET UPDATE

I really am a trying to raise my enthusiasm for the trading day. I am trying to forget about the Gold Cup at Ascot and what lies in stall for us in San Paulo tonight! Fed Chairman Janet Yellen has done her stuff by pushing the interest rate agenda further forward, which will give Mark Carney’s MPC something to think about! Consequently the FTSE 100 has added 51 points to 6831 at 1.33pm on the back of some buying in New York late last night. The £1 billion Rolls Royce buy back gave equities the kick started the rally required. Most people sat on their hands and just let the blue pencils do their stuff. Barratt Development added 2.4%, Mondi the same and Ashtead regained 2.2% of the 6% it lost a couple of days ago. Go-Ahead posted a decent trading statement – up 2.7%. Shire and Tesco eased by 1% and 0.4% respectively on very little activity. This level of inertia is not going to get the baby a new coat. There’s Wimbledon to follow starting next week and another Test match in the 3 weeks plus Henley and the Tour de France – so God knows when the market is going to engage something apart from its backside.

Of course we have very little corporate activity in terms of results to drive this market. Yes the odd IPO – some OK like Zoopla, some disappointing like MySale. Mike Ashley’s intervention has seen the company regroup a tad, but the IPO is still under water at 206P – up 3% today – having been issued at 226p. Tomorrow TSB announces its issue price. Despite sentiment being slightly better, my personal view would suggest that it would be folly to issue shares above 220p (£1.3 billion valuation). In fact that might be a smidgen too much according to counsel taken from some fund managers. Only 25% of the company will be offered for sale, which suggest there will be an overhang for some months. So a measurable discount to book value is essential, particularly as mortgages may be harder to grant in the future, with much riding on introductory mortgages, which TSB has yet to participate in, thanks to a previous agreement with Coop Bank.

Other nuggets of news include Deutsche Bank being warned about the threat of inadequate commodity controls. Also the World Gold Council will be putting its head together with the FCA over greater transparency for gold fixing with a view to avoiding another Libor crisis.

After a positive session yesterday on the Street of Dreams, the DOW futures are looking to add just 12 points at 1.55pm.

These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom
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David Buik
Market Commentator

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