Market report: A blow for the bears as JPMorgan puts its weight behind Carillion
The market bears have been sharpening their claws this year as shares in Carillion, the most shorted stock on the LSE, have been on the slide.
But they suffered a blow today as analysts at JPMorgan Cazenove became one of the construction services firm’s only City supporters, upgrading from Neutral to Overweight.
More than a fifth of the FTSE 250 company’s shares are out on loan to short-sellers hoping to profit from a share slump, according to data from the financial watchdog.
They’ve been in luck over the past couple of years, with the company losing a third of its value since its failed merger with Balfour Beatty in 2014.
But JPMorgan left them feeling a little less confident ahead of next week’s trading update, predicting the shares will recover to 292p. The upgrade boosted Carillion by 8.27p, or 3.8%, to 224.57p.
The Macron-mania which swept markets higher yesterday faded slightly.
However, buyers could still be found as the FTSE 100 added another 15.39 points to 7280.07, although gains would have been greater had it not been for Whitbread’s 6.8% dive, down 292p to 4015p.
“After Monday’s Gallic surge the markets seem in need of a break, explaining the morning’s rather snail-like start,” said Spreadex analyst Connor Campbell.
His views were shared by Neil Wilson at ETX Capital. “The relief rally in European stocks is just about still on but there are no signs of exuberance just yet. European equity markets are pretty well unmoved this morning as investors take another look at where the value is to be found,” he said.
The oil price managed to reverse six days of losses, which came as traders lost confidence that proposed production cuts from Opec will solve the market’s oversupply.
Brent crude edged up 14 cents to $51.74 a barrel, lifting London’s heavyweight oilers. Royal Dutch Shell, the biggest listed UK company, strengthened 19.5p to 2119.5p and BP was nudged 0.94p higher to 450.24p.
Goldman Sachs lost its confidence in London’s mining giants amid a reversal in fortunes for the sector.
The investment bank cut its rating on BHP Billiton, which lost 7.5p to 1207p, to Sell and Anglo American, off 15p at 1114p, to Neutral. It warned half of BHP’s profits come from iron ore and coal, two commodities it is now bearish on.
Junior market investors checked into budget hotel chain easyHotel. Shares rose 2.5p to 95p after it signed a deal to develop hotels in Nepal with IGC Group, with the first in the capital Kathmandu.
