Date: Tuesday 24 Jul 2012
LONDON (ShareCast) - It took a while for the market to fully digest the results from speciality chemicals producer Croda International, but once it did the shares raced ahead.
Strong demand for the group's products in the USA offset weaker trading conditions in Europe, while a change in the product mix sold led to an improvement in margins.
Insurers were out of favour following yesterday's market shake-out, which will have put a dent in the sector's investment portfolios. Aviva was prominent among those declining, despite Panmure Gordon reiterating its 'buy' recommendation as it speculates on the benefits of a sale of the insurer's US operations.
The broker thinks that with a "decisive no nonsense Executive Chairman now at the helm and an identified disposal programme to be executed," it won't be long before the US business is sold, albeit at about half the £2bn price tag it had when Aviva bought it in 2006.
"We believe that by selling the US operation, even at a substantial loss to its c£2bn 2006 purchase price, Aviva will increase economic capital by c£1.3bn plus the sale price, thus increasing its economic capital ratio towards 160%. In our view this would result in a positive share price reaction, given sentiment
improvement from a capital boost and it being further evidence of Aviva executing on its disposal programme," Panmure Gordon analyst Barrie Cornes said.
Glencore led fallers as profit-taking ensued across the grain complex in the United States. That on the heels of forecasts for rain across several West and mid-Western US states during the next fortnight. Nonetheless, Goldman Sachs yesterday day raised its price forecasts for grains three months out.
Thus, any profit-taking may yet prove to be short-lived some think. There is also interest in the next FDA report scheduled for release in two weeks´ time.
FTSE 100 - Risers
Croda International (CRDA) 2,380.00p +6.77%
Aggreko (AGK) 1,963.00p +2.99%
Serco Group (SRP) 568.00p +1.61%
Shire Plc (SHP) 1,895.00p +1.45%
Antofagasta (ANTO) 1,039.00p +1.17%
G4S (GFS) 244.10p +1.03%
Rolls-Royce Holdings (RR.) 842.50p +0.84%
ARM Holdings (ARM) 484.40p +0.64%
Aberdeen Asset Management (ADN) 246.30p +0.61%
Sage Group (SGE) 281.60p +0.57%
FTSE 100 - Fallers
ICAP (IAP) 300.50p -2.18%
Glencore International (GLEN) 302.30p -2.12%
Resolution Ltd. (RSL) 205.00p -2.10%
International Consolidated Airlines Group SA (CDI) (IAG) 145.60p -2.02%
Standard Chartered (STAN) 1,428.00p -2.02%
Kingfisher (KGF) 253.10p -1.86%
Aviva (AV.) 270.10p -1.85%
Lloyds Banking Group (LLOY) 28.77p -1.76%
ITV (ITV) 70.80p -1.67%
Admiral Group (ADM) 1,131.00p -1.65%