RAMSEY CROOKALL
18th July
Evening Report
The FTSE 100 closed down 1.6% at 5752.81, with Barclays and Lloyds Banking Group
slumping 7.0% and 7.5% respectively. The FTSE 350 banks index fell 2.8%. On Tuesday,
the UK economic calendar will be quiet again.
Many investors will be watching the parliamentary hearing tomorrow, where MPs will
question News Corp. executives, including Rupert Murdoch himself.
The banks were the heavy fallerstoday, as the results of Friday’s stress tests on the
Europe’s banks were seen as too soft. Markets across the continent were disappointed with
the tests, with reports from Bloomberg saying that European banks may need to raise up to
€80bn of extra capital after the European Banking Authority didn’t include a Greek default
scenario, despite the majority of investors expecting one. Royal Bank of Scotland, Lloyds
and Barclays were among the worst performers on the blue chip index in London.
Meanwhile, Fresnillo and Randgold Resources headed higher on the back of higher silver and
gold prices.
Gold rose over the $1,600-per-ounce mark before edging back down, as investors were attracted to
its safe-haven qualities as the European debt crisis rattled on. Furthermore, Standard Chartered
was seen to be bullish over gold demand, saying that gold prices may reach $2,000 by 2014
and $5,000 by 2020.
Investment management business Man Group fell after saying that it is to acquire the
remaining exposure to the estates of the now-bankrupt US investment bank, Lehman Brothers,
from funds managed by its subsidiary, GLG Partners, for $355m in cash, in an effort to reassure
investors.
Global engineering giant GKN was also firmly lower after it announced that it is looking
to expand its Land Systems division with the acquisition of engineer Stromag for €164m (£146m).
THE FTSE 100 closed Down 90 @ 5752
THE DOW JONES AT 4.45 Down 173 @ 12306
NASDAQ COMP at 4:45 Down 31 @ 2758
Exchange Rates
GBP – USD 1.6021
GBP - EURO 1.1408
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