After hitting a three month low, leading shares are attempting to mount a revival, despite continuing fears about the financial crisis surrounding Greece.
Standard Chartered is among the leading risers, up 24.5p at 1058.5p on talk that the UK chancellor might announce changes to the bank levy at his Mansion House speech on Wednesday evening. The theory goes that George Osborne could unveil a new corporation tax surcharge levied on UK assets alone, which would benefit an Asia-focused bank like Standard for one. It means it’s been a good day so far for Standard’s new chief executive Bill Winters to begin his stint at the top of the bank.
But other banks are under pressure, with Barclays down 2.35p at 259.20p and HSBC - which ought in theory to get a similar boost to Standard from any levy change - 5.3p lower at 608.4p in the wake of Tuesday’s strategy update.
Elsewhere supermarkets are in focus after better than expected figures from Sainsbury, up 9.1p at 258.1p. Rivals are benefitting from the update, with Tesco climbing 5.25p to 207.35p and Morrisons 4.6p better at 176p.
Overall the FTSE 100 is up 14.54 points at 6768.34, even though bond yields continue to rise and worries about Greece remain, with the country and its creditors seemingly as far apart as ever as the deadline approaches for the two sides to come up with an acceptable deal.
Weir, the engineering group which is a key supplier to the oil sector, is the day’s biggest FTSE 100 faller so far. Its shares are down 53p at £18.69 as it warned its full year results would be more weighted to the second half after a drop in orders at its oil and gas division and weak trading at its upstream business. Analysts at Liberum issued a sell note although admitted Weir could be a takeover target. They said:
We expect the shares to come under pressure today and struggle to justify a 2015 PE of 20 times and enterprise value/EBIT of 15 times given end market exposure and downgrade risk.
Weir has often been heralded as a takeover candidate given its attractive margins and market leading positions. A US player looking to utilise some offshore cash is often mooted as the most likely acquirer (e.g. General Electric). We see this as the key risk to our view.
At Panmure Gordon, Sanjay Jha also issued a sell recommendation:
Ahead of the Capital Markets Day focused on the Minerals division this afternoon, Weir has provided a trading update. The main change from April 29 interim management statement appears to be deterioration in Oil & Gas order input; down 34% in the first five months of 2015 compared with 23% decline in January to March period. As a result we are downgrading our forecast for Oil & Gas revenues by 10% to £695m, which based on 14% margins reduces our earnings per share by 5% to 93p.
