The markets in Europe and the US have performed well today - a significant u-turn from yesterday - despite worldwide jitters in the financial markets. It seems to stem from hopes that central banks will cut soon interest rates. Still, judging by the general state of certain companies' share prices, the recovery is a surprise.
At the close the FTSE 100 ended up 105.7 points, or 1.73%, at 6226.5, at which time the Dow Jones was up 0.9%. Europe's FTSE Eurofirst 300 index also closed up 1%.
Northern Rock, once again, is the talk of the town today, and is the biggest loser on the FTSE 100. Its position at the top of the list of losers was briefly challenged by Tullow Oil, which suffered an analyst downgrade, but the beleaguered bank soon made it back up to the top position, and stayed there. Shares have closed down 7.2p, or nearly 7%, at 97p, after reaching a record low of 60p earlier this morning.
News that JC Flowers' proposal includes an offer to Northern Rock shareholders at a nominal value, surprisingly, did not drag the share price further. The other banks, however, performed well enough.
Paragon is another company that has suffered hugely today. The buy-to-let mortgage lender's shares are down 79.2p, or nearly 39%, at 125p on news it might need to raise up to £280m in a rights issue by February if other funding does not become available. This all stems from the state of the credit markets.
And the list goes on. Euromoney Institutional Investor, the financial media company, has fallen 23.7p, or 6%, to 378p on market worries. The group, when it posted its full year results last week, said that growth in the current year was slower, adding that the full year might be testing if financial markets deteriorated further. Shares since then have fallen 21%.
So judging by the worrying news emanating from key companies, were the markets today witnessing a dead cat bounce?
