Friday Email: 19 December 2014
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The early part of the week saw a continuation of the previous weeks sell-off, but things turned around on Tuesday as oil stabilised and even rose a couple of dollars. This situation was then massively boosted by the Feds comments. Since then the FTSE 100 has risen strongly froms its low of 6150 early on Tuesday to close on Thursday at 6466 and the futures are currently pointing to another strong opening on Friday. It has just opened up 65 points at 6520.
The week past saw very little on the corporate front but we were pleased to see our expectations for Imagination Technology play out correctly as they published numbers that reflected the large investments that they have been making for the future and at the same time providing a positive outlook based upon those investments. We see a positive few years ahead for Imagination as they continue to lead the field in Graphics IP and they spread their wings into other areas. The market liked the numbers and Numis Securities immediately brought out their customary sell note with a target price of 170p. Dixons Carphone had a very good half year which was also well liked by the market and with an interim dividend 25% above market forecasts.
The week ahead is the quietest of the year and hopefully the rally of the past three days will continue into the Santa rally. Our year-end prediction of 7000 on the FTSE 100 is looking very remote. It has been one of the toughest years for trading equities that I can remember and with next year being an election year I expect these very difficult trading conditions to continue. No companies report next week so that leaves me to wish you all a very happy festive break and I will be back with my next Friday email on the 2nd January.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
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Read next: 12 December 2014
The FTSE 100 has fallen every day this week and many stocks in the commodities space have reached levels that were unthinkable at the start of the year. A trader friend of mine draws the analogy of an elastic band being streched and streched until it suddenly goes ping. This, he refers to on upside as well as downside movements. The elastic band is reaching full strech in the commodities space, but has not pinged yet and it will probably need a trigger to do so. The same guy was telling me just the other day that all OPEC needed to do was cut by half a million barrels per day and that would have triggered a rally. They chose not to and so we are still streching the elastic. Some of their members must be furious as they have developed a dependence on high oil prices. We still have overcapacity and all economists know that when supply exceeds demand, price falls. Simple. That said, we know that so many of the producers are currently producing oil at a loss or very little profit. The market is scouring for those companies that are not hedged and punishing them ruthlessly.
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