Overall volatility lessens but plenty of sector movements

25^th April - Reversal of roles as miners pullback but market strong

The baton has for a change been picked up today by some of the recovery stocks which had previously been hit hard, and it is the mining stocks that are at the bottom of the board as commodity prices fall.  We had been looking for a big fall in gold, which is now happening and this suggests there will be more potential profits on the short side in coming days in the sector.

Gains this morning have been spread around, with banks seeing good support on value buying, as is the case with certain transport stocks which had been beaten down previously.  There have also been some surprisingly good statements, with Go-Ahead standing out after it said it anticipated delivering full year performance in line with expectations and significantly ahead of record results last year, with buses driving the improvement.  The shares have shot up this morning, but it will take more than this to reverse the downtrend, so shorts might want to have a punt in the next day or two.

The pub sector has had a lean time of it this week, and today Mitchells & Butlers said it was not in talks over a possible bid for the whole company.  It did though remain in discussions over a stake sale at what it said might be at a material premium to the current share price, but investors were not impressed and the downtrend remains intact.

28^th April - Gentle rise masks underlying volatility in London

The headline FTSE 100 index feels becalmed at the moment, but there is plenty of action below the surface across many sectors.  Once again the weekend press was full of fundraising stories in the bank sector after last week's cash call from RBS.  The focus has now moved to HBOS, where the shares began steadily but have now seen some selling on reports it is planning a £4bn rights issue that will be announced tomorrow.  If this is the case, traders may look for further initial weakness here in the same way as RBS dropped back a week or so ago.

There was more gloom for housebuilders after their recent poor performance on the expectation that a survey from Savills will predict house prices could fall by 25% if the credit crunch persists, with the market declining by 10% this year and by a further 15 percentage points in 2009.  We remain extremely cautious on the sector, and CFD traders should plan for more profit warnings.

At the top end today is Stagecoach which saw some hefty buying on Friday.  Today it has said that trading has been strong and above expectations since it updated the market in February.  Eps for the year ending 30^th April are now expected to be around 20p, and this just might change the overall outlook for the transport sector, which has been another poor performer recently.  We are approaching some fairly stiff potential resistance on the chart of Stagecoach, so today's strength so far might be about the best here for a few days.

29^th April - Footsie in good shape on a very busy morning for news

Traders have had plenty to occupy them today with the eagerly awaited reports from the oil majors and the news from HBOS, but the overall bullish tone in the UK continues and Footsie is up 43 points mid-morning.

Shares in BP rose a hefty 4.8% as its Q1 replacement cost profit came in at $6.59bn, compared with $4.44bn a year ago, and well ahead of forecasts.  There was an almost identical rise at Royal Dutch Shell which also beat forecasts with a 12% rise in q1 current cost of supply net income.  With crude prices feeling resilient, brokers look likely to upgrade future forecasts, and these shares may continue to rise, which is also the case for Cairn Energy and BG Group.

Over in the banking sector, HBOS followed up the RBS rights issue with its own cash call, and the terms are 2 new shares for every 5 existing shares at 275p per share.  The group indicated that the dividend payout ratio would be reduced to 40%, so again we see this as a mixed blessing for the sector, which seems set to drift down until all this new supply is absorbed.

After the long drawn out and ultimately fruitless approach for the company, it was back to fundamentals for Friends Provident which said that Q1 new life & pensions business increased by 11% to £247m, ahead of market forecasts.  In common with many others in the sector, strong international business drove overall sales, but there are still some stale bulls out there at FP and this is reflected in a lacklustre move in the shares so far, so we would leave this well alone for now.

30^th April - Tight trading range ahead of Fed decision

It was a typically nervy opening this morning with traders tending to square some positions ahead of this afternoon's important Fed rate announcement which is expected to see a reduction in US interest rates to just 2%.  The focus early on has been on a series of corporate statements in London across many sectors, but leading the way down again is the mining sector on another fall in the price of gold and other commodities.  We have been warning for a while of the lack of underlying buying volume in the sector recently, and we see further downside here in the short term.

At the top end, Home Retail pleasantly surprised the market as it raised underlying annual profits by 15% to £433m, at the top of forecasts, but cautioned that it faced a weaker consumer spending outlook this year.  There was a sense of short term relief and this should underpin the shares for a week or two although the longer term trend is by no means certain

Another share to watch is BSkyB which also slightly beat forecasts in Q3 with adjusted operating profit of £521m, down 6%, and revenues of £3.71bn, up 10%.  The group added 56,000 net new customers with the churn rate at 10.5%, and this is one share where quarterly results have a major impact on broker forecasts.  It looks as though the short term downtrend may now be broken and we see higher prices here for a few days.

1^st May - Sellers appear in the US after cautious Fed comments

There was some selling in the US last night after the Federal Reserve's decision to cut interest rates by 25 basis points, and the feeling in some quarters was that we might be close to the end of the rate cutting exercise despite the accompanying cautious comments by the central bank.  Even so, the volatility in world markets has died down considerably this week, and it is quiet again today so far, so most of the CFD action has been in special situations or sector considerations.